Member Info for Steve4077

>> The 50% three year clause doesn't apply to the Racecourse tenement.

It does seem to read that way, which is odd. That leaves open the option for ProspectOre selling Racecourse to another company (within the XTR group) at any point, as long as they don't declare a JORC first. At least based on what was stated in the RNS. Anyone else have a different interpretation?

>> did Colin say that he isn't going to get an independently derived MRE done when he thinks BR has exceeded 2mT Cu?

No, he was just saying he didn't need an independent report done to trigger the buy-back process with Anglo. If XTR say they have 2m tons, that is sufficient. An independent valuation would still be needed for the actual deal though.

I've read back through the original RNS on the buy-back option.

Firstly, AA have a three year lock on the tenements. ProspectOre cannot effectively sell them on in that period (or if they do they have to give 50% of the sale to Anglo). However, that doesn't prevent ProspectOre itself being sold. Its similar to many expensive houses in London being owned by an overseas company. You sell the company, not the house, so you don't pay stamp duty, etc.

Then we have the buy-back agreement. The relevant section is:

"Under the terms the Bushranger Acquisition agreement, if a deposit of greater than 2 million tons of contained Cu equivalent (e.g. 450Mt @ 0.45% Cu equivalent) is ultimately identified, Anglo may buy-back 80% of the Racecourse deposit at fair market value as determined by an Independent Expert in accordance with the JORC and Valmin Code. If a "Decision to Mine" is taken by ProspectOre prior to the identification of 2 million tons of contained Cu equivalent, Anglo also have an opportunity to exercise the buy-back. Anglo have a once-only opportunity to exercise the 80% buy-back whether the opportunity comes through the discovery of 2 million tons of contained Cu equivalent or a decision to mine."

Note the agreement is between AA and ProspectOre, not XTR. XTR just happen to own ProspectOre and the agreement was already in place between AA and ProspectOre when XTR acquired the latter. The buyback text doesn't state what happens if ProspectOre doesn't declare either 2m tons or a decision to mine. It looks like XTR could either drill or sit on their hands for another two years, without either a JORC or decision to mine, then sell the tenements with no restriction (probably to another XTR subsidiary). When that happens, ProspectOre would no longer be able to declare a JORC or decision to mine. The other XTR subsidiary could do ahead and declare a JORC without triggering the agreement, because the agreement is with ProspectOre, not XTR.

The above effectively avoids the buy-back agreement entirely at the cost of a 2 year delay - actually less than that in net terms because we probably aren't declaring a JORC for a while yet. I'm not saying XTR should do that, but the option to do so should give them a lot of leverage with Anglo. On that basis, they may agree a deal before any official declaration is made or simply agree a new deal.

I spent a few minutes writing down verbatim what CB said re the model.

"As for the DCF model, somebody said you can't do the DCF model anyway. Of course you can. This is not a regulatory model. The hypothesis will not be presented to the Australian regulator or the UK regulators. It will be reported to Anglo as this is what we estimate the capital to be, this is what we estimate the operating cost to be, this is the net present value, copper price range from 8000 to 12,000. That's the way it will work Zak and of course we can do it because people are doing it all the while. You remember that I sold Kalumbila and that was basically the estimate provided to First Quantum was the in-house estimate. It wasn't even independent. You must remember when we do our internal estimate and get over 2m tons of copper, that the trigger, the two million tons of copper, not who did the scoping study. That will be our assessment, what you can do with the two million tons of copper. One thing I am sure of is that two million tons of copper is going to come from this conceptual open pit."

Yes Joeman1, I heard that too. He was talking about discussions between AA and XTR without any reference to regulators. The deal includes an independent valuation once things move to a formal process, but that doesn't stop preliminary discussions about potential value. It also doesn't stop the two companies agreeing to disregard that deal and agree a new one.

Just to be clear, what theiceberg is explaining are the rules used to value a tangible asset for the purposes of accounting. A 'tangible asset'is an accounting term for a physical asset, rather than an 'intangible asset', such as goodwill. If you look at company balance sheets, you really do see 'Goodwill' valued at many millions of dollars.

He isn't saying that tangible asset value would be the sale price of Bushranger, which seems to be an assumption that is causing some concern on the board. That is just one of many different considerations that would lead to a company valuation, with the tangible asset value being the absolute minimum.

For example, the balance sheet for XTR for 2020 has 13m for total assets, while the market cap is currently over 40m.

OK, I understand now what you are driving at. You are establishing a tangible asset value for Bushranger. With $130m on the books, plus the Africa assets, the company would look extremely good at the moment. Most companies also have intangible assets on their book, such as brand value for example.

The market cap or sale price for a company is not tied to the tangible asset value and would often be considerably higher.

>> and now they have slowed down it’s dropped, the proof is in the charts if you look

Which of these options do you think is more likely to be the reason for the drop in share price that started on October 27th?
A) Only 1 RNS in the first week of November compared to 2 per week in the preceding three weeks.
B) 50m shares becoming available to sell on October 27th, with a 300% profit margin built in (issued at 1.25p)

I just did a quick count of RNS this year. I've excluded non-news RNS such as price monitoring, warrants exercised, notice of AGM, etc.

With those removed, we have had 74 RNS in 44 weeks, or about 1.7 news-based RNS each week. That includes 21 in the last three months, which is about 1.6 per week, so the frequency of news is consistent. I suspect it would be difficult to find a company that keeps its shareholders better informed than XTR.

>> Im not saying we need to do that to get a fair value for Bushranger though.... might pay bigger dividends to confirm the extents of the other anomalys. I think there are many ways to skin this antipodean feline

Yes, I agree. I think the combination of jurisdiction, location, existing infrastructure, easy terrain, etc. will make Bushranger very attractive, so the indicated vs measured may not be as critical for Bushranger as it would for a mine where exact location of ore is more important - block cave or mountainous terrain for example. I'm sure CB and his team will be looking at the optimal way to generate the best return on investment (in time and money).

I read more about the £600m deal. The resource is 21% measured, 55% indicated and 24% inferred, so it would not be a straightforward 50% discount for Bushranger. As mentioned below, it is going to make a huge difference in capital and operational costs when this project is 6000 feet up a mountain in New Guinea, compared to the ideally located Bushranger.

The more I read about this New Guinea project, the more optimistic I am about XTR. If someone is going to pay £600m for that location, when most of the resource is indicated/inferred, what might someone pay for Bushranger, especially if the bidding gets competitive and the SE anomaly turns out to be reasonable.

Here of a description of the project in question:

"The Yandera project is located approximately 95km southwest of the city of Madang in the foothills of the Bismarck Mountain Range, which is part of the central cordillera of New Guinea, at an elevation of approximately 1,900m above sea level. The site is situated on the northern side of the range, about 13km east-northeast from Mt. Wilhelm, with the extensive floodplain of the Ramu River approximately 20km to the east.

The deposit area is mountainous with the Imbrum River valley to the west and the Tai-Yor River valley to the east. Materials and transport for the site team are via helicopter from Madang Airport or from a lay down yard which runs through the village of Usino, a 10-12 minute flight away"

So if this is in the mountains in New Guinea without existing infrastructure, it doesn't sound like a fair basis for comparison with an open pit mine near Sydney with existing transport infrastructure. Bushranger would presumably command a decent premium due to other factors beyond total resource and JORC status.

Also, if measured is worth twice as much as inferred, it also sound like it would be well worth using the income from Africa assets to conduct more drilling. Even a 100,000m extra would be about $25m, when the difference in value would be $150m+.

I can see you are getting very upset, but not entirely sure why. I am listing comparative drilling campaigns, with dates and metres drilled. That isn't my 'opinion', that is what actually happened based on RNS from the two companies. If you believe I am incorrect about those drilling campaigns, then please point to the RNS that support your assertion.

Of course, if you have no evidence, you can keep calling people rude or saying they don't know anything.

>> 1 year has gone anyway. XTR acquired Bushranger on 27th October 2020 and drilling commenced on 16th December 2020.

Which, as I stated below, was an elapsed time of 50 days.

>> And please stop arguing. I am entitled to my opinion. Too much arguing and rude responses are usually a sign on these boards of people who don't really have a clue.

I didn't realise that listing factual dates constituted a rude response or an argument. On this board, when you invent things to make a point, someone is going to point out the reality.

Probably easier if you go back and read the posts from last time you were on the board, as we seem to having the exact same conversation. You keep saying that GGP was faster than XTR but that simply isn't true.

GGP acquired the Havieron licence on 25th July 2017. XTR acquired Bushranger on 27th October 2020. The respective announcement of the first drilling campaign was 50 days later for XTR (6000m) and 267 days later for GGP (2400m).

First assay results were 143 days for XTR and 335 days for GGP.

The second drilling campaign was announced after 258 days for XTR (20,000m) and after 419 days for GGP (6,000m).

At the equivalent point in GGP history (compared to current XTR) they were still months away from even starting their second drilling campaign and even that was only planned for 6000m. XTR are moving far more quickly than GGP and drilling far more metres. It was only after a major became the majority owner of Havieron that many drills began running simultaneously.

XTR is in a very different situation to SOLG, so you can't compare them directly.

Australia vs Ecuador, with all the political and jurisdictional advantages for XTR
Nearby infrastructure vs no infrastructure. SOLG will have huge capital setup costs compared to XTR
Focus on one area vs many different areas throughout country
Market cap 50m vs 600m
100% owned by XTR vs long-running political mess with BHP, Newcrest and Cornerstone.
Obvious route to monetization of asset vs PFS/Funding quagmire.
Excellent LSE Board vs Very Fractious Board

Last time he said it was because GGP share price didn't go up after they found more gold, which 'proved' that more resources don't affect share price. Then we have a discussion about relative market caps vs known resources.

It is a good point. Not sure what the monetary difference would be between inferred, indicated and measured versions of 2mt+. CB stated in the 30th September RNS that further placing were unlikely in the forthcoming 12 months and the Africa assets should come on line well before that, so we can just keep drilling anyway. I'm in no rush and would be happy if XTR proved up a lot more than 2mt before announcing the JORC.

SOLG just announced the maiden JORC at Tandayama after 18 drill holes, so we don't need a huge amount of drilling. Also, there is already a JORC at Bushranger from previous drilling that was less extensive than the XTR drilling. You only need a lot of drill holes for the higher levels of JORC, which are not necessary for the AA buyout.

Interesting that there has been no Zak interview. Normally a good RNS is followed by a interview, except on those occasions where Colin does an interview after two good RNS on consecutive days. I wonder what might be in store tomorrow.