Member Info for CaveatEmptor

Looking at the buys, it seems that I was not the only one to like what CB said in the podcast...
Finally, good things could actually be happening for this share at long,long, last?

Looking at the buys, it seems that I was not the only one to like what CB said in the podcast...
Finally, good things could actually be happening for this share at long,long, last?

Good, solid performance by CB and answers a lot of questions.
KPZ is a conglomerate of businessmen that own a massive licence, of which our concession is only a small part. So KPZ couldn't handle production on the whole licence, even if the were interested in doing it.

The current XTR strategy is to have between £300K-£500K per month income from 4 or 5 individual operations, of which the KPZ deal is the second operation after the hard rock at Manica.

First income from this deal is expected in approximately 2 months time. We will handle the processing of the dumps material ourselves as the maths are very favourable for us to do it, but will farm out the mining of the hard rock, whilst still keeping control of the processing. The whole process will be self financing and grow organically so as not to cost anything from an XTR perspective, but will return considerable value to shareholders.

So, by March next year the plan is to have between £7M and £12M per year net income from the first two operations, and look to develop another 2-3 operations, partially financed by this income so as to get a target net annual income for the company of around £20M per year.

That would give us a new target SP of at least 25p!

We shall see...

Sorry, I think I am still missing the point. SINO is the best thing that has happened to XTR in the last 5 years!

Perhaps you mean MOZ?

I wouldn't worry about KPZ if I were you. They get to pay off their debt in less than 2 years then make about $9M a year clear profit and will own a sizeable chunk(2%-3% would be my estimate) of XTR, to boot. That alone could turn their $200k into something like $1.5M over the next 12-18 months, if all goes according to plan... and all they have to do is sit back and let it happen!

And of course, the higher the SP is when the shares are issued to KPZ, the fewer they will get and any small dilution (3%-4% at today's SP) will be even less...

The mining company said it has signed a memorandum of agreement with KPZ International Ltd and has conditionally been appointed as contractor to oversee and commence initial production from the Kalengwa dumps of 1.34 million tonnes with a potential to contain 25,000 tonnes of copper metal.
Looking ahead, Xtract said it intends to start a simple ore sorting programme, building up to a more significant ore processing operation within the next eight months, with an annual production target rate of 6,000 tonnes of copper metal.

So, at $6,000 per tonne, that means $150M just from the dumps over a 4 year LOM based on 6,000 tonnes per year.
That means about $36M worth of copper produced each year, before proper hard rock mining starts.

If Cu is sold at a 25% discount that still leaves revenue of $27M per year.
Mining costs should be low as the ore is already out of the ground and been piled up in dumps awaiting hand grading and then simple processing. As the hand-graded ore will be sold first to produce immediate cash flow in order to finance the processing plant that should mean it is self-financing from an XTR point of view. - KPZ, on the other hand could take several years to pay back its debt.

I can only surmise that it is better financially for KPZ to hand the contractorship over to XTR as then they may be able to keep a larger proportion of the income rather than paying it all over to their creditors?

I agree that it looks like a very good deal for XTR, with the potential to provide significant fast-track income and a good question to ask CB regarding what KPZ get out of it.

Let's see if the deal is confirmed following due diligence...

And only 3% dilution at the current price - less if the SP increases...and a tie-in on selling the shares for up to 24 months.

Looking better and better the more I look at it...

"On commencement of production, the Company as the Contractor, will be entitled to a monthly payment equal to 33.3% of SPV's net profits ("Xtract Profit Share"). Xtract has estimated that its capital costs to act as Contractor are up to USD 1 million, which Xtract intends to fund from its 33.3% share of SPV's net profit from processing and existing resources."

And immediate access to dumped ore, so immediate income stream...

Looks like a cracking deal to me - certainly a forte of CB...

I am not expecting the alluvial income to have moved much in Q2, we know the grades are lower now that all material is being processed.

However, if there is a particularly rich patch then there could be a spike in income - I would look on that as a nice bonus, but not something to be expected, as this may lead to disappointment and downward pressure on the SP.

As long as the alluvial processing continues to produce an operating profit for XTR then I will be happy, particularly if there is a decent overlap between alluvial and hard rock, as this means that all hard rock income, when it does eventually arrive, will drop directly to the bottom line and then a re-rate in SP will almost certainly follow.

ATB

We were given to believe, at the AGM, that the directors have plenty of skin in the game and that their investment is well into 6 figures...

Apparently they have far too much insider information now to be able to legally buy any shares... However, if they were to make that information public, then there would be no excuse.

Looks like the MMs went out to lunch then forgot to come back?

Maybe they will have a better day tomorrow...

Hello CC,

I'm not sure I would go that far just yet. but I would go so far as to say that the chances of reaching 6p once hard rock production has started is now much higher than it was a few months ago.
I like the fact that the contractor has shown good faith by placing the order for a CIL plant - that at lease shows more commitment than our previous hard rock collaborator!
Of course, if all goes according to plan then the SP could end up being considerably higher than 6p, but I think it is a bit early to say just how high it could get.
My rough calculation that shows a selling price of 15p per share for Fair Bride was really a best case scenario - reducing the production costs to $500.00 per Oz and assuming a POG of $1,400. Of course the POG has now dropped below that price today and there is no guarantee that CB's estimate of $500 direct cash cost is accurate, so all a bit pie in the sky at the moment IMHO.
However i am happy to keep my eye firmly fixed on that first target of 6p...

ATB

Hello bob, Me too!

Having made my last post, it occurred to me that I have never done the maths onthe revised figures i put in brackets.

If we take the 215,293 recoverable oz that the DFS is based on and use $500 per oz production cost ($556 in the DFS) and use $1,400 as the POG ( $1,262 used in the DFS) then an extra $194 profit per oz would result - so would add about $42M to the bottom line, so effectively doubling the NPV - this being the case the selling price for Fair Bride would be the equivalent of 15p per share - seems too good to be true, so i must have gone wrong somewhere?

Hello Bob,

I think that many would say that ceiling is quite optimistic.

Most posters seem to think that an SP of about 6p is now realistic once commercial hard rock processing can be seen to create reliable profits.

Of course, if there is movement on any of the other company assets, or an offer put on the table for Fair Bride - according to the DFS the NPV is $42M, but $11M has been saved on the processing plant, so that would give a revised NPV of about $53M. So Fair Bride is currently worth about $36M based on 80% of NPV at a 15% discount ( more if you take the POG as $1,400.00 and all-in production costs as $500.00 per oz) - $36M would represent about 8p per share - so maybe not so optimistic after all...

And also the fact that, whatever his motivation, everything Oilplayer says is at least true, so is not trying to mislead anybody...

Company currently only paying for 201, other compounds are virtually free rides...

At present cashburn almost 12 months of cash, including a VAT rebate.

No dilution needed before early 2020, and then only if a partner for 201 has not been found...

We were told exactly what the sold asset was at the AGM. Nothing to do with VAL compound development.

Not true .

Trades at 14.29 and 16.14 to name but two...

It's great to be positive but it also helps if you are honest...

ATB.