George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
When you sell…..
Hi Howezap
At the AGM I asked CB how XTR could declare a decision to mine, as I never really believed this as a realistic option (due to lack of finance to back up this etc). Apparently the valmin code dictates what’s required to declare a decision to mine (and having the money isn’t part of it although I’ve not read the code myself) however he emphasised that a key component was that a certain % of the resource needed to be indicated.
Cheers
James
Why would I be having a laugh with that comment, it would have been pretty weird for CB not to factor in further license potential when coming up with a forecast valuation would it not?
You say you are no longer naive and maybe I’m wrong to say this but I don’t believe you were at the event where this comment was made so you are believing people on a BB (not saying the people who attended this event aren’t trustworthy) Additionally for someone who isn’t naive and has been invested with CB for some time you prob should have learnt the guy is an optimist
All the best
James
Lucky
I was at the investor night where CB made the statement, from memory it was along the lines 20,25 or 40 pence after a few whiskeys. My take on this at the time was it was based on what he thought the asset would ultimately be worth not just on the information he had at that time so don’t think it’s fair to say the asset was worth 20/25 now we have found ascot and other targets it should be 20/25 + ascot.
No doubt the USD strength has helped with any dollar conversions, but to just focus on that is naive (in my view) when there have also been numerous headwinds since the investor night e.g. fears of recession, rising interest rates, copper price drop off, wars, huge spike in energy costs, inflation etc etc which none of particularly helps M&A.
End of the day what I’m trying to say is if CB “only” sells all the old prospector assets for 20p id happily buy him a drink despite the fact there has been some frustration on my part along this journey.
Cheers
James
Hi Joeman
From memory the first technical session was just based on existing resource e.g. P1 holes weren’t included.
Cheers
James
Hi Andrew
It’s not often I disagree with you, but I think the fact that copper has gone down in price is the reason gold is worth more when expressed in cueq so not sure it’s good news.
The overall RNS read well to me though for sure (and I could be wrong about the above)
Cheers
James
Hi Andrew
I’ve not looked into it but I’d guess it’s a case of the gold being worth more vs copper than when the holes were originally drilled rather than being better.
Cheers
James
Hi Howezap
I also found that sentence quite interesting, to be honest I had assumed the deposit was going to be more in the 0.3% cueq range based on results released to date (granted I have limited knowledge on how the resource grade is built up). Maybe they are going to run a higher cut off to achieve a better grade?
Cheers
James
Makes sense, all the best
Gixxer
I’m all for having a rant and to be honest I think this is a better place for it than most others, but you have clearly lost faith in CB so I don’t get how you can keep any money invested with him other than FOMO?
Cheers
James
Hi backtothesoil
Don’t forget empress get a royalty (% of revenue) while XTR get a % of profit (definition in recent release) so unless I’ve misunderstood your calculation I don’t think you can make that comparison as it’s not apples with apples.
Cheer
James
Really good news, and looking forward to confirmation on further progress! And special congrats to all the LTH who have been waiting for FB to start generating revenue for years!
Cheers
James
Thanks for the response Ben, and what you say makes sense.
The 0.15%, do you remember where this came from? Was it a CB interview or a study from the old owner (I’m forgetting the name)?
As well as CB comment in the last RNS my reason for thinking cut off will be more inline with 0.2%-0.25% is that this range seems to fit well with the lower end of the assays received to date, but fully except this isn’t conclusive and I could easily be misinterpreting the information!
Could be a complete rookie error on my part….. but if I look at the latest RNS it basically says for hole 42 that average grade is below the viable mining grade. Grade is generally above 0.15% so me this means the cut off XTR will use will be above 0.15% and maybe more in the 0.2%-0.25% range.
Understand that this viable cut off might be different in different parts of the deposit due to depth etc but would be interested to know others thoughts/what rookie error I’m making.
Cheers
James
My guess for what it’s worth is that there will be a formal presentation to AA in Q3 of this year (assuming they don’t find something interesting at foot rot in which case perhaps late Q4). If AA decide they want it id guess the sale would complete middle of 2023. If AA pass id guess XTR would open a data room late q4 inviting bids by say end of Q1 with the possibly sale concluding late 2023.
Hi Andy
If we assume that all unsold gold relates to Q4 2021, we know that the cost of gold produced was $338/oz (per the unaudited production report). Converting this to GBP at the Dec closing rate of 0.74 gives around GBP 250/oz of cost. if we divide the 177k by this 250 we get around 710/oz. Per my tracking which is based on the quarterly production updates from this should be more like 880/oz so not a million miles away but still significant. I assume my tracking sheet is wrong or that some of the unsold gold wasn’t due to XTR (I plan to attend the AGM so will try to get clarity on this).
Looking at the chairman’s report he notes that FB will continue for 5 years, but this is reduced to 3 years on page 66 or 67. Quite a difference in value when you are talking about GBP 4-5 million per year on a 35million market cap company. Again it would be good to get clarity here.
The directors renumeration was also interesting, the guy Alister Ford isn’t cheap….. And CB bonus was quite attractive (100%), I am fine with someone getting a cash bonus when in a cash generative business but not so convinced its appropriate here, I would have thought his option would have been sufficient to motivate (along with the disposal incentive the company has put in place).
Cheers
James
I always understood that the May deadline was for CB to meet with AA, the optimistic/rampy part of my head thinks that maybe this meeting has taken place and is why CB is being quite specific with the next step and is based on feedback on what is required for AA to be interested e.g. drill a couple of holes to complete the model and more shallow holes to give more confidence that the Capex can be quicky repaid.
The more pessimistic/realistic part of my head thinks this is another missed deadline (a deadline which was not required to be given out).
Cheers
James
Hi Joeman
Apologies I don’t understand what you are saying??
The direct cash cost I took from the DFS is the operating costs etc e.g. no capex. The figure I used came from the 2017 DFS so to account for increases in fuel/labour etc I increased this by 20% (appreciate its finger in the air on my part). Not sure why this should be left out or you think it’s been paid twice?
My only mention of capex was the acquisition cost which I believe might offer a tax shield against future profits e.g. via depreciation/amortisation (for simplicity I didn’t include this in my calculation)
Cheers
James
I think I should have made it a bit clearer I inflated the 2017 DFS costs of 556 by 20% to 667, I didn’t apply 20% inflation thereafter e.g. I used a constant direct cash cost of 667/oz in my calculation!
I had in my head that the alluvials would last till the end of next year, however maybe CB said that in 2021….I’ll double check my notes however end of the day the impact would be quite small.
Agree that we are unlikely to see any cash from Manica or others as it will be used on BR/other potential projects. However obviously as I wasn’t including BR in the valuation it didn’t make sense to me to incorporate the drilling expenditures.
BizzyLizzy, I agree with you that the market is assigning 1-2p for Manica and the rest to BR. However in my view and based on my numbers it should be more like 3.5-4p for Manica and the rest and hopefully this difference will be reflected in SP once Manica starts proving its cash flows to the market.
Cheers
James
A dull day in the office had me messing around on my XTR valuation, all done from July forward (excluding BR as valuing that is beyond my pay grade).
General
Gold Price, 2022: $1850, 2023 $1800, 2024 forward $1750
Tax: 32%
Production costs 6%
Ex rate 1.25
Fairbride
3000/oz per month for 5 years
23% Share of Net Profit
Direct cash costs $667/oz (DFS cash costs of 556 with inflation of 20%, this is a finger in the air job on my part)
No Tax benefits from losses/amortization of assets (from memory Manica was valued at approx. GBP 10m in the last set of accounts so depending on how this is amortized should be quite a nice offset to the Taxation XTR are required to pay).
Running this through I get approx. GBP 22.5m
Guy Fawkes & Boa
320/oz per month for 3.5 years (assumes 120 tonne per day and 1.91g/t GF and 0.77/t Boa)
XTR get 13% of GF net rev & 10% of Boa (the 10% is a guess to factor in the different rates for pay above 30m and below 30m)
No costs (all in Alluvial)
Running this through I get approx. GBP 1.5m
Alluvials
1700/oz per quarter for 1.5 years (1700 average of last 3 quarters)
XTR get 26%
Gold discounted by 10%
Total costs $250k per quarter.
Running this through I get approx. GBP 2.5m
Other projects
Unsold gold from Alluvial: GBP 1m (I reckon we have around 924/oz)
Manica upside: GBP 5m (extension of FB by say 1 year/new discovery made which would then be a 50:50 with MMP)
Eureka: GBP 0.5m (a wild hopefully conservative guess on my part)
Other: GBP 0.1m (Kalwenga/Chong wei again no basis for this)
Corporate OH: -5m (assumed GBP 1m per year for 5 years)
Cash: Assuming we are at or close to GBP 0m
Total value excluding RC = GBP 28m
To be clear I haven’t discounted any of the cashflows, however I have tried to be conservative (and hopefully realistic) on the other inputs. Happy for others input in particular where people have a different view to me (or flat out think am wrong)
Cheers
James