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I spoke not long ago about a "Meet the Directors" series the company were going to do for us, explaining who they each are, their history, the qualities they bring to PXC, and why they believe so strongly in the company. I am told the first one is in the can, and will be released very shortly! It is with Marcus Edwards-Jones, the Executive Chairman.
Watch this space!!
More good news has been published on our Redcastle Cobalt asset, which we passed recently to First Cobalt. I give the link at the bottom, but highlight the following cut and paste:
The Redcastle Property is situated right to the east of Iron Creek, close to the Ruby Zone. First Cobalt believes that the Ruby Zone continues to the Redcastle Property. This is why it is willing to pay $50,000, and 200,000 shares, and also to expend $1.5 million on exploration over the next three years, to acquire a 51% interest in the property. It can be expanded to 75% by paying further $150,000 and expending another $1.5 million over the subsequent two years.
This could be really good for us, to achieve a cash flow from an asset, which we would have been setting to one side due to higher priorities in the Empire zone.
https://seekingalpha.com/article/4439979-first-cobalt-stock-attention-switches-to-idaho
Yes, but they have to declare if more than 3% holding, and there's no one there yet.... Just think of what would happen to our share price if someone decided to take up even 5%!. And I am hoping that the institutions do build, as again they would be mopping up the shares. Also, remember that the single largest shareholder (Martin Hughes) is a personal and long term friend of our Chairman. No, I feel quite easy that we're in safe hands for a very large raise in share price before anyone would be allowed to take us over.
I think that you are correct Richyf3 that we will be on the radar of large companies, but I disagree about the time frame. It's still too early, for 2 reasons. First because the large companies make their money from operating known assets efficiently, and not from taking a plunge into a company without a yet to be defined resource. Second, no large company has yet invested into our business, so any approach would at the present time be hostile, and easily fought, and they know what. Why waste their efforts?
Wait 3 - 4 years though, and this may change. Indeed, I think we hope it will. Then we'll be looking at £5 - £10 per share, maybe more. I would wait for that!
I managed to catch up with a director, who was ebullient. He said that perhaps the market is recognising for the first time what the directors have been looking at in the face all along. “We expected to find the sulphides at depth, and this has always been the case since we took on the project, and always been very obvious to us. We see the opportunities all around and are excited. This substantiates what we have always known and believed. Frankly this is a standard geological setting. Historically the mine has mined high grade sulphide veins and leads (this is a mining term akin to underground alleys of minerals), and certainly we would look to hopefully get similar interceptions. This is outside the area historically mined, and that’s precisely the object of this programme. There may be a change in mineralogy as we go down in depth, and we may start to intercept higher values of Tungsten at depth. Don’t forget the final shipments before the mine closed were high grade tungsten, Scheelite. This reported average grades up to 4.28% WO3 in places. The average grades of the mine over life of mine from 1901 to 1942 was 3.6% copper, 1.6g/ton of gold, and 55.9g/ton of silver. We are getting into this territory, through and beneath, and in fact we are now into new territory. This is very exciting. In terms of mining, this would be a standard mine, without specific difficulty. It is easy to access, since we go into depth straight in via the side of a mountain.”
Concerning the pictures he commented “It’s as good a run of core as I have seen, and I have seen many, many cores! We do not know the true width, but we do know that we have mined through 12.6 metres of highly mineralised sulphides, which is excellent. This is confirmation though that there are sulphides below the pit, and this corresponds exactly with our model.”
He ended with “All our models are based on very sound geology, and we look forward to receiving the results from our other projects, like Navarre Creek, Red Star and the others.”
What more is there to add than that? Can you feel his excitement?
First five pictures https://phoenixcopperlimited.com/photo-gallery
Hi Mike. That's an easy one, because I already have the answer. This was a drill which encountered an old mine working when going down. It needs solidity round it to drill, to hold it steady, so they are waiting for some casing tubes, which should arrive any day now before continuing. It's a regular happening around old mine workings, and nothing to get worried about.
Yes, this is a potentially billion dollar company in the making. The RNS today is just one step along the way, but it confirms everything that the geologists have been predicting. With the sort of size of resources that has been discussed, and the clever plan from the BoD to grow the business from profits, we could well be seeing a 20 times uplift to our share price within few years. That could be life changing for some of us!
Here's a few more words after a little more study. The information is very encouraging indeed to see, and the initial concentrations seen with 75% total sulphides is quite exceptional. Take a look at the Sulphide mineralised concentrations (up to 25%) from a depth of 173 metres over 7.9 metres, and then add to that Sulphide mineralised concentrations (up to 75%) from a depth of 181 metres over 4.7 metres. That’s a continuous seam of 7.9 plus 4.7 metres = 12.6 metres. That’s exceptional! Let me offer some highlights:
• These results are giving us exactly what were hoping (planning) to find, and exactly what the geologists said we would find. That’s important.
• These results show the indications that this is a major system
• We are below the deepest historic mine, so this deposit is just waiting for us in its entirety.
• A few words now on the ores found:
• Chalcocite is generally found at the junction between oxide and sulphide layers, so it is telling us where we are leaving the oxides and entering the sulphides. A very useful indicator.
• Chalcopyrite is the world’s principal source of copper. Very encouraging indeed. Approximately 34.5% Cu.
• Molybdenite is the main ore of Molybdenum, and shows that we are moving down towards the porphyry (approx. 60% Mo)
• Molybdenite ores are essentially the only source for rhenium.
• Galena is an important ore of lead and silver
• Bornite copper content can go up to 63%!
• Sphalerite is the most commonly encountered zinc mineral and the world's most important ore of zinc
Conclusions: These results do suggest that what the geologists said we would find, we have indeed found! If so, and if confirmed with the other holes, should bring a dramatic re-rating to PXC’s value. At the present time the valuation is based essentially on the known Empire Open Pit mine and it’s very fast payback. The project is designed to throw off sufficient cash to open up access to these sulphide ores in the deep, and we are now confirming that not only do these exist, but that they are very rich. The sulphide mine should be much more valuable than the oxide pit, which is where our present valuations come from, and so our share price should rise by multiples as the development work continues. Then we can start to think of the huge molybdenum/tungsten porphyry which the geologists have told us lies below even deeper, and below the sulphide layer. This could be a real giant, and towards a world scale mine. And then we have the Red Star high grade silver mine, the Navarre Creek Carlin style gold play, plus the cobalt. This territory is full of riches, and it does look really possible that we will achieve our $1 billion value soon.
I’ll get on to the company and see if I can get any further comment from a director.
This is a great RNS. Let’s put it into perspective. This is about Phoenix’s future. The Empire Open Pit mine is today. This RNS is all about what we’re going to do with the cash we will be throwing off the Empire Open Pit project.
I’ll read it thoroughly and report back within the hour, but this looks really great. They’ve found very high levels of copper in their first hole, and over a very good length. They knew it was in the zone from previous drilling, and from their geologists, but to strike it this rich on the first hole, it’s like that classic oil gusher. Ryan (the CEO) generally doesn’t do excitement, but you can see it here. Just read this and digest “These are exceptional results from the first drill hole, suggesting potentially elevated grades of copper, as well as the presence of gold, silver, zinc, lead and perhaps molybdenum by-products. It reinforces our geological model that the deeper Empire underground deposit represents a major ore system, which we are only just beginning to evaluate and understand.”
We know that the Empire mine is going to be gushing cash. Now we know that little more on where we are going to be investing it. And what an investment it looks likely to be!
I’ll study some more and be back later.
If you meant the sharesoc webinar, it's only avialable on playback to members of sharesoc. I understand that DonaldPond is trying to get some parts for uploading to the company website, and I'll make sure it's announced here, if that happens. But in summary the session was very positive, with everything being presented as on-track for start-up end 2022, and the drilling programmes looking good.
As a matter of interest, have any of the recent posters taken account of the gold loan, and I cut and paste from the RNS dated 22nd June 2020, "14% secured Gold Loan of up to 2,000 troy ounces of gold at a price of US$1,500 per troy ounce, equating to a value of US$3.0 million (c.£2.4 million) before expenses from AIMS pursuant to the Loan Agreement", and on which the interest rate was subsequently raised to 17%, in the RNS dated 18th December 2020. Has this been factored in to your calculations? Does it have a material impact? Or with the present economics is it so small as to be insignificant?
Here follows the link to the video of the company webinar:
https://youtu.be/wNoDP-_-d9Q
Sparky, I think the BoD would agree that ultimately we would be bought out by a major. Indeed, you could almost call that a long term goal. But that is not going to happen for a very long time, as no major would make a decent offer based on an aspiration. The BoD have designed us a project to get rich in a rather clever way. The Empire Open Pit mine is of no interest to any major, it's just too small. But no major would take a punt on making an offer for future potential today, as the knowledge of the resource at the moment is not enough. Large miners generally make their money by buying low risk ventures and operating them efficiently, and not by taking punts, and frankly today we are a punt, or our share price would be way higher. If our results from the deep sulphides come back good, we will certainly invest in more drilling, and even at some opportune time, JV with a major, but definitely not sell. The BoD have designed this company for their retirement and not to sell out early. Besides which, you just can't say we'll be gobbled up, without describing the process. It just doesn't work like that, someone coming along and gobbling us up as if by a random act. No, we're not for sale, and we're staying that way (qualification: we're not for sale till we're a billion dollar plus company).
My apologies, for sportsbilly is correct (thanks mate). In juggling things round to try to get them to fit in, I left out question 9. And it is an important one. Here it is:
9) The company has referred to the deep sulphides as “the ultimate prize”. Could you give an idea of the potential size of that resource and is it something that is a factor in funding discussions or is the open pit being treated as a standalone project?
Answer: The open pit is a standalone project. Funding the underground mine will be a different exercise in due course. The ultimate prize, well yes. Do not forget that we are drilling the sulphides this year. We know we are in a prolific geological district. We know that we are at the epicentre of 3 faults which cross at Empire. The largest US copper mine is at Bingham Canyon 4 hours down the road. We are absolutely in the right area, and we know we have a substantial ore body underground. How substantial? That’s anyone’s guess. “What I am about to say is not backed up or signed off, but is stated to give you an idea of the size.” We know from existing data that the sulphide belt is between 5-7 kms long (let’s call it 3 kms to be conservative), we know it is at least 1,000 ft deep (let’s call it 300 metres), we know it is 200 metres wide, at least. Multiplying these together, we have 180,000,000 cu metres of rock. This rock has a specific gravity of 3, but call it 2, so that is 360,000,000 tons of rock. As for grade, when the mine closed it was mining 6-8% copper, but let us call this 0.5%, (a very simplistic calculation) this gives us 1.8 million tons of copper. Ignoring all the other metals, although they are certainly there (like gold and silver). Putting that into perspective, the tenth largest copper mine in the world, The Grasberg mine in Indonesia, has 10 million tons of reserve, which suggests we are a world class copper deposit, and could be much larger. Looking at a 60% recovery rate, at today’s price, we have a deposit worth $11 billion just of copper, which shows how big this could be and that ignores the Tungsten/Molybdenum porphyry underneath (noting that Tungsten and Molybdenum are each approximately 3 times the price of copper). It could be pretty big. And worth getting out of bed for.
10) How invested are the directors in the success of the company?
Answer: We own about 6% of the company and are strongly incentivised with share options. We are very much in this as shareholders, not drawing down massive salaries, and our benefit will come from share growth, and are therefore aligned with shareholders. We have participated in every equity financing to date and bought in the market. None of the directors has ever sold any shares. We are in this because we see what this company could be worth when we are up and running. When Empire open pit mine is in production, and in production at Red Star, then the underground deposit, then Navarre Creek, First Cobalt doing good things with Cobalt at Redcastle, maybe we’re doing things in Bighorn, I think as I’ve said before, this could be a billion dollar company. I want to be a shareholder then, and preferably without issuing too many more shares.
11) Can you offer any thoughts on your future dividend policy?
Answer: We want to add value and to offer dividends. The backbone is already in place. Since the IPO all the money we have sent to our operating company has effectively gone into a shareholder loan, so sitting here as Phoenix Copper, we the parent company have a $14 million shareholder loan, earning 6% per year. By the time we get into production it will be approx. $27-28 million. We know that we will be throwing cash out very quickly, we estimate maybe $40 million in the first year alone, and we want Konnex to repay that shareholder loan back to us as fast as possible, and would use that cash as a basis of a dividend. We will be in production for 2023, it is quite conceivable that if we have the free cash, and after cash aside for reinvestment, Konnex might re-pay $7-10 million, which means that we could be declaring our first dividend at end 2023. This would be attractive to all shareholders, including myself.
(Please note the person speaking was one of the directors and not me)
8) What do you believe will be the catalyst for the permanent move of the SP from the 40’s?
Answer: The longer our market cap stays above £50 million, the more institutions could buy into our shares. We expect to have 2 more analysts look at our shares (Panmure Gordon and Oberon), and we are hoping we may get some coverage in US through EAS. Some important institutions came on board during the last equity raise, and institutions tend to add to their holdings when they have cash inflows, so we are optimistic there will be more buying. It will be a gradual process enhanced by catalysts. The first drilling rigs arrive on sites shortly, we have results due shortly on the EMG survey, we will have drilling results from Navarre Creek and Red Star plus the Sulphides keeping the pot boiling over the summer, and soon after our plan of operations, which will be in about 6 weeks, we will start talking about financing. I believe that the share price will really move when the market sees that we are funded into production without having to add more shares.
Supplementary Question: What conditions would make you look for equity financing rather than debt.
Answer. Us directors own 6% of the company, and we don’t want to be diluted. We look on other companies and want to avoid their mistakes. Our models show we can pay back any debt in less than 2 years. There is no contest. There is no need to raise equity at the moment, and we have sufficient cash to take us well into 2023, by which time we will be in production and generating our own cashflow.