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I agree WWT. Zero % would be my preference. And your analogy is bang on. I think the truth will lie somewhere between from a profit perspective. The risk is minimal to the third party operator unless they have incurred some additional capex to get their operation up and running - but even that can me mitigated against to a large extent. GLR are essentially outsourcing capex for opex (so they pay a higher amount on Opex for the privelage). Standard practice in many industries. Either way the $$ looks very promising and to value the asset at less than the cost of drilling the asset makes no sense with a JORC backed asset. We applied and got a mining license to make money and now we are in an increasingly good copper price situation.
Correct Chris. 75% is owned by GLR 25% by Statunga.
I have calculated it a different way.
Ignoring the LOM extension into the deeper higher grade stuff (which is significant in itself) but winding our way down through the pit into the deeper stuff is what CB mentioned the other day - about 650m I recall? and access to another 6mt?
Either way for the Open Pit alone subject to the JORC
5.8m tonnes @ 1% @ 87% recovery rate = 5046 tonnes per annum
@$10,000 Copper = $50,460,000 per annum revenue
Costs - break even point 0.25% but lets double that to be sure!
So 0.5% of the copper goes towards costs = $25.23m leaving $25.23m Profit per annum
So the cost element has been taken into account. i.e the guys mining it, processing it etc.
How do we share out the $25m when the third party moving the ore etc has already been paid for doing so? That would be double counting in some ways. Why should they get a share of the profit when they are already paid to move it and others to process it. It's our asset.
So giving them 40% (very generous) and retaining 60% for GLR/Statunga would give 60% * $25.3 = $15m to our Statunga JV to be shared 75%:25% for each of 10 years. And more for the LOM extension - at higher grades.
Of course if during the first 5 years they hit that 70mt in the deeps then it will be sold off as the deeps are higher grades - along strike from Mopani.
Ka$hitu has a very high grade, relatively small, open pit with significant tonnage. Running the calculations on that is a double take ! I'd like to see that get worked.
What risk is the mining contractor taking? If they are purchasing additional equipment specifically for the programme of work, that is different to utilising equipment they already have. Think of rental agreements as an analogy e.g. Tool Hire, Van Hire. In the former scenario the agreement could potentialy tie in the period for which they are contracted to cover thier costs etc. The $$ per annum profit is POST costs - which would cover the outsourcer costs. For them to get 40% of the profit ON TOP would be a very good deal IMO. But of course, IKY has dworked through all the numbers as usual and will share them later ;-)
The Luansobe open pit mine originally stated as 10 year LOM with a grade of 1% plus cut off of 0.25%.
However further discussion about ramp down into the lower levels offer an increased life mine - possibly 15 years - into a higher grade part of the resource. The JLP deal is not as great as it looks IMO, and the grades were 2% in some parts of the tailings - which feels like over egging the pudding - it will not be the first time an exec has pointed to some parts of a site showing higher grades. When the actual resource estimate and overall grade comes out I expect it will be much lower. The deal with the UAE guys also is also too opaque for my liking along with share of profits and how they are calculated.
that % split would will be interesting. i would expect 60% glr, 40% contractors doing all the capex. that gives us serious $$ over 10 years - possibly 15 years+ with the mine ramping down into the slightly deeper asset. at the same time, drilling out the deeps also on that site next door to mopani opens up a whole new chunk of copper - 70mt ore at 2%+ ? shinganda (iocg) and nw foreland obviously benefits - two assets for sale/jv once and only when significant value is added in by the drill bit. ka****u zinc - a huge amount of money in the ground there, hopefully the locals etc. can agree a deal to get it out. let's talk dividends :-)
What's interesting to me Chris is Martin stated on several occasions they were looking at JV or Scheme of Arrangement, or other mechanism which indicated or implied that the ££ hurdle for what they wanted for the open pit had been reached. On the one hand a sale would be good - the question is how much would we get - compared to how much we could get from mining it e.g. Would 2-3 years mining it ourselves give us what we would have got in a sale - as an example. In terms of using contractors we must not go down the route of Star Zinc and selling it and getting a royalty. We must retain ownership in a situation where we are utilizing contractors to do the heavy lifting. At the end of the day, the asset is king, and we can swap contractors out. Either way I believe the asset is 'in play', and expect plans to come forward once the execs have received confirmation from the ministry, and no doubt some legal stamp from their own lawyers. Belt and braces. Then there is the underground and the deeps cherries on the top. Great position to be in.
I agree WWT.
Looking forward is now the much better and more rational option - things are slotting into place for GLR. I expect a PR push once the RNS around the mining license issued - even though it is approved in the MLC 79th Results, shown fully as an active license on the Cadastre etc.
I also hear that the roast guys were with the Cooper Lemon guys today. And CB will be having a discussion with 'the hive' telegram group in a few weeks time.
P.S It's a 10 year mining license valid until 23/04/2034. Then renewable as is the standard process.
3CB, Kiwara is mentioned by CB because it was an exceptional achievement - rarely matched on AIM/ASX/TSX juniors. Jubilee was set up by CB. He also named FQ. IF he can repeat any of that success here then the market cap will respond accordingly. We now have a mining license, more cash, liquid investments, an investment from Sandffire, and fantastic acreage in Zambia, Kalahari and Zimbabwe.
Chief Ramper.
Just tried a dummy sell and got a quote...
I'd like to see some stronger hands come in and weaker hands out. The dots are joining up nicely.
They have plenty of cash + liquid investments. SFR share value alone has gone up significantly. Research pays off.
Now time to get the open pit mine up and running. It is now a valid mining license in the Cadastre. Some will want to see an RNS.
Never in doubt … thanks :-)
Sure Irish.
https://portals.landfolio.com/zambia/
License 34543-HQ-SML
Held under our partner Statunga.
The Cadastre status has moved on again, from 'Approved for granting' to 'Active' and is showing as a granted license.
No longer in application status. Well done to GLR !
Tapping in annoys you ;-)
Shareholder, not a shareholder, it's difficult to tell with all the lame yet jubilant guffawing interspersed with looking at every opportunity to downplay progress. So 18 Months minimum to the Open Pit production, or sale, not based on anything except a feeling in your water. Got it.
Your amusement at a dip in share price says a lot 'Levi Stubbs'. Yet I sense a lot of anxiety about you losing that £500 investment ;-) 18 months you said before the open pit . Your finger in the air estimates are like your finger in the air research. Based on not a lot.