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When was this podcast? Was it today?
Just one question please, anyone. What is the 'decision to mine' that he has mentioned before and again today?
It means they have a viable mine under the Valmin code. There is no requirement to secure funding first. It also triggers the AA buyout option, which is the main reason to announce it.
In a nutshell : AA get first refusal on purchase of the licence as per the puchase agreement when XTR bought it from them. There is much conjecture regarding the next bit: When XTR announce a resource of 2m tonnes or more, or upon XTR issuing a decision to mine AA have 10 days ( I think) to make an offer to purchase, if said offer is rejected then the licence can be offered on the open market.
There has been pages and page on here of exactly how this will happen that I haven't got the time or the inclination to go into !
It seems you understand Jez and do you think it will be when they release there so called number crunching that they are doing now that will trigger the AA first refusal option?
The general feeling seems to be that after the modelling is done the resource will not meet that 2MT target. However, Colin Bird did in fact say in the podcast that following the completion of the model XTR will announce its decision to mine, thereby triggering AA's opportunity to make an offer to buy the resource back.
Correct me if I am wrong anyone ... but this to me took away a lot of uncertainty. It now seems the case that the model is forthcoming, the decision to mine will come with that, and AA can decide if the size of the resource, and its viability, are worth buying. If they choose not to buy the resource, or if they offer unacceptably little for it, the sale will be open to allcomers. And it is generally considered to be a resource that will be in demand. We no longer have to worry about not meeting the 2MT. less tonnage will still make for an economical prospect. Its just the price achieved that remains to be seen now?
Sienna39:
My take is the modelling will have been ongoing,not something they've been saving up to do in one go.
Once they have a model to work with they will announce a decision to mine and an invitation to AA to make an offer simultaneously in an RNS and an offer to the company.
Thank you, Steve4077 & others.
I was just hoping that it didn't mean that XTR and Mr Bird were going to set out to mine it themselves. I am very relieved and also fully understand what is going on but I was just confused by the use of the terminology. Cheers.
Art, I have always puzzled about this strange term 'decision to mine'. as it seems to have no relation to the the explorer's intention to mine it. In most cases they wouldn't have anywhere near enough funds to do that anyway.
I think what it really means: "we've looked into this prospect enough now and it seems viable. No more investigation ... its time time mine it. Anyone want it?"
The alternative of reaching 2MT in the AA agreement may have been a get out for XTR to say "look ... 2MT!! Don't make us spend any more time proving this up please ..."
I’m a little confused myself, are they going to mine themselves?
Decision to mine, is I believe, just another mechanism that is there. So Xtr can approach AA & formally ask them if they want to activate the buy back clause.
I am sure that AA would know that a junior miner, such as Xtr would not take a project on, as big as BR will be.
>>>correct me if I’m wrong,
Not at all, really good synopsis zero matrix.
It would have put them in a stronger position around the negotiating table to have hit the 2mt and to have declared the decision to mine together, which is a Oz term ( iceberg first noted) but as long as one of the criteria is met, that it what matters.
Certainly worth pointing out that Xtract have ‘no’ inclination or intention to mine the project themselves whatsoever, either solely or through a joint venture.
Far too big an undertaking in sheer scale and amount of finance required to even take it to feasibility let alone the 1.5 or so billion to take it to production.
What makes this a compelling investment, is the ‘high probability’ that it will be sold, as there is a very good chance Bushranger will go on to be mined, unlike the many projects that get parked up in the hope one day they will become viable.
Is in a mining nation, a friendly jurisdiction with a government that is openly supportive of big mining projects.
Within a fertile porphyry region of NSW nearby to Cadia ridgeway.
Multi mineralised, multi porphyry system similar to Cadia.
200km from main port of Sydney.
Close to the big town of Oberon
Nearby a dam with high voltage power line that cuts across the license.
No disputes over land rights in the area.
Not in an environmentally sensitive area that is likely to cause conflict with protective species.
I could easily go on…
Thankyou for clearing that up somewhat everyone so what's people's thoughts on timeliness for modelling etc?
Having listened to the podcast a second time I'm actually quite impressed. Why continue to drill to prove up an asset that is already big enough. That is music to my ears. Even without the answers to the questions in my last post, it is great to have a CEO who wants to monetarize the asset, and in a safe and mining-mad jurisdiction a buyer (whether AAL or another) shouldn't be too far away.
Hi ART the buy back is summarised at the end of the bushranger presentation
https://xtractresources.com/wp-content/uploads/Bushranger-Summary-Presentation_April-2020.pdf
It is generally accepted and has been suggested by Colin bird that any major will want to buy all 100% interest in the project. The 80/20% split is to give optionality to both parties.
However it is only the first 80% of the project that may be subject to third party valuation under the valmin code if both parties cannot agree on value. The remaining 20% will just be subject to negotiations between Xtr and AA, where Xtr could potentially command a higher premium.
As it is not a company buy out (xtr) shareholders will retain all their shares after a sale.
The subsidiary (Prospect Ore) that hold the license’s will be taken over where a dividend payment or a part divi and part new shares issued from the acquiring company will be transferred directly into your share trading accounts where your xtract shares are held. If you have multiple accounts, then you will receive contributions to each acc held as per shares held of course.
You will not be subject to capital gains tax outside of SiPPs or ISA until shares are sold and / or funds are transferred into your linked bank account.
I wonder if the sp will take a hammering if they don’t make an offer? Or this will cause a more significant rise, as AA will definitely offer less than full market price
Indeed. There is no guarantee that AA will make an offer. I'm thinking of Newcrest Mining recently, when they decided NOT to take up their 5% further option in GGP's Haveiron gold project. Everyone was flabbergasted, but the sp spoke.
I don't think they will, why would you squander the opportunity to make a fair offer for something when you may have to pay more in an open auction ?
XTR know what they have got, AA will know what they've got, they have the chance to pay a fair price and not more than the last bid which obviously would be the fair price as it's the last bid.
There won't be many companies who have that luxury when buying a world class copper play.
" i wonder if the sp will take a hammering if they don’t make an offer?"
I doubt it as very little is priced in for Bushranger. Because of failed forward guidance and indications by CB the market wants to see delivery before it acts as its sceptical - for good reason. The advantage we have is that the sp has not got ahead of its self and all that is priced in is Fairbride and other assets - not bushranger.
That said, I can't believe we wont find a buyer. Even if its at substantial discount to what we all think. But at a higher price than current sp
Cool, thanks for the responses.
Couple of more months to wait, could be a fat goose for Xmas, we all need it, tough times at mo and more to come
F100