Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Hey Dani
Theoretically you would think a higher Cu price would lower the economic cut off grade but generally it comes down to the selected or required processing method used with the goal of giving the least dilution or extracting the cleanest concentrate before a different method of extracting the copper is required
Methods generally vary as the grades reduce. Hence why a high grade resource tends to have a higher cut off grade.
So many different factors can determine the economic cut off grade, but will have its lower limits as methods to extract also become increasingly more expensive the lower the grade.
Spin? Just offering a rational explanation based on what has been put out and said.
My understanding is that what started out as a small scale ready to mine development project that revenue will pay toward a small sustainable mine that its cash flow will pay for to increase LOM
After evaluation the project has turned into a much bigger proposition that now first requires an initial major exploration programme that needs paying for likely through a fund raise.
CB has also said that any fund raises will only come as a result of major exploration.
There was talk that the potential scale of operation could or will warrant it ls own processing plant…..Now consider Manica’s development.
Kakuyu does not have a defined resource so exploration is potentially starting from scratch to create any kind of business case.
It could take far longer and cost more to monetise than the licenses positioned in the highly prospective western foreland where M&A activity will intensify.
Just for info
- “Samples sent to external consultant for metallurgical testing -why no news on this?”
From Feb 23 presentation
-Mett test work was completed through Jubilee metals.
This before agreement would have been made with refinery, indicating positive results were returned for compatibility of ore.
Hi Ben
Not to overlook from the FeB ‘23
Corporate presentation on Kakuyu.
-Agreement ‘reached’ with Kabwe refinery for treatment and sale of ore.
-external contract miner engaged.
-Geological contractor and grade control team employed on a permanent basis.
-Full-time in-house mining engineer employed to oversee operation.
Clearly then states that regional exploration is underway targeting further life of mine extensions.
So you would be led to believe that operations have been underway.
However, with the priorities lying now in the western foreland, it may be that a mining operation at Kakuyu that was stated that the project would be payed for from its cash flow, may have been shelved for now due to no guarantees can be made at this time toward fulfilling project development from outcome of any significant discoveries to continue a sustainable mine. Best to wait until they can be fully committed.
Alternatively, Colin also said it would be reckless to start a mining operation without first fully understanding the geology.
Take your pick on theory, but the project being shelved is almost definate imo with the projects exclusion from the latest corporate presentation. But it certainly doesn’t mean it is another duffer.
A very notable point from your comment Banzai - “Most of these outsource suppliers get fully paid when contracts complete.”
Yes, in hard cash and not in shares!
Manica disposal payments will allow them to prioritise the potential and prospectively of the Zambian licenses without dilution, which now the disposal has been passed it will see the phase 2 earn in of a further 3million ‘if warranted’ also be funded from treasury. (RNS’d)
Very positive projection going foreword.
Looking across the various projects Jez, it would appear any news from the company in relation to progress or planning is at the mercy of the timescales of various independent consultants.
Appear to have outsourced technical studies with the exception of the Western Foreland licenses to concentrate all their manpower on. News from here next, could be the only one they have actual control over.
BR may have 3 different consultancies working on the optimisation, maybe a fourth later if they do more drilling.
Optimal mining, Lycopodium who are processing experts and, likely an alternative pre concentration tech being trialled. So could literally be next week or another 6 or 9 months.
Silverking data has been referred to an external geophysical consultants only last month to refine targets for follow up drilling. Could be some time before any action plan is announced.
Kakuyu parked up for now as warrants major exploration??
Hi Andrew
You may well be right. I am of the understanding, an eventual valuation will be on the projects NPV, using current or hopefully updated mining scenarios including being based on a smaller mill and plant with copper prices ranging across all scenarios from 8-11k. These ‘will be’ the copper pricing ranges used that NPV will be determined from, and eventual valuation will be based on, not 12-15k!
However, my only reservation is that the economic model being only supported at conceptual level when complete, the economic model will not be robust enough to use a discounted cash flow model across the projected LOM.
Away from Valmin code and on global market, a DCF model can usually be used toward a higher valuation than one determined by Valmin. But have a feeling it needs to be supported at pre feasibility for DCF to be used. Need to look into it a bit more. Still early days.
Copper spot price is not going to have a direct effect on a valuation for BR so it wouldn’t matter whether was sustained above 11k or 12k or whatever price. Is more likely a conservative estimate of 10-10.5k will be used for LOM.
Capital and Op costs however will, as they come down with an improving economic climate and optimisation. These will directly affect the NPV ongoing.
Nothing will happen until the fully updated conceptual study is complete which may include an updated JORC if they decide to increase the resource to the NW toward improving the economic performance of the financial model. They will want to include every bit of defined resource in the JORC as this is what anyone will pay for on top of the projects NPV.
One minor thing I picked up on from one of the other of the group’s podcasts was CB stating they ‘have’ to report on each drill hole under AIM disclosure. I questioned this approach to marketing in an earlier post suggesting a saturated PR drive may be indicative towards a fund raise coming. So that simply may not be the case if reporting on every hole and associated technicals is seen again.
No doubt due to the volatility of AIM stocks with regs in place to protect investors from wild swings in share price.
Roast PR are using this new ‘preferred’ format with Charles Archer asking the questions to cover each of the companies in the group. Should be Xtr to follow to hopefully start reporting on the new campains particularly with updates on older ones too.
AFP podcast yesterday with Colin and Martyn Churchouse discussing AFP in general but reference the whole group of companies. Western Foreland chat is quite XTR relevant, with a couple of interesting comments, first on their Ongombo project that ‘could be’ a hint at XTR contributing toward financing a small mining operation start up. A reminder he mentioned Ongombo by name at GM as a further project the company are looking at.
Other comment was BHP offering a US$1B to Ivanhoe for their DRC copper project in the western foreland in ‘21.
https://podcasts.google.com?feed=aHR0cHM6Ly9hdWRpb2Jvb20uY29tL2NoYW5uZWxzLzUwNjQ0MzcucnNz&episode=dGFnOmF1ZGlvYm9vbS5jb20sMjAyNC0wNC0xODovcG9zdHMvODQ5MjgyMQ%3D%3D
Worth a listen.
Early estimates after aquisition of the western foreland licenses on direct savings expected to be made from access to Anglo’s historic data pack, were first estimated to be US$1.5M in direct exploration costs during the first Phase 1 of the Joint Venture.
Those estimates are now expected to be a US$3m saving and the historic data is leading towards saving two years in early exploration too.
Sounds promising and can begin to understand now why Tolai of Cooperlemon in the Zambian special podcast had said they ‘expect’ to see results when drilling commenced.
Wouldn’t even like to guess foz
Doubt will get any kind of update until financial model has been reworked from resulting ongoing work.
That is:
Further studies are being undertaken focused on:
-Optimising Plant throughput capacity
-Metallurgical recovery and early stage waste separation
-Rationalisation of proposed CapEx
-Improvement in OpEx following the abovementioned reviews
Boring wait, but at least there is no desperate need to sell BR with income from the Manica disposal being drip fed in until ‘ 27 that will cover the ongoing operational expenses.
Bobs feedback comment from the recent GM that, “there seems to be an exit strategy from AA that is not too expensive” to me implies that they will negotiate a manoeuvre that allows them out of the AA buy back option agreement, retaining ownership. They would then be capable of offering BR to the global market but I would say only once, the fully updated Conceptual study is complete.
They would want to get BR as far up the value curve as possible before an official approach to AA. And that must be at this next study level as from ‘then on,’ any increase in asset value will cost many more millions in drilling but that value will be negated to a high degree through the resulting need of partner funding.
All theoretical based on the ongoing studies for BR so likely be down to one of the other assets to get the share price moving up.
There are other types of sorting tech to choose from btw so could well be a different company than NextOre to trial. Any of which must be able to detect either the copperl, a proxy for it or a gangue mineral for rejection. So options are not limited.
But as I said, as BR mineralisation is in association with pyrite/pyrrhotite, considered gangue or waste material. Its metallic/magnetic materials properties could be suitable for rejection.
still grates me how they should have known that with br’s copper being disseminated in that ****geneous matrix that cb eventually admitted, these ore type are typically not amenable to pre-concentration. but tomra is the preferred tech for this “usual” ore type as did show was ok for sorting the lower grades.
however , he did tell us about rc’s magnetic properties of its waste material being likely suitable as a candidate for sorting ‘before’ tomra were sent samples.
so am expecting they are now looking at a company called nextore that produce an on-conveyor mr analyser bulk ore sorter which is the tech trialled at cadia and a big mine in chile. it has been successfully trialed by scanning chalcopyrite copper ore grade which is far less magnetic than br’s waste material, which could see the magnetic resonance tech target the racecourse high grade portion waste material for detection and separation in the pre-concentration needed for a viable small mine concept they will hope to verify as this is where the significant reductions in capex and op costs will significantly improve npv.
you can bet on it br will be worth more than $20m if they nail on proof of concept for pre-concentration of the higher grade.
Time and an improving global economic climate could well see viability come to the project. Just how desiresble it will be once all costs to build a mine are included will see. He mentioned many moons ago that they will likely end up with a near surface drilling programme. Cannot rule out, that has not changed. It is still as far we know, as has been RNS’d that further drilling is in the planning stage. This no doubt to add further estimated 2-300Mt of resource to NW to improve economics “if” optimising doesnt wholly return the numbers they are looking for to support the fully updated conceptual study.
Also there is an alternative smaller mine concept he mentioned they haven’t looked into the economics of yet they could go with as a mining first phase.
Think he has been clear that money is not going to be spent on drilling to get to 2mt, pretty certain that would include taking it to Pre Feasibility too, with still no guarantee they can trigger the buy back as he said it is going to be difficult to prove the decision to mine AAL option.
So a JV to this effect is not likely.
All depends on what side of the mid price at the time the trade went through at to register as a buy or sell. Think theirs is a general misconception that an actual human being pairs up trades and sets the bid and ask. With hundreds of fledgling and small caps on AIM with such piddly volume, trading will be set by algorithms which also takes any of the human emotion out of setting day to day prices.
That figures!
At group level through his various companies, Colin and Co have been acquiring a diverse portfolio of these assets across his many companies to have an inventory of particularly copper resources that vary from jurisdiction, in size and evolution in their development. Ready for when the supply deficit reaches a point where these assets become sought after from producers that will see M&A activity increase due to the need to try to keep up with the demand requirements that will be coming which will be exasperated by increasing worsening supply headwinds that range from political agenda, depleting of existing mines and the lowering of mineable grades. Not only that we are in a changing world where social acceptance and tolerances of the environmental impact of mining is making it increasingly difficult for permitting new mines.
In Zambia particularly, along with many other places , there is government policy that supports and encourages new mining developments.
Sit tight, have the confidence to accumulate to bring those averages down so when it turns you will be better placed by ‘25 into ‘26 for when the deficit is expected to hit hardest going into a very long copper bull run that will last for a generation.
All his companies will be very well placed when M&A activity ramps up.