Member Info for Steve4077

Yes, a strange new poster appearing today to attack the messenger instead of the numbers - why am I not surprised :)

>> You can take it or leave it, but the information is there about his history of manipulating the markets, and he has a reputation for pumping and dumping which is bad enough for him to be listed in the top users not to trust on the pumped/dumped website

Suffice to say, this is entirely invented. Check my posting history.

I've been blocked from posting on Telegram by the Sunday Roast moderators. However, there has been no attempt to dispute any of the numbers. People can draw their own conclusions from that. Apologies to those people who asked about the numbers and I can't answer them.

>> You obviously won't have ALL the info available to the independent group who do the economic study.

Completely agree. However, what we do have is a direct comparison on the original vs new JORC at 0.15% cut-off taken directly from XTR's own RNS. The drilling has added 235k tons of copper at 0.135% grade. I have seen no one arguing with those numbers.

We also have the original economic study from July 2021, which is based on that original JORC, which was only economic with a $5 copper price. Also, however you run the numbers for that 2021 conceptual study, they are building a mine in one year and then achieving full production by day 1 of the second year because there is no other way to mine 162mt tons at 20mt per year in 9 years. How realistic is that do you think?

So we now have a situation with double the tonnage to mine and process and only 50% more copper at an overall lower grade (0.21% vs 0.29%). Common sense alone will tell you that is a problem, without the need for detailed analysis.

>> If it really is that simple and this could be done on a spreadsheet in a few days, then I doubt it would take months to compile these reports.

If you want a detailed mine plan to provide to Anglo, it will definitely require a lot of effort and cannot be done in a few days. That is not what I am highlighting though. I am taking basic information provided by XTR and running some simple maths. I have provided all my calculations so anyone can run through it and highlight any mistakes.

I don't want to keep replying, because that just looks like de-ramping, rather than debate. I will just add for those attacking the messenger rather than the numbers that my day job is Director of Analytics for a large FTSE 100 company. I ran these numbers several times because of the impact of the conclusions.

Its very hard to face the idea that you might have made a bad investment. I have gone though a couple of sleepless nights myself over the weekend. In the end though I am an analyst and I have to act based on the numbers, not my emotions. I am now providing those numbers for everyone else. You can check them, ignore them, doubt them, attack them, etc. but the decisions are yours.

I am happy to answer posts on any clarifications on the numbers, but obviously I will no longer be a regular poster on here. Good luck to everyone with your future investments.

>> I wonder why someone who is invested would want to post such a damaging conclusion...hmmm. >> I think I'll wait until the economic model is released in early 2023 rather than trusting one person's view who wont have all the info.

Plainly, I sold before publishing the data. I stated so on Telegram, but this forum is not ideal for interactive discussion. If you don't believe the analysis, which is based on XTR numbers, not mine, you can check a couple of simple facts in two RNS.

26th July 2021 - Conceptual study
https://www.lse.co.uk/rns/XTR/bushranger-conceptual-open-pit-mining-study-c05hq78ws9qagfq.html
This has data for original JORC at 0.15% cut-off. 470,000 tons at 0.29%

23rd November 2023 - Updated Mineral Resource
https://www.lse.co.uk/rns/XTR/racecourse-prospect-updated-mineral-resource-k5dfrxajgs0ls13.html
This has data for the new JORC at 0.15% cutoff. 705,000 tons at 0.21%

There isn't any interpretation or extrapolation required. Simple maths tells you that the drilling has added 235,000 tons at 0.135% grade with a 0.15% cut-off. Doubling the ore required for processing with a 50% increase in copper.

I realise this is damaging and some people may blame me for highlighting it, and I considering not releasing it. However, I thought investors needed to understand what has happened. Happy for anyone to go through the numbers and point out any errors.

(7/7)

There is still Ascot to be revealed and that could be better, especially as it is entirely new ground. However, given the Racecourse model I have considerably lower hopes than in the past, plus if Racecourse cannot at least break-even on an NPV basis to pay for the mill, adding Ascot won’t help. There is also the hope that copper prices will improve considerably and make the deposit economic. This is going to depend on the world situation and is out of our hands, but copper prices will need to reach record levels and sustain that over the lifetime of the mine. Finally, there may be some ways to reduce the opex and capex from the original. Countering those hopes is that any buyer is likely to err on the side of caution, especially given the dependence on sustained higher copper prices, the need for a more realistic build schedule compared to the above and how Racecourse might compare to other M&A options.

Regardless of what happens in Australia, there is still gold income from Manica. I strongly believe this should be invested in drilling Ascot, where the potential for adding useful extra tonnage seems most likely. Given the conclusions from above, it seems likely that spending the Manica gold income on acquisitions in Zambia would be an attempt to distract from the reality at Racecourse.

(6/n)

If we take the 0.15% scenario from the new JORC, with 336m tons of ore, then a 20mpta mill would run for 17 years. Using the above method of building everything in year one and assuming max production from year two, I produced different NPV scenarios using a copper price of $3.68 (current), $4.02 (break-even on base cash flow), $4.50 and $5. The first three scenarios result in a loss. The last is equal to a $11,200 per ton copper price, but does have a positive NPV of 292m AUD using 8%. However, that NPV is less than 3% of total spend, so it is unlikely to be attractive to investors. Also, potential investors may not believe that building all required infrastructure in year one is a realistic scenario.

One final scenario. This uses a 24mpta mill, using the assumption of a 20% increase in capex. Opex is assumed to remain static as the total amount of ore dug up is the same (higher wages, fewer years, etc.). Copper Price is assumed to be $5. This will now require 14 years instead of 17. However, that makes the situation a little worse in terms of NPV vs the 20mtpa over 17 years.

In summary, the old JORC could only generate a small positive NPV with a $5 copper price and a very generous construction schedule and it appears the new one is the same, mainly because it is double the ore tonnage but with only 50% more copper (see above). Again, I am being very optimistic on how quickly positive cashflow will be generated and that will have a major impact on NPV. Potential buyers will no doubt factor in an appropriate level of risk to the numbers.

Once I started down this road, which was only possible once we had the new JORC, it became apparent that Racecourse as it stands is not an economic proposition. Also, I believe XTR have made a significant effort to obfuscate the reality of the new JORC, without actually stating anything incorrectly, and therefore it required some effort and analysis to understand that the extensive drilling campaign for Racecourse added only 235,000 tons of copper at 0.135% to the original JORC in a direct comparison, plus some indeterminate proportion of 216k tons at 0.12%. Neither addition improves the overall economics.

(5/n)

To make the mine an economic proposition, we don't just have to break even though. We have to generate sufficient profit to create a meaningful return vs other options for capital investment. Net Present Value (NPV) is used to calculate the value of the investment you are considering – building a mine – to an alternative strategy of investing the money to generate interest. After a given period - nine years in the original conceptual study - you can compare what the cash flow would be worth vs what the interest would be worth. The difference, positive or negative, is the net present value.

In the original conceptual model (which used a $5 copper price), the base cash flow of $1b AUD was reduced to 268m AUD using an 8% NPV and 135m with a 10% NPV, based on a mine life of nine years.

I created a simple example to replicate the NPV numbers from the original conceptual study and the result was 264k AUD vs 268 AUD. This assumes all capital expenditure before project start then equal opex and revenue in each of the nine years stated in the project. This is an extremely optimistic view because it assumes immediate cashflow, when in reality it might take a couple of years or more to build the necessary infrastructure, including the mill for processing ore.

Below (Missing screenshot) is a slightly more realistic scenario, but still optimistic, with no cashflow in year 1 but still the same nine year mine life. This is reasonable because it is supposed to be a 20mpta mine and this is 162mt over eight years with the build happening in the first year. This NPV is a little lower (192), but still positive with $5 copper price. This is the method I am going to use for future scenarios: build the mill and all other infrastructure in a single year then assume max production from day one of year two. This is still a very positive view given normal construction and ramp-up times (consider Manica).

(4/n)

Basic Model – 0.1%
If we run this basic model again with the 0.1% cut-off, capex remains the same but we have 512m tons to mine and process so the opex increases to 13.122b AUD. Total cost 14.576 AUD

Recovered copper would be 0.18% x 90% x 512m = 829k tons. 829k x 2240 (lb per ton) x $3.68 = $6.837b
Recovered gold would be 0.05 g/t x 90% x 512m = 23,040m grams or 648k ounces. 823k x $1750 = $1.440b

Total revenue is therefore $8.277b or 12.172 AUD at current FX of 0.68.

Therefore with current copper and gold prices, mining everything with a cut-off of 0.1% would have costs of 14.576b AUD and revenue of 12.172b AUD, which is a loss of 2.5b AUD. To break-even, copper price would need to be 1.35 AUD higher, which is $0.92, or $4.60 ($10,300 ton).

(3/n)

So, now we have the above, how does that affect the economic viability of a potential mine at Racecourse.

As mentioned above, this is using the old JORC but based on a 0.15% cut-off, 20mtpa mill and $5 copper price. Therefore the ore tonnage is 162mt, not the ‘official’ 71mt of the old JORC which was based on a 0.3% cut-off. The revenue in that scenario is 6.63b AUD, mainly from copper but including 230k oz gold. 914m lb of copper at $5 yields $4.57b, or 6.18b AUD, so the gold adds 0.45b AUD at about $1500 per oz. This is based on an FX rate of 0.74 in July 2021 for AUD vs USD.
Below is the new JORC broken down by cut-off. I am going to run the same conceptual study using the same XTR parameters from above but based on the 0.15% line below. This has 336mt of ore, or slightly over double the old JORC for the same cut-off. Also note that the contained tons below is copper equivalent, not copper. For example, the 882k tons at 0.15% cut-off is only 705k tons of copper with the other 177k tons being the gold equivalent

Basic Model – 0.15%
Lets assume capital expenditure (capex) for the 20mtpa plant is the same in both scenarios (1454m AUD) and that operational expenditure (opex) is pro-rata for the ore tonnage mined, which means 4152m AUD in the original and 8612m AUD in the new version. Lets also assume a 90% recovery rate, which is a little better than the original conceptual study but reflects the recent metallurgical analysis. The copper price when I ran this analysis was $3.68 and the gold price was $1750.

Recovered copper would be 0.21% x 90% x 336m = 635k tons. 635k x 2240 (lb per ton) x $3.68 = $5.234b (USD)
Recovered gold would be 0.06 g/t x 90% x 336m = 18,144m grams or 648k ounces. 648k x $1750 = $1.134b (USD)

Total revenue is therefore $6.368b or 9.365b AUD at current FX of 0.68.

Therefore with current copper and gold prices, mining everything with a cut-off of 0.15% would have costs of 10.066b AUD and revenue of 9.365b AUD, which is a loss of 700m AUD. To break-even, copper price would need to be 0.49 AUD higher, which is $0.34, or $4.02 (or $9k per ton). Bear in mind that is break-even and does not account for discounted cash flow (more on that later).

(2/n)

The new JORC doesn’t show copper tons directly, but it does have the ore tonnage and the grade with a 0.15% cut-off. 336m tons at 0.21% grade = 705,000 tons of copper.

So, given a direct comparison, the result of the phase 1 and 2 drilling has been to add an extra 235k tons of copper to the JORC at a 0.15% cut-off, while reducing the average grade from 0.29% to 0.21%. Consequently, that means the extra 235k tons must be at a grade of 0.135%. Bear in mind that the original JORC of 470k tons at 0.29% was valued at £1.25m, because that is what we paid for it.

What about the 1.1m tons at 0.1% cut-off? Well, firstly that is ‘copper equivalent metal’, not copper. The quoted grade for the 0.1% line in the 23rd November RNS is 0.18% and the ore tonnage is 512m, so the actual copper is 922k tons. That is an extra 216k tons vs the 0.15% cut-off, but with an average grade of 0.123%. We don’t know how much of that was already in the original JORC because we don’t have a 0.1% version for comparison.

As the additional copper in the new JORC is at a much lower grade than in the original JORC, I believe it is safe to conclude there is no newly discovered ‘high grade core’. Any higher grade material was already included within the original JORC and therefore within the original conceptual study.

In terms of gold, the original JORC was 0.064 g/t for the 71mt at 0.3% cut-off. However, the 162mt in the conceptual study at 0.15% cut-off must have lower grades because the conceptual study shows 229k oz after an 82.3% recovery rate. That is 278k before recovery, or 0.048 g/t. The 0.06 g/t assumed for the new JORC at 0.15% is a higher grade and for twice as many tons, giving 160% more gold. However, it is still very low grade and a relatively small part of the overall revenue.

(1/n)

I’ve run a detailed analysis over the weekend on the new JORC vs the original JORC and what that is likely to mean for the economic potential for Bushranger. The results were both surprising and concerning. This analysis is based entirely on numbers provided by XTR in various RNS.

The original JORC, which was part of the package of licences we acquired for £1.25m, is usually quoted as 71Mt @ 0.44% Cu and 0.064 g/t Au at a cut-off of 0.3% Cu. That gives us 312,400 tons of copper. The new JORC is 1.1m tons, so that sounds like a substantial increase. Except, it isn’t.

XTR produced a conceptual study on 26th July 2021 that looked at various options for an open pit mining operation. Out of all the scenarios presented, one option resulted in a positive NPV: a 20mtpa annum mill, a 0.15% cut-off and a $5 copper price. Obviously that did not include either the phase 1 or phase 2 drilling, so the assumption was that a substantial increase in JORC would make Bushranger far more economic and open up additional positive scenarios.
https://www.lse.co.uk/rns/XTR/bushranger-conceptual-open-pit-mining-study-c05hq78ws9qagfq.html

On November 23rd 2022, we received the updated JORC.
https://www.lse.co.uk/rns/XTR/racecourse-prospect-updated-mineral-resource-k5dfrxajgs0ls13.html

This was headlined as “Following the completion of a substantial drilling programme by Xtract, independent consultants, Measured Group, updated the historic Inferred Mineral Resource Estimate for the Racecourse Prospect, which is now reported as 512Mt @ 0.22% CuEq*, at a cut-off of 0.1% CuEq, containing 1.1Mt of copper equivalent metal and classified as Indicated and Inferred in accordance with JORC (2012)”

There are several important differences for the new JORC versus the original JORC.
• It is a 0.1% cut-off vs 0.3% for the original JORC
• The new JORC is quoted as Copper Equivalent grade
• The total contained metal is quoted as Copper Equivalent tons.

This can make it hard to make a fair comparison. Fortunately, there is other information that allows us to do exactly that. The conceptual study from July 2021 provided a 0.15% cut-off version of the original JORC, because that was part of the only scenario that showed a positive return. The new JORC from November 2022 also gave a breakdown of the new JORC at different percentage cut-offs, so we can run a direct comparison at a 0.15% cut-off.

The original JORC had 162m tons of ore at a 0.15% cut-off. While the study does not highlight the grades, we can work backwards from the production numbers: 914 million pounds of copper with a 86.8% recovery rate and 229k ounces of gold at 82.3%. It is interesting in itself that the study used pounds when everything else uses tons. So (914m / 2240) / 86.8% = 470,000 tons of contained copper. We can also work out the grade: 470k tons copper / 162m tons ore = 0.29%

I ran a analysis of the new JORC over the weekend, comparing it to the old one and using only numbers provided in XTR RNS. I've dropped a PDF into the Telegram channel with the results, which is several pages long. The main conclusion though is that using a direct 0.15% cut-off, the phase 1 and 2 drilling updated the JORC from 470k tons of copper at 0.29% to 705k tons at 0.21%. The extra 235,000k tons was at 0.135% grade. Running the new numbers though the July 2021 conceptual study produces slightly worse results, because there is double the tonnage of ore but only 50% more copper. Adding the lower grade material below the 0.15% cut-off makes the economics worse.

I'm going to publish the analysis in a few linked posts but I won't be able to post the screenshots from the RNS

Sells were about 66% of trades yesterday (8.1m) and about 63% today (6.3m). This is based on level 2. So total shares sold over those two days was about 1.7% of shares held. Just under 8m shares have been bought in the same period.

Very in-depth look at future copper situation
https://orocoresourcecorp.com/_resources/blog/Future-of-Copper.pdf

I think it is a much simpler explanation. Colin is waiting for the copper price to rise before announcing anything. When you have an asset like BR, with an NPV that is heavily dependent on copper price, it doesn't make sense to sell it now when the copper price trajectory is upwards,

>> Out of interest are there other message boards or websites that people are using regularly for XTR and their research.

The XTR telegram group is very good for research. There are two groups - a larger one with over 218 members that is run by the Sunday Roast team and a smaller with 36 members that is less busy but still useful. You will need to search for an invite though. Last time I tried to post the link on here I was immediately banned.

Yes, Ted is a much better standard of de-ramper. He actually makes me go and do research sometimes :)

Except its an independent valuation, and that will be based on current copper price.

We seem to have a regular debate about 'copper will be higher in the future so that means a better price now'.

Same answer every time. Firstly, copper futures are almost always similar to current price. Secondly, can anyone highlight an M&A deal that was based on a higher copper price than existed at the time of that deal?

To get a better deal we need a higher current copper price. If you don't have patience to wait for the right conditions to sell, you will end up worse off. Obviously I don't want to wait years for that, but I am very happy to wait a few months.