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With the recent slide in the pound compared to the dollar, I had a little think about how this might impact us and a potential buyout. First, we are making more from Manica due to a more favourable exchange.
Second, I had a quick look at Kiwara's news releases way back in 2009 to see a) the exact exchange rate at the time of the buy out by First Quantum, b) how quickly significant news led to official confirmation of buyout and c) the size of the actual resource
In turn:
a) Unsurprisingly, the situation has changed significantly and in our favour.
The magic figure of $260m back then was worth 157.6m GBP. Now that 260m US is worth 225.75 GBP, a 43% markup on the exchange 13 years ago. We are not only getting more from our gold production, but should an international buy out take place, we may benefit from the weaker pound. (I don't see the pound getting any stronger in the near future, but there are many better placed to give their opinion on this).
b) Re timings and speed of sale. On 5 October 2009, Kiwara hired consultants to conduct a pre-feasibility study based on an inferred resource of 340million tonnes @ 0.78 (using a 0.55% cut off!). On 21 October 2009, Kiwara then announced the results of an infill programme (where have we heard this before!) with some pretty impressive shallow mineralisation (including 20.4m grading 0.94% Cu from 12.8m (!) and 45.6m also grading 0.94% Cu from 167.6m. This was one of 4 drills hitting impressive copper.
One month and two days later, the company was sold. The pre-feasibility study hadn’t been finished or published. From news of the buyout on 23 November 2009, it took around two months for Kiwara to cease trading on 28 January, the following year.
c) In terms of the resource, the Resource Estimation Report was published two months prior to a sale (https://investegate.co.uk/kiwara-plc--kiw-/rns/kalumbila-resource-update/200909020800013638Y/ )
In short, it was a big one. We now know it’s one of the world’s biggest mines but the indications were there in 2009. 1.45bn tonnes @ 0.76%. 3.76bn tonnes @ 0.37%.
Some musings: The stories are similar. Resource estimate published in September. Infill drilling programme. Kalumbila was evidently much bigger but copper price was (as far as I can see) just under 7k /tonne on the day the sale was announced (it had more than doubled from lows during the financial crisis – I remember Colin saying at the AGM that he sold at the right time!) We are, however, in a much better jurisdiction. As Colin said, things move quickly. I believe him when he says that AA might not want BR and there may well be other customers waiting in the wings. What will be interesting is something else he alluded to: the idea of being a 200m company. Does he want to sell off BR for a dividend and keep Xtract going or sell the whole of Xtract?
For info, I have used the link below which details all of Kiwara’s old RNSs. https://investegate.co.uk/Index.aspx?searchtype=3&wo
Thanks. Interesting observations. Shows how quickly it can happen. The grades are impressive but as you say, Oz is a safer location and current grades are generally lower. If AA aren't interested I am sure the Chinese will snap it up.
I am happy to just sit back and wait it out. Still hope for that big payout, preferably gold but cash would be acceptable !.
Back when Colin said we will sell it for 20/25/30p the pound to dollar Was about 1.38. Its now 1.16.
That 20% more for us.
So it's now 24/30/36p
that's before the ascot discovery and extra drilling and more anomalies to check.
Looking forward to my 50p a share Colin, happy to take 20p now though. Need to pay the energy bill.
Dollar to pound could go to 1.05 which is 32% extra. 26.4/33/39.6p plus ascot,foot rot and other anomalies. Plus the additional revenue from manica.
Showing everyone this so that when it comes time to sell bushranger, you can look back and see if Colin was telling the truth about 20/25/30p.
I don't want all the additional waiting and drilling for Colin to just get 20p and then say 'I told you so'
Lucky
I was at the investor night where CB made the statement, from memory it was along the lines 20,25 or 40 pence after a few whiskeys. My take on this at the time was it was based on what he thought the asset would ultimately be worth not just on the information he had at that time so don’t think it’s fair to say the asset was worth 20/25 now we have found ascot and other targets it should be 20/25 + ascot.
No doubt the USD strength has helped with any dollar conversions, but to just focus on that is naive (in my view) when there have also been numerous headwinds since the investor night e.g. fears of recession, rising interest rates, copper price drop off, wars, huge spike in energy costs, inflation etc etc which none of particularly helps M&A.
End of the day what I’m trying to say is if CB “only” sells all the old prospector assets for 20p id happily buy him a drink despite the fact there has been some frustration on my part along this journey.
Cheers
James
Yes James, I was extremely nieve when I bought xtract share some years ago. I am no longer nieve.
And to say that Colin thought it was for the whole license before another porphyry was discovered??? Have a laugh.
The eternaly optimistic shareholders group I am no longer part of. Thanks Lucky
Why would I be having a laugh with that comment, it would have been pretty weird for CB not to factor in further license potential when coming up with a forecast valuation would it not?
You say you are no longer naive and maybe I’m wrong to say this but I don’t believe you were at the event where this comment was made so you are believing people on a BB (not saying the people who attended this event aren’t trustworthy) Additionally for someone who isn’t naive and has been invested with CB for some time you prob should have learnt the guy is an optimist
All the best
James
Yes, it's my fault for believing the only source of our information!! Lol
And it was 20/25/30p why would you skip from 25p to 40p?