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We are drilling blind into unknown territory, and to be coming up with results like this and proving up their geological model, is exceptional, so for me everything looks good, even very good, particularly with the levels of metals they have found across the mine. I'm very happy indeed with this news. Before they can get a value for the mine they will most likely need hundreds of holes, so this is just a start, to show us the potential, and I think they have confirmed that.
But let me make an important point. A very important point. The current share price reflects just the present state of the Empire Open Pit mine. It excludes the deep sulphides, the Navarre Creek Carlin style gold play, the Red Star high grade silver/lead mine, the Cobalt zones, and whatever else they discover. Plus, the BoD intend starting all the above without further dilution. So, whatever we find here is a real bonus.
sirspread, I am a very interested follower in GRL, and of course the start up of this extremely exciting venture. My research suggests that the potential is incredibly good, whether the gold pour is today, tomorrow next week or next month. I say this since the level of debt is very small compared to the prospective revenues, plus the directors have real skin in the game with every incentive to see this come to the success we all (maybe with your exception) expect. I am finding however that your questions (never driven by research) are becoming tedious, and are focussed on driving an argument, rather than enhancing or clarifying the debate. Might I timidly suggest that if you performed more research, and posted based on that, we would all be better off, including yourself?
For those interested, the video from the shareholder webinar can be seen here: https://youtu.be/DjC_HrcZZ7A
7) Can you clarify exactly what you have bought with the recent acquisition of Royalties and land?
a) We have bought part of the Royalty from previous owners. There is no difference to the operating company in the royalties being paid, but some of the Royalties will now come direct to Phoenix Copper Limited. The royalty owners were family owned, who had been sitting on these clams for many years, waiting to generate revenue, and they just wanted to see some money coming now. They wanted to cash in part of the royalties (they have retained the remainder), whilst we were feeling close enough to production to buy the Royalty, capturing this income flow for the long term, so this represents a real win-win for both sides.
8) Can you tell us a little about the ADR programme?
a) Today most people in USA cannot access our stock. The setting up of the ADR programme has been funded by the Bank of New York Mellon, and will actually become an income stream for us. The US people will now be able to access our shares as ADR’s. The programme went live last week with some minor issues, and from tomorrow we are fully active. We assume demand for ADR’s will build up in the States, and new ADR’s can only come about from buying Phoenix shares on AIM.
b) This is potentially a brand new pool of potential investors, and will suck those shares from UK to USA. As more and more interest comes from US, we would expect a larger percentage of the share register to be traded on the ODCQX. We have a few people lined up in the States ready to support and put orders in.
9) Do you remain as confident as ever?
a) Yes. We have 3 projects running concurrently, Empire, Red Star and Navarre Creek. Plus other projects, and plenty of news.
b) For financing of Empire, seeing some of our existing shareholders, raising $50 million will not be a huge challenge. We are not planning any share issues to get the construction money.
10) Assuming PXC delivers the plan, proves up the mines & the metal prices remain stable, what sort of valuation is possible, in say 5 years?
a) If the underground sulphide deposit is anything like we think, if the porphyry is there, and if Navarre Creek delivers, I think this could well be a billion dollar company.
11) What is the impact on the project of the increased copper prices?
a) Payback would be in under a year. Higher metals prices have a dramatic impact. Today’s metals prices would double the NPV and IRR.
b) All being well we will have this mine financed by the end of May next year, and without any dilution.
12) You’ve said Navarre Creek may be significant enough to be a separate company, If you decided to hive off Navarre Creek, how would it be done?
a) Set it up as a separate company. We would put the project into a wholly owned subsidiary, list that company and also raise some funds, distributing some of those monies as a dividend, perhaps 40%, with most of the remainder being held by Phoenix..
3) What can we do before the Permit lands?
a) We can do workshops, storage, laboratory facilities, staff accommodation, and to have this already, and integrate the 140 people who will come in to the town (an increase of 30%). We met with the mayor and he was very excited, and could not have been more supportive.
b) We are seeking permits for the unpatented land for the leach pad and the processing plant, whilst a large part of the open pit project is on patented land, which will require lesser permitting. We will get on ahead as far as we are able on the patented land.
c) The process of permits is proceeding well, with no cause for alarm.
4) How about the local community?
a) Very, very supportive. This is a mining community with historic roots in mining, and many of the present residents have ancestors who worked in the historic mines.
5) What excited you most?
a) Pretty much everything. The progress on site. The mayor, the enthusiasm of the team. It is all looking very positive. We spent a lot of time on Navarre Creek. This time the geological structure as explained to us really came to life as we saw outcrops and other features.
b) Drilling the Sulphides and Red Star will continue through the winter, whilst Navarre Creek will have to wait till the snow melts next spring.
c) Roger Turner our Chief Technical Officer, after he left Rio Tinto, consulted on the Betze Post project, and his report ended up with the formation of Barrick. Now today, Roger is every bit as excited with Navarre Creek as he was with Betze Post.
d) We have 33sq kms surface area with multiple very exciting targets. Let’s not forget the depth. As we drill down we reach the historic sulphides with high grade copper and somewhere below and deeper still is probably the Tungsten/Molybdenum porphyry, if the geologists are correct. By the time you look at our surface and the depth, where the potential monster is, that’s enough to be getting on with.
6) The Konnex team were over here last week. Can you tell us about their visit?
a) We visited a number of institutions, several of whom are existing investors, and separately our ESG team went to meet others (a relatively novel approach from mining companies of our size) which went down very well.
The company held a shareholder webinar this week (Wednesday) and here below are my notes. Please understand that these are my personal notes, presented for general interest from a fellow shareholder, but should not be used to make any decisions for investment purposes. You should always do your own research. The webinar video itself will follow shortly.
1) Was your trip to USA an easy process?
a) Not so easy in terms of approvals, until the visit to the project was deemed important enough to be given a “National Interest” Certificate by US authorities, when the doors opened.
2) Can you give us your overall impressions from the visit?
a) Since the fund raise, we’re made much progress. We now have a team of staff on site including 4 geologists, a fleet of vehicles, and have moved to much larger premises. We have a much larger network of roads, and drilling was taking place whilst we were there. We also know where things are going, and have submitted our plan of operations to the permitting authorities. The leach pad is situated behind a hill, so will have a favourable viewshed and in consequence will not be evident from town. This now looks like a serious project with legs. We had clearly moved from exploration to development. The main open pit project is really taking shape, and you can see it coming down the track. It’s not going to be far off. We have sent strong positive signals to the local community, and all in all, this is looking extremely positive.
b) Of all the projects the geologists are all extremely excited about Navarre Creek. The potential of that gold zone is enormous, and we think this could be a company in its own right.
I would like to offer more clarification. The price of a share stays the same, wherever it is, UK or USA. But in USA, the shares can only be bought in batches of 10, so making one "share" worth ten times the value of a UK share. This has been done for technical reasons for the USA market, and has nothing to do with ramping or anything else. To repeat, the underlying share price, UK or USA, will have the same value.
I love this RNS. We start with the company telling us what we had (which was pretty damn good), and then they throw in that the resource could be four times the initial value, maybe more. Let's get this into perspective. The sp has/is quite sensibly been based on the Empire Open Pit mine, for the oxides. All the rest is a bonus. Now we find that the Red Star high grade silver/lead mine has the potential to also be massive. Here's the nub. The Red Star deposit is a narrow vein, perfectly suited to a fact track low cost underground mine. Once the resource gets defined, which should be through this autumn and into the spring, we could be on our way to having a second mine operational before the end of next year! There are many infrastructure issues common to both projects, so this would be a really attractive opportunity. This is just the beginning....
Disco, you wrote "According to "Googl" copper sulfides are much better than oxides as they are usually much bigger and easier to extract the copper.". Let me explain a little of the geology.
When our planet was formed metals formed as sulphides (they react down to the most stable chemical form in their environment). These sulphides are normally encountered deep in a sulphur rich environment, often in large reservoirs, which fed up to the surface. The closer they were to the surface, they reacted with oxygen into oxides, again the most stable form. So, we tend to have sulphides deeper, and oxides in shallow locations. However the movement of the crust pushed some sulphides to the surface, where they have not yet oxidised, such as in our high grade silver/lead deposit in Red Star.
Meanwhile, prior to the 1960's is was very difficult to recover metals in oxide form, and so metal oxides were treated as waste. And that's why our surface oxides were never mined, as the heap leach process now used to recover oxides post-dated the period when this area was actively mined.
Hope that the above is of interest.
Here below is the link to the Telegram group. Please note that when I post it as written LSE get to work and alter it. Hence I am adding in some blanks. If you delete these, it should work perfectly (note I have placed 3 blanks):
https://t . me/join chat/I5hNdxg-LUTkNvtljGWq1A
Just to let you know, the earlier posts were cut and pasted from ADVFN, but were originally on Telegram. This is a brilliant forum, with very open discussion, and you can gain access to on https://t . m e/j o i nchat/I5hNdxg-LUTkNvtljGWq1A removing the spaces I have introduced.
The attendees were all volunteers from our shareholder base. Look out for the notice of the next meeting if you want to attend.
If you have any questions, then post them here and I'll try to respond.
Dear All
I was one of the 8 investors to be at the lunch meeting yesterday. Firstly let me say my personal thanks to Marcus, Richard and Dennis for their hospitality and professionalism and also express thanks on behalf of us all to our poster Zaphod on organising the event.
Donald has done a most brilliant job in summarising the discussions and I fully endorse what he has posted. There is not much further detail I can add so I would like to express my overall conclusions on our very positive lunch meeting.
The lunch was handled in a very friendly, informal and professional way. It was stated right up front that no sensitive disclosable market information would be discussed.
The main points to me were-
-The visit was successful in confirming that our Empire programme is on track
-Ryan is putting together a smashing Team in whom we should have great confidence
-ESG is at the forefront of how we operate and is first class
-All Mackay developments will he handled in a most professional way ensuring positivity in all community relations
-Work programmes are identifying innovative ways to move the Empire project forward and if confirmed these could make significant improvements to the Project Financials and NPV
-All of our geology Team and advisors like what they are seeing regarding Navarre Creek and hopefully if confirmed in the ongoing drilling campaign etc could have significant upside to PXC.
-Although delayed by understandable Covid related constraints the exploration programme will be kicking into gear shortly
-The ADR Programme with BNYMellon should be operational in a few weeks time and give US Investors a cost effective avenue to buy shares in PXC.
Not much to add to Donald's excellent summary other than to reiterate the positivity from the townsfolk of Mackay, many of whom are shareholders, and in particular, the support they're getting from the mayor of the town.
The town is already seeing positive transformation with some long neglected buildings being refurbished by the team to be used for accommodation for the increasing workforce, many of whom will be locals. The local office will be located on the main road into Mackay with the foundations already being laid and existing businesses, shops, restaurants etc will also benefit as the town expands.
Dennis is the go-to man for any questions related to the drilling programmes and the geology of the various projects. His assessment of the recent drill results from the first sulphide hole laid to rest any suggestions that they were anything other than extremely positive.
Just to mention that these lunches are NOT selective and are open to all shareholders so if anyone is close enough to London and is interested in coming to one in future, just watch out for the announcements here and on Telegram. It's always good to see new faces so priority will be given to those who haven't been to one before.
We only spoke a little about Red Star, but Marcus is of the view it could easily host a quick and dirty mine, following the high grade seams, that would pay for itself within 18 months. Now, here is something I didn't understand and which may be important. Empire is a copper oxide over a copper sulphide resource likely coming from a tungsten/moly porphyry. But, the sulphides may well extend over the whole site, with Red Star being lead, zinc and silver but also sitting above the sulphides. And all the time new things are being discovered: Red Star only came to light when roads were being cut for Empire and as more roads have been cut they have revealed more veins of mineable material.
So overall, one is left with the impression that we potentially have a huge resource. Solgold was mentioned once or twice as an example of a route that the company do not want to take, with a huge resource that has been through a couple of boards, multiple funding rounds and an ever increasing resource not that much closer to exploitation. The focus here remains on getting Empire into production, likely followed by Red Star, and continue proving up the sulphides with a likely view to selling to a major at a time of the company's choosing, if the price is right. Navarre Creek could be a wildcard that adds a lot of value: it is too early to say but the signs are promising.
So overall, a very positive lunch. It was a pleasure to hear Dennis speak: he is clearly fantastically knowledgeable and experienced in matters of geology, and with Roger Turner, who identified the potential at Betsy Post, which became Barrick's flagship mine, gives me huge confidence that we have a resource of rare potential. And Richard and Marcus are both totally focussed on getting the financing right and preserving the benefit of the site for the current shareholders. Richard was ever a little disappointed to have gone beyond his target of limiting the shares in issue to 100m, but there aren't many, and nobody is having any of mine! But having met Richard three times now, and spoken to him many times on Zoom, I am totally confident in his abilities and his approach. The more you speak to the board, the more you see their confidence in the project and in their approach to generating shareholder value.
Many thanks to zaphod (not his real name) for doing a lot of the legwork. I'm sure I missed lots out, but in many ways, it doesn't matter. My view is that this is a share to buy and hold and try to ignore on a day to day basis. The real rewards will come to those who hold for the long term imo.
Work is continuing at Empire, with the feasibility study being finalised and a focus on improving the plan of operations. They are also considering what can be done on the patented land pre-permitting. One of the thoughts, and Dennis is sending me a photo which I'll post tomorrow, is to have an aerial tramway transporting ore from Empire to the leach pads. This would mean that rather than giant yellow lorries transporting ore on a winding road down the mountain, a pulley system powered by gravity would have 2-5 tonne buckets of ore being moved directly from the mine to the leach pads 2,500 feet below. This would be self-powered, with the weight of the full buckets pulling the empty ones back up, and would save a large amount of opex (no fuel, no truck depreciation etc) and bolster green credentials. When you see the photo you will see how it would work. Nothing decided yet, but its an example of the ideas that Erin is bringing to the project and the focus on doing things as efficiently as possible. Dennis added that the Empire open pit is likely to last for 15-20 years, and the resource that has been stated will no doubt increase once mining starts. Due to the topography of the land, all of this will take place behind hills that you cannot see from Mackay itself.
There was some disappointment expressed at the response of the market to the sulphide drilling results and a belief that people perhaps misunderstood that 50cm of 8% copper was a great result, that doesn't exist in isolation, but as evidence of a much bigger and richer ore body. At this time, the suphides aren't about grades per se, but building an understanding of the totality of what lies beneath, and to intercept that on a first hole was a fantastic result and adds to the extensive historic knowledge from pre-war mining days.
On financing, Richard has been busy and has spoken to many people. He has no doubt that debt financing is available and achievable, his challenge is to get it on the best terms possible. But he was keen to remind us that the company is cash rich, has previous lenders happy to lend up to $5m unsecured whenever he wants, and he sees no reason why the company will ever need to issue further equity. Indeed, it may be that the company considers moving off AIM, as the prime advantage of AIM is the ability to issue lots of shares, which he doesn't need.
So, a very enjoyable lunch attended by 7 of us retail investors, Marcus E-J, Richard W and Dennis T. I was sat between Richard and Dennis, so didn't get to speak a great deal to Marcus. Those who sat at his end of the table may be able to add to my comments. The meeting started with structure but soon splintered into smaller discussions, and so my notes read a little like a stream of consciousness, for which I apologise.
The first thing to say is that the board hadn't been to Idaho for nearly 2 years, and they were all very impressed by the progress that has been made and the team that Ryan has built. As well as Zach, frequent mention was made of Erin, who is ex-Newmont and is playing a key role in designing the mine and Lenie, who plays an important role in many ESG areas and in relations with the local community. The town remains very supportive of the mine and the mayor is a big fan. The importance of the mine locally cannot be overstated: if it wasn't for Phoenix it is likely that the local school would have closed.
There have been delays, mainly industry wide, most evident in the time labwork is taking, but the company has drills on site and there is plenty of news in the pipeline. The EM report is imminent and they are hoping Ryan will receive it this week, but at the same time, it has been promised before and not arrived. The geophysicists came back to the site to check something last week which was interpreted as likely to be a positive sign.
From what the company has seen, it is very positive, as evidenced by the staking at Navarre Creek.
In fact, there is a lot of excitement building about Navarre Creek. It certainly seems to be the area that excites the geologists the most. There is lots of iron visible on the surface, indicating magnetite underneath and there is a belief that it could well be a "company maker" in its own right. The drills will move there after Red Star: they need to get forestry permission to drill, and the forestry people are worried about forest fires, but it doesn't really matter as Red Star is the drilling priority. But Navarre Creek looks like it extends for 6km, and when drilling is done there it is going to be very informative. Clearly we are 2-3 drilling campaigns away from knowing the true value of NC, but it could be a very significant asset in the future and its in the budget to be drilled next year. All of the 4 geologists that were on site last week said it was the site that excited them the most.
As far as the ADRs are concerned, there has been a delay in the paperwork, which is complex, but that should be up and running by mid October. As well as creating demand for shares in the US, which currently owns around 2% of the company, the way the ADRs are structure will bring in small amounts of cash to the company: nothing material, but we will be paid for the ADRs, rather than paying for it.
Notes from last week's directors lunch and discussions with a few of our shareholders have been posted on Telegram and ADVFN. Has everyone seen them, or can access them? If not, let me know here, and I'll cut and paste them across.
There have been a number of posts on Twitter and LinkedIn this evening, showing the Board of Directors on the ground in Idaho.
See https://twitter.com/phoenix_copper/status/1440416698528530434?s=21 and https://www.linkedin.com/feed/update/urn:li:activity:6846180200443584512/