Member Info for Andrew4444

I wonder if he's going to be also doing the PR and promoter??

A welcome addition if that's also part of his job description.

I thought I remembered the name.

https://www.proactiveinvestors.com/companies/news/308506/alastair-ford-s-christmas-pick-of-the-african-miners-8506.html

I was obviously joking when I said POG 2K by end of the week. That said, they way things are going it may be 2k in the next month.

I suspect POG will be much higher then 2K by the time we get in HR in production. Unless we have a massive POG retrace (we might but unlikely IMO) I think those $500K a month estimates are going to look very very conservative.

I wonder if the SP will start to reflect this over the next few months? This is one of the very few junior miners that has not had a large SP increase due to ever increasing POG. Probably down to lack of sentiment / trust with CB and his countless missed deadlines / targets.

Many may be taking the view ' we'll believe it when we see it' . That may start to change if POG keeps rising.

$1860

CB will be surprised at that..

The way things are going today, POG $2K by end of the week, not end of the year :)

May be, may be not. But its almost certainly going to $2K in next 12 months and probably a lot higher.

I feel CB has really misjudged this. His prediction is that it will fall in 2021 and fall again in 2022. Hence his base case $1300 assumption in calcs.

On Saturday he was almost laughing at POG predictions of $2500 in the next few years. I think he is going to be very surprised.

Gixxer

CB’s comment that .... 'I am deliberately being conservative with my projections because a lot of factors are outside my control'…. Would ordinarily be laughable considering his previous forward guidance comments.

However, his claim that he is being conservative with projections, may, for once, be correct re HR income projections.

1. CB confirmed that the HR production cost was $600 an ounce. Obviously that’s much lower than AISC as we are not paying for mine build.

2. CB is assuming POG will be $1300 an ounce and is basing his calcs on this, hence his previous prediction of $350K to $400K a month HR income.

3. When TW worked out the HR profit to Xtract he came up with a figure of a minimum of $500K a month using $1700 POG and $1100 margin. CB agreed with the $500K figure and even said, ‘Every bit of that’. IMO, It now appears CB is more confident in now stating a higher monthly amount than $350K to $400K. I think that’s because the penny has finally dropped with CB re future POG. It appears he may now accept that POG will be substantially higher than his base case view and working assumption of $1300 an ounce. I think its fair to say he was, for once, being conservative with that projection.

If production started now at current POG $1815, monthly cash would be circa $700K a month. So I think free cash of $500K a month is very realistic and probably conservative. That would equate to a SP of circa 6p even with 557M shares in issue.

By the time the mine does get built (Q1 IMO), I think it highly likely POG will be even higher than it is now.

Hi James

Thanks for that. I did miss something then !

For the 25% to 28% claim, that can be checked by comparing

Total contractor alluvial gold production (equivalent ounces) with Explorator share of gold produced (equivalent ounces)

These two figures are always on the alluvial quarterly returns.

The % was always 25%, as per agreement, it then changed to 28% from Q2 2019 and has stayed that same higher % since then. Figures are available to check.

The % of POG requires more work and calcs to verify as you need to know the average POG over that quarter. I did this by taking a weekly POG for the 13 weeks over the quarter and averaging them to get the quarterly ave POG.

No one would have known about the better deal unless you looked ‘under the bonnet’ and did the calcs. It wasnt obvious. Surprised CB didn’t inform shareholders of this and use it as some PR good news.

Here’s some more good news…. Also in Q2 2019, it looks like there was a change in the % Explorator received from the Gold production. I may be wrong, but I’m not aware of CB stating that we had an increase but Explorator’s share increased from the agreed 25% to 28% (according to the alluvial results) and has stayed at 28% for the last 4 quarters.

To avoid confusion, I’m not talking about the increase Xtract got from Explorator’s share, but the % Explorator got from the total production. Obviously Xtract now gets 100% of Explorator share so Xtract now get 28% of total Gold production (100% of 28%). It was originally 40% of Explorator’s 25% share (therefore originally 10% of total production) so our % share of total Gold production has increased from 10% to 28% (before tax).

I’m surprised CB did not mention these two increases (from 25% to 28% and increase in % of POG from 85% to 100%). On reflection, Q2 of 2019 saw a significant increase in the % Xtract received. The reason why all this good news was not reflected in the income figures was because there has been a significant reduction in the total Gold production figures over the last 2 years.

BTTS

From CB yesterday

'We certainly don't sell local. We did at the start but that was because we could not guarantee the size of delivery that refineries wanted as a minimum.'

I dont know if that was linked into selling Dore bars?

Whatever the reason, we are definitely getting a higher % of POG now .

Hi James

That was my question. As CB confirmed yesterday, we used to sell Gold locally but dont now. It was reported by CB a long time ago that we got 85 to 90% of POG but that was when we did sell Gold locally at the start. It appears that's all changed and we do get 99% to 100% of POG now when selling it, but, as CB said yesterday, there are admin and transport charges to be deducted after selling.

After checking the actual quarterly average POG received against quarterly average POG, there is virtually no difference (over last year or so). Those costs CB mentioned would no doubt appear in the 'costs' column in the quarterly return.

What was good to know is that we will be getting the same 99% to 100% of POG when HR mining starts - obviously there will be the stated transport and admin charges to be deducted after sale.

Looking at the historical alluvial figures, It appears we are now getting the full POG from the alluvial Gold sales. We got 80% to 85% of POG when alluvial production first started and continued to get that % of POG up until Q1 2019 when that increased to 92% of POG.

From Q2 2019, thereafter, we have been receiving 100% of POG. Until I did some calcs today I assumed we were still getting a fair bit less than full POG due to local Gold sales. That was the explanation CB gave for the reason why we weren’t getting full POG.

To work out the historical POG for the quarters I have taken the weekly POG for each week over the 13 week period and averaged those readings to get the average POG for that quarter.

It’s interesting to note that we initially got just over $1000 oz in 2017 and 2018, but received circa $1600 for the last quarter. Our share of POG (up until last alluvial results released) has roughly been twice as much as the actual rise in POG ie increase in POG has been circa $300 an oz since alluvial started (up to last alluvial results) but we have received circa $600 an oz extra due to higher % cut of POG.

The 13 week average for POG over Q2 was $1712, an increase of $130 over last quarter, so assuming Q2 production figures are reasonable / typical at circa 300 oz, we should be getting a decent amount for Q2. Probably around $500K income next quarter (not profit).

This amount over next two quarters, plus CIB, should be enough to keep things ticking over until HR income comes on stream in Q1. I can see why CB stated yesterday that he is confident alluvial income will meet the gap until HR income comes on stream. In addition, hopefully, we may also get an increase in income from the second alluvial contract and Free Gold by Q4?

CB said yesterday that he is confident that the alluvial income will bridge the gap until HR income comes on stream.

I believe that is has also been reported that CB said, last month, that there is no need for a placing for the foreseeable future - which must mean, at least, for the remainder of this year.

Bullet Points (IMO)

CB saying Hard rock mining starting by Xmas is his best case estimate. That's looking very unlikely though as he's talking about 5 months production from August (at best) or September. Subject to borders opening. So Mid Q1 now looks likely.

He didnt seem very optimistic that the Second alluvial contract and Free Milling contract were imminent. I'm not saying we wont get an RNS on Monday confirming agreements, but he has moved from saying 'dotting the i's and crossing the Ts' to I'm working on it. So I see no reason to change my Q4 prediction on these contracts.

Salient answers by CB (IMO) below: Others will have different opinions.

CB. Back to the corona virus that is the dictator. Big items of equipment are locked down in South African factories. We will also need a large tower crane. We can start the tailings dam preparation and excavation for civils. This is ongoing. In essence, 5 month from end of lockdown should see us in production.


CB. I think that South Africa reduced lock down measures a bit prematurely. People in SA are blaming the extremely cold weather which is typical for this time of the year. We are hoping that by September borders will be open for goods if not people. At Manica we can do civils and a lot of preparatory work prior to delivery of the equipment.

CB. which border is that because the traffic seems to be one way, cathodes from Zambia and certain other metals from adjoining borders. Our understanding is that queues are horrendous and trucks are being turned around. Key question is the driver he has to be quarantined after arrival in host country
all very murky and difficult

QUESTION. Colin, apologies if I am misinterpreting you but you seem much less optimistic on getting a contractor with free milling capability than previous podcasts?

CB ANSWER I am in the process and it would be most unfair to shareholders to express optimism until a deal is concluded. As I said I am busily working on it.

Finally, if CB wasnt a mining executive, he could have been a politician or defence lawyer. He would have excelled.

The reason why I keep saying CB doesn’t meet his timescales is because many seem to forget this and take the view that….
“ just because he has missed the last 20 dates / targets it doesn’t mean he’s going to miss the 21st”. I guess we all like to believe what we want to believe.

My supporting evidence that he wont meet his latest timescales is the previous 20 missed deadlines. Others’ supporting evidence that he will, is that CB said he will.

About 2 years ago, and for quick ease of reference, I started to compile a spreadsheet with the condensed and salient points of what CB had said at meetings / pod casts. Looking back at my notes, and at his timescales, it really highlights the number of missed deadlines and failed targets. What is noticeable is how an expired deadline is replaced by a new one, again and again. It’s as if the previous forward guidance didn’t happen (no reason or mention of the delay) and the latest is the first time he’s ever given timings on that subject.

Looking at the lag factor I’d say add 6 months on to his original timescale and you will be nearer to fact than sticking by his original timescale. Of course, you shouldn’t have to do this but it may help to avoid disappointment and frustration if you do.

For balance, I do expect the mine to be built (and other income to come on stream) which means substantial increase in income which means a substantial increase in SP. I just hope my Q1 HR income prediction wont start looking very optimistic over the next few months.

To clarify

The first alluvial contract (by river bed) will now continue and not stop by end of the year as previously stated. Probably change in contractor's decision is due to POG. And new additional second alluvial contract for terraces and free Gold mining will start in Q4 (supposedly sooner but my guess is Q4).

Therefore we should keep getting income from first river bed alluvial contract and not have to rely on any other new and additional income source

Lucky

My understanding is that the alluvials will now continue after this year, hence the second alluvial contract is being worked on. Unless I'm mistaken?

As I've said before , I never thought HR income would come this year, but I dont see why we wont get Free Gold income and second alluvial contract starting by Q4. So we should get income before HR starts and before the end of the year....I think.

significant issue should have been significant event

TW now holding is a significant issue. Not because TW is a great stock picker, but because CB will not have wanted the bad publicity and coverage that he will surely get if he wasnt going to deliver. Its one thing ignoring the rants of a few BB members but CB wont want TW doing a number on him with wide circulation.

I would think CB and TW , hmm 'had a conversation' before TW invested, and TW may know what's coming around the corner. If I was CB, I would not want TW anywhere near this share if I thought it was all going to go wrong.

All of course IMHO