The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I think we will probably see a phase 3 drilling program. Ascot open-ended to the South and potential deep porphyry under it plus new area of gold in RC. There are bad market conditions in general for a sale right now and, unlike most explorers, we have sufficient income and therefore can have patience. We're under no pressure, so we might as well do some more drilling while we wait and improve our eventual bargaining position.
I am sure everyone will be shocked to find this is yet another misleading suggestion from porvenireal. The grades are worse than BR, in particular because the copper grades are below 0.2% and they are using 0.32% CuEq by relying on gold, silver and molybdenum, all of which require different extraction methods (and higher costs). Its in a remote area of British Columbia with minimal nearby infrastructure about 1000 km from the nearest major port. Also, the average temperature is below freezing for half the year. I won't bothered explaining for the tenth time about the advantages of BR's location, as you ignore them every time.
What motivates you to come back here every few weeks and suggest other mining projects, only to be shot down every time?
23% of 'operating profit', although the definition of that has never been very clear. I'm fairly sure it doesn't include any capital expenditure and hopefully not depreciation, etc.
"MMP will receive 77% of all the operating profit produced from the permitted area through the performance of the contract by MMP when the prevailing price of Gold is greater than US$1,250 per ounce. For the purposes of the Collaboration Agreement, "profit" is defined as: Revenue on Sale less deductible costs (excluding non-cash items) and corporation tax."
https://www.lse.co.uk/rns/XTR/manica-hard-rock-collaboration-agreement-ghoo8qdt7s68ji6.html
>> You would think so, except there are quite a few days days where buying is exceeding selling and the price still goes down
Just to follow up on this. I normally post detail on telegram but I thought it was worth posting here. We had a 50k UT at 8am, which was a sell at 3.12p.
Since then we have had nine trades, including eight buys for 230,000 total plus a single sell of just 500 shares. The Ask continued to drop throughout that time, with the first buy at 3.26p and the last buy at 3.21p. Normally, buys cause the price to rise but I've seen this same pattern now for a few weeks. The price is being pushed down with minimal or zero selling and happens quite regularly on days with greater buying than selling. Anyone with access to L2 can see the same.
There is nothing we can do about MMs moving the price around, and eventually it will go back up, but in the meantime it is important to bear in mind that the price is not falling due to significant selling.
>> Ongoing small selling volume only needs ongoing small buying volume to broadly keep the equilibrium.... that there has been such low buying volumes in the 6's and 5's AND 4's AND NOW 3's is, simply, not a good thing, Steve....
You would think so, except there are quite a few days days where buying is exceeding selling and the price still goes down. Yesterday for example was 91% buy volume and we still dropped. I am basing this on checking individual trades on L2 vs current spread, not looking at whether something is 'officially' classed as buy or sell. If you are on Telegram you can check the details I posted on there.
>> (PS: I wish I had a pound for each ' the fall is not justified on such low volume' post I've seen over the years
I think the key thing about the 'fall is not justified' comments, is that share prices can fall because of a major sell-off due to negative sentiment, or they fall because of the MM's dropping the price on low volume (because low liquidity allows them to do that) in a way that is significantly out of proportion to the selling pressure.
From a LTH perspective, I find it much easier to handle the latter than the former. The former means you probably invested in the wrong stock. The latter means the sentiment is good among holders and very few are selling, so you can have a lot more confidence that it will eventually go back up once market conditions improve. In effect, MMs are sending the price down, not shareholders.
I agree in general with LittleWing. The world has changed too much in the last few months to expect a quick resolution, regardless of what CB might have stated before all that started. I might be wrong, but I suspect we hold off for now on any BR sale, get the modelling done, do some more drilling and wait for the economic situation to improve. We can have patience because we have income, which puts us in a very good position to ride this out.
The share price is down a lot, but as I noted earlier that is on very low volume. The vast majority of shares seem to be in patient hands and longer-term it's hard to see anything but a significant improvement in share price.
I keep seeing this comment about current prices not affecting the BR sale because copper will be higher in the future. I don't know where people get that idea. Unfortunately, price now definitely does affect future prices and no major is suddenly going to be generous enough to a small-cap miner to accept an NPV based on significantly higher copper prices than now. However, happy to be corrected if you highlight any sales where the assumed copper price was much higher than at the time of sale.
Here are the current official copper futures prices on the London Metal Exchange. Copper now is 7790. Copper for December 2025 delivery is 7865, or about 1% more. When the copper price falls, the copper futures also fall.
https://www.lme.com/Metals/Non-ferrous/LME-Copper#Trading+day+summary
I agree that copper prices are very likely to go up. However, the reality of making deals means we need to wait for that to happen to get the best value. In the meantime, lets do some drilling.
The situation has changed in the last few months. There is a worldwide market crash, high inflation, war in Europe, falling commodity prices, etc.. We have also seem have a steady income from Manica, enough for Colin to state no raises for a year.
It seems crazy to me to ignore all that, just because of something Colin said before any of that happened. We need to deal with the reality now, not the assumed future reality from several months ago. A phase 3 drilling program would add value to our assets in Australia, without needing a raise, and delay any sale until the general market conditions improve.
>> what I find the most concerning is the radio silence
I'm not sure what you mean by this - we had a detailed report on all company activities only a week ago.
https://xtractresources.com/wp-content/uploads/Xtract-AR2021.pdf
Given the current copper price, I can't see a sale happening quickly. Based on the above, it looks like a district, so with income with Manica we may as well do some more drilling while we wait for general market conditions to improve.
Unlike almost all other small explorers, we have sufficient income to fund exploration, so there is no time pressure. CB confirmed above that there would be no raise for 12 months. He said the same thing a year ago and kept his word.
Or to quote Kipling "If you can wait, and not be tired by waiting", then you will very likely make a good profit here.
I'll repost something I posted earlier on telegram:
We are down 3% at the moment but volume is only 360k traded (1 share in every 2600)
We might have had a large fall recently but it was on very low volumes of sells. Almost all of the LTH seem to be continuing to hold. For example, since the end of May there were 5 days with less than 1m volume, 8 days with less than 1.5m, 4 days with less than 2m and 5 days with less than 2.5m. The only day with more was July 1st. For reference, 2m volume is about 0.25% or about 1 share in 425. I recall several of those days where the price fell with buys greater than sells.
In other words, there is no significant selling. Just a drifting price. Don't let that affect your confidence if you are well researched.
>> I’ve been vocal that i think the company needs a ceo and a new broker team
Yes, completely agree on that. Its possibly been a cost-saving decision thus far, but with the Manica income ramping up in the next few months and a lot of activity to come across the company, perhaps a dedicated CEO might be a good use for some of that new money.
>> Did CB not say he'd be releasing the geophysics to the market and confirming when drill pad approvals were received? Do you think they are still waiting on them or are they being sat on (for whatever reason)? I
We've had the approvals. That can be inferred from the new drill locations. I'm fairly sure we have had the geophysics too. I agree we should have had that in an RNS and that in general comms could be better. I also know that CB reads here and will see all these comments and know there are holders who are unhappy about the current comms and that has been true for many, many years.
Pointing out that comms aren't great is fine the first three times or even ten times. After a while though you have to accept that complaining isn't achieving anything. Colin is the way he is. Yes, he should probably behave differently with regard to comms, but he doesn't and he won't change. This is the way it is at XTR and other CB companies. You either A) Accept that factor and live with it, B) Sell because of it or C) Regularly complain about something you already know won't change. I have chosen option A). I can only suggest to reduce personal frustration that other shareholders could do the same.