Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Hi 2Damen. I think you read this wrong. This was a small cashing in of warrants, nothing more. Warrants are issued as an incentive, often at the time of a share issue, a little freebie, as an appreciation, often when the future is still murky. Much like, if you share the pain with us today, then you'll be rewarded if we come good. To convert them into shares there's a price attached, and that money goes straight into the coffers. This is not dilution, as everyone knows about them. Look on the website under investors and shareholders information. It's published, and I do my calculations based on our fully diluted situation, with all warrants converted.
This was a very standard RNS for the conversion of a few of the warrants. And we don't have that many, compared to other companies.
It's too early, way too early, my friends. There has been massive exploration of the shallow empire open pit, but not much at depth, so no one will pay us huge sums for that. And we all know the POTENTIAL, which remains just that, till it is explored. But fast forward say 4-5 years, when we have dug out our first pit, and can place a drilling rig much closer to the deep. At that stage, we will start to build up our Resources, and start to get some interest. But we'll be in a lot stronger position ourselves, having already been mining in Empire for that period, plus would have started on Red Star, and perhaps Navarre Creek. Our sp will be much higher by then, so the uplift from any offer would need to be be much higher. I'm going to stick my neck out, and say today, looking in the crystal ball, I would expect an offer of the order of £10 plus.
Good morning 2Daman, I would suggest we don't get into a debate here about climate change, but more importantly the policies which are being implemented around the world. In USA this is called the "Clean Energy Revolution". This is pushing for the reduction in use of fossil fuels across the panorama and for the electrification of many industries. The driving force for this will be copper. And since this is being mined in USA, in an environmentally friendly way, we will be ideally placed to take advantage!
Deep does not necessarily mean bad for us. Look up Bingham Canyon just 4 hours drive south from us, owned by Rio Tinto, which is one of the deepest man made holes on earth. It's so vast, it's visible from space. And they are mining a very similar resource to ours, and now getting down to the Copper/Tungsten layer. in the porphyry .
Hi LL, you are correct. I do not believe that raising finance will be difficult. I also agree about the 1% turning into 100%. It was said a little tongue in cheek, but you get the intention, which is that we have discovered only a really tiny part of the resource to date. Of that, there is no question. I also agree that the best way to do the exploration would be from the old deep tunnels, or alternately once they have mined the first pit sufficiently low. I would estimate this to be maybe 2-3 years away, from today.
Good evening Novitiate. I can help you here. The history of this mine is really interesting. It started up in the days when there was a lot more copper in the world, so they had no interest in the lower grade copper near the surface.. This operated from the 1880's till the early 1940's. They were after the richer seams of copper at depth they, with approx 5-8% Cu in the ore they were mining, as I understand it. But they had 2 major issues. Firstly it was a difficult mine to operate since it was so deep, and secondly by 1941 they needed the manpower for the war effort. This mine was not a large volume producer, so they decided to shut it down. Meanwhile, the last week of its operation, documents show they discovered large quantities of rich tungsten, but it was too late by then. If they had found that earlier, the mine would never have closed. But that tells us that we have this massive Copper Tungsten Porphyry at depth, and that today, is very valuable indeed.
Fast forward to now, and the deep tunnels still exist, but would need a lot of investment to be used. I am not sure we would even go into them now. But also the grade of copper available in the world has changed, and we mine lower quality, and that is today's norm in the world. Our Dennis Thomas came along, and identified a potential workable copper mine on the surface, something which would not have been mined 80 years ago. This will be opened, and will be mined very profitably (I heard today, with the present price of copper, it has a pay back of 8 months), and able to throw off the cash to be able to fund the exploration work we would need to go for the deep.
We have a huge amount of information available from historic records, and we know the Empire Open Pit very, very well. Please do let me know of anything else you may be interested in.
Hi sewingmachine. The company are intending to fund the start-up project through debt, and are already deep into conversations, we understand, but for obvious reasons the details are confidential. This Monday they announced a £2 million unsecured loan (at 8%) to be used to advance the permitting process. There might be a small equity raise, I would guess, but with the expectation of adding value. The directors are all heavily invested, and understand that it is on no one's interest to drop the share price. They are also closely aligned with shareholders. Specifically though, they took on a US outfit last year (EAS Advisors) who are professionals in this sphere. The RNS about this was dated 2nd Dec 2020.
hTTps://youtu.be/y9xxb6PNuxE Enjoy!
Questions 11 and 14: Why does the board feel they are so well placed to bring PXC’s various projects to fruition? And why would I choose to invest in PXC over the other available mining plays?
Answers 11 and 14: We are very fortunate to have a mineable geology in a first world jurisdiction, favourable tax, in a community which supports our activities 100%, and with copper over $4/lb, plus high demand for our products. We get local support from the top downwards, including from the state governor, and have had great encouragement and nothing but support from the local community. We have a world class team of professionals. Very importantly we have a superb shareholder base, indeed, all the stakeholders. It does not get any better than that. We are always very willing to talk with anyone. If you are inspired to call us, or have any question, please do so.
Question 12: Can you supply some detail on the steps between now and bringing the open pit into production - assuming finance is in place?
Answer 12: Finish the engineering and process design, go for permitting, then construction, 6 months in good weather, pretty straight forward, favourable ground, and excellent community support.
Question 13: What are the plans for the 5-10 year development of the company? Which projects will be prioritised? In particular, what is the plan/timescale for targeting the deeper sulphides?
Answer 13: Get the Empire mine into production. Then into exploration work in Red Star, particularly for its silver, and if we find an economic development build an underground mine, then in the process look at Windy Devil and Horseshoe portions. We have 5.3 kms of skarn along this trend, and the exploration of Red Star northwards will be a major exercise, and we may be mining along the entire length. Then it’s Navarre Creek, which is accessible from the surface. Enormous potential. Then we can start to look at the underground sulphides, and will look at them along the entire length of the strike. We’ll be using the cash flow thrown off by the Empire open pit.
Supplementary Question: What is the largest risk to any time delay with the Empire Mine opening?
Answer. The regulatory process in USA is very standard, box checking. We have already 3 years of environmental studies, which have exposed no risk. There is no risk to ground water, and no river. In Idaho the issues are generally about water, and we don’t have any.
Supplementary Question: You said earlier we have less than 1% of our resources exploited or explored so far. But today, only in Empire open pit, we have over $1 billion dollars of assets. Does that mean what I think for how large our potential resources could go?
Answer: Yes. There is genuinely enormous potential. We are fortunate that we have the relatively low hanging fruit of Empire. Plus we also have cobalt at $50,000/ton.
Supplementary Question: Back when the mine was working they were pulling out ore with 8% copper. Is that true?
Answer: Yes, that was what they were pulling out from those deep mines, plus they were pulling out ore with 4% Tungsten, when they shut the mine (due to manpower being needed for the war effort). We will be exploring that area, and at those depths.
Question 6: The same question for the divide between those two and Navarre Creek Gold zone?
Answer 6: This is rock type. Navarre creek is hosted in quartz rich volcanics. These are similar in chemistry and character to those in the Carlin type deposits. Quartz rich volcanics are permeable, and able to host these minerals, and that’s why we are so excited with this project. The same setting as the original Carlin trend mines, which have already produced 88 to 100 million ounces of gold. If we take $1,000 per ounce of gold, that makes $100 billion of gold delivered from the Carlin Trend already.
Supplementary Question: Is the Carlin gold easier or more difficult to extract and process?
Answer: The magic of this is that Carlin gold is low grade but high tonnage, so there is an economy of scale. You can be highly profitable at grades under 1g per ton, due to the scale.
Supplementary Question: You will have all these different mines, surely there will be economies.
Answer: Yes, we will recover all the metals which are of economic grade, and we can manage all of these from a single site and office in Mackay.
Question 8: The resource table shows that the Inferred category is roughly 50% of the value of the Measured and Indicated (M&I) Categories. What sort of % of the Inferred category might be expected to be converted to M&I?
Answer 8: We won’t be able to answer this accurately till we are mining. But it is reasonable to expect 50% to be recovered.
Question 9: Would it be reasonable to assume that the Empire Open Pit will have not just a 7 year life, but might work for many years?
Answer 9: We sure hope so. The plan in the EM is a snapshot of now. As we move forward, we may assume that we may go on for some years after.
Question 10: What are the permitting requirements in Idaho as impact our projects, and what are current estimates for delivery?
Answer 10: The permitting requirements are federal and state, and all linked to environmental law. As we go through the process we go through our baseline data, then the plan of operations (June 2021), then there are mandatory timelines and deliverables, which will take us to a late 2022 start.
Question 11 (moved to 14 below)
Question 3: In the RNS about the Economic Model the project pays back in under 2 years. What is the return with today’s metals prices?
Answer 3: If you look at the EM, it is based upon $3.60 and will repay within 2 years. With today’s price of over $4 being some 10% over that, we pay back our investment in under a year. The beauty is that the benefit of increased metals price goes straight to the bottom line, since our operating costs remain exactly the same. It’s pure profit. So, look at the tons of copper processed, look at the increased price, and you can calculate the increased profit.
Question 4: Could you describe the geology in our territories in layman’s terms, and explain what makes this interesting to PXC?
Answer 4: All indications point to that we have a porphyry at depth. Porphyry systems around the world are famous for having rather large reserves of copper, zinc, gold, silver, tungsten, and molybdenum at depth. In Empire this is a large system with a large heat engine bringing the metals up. This is plate tectonics on steroids. The mineral systems come up with faults to near surface, and if you know what you are looking at you can identify them. Mackay is the centre of the dart board, with many other magmatic activities in the region.
Question 5: Can you explain why Empire open pit has a range of metals quite different from Red Star less than a kilometre away?
Answer 5: Red Star has the same range of minerals. It is just the concentration of those metals. It is the same ore body, and it has just been faulted down.
Supplementary Question: The porphyry is a very deep deposit. Are you planning on drilling into that? This can be a long process. Can you comment on this?
Answer. Look on this as a fruit tree. The Empire mine is a low hanging fruit. We are focussing today on what is readily available, Empire, Red Star, etc. In one our reports, the geologist stated that we have only exploited and explored less than 1% of resources to date. We are in a very good situation that we could go down to the porphyry in good time. Get profitable with the top, and then go for the deep.
Phoenix Copper Limited
Notes from the Webinar 23rd February 2021
Dennis Thomas. Mining engineer, worked above all in developing new projects worldwide. Found the Empire mine property. Saw the area from Google Earth. Procured in 2017 for Phoenix Copper.
Ryan McDermott. Geologist. Born and raised in Idaho. Great grandfather, and grandfather both worked underground in the Empire Mine before the last war. Started work with Kinross in the Mackay area in the late 1980’s. He feels like he is coming back home. Joined Phoenix in 2017. The town is all supportive. It would be hard to find projects in such a supportive jurisdiction.
Question 1. When do we estimate that we will generate our first dollar of revenue from production?
Answer 1. The process design is for Cu/Zn recovery by heap leach. Typically within 30-45 days of beginning leaching we will be selling product, which is planned for late 2022.
Supplementary question: What sort of royalties and taxes will we pay on everything produced?
Answer: We will pay standard state and federal taxes, plus Idaho has a 1% mining tax, which totalled up on the life of mine will be about 9%. This is a very favourable jurisdiction.
Question 2. Is there any way that the start-up date could be brought forward?
Answer 2. Simple answer no. Based on regulatory guidelines, we are confident with the schedule we have.
Supplementary Question: How are you going to juggle all the different priorities? Will you focus on 1 project, or can you handle them together?
Answer: The flagship project is the Empire Pit, and will remain that. All our other projects can be easily accessed from Mackay, and can be run concurrently. Plus we are polymetallic so we could move priorities around between projects dependent upon metals prices.
Supplementary Question: The projects will put you into a large cash flow. In order to maximise the value of the company, you will be required to upscale the exploration activity. What will be the level of extra drilling and exploration activity?
Answer: A lot depends on the copper price and the demand for copper. We will look at the market and the cash available and deploy it optimally. We will put the cash where it is most effective at that time.
Good morning all. Here following are the notes I took during the yesterday’s webinar. I understand that the company will be posting the video very shortly, and I'll post the link here, so you will have a choice of my notes (not a verbatim account, but a precis), or the approximate 45 minute video, or both. We talked briefly after about the format, as this was made in Microsoft Teams. We were thinking next time it might be better in Zoom which I think has more flexibility. Any feedback on that would be appreciated.
Back in early November, I wrote to H-L to ensure that my vote (against) the deal would be counted. They wrote back saying "We are currently waiting for more information on the Kaz Minerals Scheme of Arrangement but will be writing out to Shareholders in due course regarding how you can vote and take part in this Corporate Action". I wrote back recently and received the following " We have been waiting for a firm timetable of dates for this corporate action but will be writing out to Shareholders regarding this shortly".
Has anyone heard from H-L? Is the vote taking place? Does anyone know ?
Guys, I believe in honest debate, and I believe we have a good site here compared to many. So well done all round.
The company are restricted in what they can say, and sometimes even more importantly, what they can't say. For example, they cannot post "financially sensitive information" unless it goes out to all. That is why we have the RNS's, as it arrives to all together. One key point in everyone's minds is the question of finance. I think that 2Daman is confusing the raising of equity with an automatic drop in share price. His words "I prefer the option of a company funding by such a loan, and not dilution as such punishes early investors ". I disagree with you 2Daman. An equity raise does not always punish early investors. That may be your experience from some other companies, but does not necessarily apply to a well run company. Let me give an example. What if we bought Elon Musk into our company as a shareholder through an equity raise? I think you would agree that our sp would soar as a result. Today we have no knowledge of the plans to finance our project, but one thing we do know is that the board members themselves are all large shareholders. They would be the first to prevent an equity raise for the sake of bringing in money if it did not offer added value, not that I know that there will be any equity raise. I am inclined to trust the board, and their good intentions, and I think they will be planning things, if there is an equity raise, so that our share price booms. They may be teaming with major institutions, they may bring in high value individuals, I know not, but I trust them, for this is a company with a long term plan, and everything else I see is working out.
As an aside, we're all set for the webinar tonight, and it should be available by tomorrow. We have Ryan and Dennis, plus 6 shareholders, including myself, plus zaphod99, investorman33, goldrush, zac mir, and donald pond.
Good luck everyone, exciting days ahead!!
I see two huge takeaways from this RNS. First the word "unsecured". Second that this has been given. In order to offer any kind of loan of this nature, the lender would have performed a due diligence. They would have looked inside the box and seen the inside of PXC, and its numbers. They would have performed their own analysis. And they liked it so much, they were prepared to give an unsecured loan. In reality, it's the same process to loan £2 million, as it is £50 million, without many additional steps. This is a massive demonstration of confidence that the company will soon be up and running with its finance for the Empire Open Pit project. It's a coiled spring waiting to burst forth....
After the last week, the ups and downs, plus the knowledge that everything is lining up very nicely, in terms of delivering a profitable and eminently financeable project, combined with the price of copper moving up very nicely, this company has the feeling to me like a coiled spring, just waiting to surge up. Then we'll take the value the company is due and never see these levels of prices again. I can't wait for the weeks ahead....
A post on Telegram from Richard Wilkins, PXC CFO:
If we plug today’s metal prices into our economic model the base case 7.5% NPV pre-tax goes up to $143m and post-tax to $127m. The pre-production capital expenditure is paid back in less than one year. The IRR is 78% pre-tax and 68% post-tax.
We have to remember that on AIM it is the Market Makers who control the trades, and adjust the price to match available shares in the float. I suspect, that with the small number of trades on this site, that they do not pay continual attention, and tend to look at things in batches. In this way they lack subtlety. So, when seagreen accidentally sold his shares on Tuesday, he had no difficulty to sell, because they were moped up, but the MM's interpreted this as a moving down sentiment, and dropped the price. When he came back to buy, they had difficulty to fill the order, which has been a perennial problem here, but missed the equal and opposite trend being remote from the share, so the price never caught up. I really don't think it will take many more buys to see this share moving up, if the supply remains tight. Message to Seagreen. Don't sell shares when you have a hangover.