De Grey vs Spartan: Bush Math Battle

1
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It's a cool word.
We're going mate.

2
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Bob.
Bob.

3
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Yeah, inside.
Trav and I are going and we're

4
00:00:08,360 --> 00:00:10,760
bloody pumped about it.
We're going in the jungle or

5
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what?
We've got a bit planned, got a

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week before and a week after
going to see a whole bunch of

7
00:00:16,960 --> 00:00:19,600
operations.
And yeah, we're pumped to to see

8
00:00:19,600 --> 00:00:21,640
anyone who's also in Cape Town
at the time.

9
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So get in touch, let us know and
yeah, we can sort of take it

10
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from there.
We've got 5 or 6 days in in Cape

11
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Town itself and can't wait for
that.

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Oh beauty.
God, if LGC wasn't in the office

13
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I could walk around nude.
I'll be here by myself.

14
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That would be great.
Anyway, yeah.

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On that note.
What are we?

16
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We're also we're also going out
for drinks tonight mate.

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Oh, we get.
Yeah, we better get going.

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We've got the Chrissy party.
Yeah, right.

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We've got what have we got?
We've got Spartan bloody Raisin

20
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mud Raisin raisins.
Fuck, she's all go.

21
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We've.
Got a bit of degrade.

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A bit more degrade for like what
are you what are?

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You up to.
Australian Pacific Coal, right?

24
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It's a juicy story with some
some big, big names and yeah, an

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interesting future.
We'll leave it at that for.

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Now stock you'd have to put a
gun to my head to buy.

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Beat me to the punch it.
Might go up, might go up.

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I'm beveraged.
Righto Spartan.

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Ding Ding Ding for JD.
Yes, that is right.

30
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Well done JD.
So Pepper resource upgrade

31
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coming out yesterday and God
this happened but it wasn't

32
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recorded and I'm devastated or
did say far out they must be

33
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bloody.
This must be the queue for a

34
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capital raise.
It has to be now back in the

35
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dollar, 40s, whatever.
Fuck 2/22/20 big ones. 220 big

36
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ones, I think that's.
You did say when they hit buck

37
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50 maybe just three or four
weeks ago that they'd be mad not

38
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to raise.
They had a dip and then pulled

39
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back up.
Yep.

40
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And then they heeded your
advice.

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I'll see.
And you can probably say why

42
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with this Pepper resource coming
out.

43
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All all surprised by the
increase.

44
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Lives freaking huge. 10.3
Grammes.

45
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Yeah, and like pretty much
nearly doubled.

46
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So pepper, pepper sitting at a
873,000 oz at 10.3 grammes.

47
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That's and 88% of that is
indicated.

48
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So.
Oh fuck, I just didn't think it

49
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was that big.
Apparently it is so never, never

50
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in pepper combined now sitting
at 2.3 million oz at 9.3 grammes

51
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per tonne for the resource.
So, but that is at A2 gramme per

52
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tonne cut off.
So they won't be, they won't be

53
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that selective.
Trust me, when they're mine and

54
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they'll be taking the whole
thing.

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So you look at the the full
resource at 5.8 grammes per

56
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tonne at the lower cut off
grade.

57
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That's probably a better number
to go with.

58
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So you're ready.
Your reserve will likely come in

59
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I reckon a tiny bit under 5
grammes once it's converted into

60
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a reserve once it put shapes and
dilution around it.

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So especially if they're going
to ramp up, you know beyond 150

62
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and maybe do a 200, which I
think would be in the pipeline

63
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with getting a resource like
this, you sacrifice a bit of

64
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grade.
So yeah, 220 buckaroos, 7%

65
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discount.
So yeah, she'll be there is

66
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cash.
So look, they've effectively

67
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raised 300 because what they
raised 80 to fund the

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exploration drill drive and the
start of the underground

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drilling and everything.
So that exploration Dr is the

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start of the mind.
So I'd class that is 300 raised

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for commencing that underground
operations.

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So we.
Just talked about to grade.

73
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It's kind of similar is to what
degraded.

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They pre empted the market
thinking that they come raise in

75
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some ways and and have over
funded with equity.

76
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And you look at it now, it's
like a like they're probably not

77
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going to need too much more to
to build the mine.

78
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No, I wouldn't.
I wouldn't think so considering

79
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they've already punched it in
the day clients and they're it's

80
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only they're adding half a mil
sort of thing.

81
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A lot of infrastructure already
there and I they got a got the

82
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ball mill, the thickener or
whatever the fly sheets going to

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be and the all the other and
considering that exploration Dr

84
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gets to the ore body
effectively, then they just got

85
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to start punching out.
I wouldn't think they'd need

86
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much more could do.
I don't think there's any fully

87
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funded comments.
God, I hope they bloody don't.

88
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They wouldn't do that.
They wouldn't say fully funded,

89
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but why would you?
But yeah, well I need another

90
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100 or something but a good spot
to be in.

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Fully permitted as well was an
important sort of approval that

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came through not too long ago as
well.

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It's a bit of a distinction, but
you've gone into a bit more of a

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compare and contrast with with
Hemi as well.

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Not requested by anyone.
This is what I just woke up and

96
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thought would be the best use of
my time today.

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Why not talk about of of become
an investment banker?

98
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Maddie's Bush?
Maths, Investment banking?

99
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Well who's on the ticket for
this?

100
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A zoo?
Is it a zoo they're on?

101
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They're on the de Grey.
So oh, they were, yeah.

102
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De Grey was a de Grey, Baron
Joey and then.

103
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So it'd be like Baron Maddie or
Azur, I'll be great green bushes

104
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because I'm just better than
Azur.

105
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Like this is this is the sort of
level of investment banking

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we're dealing with here.
So final touches added by my

107
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astute colleagues over here SO.
Why do we don't give us credit

108
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for this one, Maddie?
What did you get tonight?

109
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What did you?
Well, we're thinking right

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what's look at the decision of
Northern Star to allocate

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effectively $4.2 billion mid
2025 next year, considering 8

112
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hundreds coming in from the door
from the grey and another $2

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billion of CapEx to start
producing what 530,000 oz by

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2029 versus someone acquiring
Spartan for let's say 2 billion

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today, haven't they might have
to Chuck another 100 mil of

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CapEx and producing 150,000 oz
by 2027, so.

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What's their market cap post
raise?

118
00:06:04,640 --> 00:06:09,480
Their pro forma market cap.
Shouldn't know that let's 1.6 or

119
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something. 1.61.7 tight
discount, right?

120
00:06:12,640 --> 00:06:15,320
Let's run with that.
And they and the share price of

121
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the raise was was what?
32130 Two 132.

122
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Sorry, $2 billion.
Do you reckon you could get it

123
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for $2 billion market cap then?
Because that'd be yeah,

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wouldn't, wouldn't.
Let's keep the numbers round, I

125
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reckon.
Keep them round right 2.2 it's

126
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not kind of it won't be too
impactful on my spreadsheet that

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you have no respect for, as
you've said.

128
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I respect it.
I respect.

129
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Come on, Trev.
Right, let's get into it.

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These are now remember, these
are all script transactions.

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Like likely the, let's assume
the Spartan 1 would be all

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script Northern star requiring
to graze all script.

133
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It's and it took a bit to get my
non financial head around.

134
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It is like, yes, it's all
script.

135
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I'm like, but what is the
difference between is there any

136
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benefits of doing that versus
fucking having to give him cash?

137
00:07:05,720 --> 00:07:09,600
Like is it the same value?
But it's, it will be the same as

138
00:07:09,600 --> 00:07:14,280
Northern Star raising $4.2
billion at their share price and

139
00:07:14,280 --> 00:07:19,200
handing that cash to Degray, the
same as them giving their script

140
00:07:19,200 --> 00:07:21,600
effectively.
So exact same dilution for the

141
00:07:21,600 --> 00:07:23,640
shareholders.
The Bennett, the benefit with

142
00:07:23,640 --> 00:07:27,440
the script is obviously the
rollover relief for Degray, low

143
00:07:27,440 --> 00:07:30,880
risk option for Northern Star as
they aren't using debt or

144
00:07:30,880 --> 00:07:34,520
dipping into cash or anything
like that, that they will have

145
00:07:34,520 --> 00:07:37,640
to for the CapEx.
And because if they raised money

146
00:07:37,640 --> 00:07:39,720
to do it, they'd have to do that
at a discount, then they're

147
00:07:39,720 --> 00:07:41,320
paying a bit of a premium for
degrade.

148
00:07:41,320 --> 00:07:42,880
So they're getting fisted both
ways.

149
00:07:43,040 --> 00:07:44,680
A lot of transaction costs.
Yeah.

150
00:07:44,800 --> 00:07:48,600
And it's, and it, I guess it's
the easy upfront option, but

151
00:07:49,400 --> 00:07:53,200
Northern Star existing
shareholders only get 80% of all

152
00:07:53,200 --> 00:07:57,480
future earnings forever because
Degray get the other 20% now.

153
00:07:57,480 --> 00:07:59,760
So that's the catch.
So hopefully those added

154
00:07:59,760 --> 00:08:01,640
earnings that way.
Yeah, yeah.

155
00:08:01,880 --> 00:08:04,440
It's it's more compelling for
the the Degray shareholders

156
00:08:04,600 --> 00:08:07,280
often to get the script because
of the rollover relief.

157
00:08:07,280 --> 00:08:09,960
Like you, you say, Maddie,
that's a pretty meaningful

158
00:08:09,960 --> 00:08:11,600
thing.
Otherwise people get a forced

159
00:08:11,600 --> 00:08:13,600
tax event.
They have to accept cash, which

160
00:08:13,640 --> 00:08:16,760
not everyone wants.
Tax guy, tax.

161
00:08:17,560 --> 00:08:19,480
I'm glad I'm paying it now.
Wasn't paying it.

162
00:08:19,720 --> 00:08:21,200
Wasn't paying it for a year or
so.

163
00:08:21,240 --> 00:08:26,240
It was good, right?
Let's assumptions for Maddie's

164
00:08:26,240 --> 00:08:30,040
Bush maths model.
So let's give Spartan all in

165
00:08:30,040 --> 00:08:34,360
sustaining cost of 1800.
Let's give Hemi all in

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00:08:34,360 --> 00:08:38,679
sustaining costs of 1600.
Considering it was 12/29 in the

167
00:08:38,679 --> 00:08:42,720
DFS, 1600 might be a bit under.
I'm just gonna up that a bit.

168
00:08:43,320 --> 00:08:49,080
Go to the Johnny Mack cake, add
40% job to to include like

169
00:08:49,080 --> 00:08:52,120
growth capital and other costs.
Obviously Northern Star is a

170
00:08:52,120 --> 00:08:55,360
bigger entity, but who knows who
might be mining the Dalgar anger

171
00:08:55,360 --> 00:08:57,240
ore body.
They might be a big entity too,

172
00:08:57,240 --> 00:09:00,320
so they might have similar
corporate costs, who knows?

173
00:09:00,320 --> 00:09:02,600
So let's just let's just say
it's even.

174
00:09:02,680 --> 00:09:05,120
Cake for those those new money
miners out there.

175
00:09:05,120 --> 00:09:08,840
You corporate all in costs, so
essentially capturing what's not

176
00:09:09,000 --> 00:09:11,440
captured in the all in
sustaining cost.

177
00:09:11,440 --> 00:09:15,480
Yeah, so I like all your growth
capital bloody any other cap

178
00:09:15,480 --> 00:09:18,560
growth CapEx expenditures, the
court, the head office, all that

179
00:09:18,560 --> 00:09:22,280
shit.
So if we use now, so then you

180
00:09:22,600 --> 00:09:27,240
that's so Spartan cake 2700 an
ounce, very high grade but

181
00:09:27,440 --> 00:09:33,560
smaller tonnes than Hemi 2400 an
ounce for HEMI very low grade

182
00:09:33,560 --> 00:09:36,760
and refractory, but are fuck
loaded tonnes, 10 million tonne

183
00:09:36,760 --> 00:09:39,400
per annum.
So it could, could be higher and

184
00:09:39,400 --> 00:09:41,520
I'll show you what the costs are
similar later.

185
00:09:41,880 --> 00:09:46,480
So as we said five bill was paid
for HEMI in script, but 800 in

186
00:09:46,480 --> 00:09:49,440
the Kitty already.
So let's say 4 to 4.2 billion

187
00:09:49,440 --> 00:09:53,160
paid.
They did say 1.2 billion CapEx

188
00:09:53,160 --> 00:09:56,760
in the DFS.
Let's assume that is going to be

189
00:09:56,760 --> 00:09:59,840
around 2 billion now, which I
don't think is that far out of

190
00:09:59,840 --> 00:10:02,440
the question considering those
numbers.

191
00:10:02,440 --> 00:10:04,240
And they did say that will be
reviewed.

192
00:10:05,080 --> 00:10:09,080
So 6.2 billion to get that into
production taken into account

193
00:10:09,080 --> 00:10:11,320
the 800 that's coming to the
door, that's for Northern, what

194
00:10:11,320 --> 00:10:13,720
Northern Star are going to pay
to get to 1st production.

195
00:10:14,280 --> 00:10:16,240
So and you look at the shade
here.

196
00:10:16,240 --> 00:10:19,720
So that's they've spent, they're
going to spend 4.2 billion April

197
00:10:19,720 --> 00:10:23,800
next year, then another 2
billion over the following three

198
00:10:23,800 --> 00:10:24,920
years.
And they said they're going to

199
00:10:24,920 --> 00:10:30,000
be mining 530,000 ounces in 2029
for 12 years.

200
00:10:30,000 --> 00:10:33,400
At this stage, obviously
potential upside to that amount

201
00:10:33,400 --> 00:10:36,880
of Oz and the mine life, but
with a big number like that,

202
00:10:36,880 --> 00:10:39,200
let's just keep it 530 flat
forever.

203
00:10:39,720 --> 00:10:44,600
So let's say someone took out,
decided to take out Spartan

204
00:10:44,600 --> 00:10:48,800
right now at $1.80.
That's just a bloody thumb suck.

205
00:10:49,040 --> 00:10:52,120
Heard someone that owned it said
I'd love to get taken out of the

206
00:10:52,120 --> 00:10:54,320
dollar ID.
So that is the number for today.

207
00:10:54,920 --> 00:10:58,360
So the 220 mil rise by Spartan
today, that'll get them pretty

208
00:10:58,360 --> 00:11:00,080
close to 1st production as I
said.

209
00:11:00,320 --> 00:11:03,200
But look like considering
they've already raised the ID,

210
00:11:03,200 --> 00:11:07,560
they're heading underground
already, let's assume net 2

211
00:11:07,560 --> 00:11:10,360
billion to take them out.
So that's around what that

212
00:11:10,360 --> 00:11:14,560
dollar ID is.
So money that comes in the door

213
00:11:14,560 --> 00:11:18,600
from today's rise plus the
existing cash, add another 100

214
00:11:18,600 --> 00:11:24,680
mil contingency for the CapEx
2.1 out the door by 20 in 2025

215
00:11:24,680 --> 00:11:27,720
by the acquirer because that'll
be I am.

216
00:11:27,840 --> 00:11:30,560
And then most of the capital is
going to get deployed pretty

217
00:11:30,560 --> 00:11:35,160
quickly for that project.
I think ramp up 2020 650,000

218
00:11:35,160 --> 00:11:39,640
ounces in 2020, seven 200,000 oz
by 2029.

219
00:11:39,640 --> 00:11:44,640
I'm saying the future here.
So based on all that, that big

220
00:11:44,640 --> 00:11:52,200
massive CapEx and acquisition of
degre 6.2 billion verse bloody 2

221
00:11:52,200 --> 00:11:56,360
and a bit of Spartan and
considering the answers in the

222
00:11:56,360 --> 00:12:01,360
timeline, if if both projects
started right now at the exact

223
00:12:01,360 --> 00:12:05,520
same point in time, which one
would have you first thought

224
00:12:05,720 --> 00:12:09,480
would have got to break even the
quickest as in paid back all the

225
00:12:09,840 --> 00:12:13,560
acquisition cost in the CapEx
before even though you know the

226
00:12:13,560 --> 00:12:14,920
answer?
What are the what have you

227
00:12:14,920 --> 00:12:17,320
thought?
Jeez, wouldn't it take shit

228
00:12:17,320 --> 00:12:20,920
loads longer to pay off to grey
the 6.2 billion than the two?

229
00:12:21,000 --> 00:12:22,320
What gold price you said to get
money?

230
00:12:22,360 --> 00:12:26,840
Oh. 3600 were you using?
Gutfield would have been Spartan

231
00:12:26,840 --> 00:12:29,920
marginally because of the year's
difference, but.

232
00:12:30,560 --> 00:12:34,440
And the answer is.
The answer is to grey degray

233
00:12:34,440 --> 00:12:38,360
actually pays off quicker at the
same gold price then Spartan.

234
00:12:38,400 --> 00:12:42,920
I couldn't to think that if you
paid 2.1 billion for Spartan at

235
00:12:43,200 --> 00:12:48,200
and even ramping up for 200,000
oz by 29 gone for 12 years at an

236
00:12:48,200 --> 00:12:52,760
1800 all in sustaining cost 3600
fucking 10 to 11 years to pay

237
00:12:52,760 --> 00:12:57,560
that all back.
Yeah, I guess 22 is a big take

238
00:12:57,560 --> 00:13:01,520
out number for Spartan so.
Yeah, 9 to 10 years for Hemi to

239
00:13:01,520 --> 00:13:04,720
pay back so.
What did you what did you get

240
00:13:04,720 --> 00:13:06,320
though all the relative and
standing cost?

241
00:13:06,320 --> 00:13:08,960
So Spartan cake is higher than
Hemi cake?

242
00:13:09,480 --> 00:13:11,040
That's interesting.
Yeah.

243
00:13:11,800 --> 00:13:17,640
One, yeah, I think the Spartan,
the Spartan cost will be worthy,

244
00:13:17,640 --> 00:13:22,600
worthy of worthy of
interrogation because how how

245
00:13:22,600 --> 00:13:26,480
many mines when you mine in that
like 5 grand per tonne reserves

246
00:13:26,480 --> 00:13:29,920
you think it'll be that'll be
that'll be pretty attractive

247
00:13:29,920 --> 00:13:31,800
cost basis, wouldn't it?
You'd think so.

248
00:13:32,160 --> 00:13:33,160
You'd think so.
How many?

249
00:13:33,160 --> 00:13:37,600
But I suppose how many
underground mines these days do

250
00:13:37,640 --> 00:13:41,800
you see running well under 2000?
Not many, but it's more of a

251
00:13:42,120 --> 00:13:44,520
what's your cost per tonne to
mine underground somewhere?

252
00:13:45,200 --> 00:13:48,040
It's definitely north of 100
bucks a tonne underground mining

253
00:13:48,480 --> 00:13:49,880
cost.
But it's, you know, maybe call

254
00:13:49,880 --> 00:13:52,480
it to it, you know, around 200
might be the number.

255
00:13:52,800 --> 00:13:55,080
Yeah, All right.
That depends on depth.

256
00:13:55,680 --> 00:13:58,760
So there a lot of areas.
So you know Guale is more than 5

257
00:13:58,760 --> 00:14:02,040
grammes, but it's 1800 metres
underground Spartan.

258
00:14:02,040 --> 00:14:05,600
The thing they do have in their
favour, it's not going early

259
00:14:05,600 --> 00:14:09,720
days won't be that deep.
Even when it is that deep, when

260
00:14:09,720 --> 00:14:12,320
they get to that real high oz
per vertical metre, they're

261
00:14:12,320 --> 00:14:13,840
still going to only get into the
pit.

262
00:14:14,160 --> 00:14:16,520
I would assume they'll just dump
straight into the pit and then

263
00:14:16,520 --> 00:14:18,800
Chuck it in some bloody Rd
trains.

264
00:14:18,880 --> 00:14:23,120
We talked about them Salt Bush.
And also the added benefit, I

265
00:14:23,120 --> 00:14:25,920
think you've sort of spoken to
this in, in the past of now

266
00:14:25,920 --> 00:14:28,680
having multiple, you know,
mining, mining phases.

267
00:14:28,680 --> 00:14:32,040
It's, it's, you know, not just
never, never.

268
00:14:32,040 --> 00:14:36,680
But with, with pepper being able
to get to 200,000 oz might be a

269
00:14:36,680 --> 00:14:38,400
bit more feasible.
And then you can sort of

270
00:14:39,000 --> 00:14:41,560
amortised costs over a larger
sort of base and stuff and

271
00:14:41,960 --> 00:14:44,880
pulling those unit costs down.
Yeah, and it is high grade, but

272
00:14:44,880 --> 00:14:47,680
remember the lower grade
component of the resource is

273
00:14:47,680 --> 00:14:50,480
around 2 grammes.
So to really ramp up to that

274
00:14:50,480 --> 00:14:53,160
200,000 oz you're going to be
bringing in a lot of lower

275
00:14:53,160 --> 00:14:54,720
grade.
It ain't never, never pepper

276
00:14:54,720 --> 00:14:56,440
quality.
It might be when they find it,

277
00:14:56,840 --> 00:15:01,840
but I would I did do the case
down the bottom where the costs

278
00:15:01,880 --> 00:15:10,800
are flat like because I I think
even just I believe it when I

279
00:15:10,800 --> 00:15:14,200
say it, But yes, it's 10 million
tonne, but like it's pretty low

280
00:15:14,200 --> 00:15:19,560
grade for Hemi, pretty like it's
refractory big pox plant,

281
00:15:20,040 --> 00:15:23,200
potentially underground
operations going in if they

282
00:15:23,200 --> 00:15:27,080
depending on how they attack it
to achieve 1600 all in

283
00:15:27,080 --> 00:15:29,080
sustaining.
It'd be a pretty good bloody

284
00:15:29,080 --> 00:15:31,640
effort.
I think with all that it is big

285
00:15:31,640 --> 00:15:36,240
scale, but I think that'd be A
so I wouldn't be surprised if

286
00:15:36,240 --> 00:15:40,120
these were very similar costs.
Not sure what they are at either

287
00:15:40,120 --> 00:15:43,600
end of the spectrums of scale.
Offset the low grade refractory

288
00:15:43,600 --> 00:15:46,480
with the high grade nature.
Wouldn't be surprised if they

289
00:15:46,480 --> 00:15:48,800
end up pretty similar costs
profiles.

290
00:15:48,800 --> 00:15:55,240
So your takeaway is the price
offered by non Starford A grey

291
00:15:55,240 --> 00:16:00,480
yesterday is the roughly
equivalent to $1.80 for Spartan?

292
00:16:00,480 --> 00:16:07,000
I don't know, I suppose.
Suppose, oh actually it was more

293
00:16:07,000 --> 00:16:13,400
thinking that first thoughts
were I'm like, jeez, it's not

294
00:16:14,400 --> 00:16:18,280
someone paying 2 billion for
Spartan didn't seem to be as

295
00:16:18,360 --> 00:16:24,000
alarming as paying 5 billion for
degree and plus the CapEx as

296
00:16:24,000 --> 00:16:25,360
well.
Yeah.

297
00:16:25,360 --> 00:16:28,160
One potential difference is that
there's no one out there that

298
00:16:28,160 --> 00:16:30,960
would get, you know, synergistic
benefits from buying Hemi.

299
00:16:31,160 --> 00:16:34,920
Yeah, potentially a couple
buyers that might, oh, exactly

300
00:16:34,920 --> 00:16:37,840
get synergies if they were to
buy Spartan.

301
00:16:37,880 --> 00:16:40,400
Oh and you think when they get
Hemi going far out like once

302
00:16:40,400 --> 00:16:43,760
that's if you're looking at just
back on a payback perspective.

303
00:16:43,760 --> 00:16:46,320
Like once he's paid back, she's
frigging printing money.

304
00:16:46,720 --> 00:16:49,160
It's like considering it goes
beyond 12 years.

305
00:16:50,280 --> 00:16:54,120
But I suppose from a capital
allocation decision from today

306
00:16:54,520 --> 00:16:58,240
is if like say you someone
wanted to buy Hemi and buy

307
00:16:58,240 --> 00:17:01,680
Spartan and think or Spartan and
think, right, when am I going to

308
00:17:01,680 --> 00:17:04,680
get, when am I going to pay this
back and start producing

309
00:17:04,800 --> 00:17:07,440
earnings and pay back the
capital of allocated.

310
00:17:07,760 --> 00:17:11,599
If you look at it here, based on
that, that's where Spartan comes

311
00:17:11,599 --> 00:17:16,440
ahead because Hemi's not going
to get gone till 2029 in full

312
00:17:16,440 --> 00:17:19,720
scale.
If if all goes to plan, Spartan

313
00:17:19,720 --> 00:17:23,040
gets get going a lot quicker.
But probably in 2026 they

314
00:17:23,119 --> 00:17:26,920
they'll be in ramp up.
You you'd imagine God, I

315
00:17:26,920 --> 00:17:31,560
wouldn't think any sooner, maybe
maybe end of 2025 still still

316
00:17:31,560 --> 00:17:35,040
got studies and everything to
go, but they are underground.

317
00:17:35,040 --> 00:17:37,040
So they'll definitely be in a
good position to start

318
00:17:37,040 --> 00:17:40,320
developing it.
So based on this whole thing,

319
00:17:40,320 --> 00:17:44,520
it's like Dalgar anger actually
gets paid back quicker than Hemi

320
00:17:44,520 --> 00:17:47,360
just 'cause there's so much less
to do there.

321
00:17:47,960 --> 00:17:50,080
Yeah, from today.
You've got permitting.

322
00:17:50,160 --> 00:17:50,800
Yeah.
Your time.

323
00:17:50,840 --> 00:17:52,040
Yeah.
Your timeline before you can

324
00:17:52,040 --> 00:17:53,880
start mining.
It's expediated.

325
00:17:54,120 --> 00:17:55,960
Yeah, kind of.
Underestimate the value of that.

326
00:17:56,080 --> 00:18:01,720
So it's a very, very, very basic
approach, but it it was just it

327
00:18:01,720 --> 00:18:05,480
was a good exercise for myself
to around the concept of M&A in

328
00:18:05,480 --> 00:18:08,040
the gold space, because
obviously it's much bloody

329
00:18:08,040 --> 00:18:11,240
easier to find this shit
yourself and go from there.

330
00:18:11,240 --> 00:18:14,240
Like you look at the performance
of Spartan since the rate recap

331
00:18:14,480 --> 00:18:17,600
like degrade share price would
have like degrade share price

332
00:18:17,600 --> 00:18:20,240
wouldn't be where it is today.
Pray the Northern Star offer if

333
00:18:20,240 --> 00:18:22,400
they had to build it themselves,
because they would have had to

334
00:18:22,400 --> 00:18:25,920
have raised a shit load of cash
plus a big pile of debt and had

335
00:18:25,920 --> 00:18:27,880
a lot of risks and dollar
shareholders.

336
00:18:27,880 --> 00:18:30,720
So just shows that outcome for
degrade shareholders.

337
00:18:30,720 --> 00:18:33,760
How freaking good that was to
get offered the all time high

338
00:18:33,760 --> 00:18:36,920
share price to hand it over to
someone else.

339
00:18:36,920 --> 00:18:39,360
That's an brilliant outcome.
That's an excellent takeaway

340
00:18:39,440 --> 00:18:42,640
that you because like in your in
your exercise, in your

341
00:18:42,640 --> 00:18:45,160
spreadsheet, what you're doing
is you're putting your you know,

342
00:18:45,280 --> 00:18:49,640
your, your, your 2024 cash flows
are an acquisition cost of you

343
00:18:49,640 --> 00:18:51,760
know what, what, what was sort
of stumped up for these these

344
00:18:51,760 --> 00:18:53,920
things.
And that kind of blows out a

345
00:18:53,960 --> 00:18:55,760
hell of a lot of the rest of the
equation, right.

346
00:18:55,920 --> 00:18:58,480
So the most value that you can
add as a minor eyes with the

347
00:18:58,480 --> 00:19:01,600
drill bit by a country mile
because you don't have to you

348
00:19:01,600 --> 00:19:03,160
don't have to fund the
acquisition because it came

349
00:19:03,160 --> 00:19:04,040
organically.
You just.

350
00:19:04,040 --> 00:19:06,520
Got to pay for the drill.
So that's that's take away that

351
00:19:06,520 --> 00:19:11,280
2.1 billion in the first column.
She's just fucking easy and

352
00:19:11,280 --> 00:19:12,240
easier.
Said than done.

353
00:19:12,240 --> 00:19:13,880
Oh.
Yeah, God, you can see why

354
00:19:13,880 --> 00:19:18,480
they'd much rather do.
And I suppose like that's why

355
00:19:18,480 --> 00:19:20,680
you'd.
I think the interesting one was

356
00:19:21,320 --> 00:19:24,760
Nova for IGO and I remember the
saying, oh, it's been such a

357
00:19:24,760 --> 00:19:27,560
great acquisition, it's
producing all this free cash and

358
00:19:27,760 --> 00:19:30,160
everything.
But I think it was Hoffy or

359
00:19:30,160 --> 00:19:33,920
something that did the numbers.
It's like they've only just

360
00:19:34,400 --> 00:19:37,360
nearly paid it back for what
they've actually paid for it.

361
00:19:37,600 --> 00:19:40,280
Never mind the opportunity cost.
Yeah, Yeah, it's.

362
00:19:40,720 --> 00:19:43,560
So, and I guess that's why you
get a bit sceptical about M&A

363
00:19:43,560 --> 00:19:46,960
with these high price tags
because as you said, some do

364
00:19:46,960 --> 00:19:50,000
fail, plenty do fail, have a
downturn or like get written

365
00:19:50,000 --> 00:19:54,280
down because that just that
initial outlay is freaking huge

366
00:19:54,280 --> 00:19:59,520
and takes as we said 9 to 11
years to pay back that initial

367
00:19:59,520 --> 00:20:02,320
outlay.
So consider and unless you buy

368
00:20:02,320 --> 00:20:04,920
it in a from a major in a
friggin downturn.

369
00:20:05,360 --> 00:20:08,160
Nor like to think back when
Northern Star bought John D for

370
00:20:08,360 --> 00:20:14,240
US 91,000,010 years ago.
Still producing 200,000 oz today

371
00:20:14,680 --> 00:20:18,720
but gold price was $1400.00 an
ounce Aussie then when that

372
00:20:18,720 --> 00:20:24,840
happened compared to 4100 today.
But great land, gold bought all

373
00:20:24,840 --> 00:20:28,640
the infrastructure at Telfa, all
the Telfa deposit that's there.

374
00:20:28,640 --> 00:20:32,640
The remainder, I have her on the
US 475,000,000 just a couple of

375
00:20:32,640 --> 00:20:35,040
months ago.
So that's about 78% of what

376
00:20:35,040 --> 00:20:38,800
Northern Star paid for the Grey.
So as we said at the time,

377
00:20:39,160 --> 00:20:40,880
that's a bloody good deal like
that.

378
00:20:40,880 --> 00:20:44,400
That wasn't one where you're
like risky, like that's a

379
00:20:44,400 --> 00:20:46,560
fucking good deal.
The Newmont sales have been

380
00:20:46,560 --> 00:20:50,320
really interesting, right?
Because they've sort of, you

381
00:20:50,320 --> 00:20:53,600
know, some of them people have
said they've netted way more

382
00:20:53,600 --> 00:20:57,560
than was the expectation and
others, you know, like this one,

383
00:20:57,560 --> 00:21:00,400
what you just said with with
Telfer, Telfer and great land,

384
00:21:00,840 --> 00:21:03,160
people are saying, hey, they got
a pretty good deal kind of

385
00:21:03,160 --> 00:21:04,200
right.
It was the right.

386
00:21:04,640 --> 00:21:06,120
You can't.
You couldn't compete with.

387
00:21:06,200 --> 00:21:08,120
Yeah, yeah, of course it was the
right, yeah.

388
00:21:08,160 --> 00:21:11,520
Or they just took them over.
Yeah, which, you know, you had

389
00:21:11,520 --> 00:21:13,400
to get shareholder support,
which was going to happen.

390
00:21:13,720 --> 00:21:14,920
Yeah.
And we'll consider and it

391
00:21:14,920 --> 00:21:16,920
probably doesn't move the needle
that much for new.

392
00:21:16,920 --> 00:21:20,480
Newmont made 1.3 billion in free
cash flow last September

393
00:21:20,480 --> 00:21:24,520
quarter.
So an acquisition, a sale like

394
00:21:24,520 --> 00:21:28,000
that, whether there was another
2 or 300 million on it, it's not

395
00:21:28,000 --> 00:21:30,520
going to move.
Not a big thing for them really

396
00:21:30,520 --> 00:21:32,840
considering the size of them.
I'm sure they'd like it.

397
00:21:33,920 --> 00:21:37,560
So I guess what does we talked
about it yesterday.

398
00:21:37,560 --> 00:21:40,200
What's the northern starter grey
thing mean for Spartan?

399
00:21:40,400 --> 00:21:43,000
Doesn't mean anything.
Obviously a signal that

400
00:21:44,040 --> 00:21:45,520
companies are willing to pay for
answers.

401
00:21:45,520 --> 00:21:48,720
What'd you say?
1.16 times consensus NAV They

402
00:21:48,720 --> 00:21:50,880
paid for degrade.
That was my Bush math, yeah,

403
00:21:50,960 --> 00:21:56,560
yeah, I just thought, OK, 1.16
times NAV is what what you know

404
00:21:57,040 --> 00:21:59,160
was paid here.
Then can you just apply the same

405
00:21:59,160 --> 00:22:02,760
to Spartans consensus NAV, which
before the cap raise consensus

406
00:22:02,760 --> 00:22:06,320
NAV was about $1.85.
So 1.16 would be 2 bucks 14.

407
00:22:06,320 --> 00:22:08,200
But now everyone in their
models, there would have been

408
00:22:08,200 --> 00:22:10,800
debt funding remaining CapEx and
now they've added added more

409
00:22:10,800 --> 00:22:14,280
shares instead.
So like your 180 doesn't sound

410
00:22:14,520 --> 00:22:17,240
doesn't sound now unrealistic to
me between that take more.

411
00:22:17,400 --> 00:22:19,360
Yeah, it's offered.
I, you know, like probably

412
00:22:19,360 --> 00:22:21,240
between 180 and 2 bucks to get a
deal done.

413
00:22:21,440 --> 00:22:23,640
Yeah, is my my, my, like literal
just gut feel.

414
00:22:24,360 --> 00:22:26,880
Yeah, well, and but the what
else do you buy?

415
00:22:27,280 --> 00:22:28,680
Degrade.
Degrade's off the table.

416
00:22:28,680 --> 00:22:31,000
Now those those nabs by the way,
were at spot prices.

417
00:22:31,000 --> 00:22:34,000
So I think with degrade you
weren't having like I've pulled

418
00:22:34,000 --> 00:22:37,200
nabs at spot decks there.
So you know, 180 actually

419
00:22:37,200 --> 00:22:39,200
probably makes a lot more sense
in 2 bucks because you don't

420
00:22:39,560 --> 00:22:42,320
want to pay above NAV at spot
too much.

421
00:22:42,880 --> 00:22:45,680
Now what?
Because a long term consensus

422
00:22:45,680 --> 00:22:50,120
gold prices US 2100 it's.
Yeah, Yeah, I think that's.

423
00:22:50,120 --> 00:22:53,280
The one that's right, yeah, a
lot lower.

424
00:22:53,640 --> 00:22:57,280
But I suppose if you if
someone's going to pay 2 billion

425
00:22:57,840 --> 00:23:01,280
for Spartan to develop that mine
into 200,000 oz operation, be

426
00:23:01,280 --> 00:23:04,120
interested to see what
Ravenswood is going to go for

427
00:23:04,120 --> 00:23:07,600
considering what they're aiming
to produce. 2:20 to 2:50 and

428
00:23:07,600 --> 00:23:11,880
it's already in operation.
Steady state ticking along.

429
00:23:12,080 --> 00:23:15,720
I hear they want 2 billion.
Two billion, Yeah, at least

430
00:23:15,720 --> 00:23:16,960
makes sense.
I don't know.

431
00:23:17,160 --> 00:23:18,480
Who knows?
There you go.

432
00:23:18,600 --> 00:23:22,440
So I think.
They put in 800 Yeah, investing

433
00:23:22,440 --> 00:23:25,680
in it, Yeah, after buying it.
Yeah, how much they pay for it?

434
00:23:26,760 --> 00:23:30,240
I think it went up to 300, but
that was over time.

435
00:23:30,240 --> 00:23:32,160
Yeah, yeah.
They're going to have to pay the

436
00:23:33,080 --> 00:23:37,160
like all of the contingent out.
So yeah, that was all 300, yeah.

437
00:23:37,640 --> 00:23:41,120
Yeah, I remelius they're the
interesting one here.

438
00:23:41,200 --> 00:23:44,240
What like, I guess what are
their options with Spartan and

439
00:23:44,240 --> 00:23:46,480
on the back of because it does
tie in with what the whole

440
00:23:46,480 --> 00:23:49,400
Northern Star thing, because we
said is the degrade thing then

441
00:23:49,400 --> 00:23:52,160
going to open up the chance that
they're going to to be amenable

442
00:23:52,160 --> 00:23:56,600
to selling Carousel Dam?
And then obviously Ramilius

443
00:23:56,600 --> 00:23:59,320
would want that to get the
infrastructure for to get

444
00:23:59,320 --> 00:24:02,720
Rebecca Row going.
God, I think what would they

445
00:24:02,720 --> 00:24:06,160
want for Carousel Dam?
At least a billion, probably

446
00:24:06,280 --> 00:24:08,040
bloody more.
God, it's producing.

447
00:24:08,760 --> 00:24:11,240
It's at what 2300 all in
sustaining Not sure of the

448
00:24:11,240 --> 00:24:14,280
future on it, but it's got the
infrastructure like God could be

449
00:24:14,280 --> 00:24:17,200
more if that script that's like
could be half of Ramilius's

450
00:24:17,200 --> 00:24:20,440
bloody market cap to get that.
So good Spartan.

451
00:24:21,160 --> 00:24:24,640
Yeah, yeah.
But like I suppose you do get a,

452
00:24:25,120 --> 00:24:29,640
you do get an operating mine
does unlock the million oz at

453
00:24:29,640 --> 00:24:34,080
Rebecca Row for 1.2 grammes.
But fuck, it could be yeah, or

454
00:24:34,120 --> 00:24:36,720
it could be what a shit load
more.

455
00:24:37,240 --> 00:24:39,200
Yeah.
But there's no, I suppose

456
00:24:39,200 --> 00:24:40,880
there's the synergies with
Rebecca Rowe.

457
00:24:40,880 --> 00:24:46,040
She's still got to develop that.
But if I say there is a lot more

458
00:24:46,040 --> 00:24:51,120
synergies I believe with the
Spartan acquisition because if

459
00:24:52,040 --> 00:24:55,240
they will not, they will be able
to take that dirt to checkers.

460
00:24:55,720 --> 00:24:59,520
So, and This is why I think
Spartan raising this money today

461
00:24:59,520 --> 00:25:01,240
and now having this cash in the
door.

462
00:25:01,680 --> 00:25:04,880
I wouldn't be surprised if
you're merely saying, well, if

463
00:25:04,880 --> 00:25:07,200
we, if we have a long term plan
of having Spartan in the

464
00:25:07,200 --> 00:25:09,800
portfolio, but we don't have an
intention of operating the

465
00:25:09,800 --> 00:25:12,600
Dalgaranga mill, we'd rather
send it all to checkers and

466
00:25:12,600 --> 00:25:16,280
possibly expand checkers.
Would they want Spartan to spend

467
00:25:16,280 --> 00:25:20,040
that capital now on Dalgaranga
if they don't intend to use it,

468
00:25:20,320 --> 00:25:25,520
or would they rather take them
now for the remaining 81% that

469
00:25:25,520 --> 00:25:27,960
they don't own?
They've got the cat, they've got

470
00:25:27,960 --> 00:25:31,040
extra, they've got another 220
cash on the balance that comes

471
00:25:31,040 --> 00:25:35,080
into the pro forma God, they've
got 400 out of their own that

472
00:25:35,080 --> 00:25:37,800
they've got plenty of cash to
build a mill at Rebecca should

473
00:25:37,800 --> 00:25:43,040
they choose so.
And then they just track it to

474
00:25:43,040 --> 00:25:46,560
checkers and expand that.
It makes sense that if that's

475
00:25:46,560 --> 00:25:50,040
their long term plan, I think
they'd do it now rather than.

476
00:25:50,440 --> 00:25:54,880
I see that tail is in is the
most likely like you know yeah

477
00:25:55,280 --> 00:25:58,680
big probability to happen not
AQ1 or Q2 next year is my cut

478
00:25:58,960 --> 00:26:02,160
instinct.
But I just think like the raise

479
00:26:02,160 --> 00:26:05,320
is a tactical thing in some ways
as well because your raise

480
00:26:05,320 --> 00:26:10,720
220,000,000 now it takes the
wind out of Remilius's argument

481
00:26:10,720 --> 00:26:14,000
that they would put forward,
which would be we solve your

482
00:26:14,000 --> 00:26:15,400
funding problem.
You don't have to dilute

483
00:26:15,400 --> 00:26:17,320
shareholders more to fund this
because you've now got our

484
00:26:17,320 --> 00:26:20,040
balance sheet.
So now can't, you know, well,

485
00:26:20,200 --> 00:26:22,200
they can't really say that now
because sponsor, no, we've got

486
00:26:22,200 --> 00:26:23,480
plenty of cash to pretty much
fund this.

487
00:26:23,480 --> 00:26:26,440
So yeah, so there's there's you
know, I think it's just a little

488
00:26:26,440 --> 00:26:29,000
bit of of gamesmanship to get to
the eventual outcome.

489
00:26:29,280 --> 00:26:32,000
Just hadn't, you know, I told
you the other day, sometimes you

490
00:26:32,000 --> 00:26:35,400
see deals pop up in relatively
like close proximity after an

491
00:26:35,400 --> 00:26:37,480
AGM approves more performance
rights.

492
00:26:37,760 --> 00:26:40,040
So people can kind of get a, you
know, a top up on things at best

493
00:26:40,040 --> 00:26:43,920
before a change of control and
remedies were supportive of the

494
00:26:43,920 --> 00:26:47,240
approval of some contested
performance rights of Spartan,

495
00:26:47,240 --> 00:26:49,840
which is, you know, a good
pathway to have to get a healthy

496
00:26:49,840 --> 00:26:50,840
relationship on a.
Friendly.

497
00:26:51,000 --> 00:26:54,160
Yeah, a friendly takeover just.
Goodbye some bloody mates, good

498
00:26:54,160 --> 00:26:56,680
to see everyone's getting along.
So I wouldn't, I wouldn't be

499
00:26:56,680 --> 00:26:58,720
surprised to see some progress
on that deal.

500
00:26:58,960 --> 00:27:01,560
Yeah, in the future, Maddie.
Well, and I don't think you look

501
00:27:01,560 --> 00:27:04,360
at what if you're going to weigh
up Karasu Dam and Rebecca versus

502
00:27:04,440 --> 00:27:07,800
Spartan.
What's Ramil is done Well, Penny

503
00:27:08,120 --> 00:27:14,200
Waddle Dam, they had the
Musgrave acquisition, Vivian,

504
00:27:14,600 --> 00:27:19,120
all high grade, not as big scale
mines, Karasu dams, not high

505
00:27:19,120 --> 00:27:21,720
grade Rebecca, right.
They've done well with pits as

506
00:27:21,720 --> 00:27:24,200
well, but they like underground
high grade gold mines.

507
00:27:24,200 --> 00:27:26,840
They spot that's that's spot and
through and through.

508
00:27:27,040 --> 00:27:31,680
So yes, I think that is going to
happen pretty bloody quick.

509
00:27:32,000 --> 00:27:35,640
I'm saying I don't think they're
going to buy a Karasu Dam thing

510
00:27:35,640 --> 00:27:39,400
to be too much shit loads.
It's a big buy.

511
00:27:39,400 --> 00:27:43,560
Could be 2 billion.
Let's go with two billion, yeah.

512
00:27:43,720 --> 00:27:45,240
Would Northern Star accept
script?

513
00:27:45,240 --> 00:27:48,200
They'd have to, I reckon, to get
that deal done, yeah.

514
00:27:48,640 --> 00:27:51,280
Yeah, but would Norman say like,
what's if they get Remelia's

515
00:27:51,280 --> 00:27:53,720
script, they'll just bloody
start dumping it, wouldn't they?

516
00:27:53,720 --> 00:27:55,400
Like I said, no interest keeping
it wouldn't.

517
00:27:55,800 --> 00:27:57,880
They they don't just dump
script.

518
00:27:58,080 --> 00:28:02,000
Not like over time, but.
Yeah, potentially, yeah, they

519
00:28:02,040 --> 00:28:03,200
might place it out or something
like that.

520
00:28:03,200 --> 00:28:06,880
But I, I think the like, like I
said yesterday, I don't think

521
00:28:06,880 --> 00:28:09,080
there's an intention to sell
Carousel Dam based on the way

522
00:28:09,080 --> 00:28:12,640
they've funded.
That would be great because you,

523
00:28:12,800 --> 00:28:16,400
you, you would have cash funded
some of that acquisition price

524
00:28:16,400 --> 00:28:18,280
if you knew you were getting
more cash in the door later from

525
00:28:18,480 --> 00:28:19,320
it.
Sell down of Carousel.

526
00:28:19,320 --> 00:28:20,760
Damn.
I think, I think they're

527
00:28:20,760 --> 00:28:23,240
signalling that that's not for
sale yet.

528
00:28:24,840 --> 00:28:27,800
We will say everything has a
price.

529
00:28:27,800 --> 00:28:32,240
Exactly.
Yeah that's what's going to

530
00:28:32,240 --> 00:28:35,400
happen.
I hope that bloody happens soon.

531
00:28:35,880 --> 00:28:38,240
Fucking it's just looks like
I've really thought about it.

532
00:28:38,560 --> 00:28:41,040
Anyway, go find a gold mine
tapes easier.

533
00:28:41,920 --> 00:28:45,920
Do you know if bloody Spartan
have chatted to CRE yet After

534
00:28:45,920 --> 00:28:47,680
all our call outs?
Have we been notified?

535
00:28:47,680 --> 00:28:49,600
I'd.
Be mad not to, right?

536
00:28:49,920 --> 00:28:51,880
Have Amelia's chatted to CRE
yet?

537
00:28:52,200 --> 00:28:54,040
I think I have actually, yeah.
Have they actually?

538
00:28:55,280 --> 00:28:58,480
I don't know.
Well, Zeppe and Lawson, if you

539
00:28:58,480 --> 00:29:00,800
are bloody, listen, if you want
me to stop talking about the

540
00:29:00,800 --> 00:29:05,160
both of you getting married, of
course Tari from CRE Insurance

541
00:29:05,480 --> 00:29:08,520
and broke a bloody policy for
you straight up.

542
00:29:08,600 --> 00:29:12,480
I will ease up on my speculation
talk if he's made that call.

543
00:29:12,640 --> 00:29:14,520
So what policies?
Could they get Maddie?

544
00:29:15,120 --> 00:29:17,880
Well, Adam's busy sorting out
all the cold policies I've

545
00:29:17,880 --> 00:29:20,560
raced.
Yeah, Tari's he's he's, he's

546
00:29:20,560 --> 00:29:23,360
already busy doing Hard Rock,
but he wants to get busier in

547
00:29:23,360 --> 00:29:26,120
the West, in Africa, in bloody
anywhere.

548
00:29:26,440 --> 00:29:30,080
He's he's your Hard Rock man.
So Tari in the Perth office

549
00:29:30,600 --> 00:29:33,480
mate, Fucking renewables
construction bloody business

550
00:29:33,480 --> 00:29:35,760
interruption.
Oh mate, home contents if you

551
00:29:35,760 --> 00:29:37,440
want it like they'll do
anything.

552
00:29:37,800 --> 00:29:40,400
Business interruption, why not
contents?

553
00:29:40,640 --> 00:29:42,240
Oh, you.
Never mind mind contents.

554
00:29:42,400 --> 00:29:45,640
Don't forget about Youi, it's
all CRE for me, someone said

555
00:29:45,640 --> 00:29:47,120
life.
Insurance the other day anyway.

556
00:29:49,160 --> 00:29:50,600
Not quite sure.
Yeah, you should get some of

557
00:29:50,600 --> 00:29:54,320
that right.
Revisiting the Northern Star to

558
00:29:54,320 --> 00:29:56,480
Grey deal one more time.
Why not?

559
00:29:57,200 --> 00:29:58,960
Yeah.
Oh, well, yeah, why not?

560
00:29:59,400 --> 00:30:03,120
I just wanted to point to a
phenomenon that happens when you

561
00:30:03,120 --> 00:30:04,280
know, OK, it's an old script
deal.

562
00:30:04,280 --> 00:30:08,560
So you can easily, easily back
out what the, what the relative

563
00:30:08,560 --> 00:30:11,480
kind of share prices are
implying about the proposed

564
00:30:11,480 --> 00:30:13,160
merger ratio.
Remember the merger ratio was

565
00:30:13,160 --> 00:30:16,520
like 1.19 Northern Star shares
per the ratio.

566
00:30:17,160 --> 00:30:18,880
So do you.
Reckon all these bloody ARB

567
00:30:18,880 --> 00:30:21,880
funds they've got like a fucking
screen gun that's got that's a

568
00:30:21,960 --> 00:30:23,920
live interactive merger ratio
thing.

569
00:30:23,960 --> 00:30:26,040
Totally 100%.
Now how do you get one of them?

570
00:30:26,040 --> 00:30:28,400
But wait, you can do that on
blood.

571
00:30:28,400 --> 00:30:29,840
I've made it here for you.
Yeah, I know.

572
00:30:29,880 --> 00:30:33,560
But Trading View odd is that?
Yeah, I can put in a formula.

573
00:30:34,160 --> 00:30:35,720
There you put.
There you go.

574
00:30:36,320 --> 00:30:40,480
Yeah, fucking so look, this is
what I've done.

575
00:30:40,480 --> 00:30:43,240
I've just gone like the grey
share price divided by another

576
00:30:43,240 --> 00:30:45,880
star share price, right?
And the blue line roughly

577
00:30:45,880 --> 00:30:50,080
speaking, is what the merger
ratio should be 1.19.

578
00:30:50,480 --> 00:30:55,320
Now what you should be seeing
here if in a typical deal where

579
00:30:55,320 --> 00:31:00,040
there's like, you know, no
interloper risk is it'll come in

580
00:31:00,040 --> 00:31:03,320
a little bit below, just a
little bit below that line is

581
00:31:03,320 --> 00:31:05,000
where it should sort of average
out at because.

582
00:31:05,520 --> 00:31:08,160
So where the end of that is?
Yeah, we're rough.

583
00:31:08,200 --> 00:31:12,160
Yeah, roughly there like a, you
know, plus or minus whatever the

584
00:31:12,160 --> 00:31:16,320
reason is the the merger in a,
in a rational world like you're

585
00:31:16,480 --> 00:31:19,560
a merger AB will take advantage
of when it goes sort of, you

586
00:31:19,560 --> 00:31:24,360
know sufficiently low because by
buying your target, shorting

587
00:31:24,440 --> 00:31:26,960
your acquire acquire in exact
proportions.

588
00:31:27,240 --> 00:31:31,360
And then there when there's a
greater than a risk free rate of

589
00:31:31,360 --> 00:31:34,440
return on that, on that until
estimated time of completion, if

590
00:31:34,440 --> 00:31:36,840
they think there's significant
like, you know, certainty of

591
00:31:36,840 --> 00:31:38,120
completion, that's what they'll
do.

592
00:31:38,120 --> 00:31:43,480
They'll capitalise on that.
What you can see here is it's

593
00:31:43,480 --> 00:31:45,520
it's trading, trading at the
terms.

594
00:31:45,640 --> 00:31:49,200
It's not, it's not incentivizing
their jobs to come to the table

595
00:31:49,200 --> 00:31:51,240
here.
That's trading at the terms.

596
00:31:51,520 --> 00:31:55,600
So that could be for a plethora
of reasons.

597
00:31:55,600 --> 00:31:59,520
There's a few different ones
that I could point to of why it

598
00:31:59,520 --> 00:32:03,400
would be trading at terms at the
moment. 1 is when like in

599
00:32:03,400 --> 00:32:06,360
relatively short, short
proximity after you get a deal

600
00:32:06,360 --> 00:32:10,560
announced, the short people who
were short degrade, they might

601
00:32:10,560 --> 00:32:12,640
come and just cover their short
at any price.

602
00:32:12,640 --> 00:32:15,280
So they'll kind of pay up a
little bit above what, you know,

603
00:32:15,280 --> 00:32:18,960
the intuitive intuitively things
should be doing just because

604
00:32:18,960 --> 00:32:22,480
they're covering at any price.
But like, I think it was only a

605
00:32:22,480 --> 00:32:24,240
couple percent short to go.
I don't think it was massively

606
00:32:24,240 --> 00:32:26,080
short.
And I don't know, like the

607
00:32:26,080 --> 00:32:28,200
volume looks a little bit, you
know, higher and it looks like

608
00:32:28,200 --> 00:32:30,560
it's it's trading at terms a bit
longer than you'd expect if it

609
00:32:30,560 --> 00:32:33,320
was just sort of short covering.
So there could be a little bit

610
00:32:33,320 --> 00:32:35,640
more to this.
And you know, if you kind of

611
00:32:35,640 --> 00:32:38,880
cast your mind back to, to other
deals that we've commented on in

612
00:32:38,880 --> 00:32:42,320
the past, ones that aren't
script deals, for example, you

613
00:32:42,320 --> 00:32:46,960
sometimes like, Remember,
Remember seeing like a a zua.

614
00:32:48,360 --> 00:32:50,800
I think it was, yeah, that was
like gonna be 380.

615
00:32:50,800 --> 00:32:52,640
But then we went down to like
3:30.

616
00:32:52,880 --> 00:32:54,440
Sorry, I got, I got mixed up
there.

617
00:32:54,440 --> 00:32:56,720
It was let's talk about like
remember line down when that

618
00:32:56,720 --> 00:33:00,040
traded all the way up to sort of
like 3 bucks, which was the

619
00:33:00,040 --> 00:33:03,600
potential offer on the table was
gonna be 3 bucks, but there's an

620
00:33:03,600 --> 00:33:05,160
unknown time to completion all
that sort of stuff.

621
00:33:05,160 --> 00:33:08,800
So in that case, yes, you had an
interloper and quotation marks

622
00:33:08,800 --> 00:33:11,840
was actually a disruptor Gina
sort of buying above term like

623
00:33:12,000 --> 00:33:14,360
above in terms because it should
have it should have been trading

624
00:33:14,360 --> 00:33:17,960
around like you know that 280 to
incentivize yeah, sort of you

625
00:33:17,960 --> 00:33:21,320
know people to even even lock
was because it was far less

626
00:33:21,320 --> 00:33:22,920
likely to complete.
There wasn't actually a scheme

627
00:33:22,920 --> 00:33:25,840
implementation date or anything
like that at that point or at

628
00:33:25,840 --> 00:33:28,160
all with line town that would
just yeah reveal bids.

629
00:33:28,160 --> 00:33:32,920
But in the in the case of of
here, like you should be like

630
00:33:33,000 --> 00:33:34,600
the discount should be
sufficiently large to

631
00:33:34,600 --> 00:33:36,120
incentivize measure apps to come
to the table.

632
00:33:36,120 --> 00:33:39,480
But it's not right.
So is there an interlope of

633
00:33:39,480 --> 00:33:41,680
buying a little bit above
similar to what we've seen in

634
00:33:41,680 --> 00:33:44,840
the past on some things?
I'll keep we keep breeding in

635
00:33:44,840 --> 00:33:49,840
the in in in the Australian
about a potential envelope for

636
00:33:49,840 --> 00:33:52,680
de Grey being a Nico Eagle.
And I'm going to put my

637
00:33:52,680 --> 00:33:55,680
unqualified opinion out there.
I don't think AG Nico comes into

638
00:33:55,680 --> 00:34:00,040
the picture at all on this one.
Maybe I'll be proven wrong in

639
00:34:00,040 --> 00:34:02,680
time, but I'll just try and
frame this chat a little to the

640
00:34:02,680 --> 00:34:04,680
Aussie listeners that aren't,
you know, very familiar with

641
00:34:04,920 --> 00:34:07,640
Agnico.
Agnico Eagle is the best gold

642
00:34:07,640 --> 00:34:10,679
miner in the world, period.
I'll make that statement with

643
00:34:10,679 --> 00:34:12,600
very little knowledge of how
mining works.

644
00:34:12,600 --> 00:34:15,960
You guys know that, but lots of
knowledge of how cash flow works

645
00:34:15,960 --> 00:34:19,520
and Agnico has controlled costs
when every other miner has had

646
00:34:19,520 --> 00:34:21,840
cost creep.
This is the chart of what I

647
00:34:22,000 --> 00:34:25,000
mean.
Agnico has outperformed the gold

648
00:34:25,000 --> 00:34:26,320
index.
It has outperformed the gold

649
00:34:26,320 --> 00:34:28,360
price.
It has even outperformed the S&P

650
00:34:28,360 --> 00:34:30,760
500.
For gold miner to do that over

651
00:34:30,760 --> 00:34:34,280
decades is a freak of nature.
When you just look at the, the

652
00:34:34,280 --> 00:34:37,920
peer group who you know, it's
like Newmont, the share price is

653
00:34:37,920 --> 00:34:41,719
the same as it was 20 years ago.
You know, like everyone,

654
00:34:41,760 --> 00:34:44,880
everyone else just fucks up.
And Agnico have just like

655
00:34:44,920 --> 00:34:47,600
delivered and controlled costs.
It's a, it's a, it's, it's

656
00:34:47,600 --> 00:34:49,560
freaking crazy how they've done
that.

657
00:34:49,560 --> 00:34:54,280
Is that cost per oz?
Yeah, it's that, that what

658
00:34:54,280 --> 00:34:56,080
you're looking at there is per
is per.

659
00:34:56,239 --> 00:34:57,480
Yeah.
That's just like your, yeah,

660
00:34:57,480 --> 00:35:00,920
your, your, your, your costs,
like, you know, Yeah, per Oz.

661
00:35:00,960 --> 00:35:03,400
So, yeah, yeah, so, so it's a
function they've obviously.

662
00:35:03,920 --> 00:35:06,000
That's a gross margin thing.
Yeah, yeah, yeah.

663
00:35:06,000 --> 00:35:08,800
So.
They've got that's a testament

664
00:35:08,800 --> 00:35:12,240
to the assets they've acquired,
developed and everything, the

665
00:35:12,240 --> 00:35:14,000
quality.
It's a testament to how they

666
00:35:14,200 --> 00:35:15,720
think about capital allocation.
Yeah.

667
00:35:16,080 --> 00:35:18,560
And like assets feature into
that.

668
00:35:18,560 --> 00:35:21,800
This is a 66 year old strategy
that they've been employing

669
00:35:22,080 --> 00:35:26,440
consistently for six decades.
It's not it's not like a a fluke

670
00:35:26,440 --> 00:35:28,360
that they just sort of stumbled
on the right assets.

671
00:35:28,360 --> 00:35:30,880
It's how they think about
deploying their capital.

672
00:35:30,880 --> 00:35:33,920
And if I would kind of summarise
when, when they talk about it,

673
00:35:33,920 --> 00:35:37,840
it sounds so simple and it's not
I know that, but it sounds so

674
00:35:37,880 --> 00:35:40,160
simple.
I'll, I'll play a couple of

675
00:35:40,160 --> 00:35:41,040
clips.
But if I were to sort of

676
00:35:41,040 --> 00:35:44,920
summarise the the two things
that that really come to mind

677
00:35:44,920 --> 00:35:47,320
that hone in how this company
thinks differently about capital

678
00:35:47,320 --> 00:35:49,440
allocation to their to their
peers over a long period of

679
00:35:49,440 --> 00:35:51,640
time.
One, the first one is this

680
00:35:51,640 --> 00:35:54,520
intense focus on per share
metrics.

681
00:35:54,720 --> 00:35:56,920
Return on capital is a per share
metric.

682
00:35:57,800 --> 00:36:00,440
This is, are we creating value
for them and that's always

683
00:36:00,520 --> 00:36:03,520
matters to our shareholders is
are we creating value for them

684
00:36:03,520 --> 00:36:05,720
and that's always on a per share
basis.

685
00:36:06,360 --> 00:36:10,280
I see Dave Smith here.
If he said per share basis 100

686
00:36:10,280 --> 00:36:12,800
times in an investor meeting, he
still had 20 to go.

687
00:36:14,320 --> 00:36:18,640
We've on a per share basis,
we've gone gold production an

688
00:36:18,640 --> 00:36:20,720
increase of 2 1/2 times per
share.

689
00:36:20,720 --> 00:36:24,120
That's hard.
Increasing production is one

690
00:36:24,120 --> 00:36:26,760
thing, increasing it per share,
that's hard.

691
00:36:27,200 --> 00:36:29,360
And doing it over that period of
time is impressive.

692
00:36:30,520 --> 00:36:33,880
And in that same period of time,
our dividends, which is payment

693
00:36:33,880 --> 00:36:36,400
per share has gone up by a
factor of more than 50.

694
00:36:38,560 --> 00:36:40,800
And then the second point I
wanted to draw your attention to

695
00:36:40,840 --> 00:36:45,760
was they avoid doing what
everyone else has done in like

696
00:36:45,760 --> 00:36:49,440
over time, as as gold price goes
up, people lower their cut off

697
00:36:49,440 --> 00:36:51,600
grades, as you know, as it goes
higher.

698
00:36:51,680 --> 00:36:55,320
And that's how they, that's how
AG Nico has captured more margin

699
00:36:55,320 --> 00:36:57,200
over time.
Instead of lowering the cut off

700
00:36:57,200 --> 00:37:01,640
grades, they've been like very,
very thoughtful about retaining

701
00:37:01,760 --> 00:37:03,840
the cut off grades they have
because it lets them focus on

702
00:37:03,840 --> 00:37:07,920
the highest grade Oz sending the
right tonnes to the mill and

703
00:37:07,920 --> 00:37:10,000
have the most margin on those
Oz.

704
00:37:10,000 --> 00:37:12,880
Kind of how when you would talk
about like, it reminds me a

705
00:37:12,880 --> 00:37:15,480
little bit of the way you would
talk about, you know, Silver

706
00:37:15,480 --> 00:37:18,880
Lake and they're like it's, you
know, always margin every Oz,

707
00:37:19,040 --> 00:37:21,880
all that sort of stuff.
Yeah, yeah, that's why they went

708
00:37:21,880 --> 00:37:24,520
against the grind and single
boomed and mined things a bit

709
00:37:24,520 --> 00:37:27,400
slower, but it was all in the
aim of control and dilution for

710
00:37:27,400 --> 00:37:29,360
an extremely narrow ore body,
yeah.

711
00:37:29,560 --> 00:37:33,520
Yeah.
When gold spiked, a lot of

712
00:37:33,520 --> 00:37:37,520
companies back then reduced
their cut off grade so that they

713
00:37:37,520 --> 00:37:39,720
could show expansion.
The big, the big push at the

714
00:37:39,720 --> 00:37:44,040
time, the big pressure on
executives was to increase

715
00:37:44,040 --> 00:37:46,320
production with the increased
reserves, etcetera.

716
00:37:46,320 --> 00:37:49,240
So they lowered their cut off
grade, costs went up.

717
00:37:49,560 --> 00:37:53,040
The margins weren't captured
because gold went up and then so

718
00:37:53,040 --> 00:37:55,480
did costs.
And if the margins aren't

719
00:37:55,480 --> 00:37:59,080
captured, then your share price
doesn't go up and gold equities

720
00:37:59,080 --> 00:38:00,240
underperformed.
I mean, that's an

721
00:38:00,240 --> 00:38:03,240
oversimplification.
So that was a big part of what

722
00:38:03,240 --> 00:38:08,880
happened.
So I, I, I wanted to play that

723
00:38:08,880 --> 00:38:10,920
because I bring it all up.
You know, Agnico, they're the

724
00:38:10,920 --> 00:38:14,760
best at capital allocation.
They've also to your point

725
00:38:14,760 --> 00:38:16,600
earlier, Maddie, they've,
they've had really good success

726
00:38:16,600 --> 00:38:18,480
with the drill bit.
They've had, you know, they've,

727
00:38:18,560 --> 00:38:21,760
they've picked assets that have
great capability to, to add

728
00:38:21,760 --> 00:38:24,280
value via the drill bit and
they've had discoveries, you

729
00:38:24,280 --> 00:38:26,160
know where their existing assets
are.

730
00:38:26,760 --> 00:38:28,840
Did that with Kirkland.
Like did they?

731
00:38:29,760 --> 00:38:31,560
Merge with, merge with Kirkland,
yeah.

732
00:38:31,560 --> 00:38:33,160
Yeah.
Did Kirkland have other assets

733
00:38:33,160 --> 00:38:35,560
other than Fosterville?
Yeah, yeah, yeah.

734
00:38:35,800 --> 00:38:38,640
So that was all that Foster.
That was a fucking phenomenal

735
00:38:39,160 --> 00:38:41,120
all body, that one.
Yeah.

736
00:38:41,120 --> 00:38:43,440
And they're like, you know, we
talk about, you know, how it's

737
00:38:43,480 --> 00:38:45,200
hard to mine in North America
and all that.

738
00:38:45,200 --> 00:38:47,800
They've they've friggin mined an
underground in the Abbottibi

739
00:38:47,800 --> 00:38:49,560
belt and making shit loads of
cash.

740
00:38:49,560 --> 00:38:51,000
That's where they have amazing
edges.

741
00:38:51,000 --> 00:38:52,840
Yeah.
Abbottibi is like a phenomenal,

742
00:38:53,000 --> 00:38:58,760
phenomenal location for them.
So, so absent some bizarre small

743
00:38:58,760 --> 00:39:02,160
bits that they've got in some
dog based metal stocks, Agnico,

744
00:39:02,200 --> 00:39:05,800
a phenomenal capital allocation,
look at look at Northern Star

745
00:39:06,760 --> 00:39:11,280
today, they're down another 3%.
So that's down nearly 9% since

746
00:39:11,280 --> 00:39:12,760
the deal was announced
yesterday.

747
00:39:12,760 --> 00:39:15,320
And the share price is down
because the market doesn't

748
00:39:15,320 --> 00:39:17,240
believe it is per share
accretive.

749
00:39:18,320 --> 00:39:20,560
I'm not making this up.
Here's the the research analyst

750
00:39:20,560 --> 00:39:24,000
City downgrade Northern Star
from Biden neutral target price

751
00:39:24,000 --> 00:39:26,640
lowers by $1.30 based on EPS
dilution.

752
00:39:26,640 --> 00:39:30,000
NAV dilution is $0.55 per share.
Morgan Stanley, we remain

753
00:39:30,000 --> 00:39:31,360
underway.
We question the size of the

754
00:39:31,360 --> 00:39:34,680
premium given no accretion until
FY20.

755
00:39:34,680 --> 00:39:37,880
Nine, Bank of America on our
assumptions, the acquisition is

756
00:39:37,880 --> 00:39:42,360
slightly valuation dilutive with
our HEMI valuation by 4%.

757
00:39:42,720 --> 00:39:46,040
My my point is, if the street
thinks 5 billion is too much for

758
00:39:46,040 --> 00:39:48,200
Northern Star, do you think the
market would support Agnico who

759
00:39:48,200 --> 00:39:52,360
don't have an operating team in
WA to pay more than Northern

760
00:39:52,360 --> 00:39:54,720
Star when it's their home home
ground?

761
00:39:56,200 --> 00:39:57,280
Probably not.
I believe you.

762
00:39:57,760 --> 00:39:59,880
You've convinced me with that
narrative.

763
00:39:59,880 --> 00:40:02,600
I like that, Yeah.
So there there are certain

764
00:40:02,600 --> 00:40:06,160
miners you put money on to be
irrational who would pay up

765
00:40:06,200 --> 00:40:08,840
because you know they've got the
wrong incentives in mind.

766
00:40:09,040 --> 00:40:12,120
Or certain miners that you have
a history of doing dumb things,

767
00:40:12,360 --> 00:40:14,960
right.
All I'm saying is Agnico's DNA

768
00:40:14,960 --> 00:40:19,080
is not to be one of them, but
but bringing it, you know, all

769
00:40:19,080 --> 00:40:22,040
back to the the share price of
the stocks when when you're

770
00:40:22,040 --> 00:40:24,200
looking at that trading at
terms, What could that be?

771
00:40:24,200 --> 00:40:27,280
1 theory is simple.
It's just short sellers kind of

772
00:40:27,280 --> 00:40:29,720
covering at any price.
Like I said, another another

773
00:40:29,720 --> 00:40:30,480
theory.
Simple.

774
00:40:31,960 --> 00:40:34,920
An interlope of buying, buying a
blocking stake, maybe.

775
00:40:36,800 --> 00:40:39,160
Yeah, like I said, I don't if
so, I don't think that's like a

776
00:40:39,240 --> 00:40:43,360
third theory Gold Rd buying a
bit more on market to beef their

777
00:40:43,360 --> 00:40:47,600
stake up a bit so that they can
try fish out there a full 20%

778
00:40:47,680 --> 00:40:51,200
instead of a, you know, 17.3%
which requires a

779
00:40:51,200 --> 00:40:55,160
disproportionately large amount
of voter turn out to offset it.

780
00:40:55,560 --> 00:40:57,560
That's an interesting theory as
well.

781
00:40:58,440 --> 00:41:02,760
Maybe not discount it and
hypothetically right if I'm

782
00:41:02,760 --> 00:41:05,640
wrong and AG Nico do have
interest or anyone, any

783
00:41:05,640 --> 00:41:08,320
interloper has interest.
They don't actually have to.

784
00:41:09,440 --> 00:41:13,560
They don't actually have to do
to then stamp up more money.

785
00:41:13,560 --> 00:41:15,720
They could actually just yeah,
buy buy gold roads pretty

786
00:41:15,720 --> 00:41:18,880
significant 17.3% and a little
bit more than you've got 20%.

787
00:41:18,880 --> 00:41:22,440
Then it is kind of hard to get a
deal done and things could could

788
00:41:22,440 --> 00:41:23,960
potentially like fall over as
well.

789
00:41:23,960 --> 00:41:27,280
So there's and then, you know,
you might have a theory or I

790
00:41:27,280 --> 00:41:29,560
could pick up the rest later at
a lower price.

791
00:41:30,360 --> 00:41:34,440
But you know, I just I just
think net net on balance, don't

792
00:41:34,440 --> 00:41:37,640
think Agnico is coming.
Think think Gold Rd will

793
00:41:37,640 --> 00:41:40,480
probably just monetize their
their stake in due course and

794
00:41:41,520 --> 00:41:42,520
see what see what they do with
it.

795
00:41:42,520 --> 00:41:45,360
Maybe they bid, yeah, bid, bid,
bid for something else or or

796
00:41:45,360 --> 00:41:46,680
not.
But yeah, what do you guys

797
00:41:46,720 --> 00:41:49,960
think?
Jayzod, I don't think fuck me

798
00:41:49,960 --> 00:41:52,760
theory that Northern Star and
AGNACA are going to merge is out

799
00:41:52,760 --> 00:41:53,880
the window now.
It could.

800
00:41:54,320 --> 00:41:56,160
I mean, Agni could like WA,
don't get me wrong.

801
00:41:56,160 --> 00:41:58,400
They they like, they like
regions where they've got

802
00:41:58,560 --> 00:42:00,720
they've literally they've
explicitly mentioned WA in the

803
00:42:00,720 --> 00:42:04,240
past.
Yeah, I don't.

804
00:42:05,000 --> 00:42:07,880
Yeah.
Don't but you think of future if

805
00:42:07,880 --> 00:42:12,960
they if like I'll price long
term consensus is correct and we

806
00:42:12,960 --> 00:42:17,000
are going to retreat back to
2100 And then Northern Star have

807
00:42:17,000 --> 00:42:21,120
got these big assets with you
know still if they've got CapEx,

808
00:42:21,120 --> 00:42:24,520
still got CapEx to deploy there
and they're still ramping these

809
00:42:24,520 --> 00:42:26,400
things up.
So you've got 27,000,000 tonne

810
00:42:26,400 --> 00:42:29,720
of bloody cow and then 10
million tonne of degree and

811
00:42:30,080 --> 00:42:33,880
process depress It might become
attractive to them, yeah,

812
00:42:33,880 --> 00:42:36,840
counter cyclically, who knows.
I sort of think that they're

813
00:42:37,040 --> 00:42:38,840
like, you know, they've got gold
fields.

814
00:42:38,840 --> 00:42:41,920
Australia portfolio is more more
of an agnic style of play than a

815
00:42:42,560 --> 00:42:45,960
than the Northern Star with plus
de Grey sort of portfolio

816
00:42:46,040 --> 00:42:49,080
personally.
But yeah.

817
00:42:49,320 --> 00:42:53,760
Yeah.
As As for the De Grey takeover

818
00:42:53,760 --> 00:42:56,280
and you know the question on
whether we're seeing Interlope,

819
00:42:56,280 --> 00:42:59,040
I think I understand by what
what we all said sort of

820
00:42:59,120 --> 00:43:02,200
yesterday and again you've kind
of reinforced it today.

821
00:43:02,480 --> 00:43:07,120
Find it hard to imagine somebody
can make the numbers sort of

822
00:43:07,320 --> 00:43:09,760
work better.
I think they'd be running that

823
00:43:09,760 --> 00:43:13,520
margin of safety mighty thin,
and I suspect we won't see

824
00:43:13,520 --> 00:43:15,520
anyone come forward.
What do you think?

825
00:43:15,520 --> 00:43:20,680
Is there anything beyond after
24 hours later like Northern

826
00:43:20,680 --> 00:43:24,920
Star strategy to do this?
Like is there anything we didn't

827
00:43:24,920 --> 00:43:26,840
discuss?
Like what what are the benefits?

828
00:43:26,840 --> 00:43:33,720
Is there doing this being the
biggest part substantially

829
00:43:33,720 --> 00:43:37,680
biggest gold miner on the ISX in
Australia, but I don't know is

830
00:43:37,680 --> 00:43:42,040
there bloody power in the
industry for recruitment and and

831
00:43:42,040 --> 00:43:45,480
is there do you think there's
any indirect benefits of doing

832
00:43:45,480 --> 00:43:48,960
this for the long term success
of the business that we didn't

833
00:43:48,960 --> 00:43:52,080
discuss?
I think when you look at, say a

834
00:43:53,000 --> 00:43:56,080
pie chart of what all the big
factors are, you know, making

835
00:43:56,080 --> 00:43:59,280
money out of Hemi is 90 plus
percent of that.

836
00:43:59,280 --> 00:44:03,920
Then the, you know, it's you
can't be pulling at any of those

837
00:44:03,920 --> 00:44:06,080
other marginal ones to try and
make a deal stack up.

838
00:44:06,080 --> 00:44:08,520
Then you're, you know, you're
really trying to convince

839
00:44:08,520 --> 00:44:10,880
yourself.
Maximal leverage got yeah to

840
00:44:10,880 --> 00:44:14,560
gold price Yeah, there's.
There must be some.

841
00:44:14,560 --> 00:44:17,200
There must be some upside to
that DFS like.

842
00:44:17,760 --> 00:44:19,440
Yeah.
I would imagine.

843
00:44:20,040 --> 00:44:23,920
It's reframe it another way,
which major miners in Australia

844
00:44:23,920 --> 00:44:27,760
have a growth project that is
more than 100,000 ounces?

845
00:44:29,200 --> 00:44:32,360
None.
Well, you know, Northern Star

846
00:44:32,360 --> 00:44:36,760
paid up to get the only thing
that is a 500,000 oz grass

847
00:44:36,760 --> 00:44:39,800
project.
WA It's, I just think it's the

848
00:44:39,800 --> 00:44:43,080
rationales like that, but the
yeah, there's there's a risk and

849
00:44:43,080 --> 00:44:46,840
that's why it stands up 9%.
Is that does that measure ratio

850
00:44:46,840 --> 00:44:50,480
tick up and down like say the
market say if the market

851
00:44:50,480 --> 00:44:53,880
initially people are thinking
they've overreacted to Northern

852
00:44:53,880 --> 00:44:57,280
* and then they might trend back
up in the days the.

853
00:44:57,280 --> 00:44:59,040
Tucha Track.
Yeah, and then degrade.

854
00:44:59,040 --> 00:45:01,720
That's why I follow it.
Yeah, and to the line.

855
00:45:01,760 --> 00:45:04,520
Yeah, but they set the their
feeling towards Northern Star

856
00:45:04,520 --> 00:45:06,760
dictate the bloody where that
trades in it's.

857
00:45:06,760 --> 00:45:09,640
Kind of like Paladin fission,
you know, like 2GO hand in hand.

858
00:45:09,760 --> 00:45:12,040
But it's what they think about
Paladin more than fission.

859
00:45:13,000 --> 00:45:15,400
Yeah, yeah, yeah.
Yes, with confidence the deal

860
00:45:15,400 --> 00:45:18,920
will go through, yeah.
Yeah, yeah, there we go.

861
00:45:21,440 --> 00:45:24,320
Greatlands made its way in.
Oh, sorry, yeah, I just, I just

862
00:45:24,320 --> 00:45:26,520
wanted to go Greatland.
I think what you summed up

863
00:45:26,520 --> 00:45:28,440
before about that value of that
Greatland deal makes sense.

864
00:45:28,440 --> 00:45:30,520
And that's like a, you know, an
interesting reflection and on

865
00:45:30,520 --> 00:45:33,360
the value of Spartan as well,
right, Like big scarcity of

866
00:45:33,360 --> 00:45:39,040
these growth assets out there,
you know, to grey despite it's

867
00:45:39,320 --> 00:45:43,080
it's it's it's risk because it's
gotten full value in a deal.

868
00:45:43,080 --> 00:45:45,600
What does that mean for Spartan?
I also think, you know, what

869
00:45:45,600 --> 00:45:47,600
does that mean for the value of
great than when the lease on the

870
00:45:47,600 --> 00:45:52,880
ASX, like when it gets price
discovery, just just the yeah,

871
00:45:52,880 --> 00:45:55,600
the deal looks better and better
every day based on what other

872
00:45:55,600 --> 00:45:59,760
deals come come out.
And then also what about anti

873
00:45:59,760 --> 00:46:04,360
bar, which could could beef out
the pro forma of that whole

874
00:46:04,360 --> 00:46:06,080
thing nicely as well.
That's had a great run.

875
00:46:06,080 --> 00:46:08,040
It's pulled back a bit but today
I saw a director just bought

876
00:46:08,040 --> 00:46:11,560
156,000 bucks on the market 160.
5.

877
00:46:11,560 --> 00:46:15,760
Sorry, 165,000 Walmart.
So yeah, I don't know, you

878
00:46:15,760 --> 00:46:17,800
could, you could paint a picture
that that all kind of comes

879
00:46:17,800 --> 00:46:21,160
together and the profile and the
whole, the whole thing looks

880
00:46:21,160 --> 00:46:22,560
like a pretty interesting
vehicle.

881
00:46:23,240 --> 00:46:25,400
Do you know how much bloody
odour free resin you could buy

882
00:46:25,400 --> 00:46:28,520
for 165 grand of Sandy ground
support?

883
00:46:29,520 --> 00:46:33,080
Fucking hundreds of kilos.
Just boxes of the shit.

884
00:46:33,720 --> 00:46:34,800
Under.
Free resin?

885
00:46:34,800 --> 00:46:37,000
I had a free resin, mate.
You can't put a price on

886
00:46:37,000 --> 00:46:38,880
protecting the health of
underground miners.

887
00:46:39,080 --> 00:46:41,280
Did you see Tucker and Dharma
the other day?

888
00:46:41,280 --> 00:46:43,560
Like those little twitches they
added every now and then?

889
00:46:43,760 --> 00:46:45,480
That's from sniffing too much
resin.

890
00:46:46,000 --> 00:46:48,680
That's bloody.
That's been taken out of the

891
00:46:48,680 --> 00:46:51,120
equation by the same big ground
support division.

892
00:46:51,200 --> 00:46:53,600
Bloody you.
You won't have to worry about

893
00:46:53,840 --> 00:46:58,240
getting high as a card anymore.
The resin just smells like a

894
00:46:58,240 --> 00:46:59,920
sponge cake.
A sponge cake?

895
00:47:00,520 --> 00:47:01,880
What does a sponge cake smell
like?

896
00:47:02,120 --> 00:47:06,000
Nothing, but it's bloody good,
just like the same big resin.

897
00:47:06,000 --> 00:47:08,400
So Maddie, back in your your
jumbo days, if the the mine

898
00:47:08,400 --> 00:47:13,720
manager or whoever does a a big
purchase like this, is that just

899
00:47:13,720 --> 00:47:15,400
a a Christmas treat for all the
workers?

900
00:47:15,400 --> 00:47:16,800
Right.
And do you know what the colour

901
00:47:16,800 --> 00:47:18,760
of the resin is now that you
mention it?

902
00:47:19,960 --> 00:47:21,760
Red and green.
Red and green.

903
00:47:21,760 --> 00:47:23,840
You've got the green end and the
red and the fast end and the

904
00:47:23,840 --> 00:47:25,360
slow end.
That's no word.

905
00:47:25,360 --> 00:47:27,440
It's a Christmas gift.
It's a bloody Christmas.

906
00:47:27,440 --> 00:47:28,760
I assume they're still that
colour.

907
00:47:28,960 --> 00:47:30,400
I think they're, oh, no, maybe
they're red.

908
00:47:30,400 --> 00:47:32,640
And yeah, no, I'm pretty sure
they were.

909
00:47:33,160 --> 00:47:36,000
But the point is, look after
your employees and get an order

910
00:47:36,000 --> 00:47:37,840
in before Christmas.
Just like Sam Victor looking

911
00:47:37,840 --> 00:47:41,000
after Derek Heard under the new
banner, they are look after

912
00:47:41,000 --> 00:47:42,560
Derek.
He's a treasure.

913
00:47:42,600 --> 00:47:44,600
Thanks for nurturing him.
Go Sam Victoria.

914
00:47:44,640 --> 00:47:47,320
That's it, right?
This is what's going on in the

915
00:47:47,320 --> 00:47:49,160
world of Australian Pacific
Coal.

916
00:47:49,560 --> 00:47:53,360
What a what a joint.
This is a juicy, juicy, juicy

917
00:47:53,360 --> 00:47:56,640
story in we're going to the
hunter the the sort of heartland

918
00:47:56,640 --> 00:47:58,760
of thermal coal mining for this
one.

919
00:47:58,760 --> 00:48:01,360
And this story is kind of not
not fully formed.

920
00:48:01,360 --> 00:48:04,960
There is a long, long history
tree with some super interesting

921
00:48:04,960 --> 00:48:08,240
characters.
And I'm sure you know, I'm going

922
00:48:08,280 --> 00:48:10,960
to talk about the the bit of the
iceberg that sticks at the top.

923
00:48:10,960 --> 00:48:14,320
And there's this whole sort of
90% of the story that, you know,

924
00:48:14,320 --> 00:48:17,960
the public aren't even aware of,
given the sort of dynamics

925
00:48:17,960 --> 00:48:20,520
people trying to buy the
company, buy the mine and all

926
00:48:20,520 --> 00:48:22,440
these sorts of things.
So I'm sure there's people that

927
00:48:23,160 --> 00:48:25,200
will know that I'm going to get
stuff wrong, but I'm going to go

928
00:48:25,200 --> 00:48:27,040
through it anyway and talk about
it because it's really

929
00:48:27,040 --> 00:48:30,680
interesting.
So Dart Brook is like I said in

930
00:48:30,680 --> 00:48:33,640
the Hunter, this was a mine that
was owned by Anglo back in the

931
00:48:33,640 --> 00:48:34,800
day.
They put it on care and

932
00:48:34,800 --> 00:48:39,800
maintenance in late 2006, turned
it off 2007.

933
00:48:40,080 --> 00:48:43,120
So 18 ish years.
It's it's gone unmined until

934
00:48:43,600 --> 00:48:46,320
very recently.
So Australian Pacific coal have

935
00:48:46,640 --> 00:48:50,200
recently started mining.
They they're in AJV there.

936
00:48:50,200 --> 00:48:52,920
They're not the ones operating
it, which I'll kind of get into,

937
00:48:53,600 --> 00:48:56,320
but.
For I've got 70% economic

938
00:48:56,320 --> 00:49:00,200
interest in it and that's right.
Yeah, a 20% owner of the JV

939
00:49:00,200 --> 00:49:02,320
actually is the operator.
Yes, Tetra.

940
00:49:02,320 --> 00:49:06,080
Yeah, Yeah, that's right.
So there's an interesting

941
00:49:06,080 --> 00:49:08,680
narrative since coal prices
kicked up and even, to be

942
00:49:08,680 --> 00:49:11,640
honest, before that in 2015,
sixteen people try to buy this

943
00:49:11,640 --> 00:49:14,920
thing, Nathan Tinkler being one
of them, try to get it going

944
00:49:14,920 --> 00:49:16,840
again.
Because I saw this sort of as a

945
00:49:17,760 --> 00:49:21,440
depressed ass, an asset in a
depressed market to pick up on

946
00:49:21,440 --> 00:49:24,920
the cheap and, you know, try and
make a bit of cash off on the

947
00:49:24,920 --> 00:49:28,000
wave of the, you know, commodity
upcycle again, lots.

948
00:49:28,000 --> 00:49:30,200
Of latent infrastructure it
needs to be reefer but there's

949
00:49:30,680 --> 00:49:33,400
an old wash plant there that.
Yeah, I mean, look at the map.

950
00:49:33,400 --> 00:49:38,360
It is, you know, there are huge
operations within, you know,

951
00:49:38,360 --> 00:49:40,880
almost the sort of stone's throw
all around it big, you know,

952
00:49:41,280 --> 00:49:44,080
Mount Arthur and a whole bunch
of other big, big, big

953
00:49:44,080 --> 00:49:47,920
operations owned by the majors
like Glencore BHB and the sort

954
00:49:47,920 --> 00:49:48,960
of like.
So I.

955
00:49:49,040 --> 00:49:50,840
Think it's also like wine region
right?

956
00:49:50,840 --> 00:49:52,320
The hunter like it's great wine
region.

957
00:49:52,320 --> 00:49:56,320
I'm pretty sure this is the one
where it's Malcolm Turnbull owns

958
00:49:56,320 --> 00:50:00,200
the the farm next door and it's
it's like protested so.

959
00:50:00,200 --> 00:50:03,080
I remember seeing signs up all
through there because that's how

960
00:50:03,080 --> 00:50:05,400
I used to drive from Imberel to
Sydney through that way

961
00:50:05,440 --> 00:50:08,720
sometimes those signs up and
bloody everything.

962
00:50:08,760 --> 00:50:10,800
I had, I had a good chat with
the mate who went to a wedding

963
00:50:10,800 --> 00:50:13,040
up here, you know, a couple of
months back.

964
00:50:13,440 --> 00:50:15,600
I said, oh, you go and see some
sort of thermal coal mines here

965
00:50:15,600 --> 00:50:17,520
and there.
No, no, no wineries and stuff.

966
00:50:17,520 --> 00:50:19,160
Didn't even know there was any
thermal coal mines.

967
00:50:19,160 --> 00:50:22,240
Are you bloody kidding me?
There's 200 million tonnes of

968
00:50:22,720 --> 00:50:26,040
coal gets trained through to to
the port, yeah, from here so.

969
00:50:26,200 --> 00:50:29,280
You and you literally drive past
them, but the road goes in

970
00:50:29,280 --> 00:50:32,520
between the mines and there's
freaking drag lines and shit

971
00:50:32,520 --> 00:50:33,960
everywhere.
Some of these people you can't

972
00:50:33,960 --> 00:50:35,400
miss.
You can't miss.

973
00:50:35,640 --> 00:50:37,600
Them, that's exactly what I
thought, so you know.

974
00:50:37,720 --> 00:50:39,120
You know the coal gets there,
right?

975
00:50:39,440 --> 00:50:43,360
So that's like the like the
millions and millions of years

976
00:50:43,360 --> 00:50:46,760
of decay of like the like the
trees and all that sort of stuff

977
00:50:46,760 --> 00:50:48,840
that yeah, it is.
That's like the fact that this

978
00:50:48,880 --> 00:50:51,360
beautiful region is in some ways
why the coal gets there in the

979
00:50:51,360 --> 00:50:54,080
1st place, I think.
The Pete Pete is the worst

980
00:50:54,080 --> 00:50:55,600
swamps.
Absolutely.

981
00:50:55,600 --> 00:50:59,200
So this what we're talking about
underground mine here, steady

982
00:50:59,200 --> 00:51:01,800
state would be 2.4 million
tonnes per annum within sort of

983
00:51:01,800 --> 00:51:03,240
two years.
They kind of want to get there.

984
00:51:03,480 --> 00:51:06,680
They're estimating an 80 ish
percent plus yield that they'll

985
00:51:06,680 --> 00:51:09,800
get FoB.
They quoted under 100 bucks a

986
00:51:09,800 --> 00:51:13,040
tonne and you know, for, for
reference, the benchmark which

987
00:51:13,040 --> 00:51:15,800
they're sort of selling against
or hoping to sell against, we'll

988
00:51:15,800 --> 00:51:18,760
see what the relativity that
they get is, is trading at about

989
00:51:18,760 --> 00:51:22,080
135 bucks.
And you can, yeah, just see on a

990
00:51:22,080 --> 00:51:25,320
map there where it kind of sits.
So the timeline has slipped.

991
00:51:25,320 --> 00:51:27,520
They wanted this to be producing
late last year.

992
00:51:27,800 --> 00:51:31,480
You know, we're at now late 24
and it's just slowly getting

993
00:51:31,480 --> 00:51:32,880
there.
They haven't actually made any

994
00:51:32,960 --> 00:51:36,240
sales just yet.
They said first coal sales are

995
00:51:36,600 --> 00:51:40,040
imminent, but they've got a few
other things they need to sort

996
00:51:40,040 --> 00:51:41,640
of click into gear.
Trev, you mentioned the wash

997
00:51:41,640 --> 00:51:44,840
plant, they need to refurb that.
That hasn't actually started yet

998
00:51:44,840 --> 00:51:49,120
in Q1 of calendar year 25.
They want to do that.

999
00:51:49,120 --> 00:51:51,560
So right now, essentially,
they're not going to be making

1000
00:51:51,560 --> 00:51:53,680
money on on what they're
selling.

1001
00:51:53,680 --> 00:51:56,680
No, which is they'll be selling
another unwashed, yeah, unwashed

1002
00:51:56,680 --> 00:52:00,920
call off the ROM, which is and
and they don't have the rail

1003
00:52:00,920 --> 00:52:03,680
agreement yet, right?
Yes, they need port and rail,

1004
00:52:03,800 --> 00:52:06,120
very, very important things.
So they need to get.

1005
00:52:08,400 --> 00:52:10,160
There you.
Are they've got a production

1006
00:52:10,160 --> 00:52:13,280
target of a minimum of 50,000
tonnes a month and they just

1007
00:52:13,280 --> 00:52:16,920
sort of hit that by Jan before
they commence that, that refurb

1008
00:52:17,360 --> 00:52:21,760
and a couple other details to
flag right now.

1009
00:52:21,760 --> 00:52:24,520
And you know these were flagged
in a recent capital raise as

1010
00:52:24,520 --> 00:52:26,520
well.
Like we said, Tetra are the ones

1011
00:52:26,520 --> 00:52:29,640
operating.
They've got a 20% economic

1012
00:52:29,640 --> 00:52:33,600
interest in the project.
They're the JV partner, the Dart

1013
00:52:33,600 --> 00:52:36,760
Brook JV.
Imagine that having a 20% like

1014
00:52:36,920 --> 00:52:42,360
you own, you've got technique,
80% of the JV or 70% economic

1015
00:52:42,360 --> 00:52:44,520
interest, someone else is
operator.

1016
00:52:45,920 --> 00:52:47,120
It's not great.
Let's stitch up.

1017
00:52:47,400 --> 00:52:48,880
Yeah.
I mean, we've, we've spoken a

1018
00:52:48,880 --> 00:52:50,320
bunch about it over the past
year.

1019
00:52:50,640 --> 00:52:54,360
Can you know, it's all good when
things are hamming along, but

1020
00:52:54,360 --> 00:52:57,400
when things aren't hamming
along, that's when those JV

1021
00:52:57,400 --> 00:53:00,040
start to, you know, really,
really bad heads.

1022
00:53:00,040 --> 00:53:03,400
Fucking listen to you mate.
I believe there'd be a bit of

1023
00:53:03,400 --> 00:53:05,640
that going on, Maddie.
So they're also working on a six

1024
00:53:05,640 --> 00:53:07,080
year extension.
This is another sort of

1025
00:53:07,080 --> 00:53:09,480
potential catalyst if you like
that might help the company out.

1026
00:53:10,840 --> 00:53:14,040
Right now it's sort of permitted
up to 27.

1027
00:53:14,280 --> 00:53:16,520
They want to kick that out to to
2033.

1028
00:53:16,520 --> 00:53:19,600
So the resources and reserves
aren't aren't the issue.

1029
00:53:19,600 --> 00:53:22,440
They need to get that approval
as well.

1030
00:53:22,560 --> 00:53:25,440
And then you come to the debt.
Now this is a sort of big one.

1031
00:53:25,800 --> 00:53:29,680
So the J VS debt was recently
upsized from US 60 million to US

1032
00:53:29,680 --> 00:53:31,480
90 million.
That was just in October.

1033
00:53:31,760 --> 00:53:35,640
Now that yet comes from the mega
commodity trader Vito.

1034
00:53:35,840 --> 00:53:39,520
So they're more known for oil,
but they've been branching out a

1035
00:53:39,520 --> 00:53:42,440
little bit.
So they of course nabbed the

1036
00:53:42,440 --> 00:53:45,480
marketing rights like any
commodity trader would do.

1037
00:53:46,040 --> 00:53:52,920
And as a condition of that
upsizing, they being AQC had to

1038
00:53:52,920 --> 00:53:58,480
go and do a 20 million Aussie
capital raise and they would put

1039
00:53:58,480 --> 00:54:01,440
forward another $20 million
working capital facility.

1040
00:54:01,520 --> 00:54:04,520
If you're still following me,
that working capital facility

1041
00:54:04,520 --> 00:54:08,400
for the joint venture was
shipped in 5050 by Vitol and

1042
00:54:08,400 --> 00:54:14,440
AQC, the parent there.
So as of last reporting, US 55

1043
00:54:14,440 --> 00:54:18,040
million is drawn in debt.
That doesn't include the

1044
00:54:18,040 --> 00:54:21,400
capitalised interest, which is
important because the interest

1045
00:54:21,400 --> 00:54:23,960
rate they're paying is sofa plus
15%.

1046
00:54:23,960 --> 00:54:26,960
Holy snap and duck shit.
And that changes to sofa plus

1047
00:54:26,960 --> 00:54:29,920
10% after first coal is
produced.

1048
00:54:30,040 --> 00:54:31,840
It's even sofa plus 10 is bloody
or.

1049
00:54:32,320 --> 00:54:33,320
It bloody is.
It is.

1050
00:54:33,480 --> 00:54:37,800
With a repayment date that is
proximate, it's it's only two

1051
00:54:37,800 --> 00:54:40,680
years away, so it's.
Very important detail.

1052
00:54:40,760 --> 00:54:44,240
Yeah, that is not long away.
And that leaves you in the hands

1053
00:54:44,240 --> 00:54:49,000
of the creditor really.
So at the AQC group level

1054
00:54:49,280 --> 00:54:54,040
there'd be roughly 10 million
ish after the recent raise, the

1055
00:54:54,040 --> 00:54:57,240
JV had a bit over 1,000,000
bucks at the end of the quarter

1056
00:54:57,720 --> 00:55:03,120
and I'm sort of estimating 75
ish Aussie in that undrawn.

1057
00:55:03,360 --> 00:55:05,880
You know what they can still
draw upon, hence the company

1058
00:55:05,880 --> 00:55:07,040
saying that they're fully
funded.

1059
00:55:07,200 --> 00:55:09,320
So they've got cash but the
terms aren't favourable and

1060
00:55:09,320 --> 00:55:12,600
they're gonna need to repay it
not too far down the down the

1061
00:55:12,600 --> 00:55:15,720
line so.
Plus there's part of that part

1062
00:55:15,720 --> 00:55:19,400
of the debt facility, there's
CPS where yeah, we, we don't

1063
00:55:19,400 --> 00:55:22,400
know what all the CPS are, but
they do disclose in the cap

1064
00:55:22,400 --> 00:55:25,400
raising debt that some of the
CPS and, and conditions

1065
00:55:25,400 --> 00:55:28,320
subsequent are out of are out of
the control of AQC.

1066
00:55:28,320 --> 00:55:31,480
So the ability to actually draw
down in fullness this this

1067
00:55:31,480 --> 00:55:33,360
upsize facility is in doubt.
Yeah.

1068
00:55:33,360 --> 00:55:36,960
So if all that was like a lot of
numbers, you can just sort of

1069
00:55:36,960 --> 00:55:39,800
think of it as this is a company
that is very financially

1070
00:55:39,800 --> 00:55:44,720
leveraged at the moment and.
Without without An Ave yet to

1071
00:55:44,720 --> 00:55:46,680
make money off its production.
Yeah.

1072
00:55:46,680 --> 00:55:50,560
So as we've sort of spoken about
restart projects in the past,

1073
00:55:50,640 --> 00:55:52,680
they're operationally leveraged
as well.

1074
00:55:52,680 --> 00:55:54,600
They're they're gone at it from
sort of both ends.

1075
00:55:55,200 --> 00:55:59,520
So that brings us to the AGM
which happened last week and the

1076
00:55:59,520 --> 00:56:04,760
details get even juicier here.
So the managing director and CEO

1077
00:56:05,080 --> 00:56:09,160
resigned immediately after the
AGM in late November.

1078
00:56:09,400 --> 00:56:11,720
That is not totally normal for a
company.

1079
00:56:11,720 --> 00:56:13,800
You know this is one of the red
flags we speak at for a company

1080
00:56:13,800 --> 00:56:17,840
in ramp up for the boss to leave
raises all sorts of questions.

1081
00:56:17,840 --> 00:56:21,600
Just after the IGN, Yeah.
So I would have presented at the

1082
00:56:21,600 --> 00:56:24,720
IGN and then resign.
That is out there.

1083
00:56:24,800 --> 00:56:27,200
Yeah, you think?
They went up for re election or

1084
00:56:27,200 --> 00:56:29,360
anything like that there.
It's not like they like one of

1085
00:56:29,400 --> 00:56:31,080
those ones where the resolutions
withdrawn.

1086
00:56:31,080 --> 00:56:34,600
It was just a there were protest
fights though, like on a few

1087
00:56:34,600 --> 00:56:36,280
resolutions.
But yeah, well.

1088
00:56:36,640 --> 00:56:41,920
Yeah, this Miss Saridas who was
the CEO was actually just

1089
00:56:41,920 --> 00:56:43,720
initially the the interim boss
for a period.

1090
00:56:43,920 --> 00:56:47,080
So sort of with the company that
2:00-ish years became full time

1091
00:56:47,080 --> 00:56:50,840
in June 24 and it's now sort of
stepped down.

1092
00:56:51,680 --> 00:56:53,720
And that wasn't the only
interesting bit of news at the

1093
00:56:53,720 --> 00:56:55,760
AGM.
So we've got to talk about this

1094
00:56:55,760 --> 00:56:58,800
major shareholder, a group
called Trepang, They own roughly

1095
00:56:58,800 --> 00:57:02,920
37% of the company.
They were previously the biggest

1096
00:57:02,920 --> 00:57:06,600
creditor, which might tell you a
thing or two about what has

1097
00:57:06,600 --> 00:57:09,280
happened to this company in the
past.

1098
00:57:09,360 --> 00:57:13,280
How they got their shareholding?
So this is a group that's backed

1099
00:57:13,280 --> 00:57:16,480
by John Robinson and Nick
Paspali.

1100
00:57:16,480 --> 00:57:20,760
So Robinson is a non exec
director with AQC and is also

1101
00:57:20,760 --> 00:57:23,200
acting as the chair at the
moment.

1102
00:57:23,200 --> 00:57:28,880
And AQC tried to sell Dart Brook
in 2022 whilst the company was

1103
00:57:28,880 --> 00:57:32,040
buried in debt with Trapang
being the biggest creditor

1104
00:57:32,040 --> 00:57:34,560
there.
Trapang reportedly loved a

1105
00:57:34,560 --> 00:57:37,200
beard, but for whatever reason,
that's what it didn't go

1106
00:57:37,200 --> 00:57:39,120
through.
And hence recapitalization.

1107
00:57:39,120 --> 00:57:41,720
And we sort of are where we are
today.

1108
00:57:41,720 --> 00:57:43,920
But they did actually support
the October raising.

1109
00:57:44,040 --> 00:57:46,200
They they chipped in and they
took up some of the the

1110
00:57:46,200 --> 00:57:49,720
shortfall as well.
But Trapang is not.

1111
00:57:50,520 --> 00:57:53,000
They're not, I don't think their
incentives are exactly like all

1112
00:57:53,000 --> 00:57:56,440
other shareholders because
they're also the company.

1113
00:57:56,440 --> 00:57:59,880
Trapang is like a mining camp
provider, you know, certain

1114
00:57:59,880 --> 00:58:01,880
mining service services
provider.

1115
00:58:01,880 --> 00:58:04,520
And I think they're a part of
the whole restructure.

1116
00:58:04,880 --> 00:58:07,720
There's this fee that comes out
of the business and goes to

1117
00:58:07,720 --> 00:58:09,440
Trapang.
It's like an annuity for

1118
00:58:10,080 --> 00:58:11,440
provision of camp and other
services.

1119
00:58:11,440 --> 00:58:12,960
I think it's like 1,000,000
bucks a year or something like

1120
00:58:12,960 --> 00:58:14,840
that, yeah.
With, with companies like this

1121
00:58:14,840 --> 00:58:17,440
and you know, a whole heap of
resources, companies look very

1122
00:58:17,440 --> 00:58:21,200
closely at all the other costs
laid in the, the royalties and

1123
00:58:21,640 --> 00:58:24,320
you know, the land lease
agreements and, and everything

1124
00:58:24,600 --> 00:58:27,320
to get a good feel of what
people's intentions are.

1125
00:58:27,320 --> 00:58:30,000
Some people obviously get paid
on profit, some people get paid

1126
00:58:30,000 --> 00:58:31,560
on the top line and all these
other things.

1127
00:58:31,880 --> 00:58:33,200
So it's super important to look
at it.

1128
00:58:33,840 --> 00:58:36,520
So then we get to the AGM
resolutions and there were some

1129
00:58:36,520 --> 00:58:40,000
interesting ones that got put
forward too that really sort of

1130
00:58:40,000 --> 00:58:42,720
stood out.
Firstly, ratifying the placement

1131
00:58:42,720 --> 00:58:44,560
of shares from the October
raise.

1132
00:58:44,560 --> 00:58:48,280
This essentially allows them to
refresh their 15% placement

1133
00:58:48,280 --> 00:58:52,120
capacity going forward.
And then there was also another

1134
00:58:52,120 --> 00:58:54,240
resolution that they sought
which was the approval of an

1135
00:58:54,240 --> 00:58:58,680
additional 10%, essentially
saying giving them the

1136
00:58:59,040 --> 00:59:03,760
capability to top up again the
raising equity and in future.

1137
00:59:03,760 --> 00:59:05,640
And Japan voted against both of
those.

1138
00:59:05,640 --> 00:59:08,280
Given Japan's like nearly 40%
shareholding, that was enough to

1139
00:59:08,480 --> 00:59:13,360
to not carry those resolutions,
which in effect means that

1140
00:59:14,200 --> 00:59:18,760
there's no placement capacity in
this vehicle, neither 7.1 or 7.1

1141
00:59:18,760 --> 00:59:23,240
a placement capacity.
So if if IQC needed to raise

1142
00:59:23,520 --> 00:59:26,680
more equity, they couldn't do it
via replacement without

1143
00:59:27,280 --> 00:59:30,120
shareholder approval takes time.
You could do an entitlement.

1144
00:59:30,120 --> 00:59:32,480
So far it's a different thing.
But again, you know, there's

1145
00:59:32,520 --> 00:59:35,400
there's a timing factor.
So yeah, Topanga's intentionally

1146
00:59:35,400 --> 00:59:40,480
wanted to not provide placement
capacity to this company for

1147
00:59:40,480 --> 00:59:42,560
some reason.
Exactly.

1148
00:59:42,640 --> 00:59:44,120
There's a that is.
The reason?

1149
00:59:44,120 --> 00:59:50,560
Before when they lobbed a bid.
Maybe they see some sort of

1150
00:59:51,040 --> 00:59:53,880
writing on the wall, maybe they
don't want to just sort of put

1151
00:59:53,880 --> 00:59:56,960
more cash in.
It's a, it's a distressed asset.

1152
00:59:57,560 --> 01:00:01,800
Yeah, yeah.
I mean, this company can't raise

1153
01:00:01,800 --> 01:00:04,520
one more dollar from equity.
Without and it's already been

1154
01:00:04,520 --> 01:00:05,840
recapped.
Yeah.

1155
01:00:06,400 --> 01:00:07,680
A couple times.
Couple.

1156
01:00:07,800 --> 01:00:09,960
Times the tolls.
The tolls got security.

1157
01:00:11,920 --> 01:00:16,320
Yeah, a pretty, pretty egregious
sort of debt debt terms.

1158
01:00:17,240 --> 01:00:22,440
Can you can I see a scenario
where where IQC gets the rail in

1159
01:00:22,640 --> 01:00:26,440
place, draws down the debt,
refurbs the wash plant and

1160
01:00:26,640 --> 01:00:29,120
starts making money and all that
sort of stuff.

1161
01:00:29,880 --> 01:00:33,520
There's a chance.
I don't think it's a my greatest

1162
01:00:33,520 --> 01:00:35,720
probability chance at the
moment.

1163
01:00:35,960 --> 01:00:38,920
I think there's a lot more
factors working against it that

1164
01:00:39,280 --> 01:00:42,520
could see this not go so.
Well, so you put more money on

1165
01:00:42,520 --> 01:00:44,760
Hemi?
I put more money on Vital

1166
01:00:44,760 --> 01:00:49,800
getting 100% of this.
These guys are between a rock

1167
01:00:49,800 --> 01:00:52,880
and a very, very, very hard
place operationally.

1168
01:00:52,880 --> 01:00:55,960
They've got, they've got to pull
off everything to have half a

1169
01:00:55,960 --> 01:00:58,880
chance, like you said, all those
things and, and some, you know,

1170
01:00:58,880 --> 01:01:01,840
that they need to do everything
they can operationally.

1171
01:01:02,120 --> 01:01:06,120
And even then they're in the
hands of the creditor.

1172
01:01:07,120 --> 01:01:09,880
They don't have capacity on the
the equity side.

1173
01:01:10,440 --> 01:01:12,400
The creditor will put on the
squeeze.

1174
01:01:12,400 --> 01:01:15,760
If there was any other trying
debt, they try and do something

1175
01:01:15,760 --> 01:01:19,520
with, you know, they, if they're
going to be unfriendly about it,

1176
01:01:19,520 --> 01:01:21,960
they could just be looking right
over their shoulder and waiting

1177
01:01:21,960 --> 01:01:24,280
for the company to to sort of
slip up.

1178
01:01:25,440 --> 01:01:28,520
You know, all the while you've
got your big debt pile that's

1179
01:01:28,520 --> 01:01:32,880
just growing and charging 20%
interest.

1180
01:01:33,640 --> 01:01:36,640
That is not where you kind of
want to be at this point in ramp

1181
01:01:36,640 --> 01:01:39,040
up.
Ramp up is super hard as we

1182
01:01:39,040 --> 01:01:41,040
know.
So I mean, fingers crossed

1183
01:01:41,040 --> 01:01:44,280
there's an, there's an outcome
for equity holders, hopefully

1184
01:01:44,760 --> 01:01:49,080
something, you know, we can come
to some sort of outcome where

1185
01:01:49,520 --> 01:01:53,400
the mind works well and in turn
it, it makes money and they

1186
01:01:53,400 --> 01:01:56,960
don't get completely squeezed,
but it's it's a bit out of their

1187
01:01:56,960 --> 01:01:58,800
hands the way I kind of see it
right now.

1188
01:01:58,840 --> 01:02:01,400
Jeez I hope they got some bloody
Qantas points with that debt.

1189
01:02:01,400 --> 01:02:03,640
If they're paying 20% interest
it's like having a freaking

1190
01:02:03,640 --> 01:02:05,600
credit card.
Bloody hell.

1191
01:02:06,080 --> 01:02:07,480
It's just about that bad.
Hey, yeah, yeah.

1192
01:02:08,880 --> 01:02:11,640
The, the, the blocking the
placement capacity is an

1193
01:02:11,640 --> 01:02:13,800
interesting one, right?
Because maybe maybe some of

1194
01:02:13,800 --> 01:02:15,240
those things blow out from a
timing perspective.

1195
01:02:15,240 --> 01:02:17,600
But you sort of want the company
to have the ability to raise

1196
01:02:17,600 --> 01:02:19,160
more equity as it needs and all
that sort of stuff.

1197
01:02:19,160 --> 01:02:23,360
But their ability to do that,
it's just been Hanford without

1198
01:02:23,360 --> 01:02:26,640
shareholder approval thanks to
Japan, which is still confusing

1199
01:02:26,640 --> 01:02:28,560
to me, to be completely honest.
Yeah.

1200
01:02:28,640 --> 01:02:29,920
And that's why I sort of set it
up front.

1201
01:02:29,920 --> 01:02:31,800
I mean, imagine these guys
actually do everything

1202
01:02:31,800 --> 01:02:34,360
operationally and they can get
to that point and they've got

1203
01:02:34,360 --> 01:02:36,920
line of sight to where they can
make money.

1204
01:02:36,920 --> 01:02:40,000
You know, they're higher on the
cost curve, but if things sort

1205
01:02:40,000 --> 01:02:42,840
of go their way and they can
make money, the commodity price

1206
01:02:42,840 --> 01:02:46,560
goes in their favour, then there
might be a point in time where

1207
01:02:46,640 --> 01:02:49,520
there's another sort of partial
recapitalization of the business

1208
01:02:49,520 --> 01:02:53,440
and it's a bit rejigged from
that debt to equity kind of mix.

1209
01:02:53,640 --> 01:02:55,560
And maybe shareholders would be
willing to tip in.

1210
01:02:55,560 --> 01:02:58,680
But right now they don't really
have that on the table.

1211
01:02:58,680 --> 01:03:02,160
And so, yeah, we'll sort of say
over the over the next year what

1212
01:03:02,200 --> 01:03:07,440
what kind of happens.
But yeah, like we sort of said,

1213
01:03:07,440 --> 01:03:10,000
rock and a hard place the.
Fucking confidence oozing out of

1214
01:03:10,000 --> 01:03:15,320
you about this one.
It's an interesting sort of

1215
01:03:15,320 --> 01:03:19,160
narrative and like, you know, we
want to see them sort of get up

1216
01:03:19,160 --> 01:03:22,280
and kind of do well, you don't
want to see creditors swoop in,

1217
01:03:22,280 --> 01:03:25,800
but have they got a bit of a,
you know, loan to own type of

1218
01:03:25,800 --> 01:03:28,080
mentality here?
Maybe they do.

1219
01:03:28,200 --> 01:03:31,520
The choice of debt.
Exactly.

1220
01:03:31,520 --> 01:03:35,400
God is debt.
Ever been this dirty of a word

1221
01:03:36,360 --> 01:03:38,920
as it is in this mining era
we're in now?

1222
01:03:40,120 --> 01:03:42,160
I wouldn't call it a a dirty
word.

1223
01:03:42,160 --> 01:03:44,360
It's just all in kind of
proportion and and with this

1224
01:03:44,360 --> 01:03:46,800
company right now, it's just a
bit out of proportion.

1225
01:03:47,240 --> 01:03:50,120
You know, I mean, what, what
Daco and Fisty sort of spoke

1226
01:03:50,120 --> 01:03:53,360
about when we spoke with them
half, half a year ago, it

1227
01:03:53,960 --> 01:03:57,240
actually really stuck with me.
Like I do think about that and

1228
01:03:57,240 --> 01:04:00,840
you know, the idea of degrade,
for instance, being able to to

1229
01:04:00,840 --> 01:04:02,840
get there and that risk being a
bit more buffeted.

1230
01:04:02,840 --> 01:04:07,240
Forget the paid, but then be
able to get that mine online,

1231
01:04:07,720 --> 01:04:11,000
you know, with a bit less risk
versus a single asset producer.

1232
01:04:11,360 --> 01:04:13,840
Thinking like that and what the
appropriate amount of debt and

1233
01:04:13,840 --> 01:04:16,760
equity is, is, you know, been a
big sort of lesson.

1234
01:04:17,960 --> 01:04:21,560
You know, when things go well
and your ramp up goes smoothly

1235
01:04:21,560 --> 01:04:23,480
and the commodity price helps
you out, you think, oh, why

1236
01:04:23,480 --> 01:04:24,760
don't I just do it a bit, a bit
more debt.

1237
01:04:25,240 --> 01:04:29,720
But, you know, look at the
alternative, Callitus at other

1238
01:04:29,720 --> 01:04:32,080
companies, you know?
Yeah, they said they wanted

1239
01:04:32,080 --> 01:04:34,080
Spartan.
Fully funded with equity.

1240
01:04:34,840 --> 01:04:38,080
And they were correct.
Yeah, go darker.

1241
01:04:38,080 --> 01:04:39,840
Go fisty shout.
Out boys, if you're.

1242
01:04:39,840 --> 01:04:42,840
Listening.
Carl.

1243
01:04:42,840 --> 01:04:45,360
JDI think after that mate, I
want you to keep it going.

1244
01:04:45,360 --> 01:04:47,680
I want you to bring it home with
the partners mate.

1245
01:04:47,720 --> 01:04:49,760
Just why not put some energy
into it mate.

1246
01:04:51,040 --> 01:04:53,360
Massive thank you to Mineral
Mining Services.

1247
01:04:53,360 --> 01:04:57,920
Grounded Sandy Ground support,
CRE insurance, K drill, Dysat

1248
01:04:58,040 --> 01:05:02,040
and saltpush contracting Udaru
Money miners udaru.

1249
01:05:02,040 --> 01:05:04,240
Let's go get pissed.
The information contained in

1250
01:05:04,240 --> 01:05:07,040
this episode of Money of Mine is
of general nature only and does

1251
01:05:07,040 --> 01:05:09,840
not take into account the
objectives, financial situation

1252
01:05:09,880 --> 01:05:11,880
or needs of any particular
person.

1253
01:05:12,200 --> 01:05:15,240
Before making any investment
decision, you should consult

1254
01:05:15,240 --> 01:05:18,280
with your financial advisor and
consider how appropriate the

1255
01:05:18,280 --> 01:05:22,000
advice is to your objectives,
financial situation and needs.