Member Info for Jamesiecakes

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

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