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AA have a take it or leave it choice once Xtract declare the tonnage/intent, and must respond / make thier 1 time offer within a very short time frame, there after if values differ too much it goes to independent fair proce valuation, a process that takes up tp 10 business days.
This is why I believe that XTR are at this time putting together the necessary proof required to trigger the talks with AA, at whatever tonnage it will be. The decision to mine will be based on renewed mining scenarios NPV, with initial higher grade stage followed by the, 'churn', to well beyond many of our lifetimes, as other targets are proved and added.
Not much about Xtract but when you're starving you'll be thankful for some crumbs :)
1m 30 sec in for 45 secs
https://embeds.audioboom.com/posts/8090966/embed/v4
I thought the NPV model will be supportive of the updated conceptual pit, which makes it more compelling. The decision to mine is a further step.
I think AA have first refusal regardless of the tonnage, why would they pass up first offer and get in a bidding war with other majors if they were close at 1.9mt ?
They would still trigger the option and I don't think CB would give them the cold shoulder.
Not suggesting this is a likely scenario, but consider:
Xtract modelling is showing 1.8MT + Ascot. Talks begin with another interested party who is prepared to pay good price for the license realising its potential at substantially more than 2MT, perhaps even more than the amount an independent party may fair value the 2MT at for AA. AA meanwhile believe with a few more holes 2MT would be achieved, giving them the right to purchase at the independent party value.
Could AA block the sale of the license to the other party?
I think CB mentioned in one of his interviews that 'Decision to Mine' isn't just something they state, but rather the creation of an NPV model that demonstrates a profitable mine.
Having that alongside the 2mt makes the case a lot more compelling.
Thanks Steve I can see and do take your point, although I would just add that, at the time the intention was to explore footrot.
Of course, we have no certainty yet that exploration has actually stopped! We can only second guess what the company are doing, it would not be unreasonable, with insistent targets laid out and what is in accordance with the buy back, they are now putting together a ‘package’ to offer up.
Aeris (thu13.57) is totally correct,
they cannot talk about what they are doing up to, and during talks.
Trying to fully understand the reasoning behind the whole declaring a ‘decision to mine’ as well as the minimum 2mt option, to me suggests a buy back partner that has already shown a ‘lack of intent’ to take the project back. If they don’t want it now, it’s unlikely they would want any other major to have it. They could and probably would use every trick to look to prevent xtract from selling on now, if there would be any chances they may change their minds through whatever reasons and decide to want it back in months/years to come.
If the agreement in all its perceived simplicity, was that clear, then why are xtract taking steps to potentially declare both options?
I believe the answer suggests, that Anglo may ‘not’ be the new owners. Xtract are taking steps to ensure the buy back mechanism is triggered to go through the process, so are free from the legally binding agreement to sell to a preferred party.
“We hope Anglo have the decency to tell us they don’t want it,” remember that comment?
All I am trying to do is evaluate my investment to fully understand what I have bought into. If I am correct then xtract could potentially be left in a much better position.
Sorry for the cut and paste duplication... is what happens when you are trying to do stuff whilst working!
Howezap - Where a porphyry deposit starts and ends is a matter of opinion. Where a Exploratory Licence starts and ends is not. There is no way lawyers drafted a buy-back option based on a deposit who's size and position is questionable... the option definitely applies to the EL5574 licence.
The reason Footrot cannot contribute towards the 2mt target (at least in the short to medium term) is simply because there is no drill or assay information on which to make a JORC compliant resource estimate. The same is true for Ascot but that information is at least being gathered. I think this is why CB has referred to using a 'loosely inferred' estimate to quantify the value of Ascot in any negotiation i.e. an estimate that will value but even if it is not JORC compliant. If Racecourse doesn't make the 2mt target on it's own, then the estimate for Ascot will also need to be JORC complaint to trigger the buy-back clause. The alternative, as we all know, is a decision to mine.Howezap - Where a porphyry deposit starts and ends is a matter of opinion. Where a Exploratory Licence starts and ends is not. There is no way lawyers drafted a buy-back option based on the Racecourse deposit... the option definitely applies to the EL5574 licence.
The reason Footrot cannot contribute towards the 2mt target (at least in the short to medium term) is simply because there is no drill or assay information on which to make a JORC compliant resource estimate. Ascot isfurther ahead than Footrot in these terms but way behind Racecourse. I think this is why CB has referred to using a 'loosely inferred' estimate to quantify the value of Ascot in any negotiation i.e. an estimate that will add to purchase price even if it is not JORC compliant. However, if Racecourse doesn't make the 2mt target on it's own, then the estimate for Ascot will also need to be JORC complaint if it is to count towards the 2mt target for triggering the buy-back clause. The alternative, as we all know, is to take the decision to mine.
That's my take on it anyway. But there cannot be certainty without seeing the contract.
Ha ha yes of course you got me on that one Steve but you said
>> So anything found within the EL5574 licence can count towards the 2mt target that would trigger the AA buy-back option.<<
That is what I am disputing, I’m suggesting the 2mt needs to come from RC initially, backed up by cb interview, but all proven resource from EL5574 will be subject of final saleable asset.
I understand there is sensible interpretation of agreement regarding the JORC if you ignore CB’s comment re footrot as you are implying.
With my interpretation, it leads then to a suggestion then that the raw data from RC will just be shown to “see what they want to do.” Otherwise, could there be an initial JORC from RC alone? to trigger and open negotiations. Potentially along with the decision to mine supported by conceptual pit modelled around an increased resource of +/- 2mt
Hence if shortfall, the decision to mine will cover that eventuality.
Otherwise why would there be a need to declare decision to mine if they could declare +/-3mt that includes Ascot, just to trigger buy back mechanism?
Swings and roundabouts really, Ascot discovery has turned the project on its head into a very serious proposition for any major. Of that I am certain we can all agree on.
It’s good to chat ;-)
Howezap ~ thank you for the link. That was a great to listen to again. Back in April 2021 the team were confident with the knowledge that they had then (pre geophysics / Mimdas etc) that they would be able to demonstrate 2MT from combination of mass of rock and grade. That conviction doesn’t seem to have wavered since.
Their estimate at the time was that they would need to drill 16,000m to confirm the 2MT and that was what the fundraise was to achieve. It sounds as if they thought that they might need to drill a lot deeper than subsequently proved necessary.
It seems as if some confusion has arisen because the team gave the second porphyry a different name. If they had called it Racecourse2 I don’t think that there would be any doubt left in investors minds that they have surged well past the 2MT threshold and satisfied the terms of the Anglo agreement. Any remaining doubt is simply due to the fact that there hasn’t been a formal announcement about achieving it.
My only question is when Colin will be able to announce a sale.
Not like this continued fall.. tbh
Howezap - Like I said, the JORC can't include Footrot because there hasn't been a single drill hole sunk. But it is in the same licence that is subject to the AA buy-back clause.
Stevemocal et al
Interview where CB says 2mt needs to come from RC and will not include Footrot
https://www.share-talk.com/colin-bird-executive-chairman-of-xtract-resources-xtr-l-interview-2/#gs.2limnk
Last couple of minutes
I don’t think that Xtract will produce a JORC, nor announce a decision to mine , nor confirm that negotiations are underway with AA or anybody else. The buy back clause, whatever it’s exact wording and definition, has served to prevent negotiations starting until Colin was ready with a detailed pack of information
Just to clarify why I think ascot in terms of adding to the 2mt trigger, (not to be confused with adding to the sale. ) is a grey area. As Ascot is adjacent and will share potential processing capabilities CB considers it to be accountable. But Anglo, if my hypothesis is correct could dispute its illegibility.
Hence the double whammy of both 2mt and to mine
Could be pi..ing in the wind, but that comment re footrot…..
Very true Steve it has created some confusion along the way, my opinion was born from CB’s comment ages ago about footrot not being included in the make up of the 2mt threshold to trigger the buy back. Not to be confused with non being included in the sale, as is for Ascot too. Can anyone recollect that comment?
I have learnt it’s unwise to rely wholly on what is said but it does make sense to me as otherwise you could then have half a million tonne here and there spread out over the tenement making up 2mt.
Please someone remember so I haven’t got to spend the afternoon listening back over many earlier interviews.
interviews.
I listed to a podcast recently (can't remember if it was the December 12 stocks or March with Zak, but he was asked and definitely confirmed that Ascot was included in the AA agreement.
Howezap - I think XTR make it confusing for people by interchanging language.
AA have a buy-back option for EL5574, although it is often referred to as both the 'Racecourse Deposit' and the 'Bushranger Project'. EL5574 is in fact just part of the overall Bushranger Project (which consists of four licences) but contains everything found so far i.e. Racecourse, Ascot and Footrot. So anything found within the EL5574 licence can count towards the 2mt target that would trigger the AA buy-back option. That is my understanding and it is based on the following Xtract presentation:
https://xtractresources.com/wp-content/uploads/Bushranger-Summary-Presentation_April-2020.pdf
Of course, none of us have seen the actual contract and therefore cannot say for absolute certainty. We can only go on what we are given... and what we are given is not always consistent when it comes to the use of language!
Sorry if that last bit was repetitive my bad
Good initial question Meepmeep >> Do you think AA set 2mt as an absolute minimum to be worth being interested in and therefore may discard their offer if we 'just scrape by 2mt', <<
The agreement in principle, states the 2mt must come from ‘Racecourse deposit’ CB has said on building the resource model at ascot that he doesn’t think they will need to use toward it though, as they hope Racecourse alone will model enough to satisfy the 2mt. There is no doubt potential for whoever, to increase that later with RC southern extension and to include ‘now’ what is at ascot into the resource model. So as long as the requirement is met with minimum 2mt JORC, potentially it could be 2.5-3.5 including ascot if drilling has stopped.
A decision to mine would cover all bases, particularly a scenario where Anglo may dispute resource modelled from Ascot’s legitimacy, to be included toward the 2mt to make up any potential shortfall from RC.
In the past CB, referring to Footrot, if it could add toward the 2mt (remember footrot?) said it needs to come from RC alone! so it could potentially be a grey area where legitimacy of Ascot to contribute to make up any shortfall. A decision to mine would potentially safe guard that scenario.
Just missing the 2MT on its own would be terrible. AA could just wait ..... Happy to know that no other major would make an offer as they would be bound to AA by the same terms. That is why the decision to mine is being delivered at the same time.
We need to trigger the AA buy back clause (either by 2MT or decision to mine), then either bask in the glory of the fair value offer from AA..... or ..... if they decide not to offer fair value, within a prescribed period of time (as detailed in the buyback clause that dictates/prescribes the method and timescales for defining fair value) we will be free of the AA agreement and then attractive to other top tier miners.
Either way it's good for XTR but you can see why we need to progress both fronts.
Feels very close now.
GLA
Another thought for consideration: Do you think AA set 2mt as an absolute minimum to be worth being interested in and therefore may discard their offer if we 'just scrape by 2mt', or could 2mt have been an optimistic stretched target based on their own drilling and may rip our arms off for an offer should we get there?
Either should bring us a good result in the end but may drive share sentiment in different directions for a final offer
Howezap, l hope the plot doesn't thicken much more, bet CB is smiling in his rockin chair.