RE: Buy out2 Apr 2021 15:34
My opinion on the buyout options:
AA only have the OPTION to buy once we hit 2mt Cueq at fair value (an assumption form one Cornford article is that it would be at 3%). Or the option to buy on a decision to mine.
AA can pass on the option to buy out at either of these points. XTR have to sell at fair value at either of these points.
For the first option to be triggered we would have to present a proved up Jorc resource in excess of 2mt . If it was presented as 2.6mt there is no doubt in my mind that 2.6mt x 3% would be the calculation for valuation.
Similarly, if we took our time, drilled lots of holes, increased the volume of the find by analysing the porphyry sysem, got a bit lucky with size and grade from here and a JORC was presented at 4mt copper, then AA would have to pay 4mt x 3%.
It does therefore make a lot of sense for XTR to keep cards a little close to the chest, keep drilling and keep proving until we are confident we can Jorc the large majority of the system.
It may well be the case that any major such as AA or Newcrest would NOT make any major investment or buyout without Jorc level proof. Thst's something I'm going to do a bit more research on. (ie any large scale pre jorc acquisitions).
That could work in our favour.
Honestly if they came in with an offer of £150m for the whole company on tuesday, how many of us would vote yes to that? quite a few , and shareholders would , I think, miss out on a very large amount of upside.
So taking time over this, drilling more holes, expanding the likely scale of the find, maybe even raising a bit more money in 4 months if results continue to be so good, so that when we finally are in a position to present that Jorc to AA and the rest of the world, its as big a number as possible.
I guess the closer we get to formally producing a Jorc and the size of the prize becomes apparent then the more likely that a major would take that bit of risk and buy us out.
It genuinely seems that even Colin doesn't know just how big this find is yet even approximately, but he's very confident that its over 2mt and very likely a lot more if we are drilling 1000m of mineralisation in a new direction.
So take all the time needed, let the majors begin to slaver, jorc the largest find we can even if that takes 9 months and off we go.
Sign In
Follow the stocks
