Member Info for Andrew4444

FB deal. CB has said that we will get revenue (not profit) less our share of costs. CB has stated that cost for processing is $600 oz so profit is $1375 an ounce (assuming pog at $1975). This gives a margin of 70%. I am assuming the 40% to 50% margin CB has mentioned is after tax. 32% corporation tax + 6% mining tax = 38% tax, leaving 62%. 62% of the 70% margin = 43.4% which is right in CB's margin claim.

If CB is saying the margin is 45% prior to tax, then the costs will be 55% of POG = $1080. This figures would be much higher than AISC stated of $862. We are not paying AISC cost as we are not paying for the mine construction.

So I am assuming CB's margin % is after tax. If it is not then his $600 an once cost has now nearly doubled to $1080 an ounce (55% of $1975).

That is my understanding anyway.

Assuming we get the 23kg to xtract as stated.

Margin 40% to 50%

LOM 5 or 6 years (he has also stated 7 years before)

POG $1975 at todays

USD to £ conversion rate = 0.77 (at today’s date)

These are my calcs.... Happy to be corrected.

1. Calc assuming mean figures are used so

45% x 23kg = 10.35kg = 333 troy oz=$658,000=£506,000 a month profit = £6.1M a year
At 5.5 years LOM = £33.55M profit. 557M shares (inc extra 100m not registered) =6p

2. Calc assuming lowest figures stated (40% margin, 5 years LOM) = 4.8p

3. Calc assuming highest figures stated (50% margin 6 years LOM) = 7.3p

Well so far, and surprisingly, there has been no damage to the sp. I was expecting a large fall this am after that AF interview.

I suspect those long suffering xtract shareholders have a better understanding of the prospects here then our new non-exec director. Maybe that's why there has been very few sells so far?

Unless CB was coming out with blatant lies to TW over a number of interviews (I'm sure he wasnt), we will be getting a substantial increase in income by early 2021 and therefore the sp will rise accordingly.

If CB gets a twitter account, he should employ Oilplayer2009 from twitter to ramp this. He's doing an excellent job! Wish he'd post on here...

Maybe this hasnt re-rated yet because of CB's many failed predictions. 'Believe it when I see it' - could now be the view of many.

I agree with your last comment, ..... only a matter of time before this re-rates. That's why I'm relaxed about the future and am not concerned about xtract being a bit slow to catch-up with other juniors. .....We will when the mine construction starts.

Wed, 29th May 2019 11:22

RNS Number : 4822A
Xtract Resources plc
29 May 2019

Correct - MMP have more to gain than we do. Obviously delay is down to borders being closed, not MMP's tardiness.

BBS

23% with POG $1250 + so no more % if POG goes to the moon - just more profits.

'MMP will receive 77% of all the operating profit produced from the permitted area through the performance of the contract by MMP when the prevailing price of Gold is greater than US$1,250 per ounce. MMP's entitlement shall be increased to 78.5% at a prevailing Gold price greater than US$1,175, and to 80% when the prevailing price of Gold is less than US$1,100per ounce. For the purposes of the Collaboration Agreement,'

I know it’s just speculation, but today Goldman sachs revised POG to $2300 by Q2 next year.

Bank of America had already predicted future price at $3000 by Q4 next year.

They may be wrong, but they can’t be accused of talking their book like many Gold speculators who keep saying POG $5K or $10K. At this moment in time, It's looking likely POG will be above $2K (may be well above) when mine production starts .

https://markets.businessinsider.com/news/stocks/goldman-sachs-raises-12-month-gold-forecast-2300-per-ounce-2020-7-1029437936#

https://www.bloomberg.com/news/articles/2020-04-21/bofa-raises-gold-target-to-3-000-as-fed-can-t-print-gold

Conkers

It's impossible to say as there are too many variables. Eg The Bush ranger project could be the best thing CB has ever done in his 45 years in the mining game, or it could be another O'kiep venture which cost Xtract $1.5M and we got nothing from it.

What will POG and POC be in 2 years? Collapsed or much higher?

CB said recently that he wants the co to be built into a £400M MC mid tier co. It could be IF all the potential is realised. That's highly unlikely IMO.

If I had to guess, I'd say I think in the 20p's would be the highest sensible prediction and I'd give only give that a 20% chance. I think its 50/50 if it goes above 10p.

But it's all speculation due to the many variables and unknowns.

Hi James

Good point. I usually remember to take of CIT . That said when I do I deduct 20%. I've checked and It is 32% in Moz as you said. My 25% discount was very pessimistic so maybe the actual figure wont be significantly lower – but it will be lower as you say.

You make a good point re additional unaccredited value. This shows how difficult it is to determine future SP against fundamentals as a lot of the future SP will be down to sentiment. SP is trading at discount to NAV now, it will move to fair value when income starts, but then may move to premium to NAV when the market, maybe wrongly, prices in a lot of the other potential. The market may start to think that if CB can actually deliver on HR then maybe he will deliver on all the other stuff.

All we can say with any certainty is that once HR mining starts the SP will be substantially higher.

Lucky

My thoughts on your question. Depending how you work out the new MC will determine new SP. There may be a few different assumptions so obviously some will come to a different rerate sp.

My working assumptions are:

1. Profit = POG less direct operational cost x 23% . CB has said the deal is 23% of revenue (not profit) less direct operational costs. He said DOC was $600 oz. My understanding is that AISC is now not relevnt as we are not paying for the mine construction. This understanding is further supported in the recent mine prophet pay wall pod cast when TW used CBs $600 an ounce cost to determine profit. CB did not correct TW when using the direct op cost (to determine the margin) and not the higher AISC cost.

2. Production 30,000 ounces a year

3. Life 7 years

So assuming POG at $2000 (I’m sure it will be at least that by the time the mine is in operation) profit is $1400 ($2000-$600costs)

30,000 oz x $1400 profit = $42M profit a year

23% of that = $9.66M to xtract a year

=$68M MC (over 7 years LOM)
= £54M

Assuming shares in issue are now including the additional 100M = 557M
= 9.6p SP

Discount that by say, 25% as grades in reality may not be as good as anticipated and we may get 1 less year production from the mine. Also, although unlikely, POG could be a bit lower than now. So that makes SP circa 7.2p.

Others will have a different methodology and working assumptions but it would seem reasonable to assume that 6p minimum to 7p - assuming the mine is built and POG does not collapse.

Then again, as this is Xtract, in 6 months time, SA border still shut, no mine works started, no income and CB has just done a raise ...so sp probably 1p :)

With POG now at record highs and climbing fast, I wonder if there is something in that seeking alpha article re lack of physical Gold? We may know more on Wednesday - the roll over day. Or more to the point, the delivery date.....assuming there is enough physical to actually be delivered!

Worth a read IMO. I bit too technical for me in parts but I get the general point.

https://seekingalpha.com/article/4359356-gold-short-squeeze-is-getting-physical-beware-others

This part was interesting...

Watch Out for July 29
The others are currently net long 127,455 contracts. On July 29, the active August gold futures contract rolls off the board. As Macleod points out in his latest Market Update, those that do not roll over to December by that time may be signalling their intent to stand for delivery. At least some portion of them. We will have to see. I am not saying that the gold price is going to explode specifically on July 29, though it might. I do not know. I am only saying rather that July 29 is a date to watch to see how a physical gold short squeeze might progress.

Yes, I did forget about those other two. Maybe before he reties he will do a five co merger and his legacy will be a co that rivals BHP Bilton :)

What a way to go out !!

Not too surprised he is also working for Galileo Resources. It seems that a few people are working for at least 2 of CBs three companies. Jubilee being the other one. I believe Xtract are / will be, using some of the processing equipment that Jubilee have?? In addition, all three websites are identical format.

That relationship may start to get closer - especially with Jubilee?

I wonder if the other two will soon employ Alistair Ford as their PR man to do the media work??

Completely agree CE.

Being too optimistic has caused much angst and disappointment here for many posters who have had too much faith in CB over the years. That’s why I’ve never been convinced that the mine would be built this year - despite CB’s predictions.

That said, if the sp is not at least 2p by December then either POG has collapsed and / or the mine is way behind schedule and nowhere near being completed. At this moment in time, and unless things change, I thinks its realistic to assume that by xmas, POG will still be above $1700 and the mine will be nearing completion – so 2p minimum by xmas seems reasonable to me – at the moment!

Lucky

I think Conkers was talking about 2p before we start to get any HR revenue and the build-up to it?? I can't see any HR income this year.

IF POG is still around $2K by HR production, I think your 6p target is very likely, in fact probably conservative imo.

I wouldn’t normally post a ceo interview as they just keep promoting their own company and say whatever helps others to buy in. Alistair Ford, please take note :)

In other interviews Frank G has expanded on his view and believes that as interest rates will remain very low for many years (the fed can’t raise as they have a massive debt bubble which will explode) the disadvantage of holding Gold (it doesn’t offer a yield), has now gone. In fact with negative interest rates having 0% yield is a bonus !

Secondly, the QE to infinity programme by the fed will, eventually, devalue the $ which will help Gold. Inflation at some point, must start to increase as the money supply would have massively increased. Many will run to Gold as a wealth preserver rather than investment. It looks like a perfect storm is brewing for Gold and we are heading for a major Gold bull run.

Due to the multiplier effect, a rising POG will see the profits of Gold mining companies increase exponentially, and therefore the SP. Even if this is all part right, POG looks highly likely to be on an upward trajectory over the next few years.

I havnt researched copper as much but my understanding is that there is a massive copper shortage predicted soon due to the number of mines that closed in the last copper bear run. TBH I see our copper plays as a bonus, especially as they are way off serious production and a lot could still go wrong between now and first income.

My concern is that because CB thinks POG will go down over the next few years, he may be tempted to sell manica and use all the money to invest in copper plays. I think that would be a mistake for the reasons above.

Frank Giustra rarely gives interviews, but when he does he calls it right. I’ve found him to be very astute in his observations and predictions. He’s not like Frank Holmes et al who always says ‘buy Gold’, and continually ‘talks their own book up’.

I’d recommend watching this as it concisely explains how we got here and what the likely future will be. I agree with his assessment, analysis and rationale.

First 10 minutes are the most salient imo but worth watching it all.

This interview was nearly a year ago and well before covid. He made many correct calls, so far...

https://www.youtube.com/watch?v=BnTHFGS58iE&t=1053s

POG all time high 1920 may go this week.

If not then soon. IMO

If production does starts in Q1 as I expect, has anyone worked out monthly HR income with POG at $2500 :)

I wonder if AF's appointment may now mean that we may start to get replies to emails and someone will actually answer the bloody phone !

OK that may be expecting too much :)