Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Thanks all for your replies. An interesting discussion for sure. Guess we'll have to wait and see and hope it's all irrelevant when AA give us what we want :)
Little wing
I would have thought that before CB knocked back a final offer from AA that he would have already tester the market to assess interest from other parties. It would surely be foolish of him to reject AA's offer without knowing for certain that there would be other interested parties willing to offer more.
I would also agree that the 20% belonging to XTR would focus AA's minds.
Googled: AIM Rule 18 requires that AIM companies prepare half-yearly reports within three months of the period end.
I presume this means they are supposed to publish this report within the same time frame. We are not talking about BHP Billiton here. XTR has very few projects and revenue streams to report. It shouldn't be too hard to compile the data?!
This was last year sequence:
1. 30 Sep 2021- half year report for Xtract company for the 6 months to 30 June 2021
2. 05 Oct 2021 - Q2 Moz gold results for the quarter ending 30 June
3. 14 Oct 2021 - Q3 Moz gold results for the quarter ending 30 Sept.
It is odd in my opinion that the half year report would be released before the Q2 Manica gold update. Clearly Q2 from Manica is a key input of revenue and stock for the half year report.
However last year the half year report came first....
Q2 results, for last year, were released on 5 October. So they don't have to be released within 3 months of the period ending.
Am I correct in thinking that Q2 results need to be announced by RNS by tomorrow (last day of September, 3 months after close of Q2)? If so, why do we have to wait until the absolute last minute? And why can't we get XTR RNS's at 7am, which is the de facto standard, instead of being caught on the hop at some random point in the afternoon (usually).
Steve
You maybe right, but I can only quote what CB has said. If we have to sell to AA after an "appeal process" then we can't reject the independent valuation. If so, I am surprised CB was so unequivocal in that interview, and he said the same thing in another.
My, possibly wrong and naive understanding of this is that if AA/ Xtract can't agree a price then it goes to an independent valuation. Either party can still reject the valuation and if so then we can sell on open market.
The buy-back gives AA first refusal, not option of compulsory purchase.
I accept that maybe wrong but it seems to align with what CB said in that interview
The agreement gives AA first right of refusal to buy back, not a right to. The comment from Colin bird previously that, “they don’t have to accept that 3rd party valuation.” could mean that the 3rd party valuation will not necessarily be the final sale price but will provide common ground to bring negotiations within a range.
Generally I think the agreement is fairly watertight and prevents Xtract from simply turning down any offers made for the sake of hoping another buyer wants it for more. Further previous comments from CB in an early podcast would support that, “the agreement is legally binding and the only way xtract can be free from it is if AA have the decency to release us from it.” ( possibly not exact words but very much along those lines. )
Certainly agree with stevem on the 20% and other tenements.
It’s safe to say that if AA want it, then Xtract will sell it.
Andrew - I know that CB said we didn't have to accept the valuation but I don't believe there isn't a point at which any 'appeal process' comes to an end and Xtract are compelled to sell if AA want it back. There is no point in having a buy-back clause otherwise.
" If an independent valuation is arrived at, then of course Colin can say no, but it means we are trapped with no way of unleashing shareholder value"
My understanding, maybe wrongly, is that we could then go to the open market?
"It would be independently assessed by a consulting company. And of course Anglo don’t have to accept that assessment, neither do we"
That would be an indefinite freeze situation which absolutely would not suit XTR shareholders. This idea that somehow we hold all the cards over AA is pure fantasy. If an independent valuation is arrived at, then of course Colin can say no, but it means we are trapped with no way of unleashing shareholder value. If AA put in an offer that aligns with the independant figure then we have no choice but to accept realistically. We will see I believe somewhere between 10 - 20 p. The sooner we can get that and move on the better for everyone concerned.
https://www.youtube.com/watch?v=PDv0OEknsLk
17min 15 secs in
CB quote
"It would be independently assessed by a consulting company. And of course Anglo don’t have to accept that assessment, neither do we"
I find this confusing. The argument seems to be that AA should be able to compel XTR to sell after eventually going to an independent abitur but that XTR ultimately hold all the cards do to the 80 % clause where they can name their price!
I can't believe the buy-back clause wouldn't compel Xtract to sell based on the independent valuation if AA wanted it back. But, as I said previously, the buy-back clause only applies to 80% of one licence. Xtract can refuse to sell the rest and that would make it a lot less likely that AA would want it. So AA need to offer a fair price for the lot or it is likely the lot will end up for sale on the open market.
All IMHO.
I was just going to post something similar.
I've heard Colin say they can turn down the first two offerers and send if for a third valuation, but that's all, I think that would be the sale price.
Say "no" three times and XTR can do whatever they want doesn't make sense.
There seems to be an assumption that we can say no if we don't like the AA offer or independent valuation. Can anyone point to where that is mentioned in an RNS?
There seems to be no logical reason why we would accept an offer in that situation, when we could offer it to a wider audience instead, so why would AA create a contractual situation that benefits a tiny junior more more than them?
Also, why would talk at the AGM about the decision-to-mine being a way to force a decision by AA (either way) if we could just refuse it anyway?
Rzez - If it comes to an independent assessment, then the valuation will use the Valmin code and whoever is furthest away from that valuation (AA or XTR) will pay for the services of the independent expert.
But remember, the buy back clause is for 80% of one licence. If AA want the other 20% too, and the other licences, then there are no rules. That means XTR can command a premium for the lot. We won’t be giving Bushranger away cheaply.
The only advantage AA have is an agreement for first refusal, if no deal can be had, XTR are free to offer it to the open market. Of course AA know that so either they decline to make an offer or they make an offer that XTR regards as fair market value. We don't have to sell to AA.
As far "unproven" ground is concerned, it still has a value due to the likelyhood of it containing copper(and gold).
Just one thing to add here. I was under the impression if we give AA our intention to mine, then AA presuming their interested will offer a figure and we'll likely say its worth more. If a middle ground isn't met then an independent assessor will be used to decide who was closest then that figure will be used.
If that is the case then presuming AA want it. Then it's unlikely AA will offer too much to seal the deal and will base their valuation on what can be proven, not what could be. As this is what an assessor would likely base their value on.
Now I could be wrong but I can't see possibilities being given a strong value IF AA look to buy it.
Food for thought
I'd rather see 20m now than 80m in the future, and it could be years in the future before it even starts to drip feed to XTR.
You would have to remain a share holder in order to benefit or at least be one at "ex divi" days so pretty much a waste of time that way.
It would work if current shareholders received bonds in the undiscovered material enabling them to free up their investment in XTR and still have an interest.
Obviously what I am saying is just a thought. But trying to put value on targets which have barely been drilled or just EM targets - but could be the next Cadia, ?
Thanks for clarifying. $80m is certainly not insignificant.
Although if this was a way of the buyer paying less up front that is still to me less attractive than getting a better one off sale price.
As has been said before, a Bird in the hand is worth two in the Bushranger!
The "success" payments are up to $80 million. Not small payments given the majors are paying for the exploration. So say we were offered £x for RC consisting of cash and shares plus "success" payments based on the other targets, it would all add up.
Obviously just my thought but has been the way CB has structured recent deals.
>>> AA might be quicker to decide not to offer <<<
I don't see why AA would walk away from a 25+ year copper resource without even trying.
I mentioned yesterday that I felt the 2MT scenario was possibly included in the deal to benefit XTR, not AA. Even 1MT of copper (still a lot of copper) that can be economically extracted is not to be sneezed at. And as we now know, 'Decision to mine' is a strangely named term that means 'demonstrably economical to mine'.
Maybe the beauty in missing 2MT and basing the trigger with AA on the decision to mine, means that AA might be quicker to decide not to offer.
Then we are free to do what Cygnet suggests.
To be honest I don't mind that but I'm sure the share price will be higher by then as we will have a JORC maybe 8x or 10x the current one.... and a financial model laying out how profitable it is.