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>>I'm genuinely surprised that you still quote Bird's comments and they actually still hold sway over you....
Was going to say the same thing. This thread is full of CB quotes, we all know by now they mean nothing.
Haha I really am trying to turn a new leaf gixxer but old habits die hard. I have always said though that sometimes you can understand more from ‘why’ CB has made a particular comment rather than what has actually been said. That was a good example in hindsight.
Recently though since the RC JORC he has noticeably been very pragmatic in interview, certainly in the Ascot MRE podcast sticking to facts and being just more informative with what a further targeted drill programme will achieve for example.
Worth a listen again and here’s another quote from CB referring to the 2mt
“Viability is worth more than quantum”
Now that is a fact.
https://audioboom.com/posts/8217460-midweek-takeaway-with-colin-bird-executive-chairman-of-xtract-resources-aim-xtr
>>Remember one of CB’s old comments, “only a major could take this on.” That is what he was referring to.
I'm genuinely surprised that you still quote Bird's comments and they actually still hold sway over you....
That is the problem we have.
Is understandable that CB has his sceptics, but the way I see it, is that if Xtract could afford to take the project to a DFS they would be in a position where they would not need to sell it.
Remember one of CB’s old comments, “only a major could take this on.” That is what he was referring to.
I wonder if he will go back to O'Kief !
It must clearly state in the contract what is required for a decision to mine but CB instead talks about 'heading' towards financing and a PFS... it is more than a little frustrating. Some people inclined to be less trusting might even say it was deliberate evasive.
Hi Steve, the level and intensity of infill drilling seem at cadia hill is exactly the level of drilling that would be required at RC/Ascot to have the open pitable resource at least, which is currently only 5Omt indicated resource , It would ‘all’ need be converted to indicated and the majority converted to a measured JORC that finally can be converted to a proven ore reserve along with detailed engineering and mine planning with permissions and any other studies such as an EIA that will all be required to support a final or definitive feasibility. Xtract could never afford to take it there in any reasonable timescale. Newcrest had 9 drill rigs operational at Haverion on their way to feasibility!!!
Yes there could be some clarity from xtract but common sense can prevail if you take on CB’s comment that AA just need to see that we are heading toward finance and a PFS is the first study that shows a realistic valuation that a conceptual or a preliminary economic assessment does not. If I recall correctly CB stated at an AGM that we do not actually have to get financing for the DtM.
"However, one has to factor in that with the increase in the price of Cu since the agreement was signed, less than 2MT would eventually lead to the same sort of profit margin AA originally envisaged."
Exactly my thoughts. AA can play the long game and wait until we have satisfied their view of a DtM, but as time goes on the price they will have to pay is almost certainly going to go up as POC increases.
AA should want to strike a deal sooner than later.
Although its a PITA seeing timescales move out, its highly likely that the longer this takes the higher the buy-out
One things is for certain... XTR and AA can agree a deal before a DTM or a JORC resource estimate of 2mt of Cu. Might it be in AA's interests to do so?
What is also certain is that XTR have only scratched the surface in terms of identifying the Cu and Au at BR. Compare what XTR has drilled compared to what they did at Cadia Hill before they started their open pit mine. They drilled a total of 369 holes at 157,000m... and they continue to find more across their district some 30 years later. So, at what point should AA make a play for Bushranger knowing the resource is only going to grow? If FB starts providing regular and significant cashflow, then XTR can keep drilling and for every 0.1mt that XTR can add to the resource, the price tag is going to increase considerably. It may be in AA's interests to make an early offer.
I think with the BR district now boasting 1.3 MT of Cu it places AA in an interesting position.
If AA were to argue that it does not meet their minimimu requirement of 2 MT then they could be turning their back on a porphyry district that could contain a lot more than 2 MT. Such a move would mean AA losing its current position with its 'foot in the dooor'. However, one has to factor in that with the increase in the price of Cu since the agreement was signed, less than 2MT would eventually lead to the same sort of profit margin AA originally envisaged.
On the other hand, if they decided to take on BR as it stands then it would be a small resource by their standards.
With those thoughts in mind I think it's entirely possible that AA may want to negotiate a new arrangement with XTR that allows them to maintain their 'foot in the door' which leads to more exploration and hopefully the realisation of more Cu. However, this time around XTR are in a far stronger position having already discovered what is clearly a porphyry district. What that new arrangement is I can only guess but I would hope that AA would help finance it based on some later pay-off deal.
Just my thoughts.
It is not just the PFS and DFS that constitutes a DtM though. Evidence that the first stage of developing the proposed mine would need to be shown. Its not so much that AA have us at their mercy but more we are going to have to find a way of making a valid DtM that would satisfy AA. Regardless of Colin wishing AA would turn the project down, AA dont have to if they know we are going to find it very difficult to come up with a valid DtM. the hoped for outcome has not been achieved and the SP reflects that. I'm not saying Colin will give up on BR but that doesn't mean any solution he comes up with will benefit shareholders.
Looking back at the original RNS confirming the acquisition of Bushranger, the reference is to “Decision to Mine”. That would suggest to me that there is a definition of Decision to Mine within the agreement between AA and Prospect Ore which shareholders have not seen - rather than there being a standard legal definition.
howezap - It would be nice to have confirmation of whether a PFS or DFS is required to trigger the buy-back clause. The definitions I found for these studies is in the link below, and that says DFS is when a decision to mine is taken. Would be great if CB could clarify in the next RNS!
https://stockhead.com.au/primers/your-guide-to-mining-feasibility-studies/
>>>Well if there is no more drilling then we only have a decision to mine. Will this just be a, we are going to mine or would a full viability study be required.
Hi monty there will be more drilling to come that will target areas where the updated mining study will recommend to increase resource, improve economics and how Ascot will play a part in mine planning of the early years. As far as we know the project will go to a PFS as has a higher degree of confidence than the conceptual study, that supports the economic model which AA wants to see. Xtract do not need to have the capital funding, they just need to satisfy AA the project is viable to pay back CapEx and show profitability. Xtract do not need, or could never afford to take the project anywhere near a DFS if that is what you refer. They are not at the mercy of AA who are not calling any shots btw.
My understanding is that XTR need to produce a definitive feasibility study confirming the viability of a mine and then they can trigger the buyback clause... regardless of what the JORC resource estimate is.
I guess the question then is how many more steps/phases are there before XTR get to the definitive feasibility study stage? If the study being produced reaches the level of a pre-feasibility study, then perhaps just one more drilling phase will get the data need to get this over the line? If more than one drilling phase is required , then I think we are looking at another 12 months of work. As always... ready to listen and learn from those more experienced that can perhaps answer the question better?
Littlewing, you mention "supporting studies will have to be accepted by AA."
CB has mentioned and several have confirmed that in Oz, the "Decision to mine" is an official term with quite specific parameters. I would also like to think the contract which Xtract took on when acquiring BR was watertight with whatever needed to be done to trigger this clause. Presumably Colin knows exactly what he needs to do to go down this path (and we are currently on it). AA won't be able to sit there for years if we are able to implement the decision to mine clause. CB at the AGM last year gave me (and others) the impression that he would like AA out the way to sell to a wider market. I would like to think a) Colin and AA have a reasonable relationship that they won't screw us around and b) Colin wouldn't have taken this project on if it wasn't going to be feasible making money out of it. Time will tell though.
On a slightly different note, let's compare to the situation that developed with Kiwara and First Quantum. 5/10/2009, CB announced they were getting Snowden to conduct a PFS, which was expected to be released Q12010. (This gives us an idea of how long a wait to expect)
23/11/2009 - CB announces they have agreed to sell to FQ.
A PFS was therefore not necessary to sell. Obviously, AA may operate differently and we are tied to the contract. But the situation implies we may already have the data to ignite interest from AA and others.
Let's remember we are also in a vastly different situation to 2009. Copper price higher and supply issues in the pipeline.
Many moons and interviews ago CB was asked whether we needed a PFS/DFS and he said that you don't need such things to sell a project in a situation sucj as this one,although it is preferable.
He did gloss over the DtM requirements though and that has proven to be the stumbling block now, it transpires it not just a case of saying " Hey we're going to build a mine, do you want to buy it now ?"
Radio silence since CB's last buy is required as a closed period, not sure when that is lifted but I have a feeling we will have some news very soon after that that will help the SP to improve.
Having fallen short of the 2m tons trigger, AA basically hold all the cards now. Supporting studies to make any DtM valid will have to be accepted by AA. Its going to cost a lot of cash for no increase in resource size. AA will be happy to sit there for years as they know thay will be able to pick the project up at any time they want at the price they dictate. It matters not that "somebody else" may well want it. Phase 1 and 2 has come up short of what we were hoping for and that has given us a big problem.
Well if there is no more drilling then we only have a decision to mine. Will this just be a, we are going to mine or would a full viability study be required.
https://aheadoftheherd.com/copper-mines-becoming-more-capital-intensive-and-costly-to-run/
Read this over the weekend. An article from last year but did give some good numbers going forward. In a down market and many still warning of a global recession next year it is easy to understand/be frustrated by the current low shareprices. Long term plenty of reasons to hope for a rebound across the copper space.
Death by a thousand interviews.
They can't realistically sell it until after the AA buyback has been triggered by a 2mt JORC or a decision to mine because the clause would pass on to a new owner. So they'll keep working on it until they are in a position to trigger the buyback clause.
So whats going to happen now. No more drilling, targets missed. This needs offloading now, can we assume this is happening behind the scenes. We've not got the promised 2 million so can sell to anyone now?