Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Howezap
These option give the owner e.g. the directors the right to buy the share at a price of 10p, it’s not that the shares vest once the price is over 10p.
Cheers
James
Hi Howezap
You’re obviously entitled to you opinion/theory, I was simply saying that I think it has some holes in it for example that CB would get a million quid if the price hit 10p.
Logically CB is only ever going to make serious money from XTR if he sells the company/sells an asset and takes a dividend. He is in a nice position though as his XTR salary pays for his shares and probably a few beers etc on top of that he can grant himself options etc to further benefit if he can find the golden goose (or copper goose).
Cheers
James
Howezap
I’m pretty sure these options give the directors the right to buy shares at the exercise price, in this case 10p so at a price of 10p are basically worthless so the SP would need to be significantly above this to be worthwhile to CB etc. So not sure I buy your theory.
Cheers
James
The finals were released at 4:16pm, so pretty much the last minute of the last day so I expect this trend to be followed.
It is ridiculous that he can’t arrange for them to be released at 7am, especially as these should contain actual profit from FB which we have waited for years to finally see!
Cheers
James
Hi Andrew
I left the AGM with the understanding that XTR could elect not to contribute to the sulphide plant and then we would continue to get 23% (eg current deal), if we elect to contribute towards capital this will increase to an as yet unknown %. Like you I want XTR to contribute to this plant to grow our future cashflows as much as possible via a proven asset. Despite this as others have said this seems like a reasonable buy in at what appears an affordable amount (I’m sure we XTR will fast-track the investment for the hype). In short I’m against this investment if it means we don’t contribute towards the sulphide plant or a raise is required, however pro it otherwise. Hopefully we get news on the sulphide plant before year end (I left AGM with this impression as well)
Cheers
James
Hi Howezap
Thanks for the response, I’d expect Jeremy was left on as part of the prospectore acquisition so not sure MC would have had anything to do with the appointment. Im not saying he’s good or bad by the way just curious as to how you can be so confident in his ability e.g. “BR mgmt couldn’t be in better hands” but take it your view is based on his past work experience.
I hope you are right on Kakuyu, my hope is that we are just kept up to date on progress (both good and bad) and it’s not just another project which we find out has been written off in the financial reports.
Cheers
James
Howezap
What makes you so confident in Jeremy? He came across well in that interview a year or two back but other than that and he had some reasonably high profile jobs in majors (people who work for large corps will tell you this doesn’t always translate into ability) what do you know about him?
Cheers
James
Howezap
I was at the AGM and CB did state RC would be a mine (no time frame) but he didn’t say 3 companies are interested he said companies like the project and then named 3 companies (I believe who have had a historic interest in the project).
To be clear that’s my interpretation of CB comments (not saying captain is incorrect), and it’s obviously a subtle (but key) difference to his and my interpretation.
Cheers
James
Got you, thanks Andrew
Sorry, should have said conceptual study (below is the RNS).
https://www.lse.co.uk/rns/XTR/bushranger-conceptual-open-pit-mining-study-c05hq78ws9qagfq.html
Hi Andrew
I agree that BR must be worth something, however the conceptual model that was released in 2021 wasn’t a million miles from what we have as a high grade core eg it was 162m tonnes at around 0.33% (assuming I’ve not made a mistake with my calcs). This only worked at 5/lb and it didnt really work as it was a low discount rate (No buyer/valuer would use 8%) and was before tax. So it’s hard to see how just using the high grade stuff is going to prove a viable project at todays prices and capital costs etc.
Clearly there is still a value to it (in my opinion) still exploration opportunities, if copper goes to the moon it’s worth a bunch, technological advances (different ore sorting etc) etc etc.
I’m normally more optimistic than you (Manica income) and you’re normally more correct than me (Manica income) so I’m hoping the latter continues with your “optimistic” BR numbers.
Cheers
James
Hi Captain
My understanding was that he wasn’t going to embark on a further drilling campaign to hit 2million tonnes, I don’t believe he expressly stated more/no more drilling but as he said about optimising the model I took this that they will explore different plant sizes, pit shells, ore sorting etc etc and if the model would benefit from more drilling in a particular area they will do it (this part about drilling is me reading between the lines)
Cheers
James
General
After the assets were discussed, someone asked XTR priorities, he said stabilise Manica, more of the same in Zambia (I assume small stuff like Kakuyu). Then he started talking about some big acquisition they are looking at (2) both exploration which he feels are potential company makers and offer blue sky and that there is no blue sky in the current portfolio.
I asked about funding for the acquisitions and he went off on a bit of a tangent but my understanding of his answer was that he hopes to do this via cash flows/ deal structure that avoids this. I think CB wants to avoid dilution but he will if he believes that the deal is too good for him to turn down (why I think in hindsight he made clear at the start about the vote in issuing shares etc)
I also asked him about if bushranger doesn't offer blue sky, as above it wasn't a straight answer but my takeaway was that BR is going to take time to monetise and CB is worried that investors will lose interest and hence need something new and sexy. Not sure it's investors or him who wants something new though!
My notes and thoughts from today's AGM, happy to be challenge corrected by other attendees
Vote
CB really emphasised and ensured that everyone in the room understood that the directors have if the vote passes the power to issue shares. His emphasis on this very much made me feel as if a placing is going to happen.
Bushranger
CB very open that he's disappointed with BR, and made the comment that the grade fell a bit short.
There are other Ore sorting technologies which might be better for BR, but the Tomra stuff is good enough to update the economic model with for now.
The updated economic model will focus on the high-grade material in BR and then look to make use of Ore sorting after this high grade is depleted. He mentioned that the pre concentration gets the grade to where it needs to be
He spoke about 2 million tonnes, but to be honest I lost interest at this point...I asked him about the decision to mine (DTM) and he basically said this would be tricky to prove to AA that they have taken the DTM and would likely end in court. As such he intends to negotiate an exit from the AA Claus, e.g. give them a royalty etc. Clearly a little concerning if AA don't play ball.
The study should be available September-October but made the point that he has been let down by forecasts from consultants before. It's also important to note that this won't be the final model and will go through numerous optimisations.
He did make a comment that he's still confident off getting back what's been spent and more, suggesting to me he values BR in the £10-20m range (I think it's safe to say he would snap AAs hands off if they offered 10p)
Manica
Currently in the 65-70kg range (dry season), with grade around 1.7-1.75/ton.
Should be around 500-600k a month profit (USD) at current prices etc
Recent report received gives a mine life of 4 years for the oxides, however CB stated they are using 2/2.5 (guy in the crowd who is working for XTR agreed with 2/2.5). Reason for the difference was the Ore body doesn't behave as you think always.
Plant modification/additional plant - if XTR don't put any capex in they will stick with current agreement e.g. a 23% share, however if they pay a share of capex this share will be increased. He mentioned March 2024 for the next stage decisions/orders etc so I would hope to get an RNS on the details in the next 6 months or so.
Talk about building the new plant on the resource to avoid trucking etc (I only half heard this so happy for others to correct add to this)
As we know from the original MMP deal any exploration will be a 50/50 deal with MMP, however if MMP don’t participate in the drilling this goes to 77% XTR
Kakuyu
Had a bit of production already, very small scale
To get too proper production need a plant, costing around 1.25m which would require 4/5 years of material. They are currently planning which should take 6-8 months so we should hear some news early in the
I’d rather just get RNSs than those podcasts, I assume XTR pay for them and it’s hard to see what value they bring other than giving CB an opportunity to confuse…..
I would be in favour of a proper, structured interview/presentation which CB Prepares for and he answers some shareholder questions (prob best if these were pre prepared so he doesn’t go off at a tangent)
Glixxer
They have removed run 4 from the numbers they talk about, you can see it in the table in the RNS
Cheers
James
Hi Howezap
It’s not just achieving an IRR of 25% +, it needs to be based on realistic/attractive assumptions. I could make the current conceptual study have an IRR of 50%+ by increasing the price to a level that generates this but no one’s going to buy it just cause it has an IRR of 50% + at a copper price of say 15k a ton.
I agree with what you say about waiting for the updated study, but personally I’m getting less and less confident in BR.
Cheers
James
Hi Josh
I think you are basing your calcs on run 1 (which had the best results), I’m using the average excluding run 4 for my calcs which are worse than yours.
Cheers
James
Am I reading this correctly, you reduce the ore processed by 64% but only recover 54% of the metals? Surely that doesn’t make sense (unless you processing costs are $15/t?) or your copper price is super low (in which case the project doesn’t make sense anyways).
Appreciate this doesn’t include the upside from smaller Capex etc but I’m struggling with this and hoping I’ve misunderstood?
Cheers
James
Hi Pinocchio
Time will tell on Q2, for what it’s worth my estimate of Q2 is as follows (pre tax, I doubt we will pay CIT at 32% due to losses/allowances etc but I don’t want to guess what the ETR will be)
Production 201kg = 6462oz
Price 1925oz
Revenue = $12.4m
Prod tax = $0.8m
Opex 800oz = $5.2m
Net profit = $6.5m
XTR share = $1.5m or around £1.2m
What are you expecting?
Cheers James