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I suspect that for KML and for cobre, Mtr will likely be looking to repeat what happened with mod resources... prove up a jorc compliant resource, then support a buyout of them with a mid tier, or major, in exchange for their shares, plus retention of the NSR rights....
Mtr is positioning itself for developing long term stable recurring revenue streams. That in itself will give them a premium valuation amongst resource investment houses/explorers. They’ll likely end up being the only company in the sector which is self sustaining, aside from trident royalties perhaps....
Obtaining more shares in other mid-tier / majors will allow them to pursue more collared options financing, whilst retaining what I expect will become incredibly lucrative NSR’s, for even bigger projects....
Any pullback in price in my view is a buying opportunity...
And as a mgt team, they’ve not really put a foot wrong, tho I still think they gave away mod too cheaply, but that aside, I think they’ve been pretty canny over the last 4/5 years....
L.
Thanks Doc if they hit at KML it looks like they will have a lot of options and a lot of potential even if the sold KML or JV they will have that 2%NSR forever....wow
I think t3 NPV was about $300m. SFR paid about 50% but that was a DFS stage.
It’s an interesting one for mtr /KML as they would have to spend a lot to get to DFS so now MTR have 2% NSR, I think the options are (if they hit) IPO with a mid tier/major Providing cash for equity level, farm in at project level or complete sale - if at this stage but decent hit 20-30m usd would be good before maiden resource. 10% of Potential DFS value. Don’t know if they would get that.
The thing is the NSR Will be greater value than the sale of KML if they have hit.
Doc if KML do find a dome like T3 and A4 what value do you put to it using Cu and silver credits and read across from the sale of MOD? Conservative value
Yes I would be surprised if there is no Cu. The thing about KML is that they are finding a deposit by the book, stratigraphy Holes rather than Just stick a drill in a sweet spot. My view is that they are doing this and the EM (which was complex) for a wider audience not for retail PI’s. Think that is sensible. Don’t go through bother of IPO if going to be gobbled up.
Exactly that just for a4 . T3 was something like 0.01% of exploration land. Their was plans for t20 drilling and more EM. Now lockdown improved hopefully some update in quarterlies
And what if they find a shallow dome on KML land which MTR own over 60% and have a 2% NSR. OMG
Very good Doc and let’s not forget they have not even scratched the surface of the other targeted domes T20 T23.....ect ect. So the potential is quite mind blowing for MTR 2% NSR.
I think that decision might be dependant on how SAU and CBE develops.
Probably more importantly if KML hits we have that royalty and buy out/IPO
Pan Asia metals prospectus out for IPO in Sept, so if that goes well will help our NAV also as goes from private to listed.
And all without MTR spending a penny.
Question is would we take a large chunk now (given A4 IMO will be 2-3x bigger) 100-150 usd. Or do we keep and let this pay dividends for a very long time.
This is before we have even talked about an underground resource which will come after open pit at A4.
The quarterlies will be very interesting.
Think it’s quite nice now more attention and as SFR aggressively drilling A4 and the new NW area of A4 to revisit some figures I posted re potential. I am sure Hydrogen’s fund contact will be thinking about this upside re NSR to MTR mcap hence why getting in now.
These figures have better upside now the silver and Cu price have gone up. Easy to forget our silver
So again -let’s assume the A4 deposit is the same size as T3. Currently Argonaut note say just on holes we have so far it looks 180kt contained Cu. From EM and new zone found however, and the fact we are dealing with higher grade Cu just the A4 area looks like it will be 2-3x bigger than T3.
T3 conservative reserves ( not inferred resources ) are about 350kt of contained Cu. That will change if SFR has been upgrading resource in time to review the DFS.
So let’s say 7000USD/t for the Cu and silver blend
350kt * 7000 = 2,450,000,000 usd
5% discount
2% NSR
USD 46,550,000 to MTR on equivalent to T3 resource.
Multiples as bigger.
Now there are some costs that have to come off for the final NSR figure- transportation, insurance etc but you get the general picture.