EXCO RESOURCES (EXS)

[whiteheron]

I note that EXS is up 20% in the last 3 weeks (from 17.5 to 21.0 cents ) but i can not find any reason for this

Does anybody know of any reasons for the relatively quick upsurge in the price ??

[clearasmud]

Shares have just rebounded to 25/26c after falling to 23c because of recent small capital raising at 20c
Apparently is a near term gold producer although everybody has been waiting patiently...

Peter Strachen put a value on EXS at 60c near term so hopefully its time is nearly here!

I hold

[clearasmud]

Melbourne age today (10/4/06)

EXCO Resources' share price has finally got a wriggle on after being in danger of being one of the only copper/gold stocks not to respond to the big gains posted by both metals.

Helping the stock along — it closed on Friday at 27.5¢ — was the cross-promotion of the company by its 14.7 per cent shareholder, Lion Selection.

Lion has been telling punters on its own roadshow that it is sure that Exco's Cloncurry copper resources are going to end up being owned by Xstrata.

Exco's resources are within spitting distance of Xstrata's Ernest Henry copper/gold mine, which needs to tie up additional reserves if it is to continue beyond 2011.

And if Xstrata really wants to cash in on current boom prices for copper, gaining access to the higher-grade material that Exco has on its books becomes compelling.

There is nothing new in all that. What is new is that with the copper price taking off, the value to Xstrata/Ernest Henry of the Exco-owned copper resources has soared to as much as $400 million by one estimate.

For Exco, that represents a big multiple of its current market capitalisation. But without a deal being struck, the market is holding back on giving Exco full value for its Cloncurry copper.

The October appointment to the Exco board of Barry Sullivan has raised hopes that a deal is not far off. Sullivan worked at MIM, now part of Xstrata, between 1974 and 1995.

He had a six-year stint as executive general manager of MIM's Mt Isa operations. During that time the current head of Xstrata's copper unit, Charlie Sartain, was a rising star in the Sullivan team. So the two know each other well and there is mutual respect.

While the behind-the-scenes work on a deal continues, the market has also started to take another look at Exco's gold exposure through its White Dam gold project in South Australia.

Once a native title agreement is reached, a go-ahead decision is a virtual certainty for a low-cost development that would generate super returns at current gold prices. To many in the market, those potential returns alone justify Exco's current market value. Cloncurry copper, then, is money for jam.

[Revhead]

This was released a while ago and was probably the catalyst for the recent run. Been other stuff in the papers lately which is keeping the price moving.


Stock Resource last reported on Exco Resources on 1 February 2006 when we reported that the company had secured a 100% interest in the White Dam gold project through acquisition of the 40% joint venture interest held by its former partner Polymetals. The cost of the transaction was $2m with $1m to be paid at that time while the remaining $1m is to be paid by 30 November 2006.

“Exco Resources remains extremely undervalued in the current commodity price regime. We are recommending Members increase their exposure as the realisation of a higher share price may occur rapidly.”

Since that time not a lot has happened on the company front apart from progressing the native title agreements with White Dam and the mining lease with the E1 deposits (and a bit of exploration), but on the commodity side, both the gold and copper prices have moved substantially higher. These price movements add significant value to these assets which lay relatively unnoticed in this underpromoted company. In the current market Exco actually represents one of the rare value opportunities as outlined below. The question is when this value will be realised!

White Dam Upside Case
With the A$ gold price now approaching A$820 (US$ 588/oz gold price and A$/US$ = 0.72) and some market participants forecasting a US$1000/oz gold price, this gold project has significant underlying value.

The company has previously defined the project with the following parameters and is currently waiting on finalising native title agreement before a likely go-ahead is announced.

In pit Oxide ore (t) 4,300,000
Ore grade (gold g/t) 1.28
Total gold (oz) 176,958
Recovery 70%
Recovered gold (oz) 123,870
Cash costs (A$/oz) 340
Total Costs (A$m) $42.12
Total Capital Costs (A$m) $7.00
Total Capital & Operating Costs (A$m) $49.12

Source: Company

In the following cases using the current A$ gold price, the project’s pretax margin is a robust $0.40 cents per share (pre-tax is used given the significant tax losses available for this project).

Total Revenue at following gold prices A$ gold price Gross Revenue (A$m) Pre-tax margin (A$m) Per Share
US$400/oz & AUD/USD = 0.75 $533 $66.06 $16.95 $0.14
US$450/oz & AUD/USD = 0.75 $600 $74.32 $25.21 $0.20
US$500/oz & AUD/USD = 0.75 $667 $82.58 $33.46 $0.27
US$550/oz & AUD/USD = 0.75 $733 $90.84 $41.72 $0.33
US$600/oz & AUD/USD = 0.75 $800 $99.10 $49.98 $0.40

This $0.40 per share is clearly well in excess of the current $0.22 share price.

E1/Mt Margaret Deposits
Stock Resource has reviewed some of its earlier analysis on the value to Xstrata of processing higher grade E1 ore through the nearby (8km away) Ernest Henry mill. We have assumed a mineable reserve of 88kt of copper which ignores some of the recent exploration success achieved by Exco but nevertheless highlights the significant value of this ore to Xstrata.

In the past we have assumed Ernest Henry cash costs of US0.70/lb of copper but in this exercise we have arbitrarily raised these average cash costs to US$1.00/lb. Nevertheless, with current US$2.55/lb copper price, the cash generated from Ernest Henry processing Exco’s ore is astounding!

Source: Stock Resource

The graph highlights that the margin per Exco share to Xstrata is enormous compared to the market price of Exco. Our argument is that E1/Mt Margaret is highly likely to be acquired by Xstrata and the potential margins indicate that Xstrata has capacity to pay a significant premium over the current Exco share price.

Enterprise Value of Exco
The following table incorporates a recent 3.5m placement undertaken by the company to provide ongoing working capital of $0.7m. The enterprise value remains modest at $27m.

Issued Shares (m) Share Price (A$) Market Capitalisation (A$m)
Ordinary Shares 128.2 $0.220 $28.2
Options (relevant) 41.5 $0.220 $9.1
Diluted Market Cap $37.3
Less cash raised $8.3
Less cash on hand $2.2
Add

[whiteheron]

I see that EXS traded as high as 47c today, no doubt on the coat tails of AUM whilst it was on a runaway

Current price is around 37/38c still pretty good, with further upside expected in due course

[whiteheron]

The EXS share price has been very disappointing over the last 3 months or so, trading down to as low as 21c

It now seems to be coming back to life, rising from 22c to 27c in the last 6 trading days on increasing volumes
The last ASX announcement was 3 weeks ago so this is not the reason for for the move

Methinks that somebody knows something that the market doesnt !!
There must be an announcement/announcements within the next 2 weeks --- at least the quarterly report and hopefully drilling results

Does anybody know anything of interest ??
I will be interested in hearing

Medium to long term EXS has to be a a promising company in my view
Copper will undoubtedly continue to be a great performer for the forseeable future

[kura]

quote:Originally posted by whiteheron
Does anybody know anything of interest ??
I will be interested in hearing

The price started to spike up Wednesday afternoon, just after a tipsheet (Stock Analysis) promoted them, as one of their "best bets" my guess is that after this initial burst of enthusiasim, that we could drift back a touch, despite their excellent longer term prospects.

[financial chatter]

up 15% this morning - what is stirring the pot?

in the last 2 weeks the stock could not be given away at 18/19c, now look.

someone must know (or be expecting) something.

[drillfix]

up 15% this morning - what is stirring the pot?

in the last 2 weeks the stock could not be given away at 18/19c, now look.

someone must know (or be expecting) something.

Probably the roadshow that was started 2 weeks ago kicking in, who knows.

I do know that if it doesn't break past and hold 25c, she will continue with the downward trend.

Support approx 18.5c and if that goes, who knows where it will or could go.

I dont hold but just had a little look at the chart.

Good luck to holders.

[financial chatter]

I think this is what started to stir the pot a couple of days ago.

a further buy recommendation for Exco Resources in two European Market Letters: Austria Boersenbrief (no 1 in Austria - EXS see page 6) and in the Hanseatischer Boersendienst, Hamburg (in distribution for 48 years - EXS see page 7/8.--- Two different markets: Austria and Germany but the same publishing house and therefore the same text (different target group: Austria and Germany).

I just try to translate it into English literally.

Exco Resources - real bargain - BUY

(EXS) - ISIN: AU000000EXS9 - Shares outstanding: 326,1 million - Share price A$ 0.20 (Febr. 5th, 2010) - Market cap.: A$ 65,2 million - cash: A$ 19,9 million (31.12.2009)

Based on their assets, the White Dam Gold deposit and the Cloncurry Copper project can the company be considered as strongly undervalued. Shaw Research, Sydney gives EXS a fair value of A$ 0.45/share. FD Capital increased mid January 2010 the 12 month target price to A$ 0.65. And indeed the investors in general focuses too much of a possible off take ore agreement with the resource giant Xstrata and sold their shares nerve wracking, after the Xstrata annoncement in Dec. 09. The money manager don't believe on a JV agreement with Xstrata anymore. We had a similiar situation with Hillgrove (HGO) as the shares were quoted at A$ 0.14 and we considered that price a bargain. GOLD - The White Dam operation of Exco Resources in Southern Australia goes in production as of April 2010 with a forseen annual output of 50'000 ounces. The production costs are calculated with 570 A$ per ounce. The yearly cashflow will be round 20 million US$. COPPER - The Resources of Exco from the Cloncurry Copper project in Queensland are 51 million tons ore with grades of 0.83% copper = 425'000 tons copper and 0,23 g/t gold = 373'000 ounces. Beginning of December decided Xstrata with a capital injection of US$ 542 million to finance their underground operation in order to avoid the closure of the Ernst Herny Mine (8km away from Exco's Cloncurry Project). Is just a question of time until a JV with Exco became fact. Xstrata needs in principle the Exco copper for reaching an optimum capacity of their smelting works. The first talk were not successful. Exco has no interest to sell of cheaply their "silver". Rather builts Exco an own processing plant. Even a financial participation of a copper hungry Chinese commodity company is more as possible.


Exco Resources (EXS) ISIN: AU000000EXS9 zum Schnppchenpreis
Anzahl Aktien: 326,1 Mio. Kurs A$ 0.20 (5.02.2010) Brsenkapitalisierung: A$ 65,2 Mio.
Barvermgen: 19.9 Mio. A$ (31.12.09).
Die Exco Aktien notiert zur Zeit bei A$ 0.20 - ein wahres Schnppchen. Basierend auf deren Vermgenswerten,
dem White Dam Gold Deposit und dem Cloncurry Kupfer Projekt, kann die Gesellschaft als
stark unterbewertet eingestuft werden. Show Research, Sydney taxiert den fairen Wert von EXS
Risiko-Hinweis:
Jedes Investment in Aktien ist mit Risiken behaftet. Aufgrund von politischen, wirtschaftlichen
oder sonstigen Vernderungen kann es selbst bei Standardwerten zu erheblichen
Kursverlusten, im schlimmsten Fall sogar zum Totalverlust kommen. Engagements in die
vorgestellten Aktien bergen zudem teilweise Whrungsrisiken. Alle Angaben stammen
aus Quellen, die wir fr vertrauenswrdig halten. Eine Garantie fr die Richtigkeit kann
dennoch nicht bernommen werden. Um Risiken abzufedern, sollen Kapitalanleger ihr
Vermgen grundstzlich breit streuen. Einzelne Positionen sollten nicht mehr als 3 bis 5%
des Depots ausmachen.
Hanseatischer Wirtschaftsdienst AG, Langenstcken 36 a, 22393 Hamburg,
Tel.: 040-790 60 84, Fax: 040-790 94 68
pro Aktie mit A$ 0.45. FD Capital erhhte Mitte Jan. 2010 das 12 Monatsziel auf A$ 0.65. Und in der
Tat, die Investoren fokussieren sich zu stark auf den mglichen Abnahmevertrag mit dem Gebiets-
Nachbarn, dem Rohstoffgiganten Xstrata und verkaufen entnervt - da man nach dem Dez. 09
Announcement seitens Xstrata nicht mehr an ein JV Abkommen glaubt - die Exco Resources Aktien.
Eine hnliche Situation hatten wir mit Hillgrove Resources (HGO) als wir die Aktie beim Kurs von
A$ 0.14 als Schnppchen einstuften. Heute notiert der Wert bei A$ 0.20 (4.02.10).
GOLD Die White Dam Gold Mine von Exco Resources in Sd-Australien geht im April 2010 mit
einer vorgesehenen Jahresfrderung von 50000 Unzen per annum in Produktion. Die Frderkosten
wurden mit 570 A$ pro Feinunze berechnet. Der jhrliche cashflow wird ungefhr 20 Mio. US$ pro
Jahr generieren.
KUPFER Die Exco Ressourcen aus dem Cloncurry Kupfer Projekt in Queensland betragen
51 Millionen Tonnen Erz mit Gehalten von 0.83% Kupfer = 425000 Kupfer und 0,23 G/T Gold =
373000 Unzen. Nachdem Xstrata anfang Dezember entschied den Untertageabbau mittels einer
Kapitalaufnahme von US$ 542 Millionen zu finanzieren um eine Schlieung der Ernst Henry Mine (8
km vom Exco Cloncurry Projekt entfernt) zu vermeiden, ist es nur eine Frage der Zeit bis ein JV mit
Exco Resources Tatsache wird. Xstrata bentigt im Prinzip das Exco Kupfer zur besseren Auslastung
ihrer Kupfer Schmelzanlangen. Die ersten Gesprche waren noch nicht von Erfolg gekrnt.
Denn Exco wird das Tafelsilber nicht verschleudern. Eher geht man mit einer eigenen Anlage in
Produktion. Auch eine finanzielle Beteiligung eines kupferhungrigen chinesischen Rohstoff-Unternehmens
wre gut vorstellbar.