$1.5B for a 4th Quartile Mine?

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Righto money miners.
That's not enough, Ellie, the

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three of us put all together.
Man.

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We got one man 321.
Righto money mines.

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Three make one.
Three makes 1 almost got.

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Daddy.
There you go guys.

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We got like a bit of variety
show today.

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We got global news out of China.
We've got deals, we've got

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financings.
It's all happening.

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It's like a Christmas pageant.
Super large caps, very small

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micro caps, and a bit in
between.

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Ally your.
Specialty Trav going right down

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into the micro cap plan right
this.

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Is, yeah, on the lower threshold
of what I normally talk about,

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but it's kind of an interesting
thing.

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It's one for the silver bugs
too, but all lead bugs.

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Don't think there's any lead
bugs out there, but yeah, like

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Keen to.
Can you talk about it?

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Keen for Christmas too.
We're we're on the home

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straight.
We're close, We're close.

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Business days left.
Yeah, we're counting.

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Some big news out of China,
Yeah, no.

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So.
Big article out today that I

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think bloody everyone, everyone
would have seen and certainly

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the markets, I would have seen
the news out of China signalling

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bolder stimulus for next year as
Trump returns.

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So the Politburo, I'm not sure
I'm saying that correctly, which

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is basically the the ruling
Communist Party's most senior

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sort of 24 officials led by
President Xi announced I will

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embrace a moderately loose
strategy for monetary policy in

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2025 S signalling more rate cuts
ahead and shifting from a from a

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prudent strategy that's been
held for nearly 14 years to now

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a moderately loose strategies.
This is why all the lithium

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stocks are up early.
Yeah, this is but everything you

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know, not just case metals,
lithium, everything's up massive

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commodity price wise, most
things are up, you know, a

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percent, 2 percent, 3% and and
the equities even more so about.

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Time like jeez.
That's like a little China Santa

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rally.
It's the first.

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Day that commod stocks are
looking like meme stocks.

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Will it hold though?
We've been talking about China

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stimulus for a number of months
now and it's it's faded pretty

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quickly.
So that is the big unanswered

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question, hey.
Yeah.

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So want to keep an eye on Yeah.
And as we sort of said, JD like

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and, and people, you know, sort
of raising the question like,

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you know, this is all good, but
very positive, but how it's

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going to be implemented is, is
not totally clear just yet.

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So certainly one to watch, but
going to one of our biggest

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stories for today is London
mining selling some of their

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assets to go pretty much all in
on to Vacuna.

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So take us through it, JD.
Yeah, an interesting sale.

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It had been one that's flagged
for for quite a while.

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So London mining was sale Nevis
Korvo and Zink Groven to

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Boloden, Boloden being a Swedish
miner.

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So I'll give I'll give a bit of
a big rundown, but the headline

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is US $1.5 billion transaction.
So the money miners might

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remember we spoke about one of
these assets in particular,

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Nevis Corvo, because a lot of
the Aussie miners were were

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looking at this one.
They'd been in the data room.

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You had the likes of Mac S32
were named, I'm sure Sand Fire,

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we're looking as well.
Yeah.

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So our first thoughts were how
does the price stack up against

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the recent copper transactions?
We've heard a lot of CEOs of big

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miners saying copper deals are,
you know, priced pretty richly.

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We've seen that ourselves.
You know, one that comes to mind

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that we spoke about a little
while ago was the the comic cow

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transaction.
But you've seen it for really

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fit for years now, so it was
worth getting into the weeds.

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Was this are they?
Is it fit categorise these as as

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copper?
Copper mines though, are they?

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No, no zinc mines.
So Nevis Kovo is more copper

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dominant, but zinc groovin
literally translates from

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Swedish to the zinc mine.
Yeah.

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And the forecast for 2024 was
about 80,000 tonnes of zinc and

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5000 tonnes of copper from the
from that operation.

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Gotcha.
So to to give the run through on

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the miners and the assets just
quickly because I don't think a

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lot of the Aussie listeners will
be too familiar with them.

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You've got London mining, on the
one hand TSX listed, they kept

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it just under $11 billion in
Canadian terms, predominantly a

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copper miner and this
transaction makes them even more

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so, a copper miner that are do a
good bit of zinc at the moment

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and some gold as well.
They've got stakes in

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Candelaria, Casarones, Chapada
and more.

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And of course, the big VHB deal
which you touched on there Ally

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being in the the Vacuna.
So from the moment they, they,

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they announced that Vacuni
transaction BHB that they always

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said, OK, we're going to we're
going to sell down our other

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assets in order to kind of yeah,
forward to pathway ahead to

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fund.
Yeah, and they need to

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development.
Here of.

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To delever a bit before that,
that big CapEx cycle is that

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that's sort of anticipated to
start in 26 and you know a lot

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of money's going to go into the
ground there.

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Hi is Maria to kick things off
and then yeah, there's still a

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fair bit of way come to the
bridge when it comes to you lead

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us all to.
Yeah, absolutely.

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So of course you've got the
Lundin family there as well,

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about 15% of of the stock in
Lundin mining.

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Then you've got Bolidin.
So they're a Swedish miner and

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smelter importantly.
So we've got a bit of vertical

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integration there.
Market cap in Aussie dollar

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terms around 13 billion
operations, mainly in

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Scandinavia, but they've got the
Tara mine, which is pretty well

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known in Ireland as well,
actually shut down not too long

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ago and it's getting restarted.
So strong zinc focus and then

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sort of copper comes in behind
that.

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Learning more about Boledin.
It was, you know, one, one of

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the first things that came to my
mind is are they just trying to

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lock in concentrate supply?
You guys will remember we spoke

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a lot of the beginning of the
year of these smelters around

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the world feeling the pinch of
not being able to get their

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hands on copper concentrate with
the, you know, the likes of

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copper Panama and other minds
shutting down.

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We saw a dramatic fall off in
the TCR CS that these these

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smelters charge.
And you know that that is no

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different in in Europe that was
predominantly focused in in

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China, but we saw in Indonesia
and a bit in India as well.

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But it's it's no different up
here.

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And that means the the smelting
part of their business has kind

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of been suffering.
And the answer I kind of came to

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you on that was like in part,
yes, they're definitely trying

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to address that.
But that is a bit of a longer

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term view because of course the
operations that are being bought

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here have contracts in place
already that you can't just

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change.
A lot of the supply was actually

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going to Bolidian already.
So it doesn't change and the

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other stuff was contracted out.
So it's going to take some time

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before you self get your hands
on that to bind the mines.

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I would have thought the
dynamics in the smelting market

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like the you have TTRC or
whatever, it's like a short term

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phenomenon because it's just a,
you know, like you can't have a

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long term, a long term like
downstream smelting industry

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that's unprofitable.
Eventually you'll have supply

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curtailment, less smelters
available, the ones that remain

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more profitable.
But there's there's just been

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like a lack of, yeah, shutdowns
in some of these unprofitable

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smelters, virtual, whatever
industrial policy settings are

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in these countries at the time.
But that doesn't last forever.

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That's just a short term
phenomenon.

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Nah, people aren't going to be
attracted, you know, sort of one

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O 1 to to a market that's that's
uneconomic.

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And that that plays out over
over quite a while with with a

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bit of sort of influence from,
from governments, right?

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Like you look at Indonesia and
the government forced them to

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build that, that smell to the
Freeport one and those sorts of

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things.
So there's, you know, you see

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that in in commodity markets.
So tell us about the the two

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assets that all in of buying off
London?

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Yeah.
So what are they?

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We'll start with the the
Portuguese asset.

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This was the one that the Aussie
miners were rumoured to be more

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interested in.
So it's an underground

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operation, polymetallic, it's
Avms deposit, predominantly

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copper and zinc sitting in that
western part in Portugal of the

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Iberian pyrite belt.
We've sort of been hearing for

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quite a while, but this will be
kind of consolidated.

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So the the 2024 guns like I said
just under 30,000 tonnes of

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copper and 115,000 tonnes of
zinc.

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C1 costs around about two bucks
USA pound in copper terms plus

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110 million in CapEx.
So that is, you know, that is

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not the norm.
That is a big swing of CapEx to

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get the operation kind of
humming again.

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It's got 2 processing plants.
Given the polymetallic nature I

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think of Adriatic and these
sorts of operations, you've got

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your copper and then your zinc
which can do a bit of copper as

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well, a 2.8 and a 2.5 million
tonne per annum plant.

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And it was interesting, they
noted in the call, this one

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actually produces a a dirty sort
of con with elements that

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attract a a penalty.
What are they like arsenic or

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what's?
The, I'd imagine arsenic they

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didn't sort of reveal, but yeah,
they sort of household names

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when it, when it comes to those
sorts of stuff.

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So underground mining's been
happening here for over 30 years

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now.
So it's, it's got a long life,

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but unfortunately four people
have died in, in the past four

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years.
So not up to scratch, needless

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to kind of say.
And let's let's hope that can be

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stopped going forward.
Well, I didn't also call this an

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asset that sits on the 75th
percentile.

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So it's it's not often a company
will call out an operation that

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they're buying as being between
the 3rd and 4th quartile.

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So I mean, good on them for that
that sort of disclosure.

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But yeah, by no means is this a
stand out asset.

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And if you just do back at the
envelope math on 2024 numbers,

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assuming a $4.00 a # copper
price, this makes less than $15

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million.
Again, with the big caveat that

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that is a large amount of CapEx
and that's that's not the norm.

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So cash flow should improve
going forward, but high cost

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curve like a few of the other
operations that that Bulladin

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own, which leaves you
susceptible to the to the swings

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in commodity prices.
Then you've got the other asset

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in Sweden, zinc proven.
So again, polymetallic right in

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Bullidon's backyard.
Lundin actually bought this 20

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years ago from Rio Tinto.
This mine has a huge history.

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It's been in continuous
operation since 1857.

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So it's deep now.
Three shafts go down.

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They're operating around 1300
metres below the ground.

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And like I said, 80,000 tonnes
of sync guidance with 5000

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tonnes of copper guidance.
In zinc terms, we're talking

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cash costs of $0.45 + 65,000,000
CapEx.

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So again, back in the envelope,
that's about $100 million in

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cash flow for the year.
So not too bad at all.

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And just on where this sits in
the cost curve in the middle of

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the second quarter, so much more
competitive than than Nevis core

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though and you know notably
these assets don't have a

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massive mine life less than 10
years where we're talking about.

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It's based off current reserves
but exactly but the like.

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It's been operation since 1850s.
Yeah, so keeps going.

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So with zinc riven, there's a
strong expectation that

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resources will convert to
reserve.

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You don't have quite the same
confidence with with Nevis

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Cuovo, it's it's a bit higher.
There hasn't historically been

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as good a carryover from
reserves to from resources to

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reserves rather.
But I think there's an

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expectation in buying these
assets, you know, that that the

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life will go on for for a bit
longer and.

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What about the, what about the
the price tag here?

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Supporters paying US 1.5
billion, right?

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That's yeah.
When you kind of just like think

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of the multiples here.
Is it screen?

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Is it screen fully valued?
Is it screen cheap?

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It's, it's kind of interesting,
right?

224
00:11:34,160 --> 00:11:39,000
So, but where I came to
ultimately is that it's kind of

225
00:11:39,000 --> 00:11:42,680
at the upper end of what you'd
call fair, but there's, you

226
00:11:42,680 --> 00:11:45,200
know, always many ways you can
sort of slice and dice it.

227
00:11:45,200 --> 00:11:49,800
So 1.3 billion is what they're
paying upfront on a sort of cash

228
00:11:49,800 --> 00:11:52,040
free basis.
You might see 1.37 quoted.

229
00:11:52,040 --> 00:11:54,880
There's a little bit of sort of
money that'll sit in the account

230
00:11:54,880 --> 00:11:58,520
that they'll kind of pay for as
well, plus 150 million in

231
00:11:58,880 --> 00:12:01,440
contingent payments.
It's not subject to too many

232
00:12:01,440 --> 00:12:05,240
things given it's not the core
assets of either of these these

233
00:12:05,240 --> 00:12:10,040
companies, but getting getting
into the sort of multiple and

234
00:12:10,240 --> 00:12:14,920
how they talk about it followed
in forecast 300 million to 350

235
00:12:14,920 --> 00:12:18,520
million EBITDA over each of the
next five years.

236
00:12:19,000 --> 00:12:22,160
So if you're if you're
conservative on price forecasts

237
00:12:22,160 --> 00:12:25,800
and therefore you don't assume
the contingent $150 million

238
00:12:25,960 --> 00:12:30,040
payment and you take the lower
of the 300 to $350 million

239
00:12:30,040 --> 00:12:33,360
forecast that they assume over
each of the next five years,

240
00:12:33,360 --> 00:12:36,120
you're talking about 4.3 times
EBITDA.

241
00:12:36,320 --> 00:12:40,160
Now that's you know that's,
that's definitely worth looking

242
00:12:40,160 --> 00:12:44,520
at a bit closer because these
two operations did in 2023 a

243
00:12:44,520 --> 00:12:49,040
$195 million in EBITDA.
So if you're looking on those

244
00:12:49,040 --> 00:12:53,160
numbers, just looking back 6.7
times and you know these

245
00:12:53,160 --> 00:12:56,800
operations that have been
working for for quite some time,

246
00:12:56,800 --> 00:12:58,400
so you can get a good feel for
it.

247
00:12:58,600 --> 00:13:01,440
Like I said, they did come out
of that cycle of heightened

248
00:13:01,520 --> 00:13:02,800
CapEx.
So that adds a bit of

249
00:13:03,080 --> 00:13:06,360
conservatism to it.
Interestingly, listening to the

250
00:13:06,360 --> 00:13:10,920
call in that number 300 to $350
million, the company said

251
00:13:10,920 --> 00:13:14,840
they've assumed no synergistic
benefits and that that kind of

252
00:13:14,840 --> 00:13:16,760
surprised me.
It's good to say it's, it's

253
00:13:16,760 --> 00:13:18,840
conservative.
Like I firmly believe there will

254
00:13:18,840 --> 00:13:21,800
be synergies here.
You can say that because London

255
00:13:22,440 --> 00:13:26,240
are paying Boledin right now,
the TCRC, so that in time will

256
00:13:26,240 --> 00:13:28,760
be scratched and there will be
some sort of synergies.

257
00:13:28,760 --> 00:13:31,000
But again you've got you've got
more than $100 million

258
00:13:31,000 --> 00:13:34,560
difference from what the
operations did in 2023 to what

259
00:13:34,560 --> 00:13:37,240
these guys are assuming going
forward.

260
00:13:37,960 --> 00:13:40,360
And you want to dig into that,
you want to understand whether

261
00:13:40,360 --> 00:13:44,040
that comes from the consensus
pricing assumptions or are they

262
00:13:44,320 --> 00:13:47,720
assuming cost improvements,
volume growth, these sorts of

263
00:13:47,720 --> 00:13:50,160
things.
It was a little bit frustrating

264
00:13:50,280 --> 00:13:52,360
on the call on this point
because the company just kept on

265
00:13:52,360 --> 00:13:55,200
referring back to the point that
they don't own the assets yet.

266
00:13:55,200 --> 00:13:57,880
They can't comment on costs,
they can't come on on this, they

267
00:13:57,880 --> 00:14:00,960
can't come on on this.
So it was kind of hard to hard

268
00:14:00,960 --> 00:14:03,560
to work out.
And they also didn't specify

269
00:14:03,560 --> 00:14:07,880
exactly what the consensus cost
price forecasts that they're

270
00:14:07,880 --> 00:14:10,000
using are.
The one detail they did give

271
00:14:10,000 --> 00:14:13,880
though, that it doesn't exceed
the contingent payments, which

272
00:14:13,880 --> 00:14:18,160
means it's below 4 bucks, 50
copper and retreating in the

273
00:14:18,160 --> 00:14:23,280
coming years and on the zinc
side of things below $1.40

274
00:14:23,360 --> 00:14:26,760
rather a pound and retreating
over the years to come.

275
00:14:26,840 --> 00:14:28,920
Gotcha.
I've got two points to make

276
00:14:28,920 --> 00:14:30,800
there.
One's just in relation to like

277
00:14:31,760 --> 00:14:34,960
EBITDA, What's not captured
there is the term CapEx.

278
00:14:35,120 --> 00:14:37,880
Whenever, whenever a company
runs a sale process on assets

279
00:14:37,880 --> 00:14:41,640
that they're selling, I always
assume that the seller halts a

280
00:14:41,640 --> 00:14:44,280
lot of CapEx in the the six
months before the the sale

281
00:14:44,320 --> 00:14:45,440
complete.
So there's probably some catch

282
00:14:45,440 --> 00:14:47,520
up CapEx to to embark on here as
well.

283
00:14:47,880 --> 00:14:50,880
Completely, Graham, it's kind of
the kind of the human thing to

284
00:14:50,880 --> 00:14:55,040
do which makes it all the more
interesting because of course

285
00:14:55,040 --> 00:14:56,720
you know Bolodin are going to
want to say they got a good

286
00:14:56,720 --> 00:15:00,800
deal, but they were very firm in
saying this has come at the end

287
00:15:00,800 --> 00:15:04,560
of the CapEx cycle. 110 million
is not the norm that, that is

288
00:15:04,560 --> 00:15:06,440
big.
But you know, like like we said,

289
00:15:06,440 --> 00:15:09,520
it's, it's not a stand out asset
and there's a good chance more,

290
00:15:09,640 --> 00:15:11,640
more capital will need to go
into it.

291
00:15:11,640 --> 00:15:13,800
We'll, we'll kind of see.
The other point is just on the,

292
00:15:14,520 --> 00:15:18,120
the, the copper price there.
So it's a contingent payment

293
00:15:18,120 --> 00:15:21,560
above 4450.
So yeah, this is one of the

294
00:15:21,640 --> 00:15:25,040
interesting bits of feedback
that came out of some of the the

295
00:15:25,240 --> 00:15:28,680
analyst site visits to the like
the Chilean kind of copper

296
00:15:28,680 --> 00:15:32,800
assets of of BHP etcetera.
That happened I think 2 weeks

297
00:15:32,800 --> 00:15:37,080
ago now.
It's like well reported now that

298
00:15:37,080 --> 00:15:41,240
BHP is using a long term copper
price in real terms forecast of

299
00:15:41,360 --> 00:15:44,960
4 bucks, 50 to make investment
decisions in, in real dollars,

300
00:15:44,960 --> 00:15:47,080
which is so, yeah, pretty
interesting.

301
00:15:47,120 --> 00:15:49,680
It's above, it's above
consensus, but that's that's

302
00:15:49,680 --> 00:15:53,600
where BHP sits.
And that will have an economic

303
00:15:53,600 --> 00:15:55,640
model to to point to, to suggest
that.

304
00:15:55,640 --> 00:15:58,360
But yeah, 100% you've you've
kind of got to got to have your

305
00:15:58,360 --> 00:16:01,400
own views as a miner.
I did see in the past couple of

306
00:16:01,400 --> 00:16:04,760
weeks a few people dial back
there the copper forecasts for

307
00:16:04,760 --> 00:16:10,040
sort of 25 and 26 again as as
you know China impacts and these

308
00:16:10,040 --> 00:16:11,520
sorts of things that come into
account it's.

309
00:16:11,520 --> 00:16:14,120
Just when you look at the
development assets you like the

310
00:16:14,400 --> 00:16:17,280
all of these assets need like $5
plus copper to justify

311
00:16:17,280 --> 00:16:18,880
developments.
Yeah, absolutely.

312
00:16:19,200 --> 00:16:21,440
Digging into how these guys are
financing it is kind of

313
00:16:21,440 --> 00:16:22,920
interesting.
So they're going to pay for it

314
00:16:22,920 --> 00:16:26,280
with a bridge line to start with
and then they're going to

315
00:16:26,280 --> 00:16:29,760
refinance this with a share
issue corresponding to half the

316
00:16:29,760 --> 00:16:31,920
value.
So they're flagged straight up

317
00:16:31,920 --> 00:16:34,480
that they're going to raise
about, you know, what could be

318
00:16:34,480 --> 00:16:38,680
US $650 million be replacement
or or rights issue, which is

319
00:16:38,680 --> 00:16:41,640
more common in in Sweden does
need approval.

320
00:16:41,640 --> 00:16:44,360
They need to speak with the the
owners of the business and that

321
00:16:44,360 --> 00:16:45,960
could be carried out in the
first half of next year.

322
00:16:45,960 --> 00:16:49,520
But it's not a super ASX type
thing to to sort of see

323
00:16:49,520 --> 00:16:50,920
different.
Yeah, you're doing a

324
00:16:50,920 --> 00:16:53,840
transaction, you're doing it
today and you can raise capital

325
00:16:53,960 --> 00:16:55,880
in six months time.
That's not something you see

326
00:16:56,480 --> 00:16:58,920
every day.
And it, it also does beg the

327
00:16:58,920 --> 00:17:03,000
question on the, the dividend.
They've, they've paid dividends

328
00:17:03,000 --> 00:17:05,000
for, for quite some time.
They sort of consistently do

329
00:17:05,000 --> 00:17:11,960
that, but they're expanding upon
their net debt to, you know,

330
00:17:11,960 --> 00:17:14,640
their gearing ratios on a few
different sort of metrics going

331
00:17:14,640 --> 00:17:17,839
out of the bands that they kind
of provide, which does kind of

332
00:17:17,839 --> 00:17:19,800
bring about the question like
why didn't you just sort of

333
00:17:19,880 --> 00:17:22,440
minimise or sort of pause the
dividend if you knew you were

334
00:17:22,440 --> 00:17:24,599
going to do a transaction like
this?

335
00:17:24,599 --> 00:17:28,200
And again, they, they sort of
pointed to these kind of Swedish

336
00:17:28,200 --> 00:17:30,880
rules where you can't speak with
the owners of the business

337
00:17:31,040 --> 00:17:33,400
whilst you're engaged in a
transaction.

338
00:17:33,440 --> 00:17:37,000
I hope it doesn't come from a
place of apprehension to stop

339
00:17:37,000 --> 00:17:40,120
the dividend kind of at all
costs, because in the long run

340
00:17:40,120 --> 00:17:42,320
that that just costs you more.
You end up paying more in fees

341
00:17:42,320 --> 00:17:45,880
to raise the capital, you know,
via issuing yet on top of having

342
00:17:45,880 --> 00:17:49,480
the overhang which could force
the stock in itself down over

343
00:17:49,480 --> 00:17:52,920
the next six months.
But we'll see on that one is a

344
00:17:52,960 --> 00:17:55,680
few sort of intricacies and a
few learnings on on my part in

345
00:17:55,680 --> 00:17:59,200
this one, given it's a a Swedish
company and things that are a

346
00:17:59,200 --> 00:18:01,360
bit different to how companies
operate in Australia.

347
00:18:02,960 --> 00:18:07,520
So overall your your takeaways
on the deal, Good, bad,

348
00:18:07,880 --> 00:18:11,280
indifferent.
It's gone back from from

349
00:18:11,400 --> 00:18:13,520
Bulletin's perspective to start
from the from the buyers

350
00:18:13,520 --> 00:18:16,840
perspective going going back to
the price, these, these are

351
00:18:16,840 --> 00:18:18,640
producing assets with a long
history.

352
00:18:18,640 --> 00:18:22,080
If we're conservative, we look
at 2023 copper averaged about 3

353
00:18:22,080 --> 00:18:25,720
bucks 85 a pound, zinc about
$1.20 a pound.

354
00:18:26,200 --> 00:18:30,720
That's a 7 times EV to EBITDA
transaction.

355
00:18:30,720 --> 00:18:35,440
Like I sort of said, that is at.
Seven times EBITDA, you don't

356
00:18:35,520 --> 00:18:38,800
have to say 7 times EBITDA.
DLAV is the value.

357
00:18:40,520 --> 00:18:45,120
My bad.
That's right at 7 times EBITDA

358
00:18:45,960 --> 00:18:48,920
transaction.
So that that's the that's the

359
00:18:48,920 --> 00:18:50,640
upper end of what you'd kind of
call fair.

360
00:18:50,640 --> 00:18:53,760
Looking at the brokers Navs, it
gets kind of interesting.

361
00:18:53,760 --> 00:18:56,600
There is a massive range.
Obviously this comes down to the

362
00:18:56,600 --> 00:18:58,640
the assumptions they've each
plugged into it.

363
00:18:58,640 --> 00:19:01,440
But you're getting some brokers
calling it .7 times, some

364
00:19:01,440 --> 00:19:05,160
calling it 1.6 times.
Looking at the the blue sky

365
00:19:05,560 --> 00:19:08,360
briefly, it's not not how we
tend to kind of operate, but

366
00:19:09,360 --> 00:19:11,240
there are definitely potential
synergies.

367
00:19:11,360 --> 00:19:13,600
Like I've sort of mentioned
you've got potential commodity

368
00:19:13,600 --> 00:19:17,520
outside and optionality in the
mine lifes.

369
00:19:17,560 --> 00:19:23,120
You know specifically looking at
zinc ruven, there is a strong

370
00:19:23,120 --> 00:19:26,480
likelihood that this will sort
of see multiple cycles.

371
00:19:26,480 --> 00:19:29,480
And operationally there was also
this tone throughout the call

372
00:19:29,840 --> 00:19:33,680
that they believe they can pull
down OpEx.

373
00:19:33,680 --> 00:19:38,120
They didn't say it explicitly,
but they kept on kind of hinting

374
00:19:38,120 --> 00:19:41,200
at it remains to be seen on that
part whether they can do it.

375
00:19:42,120 --> 00:19:43,200
All of those things are blue
sky.

376
00:19:43,200 --> 00:19:45,120
You don't want to have to pay
for for any of them.

377
00:19:45,120 --> 00:19:48,360
So that kind of feel is you
wouldn't have wanted to pay any

378
00:19:48,360 --> 00:19:53,680
any kind of more than they have,
especially extending your your

379
00:19:53,680 --> 00:19:57,440
leverage to buy assets that are
in, you know, the 75th

380
00:19:57,440 --> 00:20:00,200
percentile.
That's that's a risky strategy

381
00:20:00,680 --> 00:20:03,720
and can put you in a bit of
strife down the track down the

382
00:20:03,720 --> 00:20:05,360
track.
Rather you know these these

383
00:20:05,360 --> 00:20:07,560
multiples are.
A lot higher than we talked

384
00:20:07,560 --> 00:20:10,680
about with the coal sales over
the over the past year.

385
00:20:11,200 --> 00:20:13,600
No surprise in that one.
But you know, I think there's a

386
00:20:13,600 --> 00:20:15,880
chance that this one sort of
turns out well.

387
00:20:16,080 --> 00:20:18,200
They they make cash in their.
Backyard, right?

388
00:20:18,200 --> 00:20:22,240
These are Swedish miners that
bought Yeah, good, you know, 200

389
00:20:22,240 --> 00:20:24,080
year operating zinc mine in
Sweden.

390
00:20:24,320 --> 00:20:26,680
Yeah, they'll have a great
understanding from it.

391
00:20:26,680 --> 00:20:30,640
They've got smelters in in the
vicinity particularly again on

392
00:20:30,640 --> 00:20:32,480
zinc riven.
I think it makes more sense than

393
00:20:32,480 --> 00:20:34,480
it would have to any other minor
out there.

394
00:20:34,760 --> 00:20:38,080
You know, they they could reap
more benefits from this than any

395
00:20:38,080 --> 00:20:40,920
other name out there.
So yeah, makes sense on that

396
00:20:40,920 --> 00:20:43,160
part.
And for the London side of the

397
00:20:43,160 --> 00:20:47,680
equation, again, this was super
expected, very much in line with

398
00:20:47,680 --> 00:20:50,000
the the strategy that they've
put forward.

399
00:20:50,000 --> 00:20:55,320
And yeah, I mean, just helps
them importantly de Lever before

400
00:20:55,320 --> 00:20:59,160
that big CapEx cycle, it
simplifies the business,

401
00:20:59,360 --> 00:21:03,280
America's focus, they're not got
assets in Europe anymore.

402
00:21:03,960 --> 00:21:06,360
And you know, from an earnings
perspective, you're giving up

403
00:21:06,360 --> 00:21:08,080
that short term.
I think analysts were sort of

404
00:21:08,080 --> 00:21:13,080
calling it 20% of their EBITDA
in the near term for the Vicuna

405
00:21:13,320 --> 00:21:16,120
optionality for the big price in
the long term.

406
00:21:16,120 --> 00:21:18,680
And, you know, I think that's
the kind of right way to go

407
00:21:18,680 --> 00:21:21,160
about it.
I think it was the one.

408
00:21:21,160 --> 00:21:24,520
I don't know which one might be,
I don't remember which London it

409
00:21:24,600 --> 00:21:27,600
was, but there was like a quote
that every every mine that he

410
00:21:27,600 --> 00:21:30,760
ever sold, he regretted.
It was like, you know, a quote

411
00:21:30,760 --> 00:21:32,680
about that.
And that's why the family has a

412
00:21:32,680 --> 00:21:34,880
reputation of being like very
long term thinkers because

413
00:21:34,880 --> 00:21:37,120
there's but you know, you're
making this decision to sell

414
00:21:37,120 --> 00:21:39,600
these mines because you've got
the bigger picture long term in

415
00:21:39,600 --> 00:21:41,960
mind in in Vicuna.
Yeah, yeah, there's a trade off

416
00:21:41,960 --> 00:21:43,560
you can you can see on their
websites just scrolling through

417
00:21:43,560 --> 00:21:46,480
like 10K in the, in the DSA was
one of them.

418
00:21:46,480 --> 00:21:49,200
There's yeah, there's a number
of them and it's interesting

419
00:21:49,200 --> 00:21:52,080
history for this this company.
But yeah, we sort of say you've

420
00:21:52,080 --> 00:21:54,480
got to kind of give up, give up
one thing to keep it all in

421
00:21:54,480 --> 00:21:55,920
balance to to go for the bigger
prize.

422
00:21:55,920 --> 00:21:58,440
Next one, absolutely, just
chatting.

423
00:21:58,640 --> 00:22:01,080
We've got a lot happening all
over the world as part of this

424
00:22:01,080 --> 00:22:02,280
deal.
We've got, you know, selling

425
00:22:02,280 --> 00:22:06,000
base metals assets in Sweden and
Portugal, put in that money to

426
00:22:06,600 --> 00:22:10,560
copper assets in South America.
I mean, the only guy I know

427
00:22:10,560 --> 00:22:14,600
who's this global, other than
the very infamous Mr Worldwide

428
00:22:14,600 --> 00:22:18,320
people is Minings.
Mr Worldwide, Steve Tarr from

429
00:22:18,320 --> 00:22:22,560
CRE.
I mean, look at it Tari, Tari

430
00:22:22,560 --> 00:22:26,760
sorting out insurance policies
for all sorts of mines, all

431
00:22:26,760 --> 00:22:29,080
sorts of commodities all over
the world.

432
00:22:29,400 --> 00:22:32,160
And not just I know we talk
about the producing mines a lot

433
00:22:32,160 --> 00:22:35,040
with CRA, but they can help out
at the explosion and development

434
00:22:35,040 --> 00:22:37,560
end as well.
But also even all the drilling

435
00:22:37,560 --> 00:22:39,880
engineering and all the other
contractors that you know

436
00:22:39,880 --> 00:22:42,320
service these projects too.
So they're bespoke and

437
00:22:42,320 --> 00:22:44,480
comprehensive if.
The service providers need

438
00:22:44,480 --> 00:22:47,040
insurance big time.
Everyone needs insurance.

439
00:22:47,040 --> 00:22:49,240
Everyone needs it.
Sometimes people don't pay like

440
00:22:49,240 --> 00:22:50,600
you just got to be you have
insurance.

441
00:22:50,600 --> 00:22:54,480
Got to be all over it.
So you want the CRA team on it.

442
00:22:54,600 --> 00:22:57,120
It's bespoke, comprehensive,
it's tailored to your project,

443
00:22:57,200 --> 00:22:59,440
your business.
What more could you want?

444
00:22:59,720 --> 00:23:03,160
Ellie, I can't just say it's a
bit peculiar to me that you you

445
00:23:03,160 --> 00:23:06,720
draw out the parallel between
Pitbull and Taree because while

446
00:23:06,720 --> 00:23:10,720
Taree is CR ES Mr Worldwide, I
actually think you're doing an

447
00:23:10,720 --> 00:23:15,600
injustice to the big man MD Dave
Harrison, whose best I can tell

448
00:23:15,600 --> 00:23:20,120
from this image here, could in
fact actually be Pitbulls long

449
00:23:20,120 --> 00:23:22,400
lost brother.
Actually it could be Pitbull

450
00:23:22,400 --> 00:23:24,120
himself.
Dave, it's Pitbull.

451
00:23:24,200 --> 00:23:26,840
Get in touch with CRE.
Look at that.

452
00:23:27,080 --> 00:23:32,200
Go CRE and go CRE all righty,
Let's go down the the market cap

453
00:23:32,200 --> 00:23:33,720
scale and.
Just a little bit.

454
00:23:33,880 --> 00:23:36,520
And bring it back home to to
Western Australia as well.

455
00:23:36,520 --> 00:23:38,520
And talk about Boab Meadows
Boab.

456
00:23:38,680 --> 00:23:40,880
Yeah, mate, this is, yeah, a
story for the small cap silver

457
00:23:40,880 --> 00:23:42,960
bugs out there.
JDL.

458
00:23:43,040 --> 00:23:45,800
It's, it's some of those
projects it's been kind of

459
00:23:45,800 --> 00:23:48,880
hammering away for, for years
trying to get finance, but it's

460
00:23:48,880 --> 00:23:52,720
never quite gotten there.
It's Boab Boab Metals and

461
00:23:52,720 --> 00:23:56,320
they're Sobby Hills silver lead
deposit right at the top of of

462
00:23:56,320 --> 00:23:58,560
WA there.
It's, it's near the NT border

463
00:23:58,560 --> 00:24:00,920
and it's about 50 kilometres
north of of Kananara.

464
00:24:01,640 --> 00:24:03,840
Boab.
They, they own 75% interest in

465
00:24:03,840 --> 00:24:06,800
the, in the Sobby Hills project,
but they also have an option to

466
00:24:06,800 --> 00:24:10,560
acquire the remaining 25% too.
And it's just got a mere market

467
00:24:10,560 --> 00:24:14,080
cap of $35 million.
The stock went up 15% today on

468
00:24:14,440 --> 00:24:17,760
the back of a a prepaid deal
with traffic Euro commodity

469
00:24:17,760 --> 00:24:19,920
trader.
And in a nutshell, traffic has

470
00:24:20,480 --> 00:24:23,840
agreed to give Boab US $30
million upfront.

471
00:24:24,200 --> 00:24:27,120
Traffic will will get paid back
within a five year term

472
00:24:27,120 --> 00:24:31,600
following like a 18 month
interest only period at a cost

473
00:24:31,600 --> 00:24:35,360
of so far plus 5% margin.
The key here is like traffic

474
00:24:35,360 --> 00:24:39,480
will get their their hands on
75% of Sorby Hills concentrate,

475
00:24:39,480 --> 00:24:42,800
which is, you know, at the
moment Boab's kind of entire

476
00:24:42,800 --> 00:24:46,680
share.
And if Boab actually ups for you

477
00:24:46,680 --> 00:24:50,000
know, alternatives or the OR
financial close doesn't isn't

478
00:24:50,000 --> 00:24:52,880
achieved, traffic still gets a
share of the concentrate.

479
00:24:52,880 --> 00:24:57,880
So as usual, the trade is always
a win, but sometimes you could

480
00:24:57,880 --> 00:24:58,360
win too.
But.

481
00:24:58,520 --> 00:25:01,080
You've got to put fur on the
table, so let's look at the

482
00:25:01,080 --> 00:25:05,400
Sorby Hills project Economics.
If you look at the project on

483
00:25:05,400 --> 00:25:09,880
100% basis, Sorby Hills has a
has a reserve that contains

484
00:25:10,240 --> 00:25:14,840
19,000,000 ounces of silver and
531,000 tonnes of of lead

485
00:25:14,840 --> 00:25:16,720
contained.
The grade doesn't shoot the

486
00:25:16,720 --> 00:25:20,800
lights out like 3.5% lead and 39
grammes per tonne silver.

487
00:25:20,800 --> 00:25:24,640
But it was a, you know, a feed
study in July which suggested a

488
00:25:24,640 --> 00:25:30,280
pre tax MPV of $411 million, pre
tax IRR of 37%.

489
00:25:30,920 --> 00:25:34,320
But it's the, it's the CapEx
that there's always been the big

490
00:25:34,320 --> 00:25:38,000
obstacle for the longest time
for, for Bo Lab to, to find a

491
00:25:38,000 --> 00:25:41,640
way to fund upfront capital in
the latest study is

492
00:25:41,720 --> 00:25:45,520
$264,000,000.
So when you think about, you

493
00:25:45,520 --> 00:25:47,680
know that kind of capital
intensity or even you know, just

494
00:25:47,680 --> 00:25:50,800
your NPV to CapEx ratio, it's
not, it's not the world's most

495
00:25:50,800 --> 00:25:53,960
financeable project on, on
current assumptions.

496
00:25:53,960 --> 00:25:57,720
And then a 35 mill market cap as
well makes that challenging too.

497
00:25:57,800 --> 00:26:02,760
100% we, we, we cut our teeth in
the, the equity kind of it's

498
00:26:02,760 --> 00:26:06,200
like, yeah, to finance a
project, you always think about

499
00:26:06,360 --> 00:26:09,480
like a big chunk of the, the
financing is going to come from,

500
00:26:09,600 --> 00:26:11,240
from equity in some way, shape
or form.

501
00:26:11,240 --> 00:26:14,560
And, and your ability to stump
up enough equity into the

502
00:26:14,560 --> 00:26:17,120
project.
It's like directly proportional

503
00:26:17,120 --> 00:26:19,000
to the size of your market cap
in a lot of ways.

504
00:26:19,000 --> 00:26:22,000
Because, yeah, that's how much
dilution existing shareholders

505
00:26:22,000 --> 00:26:23,840
are willing to do.
That's how you know that it's

506
00:26:23,840 --> 00:26:26,760
just the lower your market cap,
it gets really, really, really,

507
00:26:26,760 --> 00:26:29,520
really difficult to, to raise
efficient equity to fund these

508
00:26:29,520 --> 00:26:33,240
chunky kind of CapEx numbers.
Not that, not that $264,000,000

509
00:26:33,240 --> 00:26:35,640
is a chunky CapEx number, but
when you've got a 35 million.

510
00:26:35,680 --> 00:26:37,680
Dollars in relative terms to
those things.

511
00:26:37,880 --> 00:26:40,960
Yeah, it.
And Once Upon a time I thought

512
00:26:41,240 --> 00:26:45,240
Knife was going to stamp up some
money, but you know, I had a

513
00:26:45,240 --> 00:26:47,960
look and it feels like things
have gone a bit quiet on that

514
00:26:47,960 --> 00:26:52,280
front for the last few years,
which begs the question at the

515
00:26:52,280 --> 00:26:56,600
assume commodity prices in the
in the study, like the lead

516
00:26:56,600 --> 00:27:00,200
revenue is about 3 times what
the what the silver revenue is

517
00:27:00,200 --> 00:27:03,040
in this project.
So it's really a majority lead

518
00:27:03,040 --> 00:27:08,280
project, which for the silver
bugs out there just means that

519
00:27:08,280 --> 00:27:10,560
the project actually has a
negative all in sustaining cost

520
00:27:10,560 --> 00:27:13,040
per silver oz after the lead
credits.

521
00:27:13,040 --> 00:27:15,000
But that's not how you should
think about these things.

522
00:27:15,000 --> 00:27:17,920
We know that it's.
Hub for way round.

523
00:27:17,920 --> 00:27:23,000
Don't let that get out.
Granted, like the the spot

524
00:27:23,000 --> 00:27:26,840
silver price is about 28% higher
than the study price, but it,

525
00:27:26,960 --> 00:27:29,040
you know, swings the other way
for the lead price assumption.

526
00:27:30,520 --> 00:27:32,000
So, you know, swings and
roundabouts here.

527
00:27:32,360 --> 00:27:35,680
So it's all up, what have you
kind of come to with with the

528
00:27:35,680 --> 00:27:38,640
project now I.
Think there's just a few things

529
00:27:38,640 --> 00:27:42,000
to keep in mind here.
Like remember how I said Bulb

530
00:27:42,000 --> 00:27:44,920
has an option to buy the
remaining 25% of the project?

531
00:27:45,320 --> 00:27:48,560
In order to do that, they'd have
to stump up stage payments that

532
00:27:48,560 --> 00:27:50,760
aggregate to $23 million to get
there.

533
00:27:50,760 --> 00:27:53,800
But that object is that that
option is subject to Bulb

534
00:27:53,800 --> 00:27:56,960
reaching FID by about September
next year too.

535
00:27:56,960 --> 00:27:58,680
They could always extend that
longer if they agreed.

536
00:27:58,680 --> 00:28:01,760
But kind of, you know, keep in
mind this, there's, there's

537
00:28:02,120 --> 00:28:05,080
there's a goal to announce FID
by, by September, you know, to,

538
00:28:05,080 --> 00:28:08,960
in order to be able to, to get
that option over the line.

539
00:28:09,520 --> 00:28:13,200
If, if they can build on the
financing momentum from, you

540
00:28:13,320 --> 00:28:16,520
know, the announcement today,
maybe, maybe they can get there

541
00:28:16,520 --> 00:28:20,320
too.
Like I remember Sheffield had a

542
00:28:20,320 --> 00:28:23,600
similarly insurmountable task
trying to finance Thunderbird,

543
00:28:23,760 --> 00:28:27,080
but they found a way and they,
you know, that this, you know,

544
00:28:27,080 --> 00:28:31,560
funky JV and you know, strategic
partner and knife came in and

545
00:28:31,720 --> 00:28:34,440
all of a sudden it's very
undemanding market cap got like

546
00:28:34,440 --> 00:28:37,360
sufficient CapEx to fund the
development of, of Thunderbolt,

547
00:28:37,560 --> 00:28:42,200
which seemed like impossible.
So yeah, knife would make a

548
00:28:42,200 --> 00:28:45,160
massive difference, but I'm not
filled with confidence given

549
00:28:45,320 --> 00:28:48,480
the, the, the lack of discussion
about knife for a few years now.

550
00:28:48,960 --> 00:28:53,120
Actually, I think of it as a
really advanced call option,

551
00:28:53,200 --> 00:28:57,840
like like if silver saws on the
back of solid demand and, and

552
00:28:57,840 --> 00:29:00,880
LED managers to hold up and it's
a really advanced project that

553
00:29:00,880 --> 00:29:03,200
can kind of get into production
pretty quickly.

554
00:29:03,200 --> 00:29:06,160
There's a lot of work that's
been done here and you know, you

555
00:29:06,160 --> 00:29:08,160
can, you can move pretty quickly
in that environment where you've

556
00:29:08,560 --> 00:29:13,320
got your ducks in order, right.
But if, if commodity prices stay

557
00:29:13,320 --> 00:29:16,440
where they are, then I think it
could be a tricky proposition in

558
00:29:16,440 --> 00:29:19,640
the near term to actually get
the, the, the financing required

559
00:29:19,640 --> 00:29:22,200
to, to build the project.
Personally, I think the supply

560
00:29:22,200 --> 00:29:25,800
and demand outlook for silver is
is it's really healthy, but I'm

561
00:29:25,800 --> 00:29:29,160
a bit more trepidatious about
lead again, what do I know?

562
00:29:29,160 --> 00:29:32,960
It's my commodity price
forecasting this side and we we

563
00:29:32,960 --> 00:29:35,760
can't not forget that like
ladies, the vast majority of the

564
00:29:35,760 --> 00:29:38,280
revenue.
Yeah, I think it's, it's one to

565
00:29:38,280 --> 00:29:42,280
keep on the watch list, but
don't be surprised to see it

566
00:29:42,280 --> 00:29:44,760
trade like a call option if
silver moves.

567
00:29:44,760 --> 00:29:52,920
Like I remember in in 2020 after
COVID, this thing like like 540%

568
00:29:52,920 --> 00:29:56,120
in like 3 months just because
like silver, silver squeeze was

569
00:29:56,120 --> 00:29:58,800
on for a period there and it's
kind of giving up all of those

570
00:29:58,800 --> 00:30:00,600
gains.
You know, that's just the way

571
00:30:00,640 --> 00:30:03,720
that kind of, you know, call
option type projects trade,

572
00:30:03,760 --> 00:30:06,000
right?
All 5 silver names on the ASX

573
00:30:06,040 --> 00:30:08,880
did I remember.
Crazy shoot through the ceiling.

574
00:30:08,880 --> 00:30:10,560
That's the point for all 5
silver names.

575
00:30:10,560 --> 00:30:14,240
The ASX is like it doesn't have
silver names and the the actual

576
00:30:14,240 --> 00:30:18,240
silver mine is like not like,
you know, we like there are

577
00:30:18,240 --> 00:30:20,480
pureplay kind of silver miners
out there or majority pureplay

578
00:30:20,480 --> 00:30:23,120
silver miners out there.
They ain't listed on the ASX.

579
00:30:23,200 --> 00:30:25,560
Yeah.
Good stuff man.

580
00:30:25,760 --> 00:30:28,360
No, So it's so Trevor.
It sounds like it's a pretty

581
00:30:28,360 --> 00:30:31,360
advanced project.
It actually reminds me of a chat

582
00:30:31,360 --> 00:30:34,440
we had yesterday as well.
I.

583
00:30:34,440 --> 00:30:37,040
Think I know what conversation
you're talking about, Ali?

584
00:30:37,040 --> 00:30:39,040
Is it?
Is it the one about the the team

585
00:30:39,040 --> 00:30:43,600
that helps companies with
advanced projects get past all

586
00:30:43,600 --> 00:30:46,520
the red tape and get their
deposits into production ASAP?

587
00:30:47,760 --> 00:30:49,960
I think it is exactly that
conversation.

588
00:30:51,240 --> 00:30:52,880
It's actually what you think
about it's actually pretty

589
00:30:52,880 --> 00:30:55,440
awesome, right, Because say
you're sitting on a project,

590
00:30:55,480 --> 00:30:59,040
It's it's it's an advanced
project, but you you don't know,

591
00:30:59,280 --> 00:31:00,960
but you know, there's still
going to be a fair bit of work

592
00:31:00,960 --> 00:31:03,240
to get done in order to get the
tick off to actually start

593
00:31:03,640 --> 00:31:04,640
mining.
Yeah right.

594
00:31:05,080 --> 00:31:07,320
You can have things advanced,
but there's there's still a

595
00:31:07,320 --> 00:31:09,080
bunch of stuff you need a bit of
help to get in order, right?

596
00:31:09,400 --> 00:31:11,960
That's where a seriously capable
technical services team comes

597
00:31:11,960 --> 00:31:14,560
into the mix.
I think I know which guys and

598
00:31:14,560 --> 00:31:16,720
gals you're talking about.
Is it MMS?

599
00:31:16,720 --> 00:31:20,760
Absolutely.
MMS got their new technical

600
00:31:20,760 --> 00:31:22,920
services team.
I'm even wearing the T shirt.

601
00:31:22,920 --> 00:31:25,360
You've got the polo today.
Love it.

602
00:31:25,520 --> 00:31:29,480
We all know MMS are just the
best open pit mining contractor

603
00:31:29,480 --> 00:31:32,280
on the block right now, but it
might have been used to people

604
00:31:32,400 --> 00:31:34,520
that they have built out a
technical services team that is

605
00:31:34,520 --> 00:31:38,000
akin to the Australian Test
cricket team of 2006.

606
00:31:38,360 --> 00:31:40,040
Jeez, that's a big call.
Love it.

607
00:31:40,200 --> 00:31:42,840
They they just don't lose.
You know that just like that

608
00:31:42,840 --> 00:31:46,280
test, they didn't lose.
Look at the highs lately, right?

609
00:31:46,520 --> 00:31:50,320
Nathan, Nathan Ram, Emma
Edwards, Wanderoo see Rob Seal

610
00:31:50,320 --> 00:31:53,880
like catches win matches LAJAD
and this Tech services team

611
00:31:54,320 --> 00:31:56,960
takes a lot of catches.
Well said.

612
00:31:56,960 --> 00:32:01,120
So if you need an elite team to
help you get the the house in

613
00:32:01,120 --> 00:32:04,160
order to start moving the dirt,
it's these guys and then you've

614
00:32:04,160 --> 00:32:09,760
got the open pit expertise that
overlays it all for a full turn

615
00:32:09,760 --> 00:32:12,200
key solution.
What more could you want?

616
00:32:12,760 --> 00:32:16,760
Go MMS love the T shirt.
All righty.

617
00:32:17,000 --> 00:32:21,560
Last one for the day develop.
It was little Ding Ding Ding for

618
00:32:21,560 --> 00:32:26,000
me.
So this is developed basically

619
00:32:26,000 --> 00:32:31,000
completed all the docs for their
$100 billion loan prepaid

620
00:32:31,000 --> 00:32:35,320
facility with Traffic Gura 2
stories another another Traffic

621
00:32:35,320 --> 00:32:37,440
Gura 1 today.
Market like this one too.

622
00:32:37,440 --> 00:32:39,720
Yeah.
I wasn't sure if it was this

623
00:32:39,760 --> 00:32:42,320
whole China thing going on
because everything else was

624
00:32:42,320 --> 00:32:44,120
maybe a bit, probably a
combination.

625
00:32:44,120 --> 00:32:47,720
Yeah.
So they announced that like I

626
00:32:47,720 --> 00:32:50,480
said before, all the
documentation completed for AUS

627
00:32:50,480 --> 00:32:53,960
$65 million prepayment loan
facility with traffic to fund

628
00:32:53,960 --> 00:32:58,360
the restart of the Woodlawn
copper zinc mine up around

629
00:32:59,160 --> 00:33:01,120
10:00-ish percent last time I
looked.

630
00:33:03,240 --> 00:33:08,080
And so it's basically the
financing plus that's associated

631
00:33:08,120 --> 00:33:10,960
off take agreement.
All of this to be fair was all

632
00:33:10,960 --> 00:33:12,760
announced back in back in
August.

633
00:33:12,760 --> 00:33:15,200
So it's not so much new news
here, it's more the fact that

634
00:33:15,200 --> 00:33:17,200
all the documentation is
complete itself.

635
00:33:18,080 --> 00:33:21,760
So Woodlawn is sort of now fully
funded through to production,

636
00:33:22,440 --> 00:33:26,440
just a bit of a high level
refresher of the key term.

637
00:33:26,440 --> 00:33:31,960
So traffic will give develop
around $100 million Aussie in

638
00:33:31,960 --> 00:33:34,520
the form of a prepayment slash
loan facility.

639
00:33:35,280 --> 00:33:38,720
The interest on that is BBSY,
which is basically a base rate

640
00:33:38,720 --> 00:33:42,720
plus a 2% margin and and props
to them for actually stating the

641
00:33:42,720 --> 00:33:45,440
margin.
This is for a term of about 4

642
00:33:45,440 --> 00:33:49,960
1/2 years from from drawdown.
And as part of the financing,

643
00:33:49,960 --> 00:33:53,160
they've also entered into a five
year off take agreement and this

644
00:33:53,160 --> 00:33:57,040
is for 100% of the copper, zinc
and lead slash precious metals

645
00:33:57,040 --> 00:34:00,160
cons produced from Woodlawn over
this period of time.

646
00:34:00,720 --> 00:34:02,360
That'll be all of the all of the
con, right?

647
00:34:02,360 --> 00:34:03,360
There wouldn't be anything,
Yeah.

648
00:34:03,880 --> 00:34:08,719
And so repayment of this prepaid
loan facility can be done by way

649
00:34:08,719 --> 00:34:12,800
of a set off against the
payments against the off take

650
00:34:12,800 --> 00:34:17,639
agreement or they can just pay
do quarterly cash payments and

651
00:34:17,639 --> 00:34:20,560
there's no repayments required
for the 1st 18 months of the

652
00:34:20,560 --> 00:34:23,719
loan.
And the last couple ones is

653
00:34:23,719 --> 00:34:28,800
develop also has the option to
sell up to 20% of the output or

654
00:34:28,800 --> 00:34:32,480
the OR the project, the Woodlawn
project 2, two third parties and

655
00:34:32,480 --> 00:34:34,520
no mandatory hedging is
required.

656
00:34:34,520 --> 00:34:37,840
So we'll just flash up the key
terms for that, those two ones

657
00:34:37,840 --> 00:34:40,560
there.
At 20%, that's something that it

658
00:34:40,560 --> 00:34:43,920
was talked about for a long time
is, is selling down 20% of

659
00:34:43,920 --> 00:34:45,560
Woodlawn.
But yeah, it's kind of it's

660
00:34:45,560 --> 00:34:47,440
been, it feels like it's been a
long time he's been talking

661
00:34:47,440 --> 00:34:50,719
about that maybe, maybe, maybe
this is the catalyst.

662
00:34:50,800 --> 00:34:52,280
Yeah.
And look, yeah, like you said,

663
00:34:52,280 --> 00:34:54,600
Trevor, it's, it's sort of a
pretty common bullet point that

664
00:34:54,600 --> 00:34:57,880
pops up in the last few, you
know, investor prezzos and

665
00:34:57,880 --> 00:35:00,800
things like that, that So
perhaps now that this financing

666
00:35:00,800 --> 00:35:04,440
is in place, that might be the
the catalyst for that actually

667
00:35:04,440 --> 00:35:08,000
in the other catalyst bank.
So you know what's actually real

668
00:35:08,080 --> 00:35:10,080
new information in today's
announcement.

669
00:35:10,360 --> 00:35:15,280
So they advised the processing
plant refurb is 50% complete

670
00:35:15,280 --> 00:35:17,600
now.
I believe GI Engineering is

671
00:35:17,600 --> 00:35:19,480
doing that.
They're on track for first

672
00:35:19,520 --> 00:35:22,640
concentrate production in the
June quarter next year.

673
00:35:23,320 --> 00:35:27,000
So all production from the
underground is scheduled to

674
00:35:27,000 --> 00:35:28,920
commence in the March quarter
next year.

675
00:35:28,920 --> 00:35:32,520
So the quarter before and the
developed board has now actually

676
00:35:32,520 --> 00:35:36,320
made a formal FI you know, FID
final investment decision to

677
00:35:36,320 --> 00:35:39,200
support the Woodlawn race start
plan.

678
00:35:40,360 --> 00:35:45,560
So I want to just briefly
revisit the the project

679
00:35:45,880 --> 00:35:50,120
economics for Woodlawn.
Sorry I'm laughing just because

680
00:35:50,880 --> 00:35:53,400
you're you're revisiting it, but
I remember how many revisits

681
00:35:53,400 --> 00:35:55,400
developed to themselves because
it felt like every couple of

682
00:35:55,400 --> 00:35:58,000
months there was an updated
restart study with with a

683
00:35:58,000 --> 00:35:59,920
higher.
Maybe it's a pun intended.

684
00:36:03,280 --> 00:36:07,960
So, so they put out an update in
August when they initially

685
00:36:07,960 --> 00:36:14,600
announced this financing package
with with traffic and this is an

686
00:36:14,600 --> 00:36:19,920
update on the April numbers,
which basically was what's

687
00:36:19,920 --> 00:36:23,120
changed is basically the change
in the CapEx costs.

688
00:36:23,120 --> 00:36:26,440
And because of the recently
agreed off take terms with

689
00:36:26,440 --> 00:36:31,560
traffic they incorporated that
and that would really deliver

690
00:36:31,560 --> 00:36:35,720
the main improvement in a lot of
the economics because the TCRC,

691
00:36:35,720 --> 00:36:38,520
the trim and refining charges
were improved.

692
00:36:39,680 --> 00:36:43,280
The commodity price assumptions
actually they kept the same as

693
00:36:43,280 --> 00:36:47,360
what they had in April.
So what are we looking at sort

694
00:36:47,360 --> 00:36:51,640
of pre production capital which
you know includes working

695
00:36:51,640 --> 00:36:56,560
capital 78 million and April was
67.

696
00:36:56,760 --> 00:37:00,760
So not too big of a change
there, but a pretty chunky

697
00:37:00,760 --> 00:37:09,920
change in the pre tax NPV from
6:58 to $728,000,000 there as

698
00:37:09,920 --> 00:37:12,600
well.
And in light of yesterday's

699
00:37:12,600 --> 00:37:16,000
conversations about commodity
price assumptions and things

700
00:37:16,000 --> 00:37:20,120
like that, I wanted to actually
take a look at that here for for

701
00:37:20,120 --> 00:37:22,440
Woodlawn.
So they've, they've got a nice

702
00:37:22,440 --> 00:37:28,600
little table in that release
from from August, which, which

703
00:37:28,600 --> 00:37:31,880
shows the average realised mine
plan, commodity prices and you

704
00:37:31,880 --> 00:37:33,560
know, over, you know, the 10
year mine plan.

705
00:37:33,880 --> 00:37:37,480
But really I think the more
important period to look at is

706
00:37:37,680 --> 00:37:40,920
what are they assuming in the
first sort of few years based,

707
00:37:40,960 --> 00:37:44,520
which is the arguably the
riskier period of the of the

708
00:37:44,520 --> 00:37:47,680
mine life when they're ramping
up, when there's debt repayments

709
00:37:47,680 --> 00:37:52,160
due and things like that.
So, so I wanted to look at how

710
00:37:52,160 --> 00:37:54,960
did their assumptions in the
first three years compare

711
00:37:54,960 --> 00:37:59,560
against current spot prices and
sort of consensus economics

712
00:37:59,680 --> 00:38:01,200
forecast.
And for those who don't know,

713
00:38:01,200 --> 00:38:05,800
consensus economics basically
averages out all the different

714
00:38:05,840 --> 00:38:08,320
various banks forecast commodity
prices.

715
00:38:08,760 --> 00:38:14,320
And when I had a look, they
actually in pretty much all

716
00:38:14,440 --> 00:38:18,360
instances what developer
forecasting in those first three

717
00:38:18,360 --> 00:38:24,120
years below current spot prices
and below what consensus

718
00:38:24,160 --> 00:38:28,480
economics forecasts as well.
With the exception of LED LED's,

719
00:38:28,880 --> 00:38:32,240
what they're saying for LED is
around where spot is at the

720
00:38:32,240 --> 00:38:35,800
moment and what consensus
economics is forecasting.

721
00:38:36,360 --> 00:38:39,600
Zinc assumption, developed zinc
assumptions are largely in line

722
00:38:39,600 --> 00:38:42,880
with consensus economics.
But Spot actually is trading a

723
00:38:42,880 --> 00:38:45,800
bit high and will flash up what
they've what they've got in

724
00:38:45,800 --> 00:38:48,480
their schedule there, so.
So all up, quite quite

725
00:38:48,480 --> 00:38:50,720
comforting.
Yeah, it's it's encouraging.

726
00:38:50,720 --> 00:38:54,240
You'd you'd rather some
conservatism and wriggle room as

727
00:38:54,240 --> 00:38:56,640
your base case.
And you know what if spot or you

728
00:38:56,640 --> 00:38:58,960
know, whatever that price is at
that point in time, in that

729
00:38:58,960 --> 00:39:02,360
first second or thirty is more,
you know how good's that you

730
00:39:02,360 --> 00:39:05,080
know that's a bonus.
But that's The thing is that's

731
00:39:05,080 --> 00:39:07,720
that's an upside.
It shouldn't necessarily pay

732
00:39:07,720 --> 00:39:10,080
your base case.
You know what I'd love to say,

733
00:39:10,080 --> 00:39:14,600
Ali, is what's that is, is now
adjust those commodity prices

734
00:39:14,600 --> 00:39:18,960
for the, you know, for all of
the terms and conditions where

735
00:39:18,960 --> 00:39:21,080
traffic takes a little bit off
of it, you know, the qualifying

736
00:39:21,080 --> 00:39:23,200
period look backs and all that.
Yeah.

737
00:39:23,320 --> 00:39:25,800
So, you know, there's that to
think about as well.

738
00:39:26,200 --> 00:39:29,760
And the other, the other sort of
key thing to know is the first

739
00:39:29,760 --> 00:39:33,600
two years of production already
fully developed and the grade

740
00:39:33,680 --> 00:39:36,080
control drilling has been
completed and all the

741
00:39:36,320 --> 00:39:38,040
underground capital
infrastructure has been

742
00:39:38,040 --> 00:39:40,240
installed.
So, you know, as we all know,

743
00:39:40,360 --> 00:39:43,640
and we've, we've, we've spoken a
bunch about on, on the podcast

744
00:39:43,640 --> 00:39:46,720
is restarts and Rev hubs are not
without their risks.

745
00:39:46,720 --> 00:39:51,360
But things like this, you know,
you know, advancing development

746
00:39:51,360 --> 00:39:54,840
grade control drilling being,
you know, sensible when your

747
00:39:54,840 --> 00:39:58,960
financial modelling are all you
know a few over many things you

748
00:39:58,960 --> 00:40:02,400
can do to certainly help
mitigate those risks as best you

749
00:40:02,400 --> 00:40:06,560
can.
And Speaking of Risk Alley, like

750
00:40:06,800 --> 00:40:11,080
one of the things that maybe get
some restart projects or

751
00:40:11,080 --> 00:40:15,000
whatever on stock is use a bunch
of debt, But you know, instead

752
00:40:15,000 --> 00:40:16,880
of instead of funding it with
equity, like, you know, we saw

753
00:40:16,960 --> 00:40:19,920
with, you know, maker or
blackout and stuff recently

754
00:40:20,480 --> 00:40:24,400
develops sort of maintained
their their desire to to to, you

755
00:40:24,400 --> 00:40:28,200
know, to basically debt fund a
good the majority of this

756
00:40:28,200 --> 00:40:29,720
project, right?
What do you think of that?

757
00:40:30,520 --> 00:40:32,800
Yeah.
I mean, it's I mean, certainly

758
00:40:33,160 --> 00:40:35,920
pretty different to being what
to what's been happening in the

759
00:40:35,920 --> 00:40:39,400
gold space, obviously.
But I think a couple things in

760
00:40:39,400 --> 00:40:42,000
the sense that they're not
perhaps like some of those

761
00:40:42,000 --> 00:40:45,320
examples, you know, like the
Spartan makers butt cats of of

762
00:40:45,320 --> 00:40:49,880
the world, you know, develop on
a single asset developer.

763
00:40:51,160 --> 00:40:53,320
You know, they've got other
sets, they've got their mining

764
00:40:53,320 --> 00:40:57,520
services business as well, which
you know, they're saying, you

765
00:40:57,720 --> 00:40:59,720
know, you should should be
making, you know, some good

766
00:40:59,720 --> 00:41:03,720
money to, you know, help during
that period as well at the the

767
00:41:03,720 --> 00:41:08,800
proportion of debt compared to
their market cap.

768
00:41:10,080 --> 00:41:13,040
I think it's like their market
cap today is like 660 million

769
00:41:13,480 --> 00:41:16,720
Aussie.
This this is AUS $65 million

770
00:41:16,720 --> 00:41:20,560
facility.
It's a pretty small proportion,

771
00:41:20,560 --> 00:41:23,880
not like say some of the other
examples where you know, some

772
00:41:24,160 --> 00:41:26,040
people are getting debt
facilities that are the same

773
00:41:26,040 --> 00:41:28,480
size of their market cap or if
if not more.

774
00:41:28,640 --> 00:41:31,560
And the reason I say that is
because say something did

775
00:41:31,560 --> 00:41:34,000
happen, you needed to raise
equity, needed to do something

776
00:41:34,000 --> 00:41:39,040
to to sort that situation out.
Would you be better positioned

777
00:41:39,040 --> 00:41:42,080
if it was a smaller percentage
of your market cap or two times

778
00:41:42,080 --> 00:41:45,280
that?
So those are some thoughts, but.

779
00:41:45,360 --> 00:41:47,080
There's another thought I had
too, which is.

780
00:41:47,080 --> 00:41:51,000
What did you guys think?
It's like share price is what

781
00:41:51,000 --> 00:41:55,480
today is like 222-4240. 2.
Share price has been as high as

782
00:41:55,760 --> 00:41:57,800
kind of maybe 5 sixes, I can't
remember what.

783
00:41:57,800 --> 00:41:59,560
They were definitely fours and
fives, yeah.

784
00:41:59,560 --> 00:42:03,600
Shareholders would probably,
yeah, not, not want to raise

785
00:42:03,640 --> 00:42:05,200
money at twos.
No to yeah.

786
00:42:06,440 --> 00:42:09,400
A bit anchored, yeah, Yeah, no,
there's, there's definitely a

787
00:42:09,400 --> 00:42:12,320
bit just just on your, your
point as well, Ali, completely

788
00:42:12,320 --> 00:42:13,600
appreciate what you're saying
though.

789
00:42:13,600 --> 00:42:17,320
If the market does suspect that
there's a raise because there's

790
00:42:17,320 --> 00:42:20,480
debt trouble, then that doesn't
go from being, you know, 10% of

791
00:42:20,480 --> 00:42:22,640
the equity that goes down.
It does go quickly a bit more

792
00:42:22,680 --> 00:42:25,040
right.
But sort of see, see what

793
00:42:25,040 --> 00:42:27,360
happens, you know, it was been
very adamant that there's not

794
00:42:27,360 --> 00:42:29,800
going to be equity dilution and
that's how he wants to go about

795
00:42:29,800 --> 00:42:32,680
things.
So or sort of sort of track it.

796
00:42:33,040 --> 00:42:35,400
Yeah, came to, came for them to
be producer.

797
00:42:36,600 --> 00:42:38,480
Absolutely, yeah.
What do you guys think?

798
00:42:38,480 --> 00:42:43,160
One final question, what do you
guys think about having the

799
00:42:43,160 --> 00:42:47,640
financing and the off take all
tied up from the same party?

800
00:42:48,120 --> 00:42:50,560
Pros and cons?
Because you could see it as

801
00:42:50,560 --> 00:42:54,600
alignment, but then you could
also see it as you know, if

802
00:42:54,600 --> 00:42:57,720
something were to go wrong, you
know that they've got the off

803
00:42:57,720 --> 00:43:01,280
take, they've got the debt as
well.

804
00:43:01,680 --> 00:43:03,080
How do you guys think about
that?

805
00:43:03,080 --> 00:43:04,720
It's.
Part and parcel of doing

806
00:43:04,720 --> 00:43:06,280
business with commodity traders
like.

807
00:43:06,400 --> 00:43:09,800
Yeah, it's, it's also another,
you know, it's a kind of

808
00:43:09,800 --> 00:43:12,920
ramification of a lot of the big
banks moving away from from

809
00:43:12,920 --> 00:43:14,600
financing projects.
You need to go to different

810
00:43:14,600 --> 00:43:16,600
sources.
And, you know, since then, we've

811
00:43:16,600 --> 00:43:19,800
seen the emergence of streamers
of royalty companies of

812
00:43:19,800 --> 00:43:23,600
commodity traders funding
projects like this and cruelty

813
00:43:23,600 --> 00:43:25,320
and streaming.
They come with with different

814
00:43:25,320 --> 00:43:28,320
problems, you know, so kind of
got to pick your poison.

815
00:43:29,000 --> 00:43:33,800
Yeah, it like does beg the
question though, if you could,

816
00:43:34,160 --> 00:43:37,160
if you if there was a world
which you could sell 20% for

817
00:43:38,120 --> 00:43:42,320
whatever, like some some highest
multiple of NPV, then why not

818
00:43:42,880 --> 00:43:48,640
put that money into find the
restart or or maybe there's an

819
00:43:48,640 --> 00:43:50,360
assumption that that's also
going to go to the restart.

820
00:43:50,360 --> 00:43:53,000
But you know, you could you
could basically fund up with a

821
00:43:53,000 --> 00:43:56,960
strategic sell down and not not
have debt as well and not that

822
00:43:56,960 --> 00:43:58,200
would.
Yeah, that's got to be on the

823
00:43:58,200 --> 00:43:59,040
table.
Yeah, right.

824
00:43:59,680 --> 00:44:01,440
Yeah.
Whether whether the capital for

825
00:44:01,640 --> 00:44:04,600
a sell down goes into the
restart or if it goes looking

826
00:44:04,600 --> 00:44:06,640
for the opportunity, I think
it's TBA.

827
00:44:07,600 --> 00:44:09,320
Yeah, I know what I'd do.
Yeah.

828
00:44:09,760 --> 00:44:12,880
Well, who knows now that they've
kind of, you know, done the FID

829
00:44:12,880 --> 00:44:16,840
and they've got the financing, I
don't know whether it'd be too

830
00:44:16,840 --> 00:44:20,520
late to if they did get that for
like a strategic partner, sell

831
00:44:20,520 --> 00:44:24,840
down, replace the financing
that's currently in place with

832
00:44:24,840 --> 00:44:26,120
those funds.
Yeah.

833
00:44:26,920 --> 00:44:29,240
I don't know how difficult it
would be to unwind that I don't.

834
00:44:29,280 --> 00:44:31,080
Know if you would have executed
the financing if that was your

835
00:44:31,080 --> 00:44:33,720
plan because trying to get to
keep the off take and why would

836
00:44:33,720 --> 00:44:37,080
you want that if you didn't need
to do anyway.

837
00:44:37,960 --> 00:44:41,560
Difficult, but no.
It would be exciting to see them

838
00:44:42,280 --> 00:44:45,600
become be producing again at
Woodward.

839
00:44:47,360 --> 00:44:49,160
Absolutely.
Well done, Ali.

840
00:44:49,400 --> 00:44:51,720
All right, couple, couple
partners to thank and wrap it

841
00:44:51,720 --> 00:44:54,720
up.
Big thank you to couple sponsors

842
00:44:54,720 --> 00:44:57,960
in the show, Mineral Mining
services and CRE Insurance.

843
00:44:58,520 --> 00:45:01,760
Also big thank you to Grounded
Sand, big ground support, K

844
00:45:01,760 --> 00:45:05,640
drill, Daysat, Saltbush
contracting and the mighty Get

845
00:45:05,640 --> 00:45:10,160
wet solutions guys.
Information contained in this

846
00:45:10,160 --> 00:45:12,880
episode of Money of Mine is of
general nature only and does not

847
00:45:12,880 --> 00:45:15,520
take into account the
objectives, financial situation

848
00:45:15,560 --> 00:45:17,560
or needs of any particular
person.

849
00:45:17,880 --> 00:45:20,920
Before making any investment
decision, you should consult

850
00:45:20,920 --> 00:45:24,000
with your financial advisor and
consider how appropriate the

851
00:45:24,000 --> 00:45:27,680
advice is to your objectives,
financial situation and needs.