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As always LSE is slow to release RNS
Released this morning
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230824:nRSX3498Ka&default-theme=true
Thanks for the early heads up wilthew.
>>Xtract anticipates funding this exploration expenditure from existing resources and current ongoing operational activities.
It’s got to be worth a punt, although it does fall outside some of the parameters set in the growth strategy for the company but could well be
worth it.
The longer it’s left before partnering up or taking over these projects the harder it will become to negotiate a stronger position as copper prices start to surge by ‘24 into ‘25.
If not in it now you can’t win it later!
Sounds ok to me
Good location but early stage. Having the First Quantum data via AFP must be useful.
Xtr covers all costs. Zero risk to partner but if the prospect is successful they do very well.
I'd love shares in the companies cb does deals with.
Slightly harsh. They have to apply for the exploration license in the first place so there is some cost and effort involved. But some very sensible people have bought multiple licenses on speculation hence why I think the authorities have applied a maximum of 5 per entity ( I wonder if this is why Colin uses multiple companies ?).
You never know - if this turns out to be a cracking high-grade copper resource then I might even get my money back. Unfortunately we won't know, and the share price is unlikely to multi-bag until all the pre-drill work is done, an initial drill campaign is funded and drilled and the assay results (if applicable) are published.
But at least there is some hope here!!!
''the two licences cover a combined 107,000 hectares area covering ground in a highly prospective part of Northwest Zambia where competition for exploration licences is acute.''
I therefore see such opportunities as hard to come by and so understand xtr has of course to pay to get involved... and xtr is getting a nice share of any potential upside too.
I'm fine with this .. It's CB's 'back garden' in terms of experience and understanding.. and it's nicely staggered Investment funded readily from that plenty of surplus cash that will ongoingly be flowing in from Manica.
And xtr is, at its core, is an exploration company. ( and fairly uniquely, now with punchy ongoing cash flowing in to pay for such exploration projects too )
So lets hope this is turns out to be a good bet with, in due course, big sell on value.
They are already in collaboration with Oval mining who are the mining contractors at Kakuyu. So will have a good rapport already with Oval who are the license holders of the larger tenement of the two.
Assumption would be that Oval would be the mining contractor at these two new ones in NW Zambia.
Early signs already, how the now primary asset in Manica is paving the way for acquiring other assets, as well as developing the current portfolio to start bringing in or toward increasing that cash flow.
It’s easy to be cynical, but as NtM has pointed out. Xtract are an exploration mining company first and foremost so exactly what should be expected.
I propose us shareholders should be given the job of choosing a deposit name! If of course they find a mineralised body there.
I hope its not Shergar ................
For Phase 1
" Xtract anticipates funding this exploration expenditure from existing resources and current ongoing operational activities."
$2M over 24 months is about £65K a month on average so well within anticipated income stream from FB
I suspect phase 3 will require a raise but this will only be done if phase 2 was a success so sp will be much higher then than now.
I'm not saying this is a bad move (or good) but I wish CB would spend the FB income on developing FB tbh and building the sulphide plant. He probably finds that too boring and he will not make a name for himself doing that !
More high risk treasure hunts. May be he will get lucky this time !
Phase 3 = phase 2
Maybe/hopefully he's expecting strong cash ongoingly flowing from manica to xtr to the extent of allowing funding - xtr share - of Manica sulphide plant development alongside this Investment, Andrew
Hi Andrew, are you suggesting because they are likely not to be spending their own money on developing plant extensions at FB?
I know CB suggested that after 18 months or so of steady income they will be in a strong position for credit to pay for mods or new plant at FB but that would be any company in any industry preferred model to advance a project surely? I’m certainly not no financial expert but even I know you wouldn’t through choice use your own money when it would be better used elsewhere if credit was available?
It looks ok to me, nothing major to pay up front, the licences are held by others, who cannot afford exploration costs, we can so are able to, "buy in", relatively cheaply via exploration, these are far bigger licences than others the previously came, or came and went. It may well be we fast track phase 1, as only need to spend $2 million over an initial 2 year period, lets now see what Q2 brings in.
Deffo worth a punt with expected levels of income.
Interesting to see if Colin will be doing a Podcast on this?
I see there's a 23% spread between the buy and sell prices !
The FB income is not gong to be so much that by using some of it on other projections it wont have an impact on FB development.
CB has mentioned £8M (I think) for the sulphide plant . Id rather all FB income went on that project tbh
I think it a better use of the FB money to go for a less high risk strategy (FB development) which will ensure more income and for longer for FB.
Then go for the treasure hunt approach when FB income is more robust, has doubled after sulphide plant built.
Xtr's share of that 8m ish gbp - total plant cost - may only be v approx three million ish Andrew.. Also some/plenty of debt funding may be optimal way to go for this plant build - across all Manica Program stakeholders minds, whether CB is 100% on board with that thinking or not - and that debt repaid out of future income .. and so xtr's upfront / short term payments for this plant build may actually be pretty small, even if they could easily have afforded - or wanted it even - it to be plenty bigger... and participation in and structuring of the expenditure on this new exploration play works well alongside that.
Next door to Kiwara's partner and AFP/FQM.
Hello ELLA
So AFP acquired licenses next door to KIW which was sold to 1st Quantum for $260m?
Please explain interest 1st Quantum has with licenses at AFP.
I wrote my write up on H1 results thread in error
cruella
Hi Andrew
I left the AGM with the understanding that XTR could elect not to contribute to the sulphide plant and then we would continue to get 23% (eg current deal), if we elect to contribute towards capital this will increase to an as yet unknown %. Like you I want XTR to contribute to this plant to grow our future cashflows as much as possible via a proven asset. Despite this as others have said this seems like a reasonable buy in at what appears an affordable amount (I’m sure we XTR will fast-track the investment for the hype). In short I’m against this investment if it means we don’t contribute towards the sulphide plant or a raise is required, however pro it otherwise. Hopefully we get news on the sulphide plant before year end (I left AGM with this impression as well)
Cheers
James
All this is golng to interest a few more new investers with a lots of optimism and something different to mull over while we await new son BR. Etc. Cheered me up loads anyway! THANKS EVERYONE FOR ALL INPUT.
"I left the AGM with the understanding that XTR could elect not to contribute to the sulphide plant and then we would continue to get 23% "
Correct James
IMHO I would prefer we put all our money in that less risky option first. I'm not saying this new venture is a terrible idea but I think there are better risk / reward options ie FB upgrade
As I say, maybe this time CB gets lucky but many past ventures like this have not ended well. I just get the impression CB knows he's running out of time before he makes the next big discovery so will be buying more lottery tickets in his last few years to end on a big win.
DREW
CruELLA here.
Please explain to the audience why today's deal is HIGH risk.
With the income being generated there is no reason why dear C🎯l can't invest in sulphide plant to get 50% profit share and drill prospects in ZAMBIA to perhaps sell onto First Quantum??
Its high risk as we may spend $2m and get nothing for it. Just like the previous other similar ventures. CB's track record on these "lets have punt" projects is poor.
I'm not saying we can't do both projects (FB and exploration) , but focusing on the less risky project first would be my preferred option. Well, until income was higher.
Then again, if I was nearly 80 and knew I only had another few years left in this game to hit the big one, then I'd probably do what CB has just done.
After all, its not his own money he's gambling with :)
Ok DREW.
KAKUYU is in the same area as these two licenses and if I am right it's already producing income which if before end H1 will be reported in H1 RESULTS or from 1st July then in a trading statement.
This is an area of HIGH grade copper. If they are using same team to drill as KAKUYU then this derisks project massively.
I think the difference between other deals is
XTR ACQUIRED LAND FROM OWNERS.
NOW they cut landowners into profit share of project.
This is how dear C🎯l creates value for shareholders ✅