Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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>Frustrating when people not with any clue of what's going on inside the company shout RNS today, tomorrow, next week.<
Hey, on the 3rd Jan I predicted an RNS the following day and there were 6 of them !!
O.K, I concede they were price monitoring RNSs, but still... pretty good crystal ball work on my part....
Presumably once sitting around the table you can amicably agree upon anything you like. 80/20% + royalty is a predetermined baseline or starting point. The royalty however is quite valuable and could be sold on elsewhere.
3cardbrag lol it does feel a bit that way….
Early indications today suggest to me an incoming intraday RNS.
Still no rns just checking dubai obituaries
It also says 80% or can dilute down to 0.75% interest in the project, which to me suggests even if we sold all of it, we would eventually receive a 0.75% Royalty?
Or have I got that completely wrong?
Joeman,
Kalumbila (sold by Kiwara) was an AA licence. The copper price and AA exiting Zambia was their reason for relinquishing it and obviously AA didn't buy it back. A scan through some of the Kiwara RNS was quite interesting. I don't know if it was down to luck or good planning but Kalumbila appeared at a very good time for First Quantum. I'm still not convinced AA is our most likely customer.
A 7am RNS with some decent news would be good...
I think you will find AA's right to 50% of the 'excess' of the sale of any of the other exploration licenses is time limited, and may soon no longer apply!
Had a refresh myself on the terms agreed for both Racecourse deposit EL5574 and the adjacent exploration licences EL8305, EL8306 and EL8585.
>2mt (contained) CuEq or a decision to mine triggers the AA buy-back for 80% at fair market value as determined by an independent expert in accordance with the JORC and Valmin Code. Thereafter funding 80/20 split or Xtract to dilute retaining a 0.75% NSR.
Should AA not exercise, 100% to Xtract with AA retaining 3.5% NSR + A$7.5m payment to others.
For the adjacent licences Xtract own 100% with AA retaining a 1.5% NSR. However, should Xtract decide to sell the terms are, up to A$100,000 no charge. >A$100,000 AA require 50% of the excess for each licence.
I hope Collin's locked in the geo team with lengthy contracts as their knowledge and proven expertise at Bushranger would be a very strong negotiating chip in striking a deal with any buyer.
Also, to add to joemans good post. Where Footrot is concerned, If I recall correctly, some EM surveying was done and their drilling was directed into the shiny bright colours of the EM signature which is the pyrite, not what they wanted. The decent grade chalcopyrite is found of to the side and when in association with pirotyte Is where the higher grade mineralisation is found. Our geo team knew this with great effect in exploration at racecourse and identifying Ascot. If AA’s explo team knew that too, things may have been different.
Ben, when they sold this on the price of copper was 1/3 of what it is now.... and average porphyry grades were higher....
I'm sure there are many companies kicking themselves for passing historic license on....
Two interesting questions have come to me reading all of these posts.
1. What will AA investors think about buying back a deposit for 150-300m when only 10-15m was spent on it. It does beg the question why didn't they do an IP and EM survey at the very least. (and yes I know they sunk a few holes into footrot and appreciate they didn't want the risk). It just seems ridiculous that they didn't do more exploration and now will pay the price: 50 times what they gave it away for?
2. If we sell EL5574 (?) back to AA for say 150m and keep the other 3 licences. What's to stop us surveying the other licences, spending big proving up deposits and then selling those on to others. Many have mentioned CB approaching twilight years and wanting to sell - do those people mean sell the whole company then? Will AA want to negotiate buy back options for the other 3 licences? Or negotiate a price for them along with Racecourse/Ascot licence (what value to they place on them?)
So many questions that we will find out in the next 12 months but invariably are being mulled over by CB, Quentin, etc. behind the scenes at this moment in time.
I'm sure Bird & AA are already in 'informal' discussion's - I imagine they already know what he's after and he will have an idea of what they want in terms of confidence that Racecourse, and now Ascot, are viable.
We already have nine drill holes in or around Ascot and time for another 20 (and assays back) before June. Plus we have the geological analysis from Racecourse to help with modelling Ascot and the EM and IP surveying which provide evidence of scale and will be supported by 'ground truthing' drill hole data. I do not think the eventual resource estimate will be that loosely inferred and I'd be bitterly disappointed if we took a huge discounting hit.
Let us also not forget that there is a kilometer long anomaly at Footrot and likely other porphyries in the area with copper and/or gold e.g. to the east of Racecourse, where there are signs of older porphyry systems that may contain gold that wasn't washed away by the later Racecourse intrusion event. More reasons to be confident that Bushranger as a whole is going to just keep on giving and, therefore, for AA not to risk letting it go to the open market by asking for an unreasonable amount of discounting.
Just my two-penneth for what it is worth. Always good to here different views and perspectives.
Further to Howzap's point that "Ascot will be ‘very’ loosely inferred and discounted accordingly" we may find that the 2mt at Ascot, may only justify a buy-out of say 1% cont copper?
Howzap
I hope you are right and you may well be.
Maybe I'm being too pessimistic or I am underestimating CB's negotiating skills, but it seems , intuitively, unlikely we will get a 2mt copper valuation for ascot by not doing the usual drilling and assay results as per Racecourse. I guess it all sounds too good to be true to me.
Hopefully I'm going to be pleasantly surprised !
Aeris
I think Cornfords 3% figure was based on measured and now I think will not be getting anything like that. I'm expecting 1.5% to 1.8% now
There has been a lot of good discussion going right back to John Cornford’s early analysis using 3%, to other well researched opinions at circa 1.5/1.75% of in ground value. Similarly there has been discussion about relative values attributable to inferred / indicated/ measured.
My take on it is that if a CEO wants to justify a particular purchase price to their Board, they will have various ways to present and justify that number. I don’t imagine that Colin’s breakdown of the sale figure will be the same as the purchaser’s breakdown. Eg how much for Racecourse / Ascot/ Footrot / other porphyries that the drilling appears to have touched on. And we won’t be privy to either.
My point being that this offers scope for a long life mine in a great jurisdiction so whoever wants it the most will find a way to be comfortable with the final figure
Andrew, the way I see it, outlining of Ascot with a a dip and strike length determined, would still give an estimated resource, for example of 500mt, dependant on grading, then an estimation of copper content of say 2mt could still be estimated. The difference between measured down to inferred is the level of geological confidence in that resource. Ascot will be ‘very’ loosely inferred and discounted accordingly just as racecourse will be discounted taking into account its new inferred/indicated JORC over a measured resource.
My main point was not is CBs strategy right, but why would a major value Ascot at 2mt without empirical evidence from a number of assay results and drills – like Racecourse. Its not difficult to see how a major might value Racecourse at 2mt due to the evidence.
Reading the comments below, it would seem that a major would value Ascot at 2mt by a combination of CBs persuasive argument, the future POC, the advantage of a nearby “proven” racecourse deposit and the good GeoPhys results at Ascot.
I maybe wrong, but I would think that the head of M & A at a major would want more empirical evidence than that to value Ascot at 2mt and sign off a big fat cheque. They tend to be risk adverse.
If I am wrong and we do get a circa 2mt Ascot valuation from a major, then CB would deserve tremendous credit. CB would have saved us a lot of time and money proving up Ascot (to get to the 2mt) by his negotiation skills. Maybe he could do the same with footrot?
It will be interesting to see if that is the case.
Personally I'm expecting a mainly share deal, with possibly a small cash element, i.e issue shares to XTR for Bushranger, or possibly just buy Prospector, that way they also get to keep the team, I think they'll want to stay anyway, it will be their baby now.
Also helps XTR shareholders, as no tax liability until you sell the shares, plus whoever buys can keep any cash for construction, further drilling costs, or dividends.
There will always be a debate on how much drilling / testing to do and you have to trust CB and team will get the balance right. One way or the other, not all investors will be satisfied.
Remember, there’s a shortage of drill teams (we’d need way more than two), delays in assay results and other than Racecourse, a huge system(s) to prove up and get JORC compliant to a detailed level - it will be death of a thousand cuts.
JORC Racecourse, prove the viability of mine, outline a rough Ascot (and others?) 100% prove the science and then sell - really does seem the best approach if the goal isn’t to JV or spend years and years on this.
If you think CB and team haven’t got the balance of time / reward for investors at the point of sale, you can always invest in whoever buys Bushranger - I’ll be buying a few for a very long term investment to see how it plays out.
I'm with you on that Andrew.... and with probably 6 months before full negotiations.... there is the potential for us to get in at least another 20 holes in Ascot by then.... much more of a hook to get in the gills of a major.
That is how I understand it too, there will be a heavy reliance on the comparative geo data to show its viability as a mineralised system and the results from the minimal drilling will show potential strike length, dip, width and is a copper, copper/gold 2nd porphry, as a sweetener on the deal for racecourse. Look forward to seeing the kind of value it could add.
We will get our 15 minutes, but when you think about it, unfortunately all the accolades will be with the new owners when Ascot and any other porphry targets are extensively drilled for their own resource estimates and feasibility of 4-6-8mt if confirmed and compared to cadia in type and size. A happy sad thought!
That’s the $1 Billion question - rather than hundreds of millions. At a time of rising copper prices / challenges in South America , can Colin and the team can wind AA or in due course competing majors up enough. Ie can they convince them that there are multiple porphyries with the same geological signature as the one drilled and assayed for them to make the highest bid and ensure that they don’t miss the next Cadia Ridgeway.
I maybe missing something here, but I don't see why AA or any other major would value Ascot as 2mt unless there had been enough drilling to give the buyer enough confidence that it will be 2mt (or whatever size). My understanding is that we wont be doing a lot of drilling at Ascot just enough to show that there is resource there of some value? And lots of potential.
I think it likely that there would be 2mt at Ascot if we did an extensive drill campaign, but as we are not going to do that then wont the buyer value it at nominal amount?
If 5 or 6 drills could prove up Ascot at 2mt or a decent amount, why was it necessary to do 30+ holes at Racecourse ?
So we may get a valuation of just over 2mt but that maybe mainly down to Racecourse and due to the extensive drilling there The buyer may add on a bit extra (0.25mt to 0.5mt) for Ascot due to the potential against a few results from a few drill holes? But not another 2mt against a few drill holes?
Or am I missing something here?