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Hi Andrew & Andy
To be honest I cannot make sense of the numbers reported (based on my understanding of the contracts), I would guess it would be a mix of things;
The decrease in Alluvial share from 28% to 26% (Jan 2019 RNS) occurred in late Q4 2021
For Boa, we are mining from a depth of less than 30 meters giving us 16% (including 6% for production taxes), possible correction from prior periods.
Adjustment of Q3/Q4 2021 numbers in Q1 2022 as Andy highlighted.
To be honest I really feel the production update should be separated by project now and show;
Project total production
Explorator share (and a note with movement in %)
Value of Gold produced
Other Income (and a note with what this is and why it changes)
Direct costs
Production costs
Other costs
Then Gold sales Oz/$ so we can get a feel for the cashflow in the quarter.
I maybe stupidly believe that we are close to something quite special but if we don’t tell the story well (with understandable numbers and a clear vision) no one is going to believe it!
Cheers
James
End of the day it doesn’t matter (unless it impacts XTR inflows, I’d be shocked if it does as surely this should been an RNS)
But why would empress give away there rights to a royalty on the satellite deposits that the agreement gives specifies they have access to?
Hi Andrew
My take would be that MMP will get 8% of the gross revenue from the GF and BE, they would then give Empress there royalty from this 8%, leaving MMP with a shade under 5% of the monthly revenues and empress with 3% (there royalty). So assuming the Chinese contractor perform it seems a win win.
Cheers
James
I’ve only skim read the conversation over the last few days so apologies if I’ve missed the point.
But looking at the empress RNS they clearly state the satellite deposits
https://empressroyalty.com/site/assets/files/6229/emprnr2022-01_manicaincrease.pdf
Hi Andrew
MMP already get 35% of the GF & BE income due to XTR from the contracts with the Chinese.
Cheers
James
Hi Andrew
Fully agree on including tax in the calculation, i am calculating taxes the same way as you to be conservative and for simplicity.
However in reality I would imagine that they would be amortising the value of the manica license as they produce (I think they paid circa $10m from memory) which should give a nice bit of relief against CIT.
Cheers
James
Not sure why people doubt RC will be economic, we have added loads of tonnage (at a grade above a reasonable cut off assumption) to a project that was approximately economic at the starting resource at todays price (granted the discount rate was a little low and it was before tax but you get my point).
Obviously adding a second pit to the equation is only going to help the economics, as the capital expenditure will be spread over a bigger resource driving down the unit development cost.
Hi Art
You might be right that we aren’t there yet, however (and I could be wrong) why would you release something before you are required to do so that is negative. In my experience the CB play book is to release good news early and push bad news as far down the road as possible (why I’m confident the Q1 alluvials aren’t great).
Cheers
James
https://mobile.twitter.com/EmpressRoyalty_/status/1524097679533477888
The alluvial results seem to be released early (first few weeks of the next quarter) when they are decent and very late (last few weeks of the next quarter or even later) when bad….
Let’s see if the trend continues
Hi Steve
I would be interested to know which RNS you have read that have changed your view? I fully accept and agree that the alluvial contracts are structured in the fashion that Andy said last night, but I don’t remember anything from an RNS on FB that could support this view?
Cheers
James
Hi Andy
MMP are financing the opex however it’s still a deductible to calculate XTR share, from further down the RNS
"profit" is defined as: Revenue on Sale less deductible costs (excluding non-cash items) and corporation tax.
So it’s just costs like depreciation which won’t be factored in to the “profit” to determine XTR share.
FYI Check out the October 2021 presentation and you’ll see that CB is estimating $6-7m pa from FB, I don’t recall what price assumption he was using other than it was a bit conservative but it gives a guide to what sort of income FB will bring
Cheers
James
Cheers
James
From the RNS
Xtract will receive between 20% and 23% (dependent on prevailing gold price) of the hard rock after tax operating cash flow
Could it just be that people think we are not going to sell any gold in Q4 hence no revenue.
Hi Andmillsy
I’ve tracked unsold gold since the alluvial started (yes I am that sad), and believe we have 883 Oz of unsold gold at 2021 close.
Cheers
James
Q1 manica update soon (assuming it’s been a relatively positive quarter otherwise it will mysteriously take a few more months to produce), FB should be starting any week now and of course what ever they find at racecourse/ascot.
So to summarise should be plenty of gold for that cake!
F100
Very clever not to add a month or year to the end of your sentence……
Cheers
James
I highly doubt the buyer, valuer or CB is going to base a valuation on % of in ground $. They will use traditional valuation metrics like discounted cash flow, EBITDA multiples and benchmarks etc to form a valuation. This valuation is what will form the price any buyer pays or seller receives which can then be translated back into a % of in ground $ if we so wish. For me it’s a nice metric to use as gives an idea of possible SP when we know so little detail, however it’s just an indication and people shouldn’t get caught up on it.
Hi BTTS
She says it’s $1.5m pa to empress the, the $0.5m p.a. Is the incremental from the additional $1m investment.
Also empress investment is a royalty, while XTR income is revenue - direct cost * 23% (at todays gold price), so you aren’t comparing apples with apples.
Cheers
James
Does anyone else track the amount of unsold gold from our Manica operations?
I have this at 883/Oz (going back to project inception) so around $1.4m USD at Q4 2021 average sale price, would be good if someone else could validate. Assuming I’m correct it would be interesting to know if CB includes this in his “treasury is sufficient” comment or if this is a little safety net.
Cheers
James