GreenRoc Accelerates their World Class Project to Production as Early as 2028. Watch the full video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
BAM may indeed easily go BAM, Mr Zap
if you look at option 3 from the br conceptual study you can see it has an npv10 of circa -100m aud at usd9k copper, usd 1,900 gold and usd 22 silver.
if you update those numbers to todays spot prices on a *** packet you get approximately aud 250m additional revenue (this was done quick and dirty so i could have made an error).the mine life is approx 7 years so around aud 35m additional income per year which i’d guess (not calculating it as i don’t know how long the mine takes to construct) would offset the negative npv. point i’m trying to make is that according to my very rough *** packet and using todays spot prices (which i’m not suggesting a buyer would do) i reckon br is a circa break even project.
Also to take into consideration along with increase in copper price is ‘resulting’ impact on increase in free cash flow after the optimisation of operating costs, metallurgical recovery rates, plant capacity and capital costs that are still ongoing. They included an illustrative 17th scenario based on reduction in processing cost and compared with same mining parameters for it produced an extra US$425m free cash flow on top from that reduction in processing costs.
This optimisation all in, is expected to have a positive effect on the economic performance when done, metallurgy recovery rates will improve from re sampling. The first sighter round only had 3 samples taken from RC, the other from the 4 total was from Ascot. The 3 from RC included a low reading of 78% from one in the NW that brings the average down to 88% used in all scenarios, so warranted more work. Other 2 had recovery rates of 89-90%.
Along with what you have illustrated james, it’s not difficult to see how BR free cash flow can swing positively to give a ‘lower’ break even and hopefully produce a good enough cash margin once CapEx is included.
James, don't forget capex and opex also increase.
Part of the reason gold and copper is up, is because the cost of mining goes up with everything else at the moment....... but I agree, I would like the calculations done again.
I assume it wouldn't be too hard to update? Just changing figures in the special software model.
Hi Lucky
Fair point, however numbers were updated late last year so I’d hope they were using reasonably up to date capex/opex e.g. inflation hasn’t had to much of an impact since ? Additionally as has been said there is room to optimise on both so I’m actually hoping/expecting the costs to come down. Obviously if you can save say AUD 50-100m in Capex costs this will pretty much directly add to your NPV.
Despite me getting a little more excited about the “value” of BR I still have major concerns about us being able to monetise it. If I was AA I would just sit on the option clause and see what copper does, there is no way XTR are going to hit 2MT (as we aren’t drilling) nor can we show we are going mining so what incentive do they have to make a decision other than a small (from memory) royalty if the mine ever gets built? If CB can pull a rabbit out of a hat and negotiate out of the clause without giving to much value away like he said at the last AGM I’ll start to get more excited about BR but I won’t hold my breath!
Cheers
James
It beggars belief that CB signed an agreement that he now wants to get out of as it prevents him from selling to someone else other than AA.
I still believe the buy back agreement, was devisedt to act as a marketing tool of which proved to be quite effective.
So I don’t think it’s a case it is water tight. Got to remember, Jeremy Reid came with BR from AAL where he was head of exploration.
Its wording is really vague toward decision to mine, with a number target that is just plucked out the air. (CB quote)
It gives AAL the opportunity to renegotiate the NSR sell on royalty if they don’t want it. For all we know CB has had talks already. One of the assumptions in the pit optimisation assessment was the royalty set at 4%. Why would they round it up from 3.5%?
The buyback was between AA and PropectOre, so in my view it’s not fair to say it was a designed as a marketing tool. It’s simple a mechanism to allow AA to buy back if the resource is better than they expected. The problem is there is no way for XTR to force AA hand without spending serious cash or incentive for AA to make a decision.
I hope CB has had discussions with AA as he was talking about negotiating the buyback in last years AGM (Jul/Aug from memory), if this had been successful we would 100% been informed and CB would be straight onto the roasties proclaiming that the bow has been put round BR and it’s going to market!
Prospect ore/ xtr as good as the same thing.
Devised not designed
Sorry to be perdantic James
But of course in light of what Colin has told us about it being this legally binding agreement and the only way we can get out is if AA are decent enough to let it go. So agree It could be a concern. However he has back tracked on that apparent grip they had then, to now just suggesting there is a relatively cheap get out.
Maybe his comment is based on the fact that now neither of the buy back options are going to be met AAL will want another explorer to take it further , it’s in their interests to with their royalty attached that can now be increased.
Why would they make xtr sit on it and wait for what?
Doubts a major would take it on without its PFS so likely a consortium or mid cap miner
Hi Howezap
No need to say sorry, although not sure I get the subtlety in devised/designed in this context?
When did he suggest it was a possible cheap exit (I can’t recall what he said at AGM), but more importantly when has he given anything other than the best possible outcome rather than the likely one?
If I was AA I would sit on the clause, develop/acquire higher return projects on a risk adjusted basis in my pipeline then revisit BR when these opportunities run out. To my knowledge there is no cost associated to AA for sitting on their hands or particular risk of them losing out on the asset ?
It’s more than possible that a deal could be done, however I see it as unlikely. For me it’s more likely that we do a deal with another smallish company for them to buy into the asset by drilling to get the asset to 2mt plus force AA hands and then share the prize.
Let’s see how BR plays out and hopefully we get some news on Zambia soon!
Cheers
James
Ps I know I disagree with you a lot but I generally value your opinion/view (hope my messages come across like this)
Hey James, fair one, but is all subjective in this big guessing game we are all ‘still’ playing I suppose.
He commented in one of the pod casts if I recall correctly regarding the relatively cheap exit. Or did I dream it ?
As any future BR development will be so heavily front end loaded, the extent of study work and drilling involved toward pre feasibility is crucial for it to be on the radar of any major, my rationale is that it makes no difference to AAL if the project is passed on through negotiation with an updated buy back agreement attached to the sell on clause that the next aquirer will be incentivised by. Someone else can take it to the next study level for them.
Your suggestion of a partner to get it to 2mt is not ‘at all’ unreasonable, however if through ‘choice’, I would question wether any financial benefits in the long run would be greater due to Xtr having to give away at least 50% if not far more, of the projects NPV that would ensure 3rd party full funding of an exploration programme that would not simply get it to 2mt, but also the absolute necessity to provide a supporting pre feasibility study with full mine plan with flowsheet design for any sale down the line to a developing major to be interested.
If there ‘is’ a relatively cheap exit, this has got to be in the best interests of shareholders to continue its current Zambian strategy.
Certainly have a mutual respect James you do keep me in check which is much appreciated.
Maybe it wasn’t from a podcast…
This from captainbob recent notes from GM
“Bush Ranger still very important asset, that it not forgotten, sort of thing majors want for inventory, regardless of wheter it will be developed or sit idle, seems there is an exit strategy from AA, that is not too expensive.”
Thats where I prob got it from about the exit so perhaps Bob can offer any further comment to substantiate from maybe a private conversation or just an assumption.
Yes that was said at the GM, basically big co's need to show inventory on books chance for future development, as other resources are depleting
Cheers Bob that makes me see the sense in James’s concern regarding making Xtr just sit on it. I’m jumping a potential step obviously. Certainly a more feasible way for them to eventually farm it back out again to get it de risked further before a ‘developing’ major will put their money into it.
So let’s just get it up to the conceptual study, got a couple of years and plenty of optionality still to do it, then see what happens.
Also the other factor to consider toward improving the free cash flow status alongside an improving sustainable copper price and the optimisation of recovery rate and associated mining costs is a reminder that with seeing growth again in global economies it will inevitably reduce interest rates and also see fuel and power costs come down which will have a more positive, direct effect on the projects NPV than copper spot price.
I think a JV to attempt to make BR viable is something that CB should consider, after all, that's exactly what he's doing in Zambia.
Would you rather have 100% of aqn "asset" with little or no value or 75% of a saleable commodity ?
Time and an improving global economic climate could well see viability come to the project. Just how desiresble it will be once all costs to build a mine are included will see. He mentioned many moons ago that they will likely end up with a near surface drilling programme. Cannot rule out, that has not changed. It is still as far we know, as has been RNS’d that further drilling is in the planning stage. This no doubt to add further estimated 2-300Mt of resource to NW to improve economics “if” optimising doesnt wholly return the numbers they are looking for to support the fully updated conceptual study.
Also there is an alternative smaller mine concept he mentioned they haven’t looked into the economics of yet they could go with as a mining first phase.
Think he has been clear that money is not going to be spent on drilling to get to 2mt, pretty certain that would include taking it to Pre Feasibility too, with still no guarantee they can trigger the buy back as he said it is going to be difficult to prove the decision to mine AAL option.
So a JV to this effect is not likely.
Just assuming, if the costs of extraction, go up with inflation. Does that mean the sale cost of copper needs to increase with the same percentage, to keep the NPV the same?
Example: inflation 5% for 3 years consecutively, meaning the $11,000 becomes $12,733.
A total increase of 15.75%.
Maybe steve can help? Lol 😆
The study was conducted at height of fuel price spikes,, probably anticipating furter rises. Things are and will most likely continue to ease.
And then there is Copper... price just now, $9,810 mt $4.45 lb, long may this rise continue.