Member Info for StanleyUK

I know it's a throw-away line, but the lack of news is because there's nothing yet to update on.
I would rather the company get their heads down and bring the project together professionally rather than try to passify an impatient group of shareholders (but for the record, I also find the wait is frustrating).

Infrastructure is being worked on right now, with the creation of trucking routes, as well as drilling to optimise the targets. These are not really RNS-worthy, but I do agree that they should offer more than just a few phtos in tweets.
We are limited in other construction as the facilities (crusher, processing etc) are on the BLM land, but the team are doing what they can on the patented ground.

On the finance front, I can imagine that getting the bond away has been more of a struggle than anticipated just a few months ago, but the repeated posting of "copper-future" articles does solidify the case for Empire, and indicates that the future price is up not down, and therefore providing a solid return to potential bondholders.
It should not be unexpected though that the delay is due to bond terms being negotiated, and the headline numbers could be higher than initially advised. But even at a few percentage points higher, Empire is still hugely profitable.
They could also be having to work on secondary funding if the bond has not been fully subscribed, but it has been advised that there is 12 months in which to get the Bond away (in which time copper should bounce, making for a more favourable investing environment), but there is also bank finance as an alternative or complementary source of funds.

I would also imagine there have been delays due to reworking the costs for the (B)FS, maybe factoring in replacing combustion-engine trucks for electric, sourcing the vehciles in times of chip shortages, getting certainty for the tramway etc.
The last few months have created many more moving parts to this project. This will then have a knock-on effect to the permitting, as the Plan of Operation needs the above items solidifying.

It is now a case trusting the reasons you invested in the first place. Empire is the primary target here, and the other drilling is just a bonus. We know all we need to know now about the Oxides, and we should allow the Board the time to arrange the right finance detail to progress us forward, and in turn reward us for our patience.

I don't expect the permit until next year. But finance should hopefully be in place well before then.

JIMO, anyway.

I don’t think funding will be delayed by the plan amendments, as the bond book build is underway. I’m hoping we get an update on the progress this week. Let’s hope it’s progressing well with a decent take up.
As for permitting, this is still a fluid situation. The Plan Of Operation should be updated shortly and submitted for approval (as a revision to the original plan).
Timelines for this are unclear and it depends on how much change or update there is ti the original submission. But the permitting process got a significant boost tonight with the US Senate passing the Inflation Reduction Bill. This has a number of provisions, including addressing the permitting process for energy infrastructure and mining projects, and restricting the litigation that can be taken out against the NEPA act. This could have significant benefit to us to help speed up the timeline to approval.

Just some of the benefits can be read here: https://www.politico.com/f/?id=00000182-5b22-de24-abe3-5b2210300000

Permit will happen when it happens. The original POO was detailed, so hopefully it’s just a minor revision to this once resubmitted. And if we do decide to process the gold in year one then all the better.

50p is a pretty pessimistic view, Sparky, considering where we have fallen from.
If we get finance in place the share price should be multiples of where we are now, as we are then only one hurdle away from unlocking Empire.

But the markets are unpredictable. By year end I’m hoping the recession risks will have calmed down and copper moving back upwards, and this should then, in sensible times, have seen us pushing £1. But whether it’s 50p or somewhere much further north, the real returns will be in the years ahead, not the months.

This isn’t just a Phoenix drop. Look across the whole industry, and even companies like Freeport McMoran, Antofagasta, BHP, and Southern Copper are all down 20-40%.

Admittedly our pressures are slightly different to theirs and the associated risk is higher, but time will be a healer for all.
Copper will reverse direction at some point, and until then we just need to ride it out. PXC has $9m in the bank, and while there is an increased burn right now as we continue work on infrastructure at Empire (truck routes, drill-testing etc), there is sufficient cash to see us through the next 18 months.
The Bonds don’t have to be completed right now, either. We can return to market at any point in the next year with a second tranche. Even taking $30m from the first round will provide us with a large safety net, and still allow the project to remain on (the loose) schedule.

Yes, there’s risk. We might not get any interest in the bonds right now at all. But we have time, and then it comes down to faith that the copper price will return to the $4 range. To me, 28p is bargain of the century.

Hi Bilko. I don't think there's any concern about operating during the current downturn.
The Company has plenty of cash in the bank, and if needed could ride out the storm until normal service resumes.
But I don't think they will need to. The Bond terms were looked at favourably by those that the company had discussions with prior to inception, and despite the market conditions changing somewhat, this is a long term investment in an in-demand product.

We don't need all the cash up front, and so can return to market with a further raise / Bond-2 next year. Just getting half the Bond away will enable us to keep the plans on schedule (permit notwithstanding).

PXC is not immune to inflation / redession, but we are well-placed to get through it. While some of us were dismayed at the extra shares issued at the last placing, the extra cash it brought in now seems like strategic genius.

Sit tight or buy more. That's the only choice I'm tussling with.

Thanks, Trek.

The timing of the bond issue hasn’t been ideal. 6 months ago we would have sailed through it, and 6 months further into the future would likely see inflation reduce and the rest of recession abate.
While short term it isn’t pretty, the HNWI and institutions that the company would have been speaking to hopefully take a longer term view than just next week.
This is a 10 year bond that could realistically pay 15% once operations begin. I can’t see there being no interest in that.

The permit is likely to come in early 2023, so we’ve got plenty of time to sort the finance. It would be good to get much of the infrastructure underway, even if we can’t start the facilities side on the patented land. But I believe we are in a bit of a Catch-22 situation right now. We need the finance in place to finalise the Plan of Operations, need the POO to complete the revision of the permit application (with final plan details), but need the permit to convince the market that this will happen, and therefore optimise the finance raise.

It’s not a unique problem to Phoenix, but the timing of the bond wasn’t optimal.
I’m still confident, and trust that the Board did their legwork and selling ahead of the bond terms being put in place. It’s a novel agreement, and one that would likely have been done through negotiation with the purchasing party, which could be why the base rate of 7.5% was increased to 8.5% (learned from the interview with MEJ). Either that, or he misspoke!

I’m sure we will get more clarity in the next few weeks.

Trek, what do you think is the likelihood of getting a full book build for the bonds?

For the upward copper-price believers there’s serious returns to be made on this bond. But has the recent downturn created a risk-off environment, and the PXC story is not yet real enough to buy into?

Would the bonds still complete if we only managed to raise $45-50m?

I’d respect your opinion on this one.

Cheers,
Stan.

There was a post on Telegram saying the company did have discussion with potential investors ahead of the bond structuring, so you’d like to think that the vast majority of it will be subscribed to. It wouldn’t surprise me if Martin Hughes directly, or Tosca Fund subscribe (although we’re unlikely to ever know).

A minimum return of 7.5% isn’t insignificant, and almost all of us here agree the copper price will see sensible levels again soon. The upside to the copper price / bond% is tasty if you believe in where it’s going.

We’re looking for a range of $60-80m. I’d be disappointed if we come away with less than $40-50m from the book build.

Todays drop was harsh and overdone. It might not be the bottom, but wherever it starts to bounce it should bounce big.

I agree, Trek, all interests are aligned.

The options extension is clearly due to the team being in possession of Feasibility Study info, which in turn should support the bond issue, as well as the bond process itself.
The Feasibility Study was scheduled for Q2, and it was earlier indicated that this could be end of May. It can’t be far away now.

One area I’m slightly disappointed in is with the current drilling at Empire. Other than a single photo on Twitter there’s been no coverage from the company. They’ve been really good at social media lately, but for something as “crowd pleasing” as a drilling campaign it would have been good to get more build-up to it.
There’s a few of us that follow it closely, but even I’m in the dark on whether we’re drilling oxides or sulphides, how long it will take, expectation of results, objectives of the drilling etc.
In these turbulent times it would be good to remind the market what a solid proposition we are. Even Paul de Gruchy has been quiet on the drilling front, and as the new company voice this would have provided a great platform.

There’s confirmation on Telegram that the summer drilling program is underway at Empire.

There’s been a few previous tweets showing the drill pad being constructed, but great news to now know the drill is turning.

Empire, then Red Star. It’s going to be an exciting few months.

There’s no clarification needed on the ExGen ownership on my part, RightOn.

Although it’s good to hear that the expectation is that ExGen are not expected to contribute, and therefore dilute their share of Empire. That is a very valuable 20% we would gain.

My question was more around where their 20% share of the start-up capital would go.
As a basic example, PXC has stated they want to raise “a minimum of” $60m, so ExGen’s full contribution would be an additional $12m.
Would the $12m just sit in the bank unallocated to start-up, or do the Company envisage needing $72m and therefore in the event of ExGen not contributing their 20% share, need to increase the debt amount to the $72m amount?

I guess the (B)FS will clarify the amount needed for the mine start-up, and this should be released imminently. Based on previous comments I’m guessing we will see it next week.

Thanks, RightOn.
From your last line, do you mean that the company is not expecting ExGen to meet their 20% commitment, and would dilute?

The RNS announced that a "minimum of $60m" would be raised, so I made the assumption that it could be more, and this was in order to cover the shortfall left if ExGen choose to dilute or are unable to raise their share?

I would be delighted if they do, as 100% of Empire is orders of magnatude more valuable than covering ExGen's share.

If I understand the situation properly, the finance requirement would be a min of $60m, but could require $72m based on the contribution from ExGen.
ExGen are required to contribute their 20% share upon the completion of the Bankable Feasibility Study, or dilute their holding accordingly.

The BFS was scheduled for release Q2 (verbally suggested to be "end of may or early June"), so this should hopefully be published within the next week or two.
Upon such, ExGen contribute, or we require to raise additional funds, but would then own up to 100% of Empire, depending on what ExGen can / do contribute.

What I am unsure of though is the contract / terms state "Bankable Feasibility Study", but ina recent post form either POF or DP (can't remember who it was) it was suggested that due to Covid and the rapid changing of costs of goods and services, this would not be released as a BFS, rather just a FS.
Would this mean it is not in line with the terms of the agreement with ExGen?

Either way, (B)FS is close, and will indicate how ridiculously profitable the company would be at current metal prices, for such a mimimal start-up cost. Finance will then shortly follow (I'm guessing they are also waiting for the study to be published and reviewed before signing off), and as you have seen on Twitter we are now gearing up for summer drilling.

Sit back and enjoy the show. It should be a fun summer.

StanUK.

I think this is one of the key strengths of PXC.
It’s still under the radar of many (hopefully Paul de Gruchy can change this!), and there is a large percentage of PI shareholders with significant holdings (250k+ shares).
With a small number of shares in issue and most holders just sitting tight, once the good news starts to roll in we should move up quickly (Conversely, a small number of sell does create the drop we have seen again recently).

The ducks are indeed lining up nicely. June should be an exciting month and there is likely to be significant updates all summer, hopefully culminating in a permit by year end.

As you say, Trek, sub-70p is bargain territory, but if the summer drilling reveals even part of what we expect to be there (and finance is signed), 70p should be a distant memory.

I understand that Phoenix will be presenting here next week:
https://melloevents.com/mello2022/

Hopefully we can get some positive coverage and investor interest there ahead of (or after!) the release of the Feasibility study.

Further to the below message, and while I’m grateful for RightOn’s information, if the company wishes to be seen as a mature explorer-developer I don’t think these off the record chats and back-channel postings are the best way for info to be given.

If they have something positive to say, say it to the market directly. The info in RO’s posts are positive, but this could have been an official post from Paul De Gruchy, or maybe a webcast update like we’ve had in the past. This can then reach a wider audience.

I appreciate RightOn’s history with the company and relationship he has with the directors, but to that end it doesn’t seem professional for this info to come from mates.
It also has less impact when the discussion was seen as “very positive”.
Ryan, Paul, or Richard could easily have put out a short video with an update on finance, which could have balanced out the slight negative of “no rush finance” statements made previously.

RightOn, I do appreciate the updates, but it’s time for the company to be more mature about where the information to the market comes from.

Thanks, RO.

I think we all still believe in the non-dilutive finance, and indeed that the permit is proceeding as hoped (mostly because it’s waiting on the revisions).

It’s the timelines that most people here are interested in. I’m sure that the “no rush to sign off on financing” that has led to some of our price drop recently.

Finance sign-off is a major milestone, and one that we are all keen to see implemented ASAP.

StanUK.

It’s a bit frustrating to see this back down at 44-45p level. It was 65p just 4 weeks ago, and there’s nothing to justify losing 20p of value.

I’m guessing people are expecting the next news to be the Feasibility study, and know that it won’t be until the end of the month, so putting money to work elsewhere?

This should be much higher. Let’s hope the next few news releases propel us back to where it should realistically be.

I agree. Most investors are now just sitting and waiting. Like you guys, I’ve built up a sizeable position and now happy to watch the plan play out over the next few years.

Feasibility study within 4 weeks, finance likely to follow that, drilling at Red Star, and the permit all to come. Once this is de-risked from a financial perspective the price won’t stay around these levels for long.

I'm sure you meant £46m, Bankrupty! But yes, it is a drop in the ocean agaisnt the estimated revenues ahead.
The new Feasability Study should give us a much clearer insight into the payback, although with the Board setting this up as a 10 year loan, I think they have a plan to fast track Red Star into production, and maybe start to capitalise on the Cobalt, too.

So long as the terms are reasonable (loan % or Smelter royalty), I'd be happy carrying the debt and moving the other properties into production (or at least M&I) sooner.
Richard has talked about spinning Navarre into another company, and if we get decent assays over the summer that could potentially happy quickly, too.

If the loan terms are fair, putting the revenues to work early is fine by me.