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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RC bigger than CB imagined.
Phase 2 drilling completed, inc infill drilling.
Model building continuing.
New JORC compliant resource and updated open pit conceptual study "soon", and decision to mine.
AA option to make an offer or reject.
Open market search for a buyer if AA don't make an acceptable offer.
500MT ore implies Cu of closer to 1 m tonnes than 2 million tonnes, but still, nothing to be sniffed at.
I personally would continue with a Phase 3 using Fairbride funds, but l get the feeling CB is in a hurry. He is 80 after all.
Iwantthatone,
My reading of his interview is that they have the IP survey results and there are new 'anomalies' which will not be drilled. The existing drill results are sufficient to imply that these anomalies contain Cu although how much is anybody's guess. They will however be valued very lowly due to the lack of evidence. It does however raise the question of why have we not seen the IP survey results? I know I would be interested.
That's the way I read it but it's only my guess.
Asian markets opened and £ still falling..
We may end up at parity after all !
At this rate by mid next year just a $100M buy-out may see us all £ millionaires :)
Don't rush that buy-out Colin !
Looks like I might get my money quicker than I thought.someone said I should just cash them in that’s not the way for me I’m here for the final countdown after all the years of patience and ups and downs I will hold out. Good luck to all I’m not as old as Colin but not much behind him.
Surely any purchase would be based on future projections for copper prices, not the spot price now?
Interesting interview. It certainly sounds like 500Mt of ore now, he said it both ways - 20 Mt pa x 25 years and 25x20. Personally I suspect a slightly lower grade than you Andrew so maybe 1.2-1.3Mt but these.are all guesstimates.
Several questions though. Did you get the impression that the infill drilling has been done already? He certainly seemed to indicate that additional drilling has been done to improve the granularity of the model. But now I’m confused about the large anomalies that they’ve decided not to drill - which is he talking about? Ascot? I note there was no mention of it, though he talked about the sale of the whole of BR, so do we assume Ascot will be left as is? He certainly said they could continue to drill the anomalies to prove up the 2Mt but won’t now, which supports the conclusion that RC is << 2Mt.
Overall he certainly sounded quietly confident.
My only regret for an early sale is that I expect the Cu price to still be low at that time. Not sure how much that will influence the price but it can't help!
Sunday roast today, talk about xtract at 1hr 6 mins in (2 min discussion)
https://audioboom.com/posts/8163008-the-sunday-roast-featuring-paul-griffiths-executive-chairman-of-predator-oil-gas-lse-prd
Cygnus
I agree with you re sp after Bushranger sale. I would think circa 3p after sale, as FB will be in full commercial production by then.
I hope you're right re earlier sale. Q2 starts in April so if you think the sale is going to be earlier than that, then that means a sale in the next 6 months.
I guess that could happen, but I would be very surprised, and delighted, if it did.
Also, as the timeline seems to have been accelerated, I wouldn't be surprised to see some buying tomorrow as the traders move in for the jam tomorrow delivery.
Andrew,
As the latest information from the podcast suggests that there will be no third phase I'm expecting the sale to be sooner than you (and I in a message I posted just a couple of days ago) suggest.
Also, I would expect the XTR shares we will still hold after the sale will be roughly similar to the current sp, i.e Bushranger is currently valued at zilch.
I won't be selling early but will be holding out for the buy-out offer as that will obviously be at a premium to the sp.
My best guess is this will be in Q2/Q3 next year?
I believe Kiwara was sold for 50% special dividend (cash to us) + 50% shares of buyer company at equivalent value. I expect the same arrangement again. I would then assume that the sp will then reduce to value of xtract assets less bushranger ie African assets?
That's my understanding of how it will work.
As PI 's control less than 25% of shares the decision to accept or reject the offer, will be out of our hands
Found the podcast quite uplifting in the light of the ongoing lack of news and depressing situation in Ukraine. I feel reassured that CB has a clear plan of action and a steady hand on the tiller. I would be most surprised if we do not have a decent uplift possibly starting tomorrow onwards. Many thanks for the informative posts and particularly to anyone being bold enough to indicate where the sp might soon be heading.
James,
I don't think that's the case in this instance. My understanding is that there will be a 'special dividend'.
My expectation is that this special dividend will probably consist of cash, presumably some shares from the miner purchasing the resource and still be left holding my original XTR shares. Does anybody think/know differently?
When you sell…..
Is anybody any wiser when do we get our money?
One further thing I took from the podcast is now that they are doing the resource statement, it would imply they will not be doing the extra shallow high grade drills to extend the early recovery phase 4-6 up to 8years as they would surely want to wait to include any extra tonnage in the resource statement toward the conceptual study.
I know this would count toward the third phase, but also a previous podcast CB said they would end up with the shallow high grade programme that seemed sensible to bolster the early recovery phase anyway, done wether or not any other drilling was undertaken in a third phase.
Think he would have mentioned wether or not this would be done if was still an option.
Andrew. Thanks for the figures. In the short term I expect the markets to be down but the $8500 is about the price I was figuring on mid 2023/24. Possibly Colin is looking to sell by his 80th birthday.
Sorry
It was me that added mid/end Nov.
I know that when CB even gives a rough timeline then with this one. It might not be until end of Dec/early 2023.
Enjoy w/end
If CB said " Not too distant future" and Oct / Nov time scale then I would think very earliest would be December, more likely Jan and possibly Feb.
Will, just say he also said along lines of that Xtr generally has good idea on what that will look like.
So presume he might have talks with AA before actual release.
Think CB, said on Racecourse model.
In not to distant future
So hopefully that will be around mid/end of Nov at latest.
Andrew - I appreciate your analysis. Thanks. When do you think the ‘Decision to mine’ will be announced? Colin appeared to make something of Oct/Nov timeframe. Did you pick this up as well?
The 20 x 25 = 500mt which imho further confirms we are well short of 2mt con copper. For that to be the case then we would need 0.4% Cu Eq which is highly unlikely looking at assay results.
As for valuation. There are so many different variables and assumptions. So when you change a few and multiply them out the margin of error / different results are high.
For what its worth my assumptions are:
1.4mt Cu Eq (500 x 0.28%)
$8500 cu price used
0.9 GBP / USD conversion
1.5% in ground value. The 3% mentioned is usually against a much higher level of confidence of resource ie a lot measured not just implied / inferred
That comes out at 16p ($178M = £160M) with 1 billion shares in issue
Thats for RC only. We have to add on Ascot and the other areas of interest. I think circa 20p is a reasonable estimation.
If you listen to the interview from 4min 15 sec to 5mins CB does appear to be hinting that the majors know what we have and the geo phys work etc may give then confidence to attribute value to other areas that have little drilling or maybe no drilling. I guess the simple analogy would be - if you have drilled half a football pitch and found value in it, then there is a decent chance the other half would be similar. You would not value the other half the same but nor would it be valued at zero value.
A rather over simplistic analogy - but you get my point
I think CB now thinks we've done enough for the other areas to have "some" value (how much is the question) attributed to them. How much or little, value the other areas of the licence (ex RC) is attributed by the majors may significantly change the valuation.
For total buy-out, I'm looking at 15p as minimum, probably circa 20p and with a bit of luck and great negotiation skills by CB, 25p max
It’s always darker before dawn, sums it up , the next couple of months will be interesting