Hi Howezap
I think you are maybe over complicating this, Ma is using 700/Oz in her calculations of Q1 margins which I am stating is wrong the RNS shows 1185/Oz.
Going forward of course the Op cost is subjective, but again from the most recent information we have (from RNS) is 800/Oz C1 (we know the agreement with MMP is based on cash costs). So again this seems like the logical point to based Q2 and forward estimates on?
Cheers
James
Howezap
What’s subjective about the Q1 Opex cost, it’s in the RNS?
Cheers
James
Ma
It tells you the Opex costs in the RNS for Q1, the only uncertainty in the 1185/Oz is wether it includes production taxes.
For Q2 forward, 800/Oz C1 is the cost shown in the 2022 annual reports so seems a good place to start with any forecast (my understanding is C1 don’t include production taxes).
Regards
James
Am I missing something the Q1 production update had Opex costs at $1,185/oz so I’m baffled why posters are using 700/Oz in Q1?
The annual report states plant C1 costs are 800/Oz (which I understand are pre production tax), so think this is a reasonable estimate for steady state production.
Any royalty payments due to any third parties (such as royalty and streaming payments) are for the account of MMP and will be settled from its entitlement under the Collaboration Agreement.
From 21-07-22 RNS
It was confirmed in an RNS that the royalty is on MMP account
Thanks NG, looks like I need to brush up on my google earth skills…..
Hi NG
Perhaps I’m about to embarrass myself here, but how do you know the the plant is a few Ks from the pit? I don’t recall seeing anything on this?
Also check out slide 27 of the below deck, which shows they are targeting 30k oz per year or approx 80kg per month (also the timeline is a little of, but no comment on CB abilities to stick to timeframes…...). I do appreciate this isn’t an RNS but it seems what the company expected and expect now are a little different. I have no problem with things changing but I expect to know what’s changed and why.
https://xtractresources.com/wp-content/uploads/XTR-Presentation-14.10.2021.pdf
Cheers
James
Hi jamr
Don’t forget there are production taxes and op costs (salaries and resettlement costs) to offset from the alluvials which aren’t stated here like previous prod updates. I’d guess XTR netter maybe 100k from this
Cheers
James
Art
Revenue: 4,522 * 1,859= $8.4m
Production tax: $8.4m * 6% = $0.5m
Op Costs: 4,522 * 1,185 = 5.4m
Pre tax profit: 8.4-0.5-5.4 = $2.5m
XTR share: $2.5m * 23% = $0.6m or around £0.45m pre tax profit
I’m not 100% sure that production taxes aren’t included in stated cost per Oz, but think it’s better to be conservative.
Cheers
James
Per the strategic review section, known Oxides and transitional are expected to provide at least another two years mine life with the current set up. Which to my knowledge has always been the rough expectation so not sure I get what these proximals are adding (I certainly could be misunderstanding something)?
Cheers
James
My understanding was the 50:50 was for exploration, this would be for known resources so doesn’t fit in that bucket to me. But as you say CB was saying about taking a loan to pay capex and not sure why we would be doing that for 23%. I share you view on Manica and see a lot of potential in it hence want it spelt out in an RNS how this works as opposed to assuming based on a “interview”
I’d be fuming if CB dilutes to fund a new acquisition from 1.25p or what ever we are currently
My take aways (for what it’s worth)
CB/XTR need to RNS plant extension plans at Manica, for me it’s not clear how this works commercially e.g. do MMP pay for the capex and then XTR get 23% or is this a different deal e.g. 50:50 like what’s specified for exploration in the original agreement.
I assume CBS quoted Manica numbers are at current spot (will they achieve spot or will it be similar to the alluvials and say -100)? Also seems he is ignoring tax, maybe we can use historic tax losses but it seems ambitious not to have any tax factored into the calculation to me.
CB stating 1.3billion on most recent prelim BR update, I assume this is the undisounted cash at 4/lb which seems like a massive improvement on the conceptual study cashflow numbers. Seems like he is aiming for a 25% IRR, wonder if this is at 4/lb as well?
It would be good if he could do a proper interview where his statements were challenged a bit by someone with reasonable knowledge of the company/industry
Hi Andy
I agree with your analysis on BR, however in fairness think bulk ore sorting is a bit more than a hail mary. That said I have no idea why XTR only stumbled across this as a concept in February other than a delaying tactic due to financial constraints.
the below link gives some nice information on the technology and its potential impact (although is clearly a little bit of a sales pitch)
https://nextore.com.au/wp-content/uploads/2020/03/2019-NextOre-Bulk-Ore-Sorting-Whitepaper-ENG_2.pdf
Cheers
James
It’s also a joke that XTR report that kind of statement I mean who cares if the revenue of the pit covers the ops costs, unless CB knows a Good Samaritan to build the plant for free……I get why optimum run these scenarios as part of a screening process but not why XTR feel the need to tell the market.
The full report is on website, looks like cash costs for Manica will be 800/oz
Steve
I think that’s a little unfair on Howezap, he correctly in my opinion pointed out that AA have an option over BR so don’t need to do anything until XTR meet 2mt or announce a DTM so can sit just back and see what plays out while with ARCM they needed to put some money down to get an interest in the license.
Cheers
James
Maybe part of a negotiation strategy ahead of a huge Australian acquisition (just in case it’s not clear I’m joking).
Did the AA guy give any indication on where they see Copper going eg 3.5-4/lb long term ?
Hi Howezap
Don’t forget that the prelim study was without Taxation and a discount of 8.4% was used. I understand that they have used this rate as it was suggested by the consultant however it’s clearly not realistic to how a buyer will asses the project. I do not work in mining but at a guess I would assume that the buyer would run their model at 3-3.5/lb copper long term, 10-12% WACC, include tax in the calc and still want to see robust economics.
Point I am trying to make is that we might see a reduction in the break even copper price (NPV8.4 = 0), if they update the original model with new technical inputs with the original assumptions but for me we are going to have to see a drastic improvement to show BR is viable or at least a clearer pathway to viability. Based simple on the MRE it’s hard to see a big change in economics from conceptual study so for me we really need to see a big improvement from the ore sorting and the fact CB has gone silent suggest it’s not quite the result he hoped for (this assumption is based on his history).
That said I hope you are proved correct
Cheers
James
Hi Howezap
I think we can make a reasonable assumption that BR is reasonably high cost, you can draw that conclusion from the prelim study. Flip side of that is we can hope to benefit from economies of scale, and maybe the ore sorting study proves a success.
Let’s see
Cheers
James