The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
I am sure Sir Mick Davis' outfit Blue Vision will have done many months of DD before investing. Sir Mick has been appointed the Chairman of FAR. He will know the risks involved. Kazakhstan is distanced from Russia on the Ukraine as the articles posted by list2309 point out. As I posted yesterday the Kazakh army support NATO and the US in peacekeeping roles.
At this point in the development of FAR I don't see a major problem. By the time funding is required I think the war will be over. This year is drilling and the BFS the current situation does not affect that unless the war spreads - if it does our shares will be the least of our worries!
Good point LB21, maybe we shouldn't buy anything from Germany who get half their gas from Russia (are they in bed with Russia? - YES!- The RNS stated they get some supplies from Russia which are available in Kazakhstan if needed!
I bought some recently and on the drop today. I doubt the Kazakh army will get involved in the Ukraine. According to Wiki, they train with NATO and have supported UN and US peacekeeping forces. I am not saying the s/p won't drop further though!
I don't believe AA care whether they buy Bushranger for a billion or 200 mil, what a major is concerned with is a viable project - if CB gets his huge project proved up it could be 50 years plus LOM and 100's of bn's in value over that period . a bn is small change to AA they have $30bn revenue per annum. Also AA made a commercial decision to sell Bushranger cheaply - they decided it was not worth the effort/risk to explore further - they have a win/win - XTR prove it up they still get to buy it back and do what they want which is long term profit.
That may normally be the case schlemiel. However with Racecourse there is an initial target of 2 mt of Cu which could trigger a buyback by AA. Also Racecourse is a huge low grade prospect so infill drilling is highly important to the economics of the project.
$250mil is not to be sniffed at is it?. CB doesn't seem to be thinking about a quick sell and I don't think the majors work like that they want to know what they are buying CB has stated he wants to prove up a bn tonnes+ and we know the BoD are incentivised by a 1-2% sell fee .
I think another drill campaign next year could do that, depending on how Footrot works out.
You never know they may find higher Cu grades or a decent amount Au to the south east, it's all to play for!
I concur CE - this is probably going to be one of my best investments ever also.
As CB has said you need 15-20 mil tonnes of ore a year for a decent return with the sort of mine that could be built at Racecourse. Obviously the bigger it gets the price goes up but probably not proportionately - a larger operation with go for way more than a smaller one i(in proportion) due to the better economics of a truly large scale mine - So if CB does get to a bn tonnes + Cu ore the price paid will be way more than for the 2 mil Cu that triggers the potential AA buyout..
Going off his podcast a couple of weeks ago he inferred it would go for more than $400 mil and that was for $2mil tonnes of copper - he is aiming for 400mil+ Cu (1bn tonnes of ore @ .4%) so that would be a mine life of 50 years as opposed to 25 ish , the longer the mine runs the better so lower grades can be mined economically towards the end of the mine life as all capital expenditure has been recovered.
Obviously a long way to go and there are many risks still, but the potential is off the scale for a junior.
Iceberg I am impressed with your insight regarding the geology - however I feel once the placing shares have cleared ( placing @ 5.6p) there will be a strong rise when the market sees all the daily gains (as per last few days).
Racecourse is not easy to understand to the average investor and the "apparent" low grades in the early drill results may have caused the sell off from 9p. I think Birdy will model 2 mil tonnes Cu this year (though won't JORC it yet), announce another drilling campaign next year and go for a billion tonnes of Cu ore+ - If Footrot and the other SE anomalies are as expected I see no reason why he should not achieve this and have 4 mil tonnes (ish) Cu by end of next year. I think 10p+ by Xmas and 20 -100p by 2023 depending. I cannot see XTR @ 3.3p again - I bought at 5.6p after the placing and all the way down to 3.5p and then up to 5p - still way under placing price - right now XTR is still a bargain IMO.
Having watched all the CB/team podcasts and researched all the available data, IMO they will hit in excess of 2 million tonnes of copper in the current drill program. Though he seemed reluctant to say it, he did infer in last Wednesday's podcast with Zac Mir, he is aiming for over a 1bn tonnes+ of ore at .45% Cu ish, the site is open to the NW and SE, they are talking of potentially 6km+ open pit - Having looked at the data I think this is possible. The market has clearly not grasped the potential size of Bushranger.
For a company the size of XTR this is off the scale.
AA revenues last year were $31bn - a bn to pay to XTR to buy back this project is pocket change to them, but a quid a share to us!
Been buying/selling MCRO for a few years, it seems to be traded by II's regular as clockwork - now a low, but back up to £4.50 in a couple of weeks - if not wait and it will happen. One day it will be £20+ or bought out.
Discounting Bushranger and Eureka CB said in today's podcast that they are on 23% of the revenue from Manica and he expected production to be around 30,000 ounces per annum at $1800 per ounce that's nearly $12.5 mil revenue. That alone has to (at least) double the current s/p add in the other projects just coming to fruition and a multibag is on the cards.
I really do not understand the current s/p - not complaining though, just buying!
I have posted this before, it gives a very good account of the discovery and mining of Marsfontein and may give some idea of the potential of Thorny River including revenues and costs: https://www.thediamondloupe.com/sites/awdcnewswall/files/attachments/marsfonteincasehistppt2005-190228162000.pdf
Seriously Angel it depends on dilution prior to production and value of diamonds mined - if it is similar to Marsfontein, it will be mined out in a couple of years but pay back the capex quickly - so BOD may generate $50 mil profit per annum but only for 2 years - it's tricky to say. Presumably they would pay the profits out in Divs and keep some for the other projects - How do you value a company that makes huge profits but only for 2 years?
Hi Echo, My take on asset sale is that it would need to be proved up more which would take longer and then you need a buyer - Thorny may be rich but it is on the small side for a major to take on and though it reduces the risk to BOD it would value the asset way below its potential if mined. The Chairman has stated he would like to actually mine diamonds and IMO this is the best opportunity - due to the fact it is small and potentially very rich (based on Marsfontein) - low capital requirement and fast return IMO it is one BOD could do whereas the other world class licences/assets the company have are going to be way out of reach to mine. The other knock on effect of mining Thorny would give BOD a much larger market cap and that in itself would attract II's and the ability to debt finance the larger assets going forward.
The options are:
1) Raise finance to mine it - 100% profit!.
2) Get a JV to fund it and mine it - lose 80%?.
3) Take a royalty and allow another co. to mine it - lose 95%.
My personal choice is 1) SA is cheap to mine in,there is a lot of equipment available - $2-3 mil would do it if it's commercial IMO - based on Marsfontein if Thorny is only 50% of the size it will still be $200mil+ at today's prices and the technology has moved on as well with XRT.
IMO BOD need to grow some and go for it!
Sorry wrong link https://www.youtube.com/watch?v=uzSm6ayRNjQ