Dial-a-Fund-Manager

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Lithium's been pretty cyclical
over the last two years.

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I do feel like we've seen
another leg up in the structural

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story around demand for EVs and
ESS, and a lot of people that

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probably weren't considering
buying an EV might now be

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rethinking that kind of thought
process.

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Happy Friday.
Happy, happy weekend, Money

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miners.
Happy Anzac Day weekend, Trev.

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I can see you've got your Anzac
Day cookie right there.

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I actually do a special weekend
here in Australia and we've got

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a special episode coming up.
It's rare that people leave just

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food for for everyone to to
access in our little kitchen

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there.
But you see there's a little

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note there today saying take you
can take free to take an Anzac

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cookie.
I was I don't know who did that.

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I'm not as generous as.
In celebration for the great

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weekend, go to the Anzacs.
What have we got in store today,

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mate?
That is, that's a question I

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keep asking you this week
because we we.

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Particularly this morning.
Particularly this morning, Yeah,

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Friday.
We've got to put, got to put an

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episode out.
Fuck, we've got nothing planned.

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So we we love the the two day
Ross that we do 2 episodes a

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week and it keeps us honest.
It keeps us churning at content,

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speaking with interesting people
and doing stuff.

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But occasionally it it really
forces us to to to click into

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gear, doesn't it?
Occasionally, occasionally

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someone cancels an an interview
the last minute and we're left.

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We're left a little bit high and
dry, but you know what?

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And occasionally we're just
disorganized.

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But JD, today we've done we've.
All of the above.

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We've done something in the past
where where I think we've been

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in a similar situation.
Sometimes you let me just do it

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to Twitter Spaces and that's OK.
Sometimes, sometimes I just put

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out the phone and start calling
people, fund managers, whoever,

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whoever will answer and and just
get their insights on some

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things.
Sometimes we just talk

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ourselves.
Yeah, and it's an awesome way to

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to kind of Crowdsource a bunch
of different ideas what's going

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on in the market.
Like I, I think right now where

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we are is just an unbelievably
fascinating point in time where

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where we're on the brink of
something truly like awful that

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could happen if things aren't
aren't solved.

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So there's obviously a lot of
market implications on the back

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of that, like first and foremost
a very awful situation

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unfolding, but.
How you feeling mate?

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You feeling nervous market wise
or?

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I think, I think the
humanitarian things that could

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fall at the back of what, what
is happening are just awful.

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And not, not to be crude and,
and jump straight into how the

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market very good, very good to,
to, to chat just about how the

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market interprets it.
But that, that is kind of 1st

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and, and foremost because things
need to get solved there.

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But we chat with interesting
people all the time, every day.

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We, we're lucky to do so.
And we thought, why not just

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like record some of those
conversations and and share a

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few ideas?
Yes, all right.

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Who do you reckon's going to
dodge my goal, first mate?

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I'm going to.
I'm going to try my luck calling

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a wonderful bloke by the name of
Anthony Kavanagh.

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No message can be left on this
service before I try and call

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someone else who doesn't answer
it.

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JD mate, we're pretty
disorganized, so you know who's

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always, always organized you
always rely on.

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Sandy Ground support.
I didn't even had a key for this

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one.
You just know that the team at

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Sandy Ground Support always
organized, Derek Heard.

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Always organized.
When you are running

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manufacturing plants across the
country and across the world and

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distribution hubs in even more
places than that, you you don't

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have any other option.
You have to be organized.

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You have to be.
Organized because your clients

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are depending on you to deliver
the bolts that meet there.

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Very specific and and you know
custom bespoke specs for all of

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their ground support needs.
Not just bolts mate.

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Yeah.
It's not just one bolt that goes

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out to all these as the people
in the industry, no, they have a

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whole range of products and they
keep their customers supplied.

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So all types of minds ground
support can go everywhere man.

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You can put ground support in
your in your above ground brief

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if you want.
Just want to keep it up.

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We know we've edited it.
We've been to many of the

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operations.
It's a hell of a business that

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they're running.
So get on the app, give Derek

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Herd a call and get your order
in for Sandvik Ground Support.

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Thank you for sponsoring this
episode, Sandvik Ground support.

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We love you.
There we go.

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It's Kev.
Mr. Anthony Kavanaugh, how are

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you going?
I've.

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Got mate, I've got JD on the
line.

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It's me.
You wouldn't believe it.

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This is a stitch up.
We've called you and we intend

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to use this conversation as a
very brief, you know, part of

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our episode today because we've
got no content and we're just

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we're calling our favorite
people for their on the spot

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insights.
So sorry to stitch you up.

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How many people say that?
Not even my wife at the moment.

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So.
Mate, how?

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Is the you boys the pleasure of
at the moment there's money

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going on?
Oh, there's so much going on.

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I really just want to know what
you're thinking about.

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What's keeping you up at night?
What's what's What's keeping

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you?
How do you think about risking

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the portfolio with with
everything going on?

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How am I thinking about risk?
Well, to be honest, like I don't

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think anything changes from our
perspective in terms of how we

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think about the portfolio
because we are always thinking

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about risk in any position we
take before we actually allocate

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to it.
So I think I think it

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accentuates what we're doing in
terms of like downside

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protection and just having a
diversified portfolio because to

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be honest, anyone who tells you
that they know exactly what's

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happening at the moment, I think
is just lying.

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Like I think that you wake up
day-to-day and oil up, go down

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or vice versa because of the
Trump tweet or what have you.

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I just, I just don't think you
can necessarily be trading based

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on kind of short term news flow.
So the way we've been thinking

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about it is almost just like 60
yards and around the margins

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kind of tweak what you can, but
like in on a short term basis,

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there's nothing that
fundamentally you can kind of

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hang your hat on if you take a
step out like longer term, yes,

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energy prices higher for longer.
I think that's a very obvious

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impact of what's occurred.
And particularly the refiners,

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like I know it's it's been done
to death now, but like I just

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don't think that you're going to
have the the refinery outages

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that you've had and all of a
sudden go back to $10 a barrel

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margins in the short term.
So very much in the camp that

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like refining margins are higher
for longer.

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I don't know, some people are
saying this is 1/4 phenomenon.

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I think this is a multi year
phenomenon because a lot of

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those refineries, you're going
to take years to actually get

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the parts to, to repair them.
And yeah, you've seen ample,

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you've seen Viva up, you know,
2030% since the conflict started

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and you've seen kind of, I know
the fire at it that Viva took a

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bit of the wind out of its sails
and some of the hot money's

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disappeared from it.
But just the leverage that those

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guys have.
And I know refining was a

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smaller component of their
businesses.

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But I just, I just think that
we're we're now entering into a,

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into a situation where like
you're de gearing both of those

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companies balance sheets and
both were starting probably at

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about 3 times net debt to EBITDA
going into this, this conflict.

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One because they acquired EG
which is a really good

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acquisition for Ampol.
The other because they're still

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been over geared from the OTR
acquisition, which you can still

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argue hasn't worked out for VB
yet.

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But with the situation that
we're in and the cash benefits

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that they're going to get from
refining margins, you're going

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to see that part of the business
D gear.

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I think it's well the FSSP,
which is kind of a thesis before

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the crisis around the refiners
is going to come to the fore.

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Now we've already seen you know
a lift in the the floor price as

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to which the FSSP kicks in.
This is for the refiners.

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And I think in the second-half
of the year we could see a

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change in the structure of it.
Now my initial thinking was,

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yeah, maybe you go to a RAP
model and it becomes a lot more

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what's the word?
Yes, the earnings streams from

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the refiners is, is more
guaranteed.

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Like you, you lose some of the
the downside, but you also lose

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on the upside and becomes like a
regulated asset with pretty

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steady income stream and the
government takes the risks on

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the upside and the downside.
But the replacement cost of

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these refiners, I think what
will come to the fore is just

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how much they are actually worth
from from a replacement

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perspective.
And, and on my numbers, it's

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like 1/2 to $2 billion for each
of those refiners.

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And if you look at, you know,
the market caps of Aviva and

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Ampol, it's extremely material.
If you do kind of see the the

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market start to accept those
types of values versus valuing

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these businesses on three to
five times even.

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Yeah.
And this was that thesis prior

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to the conflict.
So it's not not necessarily

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anything new, but I think it's
now kind of the penny starting

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to drop.
And I just I don't necessarily

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think that the share process of
both Ample and Viva as we sit

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here today are necessarily
reflective of that.

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So, so that's that's one thing
I'm thinking of.

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I think the other aspect is, you
know, some of the infrastructure

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that has been destroyed, not
just refineries, but also in in

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Qatar, you know they've lost 20%
of we've lost 20% of capacity

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and Qatar's obviously the
world's largest LNG producer at

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the moment.
So you lose 20% of their

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capacity and it's not a short
term fix.

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It's not like you can just bring
that on overnight.

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You're talking 4 to 5% of global
LNG supply that's off the market

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probably three to five years.
And everyone just kind of

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assumes, Oh yeah, you can
replace some of that with

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thermal coal.
Sure, maybe to a small degree.

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But I think we're also in this
period where maybe your LNG

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prices aren't 10 bucks an MMB to
you for the next three to five

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years, but maybe you're talking
12 to 13.

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And yeah, I've been on your show
talking about, you know, players

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like Comet Ridge and Equus and a
few other things.

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But I think that we're starting
to see those marginal gas plays.

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I think the market is Thunder
reflected like so you would have

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seen the deal that Inpex has
done around the tambourine.

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Yeah, to be low like.
It's a delayed response to the

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market with that one, but yeah.
Yeah.

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It's a delayed response because
even myself, like, like we've

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always looked at these players
down there, you're going to

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require a lot of capital to
actually appraise them and then

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get into LNG facilities.
And we're talking a long time

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span.
And as soon as you see Japanese

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money starting to come into
these plays, I mean, Japanese

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money is historically very
patient money, money that

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follows a lot of due diligence.
So it's not just a flash in the

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pan.
It's like just this is this is

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real capital now being dedicated
to some of these projects.

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And so like Comet Ridge is
starting to react now as well,

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which is the holding of ours,
but the other one as well.

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And I've banged on about it for
probably the last three to six

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months.
I'm I'm deeply surprised that

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00:10:22,320 --> 00:10:26,200
Equus Gas or Equus Energy I
should say, is trading always

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00:10:26,240 --> 00:10:28,600
below where it was pre conflict.
There seems to be some big

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00:10:28,600 --> 00:10:31,040
seller out there which is being
a bit frustrating.

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But something like that, which
is the next project in WA to

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probably get off the ground.
It's already got MOU with

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Woodside, a processor at Pluto
and Northwest Shelf and also a

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00:10:40,760 --> 00:10:43,680
similar MOU with Santos.
Like something like that.

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00:10:44,280 --> 00:10:47,560
It almost feels like when when
the gold price ran from, you

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00:10:47,560 --> 00:10:50,080
know, 3000 bucks an ounce to
5000 bucks an ounce and you saw

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00:10:50,080 --> 00:10:53,920
some gold projects like 5 to 10
X because they're, you know, the

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leverage plays.
I've kind of been expecting

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something similar from the gas
plays and particularly Equus as

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00:11:00,520 --> 00:11:01,840
the next project to eat off the
ground.

225
00:11:01,840 --> 00:11:05,320
It hasn't happened yet.
So, you know, you know, maybe

226
00:11:05,320 --> 00:11:07,840
you can say we're early, we're a
bit wrong, but I mean, it has

227
00:11:07,840 --> 00:11:09,880
doubled from when they back to
listen in December.

228
00:11:09,880 --> 00:11:12,080
So you can argue, oh, you're
being a bit impatient, but

229
00:11:12,440 --> 00:11:14,280
that's still one that I'm
looking at going.

230
00:11:14,760 --> 00:11:17,960
I honestly think this can 10X
from here under the right

231
00:11:17,960 --> 00:11:22,080
circumstances.
And you know, like from a

232
00:11:22,080 --> 00:11:24,320
sovereign perspective, I think
that everything that is

233
00:11:24,320 --> 00:11:27,760
occurring is increasing
Australia as, as a sovereign

234
00:11:27,760 --> 00:11:34,720
nation, reliable away from
conflicts and A and a more, I

235
00:11:34,720 --> 00:11:37,120
guess trustworthy counterparty
than than some of these other

236
00:11:37,120 --> 00:11:39,480
nations.
Obviously we have our weather

237
00:11:39,480 --> 00:11:42,680
impacts which we saw earlier on
this year for some of the LNG

238
00:11:42,680 --> 00:11:45,120
projects.
You can't, you can't avoid that.

239
00:11:45,120 --> 00:11:48,200
But in terms of the reliability,
I think Australia stands second

240
00:11:48,200 --> 00:11:50,280
to none.
The other thing I'm starting to

241
00:11:50,280 --> 00:11:53,360
think about, which I haven't
really been thinking about till

242
00:11:53,360 --> 00:11:55,680
the last couple of weeks because
everyone's been so focused on

243
00:11:55,680 --> 00:11:57,800
the Middle East crosses, it's
just been El Nino.

244
00:11:58,680 --> 00:12:02,320
So we kind of think about
whether because it can be quite

245
00:12:02,440 --> 00:12:07,840
meaningful and there are
increasing signs that Australia

246
00:12:07,840 --> 00:12:12,320
can go through an El Nino or, or
or at least the the globe can go

247
00:12:12,320 --> 00:12:15,800
through an El Nino this upcoming
season.

248
00:12:16,160 --> 00:12:20,720
Now, yeah, the weather people
can, you know, can't often

249
00:12:20,720 --> 00:12:24,400
forecast the weather on a on a
weekly basis, let alone on a

250
00:12:24,400 --> 00:12:27,400
monthly basis.
But if we do go through an El

251
00:12:27,400 --> 00:12:30,600
Nino, simplistically it means
drier weather conditions in

252
00:12:30,600 --> 00:12:38,360
Australia, less rain, strong for
thermal coal prices, increased

253
00:12:38,360 --> 00:12:41,560
use of electricity in the likes
of China and the marginal

254
00:12:41,600 --> 00:12:44,160
electricity generation can't
come from hydro because you get

255
00:12:44,160 --> 00:12:48,640
less hydro draws on energy
supply even more, which should

256
00:12:48,640 --> 00:12:51,360
be something that might start to
occur over the next few months.

257
00:12:51,720 --> 00:12:56,080
We should kind of exacerbate
some of those kind of pinpoint

258
00:12:56,880 --> 00:12:59,480
in the energy supply chain,
whether it be LNG or thermal

259
00:12:59,480 --> 00:13:00,920
coal.
So I'm just kind of stunned.

260
00:13:01,520 --> 00:13:07,520
So I mean, let's not and I know
we're we're talking just like

261
00:13:07,520 --> 00:13:12,440
food magic, like I just we're
sitting here today and just kind

262
00:13:12,440 --> 00:13:15,040
of blessed we produce sometimes
about food we export.

263
00:13:15,040 --> 00:13:20,480
So yes, maybe we'll and wait
more so than than some of the

264
00:13:20,480 --> 00:13:21,840
other things that that we're
importing.

265
00:13:21,840 --> 00:13:26,720
But we could be facing a pretty
significant challenge from a

266
00:13:26,720 --> 00:13:29,360
food perspective if we do go
through an El Nino, the Strait

267
00:13:29,360 --> 00:13:35,120
stays closed and you know, we
just can't get the same level of

268
00:13:35,280 --> 00:13:36,800
chemicals coming into the
country.

269
00:13:37,480 --> 00:13:41,000
Now we've been speaking to a few
different companies that have

270
00:13:41,000 --> 00:13:43,960
started to receive assurances
from the Australian government

271
00:13:43,960 --> 00:13:46,440
that they'll underwrite some of
the risks they're taking like a

272
00:13:46,440 --> 00:13:50,720
Ridley that's importing urea
starting to see some support

273
00:13:50,720 --> 00:13:52,000
from the government, which is
helpful.

274
00:13:52,120 --> 00:13:55,760
And I've thrown about 3 or 4
different themes at you in quick

275
00:13:55,760 --> 00:13:58,200
succession, but they're all
derivatives I'm thinking about

276
00:13:58,480 --> 00:14:00,040
yeah.
And there's a lot I'm thinking

277
00:14:00,040 --> 00:14:02,360
about at the moment and, and
what could be the outcomes.

278
00:14:03,000 --> 00:14:05,480
But ultimately, like we're
continuing to keep a balanced

279
00:14:05,480 --> 00:14:09,120
portfolio that that, you know,
holds energy, holds gold.

280
00:14:09,120 --> 00:14:11,440
I mean, gold, gold is something
that I've been thinking about

281
00:14:11,440 --> 00:14:13,200
deeply.
And, and we have as a house just

282
00:14:13,880 --> 00:14:17,040
like going into crises, it
usually is the thing that kind

283
00:14:17,040 --> 00:14:21,080
of you sell off first.
Yeah, it's, you know, like you

284
00:14:21,080 --> 00:14:24,280
were seeing obviously Turkey's
central bank, you know, sell

285
00:14:24,280 --> 00:14:26,640
large gold holdings.
And people are blaming that as,

286
00:14:26,720 --> 00:14:31,200
as you know, the early, early
reason why gold underperformed

287
00:14:31,200 --> 00:14:34,440
in in March.
But on the on the other side of

288
00:14:34,440 --> 00:14:37,720
that, if we do go through a a
more challenging period, gold

289
00:14:37,720 --> 00:14:41,080
is, is usually what outperforms,
you know, we've gone back

290
00:14:41,080 --> 00:14:43,840
through historical drawdown
periods during during market

291
00:14:43,840 --> 00:14:47,320
conditions and you know, we
count something like 17 times

292
00:14:47,320 --> 00:14:50,520
that the market is we're talking
the S&P 500 here is drawn down

293
00:14:50,520 --> 00:14:54,760
by more than 15% the last 100
years and we're talking average

294
00:14:54,760 --> 00:14:56,960
drawdown of close to 40% for the
market.

295
00:14:56,960 --> 00:14:59,440
And during those periods gold is
up between 5:00 and 10%.

296
00:15:00,800 --> 00:15:04,400
And so yes, we don't want to be
too sensationalist about the

297
00:15:04,400 --> 00:15:07,480
conditions that we're in, but I,
we continue to believe that

298
00:15:07,480 --> 00:15:10,560
holding gold during this period,
if you do need it for that

299
00:15:10,560 --> 00:15:14,560
insurance perspective or what
have you, like it still should

300
00:15:14,560 --> 00:15:17,520
stand pretty well.
And like, you know, we've had

301
00:15:17,520 --> 00:15:22,080
this argument for years, to be
honest, that the analysts

302
00:15:22,080 --> 00:15:24,800
continue to use the gold price
that is well South of where

303
00:15:24,800 --> 00:15:27,680
we're trying to get the moment
within their models and for

304
00:15:27,680 --> 00:15:29,920
their valuations.
And if you start using a price

305
00:15:29,920 --> 00:15:33,800
closer spot, which at the moment
is between 4500 and 5000 bucks

306
00:15:33,800 --> 00:15:39,720
down to US 6 1/2 to $7000
Aussie, your NPV's like the

307
00:15:39,720 --> 00:15:44,000
goals that we look at are
trading at like 55% of NAB and

308
00:15:44,400 --> 00:15:48,760
on free cash flow yields between
15 and 25%, which is an

309
00:15:48,760 --> 00:15:52,400
amazingly attractive position to
be in versus history during

310
00:15:52,400 --> 00:15:55,720
times of crisis when gold often
trades at one to 1/2 times NAV

311
00:15:56,480 --> 00:15:59,840
based on closer to spot prices.
Yeah.

312
00:16:00,040 --> 00:16:03,280
So, yeah, that's that's another
thing that we think could start

313
00:16:03,280 --> 00:16:07,320
working Now, you know, you go
back through history as well

314
00:16:07,880 --> 00:16:11,360
during times of stagflation,
which I don't want to call too

315
00:16:11,360 --> 00:16:15,280
many macro forecasts or anything
like that, but it does feel like

316
00:16:15,280 --> 00:16:18,040
we could be entering the period
of stagflation, which is during

317
00:16:18,040 --> 00:16:20,360
those periods gold miners tend
to tend to work best.

318
00:16:20,560 --> 00:16:25,400
So, yeah, you know, holding a
portfolio that includes gold,

319
00:16:25,600 --> 00:16:29,520
energy, food exposures, long
inflation, you know, long

320
00:16:29,520 --> 00:16:33,600
inflation or long stagflation.
Yeah, hopefully in this

321
00:16:33,600 --> 00:16:36,400
environment it does well.
But at the same time, I'd say

322
00:16:36,400 --> 00:16:38,160
you've got to have a, you've got
to have diversity.

323
00:16:38,160 --> 00:16:41,080
You can't I, I don't think you
can be, you know, all eggs in

324
00:16:41,080 --> 00:16:43,720
one basket on any one of those
themes at the moment because

325
00:16:44,080 --> 00:16:48,360
things could change quite
rapidly overnight, to be honest.

326
00:16:48,600 --> 00:16:51,160
Totally.
So yeah, no, no, I'm not

327
00:16:51,160 --> 00:16:53,680
throwing well, probably 6 or 7K
themes at you.

328
00:16:54,560 --> 00:16:57,240
Happy to discuss any in any more
detail or talk about anything

329
00:16:57,240 --> 00:16:58,640
you you guys really wanted to,
but.

330
00:16:58,880 --> 00:17:01,320
Just the best idea you've got
right now other than Equus,

331
00:17:01,360 --> 00:17:04,680
because we've talked about that.
Other Equus and like can I?

332
00:17:04,680 --> 00:17:06,880
Can I rehash Habler like?
Yeah, yeah, I'm.

333
00:17:06,880 --> 00:17:10,560
Looking at it at the moment
ending and and like I really

334
00:17:10,560 --> 00:17:14,960
like Brendan at Sandfire.
Anyone who is sick of me

335
00:17:14,960 --> 00:17:18,119
speaking about Habler and like
sick of me talking about it,

336
00:17:18,599 --> 00:17:20,599
just go speak to Brendan.
Like, I mean, he's out there

337
00:17:20,599 --> 00:17:22,720
now.
Now that they've got their hands

338
00:17:22,720 --> 00:17:25,720
and, and the deal's completed
and they own effectively an

339
00:17:25,720 --> 00:17:30,240
option over 80% of that asset,
Hava's still trading at 90% of

340
00:17:30,240 --> 00:17:33,040
its pro forma cash.
When that money gets received

341
00:17:33,040 --> 00:17:38,360
within 1824 months for Habler,
Brendan is now talking to the

342
00:17:38,360 --> 00:17:42,400
upside of that asset in Kakaru.
I'm probably paraphrasing what

343
00:17:42,400 --> 00:17:46,440
he said, but he's suggesting it
can be a a meaningful portion of

344
00:17:46,480 --> 00:17:49,960
the NAB, even a higher valuation
than their other two assets.

345
00:17:50,600 --> 00:17:55,120
Which in my mind infers 3 to 4
billion bucks for the 80% stake

346
00:17:55,120 --> 00:17:57,720
in in Kakaru.
And I can come I can justify

347
00:17:57,720 --> 00:18:01,440
that myself if it's a 15 to 20
million ton per annum projects.

348
00:18:01,440 --> 00:18:06,600
300 million tons plus.
And how you get the 300 million

349
00:18:06,600 --> 00:18:10,200
tons is is habla using their
drill rigs that can only go to

350
00:18:10,200 --> 00:18:13,080
200 meters.
They've never been out of drill

351
00:18:13,080 --> 00:18:16,160
below 200 meters below where the
current resource is.

352
00:18:17,160 --> 00:18:20,360
And oh, sorry, they've drilled a
couple of holes that have all

353
00:18:20,360 --> 00:18:24,800
shown that the Capra ore body
extends a depth and it's open in

354
00:18:24,800 --> 00:18:28,280
multiple directions.
So I think as the, as the

355
00:18:28,280 --> 00:18:31,840
drilling occurs, we're going to
see what what was 100 million

356
00:18:31,840 --> 00:18:37,240
tonne reserve and 180 million
tonne ore body become, you know,

357
00:18:37,360 --> 00:18:40,960
double, triple that over time.
And these aren't my words.

358
00:18:40,960 --> 00:18:45,360
They I'm affecting paraphrasing
Brendan, and you're going to see

359
00:18:45,360 --> 00:18:49,520
kind of that value realization
event occur for the haveler.

360
00:18:50,880 --> 00:18:55,560
In the meantime, assuming that,
you know, sand fight progresses

361
00:18:55,560 --> 00:18:58,400
with that stake in Kakaru, which
I've said multiple times and you

362
00:18:58,400 --> 00:19:02,000
just need to hear Brendan to
understand that it feels a lot

363
00:19:02,000 --> 00:19:05,960
more certain than than not that,
you know, you're basically able

364
00:19:05,960 --> 00:19:11,640
to acquire what is a world class
copper exposure 20% of an asset

365
00:19:11,640 --> 00:19:16,160
that effectively could be worth,
you know, anywhere from 500 to a

366
00:19:16,160 --> 00:19:19,360
billion bucks for their 20%
stake was free carried at less

367
00:19:19,360 --> 00:19:23,280
than the pro forma cash backing.
Now like anything in this

368
00:19:23,280 --> 00:19:25,920
environment, there's a lot of
uncertainty, but the downside

369
00:19:25,920 --> 00:19:29,000
protection that you're getting
and the upside optionality

370
00:19:29,000 --> 00:19:31,280
around that for me is still
unbelievable.

371
00:19:31,280 --> 00:19:35,720
Like it's, it's, you don't often
see these situations in markets.

372
00:19:35,720 --> 00:19:37,800
And, and you could argue that,
yeah, maybe the same five share

373
00:19:37,800 --> 00:19:40,440
price comes off if we go through
a period of deep stagflation or

374
00:19:40,440 --> 00:19:43,480
recession, but the second
tranche is still going to be

375
00:19:43,480 --> 00:19:45,560
received in cash.
So at the very least you've got

376
00:19:45,920 --> 00:19:47,920
a fair bit of certainty on your
downside.

377
00:19:48,920 --> 00:19:52,880
And your upside for me is still
multiples that can be realized

378
00:19:52,880 --> 00:19:55,920
on an 18 to 24 month view.
As you know, the drilling is

379
00:19:55,920 --> 00:19:59,800
done, the PFS is released, we
see more exploration results

380
00:19:59,800 --> 00:20:02,240
from you know.
Some of the regional

381
00:20:02,280 --> 00:20:05,800
exploration, so I would still
sit here today and say that's

382
00:20:05,800 --> 00:20:09,600
that's extremely compelling if
you want some food exposure, I

383
00:20:09,600 --> 00:20:11,720
think new farm trading at .6
times book value.

384
00:20:11,720 --> 00:20:13,960
And we don't need to necessarily
go in too much detail because I

385
00:20:13,960 --> 00:20:17,160
know it's a resource podcast,
but we still think that it

386
00:20:17,160 --> 00:20:21,560
stands in pretty good stead.
Increases yield for for farmers

387
00:20:21,560 --> 00:20:24,120
at a time where, you know, we
could be looking at some pretty

388
00:20:24,120 --> 00:20:27,520
challenging conditions and, and,
and requiring a lot more food in

389
00:20:27,520 --> 00:20:30,960
the system than than what we
what we've got at the moment.

390
00:20:30,960 --> 00:20:35,840
So, yeah, plenty of ideas at the
moment.

391
00:20:36,000 --> 00:20:39,080
And like gold, gold in this
environment, like we're, we're

392
00:20:39,080 --> 00:20:41,600
still very comfortable holding
our gold positions that, you

393
00:20:41,600 --> 00:20:46,320
know, as we said, point .5 times
NAV plenty of exposure proofs.

394
00:20:46,320 --> 00:20:49,640
We're talking about like a
Genesis or a West Gold or, you

395
00:20:49,640 --> 00:20:51,440
know, even St.
Bob's right here.

396
00:20:51,440 --> 00:20:53,600
I think that's looking really
attractive from a valuation

397
00:20:53,600 --> 00:20:56,880
perspective as well with $0.50
almost pro forma cash.

398
00:20:58,720 --> 00:21:00,400
Yeah, to seem to progress that
project.

399
00:21:00,400 --> 00:21:03,880
So yeah, there's plenty, plenty
of ideas mate.

400
00:21:05,120 --> 00:21:09,160
Just just announced FOD as well
on restarting turquoise as well

401
00:21:09,200 --> 00:21:10,360
in.
Yeah, Yeah.

402
00:21:10,360 --> 00:21:14,240
I saw that today and I I think
that Turquoi asset is deeply

403
00:21:14,240 --> 00:21:17,160
underappreciated by the market.
Like I mean, if it's going to be

404
00:21:17,160 --> 00:21:20,280
a hundred 120,000 oz per annum,
it's previously operated.

405
00:21:20,280 --> 00:21:24,520
So if you're in operating
history and I think that that

406
00:21:24,520 --> 00:21:28,200
project continues to get bigger,
I think that the, the regulatory

407
00:21:28,200 --> 00:21:30,920
environment in Nova Scotia is
looking a lot more promising

408
00:21:30,920 --> 00:21:34,440
than it was previously.
You know, they've got deep

409
00:21:34,440 --> 00:21:37,840
support from the community for
that, As for that project now

410
00:21:37,840 --> 00:21:39,280
which?
Wasn't always the case.

411
00:21:39,880 --> 00:21:41,800
Wasn't always the case. 100%
something else.

412
00:21:41,880 --> 00:21:43,680
Don't even have it yet in their
numbers.

413
00:21:43,840 --> 00:21:48,360
Appropriately so, I mean St.
Bob's now within four years is

414
00:21:48,360 --> 00:21:51,640
looking like a 200,000 oz
producer with a $300 million EV.

415
00:21:52,520 --> 00:21:56,120
Now we've we've faced similar
situations before when when we

416
00:21:56,120 --> 00:22:00,000
were holding Oceana as a house
and and saw that rewrite.

417
00:22:00,760 --> 00:22:04,680
And I think that it's just
another one of those names that

418
00:22:04,840 --> 00:22:08,800
has historically disappointed a
lot of the people on the on the

419
00:22:08,800 --> 00:22:11,000
buy side.
And so they've been reticent to

420
00:22:11,160 --> 00:22:14,560
to revisit the name, despite I
guess the change you've seen

421
00:22:14,560 --> 00:22:16,880
kind of in the Nova Scotia
environment.

422
00:22:17,400 --> 00:22:20,120
They've de risks seem buried to
some degree, bringing Ling Bao

423
00:22:20,120 --> 00:22:22,320
on as a as a material
shareholder.

424
00:22:22,680 --> 00:22:25,720
So, you know, I think that kind
of changes the complexity of

425
00:22:25,720 --> 00:22:29,960
that asset and, and the capital
requirements for that asset.

426
00:22:29,960 --> 00:22:33,200
And, and, and it's still my
belief or understanding that

427
00:22:33,720 --> 00:22:36,960
Bling Bao would like a, a larger
stake in that asset potentially

428
00:22:36,960 --> 00:22:38,120
in the future.
I mean, they brought the

429
00:22:38,120 --> 00:22:40,240
government on as a 20%
shareholder.

430
00:22:40,240 --> 00:22:42,840
I think there's some in the
market that are still extremely

431
00:22:42,840 --> 00:22:46,240
worried about their, their tax
liability in PNG.

432
00:22:46,240 --> 00:22:48,560
And you know, we're, we're
reticent of that.

433
00:22:48,560 --> 00:22:52,080
We're not, we're not going in,
you know, eyes, eyes shut to

434
00:22:52,080 --> 00:22:55,920
that issue, But they've now
divested A stake within that

435
00:22:56,120 --> 00:22:59,440
potential liability and brought
the government on.

436
00:22:59,440 --> 00:23:03,160
So I would I would assume that
the government is more, you

437
00:23:03,160 --> 00:23:05,000
know, pro that that project
they're.

438
00:23:05,000 --> 00:23:07,520
On your side, now that's that's.
Yeah, 100%.

439
00:23:07,520 --> 00:23:09,160
They're on your side.
They want to see increased

440
00:23:09,160 --> 00:23:13,840
mining activity and I think
they've certainly got the cash

441
00:23:13,880 --> 00:23:16,960
if they if they needed to, but I
just don't think we're facing a

442
00:23:16,960 --> 00:23:20,200
$200 million liability for that,
that tax case.

443
00:23:21,920 --> 00:23:25,000
Time will tell there, but I, I,
yeah, I think, I think St.

444
00:23:25,000 --> 00:23:28,040
Barbara from a value perspective
is, is extremely well placed as

445
00:23:28,040 --> 00:23:31,320
well.
So those that can buy value, I

446
00:23:31,320 --> 00:23:32,440
think, I think it's looking
pretty good.

447
00:23:32,440 --> 00:23:34,600
But, but still, I mean, Genesis
is going to come out with their

448
00:23:34,600 --> 00:23:37,200
updated mine plant, which
includes magnetic.

449
00:23:37,360 --> 00:23:40,200
I think that's going to, that's
going to be extremely well

450
00:23:40,200 --> 00:23:44,040
received, 500,000 oz per annum
free cash flow from that

451
00:23:44,040 --> 00:23:45,480
business is going to be really
strong.

452
00:23:46,080 --> 00:23:47,360
It continues to be really
strong.

453
00:23:47,480 --> 00:23:49,440
I think West Gold is looking
really interesting.

454
00:23:49,440 --> 00:23:51,320
They're one of their companies
that hasn't yet come out with

455
00:23:51,320 --> 00:23:55,040
their quality update yet.
I mean, I think the OPA is

456
00:23:55,880 --> 00:23:59,600
providing some pretty strong
production levels at the moment.

457
00:24:00,280 --> 00:24:02,280
Like all miners.
I think at the moment costs are

458
00:24:02,320 --> 00:24:04,120
kind of going to be in focus for
everyone.

459
00:24:05,280 --> 00:24:09,720
But these types of gold prices
and, you know, these types of

460
00:24:09,720 --> 00:24:11,680
production growth that some of
these companies are seeing, I

461
00:24:11,680 --> 00:24:13,560
still think they're all pretty
well placed to be honest.

462
00:24:15,760 --> 00:24:19,360
Kev, you've, yeah, you've,
you've, you've given us heaps in

463
00:24:19,400 --> 00:24:22,840
a in a very short period of time
and just grateful that you

464
00:24:23,320 --> 00:24:24,400
answered the phone.
Call me back.

465
00:24:24,800 --> 00:24:26,880
Yeah, well, man, I hope, I hope
it was actually you could

466
00:24:26,880 --> 00:24:29,400
actually get some good sound out
of it because I, yeah, it sounds

467
00:24:29,400 --> 00:24:31,680
a bit silly, but I was, I was
driving another fund manager to

468
00:24:31,680 --> 00:24:34,320
the airport as I do my second
job as an Uber driver.

469
00:24:34,360 --> 00:24:37,240
And I was, I was wondering
whether you'd actually be able

470
00:24:37,240 --> 00:24:38,440
to pick up what I was saying.
Probably.

471
00:24:38,440 --> 00:24:40,320
I know I was speaking 1,000,000
miles an hour but.

472
00:24:40,680 --> 00:24:43,280
Cutting out briefly in a tunnel,
maybe, but other than that, that

473
00:24:43,280 --> 00:24:45,280
sounds me beautiful, yeah.
It was awesome.

474
00:24:45,320 --> 00:24:47,640
You'll give it a go at least a
dozen ideas Kev.

475
00:24:47,760 --> 00:24:49,240
Really appreciate your time as
always mate.

476
00:24:50,400 --> 00:24:52,880
No, no, no worries.
And there's plenty to talk

477
00:24:52,880 --> 00:24:54,520
about.
So if if you didn't want to

478
00:24:54,520 --> 00:24:57,080
circle back on any of that or
talk about something completely,

479
00:24:57,080 --> 00:24:59,760
but I mean, I probably didn't
even mention lithium like and

480
00:24:59,760 --> 00:25:01,600
I'm still quite excited about
lithium.

481
00:25:01,600 --> 00:25:03,640
And I think maybe we're going
through a bit of a structural

482
00:25:03,640 --> 00:25:06,200
change.
I mean, I know lithium's pretty

483
00:25:06,200 --> 00:25:08,520
been pretty cyclical over the
last two years and it was my top

484
00:25:08,520 --> 00:25:10,360
pick.
We spoke about in December when

485
00:25:10,360 --> 00:25:13,000
it was 700 bucks a ton spot and
they were at 2500 bucks a ton

486
00:25:13,000 --> 00:25:15,920
spotted.
You can be guilty of of kind of

487
00:25:16,640 --> 00:25:20,160
jumping in at the top, but I do
feel like we've seen another leg

488
00:25:20,160 --> 00:25:24,400
up in the structural story about
around demand for EVs and ESS.

489
00:25:24,400 --> 00:25:26,880
And a lot of people that
probably were considering buying

490
00:25:26,880 --> 00:25:29,920
an EV might now be rethinking
that that kind of thought

491
00:25:29,920 --> 00:25:32,120
process.
Particularly in Australia, it's

492
00:25:32,120 --> 00:25:35,960
fascinating to see like ESS
demand, 30 plus percent, you

493
00:25:35,960 --> 00:25:38,080
know, 30 to 40% of of lithium
demand.

494
00:25:38,080 --> 00:25:39,920
It's just growing.
It's crazy.

495
00:25:39,920 --> 00:25:42,880
Gangbusters.
After last year's big jump, I

496
00:25:42,880 --> 00:25:45,600
think a lot of people were
thinking, oh, ESS will stabilise

497
00:25:45,600 --> 00:25:47,200
or you won't see the same leg
up.

498
00:25:47,200 --> 00:25:50,120
And I think some of these crises
has caused a lot of people to

499
00:25:50,120 --> 00:25:51,640
rethink shit.
Maybe I do need a battery on my

500
00:25:51,640 --> 00:25:54,280
roof, battery in my house and
and solar on the roof.

501
00:25:54,280 --> 00:25:58,520
And yeah, I think that like
we're just going through this

502
00:25:58,520 --> 00:26:02,480
period and, and none of these
projects were kind of in

503
00:26:02,480 --> 00:26:04,640
position because everyone was
just thinking this 700 bucket

504
00:26:04,640 --> 00:26:07,000
ton spot price that we were
seeing is going to, you know,

505
00:26:07,120 --> 00:26:10,920
last for a couple of years.
And the surpluses were supposed

506
00:26:10,920 --> 00:26:14,040
to be there till 20292030.
And now people have reworked

507
00:26:14,040 --> 00:26:16,600
their models with some changes
in Zimbabwe and and you know,

508
00:26:16,920 --> 00:26:20,800
and, and some of the stuff out
of China with the lapidolite

509
00:26:20,800 --> 00:26:24,440
kind of shutdowns, you really
are seems starting to see some

510
00:26:24,440 --> 00:26:26,360
changes.
Like it doesn't take much of a

511
00:26:26,360 --> 00:26:29,480
change in demand and supply
before, you know, we're in kind

512
00:26:29,480 --> 00:26:32,000
of deficit territory again,
which is probably what we're

513
00:26:32,000 --> 00:26:34,480
looking at even even back into
this year into 27.

514
00:26:34,480 --> 00:26:38,480
And, and now, now people are
starting to talk about 2500

515
00:26:38,480 --> 00:26:40,080
being the new normal for the
next few years, right?

516
00:26:40,320 --> 00:26:43,640
Which means maybe Wildcat comes
into the market and you know, Q2

517
00:26:43,640 --> 00:26:47,760
gets funded and yeah, core.
Lithium's coming back on in the

518
00:26:47,760 --> 00:26:49,720
next few months.
Core Lithium coming back on and,

519
00:26:49,760 --> 00:26:53,680
and yeah, you, you chew through
some of those mothballed

520
00:26:53,680 --> 00:26:57,240
projects pretty quickly and
then, you know, it doesn't feel

521
00:26:57,240 --> 00:27:00,280
like there's too many projects
coming into the market in 2027

522
00:27:00,280 --> 00:27:02,840
outside of, you know, some of
these Nigerian and Zimbabwe

523
00:27:02,840 --> 00:27:06,000
supply out of Africa that who
knows what's there, right?

524
00:27:06,400 --> 00:27:07,600
Yeah.
Nagaji restarting.

525
00:27:07,600 --> 00:27:10,600
Australia, yeah, like Wildcat,
Wildcats, probably the only

526
00:27:10,600 --> 00:27:13,560
Greenfield project in Australia
that's that's there.

527
00:27:13,560 --> 00:27:16,800
And you know, Allegra's looking
pretty interesting in terms of

528
00:27:16,880 --> 00:27:18,800
NAL expansion and yeah,
whatever.

529
00:27:18,800 --> 00:27:21,560
But like Q2 and PMAT are still
probably a few years away.

530
00:27:21,560 --> 00:27:25,840
So between 27 and 2829 from a
particular spot perspective,

531
00:27:26,600 --> 00:27:29,520
there's not much meeting that
that shortfall that looks like

532
00:27:29,520 --> 00:27:30,720
it's coming now.
So.

533
00:27:30,840 --> 00:27:33,320
Yeah, so Wildcat.
The elephant in the room that

534
00:27:33,320 --> 00:27:37,320
the Chinese like to talk about.
So Wildcat payment and and and

535
00:27:37,320 --> 00:27:39,600
Q2 they.
They well, Q2's still probably a

536
00:27:39,600 --> 00:27:41,480
couple of years behind Peanut
because they only started a lot

537
00:27:41,480 --> 00:27:42,600
of their environment.
Yeah, so.

538
00:27:42,600 --> 00:27:44,440
But those three, those three
would have to be, you know,

539
00:27:45,120 --> 00:27:47,680
pretty, pretty, pretty healthy
acquisition targets in this

540
00:27:47,680 --> 00:27:49,640
environment too.
Like, you know, you see, you see

541
00:27:49,640 --> 00:27:53,000
100% CPI, 100% cashed up like
crazy again.

542
00:27:53,000 --> 00:27:55,960
And and with a fresh debt
facility, yeah.

543
00:27:56,760 --> 00:27:58,200
Yeah.
So sorry, probably the Brazilian

544
00:27:58,200 --> 00:28:00,240
assets are probably still the
other ones that are probably a

545
00:28:00,240 --> 00:28:02,200
bit of a swing factor, but I
don't feel like they're coming

546
00:28:02,200 --> 00:28:04,600
in the market 27 and maybe more
of a 28 story.

547
00:28:04,600 --> 00:28:06,040
Maybe I've got that wrong
because I've been looking at

548
00:28:06,040 --> 00:28:08,800
them deeply.
But yeah, there's not, there's

549
00:28:08,800 --> 00:28:11,960
not much, there's not much there
that can that can come on in in

550
00:28:11,960 --> 00:28:15,240
any quick fashion.
On the carbonate side, Galan, I

551
00:28:15,280 --> 00:28:17,240
mean much smaller scales and
stuff, but.

552
00:28:18,080 --> 00:28:19,880
Yeah.
So, so carbonate's probably the

553
00:28:20,040 --> 00:28:23,000
the easier.
And I say use the word easier

554
00:28:23,000 --> 00:28:25,240
loosely because it's it's not
easy by any stretch of the

555
00:28:25,240 --> 00:28:27,720
imagination.
But in terms of like near term

556
00:28:27,720 --> 00:28:30,520
production growth, yeah.
And Rios obviously you know,

557
00:28:30,920 --> 00:28:33,280
holds the cards from a carbonate
perspective.

558
00:28:33,280 --> 00:28:35,920
But yeah, there's, there's not a
huge amount out there.

559
00:28:38,120 --> 00:28:40,520
Yeah.
So, yeah, no, I continue to

560
00:28:40,520 --> 00:28:42,760
think that like lithium,
lithium's super, super

561
00:28:42,760 --> 00:28:45,640
interesting at the moment.
Yeah, it's a, it's a fascinating

562
00:28:45,640 --> 00:28:47,600
spot.
I mean, just to see how quickly

563
00:28:47,600 --> 00:28:50,000
it's changed that Pilbara
printed 400 million in cash flow

564
00:28:50,040 --> 00:28:51,760
this this quarter alone just
like that.

565
00:28:51,760 --> 00:28:54,840
It was like the old days.
It's amazing back back.

566
00:28:54,840 --> 00:28:56,280
Yeah.
And I, I haven't done enough

567
00:28:56,280 --> 00:28:58,280
reading yet about Grassberg
overnight.

568
00:28:58,280 --> 00:29:00,480
Like I, I probably need to sit
down, actually do some thinking

569
00:29:00,480 --> 00:29:02,360
over the weekend as to what that
actually means for copper

570
00:29:02,360 --> 00:29:04,480
supply.
But I mean, copper at 6 bucks a

571
00:29:04,480 --> 00:29:06,760
pound is pretty healthy, right?
Like I'd be very happy to take

572
00:29:06,760 --> 00:29:08,000
that for most companies, you
know.

573
00:29:08,000 --> 00:29:11,800
Yeah, whether it be developed,
whether it be Habler or even you

574
00:29:11,800 --> 00:29:14,440
stand for exposure.
I think that, you know, the

575
00:29:14,440 --> 00:29:16,120
copper continues to hold up
pretty well.

576
00:29:16,120 --> 00:29:19,760
So yeah, now I'm sitting here
pretty happy with the picks that

577
00:29:19,840 --> 00:29:22,640
I made it back in the last year.
I think I said energy.

578
00:29:22,640 --> 00:29:25,160
Was going to be.
A big contrarian player did not

579
00:29:25,160 --> 00:29:26,800
foresee like the Middle East
crisis.

580
00:29:26,800 --> 00:29:29,160
And but that's the last thing
you want you want to see occur

581
00:29:29,160 --> 00:29:32,760
to get your call right.
But yeah, I still think energy

582
00:29:32,760 --> 00:29:34,760
is like looking pretty well
placed for the rest of the year

583
00:29:34,760 --> 00:29:36,400
as well.
Yeah, just.

584
00:29:38,440 --> 00:29:41,000
Yeah, I, I think, I think you're
right on that, on that Grasberg

585
00:29:41,000 --> 00:29:45,000
point as well that we're talking
about like .6% of world supply

586
00:29:45,000 --> 00:29:48,080
that's been been curtailed.
Again, like when when we spoke

587
00:29:48,080 --> 00:29:50,600
about it like a year ago,
somebody made the comment that

588
00:29:51,160 --> 00:29:53,960
block caves are bloody hard.
They're they're really hard work

589
00:29:53,960 --> 00:29:55,200
and.
Especially ones with a big

590
00:29:55,200 --> 00:29:57,720
swimming pool on top.
Yeah, yeah, exactly.

591
00:29:57,720 --> 00:29:59,200
So yeah, I'd be.
Yeah.

592
00:29:59,240 --> 00:30:01,880
And like, I mean this, this I
think the other thing as well as

593
00:30:01,880 --> 00:30:05,000
the straight right has been
closed for, you know, a month or

594
00:30:05,000 --> 00:30:08,400
so now.
And the barrels that were flying

595
00:30:08,960 --> 00:30:12,040
have have continued to flow from
when it first closed.

596
00:30:12,040 --> 00:30:15,480
But you're only now starting to
get to a point where whatever

597
00:30:15,480 --> 00:30:19,040
was in the straight, whether it
be oil, whether it be sulfur is

598
00:30:19,040 --> 00:30:20,880
now starting to hit that
pressure point.

599
00:30:20,960 --> 00:30:24,400
So even straight open like
tomorrow, my understanding is

600
00:30:24,400 --> 00:30:27,880
you're going to take four to
five weeks of getting whatever

601
00:30:27,880 --> 00:30:30,000
inventory is in the straight out
to the customer.

602
00:30:30,000 --> 00:30:33,040
So there is this kind of air
pocket for the next month or two

603
00:30:33,720 --> 00:30:36,160
around that inventory.
So I mean, that's gonna impact

604
00:30:36,320 --> 00:30:38,080
copper, it's gonna impact
nickel, it's gonna impact

605
00:30:38,080 --> 00:30:41,040
everything that relies on on
sulfur in the, in the, in the

606
00:30:41,040 --> 00:30:44,040
short term.
So nickel nickel is a really

607
00:30:44,040 --> 00:30:46,560
interesting one because
obviously like Indonesia is a

608
00:30:46,560 --> 00:30:50,680
huge proportion of of world
supply now and H pal is a big

609
00:30:50,680 --> 00:30:54,480
part of the the the processing
energy and sulfuric acid

610
00:30:54,680 --> 00:30:58,080
intensive, right.
And that's in massively

611
00:30:58,080 --> 00:31:01,160
curtailed.
So finding nickel sulfide

612
00:31:01,160 --> 00:31:04,000
players that are operating that
that could benefit they could be

613
00:31:04,000 --> 00:31:06,280
kind of option type players on
on a nickel kick up.

614
00:31:06,280 --> 00:31:13,320
Yeah, A. 100%, So I haven't
spent time looking at nickel

615
00:31:13,320 --> 00:31:15,040
just like everyone else have
kind of found it a bit

616
00:31:15,040 --> 00:31:17,280
challenging, particularly fine
exposures in Australia.

617
00:31:17,280 --> 00:31:19,800
But yeah, all that's looking
really interesting.

618
00:31:22,320 --> 00:31:24,680
No shortage of of work to do,
yeah.

619
00:31:26,640 --> 00:31:29,480
That's 100% right.
Like, and it's changing so

620
00:31:29,480 --> 00:31:32,760
rapidly, like, yeah, you know,
you start focusing on one thing

621
00:31:32,760 --> 00:31:34,920
and then within a week or so
you're kind of changing your

622
00:31:34,920 --> 00:31:37,360
attention to something else.
So, yeah, I think yeah,

623
00:31:37,360 --> 00:31:39,640
continuing to hold a diversified
portfolio of high conviction

624
00:31:39,640 --> 00:31:41,720
ideas is is kind of where you
want to be right now.

625
00:31:42,320 --> 00:31:45,080
Yeah, yeah, Kev, love it.
Kev, you're a legend.

626
00:31:45,680 --> 00:31:47,600
Thank you so much, mate.
Really, really appreciate it.

627
00:31:48,440 --> 00:31:50,280
Always worth a chat boys, always
appreciate it.

628
00:31:50,640 --> 00:31:53,000
I know that you know that one of
the biggest frustrations for

629
00:31:53,000 --> 00:31:55,880
heaps of miners and producers
out there is just being a price

630
00:31:55,880 --> 00:31:59,840
taker and just copping this
price from a lagging index and

631
00:31:59,840 --> 00:32:02,800
not seeing that price reflect
the quality of your product

632
00:32:02,800 --> 00:32:05,720
that's coming out of the ground.
It's unfortunate mate, and it's

633
00:32:06,200 --> 00:32:09,760
but you know, it's one of the
realities of being a miner or a

634
00:32:09,760 --> 00:32:12,800
commodity producer.
However, mate, what you see the

635
00:32:12,800 --> 00:32:15,560
sophisticated specialized
producers doing like like the

636
00:32:15,560 --> 00:32:18,640
climax mollies of the world,
they're using metal sub.

637
00:32:18,640 --> 00:32:21,080
They aren't just sitting back,
they're running structured

638
00:32:21,080 --> 00:32:24,160
bidding events to ensure they're
capturing the absolute best

639
00:32:24,160 --> 00:32:25,480
market premium for their
material.

640
00:32:25,640 --> 00:32:28,400
What they are doing, Trav, is
taking control of the sales

641
00:32:28,400 --> 00:32:29,840
desk.
When you've got a high quality

642
00:32:29,840 --> 00:32:32,680
product like Climax Molly that
you mentioned there, you've got

643
00:32:32,680 --> 00:32:35,520
to be running an auction to get
the best price for your product

644
00:32:35,520 --> 00:32:39,080
so you can consistently beat the
benchmark and not just match it.

645
00:32:39,200 --> 00:32:41,200
Transparent digital auction.
I like the sound of that.

646
00:32:41,440 --> 00:32:44,360
So if you want to move away from
the hope and pray method and

647
00:32:44,360 --> 00:32:46,720
start using the tools the top
tier specialty producers used to

648
00:32:46,720 --> 00:32:48,320
stay ahead, you got to check
this one out.

649
00:32:48,320 --> 00:32:51,480
Money minus.
Join over 3000 other companies

650
00:32:51,480 --> 00:32:54,160
and go to metalshub.com/money of
mine.

651
00:32:54,600 --> 00:32:57,480
Look, JD, we just tried calling
a few, a few extra friends of

652
00:32:57,480 --> 00:33:00,200
the show and lots of people are
busy at the moment,

653
00:33:00,200 --> 00:33:03,680
unfortunately.
But Cav gave us an enormous

654
00:33:03,680 --> 00:33:06,280
amount to think about.
So I actually just wanted to ask

655
00:33:06,280 --> 00:33:09,480
you how how like what do you
reckon?

656
00:33:09,560 --> 00:33:12,000
Here's synopsis of the the
energy situation.

657
00:33:12,080 --> 00:33:13,080
You've been following this like
a hawk.

658
00:33:13,080 --> 00:33:15,640
You've been been reading about
hormones every day.

659
00:33:17,720 --> 00:33:19,480
I think Cav was Cav was all over
it, right?

660
00:33:19,480 --> 00:33:22,080
We, we, we touched on a heap of
interesting topics.

661
00:33:22,080 --> 00:33:24,080
One of the things we didn't
touch on, which I was going to

662
00:33:24,080 --> 00:33:26,720
ask you about is, is coal.
So people have been speaking

663
00:33:27,240 --> 00:33:30,360
about coal more and more.
We saw a lot of the names like

664
00:33:30,800 --> 00:33:34,720
Run Run Hard maybe a month ago,
maybe even more than a month

665
00:33:34,720 --> 00:33:36,720
ago, and then they pulled back a
long way.

666
00:33:36,960 --> 00:33:40,680
Since then we've seen more
chatter about the the the Anglo

667
00:33:40,720 --> 00:33:43,400
spin out of those assets.
We saw the Kestrel deal get

668
00:33:43,480 --> 00:33:45,720
signed as well and then we've
seen the names start to kick up

669
00:33:45,720 --> 00:33:49,200
again.
So Whitehaven is back below what

670
00:33:49,200 --> 00:33:53,600
it was pre Hormuz, which is,
which is like remarkable I

671
00:33:53,600 --> 00:33:55,400
think.
New Hope and Yang Cole as well

672
00:33:55,400 --> 00:33:57,920
had touched lows and now they've
bounced back off them again.

673
00:33:57,920 --> 00:33:59,800
But there's something really
interesting there, like I've

674
00:33:59,840 --> 00:34:01,520
touched on it in.
Ding, Ding, Ding for me.

675
00:34:01,520 --> 00:34:03,720
All of those names, by the way.
On all of them.

676
00:34:03,920 --> 00:34:14,000
Yeah, super, super fun.
So, yeah, look, you know, I'm a

677
00:34:14,000 --> 00:34:19,199
bull on, on thermal coal and and
I do still think that this is

678
00:34:19,199 --> 00:34:23,239
its moment.
And I think like personally, I

679
00:34:23,239 --> 00:34:27,000
see, I see demand for energy
just just, yeah, being being

680
00:34:27,000 --> 00:34:29,239
really, really strong on the on
the back end of that.

681
00:34:29,320 --> 00:34:32,480
Like Cab's comments on, on El
Nino, I hadn't even probably

682
00:34:32,480 --> 00:34:35,080
digested or thought of, but but
I do look at like some of these

683
00:34:35,080 --> 00:34:39,920
companies and I think I think
they've got, they've got, you

684
00:34:39,920 --> 00:34:44,040
know, in many cases like 50 year
life assets, some of these mines

685
00:34:44,040 --> 00:34:46,199
would just go on a very, very
long time.

686
00:34:46,199 --> 00:34:48,719
And they, they traded on
demanding multiples still.

687
00:34:48,719 --> 00:34:52,280
Like, yes, yes, there is the
case that maybe they'll go from,

688
00:34:52,360 --> 00:34:55,880
from trading, you know, four
times down to down to three

689
00:34:55,880 --> 00:34:58,920
times every day.
But I, I think when I, when I

690
00:34:58,920 --> 00:35:01,600
look at the, you know,
especially the, the debt deals

691
00:35:01,600 --> 00:35:05,680
that were done recently, you
know, White Havens dead at a

692
00:35:05,920 --> 00:35:09,280
with a with A6 handle locking
in, you know, long term, long

693
00:35:09,280 --> 00:35:13,320
term debt at 6% when you know
your cost of inflation is going

694
00:35:13,320 --> 00:35:16,280
to be way more than that.
I just think it's it's a a

695
00:35:16,280 --> 00:35:19,040
brilliant time for these like
large miners who can borrow it a

696
00:35:19,040 --> 00:35:23,480
really low, like a low cost.
And then and then they have what

697
00:35:23,480 --> 00:35:26,680
what to me screens as like
infrastructure, like assets,

698
00:35:26,680 --> 00:35:29,840
these long life, beautiful cash
flowing assets, which in good

699
00:35:29,840 --> 00:35:31,760
times can can make super
profits.

700
00:35:31,760 --> 00:35:34,560
I'll be yes, there's yes,
there's, yes, there's, yes,

701
00:35:34,560 --> 00:35:38,320
there's challenges, but but you
know, I'm, I'm not, I'm not

702
00:35:38,320 --> 00:35:39,800
deterred by the demand case
here.

703
00:35:39,800 --> 00:35:43,040
I think we, we need this stuff
for a very, very long time.

704
00:35:43,200 --> 00:35:45,480
And, and it's moments like this
that that comes to the

705
00:35:45,480 --> 00:35:47,320
forefront.
I wouldn't be surprised to see

706
00:35:47,920 --> 00:35:50,320
thermal call, you know, roar in
the second-half of the year.

707
00:35:50,400 --> 00:35:53,120
Yeah, you've sparked two
thoughts in my mind.

708
00:35:53,520 --> 00:35:58,840
One person call related is BHP
reportedly looking at selling.

709
00:35:59,000 --> 00:36:02,840
Let's see if they do that.
But it is an interesting point

710
00:36:02,840 --> 00:36:06,200
in time when you've said for
four plus years now we're not

711
00:36:06,200 --> 00:36:08,520
putting another dollar in this
state because of the royalty

712
00:36:08,520 --> 00:36:09,920
regime.
Like.

713
00:36:10,400 --> 00:36:13,640
Eventually you need to either
invest in in your assets or.

714
00:36:14,080 --> 00:36:15,880
So did you see like just on
that, right.

715
00:36:15,880 --> 00:36:18,160
Like did you see?
And I totally understand why BHP

716
00:36:18,600 --> 00:36:23,560
like will will probably likely
divest their their share of BMA

717
00:36:23,720 --> 00:36:26,480
at a minimum because, because
the return on capital just

718
00:36:26,480 --> 00:36:28,480
doesn't stack up when you, when
you comp against the rest of

719
00:36:28,480 --> 00:36:30,400
portfolio.
They're focusing on high return

720
00:36:30,400 --> 00:36:32,160
on capital endeavours.
It's part of their capital

721
00:36:32,160 --> 00:36:33,640
allocation framework.
I get all of that.

722
00:36:33,960 --> 00:36:36,360
And I don't think they're going
to have the win required on the

723
00:36:36,360 --> 00:36:40,520
royalty front to justify yeah,
like continuing to allocate

724
00:36:40,520 --> 00:36:42,280
capital there.
But what I found super

725
00:36:42,280 --> 00:36:45,720
interesting, I think it was an
article that came out last night

726
00:36:45,720 --> 00:36:48,680
out of Bloomberg.
You saw the three parties in the

727
00:36:48,960 --> 00:36:52,040
in the process.
Stanmore, Mitsubishi and Boomer.

728
00:36:52,400 --> 00:36:55,080
Now.
Now, which one of them like, you

729
00:36:55,080 --> 00:36:58,320
know, just just, you know, jumps
out the most out of those

730
00:36:58,360 --> 00:37:00,400
threads?
Mitsubishi, because Mitsubishi

731
00:37:00,400 --> 00:37:03,000
is the other party in the JV
with BHP.

732
00:37:03,000 --> 00:37:06,160
So BHP is looking like, you
know, this is like Calvary

733
00:37:06,160 --> 00:37:08,880
talking about this is this
Japanese capital thinks long

734
00:37:08,880 --> 00:37:12,880
term.
They, you know, they, they, but

735
00:37:13,280 --> 00:37:15,760
they're like, meanwhile, BHP is
looking to get out of these

736
00:37:15,760 --> 00:37:17,720
assets.
Mitsubishi is actually looking

737
00:37:17,720 --> 00:37:18,800
for more.
So I don't know if that's like

738
00:37:18,800 --> 00:37:20,600
production related.
I don't know if that's got to do

739
00:37:20,600 --> 00:37:22,880
with the capital that's been
allocated in BMA.

740
00:37:23,040 --> 00:37:27,440
But I think, I think you know,
in there is a, a clue about the,

741
00:37:27,600 --> 00:37:31,600
the world's need for, for the
material of these of these coal

742
00:37:31,600 --> 00:37:34,080
mines for a for a very, very
long time going, going to the

743
00:37:34,080 --> 00:37:35,600
future.
Yeah, yeah.

744
00:37:35,600 --> 00:37:37,800
And the other thing that had
jumped into my mind as well is

745
00:37:37,800 --> 00:37:40,840
just like the cost of debt.
We, we saw new debt signed up

746
00:37:40,840 --> 00:37:43,680
across a number of ASX miners as
well.

747
00:37:43,680 --> 00:37:47,760
We're changing their, their,
their capital structure.

748
00:37:48,840 --> 00:37:51,160
The cost of debt is, is so
interesting.

749
00:37:51,160 --> 00:37:54,760
We're in a world right now where
the US 10 year is, is punching

750
00:37:54,760 --> 00:37:57,440
up again.
It was 4.3% when I last looked

751
00:37:57,960 --> 00:38:02,800
and Whitehaven is talking about
a cost of debt of about 6.3%.

752
00:38:03,160 --> 00:38:07,920
So Whitehaven is too is too
percent above 200 basis points

753
00:38:07,920 --> 00:38:10,800
over the 10 year U.S.
Treasury.

754
00:38:10,880 --> 00:38:16,120
Like if you just go back
3:00-ish years when before, I

755
00:38:16,200 --> 00:38:20,840
mean maybe four years before we
had the rate hiking cycle, I

756
00:38:20,880 --> 00:38:23,480
mean, we would have been talking
like 15 plus percentage points

757
00:38:23,480 --> 00:38:27,240
differences between the, the
risk free rate and, and any kind

758
00:38:27,240 --> 00:38:29,520
of code name like that.
That is wild.

759
00:38:29,520 --> 00:38:33,320
Like the the the way the world
works, the the way cycles evolve

760
00:38:33,320 --> 00:38:36,080
and human behavior changes never
ceases to amaze.

761
00:38:36,760 --> 00:38:41,000
Yes, cost of debt, like, yeah,
yeah, I I think it's a wonderful

762
00:38:41,000 --> 00:38:43,160
time to be big borrowing long
term.

763
00:38:43,440 --> 00:38:46,640
Add a fixed low coupon if you
are a miner who has access to

764
00:38:46,640 --> 00:38:49,920
the US debt markets.
It's a beautiful time to do that

765
00:38:49,920 --> 00:38:53,400
because we can all see the
inevitable cost inflation that's

766
00:38:53,400 --> 00:38:56,040
already materializing in a lot
of different, you know, input

767
00:38:56,040 --> 00:38:58,560
areas.
Like heck, if if your borrowing

768
00:38:58,560 --> 00:39:03,520
costs are lower than inflation,
like yeah, I mean it's a no

769
00:39:03,520 --> 00:39:04,960
brainer.
I'll give you one other

770
00:39:04,960 --> 00:39:07,400
interesting thing that's jumped
into my mind as well.

771
00:39:07,800 --> 00:39:13,200
A topic we started talking about
6 to 9 months ago was the rising

772
00:39:13,200 --> 00:39:17,080
use of the yuan, the renminbi,
in commodity markets.

773
00:39:17,080 --> 00:39:18,560
Now there's a really interesting
article.

774
00:39:18,560 --> 00:39:23,360
I think the Journal put this out
that the UAE, they wanted to tap

775
00:39:23,360 --> 00:39:24,800
capital lines.
Obviously they wanted to do it

776
00:39:24,800 --> 00:39:28,280
with the US first swap, but then
secondly they were looking at

777
00:39:28,280 --> 00:39:32,600
potential oil sales to China.
In renminbi in the media, give

778
00:39:32,680 --> 00:39:36,720
us more swaps in USD.
Yes, you caused this war.

779
00:39:36,720 --> 00:39:40,160
Otherwise, yeah, we'll be
selling our oil in renminbi.

780
00:39:40,200 --> 00:39:41,400
Yeah.
And in some sense we're coming

781
00:39:41,400 --> 00:39:43,520
full circle because one of the
things that it instigated us

782
00:39:43,520 --> 00:39:46,680
talking about this was BHB
totally and their standoff with

783
00:39:46,680 --> 00:39:51,560
CMRG, the Yep, still making
cartel, if you like from, from

784
00:39:51,600 --> 00:39:55,000
our good friends in China.
And that was.

785
00:39:55,600 --> 00:39:58,200
Resolved.
Me in one deaf line resolved in

786
00:39:58,240 --> 00:40:00,120
resolved.
In BHPS quarterly report

787
00:40:00,360 --> 00:40:03,560
resolved, yeah.
Negotiations have been put to

788
00:40:03,560 --> 00:40:07,440
bed.
Let's see how that one pans out.

789
00:40:07,520 --> 00:40:11,640
I, I dare say BHP probably had
to give a fair bit in those

790
00:40:11,640 --> 00:40:16,160
negotiations and I yeah, like
we've got no, no real color yet,

791
00:40:16,160 --> 00:40:18,760
but I imagine that stuff will,
will come out over time The.

792
00:40:19,240 --> 00:40:22,880
Well, I dare say the the CEO
change played played a role,

793
00:40:22,880 --> 00:40:25,880
maybe some small role in that
and in the negotiations.

794
00:40:25,880 --> 00:40:31,440
And you reckon, and I do, And I
think the Iran crisis as well

795
00:40:32,040 --> 00:40:32,640
would have.
Do you?

796
00:40:32,880 --> 00:40:35,120
How do you reckon that the CEO,
do you just think what Mike

797
00:40:35,120 --> 00:40:37,040
wants to go out with that that?
Result.

798
00:40:37,040 --> 00:40:39,360
No, no, I think.
I think when it comes.

799
00:40:39,400 --> 00:40:40,920
Overhang had a role in his
departure.

800
00:40:41,360 --> 00:40:45,720
I think he was playing playing a
tough game with with with the

801
00:40:45,720 --> 00:40:47,360
Chinese.
He was he was sticking very

802
00:40:47,360 --> 00:40:49,880
firm.
And it's a way of kind of like

803
00:40:50,480 --> 00:40:55,000
saving face in a sense with with
the outgoing like it.

804
00:40:55,040 --> 00:40:57,720
It was noted that the first
official meeting they had done

805
00:40:57,720 --> 00:41:01,360
with Brendan being the the new
CEO coming on board was to China

806
00:41:01,360 --> 00:41:04,640
was yeah, yeah, was literally to
the steel mills and they are

807
00:41:04,640 --> 00:41:06,600
their most important customer.
I don't.

808
00:41:06,960 --> 00:41:08,880
I'll take the other side.
I don't think that Mike's

809
00:41:08,880 --> 00:41:11,600
departure had to do with this.
I just think that was kind of,

810
00:41:11,760 --> 00:41:13,800
you know, in the making.
It's been around a long time,

811
00:41:15,160 --> 00:41:18,520
but yeah, point.
And the other point is the the

812
00:41:18,760 --> 00:41:21,680
Iran war that that played a role
in this as well.

813
00:41:22,320 --> 00:41:23,760
Yeah.
Do you agree with Cab's

814
00:41:23,920 --> 00:41:31,200
portfolio allocation?
Gold food, food Firts and and

815
00:41:31,320 --> 00:41:35,440
energy well amongst amongst the
first five things, but those are

816
00:41:35,440 --> 00:41:37,520
the three like key ideas he
spoke to us about.

817
00:41:37,720 --> 00:41:42,360
I do I do agree with that.
There was a lot of reminiscence

818
00:41:42,360 --> 00:41:47,040
of the very first conversation
had with Cav 3:00-ish years ago

819
00:41:47,040 --> 00:41:50,800
about just like that structure
that 15% of his portfolio that

820
00:41:50,800 --> 00:41:53,400
has always been gold.
And it's for for times like this

821
00:41:53,440 --> 00:41:56,000
and how he thinks about it.
And what he reference again is

822
00:41:56,000 --> 00:42:00,040
like the the, the almost
structural undervaluing of gold

823
00:42:00,040 --> 00:42:03,320
or underpricing of gold within
the models that that the the

824
00:42:03,320 --> 00:42:05,640
analyst community and and the
street does very, very

825
00:42:05,640 --> 00:42:07,800
interesting.
So that's not by any stretch a

826
00:42:08,040 --> 00:42:11,240
new trend for him is, is spoken
about that for for quite some

827
00:42:11,240 --> 00:42:14,360
time.
And yeah, I think the energy

828
00:42:14,360 --> 00:42:16,520
structurally higher makes makes
a lot of sense.

829
00:42:16,560 --> 00:42:21,040
And the, the, the point on food
on AGS is, is a real point of

830
00:42:21,040 --> 00:42:23,640
concern.
And yeah, from a from a capital

831
00:42:23,640 --> 00:42:26,360
allocation perspective, it's not
not the worst place to be

832
00:42:26,360 --> 00:42:28,640
thinking about.
I agree with him that refining

833
00:42:28,640 --> 00:42:33,640
margins being I for longer is
is, yeah, is an underappreciated

834
00:42:33,840 --> 00:42:36,720
like part of the puzzle.
Definitely, definitely paying

835
00:42:36,720 --> 00:42:38,720
attention to that.
I think you would have sent some

836
00:42:38,720 --> 00:42:40,680
stepping, stepping out of my
comfort zone looking at

837
00:42:40,680 --> 00:42:43,200
refineries, but it's it's
something to read about and

838
00:42:43,200 --> 00:42:44,800
learn about for sure.
You'll be all over it mate.

839
00:42:44,800 --> 00:42:46,480
It's just like, it's just like
metals.

840
00:42:47,000 --> 00:42:49,040
Just like metals.
Awesome mate.

841
00:42:49,040 --> 00:42:52,160
I think that's a great spot to
wrap it money miners have a

842
00:42:52,200 --> 00:42:55,400
fantastic Anzac weekend.
Big thank you to our awesome

843
00:42:55,480 --> 00:42:58,920
partners Sandwich Ground Support
and Metals Hub in the show as

844
00:42:58,920 --> 00:43:01,800
well as Interlinks Focus
Platform by Market Tech and

845
00:43:01,800 --> 00:43:03,920
Exceed Capital.
Good root money miners.

846
00:43:03,920 --> 00:43:05,480
Go Australia.
It's a really long weekend.

847
00:43:06,080 --> 00:43:09,440
Go Australia.
Now remember, I'm an idiot.

848
00:43:09,720 --> 00:43:12,160
JD is an idiot.
If you thought any of this was

849
00:43:12,160 --> 00:43:14,680
anything other than
entertainment, you're an idiot

850
00:43:15,040 --> 00:43:16,160
and you need to read out
disclaimer.