The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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Good find on the Harmony deal by Prof Cheese!
Andrew4444 your calculations were spit on for a first pass comparison.
I don't think a major would balk at a billion dollar capex at RC vs 600 million at Eva copper project when the contained copper at Racecourse is at least 2 times, and with possible further multiples once the porphyries at Ascot and possibly Footrot are added in. As someone mentioned, the payback is also faster.
Good morning Xtractors!
Good potential from Ascot yesterday. More exploration would certainly be required to understand the more concentrated mineralisation along sub vertical zones. The long strike indicates large volumes. Look forward to the maiden JORC Resource.
For Cygnus, each porphyry does indeed have its own emplacement style and geochemistry, depending on its timing, magmatic evolution and fluid expulsion, and geological stresses present in the country rock, to name but the main factors.
Capex, nearly double, no issue. Of course plant needs to be bigger, due to sheer volume to process.
At 87% Recovery rate about the same.
Basically Racecourse will return Capex and probably similar quantity of Cu/Ag to eva over the initial 6-8 years, rather than 15 years, from near surface higher grade material, it is unlikely we have pierced all the higher grade zones, or thickest areas of high grade within the deposit either.
I find following article interesting, though there are no specifics, it nicely debunks the grade is king philiosophy, when it comes to copper.
https://www.prnewswire.com/news-releases/why-the-global-economy-deems-copper-porphyry-as-one-of-the-worlds-most-valuable-deposit-types-301539259.html
Hi IWTO, wouldn’t the economics and potential to return CapEx be far greater with the sheer scale of RC alone, which would proportionately increase due to increased size of operation, footprint, facilities and logistical requirements. It has more consistent grades in bulk. Higher grade early recovery phase that will see CapEx recovery from 4-8 years.
Eva is made up of 12 small deposits ranging from 0.7mt with the largest, little Eva, still being only 100mt. 7 of these are included in the current mine plan. Most deposits are IOCG with mineralisation being veined networks or breccias. Others are copper only stratabound type. So recovery of concentrates from these sulfide deposits can be easier to separate and can be more profitable, but nowhere near as abundant as more desirable porphyry deposits, which can be processed at lower cost making them very economical to mine.
These really are two completely different animals after all.
David and Goliath!
Andrew, your calcs look right but note that the capex for the Harmony project is less than US$600m. For BR Mr Bird has already suggested it’s at least $1bn and likely a lot more. That’ll change the calculation quite significantly. Plus BR’s cash flows will be over a longer period and discounted more on average. Still, it’s a very encouraging comparator.
Another glaring point from that,, these portfolio managers are referencing their interest in mid to long term outlook. What we have in BR will likely be a far shorter term to realise a big chunk of value for its shareholders, will continue to be in a strong financial position with remaining quality assets having the scope to be further developed. So Xtract will ‘still’ fall into the mid to long term interest of these fund managers and investors alike.
You hear repeatedly from portfolio managers to analysts in the resource sector about the mid to long-term prospects of copper and gold in particular.
If you can stomach the short-term volatility there is a strong case to look for value right now in companies that have been literally thrown out with the bathwater and are between 50 and 80% down from highs of 18 months ago. Have good assets and have been either lucky or clever enough to have had a last raise in the last year that will see them over and through this micro bear market in the resource sector and potentially for the next 12-24 months.
What I’ve just heard now and similarly a couple of times from various other podcasts, if it’s a quality junior with quality assets that has a quality management team and is in a position to not need to raise capital they are ‘all’ very interested indeed.
HELLO!!
What I find really positive is that companies in this position wouldn’t necessarily have been sold off so much because the market sees there is no financing overhang. So with the timing of fairbride start up being late, we have seen Xtract being dragged down, Potentially further than it would have done if it were already at maximum production. So there is even greater upside potential there too, once the full fundamentals are there for the market to digest.
Just a case of when will it be time to roll out the great Xtract PR marketing machine soon.
"Seems to be as near to a reasonable comparison as any others we have seen I would think."
Agreed. Possibly the most similar recent sale comparison I've seen?
"Interesting to see methods for the seller to capitalise on additional discoveries. Very applicable to XTRs bushranger."
Agreed. Very, very applicable !
Btw.
By my quick calcs, the additional Gold valuation for that sale only contributes to between 6% and 10% depending if you look at revenue or profit.
So for a more accurate copper v copper comparison, take a max of 10% off that sale - Obviously we may have some Gold valuation in our sale though.
I think you are on the right lines Andrew. Seems to be as near to a reasonable comparison as any others we have seen I would think.
Certainly a lot smaller than BR in terms of tonnages but the deposit is an IOCG so slightly higher grades are reflected. It is proven to part measured/ indicate/ inferred and is at feasibility level to be an open pit with. Planning is subject to detailed plans and finance being sought. It’s accessible by air and road, with water and HVpower line too.
https://cumtn.com/operations/eva-copper-project/overview/
plus a contingent payment of up to a maximum of US$60 million, consisting of up to US$30 million via a 10% sharing of net incremental revenue and up to US$30 million on a new copper resource discovered and declared within the acquired tenements.
Interesting to see methods for the seller to capitalise on additional discoveries. Very applicable to XTRs bushranger.
btw
Happy to be corrected on assumptions and maths.
I may have misunderstood something
Assuming I've got my maths correct:
100Mlbs = 45,350 tonnes Per year
15 years = 0.680M tonnes
If we end -up with 1.36M then that's double
Double of that $170M offer = $340M = £300M circa = 30p buy-out
Obviously that' s an oversimplification and I havnt taken into account Gold production.
But gives a loose indication of possible buy-out.
Obviously if we have more than 1.36M tonnes then...........
What I find odd about Ascot is that it has some cracking grades and then there are large stretches with very little Cu/Au. Rc seems to be more consistent. I guess they all have their own personalities.
In the round, Bushranger remains a very exciting prospect, clearly.
And Africa Gold revenue prospects are very exciting here too, clearly.
And most clearly of all; whatever the bear market, this s/p is too low in 3's p.
A share price re rate imminent, especially by the Bird Gem Dictionary definition of the word imminent, I'd hope..
IMHO &DYOR
It looks like we are starting to find some of the higher copper and gold grades. Still a relatively small amount of holes in such a big target so plenty to come.
Ascot still needs some exploring imo there is tantalising signs of of some really top class porphyry grades.
The jorc will be interesting when it comes out!
Persistent 250K seller is still about ...
Annoying !
If they have enough data for a maiden Mineral Resource (JORC 2012) for the Ascot prospect (which is completely open and only going to keep getting bigger), then we may go over the 2mt of contained Cu Eq target when added to the new Racecourse JORC.
Altogether, a very attractive prospect for any major. Especially so with Footrot now smelling like gold and the additional lure of three neighbouring licences, all exploration virgins, just begging to be drilled by a big boy. Come on... take us.
This is going to fly very soon don’t miss out
>>>Xtract is now incorporating all the geological and geochemical data from the Ascot prospect into a geological model which will be used to estimate a maiden Mineral Resource (JORC 2012) for the Ascot prospect. In tandem with this, a revised resource estimate is in preparation for the Racecourse deposit. This will then be used as the basis for an updated conceptual open pit mining study.<<<
As above, no doubt they are preparing both RC/Ascot models concurrently, the “in tandem”may also suggest both models will maybe, be released at the same time. Then potentially conceptual study to follow on after.
As the decision to mine will now be the option favoured to trigger the AA option, ‘with’ the conceptual study being integral for this. How do folk see this unfolding?
A/ Resource statements released- pit study then released - AA invited to the party
B/ AA approached first once the resource and pit study is complete- then inform market of intent and/or release of resource and pit study after.
Or any other which way?
To me the first right of refusal may offer exclusivity to AA in having access to data prior to market. The uniqueness of the agreement in place has caused so many unknowns and or uncertainties and I think still does. Be interested to know how others think this will unfold.
That really is a significant long zone of mineralisation.
Hole 55 looks as though it fell short of a couple hundred metres as completed at 721m so was unable to test the full target interval below 35.
On the plus side
>>>The intersection in hole BRDD-22-051 of 18m @ 1.8% CuEq from 432m (Zone 3) occurred 170m up dip of the intersection of 64m @ 0.58% CuEq in drill hole BRDD-21-035 suggesting that high grade copper mineralisation does extend closer to surface and potentially within depths which would be amenable to open pit extraction.
As we know RC and Ascot are being looked at as separate entities, this is very significant for Ascot future viability to be mined in the Aussie sunshine alongside RC
Equally.... I cant wait for the resource update. I hope it is indeed imminent now.
I hope that this RNS is just a taster.
One of these coming days Xtract is going to burst into action. The breaks will come off and this i hope will be like a gold rush. All too late for the watchers. Current price is easily supported without Bushranger. Let the watchers watch and the opportunists fill their boots at every opportunity. D day is coming soon. That i do know.
Great RNS - what is wrong with the market - everyone is asleep
Really need to top up big style as this becomes more and more a no brainier
GLA
Those high grade intersections seem to indicate that they are homing in on the source. Another huge porphyry (1km strike and open) with even higher Cu grades than Racecourse and gold to boot (that could even be a separate system?). The Bushranger project is sitting on a beast of a discovery.
Can't wait for the resource estimates, results of the modelling and the 'for sale' sign to officially go up... there is light appearing at the end of the tunnel.