Member Info for iWantThatOne

Agree, my favoured way forward is to sell Dugbe. Three months DD and the sale proceeds will be available late-Q4. Even if production hits guidance for H2 at Yan it won’t provide a huge amount of cash - $15m? - and all the while Koroussa will be eating up capital. Better to regroup, get Yan sorted and in six months time things should be looking rosier. Easier said than done, though - I bet you’d have to wrench Dugbe from Dan’s cold, dead hands.

Some news reported today by NEL that may relate to AFC’s interest in Norwegian shipping. I’ve cut and pasted from the RNS but left out paragraphs that contain no relevant info for brevity:

“Yesterday, Enova announced that Glomfjord Hydrogen, where Nel owns 23 percent of the shares, will receive up to NOK 150 million in funding as one of five maritime hydrogen hubs along the Norwegian coastline.

Glomfjord Hydrogen plans to establish a 20 MW hydrogen plant in Glomfjord in Meløy municipality for production of renewable hydrogen to customers in the maritime sector.
Enova, which is a state enterprise owned by the Norwegian Ministry of Climate and Environment, also announced that four additional hydrogen hubs will receive funding. These projects will be located in Rørvik, Hitra, Florø and Kristiansand.

All in all, the five hydrogen hubs will receive up to NOK 669 million in support from Enova, which also announced that they will support seven game-changing hydrogen and ammonia driven vessels with more than NOK 451 million.”

Well BGO is currently valued at about 14x EBITDA for 2022. I’m waiting for the usual HY TU but, if all’s well there, this looks a crazily low valuation for such a high growth company. I assume the cost of living crisis will have some effect but even so.....

Great analysis Andy. Do the figures work out right if you take off the 6% mining tax first (as this is paid by Explorator), leaving 20% of which Explorator gets 65% (so 13% net overall)? I note that the difference you quote of 17% vs 11.1% is virtually 6%.

If this is the explanation then it’s yet another c**k up by the company. Very sloppy and affects our expectations going forward. And it should have been explicitly referred to in the RNS.

The RNS does seem low key but all regulars will be happy to see FB finally up and running. $1m per quarter average income from alluvials plus BE etc, $1.5m per q from FB once fully operational. $10m pa income even without Zambia or Bushranger. The market is mad.

The conceptual open pit modelling from July 2021 showed a positive NPV based on a nine year mine life and A$1454 capital. That was at $5 per lb copper price but, on that basis at least, the capex can be repaid and a profit then made on what’s left. That modelled scenario produced 0.41Mt of copper from 162Mt of ore. The tricky part is in estimating how much additional ore there is and at what grades.....the model mentioned above didn’t include the results from phases 1 and 2 drilling, it was just based on the original 71Mt resource (grown to 162Mt due to the cut-off reducing from 0.3% to 0.15%).

The pit shell has a strike of c1500m, CB has said, and since they’re broadly circular or lozenge shaped the width at the top must also be well over 1000m. He must have meant 150m width at the bottom. I’ve done a very rough calc assuming the pit shell is an inverted cone - I.e. a circle at the top of diameter 750m and a depth of 600m. The formula is 1/3 x Pi x r^2 x depth. That gives you c350m Cu metres, or (using the 2.7x factor to get to metric tonnes) c960m tonnes of ore+waste combined. That’s an understatement as a cone narrows to a point, rather than a narrow (150m wide?) base. And it does scale up nicely as you increase strike by 100-200m. Probably comfortably over 1000Mt. Still - gives you an idea.

Johnswan1, what do you expect CB to do, though? He can’t just rock up at AA and say here’s some drill results, give us $300m please. He’s already said there are some gaps in the model that can only be plugged by two further drills. And Ascot could be huge but they’ve barely found the main part yet. It’s unrealistic to say the company should stop now and just get on with it. I agree with you, expectations set have again (again!) been over-optimistic. And we know (we’ll I’m convinced) that Bushranger, even at 1.2-1.5Mt, is worth a lot more than the African assets. We’d all like the money in our pockets soonest but it’ll take time I’m afraid.

Somebody help me out please ...... from memory Dugbe is included in the corporate presentation as containing 3.2m ozs of gold with an NPV of c$800m. We now see in the DFS that there are 2.2m ozs and the NPV is $690m. Why the big drop in ounces?

The choice of discount rate will depend on whether there are margins in the other elements of the NPV basis. If so then there is no need to reflect (I.e. double-count) risk within the discount rate itself. 5% could be perfectly sensible.

I’d have it a bit lower myself Bonker but certainly worth a few pence. 1.1m Oz for HUM x $50 each = about 10p. Everyone can put in their own assumptions. I say sell it and use the cash to reduce the loan on Koroussa. I just don’t trust Dan to develop a mine this size with $400m capex.

ART, I totally agree about the 2Mt. I think a 1.0-1.5Mt mine can be perfectly profitable (though the more the better). Even better would be if Ascot can then be mined without having to pay for any capex.

Btw I fully agree with Howezap (I think) who said the other day that we’re getting overly fixated on the 2Mt. The real question is: do we have a resource at Racecourse that is profitable and can be sold for good bucks? We know from the July 2021 conceptual open pit model that the favoured Scenario 10 gives us a positive NPV at $5 per lb Cu. That scenario was drawn up at the end of Phase 1 drilling even before all P1 assays were received. It included c475Kt of copper from 160Mt of ore even before the additional copper from all phase 2 drilling (and likely some P1 too). The amount of stripping in that scenario was huge by the way (4.37:1, so c700Mt) - all included in the calculation (which I’ve broadly replicated in my own NPV model). For me, this means that - provided buyers are prepared to pay $5/lb, or at least the spot price of c$4.50 - there is value in Racecourse.

Howezap - it’s possible that near surface deposits at Ascot could be mined profitably on a marginal basis (I.e. no contribution to initial capex) for a few years before stopping any further mining there. That would make Racecourse (or rather the joint system) more profitable even if Ascot as a whole isn’t economic.

Just checking - is the “decision to mine” simply a question of whether 2Mt is hit or not?

CB said in his interview that RC is now looking to be a viable standalone mine. I’m not sure if that is a view based on his up to date knowledge of the modelling or if it related to his comments that they’ve stopped drilling between RC and Ascot because there’s little mineralisation there, I.e. it’s not all linked up into one big pit. Either way, it’s a positive - if we can take his comment as reliable.

On the infill drilling to locate the highest grade ore, I presume that’s standard practice to improve the IRR and to repay initial capex as quickly as possible. I’m not sure it indicates > or < than 2Mt.

Agreed, Andrew.

I've just gone back to the last of Zak's interviews with Colin prior to the one this week, from March 2nd this year....at around 2m10s he talks about Ascot and says "....I don't think we need it from Ascot [i.e. tonnes/grades to reach the 2Mt target].....there's a very good chance we'll get it from the conceptual open pit [i.e. Racecourse]. That interview was on the back of an RNS being released concerning seven holes (37 upwards) that had just been drilled and logged. Of course things will have developed quite a bit over the ensuing three months but it would seem odd if in that short time his expectations have deteriorated as much as some are now suggesting. Unless he was telling porkies or speaking from a position of ignorance.

Of course that’s correct Gixxer but the point is that RC is still very sizeable, based on the dimensions CB stated today, and there’s no real reason yet to be negative about that part of the license. You seem determined to pour cold water on the project.

Listening again to the interview, I’m pretty sure his reticence is because Ascot has turned out to be quite different from expectations and he’s now having communicate that fact. He says it’s now a “semi-porphyry”, whereas before it was a full-on one. He says there *could be a big system down there* - very unsure. He says it’s “intriguing”. It sounds more like a potential gold mine than a copper one to me. “It’s giving us good stuff, but for every bit of good there’s a question” he says. He basically doesn’t know what he’s got - and it’s certainly not another copper-rich RC (perhaps with a tad more gold) which is what we were all expecting.

I think it’s wrong to read across from this to RC. That’s clearly viable in its own (and again, a difference there - for the first time he’s explicitly separating RC and Ascot because they’re so different).

I’m relaxed about the RC figures he’s quoted. 1500m strike x 600m deep x 250m wide (my estimate from the map) gives c1.5m tons of copper at 0.25%, which would still be an excellent figure. I’m disregarding his “20Mt for 20 years” quote - that was clearly off the top of his head and has been used before by him as evidence of a T1.

Alright as a holding statement but not too much to go on - just tasters of what might come or might not. The most promising gold seems very deep. As the RNS says, ideally we need to find shallower stuff.