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Back in late winter I did some numbers to see where the BR prospect may lead the sp. I thought I'd do the same again now that the prospect looks so much bigger. One of the advantages of BR's larger size is that one can be more conservative with the figures and still end up with a valuable result. Before I start I have one question that I would appreciate an answer to if anybody has an insight. During the video/zoom meeting there were references to the very clear saddle resource to the east of the currently known resource that was picked out by the IP survey. However, this, to my eye was not clear on the 3d presentation. It looked rather minor to me but elicited a lot of excitement because what was previously dirt suddenly became 'pay dirt'. Am I missing something?
In the following, you can just inject any figure that sounds sane to you but I have tried to be conservative.
So, after watching the presentation the length of the currently planned open pit and the new IP detected area to the south was quoted as being up to 3 km long (yes, I realise this needs to be confirmed as Cu bearing ore but lets assume that's the case). So, let's use a length of 2.5 km. The width was quoted (if I remember correctly) as being over 600 m (including the saddle feature) so I'll use 600 m and a depth of 500 m as the Cu does not start at the surface. This rectangular shape has a volume of 750 million cubic metres. I'm then going to halve the volume to account for rounding off the corners of the resource and for any voids within it. Then multiply by 2.7 T/ Cubic m (this is one of the numbers we can rely on as the density of rock per Cubic metre is not going to vary too much) which gives a nice round figure of 1 Billion T.
If we assume that the average grade across the whole resource (after we have rounded off the corners and eliminated the voids is 0.002, i.e. 0.2 % then we are left with the fabled 2 million tonnes of Cu. Multiply that my 10k /T which although above the current price, is only so by a few % and could soon be a low number. Use 0.72 to convert US$ to £ and then the tricky question of the % that a miner like AA would pay for the resource. I have chosen 3% which could be very conservative considering the location of BR, the size of the resource (decades of mining to come) and the 'heat' for future Cu resources. Then divide by the number of shares which I will take as 1 Billion. The net result is: 44p per share - a ten bagger from where it currently is.
Now, many a slip between cup and lip but which of those figures would others consider extravagant? Possibly the 0.5 figure to round out the resource may be too high, the length dimensions of the resource may be too large. But many of those figures could well be too small.
Something to mull over.
Cygnus
The first part of your calculation basically just seems to produce the ' fabled 2 million tonnes of Cu'. But from the presentation from the team on the ground (who after all have much better info than us) I got the impression they are expecting to beat that by a mile. So I suspect (without much evidence I admit) we may have a resource maybe 50% bigger than that or more. If I understand how your calculation correctly that would increase the target share price by the same percentage. That said I doubt we will gee this price until we have a lot more evidence that the team's expectation have been validated and we have a new JORC that confirms the higher resource estimates. So I think eventually a higher SP, but we will have to be patient.
I suspect the 3% buyout is on the low side given the location and how pro mining Australia is.
I don't however think anyone will use $10k copper price at the moment. It is a peak which won't be used. It could however be used if copper goes to $15k a tonne between now and when we sell it.
Who knows where the copper price will be but it is a major factor when we come to sell.
Hopefully the copper price stays high and 10k is considered the new normal.
And those calcs are excluding Footrot !
Screen & L520,
Yes, I tried to veer very much to the conservative side of things so I ended up with 2 M T but that figure could indeed be a lot higher. It's just a matter of the market getting to gripps with the potential.
Cygnus
Yes A444, I meant to add that Footrot was being ignored. I have a feeling that should BR be sold to AA, CB may well keep Footrot for XTR as a home grown development.
Cygnus
Interesting, so in let's say 6 mths to a year's time we could have a JORC at 3 to 4 MT Cu and a major willing to pay more than 3% of value. £1 a share anyone? Lol. I can dream can't I?
I understand footrot is another target and something Colin is clearly excited by, but I was surprised that the IP targets were 500m down , didn't seem as appealing due to the amount of overburden, thoughts ?
Conservative estimates in calculations are returning good numbers back that must be outside of most ‘earlier’ investors expectations considering the confidence of the team this will exceed 2mt now.
Bear in mind we are not just selling a mineral resource but an ore reserve that will be open pit-able. Are there any variables that are used for calculating the value of such? I would have thought it would be of a higher premium value added, considering the lower CapEx required to initially mine, as against were just selling minerals in the ground.
Footrot is an unknown at the moment. There's clearly something there but it could be a wet squib or even another BR.
Potentially selling…. That’s important to understand for accuracy at present
Howezap I agree. The fact that the resource is in Aus, is close to Sydney and open pit must surely pump up the price a big miner would pay. In addition, if BR is the size we hope then this is the sort of mine that could become a hub for decades due to it location and size.
4 or 5% ? Now that would make a lot more difference than a few $ on the price of Cu.
Thoughts from me.... if the expert geologist thinks its worth drilling, I dont want to argue..... if the copper starts at 500m down and the % comes back too low to mine at that depth then the upside is we can stick a pin in it and move on.
Personally I would drill to at least find out, but with the results already looking so good at racecourse I would keep 95% of my focus there.
Use the last 2 holes from a campaign to relocate the rigs and speculatively drill footrot while the assay results are being waited on for the main event.
I'm no expert though.
I don't remember anybody saying that Footrot starts 500 m down but maybe I missed something.
Footrot RNS has the data on depth:
This combined data set shows a large chargeability anomaly over more than 1km length at about 500m depth in the west of the prospect area
Thoughts based on prior interviews was AA didn’t drill the right location. Also, if it’s 500m depth, then AA won’t have gone deep enough as well.
Footrot I’m hoping will be surprisingly good as the insistence from Colin to stick a recon hole in it regardless of what is found at racecourse. Even if all the remaining drilling is used to start infilling to realise and increase the existing open pit potential. They ‘still’ want to stick a hole in there. There seems to be an air of confidence about footrot. And as these type of porphyry are found in clusters the Hope would be to find further in between along the 7km corridor. All easily accessible from racecourse by cave mining further down the line. (If economics dictate)
Footrot I’m hoping will be surprisingly good as the insistence from Colin to stick a recon hole in it regardless of what is found at racecourse. Even if all the remaining drilling is used to start infilling to realise the existing open pit potential. They ‘still’ want to stick a hole in there. There seems to be an air of confidence about footrot. And as these type of porphyry are found in clusters the Hope would be to find further in between along the 7km corridor. All easily accessible from racecourse by cave mining further down the line. (If economics dictate)
A 7km stretch of porphyries, so good you said it twice.
Falls into previous CB district comments.
Slightly different topic, is CB back on holiday? And if so will we have to wait for our next RNS for him to get back?
Thanks Sq52 for the Footrot info.
I would be very surprised if we don't hear about the first drill hole on Monday morning. If we don't it's either still going and finding mineralisation or we're waiting for CB to return from his hols.... No seriously, I think his hols will not affect the delivery of news in any way.
Joeman, agree with your thoughts. I got the feeling from the first three Amigos podcast that Colin is the one pushing footrot as a target. I suppose there is always a chance that the 500M doeth is the bullseye and there are mineralised halos around it which are shallower. Either way it's been a feature since the licence was purchased so will be good to know one way or another.
Just out of interest, how do folks manage to keep a track of where CB is at any given time ? Where is he normally based ?
Well we fitted an electric tracking collar on him and when he's bad or goes where he shouldn't we zap him.
That would be my bet, Xeiger
If 500m is the 'core' then the mineralisation body could have a radius of up to 150m (300m deposit size) and still be perfect for open cast mining - perfect for a small mining company that has just sold a massive prospect...
I have wondered what the economics would be between racecourse and footrot if fotroot has a resource. Would 7km of conveyor belts be economic or would you move the processing plants and set up a new system?