Member Info for Andrew4444

We should be getting alluvial update very soon?

I wonder if this will also be a prompt for CB to update us on the second alluvial contract and free milling gold? The free milling gold at GF should be well advanced by now??

I hope.

Hamster

In answer to your question....because the commodity price at the time was so low that it was not economic to mine. AA then focus on the other commodities that are at an economic price . They keep a claim on the less economic commodity licence so they can go back when that commodity price is economic.

I bit like how the price of copper has massively increased over the last few years and why AA retained the buy-back clause when they sold their uneconomic licence.

I think it’s very encouraging that such a respected and long standing mining journo as John Cornford has taken a position here.

He must see many false dawns in this game, so I think he has come to the conclusion the fundamentals here are looking very good for a significant rerate.

Also, I also think his methodology for determining the anticipated future SP must have some credibility and be robust. Obviously the assumptions that he uses will change, but his methodology should give a good indication of the potential sp and can be ‘firmed-up’ as and when we get more info.

His 40p estimate in January was for 80% AA buy-out assuming, POC $8000, 2mt contained copper, 3% margin buy-out.

That may need to be revised!

Hello CE

We dont have to take the 20% option and can sell nearly all of the licence. The 20% is an option. Because CB has said before he wants to 'put a big bow around it' and sell it I am making the assumption he will want to sell all of the licence.

In the unlikely event he wants to keep 20% of the licence then SP will no doubt reflect the massive additional income we will get from 20% of the mine.

I'm sure CB wouldnt go for the 20% option if this was going to result in a significant reduction in the SP.

Steve

I did a similar calc over the weekend but used different assumptions. I determined the mineralisation as 900,000,000 tonnes but your 700,000,000 maybe more accurate as the resource shape is probably more of an ellipsoid shape as you said, not my cuboid estimate.

I used 0.2% cu as worst case scenario, but I think 0.35% cu is more realistic esp after todays interview.

So that’s 2.45Mt @ $9000 POG x 3% buy-out price =$661,000 = £476,000 MC

I’ve revised the calc to use 825M shares as this is fully diluted and not just the 725M just in issue.

=57p (ex African projects) Very near your 60p estimate

As others have rightly said, lets keep it real. Those assumptions and figures look pretty real to me!

7.37p £5K X-O

The Frog

I take your point re more drill holes could potentially means more dilution so in the case its maybe best to focus on racecourse. However, we should have at least £600K a month coming fcf from Fairbride + Eureka+GF+alluvials mk2 in the next 6 months, certainly by the end of the year.

If it wasnt for that additional income then I would say its a no brainer and just drill out racecourse only to get to 2mt. I would be very annoyed if the value of bushranger less racecourse was higher then racecourse alone and we end up 'giving away' most of bushranger asset to AA just because we trigger the 2mt buy-out early.

£300M to £400M is great but we may find that we have given away more value at bushranger than the value we could get from focusing on Eureka and Kalengwa . And the other Bushranger assets would be from a buy-out and do not require a long duration to build a mine as per Kalengwa and Eureka.

In addition, maybe the additional income by end of the year could enable us to progress africa projects and keep drilling other deposits at bushranger? You can do a lo with £600k fcf a month !

All speculation, and an alternative view.

The Frog

Re your last para where you ask the question if it’s better to drill other deposits or try and get to racecourse to 2mt jorc asap. If I’ve understood Dcat correctly, he seems to have already answered that and confirmed that once we hit 2m jorc, AA can exercise the buy-out and then get all of any extra copper value in the other resources.

I assume I’ve understood Dcat correctly?

If so, we should not try and get to 2mt at racecourse but keep just below that threshold and drill footrot and prove that up before we hit 2mt at racecourse.

In the past there has been some debate whether the AA buy-back agreement covers just racecourse or all of the licence EL5574.

I think the wording in the agreement is, possibly, a little confusing. It states.

Anglo Buy-Back Option To Monetise Project Value
Racecourse Deposit - EL 5574 1.
EL5574 was purchased 100% by ProspectOre from Anglo American (“AA”) via a Sale and Purchase Agreement 2.
AA have a “buy-back” opportunity, giving ProspectOre a mechanism to monetise exploration success:

If the agreement was for all of the licence EL5574, then why specifically reference racecourse in the title heading? Why not just state the licence only?

If the buy-back clause does cover all other deposits under EL5574 licence, then it could be that this buy-back only applies when each individual deposit within EL5574 hits the threshold of 2mt contained Cu Eq?

The reason why I think the buy-back agreement wont need to be exercised for all the licence (if racecourse gets to 2mt) is because it will be impossible to value the whole licence and other deposits, without drilling. By the time we hit 2mt at racecourse, I doubt any or much drilling will have been done at say footrot, or the other deposits. Footrot could be worth the same as racecourse..... or nothing.

AA will surely want to wait before giving other deposits a value?

But are AA, or indeed Xtract really going to want to wait until all the deposits have been drilled extensively before a buy-back takes place?

So my gut feeling is that if / when racecourse gets to 2mt, this deposit will only be valued re buy-out and the other deposits will only be valued on a case by case basis IF they get to same 2mt threshold?

Obviously that’s assuming the other deposits are within this buy-back agreement and it is possible they are not and it is just racecourse – hence the reason for only racecourse being referenced in the subject heading of the agreement.

My best guess is that this agreement does apply to all of the licence, but AA may only need to exercise the buy-back agreement on a case by case basis for each deposit as and when they hit 2mt threshold.

Of course I may be wrong.

..........and the number of share options available to be exercised (which I don't know)........

Ella

Good point.

I've looked back and at my notes and on 5 October Align Research stated that we had about an additional 68M shares (warrants / options) against fully diluted holding. I believe this has now increased by about 30M to £98M.

I therefore think its more realistic and accurate to use fully diluted 835M as shareholding rather than 735M in issue.

So that's a 12% reduction against previous valuations.

Hello CE

I think you have missed the point of my post.

I agree with your current valuation of xtract and the sp. But I was trying to determine what the sp could be based on certain reasonable assumptions (which hopefully will happen reasonably soon). Same as you, and others, have done many times before in the past. I used the word ‘assuming’ in my post a few times which implies something that may happen in the future.

I wasn’t try to claim that the sp should be significantly higher than it is now.

You have come up with a valuation of £350M to xtract but this valuation can only be made if you are also making an assumption. Your assumption is that xtract will prove up 2mt of copper.

I think your valuation seems reasonable, but IF that happens then I cant see how the sp wont rerate to a value way over 30p.
It remains to be seen if these assumptions happen, and therefore if the sp does reach these higher levels. But I wasn’t suggesting the sp should be there now.

Cygnus

I've started to come to the same conclusion of ' if it sounds too good to be true...etc' and that is why I asked for corrections.

The post was not intended as a 'look at me arnt I clever' or ' this is going to be great and we are all going to be rich'. It was more of a request for critical analysis and debate, in short..... 'what have a got wrong here' ?!

Maybe I'll realise what I've got wrong in 3 months time when we have more info and I'm looking very silly with these sp values.

But at this moment in time, with what I think I know, something has to go very wrong here for this not to go way above 30p

(And I do mean way above 30p) !!

We'll see.

Lucky

By my calcs 2 million tonnes at $9000 at 3% buy-out = 53p (for 100% buy-out not 80% though)

Not too sure how you came to 98p unless I've missed something ?

Hi Ella
Yes you may be right that the LxBXH to get volume may not be accurate as all the lengths stated may not be correct. We need more holes to br more certain. I deliberately was under on mineralisation lengths - to be on safe side.

But even if it 0.75B tonnes at 0.2%, that's 1.5mt.

We need more drilling to accurately determine volume, but we may find more drilling increased volume !

If I am over with the 1B tonnes estimate, I think I am under with the 0.2% cu eq.

We are going to be very unlucky not to get to 2mt imho.

Although we don’t get know exactly what the grades will be until we get assays results, I’m sure the grades will be, at the very least, reasonable. In previous interviews, CB has said three things that have confirmed this:

1. Copper grades are very similar to other porphyry’s in the area.
2. Not worried about the grade, it’s all about the volume.
3. We know these systems are between 0.25% to 0.45% (the most recent and pointed comment in the share prof interview 23 Feb 3 min 10 secs )

So if grades are not within the range implied by CB or are very poor, then his credibility will be shot. Just like with his ‘No news is good news comment’ I’m sure he understands the negative impact of him making these major statements and then being shown to be wrong. So I’m sure the grades will be, at least reasonable and consistent with his comments.

Imho the lowest possible copper grade that could be classed as consistent with CB’s comments would be 0.2% Cu Eq. (average)

From the first three drill holes so far, I think we have about 1 billion cubic tonnes of mineralisation (hole 1 approx 940m x hole 2 approx 560m and x hole 3 approx 665m) x 3 tonnes cubic mtrs

Happy to be corrected if anyone thinks this is wrong.

So, If we assume the average Cu Eq is 0.2% (including any gold) then total mineralisation has to be 2Mt minimum (1billion x 0.2% Cu Eq)

I believe the 0.2% Cu Eq is the lowest it could possibly be to ensure any consistency with CB’s previous comments re grades. Imho it will probably be higher and in the range of 0.3% to 0.4% Cu Eq (average). This is more consistent with CB’s previous comments on grades.

Assuming:

2mt contained Cu eq.
$9000 POG
3% Buy-out (Cornford in his article said that was conservative)
0.72% conversion USD to GBP
735M shares
= 53p sp (ex Africa projects)

I can’t see how we are going to get lower than 2mt Cu Eq but even if it is, say, just 1mt and also assuming much worse figures of $8000 POG and 2.5% buy-out – that equals 20p sp

Of course if Cu Eq grades are a more probable 0.3% to 0.4% (average) and by using a more realistic POG of $9000 and less conservative 3.5% buy-out, you get a, hhmmm a slightly higher SP :)

I won’t work that out the SP using those more likely figures, otherwise I’ll be accused of ramping!

Of course AIMHO
Happy to be corrected on assumptions or workings

I wonder if Lloyds view on this is typical of many potential investors and could explain why the sp is not higher? A cursory glance at this may not show what is really here and there may be many ‘Lloyds’ who have not done their research.

Hopefully after assays results, Lloyd and many others, will understand why many on this board consider 12 month 30p valuation as being conservative.

But similar co don't have one of the biggest copper / gold prophy's in Australia.

Tbh I don't think you are aware of bushranger and are trying to compare apples with oranges.

I would like to know your valuation of racecourse?

I've seen a few valuations of 20p to 30p here. in 12 months. That could be accurate.

However, imho a lot will have to go wrong for it to only get to that level in 12 months.

AIMHO

'this' being the £60K today

.......this seems to be the largest for quite some time. Is this correct?....

Iceberg

Yes and No.

If you consider he 'bought' shares with deferred salary payment in Dec 2017 then he 'bought' £131K of shares then. So this £60K isnt the largest purchase.

Tbh the £131K seemed to come from no where and not sure anyone was aware he was owed this money as salary.

I believe It happened after he took over as Exec chairman, so you can draw your own conclusions!

So in reality I think this is his largest bonafide purchase......by some way.

CB's previous buys in Xtract

Date/ number / cost
Mar 2015 2,418,231 £10,000
27 Dec 2017 4,614,035 £131,500 (deferred salary payment)
2 Aug 2019 1,000,000 £11,100
11 Oct 2019 1,000,000 £10,900
25 Nov 2019 500,000 £5,200
26 Nov 2019 500,000 £5,450
27 Nov 2019 500,000 £5,400