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I think this could be the case, Colin has been very circumspect recently. Perhaps on some of the drill results he had reason to be but Fairbride starting is a very different matter.
It is now a steal at 4.80 with pretty much confirmed $10m plus net a year incoming , plus a potentially huge asset in oz and more copper in Africa .
Good time to buy for those in the know.
Sounds like Joel needs another new calculator....
Not sure if its true but Jan told me via email that he fired JS for mistakes back in the day. CB reinstated him after he left.
Great analysis Andy. Do the figures work out right if you take off the 6% mining tax first (as this is paid by Explorator), leaving 20% of which Explorator gets 65% (so 13% net overall)? I note that the difference you quote of 17% vs 11.1% is virtually 6%.
If this is the explanation then it’s yet another c**k up by the company. Very sloppy and affects our expectations going forward. And it should have been explicitly referred to in the RNS.
Andy
Thanks for your thoughts.
Yes you could be correct. there could have been some sort of "adjustment" to compensate errors made last time. So the question is what will the % cut be next quarter for hard rock? Has the adjustment finished ?
As you say "It really feels to me that the format of the quarterly gold report is no longer fit for purpose".
Its hard enough predicting income when there are some constants, but when the % cut changes its all guess work !
Andrew great question on share of gold production.
Note that for Q2, Q3 and Q4 share of production can be reconciled plugging in 28% of alluvials and 24% of hard rock although I would have perhaps expected 26% of hard rock from initial recall of RNSs for hard rock agreement.
So why is Q1 different? I think 24% (26%) hard rock is wrong and not aligned with the RNS for Guy Fawkes or Boa. It seems to me that in Q3 and Q4 the results may have overlooked 35% attributable to MMP.
Extract from RNS for GF
https://www.lse.co.uk/rns/XTR/manica-gold-hard-rock-mining-contractor-agreement-d96j192dh5meval.html
"Guy Fawkes Agreement provides for Explorator to receive 20% of gold production (after settlement by Explorator of the Mining Production Tax)
· Explorator will remit 35% of its share of Guy Fawkes gold production (after applicable expenses and tax) to Mutapa Mining and Processing LDA, Explorator's existing hard rock collaboration partner
In consideration for the appointment, the Contract Miner will retain 74% in gold for services provided, and Explorator will retain 26% of all gold production, amounting to 20% after payment by Explorator of the applicable Mining Production Tax of 6%.
After deduction of applicable expenses and costs and tax incurred by Explorator, Xtract has agreed with MMP to split the net cash flow 65% in Explorator's favour (with 35% due to MMP)."
So I think we need to work on 65% of 26% muddied a bit by deduction of attributable expenses. So more like 17%.
BOA is similar but with complications mentioned by Iceberg on recovery of upfront costs.
I think the overstatement in Q3 and Q4 may be corrected in Q1 figures by about 48oz (difference between 24% and 17%)
In Q1 sticking with 28% on 1370 for gold alluvials gives 383.6oz so hardrock share of production was 41.4oz to give declared 425oz in total.
Adding back my assumed correction of 48oz from prior periods gives an "unadjusted" share of hard rock production of 89.4oz (41.4+48) which is 11.1% of hardrock production still light but may be explained by Boa and my assumption of 17% being too high.
I'd love to hear James view on this.
It really feels to me that the format of the quarterly gold report is no longer fit for purpose. Various agreements need to be separate line items with transparency of calculation and also a view of stock of gold not yet sold and this needs to be addressed before FB comes into the mix.
Btw all this may just explain the delay in reporting pretty decent results.
Worth remembering what CB has said about alluvial / small hard rock production recently. He said that he thinks production will be about 25kg to 30 kg a quarter. Now he’s not known for under promising and overdelivering, as can be seen by the recent results which were less than his predicted 25kg a quarter. So I think its fair to say his 30kg high figure will be the highest possible amount in a quarter and not exceeded. 30kg is 2892 troy ounces.
So far, the best quarter we have had re production and costs per ounce, was q4 2021 at 2306 oz. If we up lift that amount to 2892 we get an income of just over $1.7M. Unless CB has started to be overly pessimistic in his predictions or POG is going over $2K, that will be the most income we will get in a quarter imho. And that will most likely be in Q3. I know Q4 was best quarter last year but Q3 is usually the best quarter.
My best guess on other quarters would be Q2 $1.4M, Q4 1.5M and Q1 (23) $1M. This last quarter is difficult to determine as CB has said in early 2022 that alluvials will probably only last another year. So we may not get a full quarter out of Q1 2023. If so it may well be much less at say $500K?
I appreciate these figures may seem low compared to other predictions, but I think they are realistic. More than happy to be proved pessimistically wrong:)
That said, by 1 October (q3) I would think that the alluvial income will not be that important compared to the FB income. By then I suspect alluvial income will be in its last full quarter and seen as no more than a nice “top-up” against an FCF basis and against other income: FB and hopefully Eureka?
Had same thought myself NtM, honestly think he has said all you could possibly say and all that’s really needed at this time on fairbride start up. Market sentiment is just too subdued at the moment so whatever spin he put on it, I don’t think would make much difference in the short term. The market is only going to respond to hard cash income leading toward and up to full capacity.
Yes, thanks too for the posting this morning regarding alluvial and hard rock incomes.
Looking positive.
Fine posting here today gentlemen.. reminds me that as well as some brilliant posters here, there are also a bunch of really high quality posters too.. imho.. and you're all hugely appreciated by me !
Of course CB should publicise this - hopefully soon enough to be - monumental achievement for xtr.l of Fairbride 'Ard processing go live and the fact he hasn't today leads me to offer the following thought:
Off the back of one of his interviews in last week of May ish I remember joking about his 'any minute now' line re the end to processing machinery being turned on for initial testing of Fairbride rock. It's now almost a month later and we're at ''Fair Bride production has started with the introduction of low-grade ore to commission all parts of the processing circuit. We expect that by the end of Q3 Fair Bride should be up to full commercial production.''.. so he understands that there have been and will be plenty of teething/learning/ part fixes / retuning etc to be gone thru.. and as he is slated by many forever for being overly optimistic as a rule, why not hold off cranking up the publicity until after for eg a first months income of some merit has been recorded from Fairbride AND alongside that a clear view to that the next month will be better again too.. etc..
Generally, the timefames and costs of implementation tells me that Fairbride processing plant / operations are relatively properly complex .. so best not count too many chickens too soon imho .... and here's hoping.
Unless some connected people are quietly accumulating shares in the background.
Just had to go for an 8k run/hike to try and digest such underwhelming - Nope, still completely at a loss as to why Bird would release such big news with a one liner.
As other have mentioned Alluvial results were better than I'd expected so not sure why the delay...
For us, FB beginning to process is transformational - Yes there maybe some teething issues as processing ramps up but the bigger picture is we massively reduce the requirement for more cash calls and can use the $$ generated to progress other assets.
How could Bird miss such an opportunity, would have been the perfect time to give a detailed overview of the further potential at Manica. Complete Idiocy from CB IMO.....
The % of alluvials go down once our initial costs have been repaid. Down to 22% from memory. But if alluvials increases by 50-100% etc it’s largely immaterially.
Ella
Yes two different contracts but we have always got 28% of alluvial production.
If you take our share of alluvial gold oz from the total we get, then you can see the contribution from small hard rock.
Hard rock production is increasing each quarter, but our cut is going down. Last quarter we got 121 oz from 505 oz (hard rock). This quarter hard rock production was up 60%, but our share was only 34% of last quarter and it should have been 60% higher.
Either we are not getting the usual 28% of alluvial production, or we are not getting the same % of hard rock production.
Overall production was 77% of last quarter, but our income was 57% of last quarter. Unfortunately we cant extrapolate the increase in production with a direct and equivalent correlation with the same % increase of income.
It is hard to image good news being delivered in a less inspiring way. Surely the BOD should be able to pull something together better than this?
Hi Andrew,
There appear to be 2 different alluvial contracts?
From the annual report
'On 8 December 2020, the Company announced that it had agreed an alluvial processing agreement with Omnia Mining
Limitada over the Company’s existing adjacent licence 7569L at Manica. The contract covers an area of 1,727 hectares.'
I'm not sure how they are split.
Production Results
The production figures are broadly what I expected but the gold value against those figures seemed low. Looking at the previous % we were getting we have always had 28% of alluvial production. Looking at Q3 and Q4 figures we canb work out the % from hard rock which was circa 22% to 23%.
If we plug in those % figures we should have 383 oz from alluvials (1370 x 28%) and 177 from hard rock (805 x 22%) = 560 oz. However, we have 425 recorded as our cut. If we still get 28% from alluvials (as we have been getting for years), then that means we got 42oz from small hard rock ie 5%
If we had got the usual 28% alluvials and 22% hard rock we would have had 32% more income which would have given us $1.05M. Not far off my $1M prediction.
Have I missed something here and does anyone know why our % cut is lower then in previous quarters? James is on the ball with this type of thing. James any thoughts? Anyone?
My other observation re results is that we have not sold all the gold produced. This must surely indicate we are not that low on immediate funding.
Fairbride.
I find the one liner on this massive news very surprising and bizarre. CB has buried it in another RNS as well. Its almost bordering on the surreal that CB tries to promote the co vigorously with his optimistic predictions and time lines, but when we have actual news – unequivocal fact, he gives it a cursory mention! And news which is the most important news imho that we have had in all the years I’ve been invested here.
My possibly mad theory, but is CB deliberately trying to suppress the sp for some reason? That suggestion may be nonsense but why else give a passing mentioned, hidden in another RNS, about transformational news when hes only too quick to “ shout from the roof tops” any other less significant and moreover possible (not factual) good news.
If i was writing this i would point out the change from the same period last year (as I said before). If you look at it like this the figures are quite staggering for the Manica.
Q1 2021 Total gold production 284 our share 79 - Q1 2022 Total Gold production 2176 our share 425.
We saw a 400% increase in gold mined - in what is our worse quarter. It looks like the increase would give an increase of between 1000-1500 oz for the next qtr to be released next month. Thats an extra 500k easily.
On top of this the hard rock (not the new plant that Empress are involved in) is continuing to ramp up from nothing a year ago. to a 50-200% increase qtr on qtr. Again it looks on target to be 1000-1500 oz in next months figures.
Given al this the figures for the next 12 months (gross to XTR) conservatively look to be Q2 1.5m - Q3 1.8m - Q4 2.4m and Q1 (2023) 1.3m giving gross profit just from this single license (not the empress stuff to reiterate) of 6m.
TBH, I am quite flabbergasted by this figure, it blows away my negative thoughts as I thought this was a bit of a distraction. With the empress manica plant added on at 8-10m a year thats 14-16m just from these. With Eureka and the few other bits added on 20m USD over the next 12 months is certainly possible.
At some point the market will actually look at the figures and realise. (it would happen quicker if Colin actually did a bit more - had a broker that delivered analysis and price targets looked at ebita etc.
The RNS does seem low key but all regulars will be happy to see FB finally up and running. $1m per quarter average income from alluvials plus BE etc, $1.5m per q from FB once fully operational. $10m pa income even without Zambia or Bushranger. The market is mad.
Cyber, 3m per annum as you say is not to be sneezed at. It keeps the lights on, pays for all the admin staff, accountants and directors and enough left over to fund some exploration. All from alluvials.
Hard rock profit is essentially all going into exploration funds as alluvials already paid for the above.
5p has to be the basement sp here with so much going on. Wish I had some more cash down the back of the sofa I could throw in here. 12 months time, we will be nowhere near this level.
I dont see why this has dropped. Q1 are always lower numbers. I'm not too bothered on the wording of the statement on Fairbride either.
It would be an opportunity to now start adding more Fairbride pictures to the website. The videos of the mill turning..... dirt being added to the plant....gold evidenced on the shaker..... and personally I think it would be good to repeat the photo opportunity from first Alluvials production. Namely pictures of the early Dory bars and Colin holding them.
Also modifying the project synopsis on the website to show visitors to the website that this is now in the production phase.
'sounds like he wrote it on the bog' - Indeed, the company should take a look at what Empress did if they are lacking imagination!
If non fairbride production is running at $250k per month average per month that’s still a nice $3million pa profit and cash-flow
I’m sure there will be profitable output from fairbride over the next 3 months as it cranks up could easily be looking at $1.5 million plus net over that quarter for all of manica with a good weather alluvials quarter
I agree tho he could have made a lot more of the commencement lol
“Delighted to announce … will generate very significant profits … further future expansion of the field etc “ sounds like he wrote it on the bog
Anyone knows what the expected production from Fair Bride is?
'As at today's date, Fair Bride production has started with the introduction of low-grade ore to commission all parts of the processing circuit. '
So, after 5 years years of waiting for FB to come online a one-liner is all the effort Bird makes to inform the market.
Just retire Colin and let someone who can actually be arsed to put some effort in take over.....
Better than expected tbh. To compare like for like we need to compare with this quarter last year so a nice increase and it looks like we will put all our African production together together going forward in a single quarter release.
Rns out!
Nice to get confirmation of mine starting.
Revenue to be less than previous quater which was expected.