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Genghis15,
Apologies to you and any one else who got confused by my poor choice of words... Part of the point I was trying to make is that I expect the AISCs at Verkhuba to be low at around $1.25/lb.
I beg your pardon....tho I think your wording was a little ambiguous- I took your post to refer to receivable price, not cost. Tho your cost workings are v useful, nonetheless!
The filter did not like the first links but you can access them from
https://www.kazminerals.com/
genghis15,
i am basing that estimate on other low cost open pit mines in low-cost jurisdictions and taking into account the grades at verkhuba which are high for an open pit mine. costs around $1.25 a lb are possible at low cost mines in south america [chile and peru] and i would expect similar costs in kazakhstan. kaz minerals published costs at $1.14/lb for akto*** in 2022 but that seems to be based on a much lower copper equivalent [wikipedia says just 0.37%]. kaz claimed $1.08'lb for bozshakol in 2022.
inflation will have had an effect on kaz's costs over the last couple of years, but the higher grades at verkhuba will help. my figure is just an educated guesstimate.
https://www.kazminerals.com/our-business/akto***/
https://en.wikipedia.org/wiki/akto***_mine
https://www.kazminerals.com/our-business/bozshakol/
Nomlungu
Can you explain how you get to such a low figure of $1.25/lb? barely a quarter of current market prices? Are you estimating a NPV, or something else?
American traders betting on profiting from the difference between US and Chinese copper prices have been caught out and had to close positions, which has caused the $ price of copper to spike. Whilst the trend is clearly a firmer copper price, expect some slippage over the next few months [see Stepek's Bloomberg article linked below).
This is not necessarily a bad thing - whilst prices for the open pit potential at Verkhuba have not been announced, they will be low; I doubt they will be much over $1.25 a lb (if even that high). If prices do not go higher and higher, then the appeal of projects with low lead times and bottom quartile prices just appeal more. There should be news on the potential farm out within 2 months...
https://www.bloomberg.com/news/newsletters/2024-05-15/four-more-reasons-uk-stock-market-looks-cheap
From Phoenix Copper Ltd today after a major investment in the company : "As I write copper is trading close to the symbolic $10,000 per tonne, having rallied strongly in recent weeks.Uncertainties over the Chinese and US economies meant that it took longer for the drivers of electrification and supply issues to reassert their influences on the copper price. It now looks as if the penny has finally dropped
The right deal with the right partner, a win-win..and more to come,. this will rocket.
BHP taking the time to visit EST in country!- https://www.linkedin.com/posts/marley-palin-91a212115_kazakhstan-copper-activity-7192118199704866816-y12v?utm_source=combined_share_message&utm_medium=member_desktop
Scrwl
I agree, lazy typing on my part, a med size co wouldn't come to mind at that point. CAML or similar more likely. But you never know.
Agree completely. My money is on Kaz Minerals to secure the deal.
Not sure if BHP are interested in Verkhuba as the open pit and underground sizes may not be big enough. They are really chasing porphyry deposits which are a different beast and much larger.
Market cap at £10m makes this extremely attractive given this Copper market
Need more volume and this will move up quickly.
Nomlungu
Hope you're right...obvs the bigger the retained stake the better in many ways, just be nice to avoid the discounted raises that are the understandable norm. The great thing about EST is we appear to have enough serious interest and optionality to avoid that and all the uncertainty that goes with it. Looking forward to Q2 !
WOS
i am not a day trader, ....but on the evidence of this share, you clearly have a handle on the trading presures/pricing that I do not...well forecast!
It’s been looking coiled for days and now it appears it’s about to breakout in style.
All options are on the table but even after the wonderful gains we've had over last few weeks I suspect there are more to come in build up to results of JV bidding. Having already put in $500k from their grant surely BHP must be the favourite ?
Alex has clearly said that a sale will occur if it's good enough. The latest investor presentation states that the process is underway for partnership or sale.
It wouldn't surprise me that the non binding offer mentioned in the 3 April rns was for a sale.
Genghis15,
Starting to exploit the open pit resource at Verkhuba will not require a significant sum (for a copper mine)... And, the cash flow from the open pit mining will be able to fund any underground mining. There has not been a feasibility study released yet but the IRR is likely to be very high [circa 100%] when it is.
I would be very disappointed with a small retained stake; if the IRR is as high as I expect then retaining close to half of the project would still offer any farm inner an attractive rate of return.
It must not be forgotten that the MRE has 7 million tonnes at 1.82% CuEq. Thats 126 000 tonnes of Copper just from the easily harvested open pit potential. All in a low cost mining friendly environment with existing spare concentrator/tailings and smeltor capacity.
I think AW has mentioned all possibilities, but from memory they all included retaining some sort of economic interest.
Free carry to production with a snmall reatined stake, royalty, who knows. Who cares? As long as s/holders see the benefit that's fine. All too often in non top tier jurisdictions especially, some sort of shenanigans get pulled to cream off the bunce. I don't see that happening here, but in many ways best to let a BHP or Glencore(or even CAML!) take the reins and go again on other targets.
No need for an outright sale and I cannot see that happening under any circumstance.
Yes upfront cash but AW won’t lose control of this asset imo.
June will be the big month when the Verkhuba options are finalised. I don't know if I want a JV instead of an outright sale as the sale would provide a load of cash.
It’s been coiling for a while and I expect them to let it go soon. The lack of liquidity driven by the fact there are no large sellers. They’ll need to push the bid up higher at some point.
Everything in East Star’s favour both micro and macro at present so I believe May will be a stonking month for the share price.
Could move soon......
Full ask paid just there.