Andrew. My point is there is a trade-off. If XTR want more drill holes in more prospects that costs money and potentially means more dilution. That may be a sensible strategy if those additional drill holes result in a sufficiently higher valuation from the independent expert to compensate for the dilution. Alternatively XTR could aim to reach the 2mt with as few drill holes as possible (perhaps Racecourse only) and trigger the Anglo option. Anglo has to fund 80% of further exploration costs from that point on.
If the option didn't exist I think it would make sense to prove multiple prospects before negotiating with a major. However with the pre-agreed option, it may make more sense to trigger it asap with as little dilution as possible, and get Anglo funding 80% asap.
These are all hypothetical and "high quality" issues, but interesting to consider. The assays and further drilling in this phase will be important as they will indicate how close to 2mt XTR might be able to get from Racecourse.
The buyout process for Racecourse is different to ARCM because under the XTR / Anglo option agreement a third party independent expert will determine the price once the 2mt is JORC'd, and Anglo just have to decide yes or no. There is no negotiation of price or transaction structure between XTR and Anglo. Anglo will clearly want to do DD but the negotiation process is more straightforward in theory.
If I was Anglo I would not be looking to buy in earlier - let XTR spend the money and bear the risk of drilling and proving up resource.
The interesting strategic question which Dcat was alluding to is: is it better for XTR to spend extra money drilling other prospects within the EL5574 licence (e.g. Footrot) to get some more value attributed to them in the independent valuation? Or is it better to get to the 2mt as quickly and cheaply as possible? The answer to that question must depend on the JORC / Valmin valuation methodology and to what extent it ascribes value to prospects beyond the JORC resource.
Steve. KMP haven't sold any shares. It's just the total number of shares in issue has increased since May 2020. They had 4.11% of 457m shares in May 2020 => 18.8m shares. They now have 2.55% of 736m shares in Feb 2021 => 18.8m shares.
Willem also tweeted the following on 26th Jan, a few days after that video.
"Chasing a few new discoveries in Australia .. amazing drill results (gold, copper and nickel) .. let's hope we can build a position quickly
Australia, still being very under-explored, is beating Canada every year now."
He then responded to one of the replies which was asking what the position was:
"I sure will .. some new GGP's and DEG's in the making .. expecting at least 1 ten-bagger this year"
The break in newsflow has hopefully allowed a consolidation in share price. When we were getting daily updates it was frustrating that large chunks of placing shares were sold into the liquidity, stalling any rise. Hopefully most of those wanting to offload will have done so before more news arrives.
From previous comments on here, Northparkes and Ridgeway are the ones to look at rather than Cadia. Iceberg's blog gave a good comparison of these different porphyry systems although I'm sure you've already read it... Worth a re-post for anyone new to Xtract!
Just to keep us focused on the prize while we wait for more news, I found the video at the following link very interesting. It is Alkane's Technical Director talking about the Boda discovery from October last year. I can't claim to understand it all but interesting nonetheless. Fingers crossed for something similar at Bushranger!
Agreed Iceberg. I just posted in the vague hope that Mr Bird might read it as he mentioned reading these boards in a recent interview!
On a positive note, at least the latest raise did not include a ton of warrants.
It's a shame Colin didn't do the placing with institutions / individuals who might hold onto the shares for longer than five minutes. Flipping of placing shares seems to be what is holding the share price back at the moment.
They are mostly sells. Look at the share price at the time of the trade. Also note that the share price has declined over the last couple of days. The large round numbers of shares suggests to me it is still placing churn. I think the price has held up reasonably well considering. The question is when does the selling dry up?
cyberiachas. There is clearly a critical point where the deposit goes from economic to non-economic which is a big value inflection point. The question of whether the deposit is economic is not just a function of the size of the deposit, it is also the capex, AISC, commodity price outlook and even financing conditions. The balance has clearly moved substantially towards the deposit being economic since xtr acquired Bushranger due to external conditions and the drill success. Hence the market has increased the probability of the deposit being economic and the share price has gone up. I am not sure the deposit has to be very large as you say for it to be economic - see for example the 2011 scoping study where it was talking about AUD 98 million of capex and a viable project with a smaller resource than today. Of course we would all like xtr to trigger the Anglo option with 2 million tonnes asap, but I think xtr has an economic resource before they get to that point.
@Investor12. I thought John Cornford gave a sensible methodology for a project at this stage: resource estimate x copper price x %.
You just need to come up with the assumptions.
If you just plug in the existing resource of 340k tnes, $8k/tne Cu price and 3% you get a value of over £60m. Clearly resource should go up as a result of recent drilling.
Is it not a big delayed sell from Friday when price was above 6p? A £340k buy and a share price drop of 8% just doesn't make sense.
I don't see a big sell at 6p as a bad thing, if that's what it is - more placing overhang churned.
@Investor12. Your comments apply to every small cap that does interviews like this - it is PR, often paid for by the company, and should be taken with a pinch of salt. At least this Share Talk chap has disclosed his interest. I find these type of interviews interesting nonetheless as they give a few snippets and a bit more context beyond RNSs.
Anyway, rather than all this second guessing, conspiracy theorizing, etc., it would be better to focus on the facts as set out in RNSs and other sources. In my view these set out a strong investment case based on current market cap versus what is shaping up at Bushranger and elsewhere for Xtract.
Correct O&W. This is the relevant wording from the Bushranger presentation:
"AA have a “buy-back” opportunity, giving ProspectOre a mechanism to monetise exploration success:
a) If a deposit of greater than 2M tons of contained CuEq (i.e. 450Mt @ 0.45% CuEq) is ultimately identified. AA
may buy-back 80% of the deposit at fair market value as determined by an independent expert in accordance
with the JORC and Valmin Code. Parties are to then pro-rata fund to maintain 80/20 or ProspectOre may dilute
which ultimately ends with ProspectOre retaining a 0.75% NSR
b) If a “Decision to Mine” is taken by ProspectOre prior to the identification of a 2M ton contained CuEq resource,
AA also have an opportunity to exercise the buy-back
c) AA have a once only opportunity (before it falls away) to exercise the 80% buy-back whether the opportunity
comes through the discovery of 2M tons of contained CuEq or a decision to mine.
d) If AA does not exercise the buy-back and ProspectOre ultimately develops a mine, ProspectOre would have a
100% project interest less 3.5% NSR royalties and a $7.5M development payment to historic holders (which