I am currently reassessing my opinion on your intentions, given that you have stated that you have decided to buy a few shares.
I am genuinely puzzled and confused by your posting and will be prepared to be much more helpful (if I can) if I understand your motivation and intentions better. It may help you too to understand the responses of long term holders if you can see things from our POV too.
Firstly, your very first post on EXT was entitled "when does ext start selling uranium". The tone of the post suggested that you were having a dig at the company and at long term shareholders - this is because we all know that a) no firm date can be set yet; b) the case for buying and holding EXT is primarily based on it being a takeover target (due to its highly attractive resource), rather than it becoming a producing miner in the near term.
Your second post, made at a time when the SP was $3.90, last Thursday, was entitled "short time, target $3". Are you surprised that many long term holders immediately jumped to the conclusion that you were a downramper, or simply here to bait the long term holders (and those that may have bought above $5 in the recent past)?
Posts like that are not a way to encourage co-operation.
Personally, I will not comment on short-term price targets, as I am more focussed on the long term (though I will use what I may consider to be pricing anomalies to add to or reduce my holding). I'll mainly leave those sort of issues to others.
Moving forward in time, you have made a lengthy post, which appears impressive (and sounds authoritative) to the inexperienced, and also appears to cast more negative light on Extract. Again, you should not be surprised that it garnered a hostile reaction.
In my eyes the arguments in the post contained some fundamental flaws:
1. Emphasising spot uranium prices. You gave the impression of being knowledgeable about the uranium market yet failed to mention that long term contract pricing is key to resource valuation, rather than the somewhat artificial spot price.
2. Suggesting that posters that have not performed detailed NPV calculations were in some way negligent and that such calculations were crucial to valuation. You are right that ultimately the price that a buyer of the resource will be prepared to pay will be based on an NPV calculation (with some caveats that I will explain below*). However, I would suggest that probably not even the Company, let alone posters here, are in a positon to make an NPV calculation yet. That's because the project is still too early stage. Much more drilling needs to be done. More metallurgical test work, to determine the best ore processing methods, which in turn will dictate process plant design and hence CAPEX are also needed. Pit(s) need to be designed, calculations performed on sand removal costs, roadway building etc etc. We don't even know whether much new plant will need to be built or whether existing facilities at, say, Rossing can be used with little modification.
Without doing that real work (which none of us is in a position to do) an NPV calculation at this stage is spurious IMV.
So how do we value Rossing South and hence Extract? Firstly, I make the assumption that there is likely to be a trade sale - given the likely motivation of Extract's principal shareholders. Then I observe that this is the "highest grade granite hosted uranium deposit in Namibia and potentially one of the largest uranium deposits in the world." (quote from recent company news release). That statement, which I believe to be factual, has two implications. Firstly, that there is likely to be considerable interest from trade buyers; secondly, that due to the excellent grades, the price/lb that buyers would pay should at least equal that paid in recent similar transactions. As I'm sure you know, price/lb is a very crude proxy for an NPV calculation.
In arriving at a price/lb, I've looked at two recent transactions. The sale of Forsys Metals to Georges Forrest, last November and the more recent farm-in of Itochu Corporation to MegaUranium's Lake Maitland property. Both of these are undeveloped deposits and the Forsys Valencia deposit is physically close to Rossing South, though lower grade and smaller. They both indicate a trade value ITRO US$6/lb of U3O8 resource.
Given that figure it then becomes simply a matter of multiplying one's own best guess of the scale Extract's resource by it to arrive at a value.
Like anything in the investment world, there is no guarantee that there will be a sale nor of whether the resource will fetch more or less/lb than the indiciated figure. However the $6 figure should be conservative given the resource grade found so far, the scale of the resource (both of which would augur well for a proper NPV calculation).
The share price figures lord elpus has proposed are based on these sort of considerations and are not just fanciful numbers plucked out of the air.
3. I observe that your own calculations seem to be based solely on published JORC estimates. This may appear reasonable and I use this as an ultimate "bear case" in my own estimate of value. However, it most certainly isn't a base-case fair value figure. We already have drilling results which give a virtual certainty to resource upgrades to come. An estimate of 300Mlb for zones 1 and 2 would be considered conservative by many here. Once proven, that would give a value of US$1.8bn in a trade sale. I am not a geologist, so personally am somewhat agnostic on the likely ultimate resource size but that figure is consistent with analyst estimates (see, for example, Ambrian research on Kalahari Minerals)
4. Given the scale and grade of resource I also think you may have underestimated the potential productivity of a mine at Rossing South (probably the CAPEX too).
Considering all the above, either you have been naive in your approach to posting here (and have not given any thought to the likely reaction your posts and their manner will provoke) and have made several errors in your assertions... or long term holders here have genuine cause to doubt your motivation.
It would be helpful if you could add some clarity to this. If it is the former then you may find you get a more helpful response here and a more constructive debate ensues. Otherwise, expect a pretty powerful and negative reaction.
On a more positive note, FWLIW, I would say that your stated approach of "dipping a toe in the water" at this stage sounds sensible. It is entirely possible that the price will fall further in the short term and there may be better buying opportunities. Of course, equally there may not - especially with the likelihood of announcements concerning further drilling results and the possibility of corporate action at any time. Like you and unlike some other posters here, I am wary of being overexposed to any one stock (which is why I progressvely reduced my holding "on the way up" - a fact I have never sought to hide but didn't make a big song and dance about). My holding remains substantial relative to my portfolio but not scarily so (and is now at "negative cost" as I have already more than recouped my original cash investment). Even though Extract looks like an excellent investment proposition to me, things can go wrong. Drilling results may not live up to expectations. An offer may not materialise and EXT may face financial (or other) difficulties in developing a mine. Neither of these seem particularly likely to me but cannot be ruled out. These are the known unknowns. ;0) People like certainty but as I'm sure you know, there is none in the real world.
*Caveats: there are a couple of factors that may make the $6/lb figure overly conservative. Firstly, Rossing South has the potential of being so large and low cost that it actually sets the baseline for uranium pricing: whoever owns it may have the power to substanially influence the U market. Secondly, for U consumers like China, security of supply is an overriding concern. The cost of yellowcake is a relatively small part of the cost of building and operating a fleet of nuclear reactors. The Chinese have shown a willingness to pay a premium for security of supply (see deal with Areva re Trekkopje). These strategic aspects are unique to Rossing South/Extract and may set its value apart from that of other comparators.
Regards,
Mark
EXT Price at posting:
$3.88 Sentiment: Hold Disclosure: Held
(20min delay)