Member Info for Jamesiecakes

Hi Andrew

My point was more that just because CB isn’t doing what we would have done, doesn’t mean it’s just for his egos sake more that his method of building shareholder value is different and possibly influenced by his past successes (but yes more risky).

Cheers

James

Anyways

Anyways the simple truth is the deal

Hi Andrew

I think you are perhaps being a little unfair on CB, we both believe that Manica alone could have restored value (at least to a level we were happy with) and certainly should have been further developed before expanding the portfolio.

However looking at CB history he has had success with flipping assets, over 200 times return in under 2 years in one (I forget the name of the asset). So I can understand why he is drawn to these assets in search of shareholder returns (plus obviously his own returns!)

Cheers

James

Hi CE

Not sure we can be almost certain it will add value for XTR shareholders, in effect we have given up approximately 20% of Manica, Kalengwa & Eureka for this opportunity (on a per share basis). So Bushranger needs to be more valuable than what’s been given up for shareholder value to occur, and only time will tell if that’s the case.

Right now I’m finding it hard to be positive about this acquisition as an overal package.

Cheers

James

Hi Andrew

I guess the positive of CB’s gold price forecast is it should mean more than 350k per month income from manica, assuming prices stay at today’s level (and all else is equal of course).

Cheers

James

With CB history of timelines I think you are well within your rights to maintain your personal timeline, just reporting what was said.

I’ve struggled to see why MMP would pay the minimum option price for fairbride, as I can’t make sense of the numbers from their side or the logic of why they would buy fairbride out before the option has expired.

Besides a buyout is speculation, while NPI income is inching closer to becoming reality income which can be used to finance xtr 50% share of exploration in the wider manica concession potentially increasing the monthly cash flows or the life of mine, fund other projects (Zambia) or even generate a little income for shareholders.

Anyways let’s see what plays out over the coming months

Cheers

James

Hi Andrew

Both are correct, as they were both mentioned I just went with the slightly more conservative as it’s already mid may and if the build takes 4 months the slightly later date makes more sense to me.

I guess we do indirectly pay the production costs, as the opex will be deducted from the revenues before we get our 23% of the net profits.

Hi H50

Fair enough on the $100m, yeah I was a bit taken aback by how much money he made on that deal! I liked his answer on why he didn’t retire, he seems to generally love what he does!

I felt that there could be some dilution coming share holders way to get Kalengwa started, although not a massive amount.

I agree that this is a stonking buy even if fairbride comes off, add in Kalengwa and its a slam dunk and then add in a success case on Eureka and to be honest that’s a potential life changer.

Cheers

James

Hi Andrew

It’s the cash XTR should receive each month from the mmp deal (fairbride) besides as this is an NPI deal revenue and profit will be the same, unless I’m missing something?

Cheers

James

Hi H50

Thanks for the notes, I thought TW lacked extensive XTR knowledge to really ask CB any tricky questions e.g. missed deadlines/moz gold issues etc but it was still a good watch.

Our notes are very similar as you would expect, I have a few additional comments which may be of use to the board;

By Colin’s own workings cash flows to XTR from fairbride should be $460k per month, which he then rounded down to $350k “as you won’t always have a fair wind behind you” . Maybe He’s trying to under promise and over deliver!

The mine will take 4 months to construct, but the September/October timeline was conditional on the boarders opening in a month. I assume this is because things are being manufactured in South Africa.

CB said that the current proved resources are 1.4mm oz, which from memory is in the DFS report, however CB and MMP think there is in excess of 2mm oz.

Just after the about half a million comment, TW said there aren’t any excuses for that half million not lasting until hard rock starts. CB then said that’s not particularly true because I went to Zambia (referring to the Kalengwa). However he then went onto say that $4-6mm capex costs could be financed by offtakers (he estimated around $2m from this source), project finance & equity. Although equity isn’t always required. The final passage of this section was TW saying the key point here is that this project can be funded without a huge equity release which CB agreed to.

I didn’t hear the part where CB discussed a potential value for Eureka certainly not $100m however he seemed very confident about it. And mentioned that there had already been loose enquires from companies wanting to have a look following last months RNS.

Cheers

James

Hi Andrew

I have a valuation of around 5.5p at current gold prices, with a $100oz increase/decrease moving this valuation by around 0.6p (little more when you go below 1250/oz due to structure of the deal). This is based on some fairly crude inputs e.g. cash costs of $650/oz, Corporate costs of GBP 50k per month, Start date Jan 2021 & 8.4% discount rate (as used in the DFS although in my view this is rubbish as I highly doubt its XTR WACC). This valuation doesn't include any other future cash stream's e.g. copper dumps etc so there is "potential" upside

There is obviously a large disconnect between asset value & share price, which I can only attribute to people thinking CB is full of horse S&%t and that the MMP deal will be like the Omina one e.g. won't happen. However even applying a 1/4 chance of CB/MMP coming up trumps and building the mine still gives a SP of approximately 1.4p, as such I am happy to hold.

Cheers

James

Anyone else expecting another RNS today? Or you reckon this was put out as the detailed report to be “tabled” wasn’t quite ready?

Of course an offer is a possibility, we hold a valuable asset and an option was included in the MMP deal. However the fact news was delayed (until recently) and then “tabled” was used in the recent RNS doesn’t justify to me that we can expect an imminent offer (as some on here seem to speculate). I think it’s much more reasonable that we will get an updated schedule regarding the timings (I guess mining will start at the end of the year), potential cash flows at different price scenarios (or the ability to work this out ourselves) and maybe something on future exploration.

As you say time will tell

Cheers

James

Hi Lucky

I read your post as you are expecting an imminent offer for FB/Manica which i still see as unlikely, for reasons previously mentioned. However i feel that the NPI deal with MMP which has been announced and appears to be moving forward is what we should base valuations on!

Apologies if i misunderstood your post

Cheers

James

Lucky

I wouldn’t hold your breath for an offer, just treat it as a nice to have (assuming it would be above 20m) and focus on the potential of the MMP deal.

Cheers

James

Hi Jdau

I think you have missed the point, the conversation wasn’t why is the price going down......

It was more a discussion about news flow, some people think the delay is likely a potential positive, I don't. I’m sure everyone is aware of why the market is dropping like a stone.

Cheers

James

Hi Andrew

I know nothing about MMP as a company, I agree they will make a bucket load of cash here if they actually have the financing to be able to become operational. At this stage this is the biggest risk I can see, and as far as I can see is why Xtr is valued so disproportionately to the potential.

Cheers

James

I’m more worried that Exceptionally bad equals MMP leaving!!

Hi Dave

Enjoyed reading your post, thanks.

For the NPV calculations, id always added back the estimated capex cost to the NPV 15 stated in the DFS. Generally when valuing something you ignore historic (sunk) investments and focus solely on the forward cashflows. However as the CIL capex etc hasnt been spent i think this is incorrect, and i should perhaps include 10-15 in my calcs.

In your discounting you are assuming that all cashflows occur at the end of the year e.g. For year two 19.8m/(1.15)^2 = 15m, i would make this 19.8/(1+.15)^1.5 which is mid year discounting and assume that cashflows will occur evenly throughout the year (on average in the middle of the year) It wont make a huge difference but will give a higher and more accurate valuation.

My understanding is that it was Ominia who spent 11m before they had a resource, im not sure about MMPs plants history? So i will continue to believe that they wont make the call to trigger the option until closer to the option expiry date.

Despite there being a range of uncertainty on valuation no one has come close to making the current share price seem reasonable and even the lowest is a multiple of around 4 solely on fairbride.

Other than MMP walking away i am struggling to see a downside here (other than the pain of waiting for things to finally happen of course)

Cheers

James

Hi Andrew

Call me conservative but if a buy out were to occur today I think a price of between 20-25m would be achieved, if as you say they chuck the whole Manica in maybe 30m isnt unrealistic. So based on a buy out a share price of between roughly 3-5p.

I personally dont think that MMP will trigger the option until they have spent some time operating in the area and had chance to do some exploration. They have around 1.25 years left to exercise the option so cant see why they would rush into giving away 20-30m usd Before they know fairbride is what it says on the tin.

Cheers

James

I agree that’s how it reads, as such I can only assume1 of 2 things

A.) they won’t take the option

B.) the valuation model will be based on lower price assumptions, higher Opex costs etc to bring the NPV15 down to a more attractive price (obviously XTR would need to agree to these assumptions).

Cheers

James

Hi Andrew

Rough numbers, DFS at 15% discount = 28m, add back the capex 40m (rounded down a bit for the time value of money). So 68m, add 10-20 for gold price appreciation. And then divide by around 1.3 to convert from usd to gbp which Gives approx 60m gbp which CE refers.

However in my view it would make no sense for MMP to pay this, I calculate that XTR will receive around $5m a year under the agreement over the 7 year mine life so think them paying 50-60m isn’t realistic, maybe the 20m usd floor.

Cheers

James