Member Info for Jamesiecakes

For what it’s worth I actually think you both have a point, of course if copper spikes to say $15/k ton it doesn’t mean BR is going to brought or developed etc. however if the futures price has copper at say a steady $12k and people become accustomed to valuing projects at this price this can only be beneficial to a potential sale price.

For me the crucial part is that the project is optimised so the breakeven price drops eg lower Opex, lower Capex or additional (higher grade) tonnage. This will make the asset more comparable with alternative projects etc.

Guess the tests are going to take 2/3 months, fingers crossed they are clearly value enhancing as would guess it’s going to take a long time to get the results into the model (it shouldn’t but based on how long the model took to update last time……)

I’m hoping/expecting news on Zambia drilling starting, expecting this to be announced before the AGM.

Would be great if the XTR could announce a business update before the AGM.

Hi Abso

Return on investment is not IRR, we can see that the the NPV8 of option 5 is AUD 362m so by definition the IRR cannot be less than 8% (the IRR is the discount rate that would set the NPV to 0).

When they talk about return on investment I believe they are taking the NPV8 over the total project expenditure eg 362/5080 = 7.1%.

I think we are all in agreement that in its current form the project won’t get acquired, however if the break even price is able to get brought down, other optimisations, additional resources and then of course copper price rise happen it’s get a chance in my opinion

Cheers

James

Hi Abso

My understanding is that they are trying to determine what material can be produced economically e.g. revenue per unit is greater than operating cost per unit. This then tells them what material they can include in the economic model which includes capital expenditure.

Cheers

James

Abso

The model includes capex of just under AUD 1.2bn, which can be seen in the RNS

https://www.lse.co.uk/rns/XTR/bushranger-pit-optimisation-financial-study-jxp0lzmb606mvwu.html

Cheers

James

Hi Howezap

No need to say sorry, although not sure I get the subtlety in devised/designed in this context?

When did he suggest it was a possible cheap exit (I can’t recall what he said at AGM), but more importantly when has he given anything other than the best possible outcome rather than the likely one?

If I was AA I would sit on the clause, develop/acquire higher return projects on a risk adjusted basis in my pipeline then revisit BR when these opportunities run out. To my knowledge there is no cost associated to AA for sitting on their hands or particular risk of them losing out on the asset ?

It’s more than possible that a deal could be done, however I see it as unlikely. For me it’s more likely that we do a deal with another smallish company for them to buy into the asset by drilling to get the asset to 2mt plus force AA hands and then share the prize.

Let’s see how BR plays out and hopefully we get some news on Zambia soon!

Cheers

James

Ps I know I disagree with you a lot but I generally value your opinion/view (hope my messages come across like this)

The buyback was between AA and PropectOre, so in my view it’s not fair to say it was a designed as a marketing tool. It’s simple a mechanism to allow AA to buy back if the resource is better than they expected. The problem is there is no way for XTR to force AA hand without spending serious cash or incentive for AA to make a decision.

I hope CB has had discussions with AA as he was talking about negotiating the buyback in last years AGM (Jul/Aug from memory), if this had been successful we would 100% been informed and CB would be straight onto the roasties proclaiming that the bow has been put round BR and it’s going to market!

Hi Lucky

Fair point, however numbers were updated late last year so I’d hope they were using reasonably up to date capex/opex e.g. inflation hasn’t had to much of an impact since ? Additionally as has been said there is room to optimise on both so I’m actually hoping/expecting the costs to come down. Obviously if you can save say AUD 50-100m in Capex costs this will pretty much directly add to your NPV.

Despite me getting a little more excited about the “value” of BR I still have major concerns about us being able to monetise it. If I was AA I would just sit on the option clause and see what copper does, there is no way XTR are going to hit 2MT (as we aren’t drilling) nor can we show we are going mining so what incentive do they have to make a decision other than a small (from memory) royalty if the mine ever gets built? If CB can pull a rabbit out of a hat and negotiate out of the clause without giving to much value away like he said at the last AGM I’ll start to get more excited about BR but I won’t hold my breath!

Cheers

James

if you look at option 3 from the br conceptual study you can see it has an npv10 of circa -100m aud at usd9k copper, usd 1,900 gold and usd 22 silver.

if you update those numbers to todays spot prices on a *** packet you get approximately aud 250m additional revenue (this was done quick and dirty so i could have made an error).the mine life is approx 7 years so around aud 35m additional income per year which i’d guess (not calculating it as i don’t know how long the mine takes to construct) would offset the negative npv. point i’m trying to make is that according to my very rough *** packet and using todays spot prices (which i’m not suggesting a buyer would do) i reckon br is a circa break even project.

At $4/lb and the AA clause in action I just don’t see anyone taking it off XTR hands or XTR adding value to it (Zambia is clearly the focus) so I think a value of 0 is about right.

If the price of copper starts going up and the futures curve is robust this changes things for me, alternatively if CB is able to deliver on what he spoke about at the AGM and negotiating an exit to AA Claus this also changes things for me as I’m sure the asset would be of interest to people (has potential etc)

Cheers

James

Hi Howezap

Either you have misunderstood my question or I didn’t ask it very well…..

But what expertise has Colin shown in being able to monetize small scale mines? To date these haven’t been at all successful (I’m no expect on his other companies but imagine this is true for all of them) and have just cost shareholders money. Don’t get me wrong I love the idea of making a sustainable company, but I dont trust the board to develop one (experience has taught me there will just be noise followed by a write off). Appreciate history doesn’t always repeat but it often rhymes…..

For me better just to focus on Zambia (big stuff) and monetize BR (if possible).

Cheers

James

Not often I say this Andrew, but I disagree with you

For me if CB wants his legacy then chase the blue sky, these small scale cash flowing assets are just a distraction to that and an opportunity to spread the team to thinly/waste share holder cash

Hi Howezap

This is a genuine question, but what makes you think the company have the ability to monetize these small projects. Looking at the accounts you can clearly see several attempts to achieve this which have all ended in impairments. What makes this time different?

Wouldn’t Colin and team be better off focusing on the big exploration projects and monetizing BR, the income from the Manica disposal should support this without the need for dilution so I don’t see the need or the benefit (on risk reward basis). In short focus on the blue sky opportunities……..

Cheers

James

My bet is that we hear something about Kakuyu, and the short term cash flow that’s about to come from this asset……

This is purely based on the fact I listened to a roast podcast yesterday, and this asset was mentioned a couple of times. Obviously I take anything mentioned on there with a pinch of salt however they clearly discuss things with CB so I’ve put 2 and 2 together and come up with something

I think companies are able to adjust share capital (or an accounting adjustment) to get round that rule about dividends. I remember something similar done elsewhere.

From the above poor description I’m clearly not an expert on the subject but I wouldn’t give up straight away if it’s something you feel strongly about. I’m personally more in favour of buys backs (to be honest I can’t see the company doing either as I think CB wants to chase the dream so it’s either boom or bust, and likely the latter)

On reflection what I’d like to see is the following (trying to be realistic)

Based on history I do not want to see XTR chasing any small scale income plays, the company clearly do not have the expertise for this.

Zambia, minimum commitment being met but a very considered campaign (not hell for leather like BR)

BR, not sure if this is realistic but a break of the AA clause, if not someone with slightly deeper pockets to try and take the asset forward

New assets, none

Residual cash, share buy backs (if this is possible)

Cheers

James

I agree Andrew, if you believe the RNS you can calculate the NPI easily (or XTR will continue to provide an estimate) at the before tax level at least. Issue as others have pointed out is what’s been collected, it would be disappointing to wait to June to hear what we have collected.

The recent Zambia project were supposed to kick off in September, as there hasn’t been any update you could speculate this is due to lack of funds etc…..

Hi Jez

CB deserves a lot of the stick he gets on these BB in my opinion, however I think we have to be fair to him in that he’s put his hands into his pocket to buy shares on the market several times in the last few years and agreed to settlement shares (in lieu of salary). I’ve not run the numbers but I’d reckon he’s properly put the majority of what he’s earnt from XTR back into XTR. So think it’s a little unfair to suggest he just wants to keep the company solvent.

Cheers

James

Hi Banzai

I’m a fan of Manica and think it deserves far better publication by the company. My issue is that the suggested life of the of oxides is 2.5-4 years which at 5-6m per year pre tax supports an SP of roughly where we are today (this is my view). We also need evidence of the money hitting the account

Until the company releases some tangible news on how they are going to extend the mine life, new oxides, plant modifications etc I don’t see why anyone would accept what CB says suggest might happen to the mine life.

I also found some of the BR release confusing, and to be honest I don’t believe some of the numbers (the break-even copper prices of the different scenarios don’t make sense to me, of course I could be misunderstanding something).

CB needs to provide a corporate update and presentation showing his plans for the company over the coming 12-18 months, focusing on growth opportunities at Manica, and then where and what the the cash is going to be spent on at BR and Zambia (and rationale behind each investment). I obviously don’t think he will do this but it would be welcome.

Cheers

James

Hi Andy

https://www.lse.co.uk/rns/XTR/definitive-feasibility-study-eqcnevjxyc9ebax.html

This is the DFS for Manica, which shows the break down of costs (C1, C2, C3). This report should include things like security etc so you would assume they are in the C1 category (perhaps other?) Clearly we are now in a different cost environment but it’s still a useful starting point.

My understanding is that the Operating costs quoted in recent production reports is C1 + royalty (6% production tax). So if you strip out the royalty from 1215 you are left with approx 1100/Oz in C1 cost for Q2 2023 which is quite an increase from the 800 CB quoted in the 2022 full years released in June 2023 hence should have been based on pretty up to date figures. It’s very unclear if the infill drilling is the sole driver of this increase or costs have just gone up elsewhere but for me XTR need to expand on Operating costs so investors have a reasonable idea of what Q3 and beyond costs will be.

Cheers

James