The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Some of us have quite a lot riding on this, and for all the attention we've paid over the years....we're really still guessing. The curse of the retail investor, I guess.
Here's my guesses, closest to the pin wins a night with Dianne Abbot...
Upfront Capex - $1.8 Billion
Tonnes per year - 15 million
NPV - $3.5 Billion
IRR - 27%
Headgrade - 0.9% Cuex x 750 million t's. X 50 years.
Price Assumptions...
Copper $3.75
Gold - $1750
Silver...who cares... tell me about the moly/rhenium circuit.
It's interesting to see that they have drilled so many geotechnical holes already. I'm not used to seeing Solgold do anything in a hurry, but it appears 5hat they are hurrying to progress the TAM open pit. Maybe they're trying to make El Presidente happy by starting production before the end of his term? Suits me.
Being the Banker, is that rhyming slang? You're already forgetting their second trick, which is Porvenir. And the third trick, a bloody big exploration portfolio. As for TAM, probably only one or two of these new holes are any good, but what matters is the possibility of an open pit for early feed to Alpala's plant, which, if it's a goer, would reduce payback and increase NPV compared to the upcoming PFS numbers. If TAM was a standalone deposit somewhere in the jungle then it would probably be a write off...but it's right next to where a huge plant will be built. The rest of TAM is just resource inventory for another time, but it's still a place to drill out.
666
I think it does work more or less like that.
Here's a great tin primer, that's enough OT from me.
https://petepanda.com/the-case-for-tin/
Nick and Ingo both directors. Just a heads up. The global tin supply/demand situation is simply incredible, and there's only a handful of investable companies in the whole world. It's still very early days.
OT about OT, but maybe Xanadu would work as satellite feed for Oyu Tolgoi? Wasn't the story that they had f'd up the mine plan such that their plant is heavily under-utilised? Maybe we could ask our Keith? ;)
I'm reminded of the biblical commandment not to cast the gemological product of bivalve molluscs before domesticated porcine mammals, but anyhow, that's over there.
But yeah, Xam used $4 copper. It seems reasonable to me, given that a study needs to incorporate the rising prices of steel, labour, deisel etc, then why not incorporate the increased selling price of their product as well. They argue that the current production price of today's marginal Cu pound is over $4, therefore a $4 price assumption is legit. Dunno what to think there. It's an argument at least.
Yeah
So if the plan is to sell the deposit, then its comparative economics don't matter? FMD! i can assure you that any potential purchaser (sic) will perform an in-house economic analysis comparable to a PFS. All the same questions apply.
As for Xanadu and financing, they obviously haven't got any yet, but one thing at a time. Generally doors will open upon completion of a formal study, if the results are decent. (Although maybe not if it's like xtr's back-of-a-fag-packet study which showed world's-worst economics.)
Xanadu give a boilerplate listing of the available financing options, which apply to everyone. So what.
And on grades, their billion tonnne resource is is @ 0.48% Cueq....probably double the grade I expect for xtr. (As well as more than double the size.) Was xtr's best hole 0.48% cueq from 500m?.? deep? Xanadu's best include 606m (from surface) @ 1.06% Cueq, and 203m @ 2.41% Cueq from 3m. Mostly pit constrained now.
Well yes I made a driveby appearance....who wants me to hang around? Complaining about grades? Absolutely. You're right to point out that other factors are important as well, but grade is the most important factor, assuming we're comparing a deposit with the same style of mineralisation and depth. If we're comparing apples to apples - eg two open pit copper gold porphyries - than yes grade is the best place to start a comparison. Jurisdiction and infrastructure are both important, and can be deal breakers, but if they're ok then they're ok, and focus back to grade.
The example I brought up - Xanadu in Mongolia - is 15km away from power, water, highway, train line to smelters etc...this is fine by industry standards, despite it being a remote country. Jurisdictionally Mong used to be a no-go after Rio's travails, but things have changed, nb Rio's recent decision to spend billions buying out their junior partner, plus the upcoming re-writing of their mining code to Aaussie/Canadian standards. Sometimes it's good to have a fair reason how come a stock is so cheap...and best when you can see that change before the broader market does. A handy tip for any youngsters watching today's game.
Anywho, Xanadu put out their initial scoping study. It's neither awesome nor terrible. They arrived at a $630 million NPV @ $4 copper...remember xtract had their scoping study showing a negative NPV for anything under $5 copper. Now yes, xtr's resource has grown a lot since then, but did they find any rich starter pit that outshines the initial resource in the study? Nope.
The capex of ~$600m is large but doable, and given the high gold content of the deposit they stand a good chance of getting a favourable streaming deal, ala genm.v for one example, which have the effect of strongly raising the NPV even while reducing the attributable cash flow.
Even after accounting for the 3/4 ownership of their property, they are still effectively half the market cap of xtr today. Does xtr have a chance of producing a comparable scoping study, once their resource expansion is integrated?
No.
G'day News, hope the commodities are treating you well.
I haven't had much to say, because nothing has changed. Xtr's drilling keeps coming in at a disappointing grade, but how many times can I point that out. And again my other gripe - that the market cap here is way to high by peer comparisons - hasn't changed too much either.
A while back I pointed out that for the price of xtr's market cap, you could buy all three of xam.ax cla.ax and lbc.v, and thereby get yourself exposure to 8 different copper/gold/etc porphyry projects plus a big cobalt thing, over 7 countries, with 5 current drill programs and ~US$130 billion worth of in situ resources already.
Well, these bad boys have opened up a 32% market cap lead over xtr since then, without much of anything happening. Lbc.v's imminent drilling results promise to be a corker.
I can give you comparisons....
Those two, and the rest, would argue in favour of ALL getting an asx listing.
Thos
dropped my phone)
..eg Brett & Joe, Mickey Fulp, Bill powers etc. Their grades a pretty special for an open pit. They seemed like sure thing, until the government (in a "good" jurisdiction no less) decided not to build the road that the project and the region needs, due to alleged indigenous concerns. I don't know what the story is currently.
Hi Darren, Trilogy are very well regrded...partnered with South 32, followed by a lot of the beter pundits
Dazza quietly mentioned they won't update exploration till the 3rd quarter.