The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
LW I completely agree with you, hence me drawing attention to the fact that within the original open pit study there's a positive NPV assuming only 9 years mine life.
Ref: https://www.lse.co.uk/rns/XTR/bushranger-conceptual-open-pit-mining-study-c05hq78ws9qagfq.html
The previous conceptual pit study doesn't take into account that LoM can be added to significantly via adding volume of ore (which we have done as a result of the drilling campaigns) and we already know there's a situation where the Capex (which is likely to reduce) and Opex (which is also likely to reduce) works for the project (based on the detailed assumptions) then I don't understand how it's not pretty obvious that when LoM is added, and the operating efficiencies are improved, then the NPV becomes considerably more attractive, dare I say, even viable.
To be clear, my view is that on the basis the project is able to be economic (admittedly based on the discussed assumptions) including Capex based off the previous JORC (i.e. prior to all of our exploration / addition of a huge amount of potential ore). When you further improve efficiencies / add significant mine life which can effectively be seen as ‘the Capex is now paid off and we know that this throws off a decent cash margin when only opex is considered’ then I’m assuming this project will be more, not less viable.
An open question to the bb: if the Capex can be paid off using the original open pit model referenced above, and we know the project is viable/throws off good cash when only considering the Opex, what do you think happens when several years life of mine is added to that original model (i.e. after Capex is paid off) AND on top of that the operating margin can be increased significantly through pre-concentration?
Answers on a postcard please.
Now lets look at some of the new information we have from the latest open pit mining study RNS / Updated mineral resource RNS’s:
“Following the completion of a substantial drilling programme by Xtract, independent consultants, Measured Group, updated the historic Inferred Mineral Resource Estimate for the Racecourse Prospect, which is now reported as 512Mt @ 0.22% CuEq*, at a cut-off of 0.1% CuEq, containing 1.1Mt of copper equivalent metal and classified as Indicated and Inferred in accordance with JORC (2012)”
Ref: https://www.lse.co.uk/rns/XTR/racecourse-prospect-updated-mineral-resource-k5dfrxajgs0ls13.html
“A maiden Inferred Mineral Resource Estimate for the Ascot Prospect at the Bushranger Project is reported by independent consultants Measured Group Pty Limited ("Measured Group") as 87Mt @ 0.22% CuEq*, at a cut-off of 0.1% CuEq, containing 0.19Mt of copper equivalent metal and classified as Inferred in accordance with JORC (2012)”
Ref: https://www.lse.co.uk/rns/XTR/ascot-prospect-maiden-mineral-resource-x1tplqdy6mkrsi1.html
“Optimal Mining has identified a copper project with similar grades to Bushranger where pre-concentration reduced the amount of material to be concentrated up to approximately 50%, significantly reducing pre-production capital and operating costs.”
Now lets use our brains a bit… what do you, the reader, without being fed the information by an anonymous poster or being told that this will/won’t work by any of the posters here, think the outcome of an updated open pit conceptual study will be where we assume the following:
Considerably more Ore
Longer Mine life
Considerably lower Opex due to pre concentration
Significantly lower Capex
As detailed in the most recent RNS.
Ref: https://www.lse.co.uk/rns/XTR/update-on-open-pit-mining-study-for-bushranger-kk3razabvvakq58.html
Let's begin this discussion with the statement: 'NPV of the project is going to be hugely affected by Life of mine (LoM)', considering we're discussing porphyry mining I feel this is often overlooked in bb discussions.
Here are some of the figures/a little info from the original (pre drill campaign) conceptual open pit study:
“Open pit modelling was carried out using the currently defined JORC (2012) compliant Inferred Resource of 71Mt @ 0.44% Cu and 0.064 g/t Au at a cut-off of 0.3% Cu, as well as additional unclassified resources at the Racecourse prospect”
Now I’m sure some of you will remember that a positive NPV (including Capex) was established (Scenario 10) - please see reference for further details.
Some of the key metrics:
Assumes 20mtpa
Assumes $5 / lb
Capex AUD$1,454m (circa $965m)
Opex AUD$4,152m (circa $2,756m)
Mine life 9 years based on total ore assumption of 162mt
8% discount rate NPV AUD$267,768m (circa $177,901m)
10% discount rate NPV AUD$134,943m (circa $89,649m)
Ref: https://www.lse.co.uk/rns/XTR/bushranger-conceptual-open-pit-mining-study-c05hq78ws9qagfq.html
Wait wait wait, are you saying that you DON’T trust the anonymous poster hiding behind an alias who claims to be the “Director of Analytics for a large FTSE 100 company” in order to give credibility to a damning ‘financial analysis’ that can’t be disproven by other posters as the company hasn’t even released the figures yet?
Where’s the trust gone guys?
Speaks volumes…
https://www.bloomberg.com/news/articles/2022-07-28/anglo-american-s-new-boss-sounds-warning-on-future-copper-supply
Definitely meant to post the link…
https://embeds.audioboom.com/posts/8125717/embed/v4
Appreciate the sentiment Steve, my view however, is that Colin - with a track record of selling mines - will be the one at the negotiating table. We have teams in place doing the 'heavy lifting' within the various subsidiaries so I'm not sure I agree with the view that CB doesn't have enough support. I'm also reasonably confident CB has solid strategies in place re our various assets (including an exit strategy for Bushranger), it can't be helped if we found a new resource (Ascot) that has extended the timescales due to the desire to further explore... any other head honcho worth their salt would have made the same play as CB if they were in the driving seat, so why should we pay another wage for someone else to make the same decisions?
I'm genuinely interested, what is it - specifically- that those posters calling for a dedicated CEO think said person would be doing to earn their keep?
Jezzoo, I feel like I say this almost every time the "we need a ceo" gets brought out the bag.
I appreciate your view, you're entitled to it, but it has to be said: all of what we have currently is down to CB
- he's got us this far...
We have various income streams either currently operating or coming online in the immediate future (managed by teams on site/contractors), we have development on our Lachlan fold project down under being managed by the team down there.
It seems to me like our projects are being managed just fine, even if the timescales means we have to wait patiently.
What would paying someone 100k+ per annum bring to the table? - We'd still be at the behest of the sometimes glacial pace of mining.. A dedicated CEO isn't going to make a blind bit of difference to the amount of gold processed in SA or the speed of drilling/lab work in Australia.
CB still has my unwavering support as a long term shareholder - my view, for what it's worth, is that a CEO taking the reigns is a fairly pointless expenditure considering the model under which extract operate (royalty streams and/or exploration which is managed by teams on the ground) - 100k+ a year for someone else to ring those teams for an update and update the market? No thanks.
For what it’s worth, I don’t agree that “ignoring them completely” is the right way forward.
Call these posters out on their nonsense, post the facts and challenge the rubbish, otherwise they just get to post what they like unchallenged as though it’s fact.
Just my two cents…