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Some clarity for the observer -

>>> there must be the need then to show a certain level of geological confidence in the resource which ultimately adds weight behind the financial model where there is a decision to mine.<<<

The key component to the decision to mine will be its financial model, so the necessary upgrade in the resource would be a stronger validation of the model showing the projected revenue and cash flow potential.

Thank you James, it does make sense. For the Valmin code to be in effect ( in this case? ) there must be the need then to show a certain level of geological confidence in the resource which ultimately adds weight behind the financial model where there is a decision to mine. So wether it be through a third party consultancy firm or any other major valuing the resource and mining concept a ‘fairer’ value will be reached I would have thought.

Thanks
Guy

Just to add that a 100% increase is highly unlikely with a copper porphyry deposit ;-)
I’m not suggesting that at all.

One further question then, that comes to mind from the reasoning behind the extra infill drilling.

There is an argument against it being the only reason why there is the need to extend the early recovery phase.

Not only will it improve and support the economic viability, it is also one sure way of increasing the resource estimate for whatever reason. There was some uncertainty before in a podcast where Colin said he didn’t know, ”if the 2 million tons was all gonna come from racecourse.” so maybe the extra infill drilling that’s planned is a double edge sword and maybe is another indication RC is closer to 2mt than many believe.

You can find examples if you look where an infill drill programme has upgraded part of a resource and increased the resource estimate by over 100%.

Be interested to find out how just much of the inferred resource (71mt) will convert after all the infilling, as there will be a targeted minimum category of indicated they will be looking to achieve. This will be required, more than preferred I would have thought as the indicated part of the resource is necessary to support the financial evaluation that inferred simply does not, as the geological confidence is considered too speculative to support the economics to the level needed.

So there are very good reasons why a company will infill, the initial recovery phase is looking to be increased as has been mentioned by Colin, not only will this further increase the indicated level, it will further increase the resource estimates as the levels of confidence increase.

With anticipated 20mtpa mined in the high grade early recovery phase which is looking to be further extended from 4-6 years for up to 8 years, we could expect then, up to 100mt firstly, will have converted to indicated. Increased up to a ‘minimum’ of 160mt later after further infill drilling.

That simple?

>>Predictions of 2m tonnes and $7-800m price tag<<

There has already been much infill drilling through phase 2 at particularly racecourse. Where results will have expanded the size of the initial 71mt 0.44CuEq @0.3%Cu cut off JORC resource ‘before,’ all the remaining resource definition holes have been added that have potentially increased the resource to around 450-500mt tbc which basically, the open pittable extremities will more or less envelope.

Am very much hoping 2mtCuEq will not be too far off from RC alone when the lower economic cut off is then applied. Then there is the adjacent Ascot resource 1.5km away that is about the same size but as yet not drilled to the extents of Rc but has a lot higher gold and silver content. Potentially open pittable too……

$360m is a ten bagger from here, a more and very realistic estimate I would have thought. Certainly not to be sniffed at, but I’d be happy to wait another 6-9 months for $750m if the gold systems at Ascot are significant as the potential suggests from the assays and core analysis of the discovery holes.

Are you still there????

Kullybahia
>>XTR Aus assets are poor grades 0.3-0.4% of cueq, and non commercial.<<

Uninformed nonsense! The whole Racecourse drilling phase was targeted toward open pittable depths, with mineralisation across the deposit starting from as little as 11 metres down.

Open cut mine is by far the cheapest method of mining, in a nation that is supportive of mining activity, waiting on the updated resource estimate, but the financial modelling is expected to show 0.15%Cu economic cut off, 89-90% recovery rate from initial met test work with a very favourable strip ratio tbc

As has been said it’s not the grades that determine wether a resource is economic, it’s what is recoverable from evaluation many different factors

Thoughts?
Yes, I know what I think pops

Mr gez hi, few weeks ago I had a young apprentice start with us, he lasted 2 weeks! Charles has just ended a 70 year apprenticeship to succeed the throne, I doubt he will just step aside. It is a hereditary succession. ;-)

With our Queen passing, she is now safe in the arms of god

God save the king

At this very sad time,
with respect

Hi flipper there is always that suggestion that AA are not necessarily the ideal buyers so I think waiting for the cat to come after the pigeon is not ideal if they are not interested. Let’s wrap it in a big bow and take the pigeon to the cat. With an outcome one way or another, it sounds as though the early high grade recovery will be increased anyway, and then further drilling dependant on outcome.

I’ve always had concerns that mighty AA will play hardball, if they don’t want it now, they are not likely to just rip up the agreement if there is the chance that their internal politics might change in a few years and so will not want any other majors stepping in to take it on in the meantime. So I think there is a dependency on getting the data package quality right so one, or both of their options is met and triggers the buy back mechanism undisputed.

If they do want it, then at least there is option to go to third party valuation if both valuations are too far apart.

I agree with Steve’s interp too, and others that it’s looking toward a ‘23 sale at some point now.

It’s noticeable how Colin seems to bring up the sale of kalumbila frequently and in this podcast he does so again, commenting on what it now produces against what it was sold for. That, “it was the right time for shareholders.”

It’s fairly obvious he feels they under sold it, and now with Bushranger you certainly get the impression he is not going to make the same mistake by not realising the asset potential by “selling and then 6 months down the line it’s announced that another Cadia is found.”

Is justification enough that has seen the completion of an extended exploration phase, with a next phase under consideration. First step, get the modelling out, and see if our buy back partners want it so they can get the constricting agreement out the way.

Have complete faith in Colin to deliver, there’s your experienced businessman right there! He may have his critics, but you would not want many, if any other chairman in control of your hard earned.

I read somewhere that, “the strip ratio has lost some of it’s importance over the last decade with tools now that allow better modelling and quantifying, a number of the other ratios or strategic indicators.” Also that it is not an absolute factor but just an indicator.

After looking into it further, it is clear that the geology on its own, determines the strip ratio, it is not influenced by the economics or even wether there is a higher quality, or grade of resource. It is however, influenced by the type of waste materials that will need to be removed. So the strip ratio, ultimately influences the economics, not the other way round as is the case for the economic mineable grade cut- off. The strip ratio ultimately determines the open pit slope angle, so in theory an easier to dig overburden will not necessarily be cheaper for the project economics as it may mean the slope angle needs to be increased to have the same structural integrity to prevent land slip. So, although the waste material could be a lot easier to remove, this could well actually increase mining costs overall.

So I it seems fairly clear that the strip ratio is an important factor now as it has always been, toward economic evaluation. Then, the more the project is studied, the other associated costs are added to figure the projects value.

Having said that, is there a correlation with strip ratio and the latest focus on environmental impact and reclamation costs that might actually increase the importance of the strip ratio?

Any other thoughts overall appreciated.

>>>the junior sector is pulling back, spending less and guarding what cash they have. The juniors are "...doing what they've always done. They're canceling financings. They're decreasing the amount of drill rigs they're using. They're just...waiting until this is over. And, I don't see much on the horizon that might change<<<

What we are likely to see is a good window of opportunity when the time is right to push on with the flood of news that will be due. There will a lot less activity in the sector and a ‘lag’ before these bring their operations back online again so news when released will hopefully get more exposure and focus as the market look for good opportunities to get back in early. Assay labs will be quieter too.

Of course there is always risk associated that’s true, never know what curveball is going to be served, as was shown with Andy’s example of Mankayan. I believe these small JV’s they are looking at are within Zambia too, as is the more recent deal to mine in Chongwe.

There is a clear enough path set to further develop Manica but with nothing implemented as yet, it will always be the case for projects to deliver first to be cash flow positive and independently be on a financial standing to then advance with the further development planned. Eureka in moz is a little different in that there are no immediate plans to explore further yet, due to the scale of operation and costs involved in the style of mineralisation there.

Thank you Andy
Also, here is the reported (not from official RNS) details of when kalumbila was sold, seems a better comparison.

>>> LONDON/TORONTO (Reuters) - First Quantum Minerals FM.TOFQM.L has agreed to buy Kiwara Plc KIWA.L in a cash and share deal worth $260 million.

London shares of Kiwara, which owns the Kalumbila copper project in Zambia, jumped 30.2 percent to 68-1/2 pence after the agreed deal was announced. The shares had nearly tripled so far this year before Monday’s news as copper prices recovered.

First Quantum said it had received commitments from shareholders representing 76 percent of Kiwara shares to accept the offer, which has also been recommended by Kiwara’s board.

Under the deal, Kiwara shareholders will receive 0.0085 First Quantum shares and 37.5 pence for every Kiwara share held. First Quantum will issue about 1.9 million shares, which will dilute its shares by about 2.4 percent, according to Reuters data.
The implied value per Kiwara share is 75 pence, a 41.5 percent premium to the closing price of Kiwara on Friday.<<<

So in comparison, with the subsidiary holding company (Prospectore) being bought out, are shareholders expected to see the full 100% share of proceeds of sale returned to them in form of full dividend payment or part divi with the remaining value returned by issue of new shares in the acquiring company?
Whilst retaining all xtract shares held prior to sale?

Bit premature I know but worth the query as have not been through a process like this before as I’m sure many have not either.

A comment at the end of your post flipper had me thinking.

>>I am sure many on here wouldn't want to see money made from a BR sale reinvested in such locations no matter how great the geology.<<

On recollection, in interview Colin has said a couple of things, one being, “I want to do this for the shareholders.” I know that sounds obvious but was more relevant within the context in which it was spoken at the time. Also, “Shareholders would be getting a big fat cheque.” No doubt figuratively speaking, that will be in the form of a big divi payment.

Do any members have any insight into a likely dividend or divi / share split return to shareholders following ‘potential’ sale of BR?

I certainly wouldn’t disagree there flipper at this stage, it would be a little premature until we know what is actually on the table, both in terms of what else is required to make BR saleable and what, where and at what cost these further projects are looking to be.

My reasoning is more toward the overall business model and part of that is a budget ceiling for BR. From the acquisition of the license, there has always been a clear objective to prove up the 2mtCuEq and / or decision to mine to see if AA want to buy it back.

I think also, referring to Bens recollection of the 20-30p comment by CB, it is also an indication that, even back then, they obviously had a certain expectation as to where the resource would sit with a budget needed to achieve that goal with a realistic sale price in mind. Even a timeframe of a sale by end of ‘22 was quoted by CB back then, all shows that there is a clear enough, maybe even a definitive plan, within that overall strategy to grow the company.

To all
It’s remit for growth is to look for assets that meet a certain criteria and that criteria does not involve risky, expensive exploration programmes in unsafe jurisdictions. It’s all in the recent audited report.
It’s where their expertise lies and focus is now.

I’m sure the Colin Bird stable of companies are adequately structured to enable new projects to be taken on along side the existing, without the burden being solely placed on Colin’s shoulders ;-) There is also regional/national/continental risk diversification of assets to consider in the longer term when considering new projects I would think.

Hi Cygnus yes I see where you are coming from now, I guess the comment CB had made about sequentially drilling in a phase 3 programme rather than all at once, is indicative of that comment about, ‘sitting on hands’. Particularly of course if AA pass, on their options to buy back in then Xtracts optionality opens up further once again, with cash reserves in bank to get the project potentially over the line and the ability to self fund any further exploration beyond that to build on the resource.

I do believe though, that there will be an overall budget cap for Bushranger, they are not just going to keep spending because they can, not sure to what amount, but I think it will likely be sold before a full phase 3 is completed.

The further small, minimal capital cost, near production ready, safe jurisdiction etc joint ventures they are hopefully going to be reporting on soon that are planned for strategic growth. Will be important toward the long term outlook of Xtract and sound like they could well have the majority of income set aside for them. Although are potentially minimal capital outlay, they still don’t sound cheap. The company are in a stronger position now to be getting on board some of these projects as many more will be finding it increasingly difficult to get the funding without giving to much away in dilution in getting these projects finally to production.

I did read a comment that we should concentrate on what we have and not take on any more. I say, there should always be a business plan.
What do others reckon?

Good stuff Cygnus the only thing I would tend do disagree on is sitting on hands tho.

Being in recessionary times, does not mean that M&A’s will not happen, where one, or any of the majors are concerned it will be an ideal time to jump, wether it be AA, or other once we get the agreement out the way.
Businesses are, or should be, examining their existing lists of potential acquisition targets and should be prepared to act, as deal premiums maybe likely to come down and assets that companies had been reluctant to sell in the past may become available. As in xtract’s case with its primary asset being under the confines of the buy back agreement.

>>Evidence from the global financial crisis from late 2007 through early 2009 shows that companies that made significant acquisitions during an economic downturn outperform those that did not.
There are some caveats: The GFC was, as its name indicates, a financial crisis, and was somewhat limited to the financial services and real estate sectors. << But it is the nearest example there is.

I believe Xtract will have a fairly decisive plan what to do with Bushranger and if that is to actively market it once the models are released (as per paragraph in annual report RNS) then that along with Colin’s “being happy with an $8000 copper price” will not see a shortage of willing buyers.

Steve4077’s post notes from the AGM (24 Aug 2022 09:56) do suggest they will be actively marketing too, as soon as the modelling is announced, then after speaking to AA it seems, entering into more drilling, at first to improve the IRR with higher grade at RC then other targeted areas sequentially. With a further comment from Steves notes on Colin
>> Again reading between the lines, it sounds like informal contacts may have already happened. Colin made it clear that when a deal happens, it can happen quickly.

If there is a fair value to be had it will be got. The actual sale process going foreword I don’t believe has been affected so far beyond the 2-4 month delay in RC modelling by any of the external factors……..yet!