Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
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Cygnus
Thanks so much for taking the time to share your thoughts and insights in such a clear logical post. Very very useful and definitely I'll be holding this as the market still hasn't priced in the available information or is applying an arguably excessive risk factor. I know it's not guaranteed but downside on sp is very limited and upside significant.
I keep saying that's me done with topping up but looks like I should think again.
Thanks also Andrew, Iceberg and others for all the info you've been kindly sharing.
Part 2, (continued)
The value to the mining company is in addition to the attractiveness of existing infrastructure, being in Aus and an experienced workforce. Consequently I think that grades are critical to the eventual value to shareholders given that we know the size of the resource is big (and I think we are probably safe to say that it is going to be bigger than the 2M tons required by AA).
If one wants to play with the affects of the variables I identified in Part 1 of this message then a simple spreadsheet can be constructed such that each chosen value is multiplied together (and divided by the number of shares) and one can choose conservative or outlandish values as one see fit to find the value of one share. It may look like:
Length width depth density Cu grade Cu price % asset value* £/$ No of shares/M
850 600 600 2.7 0.2 8500 2 0.71 810
900 650 650 0.25 8700 2.5 0.72 820
950 700 700 0.3 8900 3 0.73 830
1000 750 750 0.35 9100 3.5 0.74 840
* Value of in the ground Cu
I have chosen the number of shares as being over 800 million as I am uncertain how many warrants there are but seem to remember reading that it could eventually take the total share count above 800 million. It is, in any account a relatively small percentage factor to the overall value of each share.
By plugging some figures figures into this 'spreadsheet' you find that a resource volume of 800 x 500 x 500 with a Cu grade of 0.2 %, a POC of $8900, $/£ exchange rate of 0.7 and a buy out % of 3% gives around a value of 24p per share. I think you'd agree that I've been pretty conservative with all of my figures. Plugging what seem more realistic values in quickly gives eye-watering figures......
I think the geologic case for Bushranger (and us as shareholders) is likely to be made pretty soon. But I have been here before with other shares. The mill is being constructed, it's being painted lovely pastel shades and production is just around the corner. They are even spending money finding more resources and investing in new equipment when you get an RNS saying that the money lenders have not been paid and that the mill has been handed over to them - but not to worry, the BOD is working over-time to create value for shareholders ! Not saying that's the case here but if this does not pan out, it will likely be due to non-geological factors. Just trying to keep it real.
Hope this was of interest or use to others.
Part 1,
I'd like to add some thoughts to Andrew4444's posts. Maybe a share value sensitivity study is too grand a name but I thought it would be good to look at what factors drive the value of one of our shares. Just to set the baseline that Andrew set out about a week ago and assumes that AA or a similar miner is willing to purchase the asset.
The value of a share can be estimated from the follow calculation.
The volume of the asset (Length x width x depth) in meters - gives volume of porphyry
multiplied by the density of the rock (given as 2.7 T/cubic m by CB) - gives mass of resource
multiplied by the mass of copper per ton of resource (incl other minerals [Cu equiv]) - gives mass of copper equ in porphyry
multiplied by the market price of copper per ton - gives $ value of the asset
multiplied by the % of that asset value that a mining company is willing to pay XTR
multiply by the $/£ exchange rate - gives value in £.
And finally that £ value is divided by the number of shares in circulation.
As some posters pointed out, the volume of the asset is the biggy as it is a cubed function. If one uses a simplistic sphere as a demonstration, if one were to double of the radius of a given sphere then the volume inside the larger sphere is 8 time greater than the smaller sphere: so size matters! CB reinforced this view when he made remakes that implied he was not worried about Cu grades but I think this may have been based on the fact that (I believe I'm right in saying [as I'm no geologist])) that local porphyry systems tend to have similar Cu grades and hence grades should not be an issue (a feeling reinforced by the hand held X-ray device). Some posters have also made comments to almost suggest that as long as we get to 2M tons, grades were almost irrelevant. Personally I think a little differently. Take the almost daily comments about the price of Cu. If the market price were $8500 and one were to compare the effect of that to the company value when Cu is valued at $9500 then the % uplift would be around 12%. All well and good. It all helps but it's not Earth shattering. If however you compare the value of a huge resource at 0.2 % Cu to one at 0.4% Cu then the value to the potential mining purchaser is 100% greater - making 12% look almost inconsequential. Actually, I'd say 0.4% Cu is worth more than that. From the mining company's point of view, a 0.4% Cu resource suggests that cashflow can be doubled relative to a 0.2% Cu resource as for any given ore mined they would access twice the copper. Consequently, doubling the Cu grade makes the asset at least approximately twice as attractive as the 0.2% resource and the company would presumably reflect this in the offer made to XTR based on the fair market value. So, Cu grade affects not only the value in the ground but the relative attractiveness of the asset to the mining company which should be reflected in any potential offer. See next message.
Superb initial post Andrew and follow up from others. (Thanks Michu haha)
Just goes to show the odds are stacked very much in our favour. Especially when you consider the content of similar ore bodies in the area but also the copper price currently.
I am extremely excited to receive the impending (imho) positive assays from holes 1-3 and look forward to hearing everyone's thoughts thereafter. In the meantime, I hope everyone has a pleasant weekend dreaming of multiple fingers and copper/gold cathedrals!
Indeed a no lose situation.
No gold, ok
Little gold, not bad at all
Moderate gold, very good indeed
Decent gold, amazing
Very good gold, incredible mind blowing !
:)
The beauty is we don’t know so it’s kind of like Schrödinger's cat - it can be both full and empty of gold at the same time.
Iceman
You may be right.
But we are certainly being encouraged (imho) to think there maybe a reasonable amount of Gold. Not only from the very pointed 25 Feb RNS, but also another interview comment by CB when he said, something like, ‘previous AA drill results showed decent Gold grades’.
In addition Boda keeps being referenced as comparison by CB, and that’s got reasonable Gold grades.
Even if it’s nothing like 1:1 but just a small amount of Gold, say 0.1g/t Au. Against 0.3% Cu, that small amount of Gold will increase Cu to 0.36% Cu Eq.
An increase of 20%, which would translate into 20% extra on SP valuation.
As you say, it will be fun finding out!
It would be nice :)
I am ultra conservative so .2-.4 cu eq is good enough for me. I.e just the copper.
Personally I don't buy the reduced copper scenario, I know that puts me against the geo statement but...
That aside, like most we can dream, maybe a gold core from a separate early intrusion with grades pushing 3-4g\t. :)
A detailed explanation might be a phase 1 fluid flow, with high temperature quick cooling allowing the chemical change to pyrrhotite. However later phases , lower temp, slower cooling are the ones laying down the copper elements.
But.
Was their gold in the first phase? Where did the gold go? Did the second phase completely over print the first or is there an intact gold bearing intrusion splinter?
It will be fun to see!
I think you are right too Andrew and come April Gold will have sorted its crisis of confidence out too...
All about Q2
Personally, I have just become more excited as each hple has realised better than expected results in range, not really thought about possible gold being in them there hills. (or plains). Have a good weekend all, and lets see CB delivers next week.
Nice work Andrew4444, if that is the case, and the size of the mineralisation is as big as suspected, surèly that will blow the blooming doors off?
There have been some excellent posters come on board 'ere since Bushranger.. and yet you remain the best poster 'ere imho Andrew.... your excellence is ongoingly is much appreciated ! (of the old school CE is excellent too, no doubt)
PS : Your surname doesn't start with an 'O by any chance Andrew.. that could put you on the road to cult status imho.. imagine for eg Ben 'Owell had your content :-)
(In case of misconstruction, Ben 'owell defo. has good content imho btw.... I witness my Ben 'owell wise 'owell post in support of me not just saying that )
nice work, many thanks. V Interesting few weeks / months ahead
A few interviews ago CB implied that racecourse could have a larger than usual Gold content and maybe more like Northparkes or Cadia which have a 1:1 Copper / Gold ratio. This possibility was increased in the 25 Jan RNS:
‘The presence of a significant proportion of pyrrhotite associated with copper sulphides (chalcopyrite) at Racecourse suggests the deposit is a reduced copper-gold porphyry deposit - such deposits are known to have higher gold grades in comparison to copper grades’
Obviously this has not yet been confirmed and at this time is only a possibility.
However IF it is a 1:1 porphyry, then that means for each 0.1% Cu there is 0.1 g/t Au.
Iceman did an excellent post a month ago showing how to convert the Au to Cu Equivalent.
I’ve made an excel spreadsheet with this conversion formulae to save me having to keep working out Cu Eq against different outcomes. I now just have to input POG, POC, Cu %, Au g/t and it works out Cu Eq.
What’s interesting, well I think so anyway, is seeing how the Cu Eq increases if it is 1:1:
Assuming 1:1 Cu to Au and at current POG/POC values.
(Figure stated is Cu % and Au g/t ie 0.20 = 0.2% Cu and 0.2 g/t Au.)
0.20 Cu/Au = 0.32% Cu Eq
0.25 Cu/Au = 0.40% Cu Eq
0.30 Cu/Au = 0.48% Cu Eq
0.35 Cu/ Au = 0.56% Cu Eq
0.40 Cu/ Au = 0.64% Cu Eq
The Gold content will substantially lift the Cu Eq by 60% – assuming its 1:1.
So a typical Copper grade of 0.3%, will increase to nearly 0.5% Cu Eq
At lower Gold content, 2:1 ratio (Cu:Au)
0.20 Cu 0.1g/t Au = 0.26% Cu Eq
0.25 Cu 0.125g/t Au = 0.33% Cu Eq
0.30 Cu 0.15g/t Au = 0.39% Cu Eq
0.35 Cu 0.175g/t Au = 0.46% Cu Eq
0.40 Cu 0.2g/t Au = 0.52% Cu Eq
Even at these lower Gold levels, Cu % increases by 30%
Obviously this exact mark-up is also subject to ratio of POG and POC at the time, but it does show the noticeable increase in Cu Eq when a reasonable amount of Gold is also found.
Lets hope it is 1:1 ratio, or at least near it. My gut feeling is that there is going to be more Gold than usual.
We’ll see.