MXR (ASX) Mxr being bought up

Originally posted by Crazy-Trader ↑

Been following the MXR story for about a year, and bought and sold this stock a few times. Have stayed away for the most part, given, the ~2.5bill shares on issue.

The Burbank Mill has a capacity to process 180,000 tpa, and it was purchased by MXR for $2m (that will be paid back of the 24 month period). This is an exceptional, given, that in Aug 2015, KDR was prepared just lease the premises and pay RMS ~$6 per each tonne the process. This would mean the Burbank Mill as purely rental asset with zero overheads has a capacity to generate over $1,000,000 in revenue. The profits from Toll Treatment should be above an beyond $1,000,000, as MXR would carry an element of risk (staffing issues, etc.).

KDR's announcement is below:
http://kidmanresources.com.au/live/wp-content/uploads/2015/08/ASX-Announcement_Kidman-to-cut-sosts-with-deal-to-lease-Burbankss-Mill_20150804.pdf
"Under the deal, Kidman has an initial one year lease with an option to extend by mutual agreement. Kidman will pay Ramelius $5 per dry metric tonne of ore processed and $1 per tonne of capacity utilised in the TSF."

In relation to Burbank Mill, it is right beside KDR's Burbank Mine (and right next to BARs MLs/ELs). KDR's Burbank mine is for sale. The last announcement made by KDR's last announcement in relation to the Burbank Mine Sale outlined:
"the Company and Resources & Energy Group Limited (ASX: REZ) have been continuing discussions in relation to the proposed Sale of the Burbanks Mine with a view to reaching a mutually acceptable outcome. However, the transaction is unlikely to proceed under the original terms and the Company is continuing discussions along with other interested parties to progress a potential transaction."

The asking price price that was set by KDR at the time was only $4.5mill, and they were quite generous terms.

The REZ $2.5 million convertible note to be issued to KDR will be on the following terms: • Term: 3 years • Interest rate: 5% per annum • Conversion price into ordinary shares of REZ: 20c • REZ has the right to repay the note in full within 12 months at its face value of $2.5 million. In the event of repayment the conversion rights into ordinary shares of REZ will lapse. The cash payment of $2.0 million will be made in the following instalments: • 1 payment of $100,000 upon execution of a formal agreement; • 1 payment of $400,000 to be paid at completion occurring; and • 3 equal 6 monthly payments of $500,000 each commencing 6 months following completion.

At $0.002, MXR has a MC of 5.7m, and a long-term liability of 2mill (due to the Burbank Mill purchase). It would equate EV of $7.7 mill. If the Burbank Mill was to run at ~75% capacity, it is likely to generate over ~$810,000 in profits (purely based as rental asset, not a Toll Treatment processing facility). That is a P/E of less than 10.

If the purchase of KDR mine is on the cards (and on similar terms of REZ), then there is a tremendous upside to MXR shareholder. From KDR’s website “Kidman Resources has re-established the operations of the Birthday Gift underground mine and recently announced a maiden Indicated and Inferred JORC resource of 99,000 ounces at 5.7gpt.”

180,000 tpa x 75% of nameplate capacity x 5.7 gpt x 90% recovery = 21462.18 oz per annum. Depending on the all in costs and prevailing gold price, MXR could potentially pay for the purchase of the Burbank Mine in a year:
$100 margin – ~$2.14 million
$200 margin – ~$4.3 million
$300 margin - ~$6.45million
$400 margin - ~$8.6million

You get the drift.

Hopefully, if this eventuates hopefully MXR aims for a high margin business based on current known.

DYOR.

Expand

Sounds good , I have previously suggested to MXR we go down this path of purchasing Burbanks and they had looked into it but weren't seen as the correct suitor at the time.!!!

And once the sale had failed I brought it up again.

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0.034	95000	1
0.035	740810	2
0.037	53268	1
0.038	408900	2
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(20min delay)
Last 3.1¢		Change 0.001(3.33%)		Mkt cap ! $13.26M

Open	High	Low	Value	Volume
2.7¢	3.1¢	2.7¢	$4.799K	175.0K

Sounds good , I have previously suggested to MXR we go down this...

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