Focusing on fundamentals amid volatility (Matt Fist of Firetrail)

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They've got close to $100
million of net cash on the

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balance sheet.
They've got a huge amount of

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production growth coming up from
a high quality asset.

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We see that business generating
100 million bucks of free cash

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flow on what is today an EB of
250 with a substantial.

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Mine mine.
Happy Friday, money miners, and

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what a Friday it is because you
always upload a long form

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conversation and Jonas and a
Dick darling, you've, you've

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managed to get hold of none
other than Matthew Fist, AKA

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Fisty, who we had the pleasure
of interviewing like like a year

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ago with, with the live wire
guys.

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And that was just a, a pleasure.
But you, you managed to to pin

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him down while you're in
Melbourne.

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What did you talk about?
Yeah, it is hard to believe.

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It had been almost a year since
we we spoke with him mate and a

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lot's happened and he he made
some pretty prescient calls back

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then, which I'm sure was music
to his ears for for me to repeat

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to him.
But we covered a hyperground.

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We, we started with the macro,
but 50 really works from the,

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from the bottom up finding,
finding stocks in that small cap

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space.
So yeah, it's, it's hard to miss

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all the disruptions that have
happened across the commodity

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world and the, the trade war
going on.

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So we get into that a bit and
then we spoke a good bit about

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the Goldies, which I'm sure
people will be keen to hear

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about his, he's long and strong,
a few of the names that we speak

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about quite regularly.
And then the, the, the

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conversation sort of ebbed and
flowed its way through lithium,

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uranium.
We've obviously touched on next

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Gen. when we spoke with him
quite some time ago.

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And yeah, a bit sort of happened
on that one and kind of

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everything in between.
So plenty for the the money

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miners to to dig into in this
conversation. 50 Of course,

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yeah, a portfolio manager at
Fire Trail, but he used to be,

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didn't he used to be a
geologist?

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Yeah, Geo scientists at at BHB
of all stomping grounds.

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Geo scientists, not Geo.
Well I'm I'd still be familiar

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with this problem that that geos
and drillers have.

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I'm sure you know when the drill
rig is just chewing through bits

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faster than you can order
replacements.

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I hear it is a nightmare mate.
I think you're on to something

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and there's one company that
springs to mind mate.

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Black Diamond Drilling Services.
BD Drill, our newest partner

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with pumped to promote these
guys.

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They are the go to name for
consumables.

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So born and bred in Perth, got
an office in Sudbury, Canada,

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distribution hubs all across the
world, even your old stomping

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ground.
Trev Kalgoorlie.

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These guys are known newbies, 30
years in the industry.

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They are leading the pack at
what they do.

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They are.
They manufacture over 600,000

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drill bits a year I hear.
And it's all under strict QA

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testing.
It doesn't stop at bits.

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We're talking down the whole
hammers, drill pipes, Subs,

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casing systems, even complete
drill rigs.

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Plus every accessory you can
dream of.

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Mate what what the BD drill not
do?

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It does get better though mate,
their gear goes the distance.

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It means fewer change outs,
lower costs for your operation

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and that is one of the reasons
why these guys have won

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contracts with the FM, JS of the
World, Rios, Newmont's and heaps

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more.
And here is the kick out.

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They keep inventory on site and
backups in their other hubs, so

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you are never going to have
downtime if you're using BD

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Drill.
Lower cost per meter drill

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making up the team at BD Drill.
Drill smarter, not harder.

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JD, let's RIP into you.
All right, Matthew, Fist from

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Fire Trail.
It's been a hell of a past

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couple weeks in market so I
thought I'd start this

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conversation, but just gauging
the temperature and seeing what

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the emotions have been like and
what the the feeling amongst

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junior portfolio managers has
been like over this little

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period.
Yeah, it's certainly been

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eventful.
Never a dull moment waking up to

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to something new every day.
At the moment, as you know, I

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think we're measured, we're
pretty calm and collected and

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we're just taking everything in
our stride.

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I think heading into this
period, there was a real sense

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of complacency in the market.
Some people were pretty

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comfortable with high price
earnings multiples.

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And I still think there's quite
a bit of complacency in the

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people who are expecting a lot
of these tariffs to be wound

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back or policy positions
reversed.

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We're certainly not approaching
our portfolio like that or any

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of the stocks in our portfolio.
We're assuming that this is very

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much the status quo and and
making decisions on that basis.

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But yeah, as with all market
dislocations, this is what we,

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this is what we get paid for.
This is what we love doing.

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And there's a lot of very, very
good companies on sale both in

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in resources and industrials.
So it's the onus is on us as

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portfolio managers to to make
the right decisions now that

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will drive returns over the next
three years.

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So it's a, it's a great time to
be in markets.

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Yeah, I'm keen to keen to dive
into what you said at the end

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there.
You know, companies being on

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sale, how are you seeing and
maybe you just clarify upfront

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for the listeners that you're
running a small cap fund, so

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your benchmark is the sort of
300th to 100th biggest company

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companies.
That's right.

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Yeah.
I spend about 30% of my time on

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resources.
So, yeah, very much looking

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across the broader market as
well.

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And how are you seeing sort of
valuations amongst that subset

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amongst that subset versus the
the bigger names in Australia

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and even down the bottom end
where you sometimes sort of pick

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a story, be nice and early?
I mean, if you believe current

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market forecasts, then
valuations are cheap in

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resources and in small caps
relative to large.

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But the EE or the earnings is
wrong clearly for many companies

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out there at the moment and
that's what the market's telling

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us.
So we can talk about price to

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earnings multiples for cyclical
companies across the ASX or in

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resources.
But given what's transpired over

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the past couple of weeks, those
earnings estimates need to come

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down substantially.
And you know, who knows where

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where they'll land, but it's
very hard to have a Fairview on

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on valuation in these sort of
markets.

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What you can do and what we do
is focus on on good balance

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sheets and earning certainty.
So identifying those companies

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that do have any certainty
because they're they're going to

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be rare in this sort of
environment.

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And, and you guys sort of by by
nature a bottom up, you're

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focused on picking out the
companies, right, that you

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think, you know, resources might
be a bit different, but in the

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industrial space, the ones that
from the from the ground up have

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have good earnings.
How much time do you actually

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spend on the macro?
Like it can be pretty tempting

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just to to spend all day, you
know, reading what Trump's doing

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what best and what's happening
at a macro level.

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How do you sort of divide your
time at the moment?

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Yeah, we don't look at the macro
at all.

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It's very important to
understand, you know where the

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temperature of the markets are,
you know hear what you're up

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against from a macro
perspective.

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But we are all bottom up when it
comes to resources and

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industrials as well.
And we're always looking at

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valuation relative to market.
We don't take a view on cash

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versus fixed income versus
equities.

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We're always 100% equity market
exposed.

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And as much as possible what we
try and do is eliminate any sort

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of thematic risk in our
portfolio.

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So we're very fortunate in small
caps.

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We can have a portfolio with
with very high tracking error or

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very different to the benchmark
and we don't need to take factor

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bets.
So we don't need to be long

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momentum growth value.
We don't need to take massive

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bets on industrials versus
resources.

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We can have a very active and
high performing portfolio just

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with stock specific risk and
that's what we're really focused

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on.
And is that the core of what we

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do?
So stepping away from resources

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for a moment, if we look at your
portfolio, where are you sort of

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underweight slash overweight, I
know you'd said in the past that

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that benchmark is sort of 30 odd
percent resources, right?

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And you're about on track.
If we look across the the

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spectrum, where are you?
Yeah, that, that's right.

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Yeah.
So dominated by gold at the

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moment as as you and all your
listeners will be aware, the

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gold sector on our numbers, just
looking at the latest numbers

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this morning, up to 16% or just
over 16% of the small orders

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index is gold and roughly 30% is
resources.

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We are pretty much in line with
that on a on a benchmark basis.

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We're not trying to take a view
here on yeah, macro,

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macroeconomic factors as we've
talked about.

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But within that we have a huge
amount of conviction in the

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particular stocks where we've
selected and their ability to

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outperform both in in resources
and and gold and energy as well.

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And and just to, to understand
your style a bit more, how do

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you sort of view a a trading
mindset versus a buy and hold?

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Yeah.
You know what, What might your

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turnover be over a kind of year?
How do you think about that?

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Turnover for us is an outcome.
So we're not looking to make

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decisions based on on turnover.
We don't try and target a

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certain turnover.
If the stock reaches our

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valuation and we do have very,
very strong views on valuation,

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then we will sell.
Typically over the last five or

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ten years that we've been
running the same strategy,

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turnovers mean about 100% per
annum, but that will spark

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materially in times like this
where we have a lot of market

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volatility and if there's a lot
of equity capital market

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activity as well.
I'm I'm curious to just to, to

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learn about the, the fun and
sort of, you know, beating,

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beating your benchmark, which is
obviously what you you strive to

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do.
You've done well at that so far.

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How does it play in with, say,
companies that are that are

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falling?
There's a few in the the

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resources space that that spring
to mind and also the the rises.

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My understanding is that you can
play outside the bounds of the

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the benchmark a bit to yeah to
the to the upside of your your

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unit holders.
Absolutely, Yeah.

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So as you said, the ASX small
words index which is is our

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benchmark is ASX 300 to 100.
We're very happy to to play

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below that and we see a huge
amount of opportunity in the

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market cap stocks as you know
particularly in mining, it's a

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very inefficient market.
It's under researched and that

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that is that is just amazing and
we can generate a huge amount of

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excess returns there.
I think in resources that's

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particularly been the case in
the past couple of years in the

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gold sector in particular.
And then we can also choose to

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invest in in the mid caps if we
want so that ASX 51 to 100 we

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can take positions in that part
of the market pretty rare for

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us.
But you know, we absolutely will

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invest there and hold stocks
that RIP through the small wards

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and into that mid cap part of
the market if we still see some

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good valuation upside.
And in, in terms of sort of

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hedging risk at the moment, I'm
kind of curious it's, it brings

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to mind everyone's sort of
talking about it at the moment.

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You hear a couple people that
might have called it and they

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get all the plaudits.
You know, it's kind of few and

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far between.
But do you think about that at

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all?
I know you mentioned before that

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you don't actually hold a cash
pole yet you're fully invested.

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How do you think about hedging
risk?

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Is it purely from a basis of
picking good companies?

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When, when you say risky,
talking about equity market

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risk, yeah, yeah.
So we, we take the view that if

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people are allocating to our
fund, they want equity market

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risk, they want small cap
exposure and we'll deliver that

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to them.
We'll leave it for asset

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allocators to decide if they
want to be in cash fixed income.

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But if they're invested in our
fund, then we take the view that

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they're paying us to be fully
invested in equities.

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And that's what we deliver.
At times like this, we do have a

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slightly higher cash component
of the portfolio.

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So typically we'd run 3 to 4%
cash at the moment or as of this

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00:10:47,280 --> 00:10:49,320
morning anyway we're sitting at
about 5%.

227
00:10:49,320 --> 00:10:52,000
So slightly overs versus the
long term historical average,

228
00:10:52,240 --> 00:10:54,800
but that's fully covered with
with futures.

229
00:10:54,920 --> 00:10:58,120
So it's a hundred 100% market
exposed at all times.

230
00:10:58,240 --> 00:11:00,920
Yeah.
And where we sit sort of today,

231
00:11:00,920 --> 00:11:03,960
are you, are you getting itchy
to to deploy that extra bit of

232
00:11:04,240 --> 00:11:05,880
capital?
Absolutely.

233
00:11:05,880 --> 00:11:07,800
Yeah.
It's, it's always tempting, but

234
00:11:07,800 --> 00:11:10,640
I think in times like this,
sometimes the hardest thing is,

235
00:11:10,640 --> 00:11:14,040
is to do nothing for a period of
time and, and just let the dust

236
00:11:14,040 --> 00:11:15,400
settle.
There's a massive amount of

237
00:11:15,400 --> 00:11:18,680
uncertainty out there and there
are a huge amount of

238
00:11:18,680 --> 00:11:20,720
opportunities.
It's pretty important to

239
00:11:20,720 --> 00:11:22,400
separate our resources here, I
think from the rest of the

240
00:11:22,400 --> 00:11:25,920
market because clearly, you
know, resources have their own

241
00:11:26,680 --> 00:11:28,600
own characteristics that are
quite unique.

242
00:11:29,360 --> 00:11:33,080
But we are very, very excited
about some of the opportunities

243
00:11:33,360 --> 00:11:35,000
that are presenting themselves
at the moment.

244
00:11:35,000 --> 00:11:37,840
And as we talked about prior to
this of being in WA and, and

245
00:11:37,840 --> 00:11:41,280
Adelaide in the past couple of
days, meeting companies, which I

246
00:11:41,280 --> 00:11:43,440
won't tell you who they are for
obvious reasons, but you know,

247
00:11:43,440 --> 00:11:47,560
share prices down 3040% in the
last month alone, you know, and

248
00:11:47,560 --> 00:11:48,920
we'd love to earn them at a
point in time.

249
00:11:50,000 --> 00:11:53,080
Unfortunately, them being down
30 or 40% doesn't really single

250
00:11:53,080 --> 00:11:55,840
them out too much in the moment.
Yeah.

251
00:11:55,840 --> 00:11:58,960
So let's let's talk resources,
right, let's let's talk

252
00:11:59,160 --> 00:12:04,320
commodities and kind of trace
how the the broader macro is

253
00:12:04,320 --> 00:12:06,320
really playing into the the
resources.

254
00:12:06,320 --> 00:12:09,440
So I think the, you know, the
obvious connections are

255
00:12:09,720 --> 00:12:14,480
terrorists bad China hurts the
biggest consumer of commodities

256
00:12:14,520 --> 00:12:17,400
globally and that can really
hurt Australia.

257
00:12:17,400 --> 00:12:20,760
We've started to see it in iron
ore, which had a bit of a

258
00:12:20,760 --> 00:12:23,760
delayed response.
We've seen it amongst some other

259
00:12:23,760 --> 00:12:25,880
sort of commodities, some more
dramatic than others.

260
00:12:25,960 --> 00:12:30,760
But what what do you make of the
the notion that this trade war

261
00:12:30,760 --> 00:12:32,800
will cause a slowdown for China
that's really going to hurt the

262
00:12:32,800 --> 00:12:35,880
Australian economy?
I'm concerned about it, yeah.

263
00:12:35,880 --> 00:12:39,360
I think it'd be remiss of anyone
not to be, you know, as an

264
00:12:39,360 --> 00:12:41,840
Australian, as an investor in
resources as well.

265
00:12:42,280 --> 00:12:45,120
But I think you need to, you
know, just take a step back here

266
00:12:45,120 --> 00:12:48,200
and and look at the macro and
the context of the individual

267
00:12:48,200 --> 00:12:49,800
companies.
We can invest in that position

268
00:12:49,800 --> 00:12:52,600
on the cost curve and what that
means for longer term prices.

269
00:12:55,040 --> 00:12:58,480
The moves we're seeing in
copper, zinc, aluminium in my

270
00:12:58,480 --> 00:13:02,680
view over the past 3-4 days or
three, four trading sessions I

271
00:13:02,680 --> 00:13:06,600
should say, don't really reflect
in our view the fundamentals of

272
00:13:06,600 --> 00:13:09,920
what is a pretty tight supply
and demand, fundamentally tight

273
00:13:09,920 --> 00:13:13,080
supply and demand market.
And they're more driven by

274
00:13:13,080 --> 00:13:16,280
financial market participation,
which is, you know, speculating

275
00:13:16,280 --> 00:13:20,360
on a global growth slowdown.
And that's that is what it is.

276
00:13:20,680 --> 00:13:23,760
But what I'd say, you know,
China is the most important

277
00:13:24,080 --> 00:13:27,440
consumer of, of all commodities,
just about particularly the ones

278
00:13:27,440 --> 00:13:30,280
that Australia produce.
And over the last 20 years, if

279
00:13:30,280 --> 00:13:33,720
there's ever been a slowdown in
the global economy or, or in the

280
00:13:33,760 --> 00:13:39,000
US, they have not hesitate, not
hesitate to stimulate their

281
00:13:39,000 --> 00:13:41,480
domestic economy through
construction and property and

282
00:13:41,480 --> 00:13:43,320
infrastructure.
This will be no different.

283
00:13:44,000 --> 00:13:47,960
The Chinese government started
that I think in September last

284
00:13:47,960 --> 00:13:49,560
year.
I think we caught out last in,

285
00:13:49,640 --> 00:13:51,760
you know, late in the year after
I just got back from China in

286
00:13:51,760 --> 00:13:56,080
November, Robert was hitting the
the road then they've continued

287
00:13:56,080 --> 00:13:59,080
that and accelerated,
accelerated post the US

288
00:13:59,080 --> 00:14:01,040
election.
And this is only going to add

289
00:14:01,040 --> 00:14:04,160
further fuel to the fire.
So, you know, I'd say don't get

290
00:14:04,280 --> 00:14:06,600
don't, don't get too negative
and particularly don't get too

291
00:14:06,600 --> 00:14:09,360
negative on steelmaking
commodities like Coke and Cola

292
00:14:09,360 --> 00:14:09,840
and on.
Or.

293
00:14:09,840 --> 00:14:12,800
And yeah, in reality sense, they
could actually be set up pretty

294
00:14:12,800 --> 00:14:14,560
well.
You're a cool head Fisty.

295
00:14:15,400 --> 00:14:18,560
I'm keen to dive into that more
the, the stimulus part, because

296
00:14:19,040 --> 00:14:21,280
one of the arguments that was
made at the at the time

297
00:14:21,280 --> 00:14:24,880
September when Chinese equity
markets rallied really, really

298
00:14:24,880 --> 00:14:28,360
hard, sort of 30% over the space
of the week was that a lot of

299
00:14:28,360 --> 00:14:33,600
that stimulus was sort of
monetary and basic kind of

300
00:14:33,600 --> 00:14:37,240
financial assets as opposed to
being fiscal that's going to,

301
00:14:37,280 --> 00:14:40,840
you know, kick start property
development infrastructure.

302
00:14:41,520 --> 00:14:43,920
Do you anticipate now that we're
going to we're going to see more

303
00:14:43,920 --> 00:14:48,400
of this fiscal type stimulus
that tries to kind of spur

304
00:14:48,400 --> 00:14:51,960
demand for for commodities as
opposed to more monetary side

305
00:14:52,120 --> 00:14:55,480
stimulus?
Or look, yeah, I'm trying not to

306
00:14:55,480 --> 00:14:58,000
get in the prediction game too
much, even though that's my.

307
00:14:58,040 --> 00:15:00,680
Job.
Yeah, you're reaching the limits

308
00:15:00,680 --> 00:15:02,920
of my macroeconomic prediction
skills here.

309
00:15:03,200 --> 00:15:07,160
But let's comment about what
we're actually seeing on the

310
00:15:07,160 --> 00:15:09,720
ground right now because that's
what we can observe and what we

311
00:15:09,720 --> 00:15:12,160
can make decisions on as
portfolio managers and

312
00:15:12,160 --> 00:15:14,800
investors.
And what we're seeing, whether

313
00:15:14,800 --> 00:15:18,400
it's apartment sale numbers,
machinery sales, industry

314
00:15:18,400 --> 00:15:21,520
numbers, we're seeing, you know,
double digit increases year on

315
00:15:21,520 --> 00:15:24,280
year up to 20 to 30% in some in
some cases.

316
00:15:25,000 --> 00:15:26,880
So last year when we were
sitting here talking about

317
00:15:26,880 --> 00:15:29,280
potential stimulus in the
Chinese economy, it was really

318
00:15:29,280 --> 00:15:31,800
reading the the policy tea
leaves about what could

319
00:15:31,800 --> 00:15:33,840
potentially come now.
Now we're seeing that hit the

320
00:15:33,840 --> 00:15:36,600
ground and it's not, you know,
speculative anymore.

321
00:15:36,600 --> 00:15:40,680
This is, this is really
happening and absent what's

322
00:15:40,680 --> 00:15:43,800
happened in the past week in
terms of macro shocks, we think

323
00:15:43,800 --> 00:15:47,240
the commodity sector was was set
up extremely well just on that

324
00:15:47,240 --> 00:15:50,080
basis, Lauren and we're going to
see further, further stimulus

325
00:15:50,080 --> 00:15:52,480
come through.
Very curious to hear as well

326
00:15:52,480 --> 00:15:55,800
from your, your visit there late
last year, what, what were the

327
00:15:55,800 --> 00:15:59,160
other sort of takeaways, whether
they be sort of specific to

328
00:15:59,160 --> 00:16:01,840
certain commodities or across
the board where they were the

329
00:16:01,840 --> 00:16:05,760
things that just you didn't kind
of realize were as big a trend

330
00:16:05,760 --> 00:16:07,560
or anything else that really
stuck in the mind.

331
00:16:09,880 --> 00:16:12,480
Gosh, that's thinking about.
Put you on the spot.

332
00:16:16,800 --> 00:16:19,280
I have to say it was a pretty
good trip in terms of terms of

333
00:16:19,280 --> 00:16:21,880
read throughs and yeah, the
insights that we got.

334
00:16:22,040 --> 00:16:24,880
We spent a lot of time, a lot of
time in the lithium market,

335
00:16:25,000 --> 00:16:28,240
visiting some mines in a couple
of different provinces, going to

336
00:16:28,240 --> 00:16:34,600
some car factories.
And yeah, I came away amazed

337
00:16:34,600 --> 00:16:38,320
that they're able to mine some
of the grades that they do mine

338
00:16:38,320 --> 00:16:42,640
over there and then, you know,
do that at a cash cost that

339
00:16:42,640 --> 00:16:45,320
makes sense at current prices or
slightly above.

340
00:16:46,240 --> 00:16:51,120
And the fact that those car and
battery raw material supply

341
00:16:51,120 --> 00:16:55,840
chains are all within a very
confined in a confined space.

342
00:16:55,840 --> 00:16:58,400
And so you're going from mining
lithium, even though it's low

343
00:16:58,400 --> 00:17:02,000
grade to producing a battery to
producing a car, you know,

344
00:17:02,000 --> 00:17:05,560
confined geographic area with
cheap energy, cheap later labor

345
00:17:05,839 --> 00:17:09,160
and very good technology.
And, you know, the

346
00:17:09,160 --> 00:17:12,760
competitiveness of the, the
Chinese auto sector and, and

347
00:17:12,760 --> 00:17:14,680
even their lithium mines, I
think is something that we're

348
00:17:14,680 --> 00:17:18,319
going to have to learn to
grapple with because we're, you

349
00:17:18,319 --> 00:17:21,240
know, the, the, the WA mines,
they're the high cost ones, I

350
00:17:21,240 --> 00:17:23,440
think when you take into account
all the transport and that sort

351
00:17:23,440 --> 00:17:25,280
of stuff.
So that was, that was a really

352
00:17:25,280 --> 00:17:28,640
interesting insight.
And as anyone who's seen the BYD

353
00:17:28,760 --> 00:17:31,000
cars driving around the road so
recently, we've seen those,

354
00:17:31,000 --> 00:17:33,120
those sales explode everywhere.
Everywhere.

355
00:17:33,200 --> 00:17:34,080
Yeah.
And they're pretty good.

356
00:17:34,320 --> 00:17:36,520
They're pretty good.
One of my colleagues, Blake's

357
00:17:36,520 --> 00:17:38,000
got one, He's got the sea lion
loves it.

358
00:17:39,520 --> 00:17:44,000
And you know, that is just going
to be a continuation of of, I

359
00:17:44,000 --> 00:17:45,160
think we're just in the infancy
of that.

360
00:17:46,000 --> 00:17:48,800
Yeah, it's crazy.
You saw the the BYD shark as

361
00:17:48,800 --> 00:17:50,800
well.
Six best seller in Australia

362
00:17:51,240 --> 00:17:53,880
year to date.
I think that's yeah.

363
00:17:54,000 --> 00:17:56,760
I mean, we don't quite have the
same tariffs the the rest of the

364
00:17:56,760 --> 00:17:59,800
world has, but you can see why
it's such a important part

365
00:17:59,800 --> 00:18:02,360
because the competitiveness is
is through the roof, right?

366
00:18:02,440 --> 00:18:03,240
Absolutely.
Yeah.

367
00:18:03,240 --> 00:18:07,080
I think it's potentially a
byproduct of what we're seeing

368
00:18:07,080 --> 00:18:10,160
at the moment in global markets
is really going to be of the

369
00:18:10,160 --> 00:18:13,120
benefit to Australian consumers
if we're able to access cheap

370
00:18:13,520 --> 00:18:16,160
Chinese EVs and cheap goods that
otherwise might have gone to the

371
00:18:16,160 --> 00:18:19,520
US.
On on the topic of EVs, taking a

372
00:18:19,520 --> 00:18:23,480
step back, how do you view the
the energy transition trend?

373
00:18:23,480 --> 00:18:28,840
This was sort of all the rage
over the sort of 2020 to 23 ish

374
00:18:29,240 --> 00:18:32,320
kind of period.
You know, resource investors

375
00:18:32,440 --> 00:18:34,040
were not excluded from that by
any means.

376
00:18:34,040 --> 00:18:36,520
You know, they were sort of
leading the leading the charge,

377
00:18:36,520 --> 00:18:40,120
but it's sort of been been
dialed back as other other

378
00:18:40,120 --> 00:18:42,480
issues come to the fore.
How do you how do you see the

379
00:18:42,480 --> 00:18:47,280
broader narrative at the moment?
I think it's progressing as as

380
00:18:47,280 --> 00:18:51,840
we forecast AV sales have been
volatile, but they're increasing

381
00:18:51,840 --> 00:18:55,400
penetration globally.
Yeah, everything else that I

382
00:18:55,400 --> 00:18:59,120
see, stationary storage is
increasing rapidly and is going

383
00:18:59,120 --> 00:19:01,480
to become a huge driver of
lithium demand and maybe even

384
00:19:01,480 --> 00:19:05,280
overtake EVs in time.
So yeah, I think it's

385
00:19:05,280 --> 00:19:07,680
progressing.
What's really changed is just

386
00:19:07,680 --> 00:19:10,240
the supply side dynamics.
We've gone from a chronically

387
00:19:10,240 --> 00:19:14,080
undersupplied market in many of
those raw materials to now being

388
00:19:14,080 --> 00:19:16,440
oversupplied and a huge part of
that's come from Africa and

389
00:19:16,440 --> 00:19:18,440
China, and that's just
fundamentally changed the game.

390
00:19:18,440 --> 00:19:21,120
So no, no issues on the demand
side of the equation.

391
00:19:21,640 --> 00:19:25,560
It's all about supply for me.
And what did it sort of leave

392
00:19:25,560 --> 00:19:29,040
you thinking about maybe a few
of your exposures in the in the

393
00:19:29,040 --> 00:19:32,040
lithium basket in the in the
portfolio coming back.

394
00:19:32,040 --> 00:19:35,640
Some of these names are are
notably shorted, not to the same

395
00:19:35,640 --> 00:19:39,400
extent they were last year, but
have you, have you taken a sort

396
00:19:39,400 --> 00:19:40,640
of against the grand view on
them?

397
00:19:42,280 --> 00:19:44,840
No, we've, we've been pretty
cautious on that sector for a

398
00:19:44,840 --> 00:19:48,040
while.
I'd say we're starting to get

399
00:19:48,040 --> 00:19:52,000
pretty interested though, I
mean, again, taking back to the

400
00:19:52,000 --> 00:19:54,080
actual companies rather than
getting too caught up in the

401
00:19:54,080 --> 00:19:58,280
macro companies like IGO, which
we don't own at the moment, but

402
00:19:58,680 --> 00:20:02,440
even at current prices
generating huge amounts of free

403
00:20:02,440 --> 00:20:07,480
cash flow from Greenbushes.
Yeah, that that, that is sort of

404
00:20:07,920 --> 00:20:10,320
hidden if it within different
corporate structures and

405
00:20:10,320 --> 00:20:12,040
reinvestment in the asset at the
moment.

406
00:20:12,040 --> 00:20:15,600
But yes, companies like that,
there's potentially some real

407
00:20:15,720 --> 00:20:18,120
really, really good valuation
opportunities emerging.

408
00:20:18,560 --> 00:20:21,120
Remain very cautious on on the
higher cost producers.

409
00:20:21,120 --> 00:20:24,400
We think you are going to need
to be able to compete at lithium

410
00:20:24,400 --> 00:20:25,720
prices at or around these
levels.

411
00:20:25,720 --> 00:20:28,480
But if you can find an asset
like Greenbushes that's

412
00:20:28,480 --> 00:20:31,560
generating good cash at current
prices with the potential for a

413
00:20:31,560 --> 00:20:35,440
rebound, then to us that's when
we start to get excited from an

414
00:20:35,440 --> 00:20:37,720
investment standpoint.
And no one's talking about

415
00:20:37,720 --> 00:20:39,640
lithium.
So it's always a good time to

416
00:20:39,640 --> 00:20:42,240
invest right when it's gone from
being hated to no one's even

417
00:20:42,240 --> 00:20:44,400
talking about it.
Yeah, yeah, low on the cost

418
00:20:44,400 --> 00:20:46,320
curve tends to be the, the safer
way.

419
00:20:47,040 --> 00:20:49,880
Just to just to expand for a
second on, on what you said

420
00:20:49,880 --> 00:20:53,200
though with, with the kind of
harsh realization that we in

421
00:20:53,400 --> 00:20:57,120
Washington are much higher, you
know, on aggregate and the cost

422
00:20:57,120 --> 00:21:00,680
curve than what we what we kind
of thought we were.

423
00:21:00,760 --> 00:21:04,240
Is there any other kind of
projects that start to tempt you

424
00:21:04,240 --> 00:21:07,120
or is it a, is it a bit touch
and go and you got to kind of

425
00:21:07,240 --> 00:21:10,600
see where we where prices sort
of sit and whether these

426
00:21:10,600 --> 00:21:12,960
companies can really pull in
prices anymore?

427
00:21:13,640 --> 00:21:15,880
I think there's some, there's
going to be some really hard

428
00:21:15,880 --> 00:21:20,280
decisions that need to get made
in the next 612 months for some

429
00:21:20,280 --> 00:21:22,280
of these assets.
And I think some of them

430
00:21:22,280 --> 00:21:24,640
probably need to go in to carry
on maintenance to see the market

431
00:21:24,640 --> 00:21:27,960
rebalance.
Yeah, when sort of go into which

432
00:21:27,960 --> 00:21:31,000
assets or anything like that.
But yeah, I think, yeah,

433
00:21:31,880 --> 00:21:34,480
Australia is at the top end of
the cost curve at the moment and

434
00:21:35,120 --> 00:21:39,040
some of the assets here probably
do need to to to idle to see the

435
00:21:39,040 --> 00:21:43,600
market rebalance.
How do you think about Aussie

436
00:21:43,920 --> 00:21:47,240
cost competitive more broadly?
Not not being specific to the,

437
00:21:47,360 --> 00:21:50,320
to the lithium names, but it's
something we'd spoken about on

438
00:21:50,320 --> 00:21:54,120
the show quite a bit lately with
the, you know, the futurization

439
00:21:54,120 --> 00:21:56,760
of mines, the automation and,
and all these sorts of things.

440
00:21:56,760 --> 00:22:00,920
But you've got very real sort of
political kind of challenges,

441
00:22:00,920 --> 00:22:04,040
you know, for the for the cost
structure of Australian mining

442
00:22:04,520 --> 00:22:07,960
more broadly.
Are there are these sort of

443
00:22:07,960 --> 00:22:11,040
concerns pretty pressing for you
or that you think that there's

444
00:22:11,040 --> 00:22:13,440
sort of shorter term quieter
noises at the moment?

445
00:22:14,640 --> 00:22:17,080
Yeah.
I mean, it's, it's not what I

446
00:22:17,080 --> 00:22:21,440
focus on, but as a, you know, as
a participant in, in the market

447
00:22:21,440 --> 00:22:23,320
and someone who's really
passionate about the mining

448
00:22:23,320 --> 00:22:27,120
sector, I think that we really
need to invest and we need to

449
00:22:27,120 --> 00:22:31,800
have the right settings from a,
a political and a a social

450
00:22:31,800 --> 00:22:34,800
perspective to continue to
enable the mining sector to keep

451
00:22:34,800 --> 00:22:37,520
on delivering the fantastic
windfall benefits that it's

452
00:22:37,520 --> 00:22:40,800
delivered really, you know,
since the 1800s to, to

453
00:22:40,800 --> 00:22:43,440
Australia.
And it's really concerning to me

454
00:22:43,680 --> 00:22:46,680
when I go to places overseas and
see their cost structures, the

455
00:22:46,680 --> 00:22:49,480
amount of infrastructure they
have, and then to come back and

456
00:22:49,480 --> 00:22:53,200
see some of our sectors here.
And you know, yeah, it, it makes

457
00:22:53,200 --> 00:22:55,280
me concerned as as an investor
as well.

458
00:22:55,640 --> 00:22:58,440
Yeah, for sure.
Let's let's talk about gold.

459
00:22:58,440 --> 00:23:04,040
So you, you said it's not
towards 16% of the of the, the

460
00:23:04,040 --> 00:23:06,920
benchmark that you follow and
you know, equally a big part of

461
00:23:06,920 --> 00:23:11,440
your portfolio and I've sort of
dug into it quite a bit.

462
00:23:11,440 --> 00:23:13,800
But do you consider yourself a
gold bull at all?

463
00:23:13,800 --> 00:23:16,240
Or are you just working again
from from the bottom up and

464
00:23:16,240 --> 00:23:19,440
picking companies you like and.
Projects you like I'm a genesis

465
00:23:19,440 --> 00:23:23,640
bull I.
Might hear that.

466
00:23:25,080 --> 00:23:28,680
So I mean, we we very, very much
take the view that gold is a

467
00:23:28,680 --> 00:23:31,400
currency, not a commodity.
Against that backdrop, it's very

468
00:23:31,400 --> 00:23:34,040
hard to have a fundamental view
on supply and demand, although

469
00:23:34,040 --> 00:23:38,960
you can try, people do, but
we're we're confident in our

470
00:23:38,960 --> 00:23:40,560
ability to try and pick stocks
within that.

471
00:23:40,800 --> 00:23:44,320
Well, obviously when we're
assessing valuation, we'll put

472
00:23:44,320 --> 00:23:47,680
in a range of different
assumptions and, and look at

473
00:23:47,680 --> 00:23:51,280
what that spits out, including
forward curves, broker estimates

474
00:23:51,400 --> 00:23:54,120
and spot as well and make our
decisions on that view.

475
00:23:54,320 --> 00:23:57,120
But we're making decisions on a
sector relative perspective from

476
00:23:57,120 --> 00:24:01,760
a sector relative perspective.
So you know for the top holdings

477
00:24:01,760 --> 00:24:04,320
in our portfolio at the moment
in the gold space, great land

478
00:24:04,320 --> 00:24:10,360
gold in Genesis, we see 50%
upside ish route to the rest of

479
00:24:10,360 --> 00:24:13,520
the sector for those companies
if they deliver what we think

480
00:24:13,520 --> 00:24:15,120
they can over the next three
years.

481
00:24:15,120 --> 00:24:18,000
And so that's the basis on on
which we invest and hold them,

482
00:24:18,040 --> 00:24:20,560
not a a top down view on the the
gold press all.

483
00:24:21,160 --> 00:24:22,840
Right, let's let's dig into it
some more.

484
00:24:22,840 --> 00:24:25,720
So, so Genesis, you've been a
fan for for quite some time.

485
00:24:25,880 --> 00:24:30,000
Riley and the team have done a a
pretty stellar job since they

486
00:24:30,240 --> 00:24:33,760
grabbed the wheel, you know, 3-3
or four years ago.

487
00:24:33,760 --> 00:24:37,480
Now that we go through it, you,
you know, you obviously

488
00:24:37,640 --> 00:24:40,160
highlighted a, a pretty bullish
outlook.

489
00:24:40,480 --> 00:24:42,840
I think you've got a much sort
of stronger view on, on Tower

490
00:24:42,840 --> 00:24:47,480
Hill getting getting mined
before I guess consensus does.

491
00:24:47,480 --> 00:24:51,440
You've got, you know, bullish
views on each meal getting

492
00:24:51,440 --> 00:24:53,560
expanded as well in in due
course.

493
00:24:53,560 --> 00:24:56,600
Can you can you go into a bit
more detail on on why you are

494
00:24:56,960 --> 00:24:58,520
such a fan of the company?
Yeah, sure.

495
00:24:58,520 --> 00:25:00,640
I mean, it's very simple,
Genesis.

496
00:25:00,760 --> 00:25:05,160
In my view, there's 15,000,000
oz or so of resources and three

497
00:25:05,160 --> 00:25:07,600
in reserves and 3,000,000 ounces
in reserves.

498
00:25:07,800 --> 00:25:10,480
The company in our view at the
moment is being valued on a base

499
00:25:10,480 --> 00:25:15,920
case plan whereby the company
produces at 325,000 oz into

500
00:25:15,920 --> 00:25:20,160
perpetuity or thereabouts and
extracts that 3,000,000 oz.

501
00:25:20,440 --> 00:25:24,240
Given what's happened with the
gold price in the past 1218

502
00:25:24,240 --> 00:25:28,240
months, even before that, that's
just not a realistic scenario at

503
00:25:28,240 --> 00:25:29,920
all.
If you look through Janice

504
00:25:30,040 --> 00:25:33,600
Genesis recent quarterly
announcements, you can see very

505
00:25:33,600 --> 00:25:36,320
clearly that they're building or
stockpiles, they're building

506
00:25:36,320 --> 00:25:37,760
inventory.
They are they are meal

507
00:25:37,760 --> 00:25:40,720
constrained at the moment.
When you've got that much

508
00:25:40,720 --> 00:25:43,840
inventory again 15,000,000
ounces of high quality inventory

509
00:25:44,600 --> 00:25:46,520
and you're meal constrained,
there is only one thing that you

510
00:25:46,520 --> 00:25:50,880
do to to extract the cash flows
bring for that MPV for

511
00:25:50,880 --> 00:25:52,960
shareholders and that is to
expand meals.

512
00:25:52,960 --> 00:25:56,360
And so yeah, well, so yeah, I
don't know.

513
00:25:56,360 --> 00:25:59,880
I strongly suspect that there'll
be meal expansions both at

514
00:25:59,880 --> 00:26:05,280
Leonora and at Laverton in the
next 12/18/24 months.

515
00:26:05,280 --> 00:26:08,760
And that will enable, you know,
the company to bring forward

516
00:26:08,760 --> 00:26:12,160
Tower Hill Australia and a
number of other assets as well

517
00:26:12,160 --> 00:26:15,400
that are currently not factored
in by the market.

518
00:26:16,400 --> 00:26:19,000
And that will, yeah,
consequently result in more

519
00:26:19,000 --> 00:26:22,120
production, more cash flow and a
higher valuation.

520
00:26:22,320 --> 00:26:24,400
And we think the market's just
just really playing catch up

521
00:26:24,400 --> 00:26:26,960
here.
Pretty compelling.

522
00:26:27,360 --> 00:26:30,120
How do you, how do you
anticipate the financing of of

523
00:26:30,120 --> 00:26:33,720
the expansions with sort of cash
and time that they'll build up?

524
00:26:33,720 --> 00:26:37,360
Do you foresee, I mean, we've,
we've spoken in the past about

525
00:26:37,360 --> 00:26:39,960
your views on, on companies
with, with debt just to sort of

526
00:26:39,960 --> 00:26:41,960
round out the argument on, on
Genesis?

527
00:26:42,880 --> 00:26:46,680
Yeah, it's it'll all be self
funded if generating very strong

528
00:26:46,680 --> 00:26:48,400
cash flows given the gold price
at the moment.

529
00:26:48,400 --> 00:26:50,240
I think that's probably one
thing that really has changed in

530
00:26:50,240 --> 00:26:53,240
the past 12 months.
And then the company will tell

531
00:26:53,240 --> 00:26:56,760
you this is they were prepared
to take on debt over the next

532
00:26:56,760 --> 00:26:59,480
couple of years to to invest in
those growth projects.

533
00:27:00,240 --> 00:27:03,200
There is no need for debt now,
certainly no need for equity.

534
00:27:03,800 --> 00:27:06,960
And so we expect that to be all
self funded and and as a

535
00:27:06,960 --> 00:27:10,080
consequence it will have a great
per share impact.

536
00:27:10,600 --> 00:27:13,280
Genesis, if you guys are
thinking of expanding your plant

537
00:27:13,280 --> 00:27:16,400
or any other miners out there,
if you've got work that requires

538
00:27:16,400 --> 00:27:19,200
the best engineering
capabilities the industry has to

539
00:27:19,200 --> 00:27:22,440
offer, it's time to call that
the big guns, Quattro Project

540
00:27:22,480 --> 00:27:24,320
Engineering.
JD These guys don't just

541
00:27:24,320 --> 00:27:26,920
engineer projects, they make
everything run smoother.

542
00:27:27,160 --> 00:27:30,280
It's true mate, Quattro works at
the surface, They work

543
00:27:30,280 --> 00:27:33,440
underground, from blue sky
concepts through to the DFS

544
00:27:33,440 --> 00:27:36,760
construction and keeping the
whole thing running without a

545
00:27:36,760 --> 00:27:40,040
hiccup to your operations.
They'll design it, engineer it,

546
00:27:40,040 --> 00:27:41,280
source the gear, build the
thing.

547
00:27:41,280 --> 00:27:43,720
Commissioner.
Talk about expertise, JD.

548
00:27:44,040 --> 00:27:46,960
Mate, if you're a minor out
there, you might be expanding

549
00:27:46,960 --> 00:27:49,640
your plant, you might be
modernizing the circuit, or just

550
00:27:49,960 --> 00:27:52,960
tired of projects that drag on
way longer than they should.

551
00:27:53,400 --> 00:27:55,160
Talk to the crew that actually
gets the job done.

552
00:27:55,160 --> 00:27:58,880
Jeremy Palmer and the whole team
at Quattro Project Engineering.

553
00:27:59,080 --> 00:28:01,280
Engineering experts, no
headaches.

554
00:28:01,600 --> 00:28:04,040
Go Quattro.
And I think the the sort of

555
00:28:04,200 --> 00:28:08,440
logical next place people would
take that sort of debate is when

556
00:28:08,440 --> 00:28:11,160
they have expanded meals, where
where do they look around just

557
00:28:11,160 --> 00:28:13,560
to just to fill it out if if
need be.

558
00:28:13,560 --> 00:28:18,080
I know you've said they've got a
a ton in in resource and and

559
00:28:18,080 --> 00:28:20,200
reserve already.
Do you do you have a strong view

560
00:28:20,280 --> 00:28:22,520
here?
If you speak to rally, say

561
00:28:22,520 --> 00:28:25,960
there's no need for for M and AI
know he's you know can can make

562
00:28:25,960 --> 00:28:28,240
up his own mind.
But how do you view that debate?

563
00:28:28,840 --> 00:28:32,320
I think it'll be assessed
logically and if there's

564
00:28:32,320 --> 00:28:35,080
opportunities that make sense
for shareholders such as

565
00:28:35,080 --> 00:28:38,720
ourselves and the management
team who are highly aligned in

566
00:28:38,880 --> 00:28:41,480
in their equity ownership with
the company, then they'll look

567
00:28:41,480 --> 00:28:43,720
to execute on them.
And you know, companies like

568
00:28:43,720 --> 00:28:47,560
Magnetic Lock, Focus Lock,
Bright Star, there's even some

569
00:28:47,560 --> 00:28:50,000
Anglo assets in that part of the
world that I think could be

570
00:28:50,000 --> 00:28:52,520
interesting.
Yeah, there's a huge amount of

571
00:28:52,520 --> 00:28:55,680
value to be created and unlocked
and we'd support that.

572
00:28:56,400 --> 00:28:59,320
The obvious question I'm sure
you'll ask me is on is on Vault.

573
00:29:00,920 --> 00:29:06,800
You said it just to preempt
that, you know, I just don't see

574
00:29:06,800 --> 00:29:07,760
it.
I don't see the relative

575
00:29:07,760 --> 00:29:11,000
valuation stacking up too well
at the moment from a Genesis

576
00:29:11,000 --> 00:29:13,160
perspective.
I think if the vault portfolio,

577
00:29:13,560 --> 00:29:16,040
I was, you know, singularly
focused on that, that king of

578
00:29:16,040 --> 00:29:18,400
the Hills asset potentially
that's when it starts to look

579
00:29:18,400 --> 00:29:20,720
more interesting from a Genesis
perspective.

580
00:29:20,720 --> 00:29:24,640
But you know, back when there
was a lot of speculation about

581
00:29:24,640 --> 00:29:26,440
that occurring, the gold price
is much lower.

582
00:29:26,960 --> 00:29:29,720
And what that means in practical
terms is the value of the mill

583
00:29:29,720 --> 00:29:33,560
was much higher.
So now Genesis can go out and

584
00:29:34,440 --> 00:29:38,560
you know, build or expand their
meals for a normal value of

585
00:29:38,560 --> 00:29:41,320
money compared to the the excess
returns or the cash flow it's

586
00:29:41,320 --> 00:29:43,960
going to generate.
Back then the value of that meal

587
00:29:43,960 --> 00:29:47,720
was was much higher in my view.
So I think a lot's changed

588
00:29:47,720 --> 00:29:49,640
there.
I think at a point in time

589
00:29:49,640 --> 00:29:53,640
potentially, but I think there's
a lot more smaller and more

590
00:29:53,640 --> 00:29:57,840
value of creative deals to be
done 1st and they also have to

591
00:29:57,840 --> 00:30:01,080
be assessed in light of what we
talked about earlier with with

592
00:30:01,080 --> 00:30:04,600
their own portfolio.
So, yeah, I expect them to be to

593
00:30:04,600 --> 00:30:07,520
be active in in the coming years
and and that will form part of

594
00:30:07,520 --> 00:30:11,560
the part of the growth.
What they really need in my view

595
00:30:11,560 --> 00:30:13,800
is some more grade around
Laverton.

596
00:30:13,800 --> 00:30:18,840
So if if there was an asset that
added some grade 2-3 grams per

597
00:30:18,840 --> 00:30:21,880
tonne to that meal, that could
really, really see it.

598
00:30:22,360 --> 00:30:25,000
Yeah, produce some fantastic
cash flows and also oxide

599
00:30:25,000 --> 00:30:27,400
material as well.
So they acquired an asset called

600
00:30:27,400 --> 00:30:30,480
Bruno Lewis, good amount of
oxide in there.

601
00:30:30,600 --> 00:30:34,040
As many will know oxide goes
through the mill much faster

602
00:30:34,320 --> 00:30:37,240
than typical Hard Rock or.
And so you meal capacity, whilst

603
00:30:37,240 --> 00:30:40,360
it might be 3.3 on paper or
whatever the number is, you know

604
00:30:40,400 --> 00:30:42,800
you can often get up to 25% more
if you're feeding oxide

605
00:30:42,800 --> 00:30:44,840
material.
So that's another lever for some

606
00:30:44,840 --> 00:30:49,080
value creation there.
You mentioned great land before

607
00:30:49,080 --> 00:30:52,360
as well and you, you did a write
up not too long ago calling it

608
00:30:52,360 --> 00:30:57,200
the the deal of the decade and I
think you, I think you added

609
00:30:57,200 --> 00:31:00,800
that have you, Ron is the best
undeveloped resource in

610
00:31:00,800 --> 00:31:02,800
Australia.
Am I right?

611
00:31:02,800 --> 00:31:05,440
I have had some people try and
correct me on that since, but

612
00:31:06,000 --> 00:31:08,080
something about to stand by it,
something about an iron ore

613
00:31:08,080 --> 00:31:10,720
asset, I'm not sure, but yeah,
sure, I'll stand by it, yeah.

614
00:31:12,320 --> 00:31:14,000
Let's let's talk about the deal,
right.

615
00:31:14,000 --> 00:31:18,080
So yeah, by by all accounts,
it's it's been a pretty cracking

616
00:31:18,080 --> 00:31:19,480
deal.
But firstly, just curious to

617
00:31:19,480 --> 00:31:22,840
hear it.
It is still UK listed at at the

618
00:31:22,840 --> 00:31:25,200
moment, but you've been able to
with the anticipation that it

619
00:31:25,200 --> 00:31:27,760
comes here in, in the June
quarter get in already.

620
00:31:27,920 --> 00:31:30,280
Yeah, that's right.
So we can invest up to 10% of

621
00:31:30,280 --> 00:31:34,240
our funds in what we call pre
IPO opportunities, fits

622
00:31:34,240 --> 00:31:37,120
comfortably in that sleeve.
Currently, I'm listed as you say

623
00:31:37,120 --> 00:31:40,200
and looking to list here June,
July as we understand it, which

624
00:31:40,480 --> 00:31:44,040
we think will be fantastic for
Aussie investors to be able to

625
00:31:44,440 --> 00:31:47,120
invest in Telfer and everyone.
It's an amazing asset.

626
00:31:47,480 --> 00:31:49,760
For sure.
And the, the, the natural

627
00:31:49,760 --> 00:31:53,360
question that that comes to mind
is 20 million tons per annum at

628
00:31:53,520 --> 00:31:57,360
at Telfer.
Obviously there's, there's a, a

629
00:31:57,360 --> 00:32:00,440
mine plan in place, a 15 sort of
month mine plan that they've put

630
00:32:00,440 --> 00:32:04,080
forward already that is, is
meant to spit out sort of over

631
00:32:04,080 --> 00:32:09,120
400,000 gold equivalent oz, a
bit under 400,000 gold oz.

632
00:32:09,120 --> 00:32:12,760
And you know, the, the expansion
sort of starts to to happen

633
00:32:12,760 --> 00:32:16,760
after that heavier on in in due
course should come online.

634
00:32:16,760 --> 00:32:19,680
But how do you think they go
about filling that meal?

635
00:32:19,680 --> 00:32:21,840
Do you do you have any
reservations about it?

636
00:32:21,840 --> 00:32:23,840
Do you think from the offset
there they're going to be

637
00:32:23,840 --> 00:32:26,400
filling it or doing a train,
train and a half type thing?

638
00:32:26,400 --> 00:32:29,520
Yeah, I think the processing
solution is still up in the air.

639
00:32:30,480 --> 00:32:32,680
There's still work happening to
determine what the the best

640
00:32:32,680 --> 00:32:35,440
outcome is and the company will
go through that engineering

641
00:32:35,440 --> 00:32:36,680
process.
None of this stuff happens

642
00:32:36,680 --> 00:32:39,320
overnight.
But what is very clear and was

643
00:32:39,320 --> 00:32:42,440
not clear to the market 612
months ago is that there is not

644
00:32:42,440 --> 00:32:45,320
going to be a production gap
between Telfra and Have You On.

645
00:32:45,520 --> 00:32:48,360
That was a big concern that
they'd have to idle both trains.

646
00:32:48,600 --> 00:32:52,400
There wouldn't be any free cash
flow or production for a number

647
00:32:52,400 --> 00:32:56,920
of years whilst Haver On was
being developed based on their

648
00:32:56,920 --> 00:33:00,640
recent resource update, mine
plan update to a certain extent

649
00:33:00,920 --> 00:33:03,240
that is yeah, completely off the
table.

650
00:33:03,520 --> 00:33:07,840
We and I think they'd be able to
produce from Telfer at an

651
00:33:07,840 --> 00:33:12,120
annualized run rate of over
300,000 oz per annum of gold

652
00:33:12,240 --> 00:33:16,360
equivalent for the next 10 years
based on the open pit stockpiles

653
00:33:16,360 --> 00:33:19,480
there as well as Telfer
underground proper and West home

654
00:33:19,480 --> 00:33:22,720
underground.
So we see that asset continuing

655
00:33:22,720 --> 00:33:27,560
to generate very healthy cash
flows that will then fund Haver

656
00:33:27,560 --> 00:33:30,080
on to your point around Genesis
earlier and what really creates

657
00:33:30,080 --> 00:33:33,000
value and resources that that
self funding is, is is

658
00:33:33,000 --> 00:33:34,920
fantastic.
Yeah.

659
00:33:34,920 --> 00:33:37,600
And they've got pretty hefty
stockpiles as well, some some

660
00:33:37,600 --> 00:33:39,400
low grade, some some higher
grade as well.

661
00:33:39,400 --> 00:33:42,840
That should help them ease their
kind of way through that.

662
00:33:43,000 --> 00:33:46,720
How do you, how do you kind of
benchmark their, their value

663
00:33:46,720 --> 00:33:50,320
obviously sort of 400,000 ounces
is it's a decent amount.

664
00:33:50,320 --> 00:33:52,520
I think last time I looked in
Aussie dollar terms they kept at

665
00:33:52,520 --> 00:33:57,640
2.7 or 2.8 ish.
Dear, you know, you mentioned an

666
00:33:57,640 --> 00:34:00,840
upside there 50% before.
Is that is that kind of how you

667
00:34:00,840 --> 00:34:03,400
think and how they should play
in the in the Aussie market?

668
00:34:04,320 --> 00:34:06,160
Absolutely.
I think it gets rewrited when it

669
00:34:06,160 --> 00:34:10,560
lists here based on where it's
currently trading and and people

670
00:34:10,560 --> 00:34:13,159
getting more comfort around the
sustainability of the production

671
00:34:13,159 --> 00:34:14,880
profile at Telford.
There's still work to do there,

672
00:34:14,920 --> 00:34:20,239
but the the cards are out.
When we look at valuation for a

673
00:34:20,239 --> 00:34:23,360
company like that, we'll assess
it on a range of different

674
00:34:23,360 --> 00:34:25,679
metrics.
Ultimately it's MPV, but in this

675
00:34:25,679 --> 00:34:28,080
case you need to look at the sum
of the parts MPV for the

676
00:34:28,080 --> 00:34:31,719
existing Telfer asset and then
have everyone at the back end

677
00:34:31,719 --> 00:34:34,600
given that it's not currently
contributing to cash flows or

678
00:34:34,600 --> 00:34:36,760
production.
So that's the way we assess it.

679
00:34:37,239 --> 00:34:40,560
We give a value to Telfer for
the for the operations there

680
00:34:40,960 --> 00:34:44,239
that 300,000 oz or so over the
next couple of years and then

681
00:34:44,480 --> 00:34:46,159
layer and have everyone over the
top of that.

682
00:34:48,000 --> 00:34:50,360
If we, if we look at some of the
other sort of major gold

683
00:34:50,360 --> 00:34:55,480
companies in your, your sort of
ballpark you, you've said in the

684
00:34:55,480 --> 00:35:00,160
past that you, you don't hold
Perseus and Wolf and you know,

685
00:35:00,160 --> 00:35:02,480
for, for jurisdiction risk,
right.

686
00:35:02,480 --> 00:35:06,840
But these companies have, you
know, today they've performed

687
00:35:06,840 --> 00:35:10,160
pretty, pretty strongly.
But if you, if you look around

688
00:35:10,160 --> 00:35:13,520
that part of the world, there's,
there's been some pretty big

689
00:35:13,520 --> 00:35:17,600
losses on, on companies that,
you know, didn't draw the the

690
00:35:17,600 --> 00:35:21,360
right straw.
So to say in in West Africa.

691
00:35:22,240 --> 00:35:24,240
How much of an ingrained view is
that?

692
00:35:24,240 --> 00:35:27,680
Is there, is there a point where
where value kind of beats out on

693
00:35:27,680 --> 00:35:29,480
these sorts of things?
What's your sort of thinking

694
00:35:29,480 --> 00:35:31,800
toward African and.
Jurisdictional risk, generally,

695
00:35:31,800 --> 00:35:33,760
we have an attitude across the
market that we see.

696
00:35:33,760 --> 00:35:36,360
Every single stock is an
opportunity for our investors as

697
00:35:36,360 --> 00:35:39,880
long as it meets a certain base
level of criteria with respect

698
00:35:39,880 --> 00:35:43,320
to things like ESG and, and
alignment of the board and the

699
00:35:43,320 --> 00:35:45,440
management team.
And so we never rule anything

700
00:35:45,440 --> 00:35:48,880
out, never rule anything out.
We just haven't felt the need to

701
00:35:48,880 --> 00:35:52,080
invest there given the the
plethora of opportunities

702
00:35:52,080 --> 00:35:54,960
available in in Australia and in
particular in WA.

703
00:35:56,240 --> 00:35:58,240
Yeah, continue to meet with
those companies.

704
00:35:58,240 --> 00:36:03,080
Jeff and and Richard have done
amazing jobs and added a huge

705
00:36:03,080 --> 00:36:05,360
amount of value, added massive
amounts of cash to the balance

706
00:36:05,360 --> 00:36:07,320
sheet.
You just can't ignore no matter

707
00:36:07,320 --> 00:36:10,600
where the asset's located.
And you know, from our end of

708
00:36:10,600 --> 00:36:12,600
the situation, it seems like
they're going to continue to do

709
00:36:12,600 --> 00:36:14,080
so.
So if we'll continue to meet

710
00:36:14,080 --> 00:36:16,880
with them, if they start to
stack up, maybe when Genesis

711
00:36:16,880 --> 00:36:20,200
hits 8 box or something, we'll
we'll look at if we redeploy

712
00:36:20,200 --> 00:36:24,800
that capital somewhere else.
Very interesting you, you speak

713
00:36:24,800 --> 00:36:28,120
a lot to quality management and
you just mentioned it there

714
00:36:28,120 --> 00:36:31,440
again with with two teams that
have demonstrated you've backed

715
00:36:31,440 --> 00:36:35,840
it in in Genesis and a host of
other names.

716
00:36:36,560 --> 00:36:40,520
I guess the way I'd frame this
question is you've, you've been,

717
00:36:40,520 --> 00:36:43,520
you've been a manager of money
for, you know, the better part

718
00:36:43,520 --> 00:36:46,120
of a sort of decade and in the,
the finance world for, you know,

719
00:36:46,200 --> 00:36:49,720
15 odd years or so.
How has the the thinking toward

720
00:36:49,720 --> 00:36:52,840
backing proven management teams
changed over that journey?

721
00:36:53,840 --> 00:36:57,520
Yeah, I think there's two things
that I I value more highly the

722
00:36:58,200 --> 00:37:00,480
the further I go in my investing
career and that is a good

723
00:37:00,480 --> 00:37:02,960
balance sheets and good
management teams or

724
00:37:02,960 --> 00:37:05,160
conservatively managed balance
sheets, I should say.

725
00:37:06,240 --> 00:37:10,440
Yeah, cannot be overstated.
And you know, just knowing that

726
00:37:10,480 --> 00:37:13,400
you have a team that's highly
aligned, highly competent and

727
00:37:13,400 --> 00:37:16,800
you can believe what they say
is, is just yeah, it's a non

728
00:37:16,800 --> 00:37:20,160
negotiable for us and investing.
And that's why we find that a

729
00:37:20,160 --> 00:37:24,200
lot of our portfolio is invested
in companies both within the

730
00:37:24,200 --> 00:37:27,680
industrial space and resources
where management are long term

731
00:37:27,680 --> 00:37:32,640
owners of the business, have
significant skin in the game and

732
00:37:33,280 --> 00:37:35,480
you know have been there for a
decent period of time as well.

733
00:37:36,840 --> 00:37:40,080
And the, and the point on debt
is, is super fascinating, right?

734
00:37:40,080 --> 00:37:44,440
And it, and it feels more sort
of, kind of it rings louder

735
00:37:44,440 --> 00:37:47,720
than, you know, than ever right
now with everything that we've

736
00:37:47,720 --> 00:37:51,640
seen, like the, the speed at
which share prices can, can

737
00:37:51,640 --> 00:37:56,720
fall, commodities can, can fall.
I know you said it when we, when

738
00:37:56,720 --> 00:38:00,520
we spoke in, in Sydney a year or
so ago, but a super, super clean

739
00:38:00,520 --> 00:38:03,760
balance sheet was your, your
outlook in particular for, for

740
00:38:03,760 --> 00:38:08,080
single asset companies.
I'm, I'm just keen to, to hear

741
00:38:08,080 --> 00:38:12,040
you expand on that because I
think it's a, a point that's not

742
00:38:12,040 --> 00:38:14,640
often well enough appreciated
across the market.

743
00:38:14,640 --> 00:38:16,120
I'm keen to learn more about it
myself.

744
00:38:17,640 --> 00:38:19,880
I think, you know, corporate
finance one O 1 will tell you

745
00:38:19,880 --> 00:38:23,680
that leverage is good and that
it increases the equity IRR on a

746
00:38:23,680 --> 00:38:26,720
project in in reality that that
doesn't work.

747
00:38:26,720 --> 00:38:29,120
And that particularly doesn't
work in resources.

748
00:38:29,120 --> 00:38:32,120
And particularly when you have
single asset resource companies,

749
00:38:32,640 --> 00:38:35,240
as you have highlighted.
It's not to say it will never

750
00:38:35,240 --> 00:38:38,040
work, but you know, the track
record speaks for itself.

751
00:38:38,400 --> 00:38:40,600
It's it's good for for one set
of people.

752
00:38:40,600 --> 00:38:42,720
And that's the people that raise
money, the investment banks,

753
00:38:43,160 --> 00:38:45,760
because they get multiple cracks
of the cherry whenever this

754
00:38:45,760 --> 00:38:47,920
plays out.
And so, yeah.

755
00:38:48,080 --> 00:38:49,920
I need to say where we're
recording this interview from.

756
00:38:50,480 --> 00:38:51,520
That's right.
Shout out to it.

757
00:38:53,760 --> 00:38:57,520
But yeah, so for, you know, we'd
much rather companies,

758
00:38:57,520 --> 00:38:59,640
particularly with interest rates
where they are at the moment,

759
00:39:00,160 --> 00:39:01,360
you know, pick up the phone,
call us.

760
00:39:01,360 --> 00:39:05,160
We're here to provide equity.
And you know, we, we don't want

761
00:39:05,160 --> 00:39:09,160
to see hedging, we don't want to
see commodity or financial risk

762
00:39:09,160 --> 00:39:12,200
or leverage on top of commodity
price risk and operating risk as

763
00:39:12,200 --> 00:39:13,720
well.
We, we just don't think it's

764
00:39:14,280 --> 00:39:16,200
needed or appropriate in many
instances.

765
00:39:16,800 --> 00:39:20,920
And so it's a key, yeah, red,
red flag for us, I suppose.

766
00:39:21,040 --> 00:39:22,960
Yeah.
The the point on hedging is when

767
00:39:22,960 --> 00:39:27,760
I want to tap into as well it
yeah, it it ebbs and flies with

768
00:39:27,760 --> 00:39:30,680
the commodity price.
And right now it's, you know,

769
00:39:30,680 --> 00:39:34,560
it's not in in fashion to have
a, a big hedge book, that's for

770
00:39:34,560 --> 00:39:35,880
sure.
What do you make of the, the

771
00:39:35,880 --> 00:39:38,960
trend of people actually, you
know, buying them out?

772
00:39:39,640 --> 00:39:41,360
You've got it.
Say there's a company you're

773
00:39:41,360 --> 00:39:43,160
invested in that that has a
hedge book.

774
00:39:43,680 --> 00:39:46,280
Are you a fan of them cancelling
that out?

775
00:39:46,280 --> 00:39:47,920
How do you think about?
It, yeah, I mean it's easier to

776
00:39:47,920 --> 00:39:50,000
say you're not a fan of hedges
when the gold price is ripped

777
00:39:50,000 --> 00:39:53,520
and they're on the nose.
They definitely have a place

778
00:39:53,520 --> 00:39:57,320
from a from a risk perspective.
And I think they've been used

779
00:39:57,320 --> 00:40:00,400
very effectively in the past by
companies like Evolution who

780
00:40:00,400 --> 00:40:02,600
acquired assets, put in place
hedging, paid it out.

781
00:40:03,040 --> 00:40:08,000
Did a great job.
But you know, philosophically at

782
00:40:08,000 --> 00:40:10,000
the moment if you're investing
in a gold company, it's because

783
00:40:10,000 --> 00:40:11,800
you want exposure to to the gold
price.

784
00:40:11,800 --> 00:40:15,960
And I think having a management
team that might have actively

785
00:40:15,960 --> 00:40:18,560
bet effectively against the gold
price through a hedging profile

786
00:40:18,720 --> 00:40:19,960
is a little bit
counterintuitive.

787
00:40:19,960 --> 00:40:23,520
So unless there's debt involved,
which goes to our earlier point,

788
00:40:23,840 --> 00:40:24,960
I really don't see the need for
it.

789
00:40:27,400 --> 00:40:30,160
Let's talk about a couple other
Goldies.

790
00:40:30,160 --> 00:40:32,800
Some of them have quite a bit of
hedging in place.

791
00:40:32,800 --> 00:40:36,960
I want to talk about Bellevue
and tie in Spartan and Remelius.

792
00:40:36,960 --> 00:40:39,320
You made the call when we spoke
and I think you're going to love

793
00:40:39,320 --> 00:40:41,440
hearing this.
I mentioned it to you just

794
00:40:41,440 --> 00:40:45,320
before, but you, I think the way
you sort of framed it was in

795
00:40:45,320 --> 00:40:48,520
about 3 or so years.
Let's have a look again at what

796
00:40:48,520 --> 00:40:53,280
the grade is between Bellevue
and the grade at Spartan is.

797
00:40:53,280 --> 00:40:57,280
And looking back, I can't
remember if Pepper had been

798
00:40:57,280 --> 00:40:59,440
discovered or not at that point
in time.

799
00:41:00,280 --> 00:41:03,040
But obviously Spartan has gone
from strength to strength.

800
00:41:03,080 --> 00:41:04,840
And I'll disclose that I own a
couple Spartan.

801
00:41:04,840 --> 00:41:09,800
But the, the other side of the
coin there on, on Bellevue that

802
00:41:09,800 --> 00:41:10,920
that companies had a bit of
trouble.

803
00:41:10,920 --> 00:41:15,320
They, you know, they paid down a
portion of their, their debt,

804
00:41:15,320 --> 00:41:19,040
but ramp up is hard single asset
companies and, and all that,

805
00:41:19,040 --> 00:41:23,600
like you, you mentioned before.
What's your, what's your view on

806
00:41:24,840 --> 00:41:27,680
Bellevue?
You know, I'll disclose maybe

807
00:41:27,680 --> 00:41:29,520
this interview comes out later,
but they're in trading halt

808
00:41:29,520 --> 00:41:31,600
right now when we're recording
this this interview.

809
00:41:31,960 --> 00:41:33,520
They're in an interesting
position, right?

810
00:41:33,520 --> 00:41:36,560
They're they're one of the
weakest performers today versus

811
00:41:36,560 --> 00:41:39,520
their, their benchmark.
But that does, to an extent,

812
00:41:39,520 --> 00:41:42,840
make them attractive, right?
Absolutely, Yeah, I mean, we're

813
00:41:42,840 --> 00:41:44,040
all waiting to see what happens
there.

814
00:41:44,840 --> 00:41:47,960
We're not currently, currently
shareholders, but we we know the

815
00:41:47,960 --> 00:41:49,880
guys really well, got a lot of
respect for them.

816
00:41:50,400 --> 00:41:52,720
They've created a lot of value.
It's looks like a great ore

817
00:41:52,720 --> 00:41:55,040
body.
And so there's potentially an

818
00:41:55,040 --> 00:41:57,280
opportunity there.
I think just in terms of what

819
00:41:57,280 --> 00:42:01,480
we'd really like to see from
from that company from a

820
00:42:01,480 --> 00:42:06,000
disclosure perspective is what's
changed with the ore body is it

821
00:42:06,000 --> 00:42:08,440
seems to be that there's the ore
body that they thought was there

822
00:42:08,440 --> 00:42:11,040
fundamentally potentially is a
bit different.

823
00:42:11,800 --> 00:42:15,680
And so, yeah, it's hard to at
this point in time have

824
00:42:15,680 --> 00:42:18,720
confidence in in production
targets and things like that

825
00:42:18,720 --> 00:42:22,640
without a recut in terms of
stoke sizes dilution, you know,

826
00:42:22,920 --> 00:42:25,760
is a great appropriate, other
modifying factors appropriate

827
00:42:26,160 --> 00:42:28,240
all that sort of stuff.
So we'll look forward to

828
00:42:28,240 --> 00:42:31,880
engaging with the company in in
hopefully the coming weeks or,

829
00:42:32,120 --> 00:42:34,280
or days and, and forming a view
on that.

830
00:42:34,280 --> 00:42:36,040
And if there's a potential
opportunity.

831
00:42:37,040 --> 00:42:41,360
I think there absolutely is.
Yeah, that was my view sort of,

832
00:42:41,600 --> 00:42:43,720
you know, before them going into
trading halt.

833
00:42:43,720 --> 00:42:45,520
There's been a production
downgrade since then.

834
00:42:45,520 --> 00:42:48,120
But you know, the odd body is
still there, an all time high

835
00:42:48,560 --> 00:42:50,440
gold price environment.
They've got debt, they've got

836
00:42:50,440 --> 00:42:51,440
hedging that needs to be
cleared.

837
00:42:51,440 --> 00:42:55,040
So we look at situations like
this is a fantastic opportunity

838
00:42:55,040 --> 00:42:58,520
for our investors.
Yeah, it's, it's an interesting

839
00:42:58,520 --> 00:42:59,480
one.
I'm very keen to see how they

840
00:42:59,480 --> 00:43:02,200
they come out of this situation
on on the flip side, we've got

841
00:43:02,200 --> 00:43:05,640
Spartan who just tied up the
deal came to hear your thoughts

842
00:43:05,640 --> 00:43:09,440
on on what you make of the, the
deal and the the sort of pro

843
00:43:09,440 --> 00:43:14,400
forma entity moving forward.
Yeah, I think Simon Lawson and,

844
00:43:14,440 --> 00:43:18,920
and the Spartan guys have to be
congratulated for, you know, not

845
00:43:18,920 --> 00:43:21,080
manufacturing, but you know,
delivering such a great amount

846
00:43:21,080 --> 00:43:24,720
of value to shareholders and
then rolling into Remelius and,

847
00:43:24,720 --> 00:43:26,920
and, and the value creation that
they've seen since then.

848
00:43:26,920 --> 00:43:30,440
Very rarely do you get 2
entities combined or merge like

849
00:43:30,440 --> 00:43:33,160
that and, and see the share
price perform as well as it has.

850
00:43:33,440 --> 00:43:36,920
And I think that's a real credit
to Zappy and, and Simon, the way

851
00:43:36,920 --> 00:43:40,000
they've communicated that to the
market and so on and so forth.

852
00:43:40,000 --> 00:43:42,800
We we don't own either at the
moment, but.

853
00:43:43,160 --> 00:43:44,840
There might actually be
synergies in this deal.

854
00:43:46,080 --> 00:43:50,360
Yeah, who knows, But yeah, it
was an obvious one that had to

855
00:43:50,360 --> 00:43:51,800
happen.
And it's good to say.

856
00:43:52,440 --> 00:43:55,720
It's good to say logical deals
happen, is the thing I'd say

857
00:43:55,720 --> 00:43:58,520
there, yeah.
And if we look across the gold

858
00:43:58,520 --> 00:44:03,520
space, M&A discipline has sort
of been a theme of the minus.

859
00:44:03,520 --> 00:44:07,200
It's been sort of hammered into
them since, since I guess the,

860
00:44:07,360 --> 00:44:10,880
the downfall of the 2012 cycle
that that peeled off.

861
00:44:10,960 --> 00:44:13,760
And you know, you can sort of
say that for the, the mining

862
00:44:13,760 --> 00:44:17,600
sort of complex more more
broadly, but we have started to

863
00:44:17,600 --> 00:44:20,360
see more and more deals in, in
the gold space.

864
00:44:20,360 --> 00:44:25,480
What do you make of the, the
trend for, for these bigger now

865
00:44:25,520 --> 00:44:27,840
kind of mid cap dealers?
Do you, do you see it playing

866
00:44:27,840 --> 00:44:31,160
through to the, the smaller end?
Does it, does it worry you?

867
00:44:31,160 --> 00:44:32,840
Does it kind of excite you?
How do you think about it?

868
00:44:33,480 --> 00:44:35,520
Oh, it excised me from an
investment standpoint for sure.

869
00:44:35,520 --> 00:44:38,480
Yeah.
I mean, would I be invested in a

870
00:44:38,480 --> 00:44:42,360
large cap company with very
fully valued paper that, you

871
00:44:42,360 --> 00:44:44,760
know, was lacking production
over the long term and had a

872
00:44:44,760 --> 00:44:47,560
short reserve life position?
You know, we wouldn't be

873
00:44:47,560 --> 00:44:48,680
investing in those sort of
companies.

874
00:44:48,680 --> 00:44:52,160
But if we can find companies
that have high grade assets that

875
00:44:52,160 --> 00:44:54,760
they're drilling out like a
Spartan, you know, that's a

876
00:44:54,760 --> 00:44:58,240
fantastic place to be because,
you know, there's an immense

877
00:44:58,240 --> 00:44:59,840
amount of value creation that
can happen there.

878
00:45:00,480 --> 00:45:03,200
So one of our recent investments
in the portfolio has been a

879
00:45:03,200 --> 00:45:08,160
company called Gorilla Gold.
They previously labyrinth and

880
00:45:08,160 --> 00:45:11,360
they, you know, they've got a
suite of fantastic assets that

881
00:45:11,360 --> 00:45:13,600
would make sense in other
people's hands.

882
00:45:13,600 --> 00:45:17,520
And we expect them to, to jewel
his assets out, find more gold.

883
00:45:17,520 --> 00:45:21,040
And, you know, if it's not
appropriate for them to, to

884
00:45:21,040 --> 00:45:23,280
monetize the asset through
developing their own mills and,

885
00:45:23,280 --> 00:45:26,520
and, and mining them themselves,
then they'll look to, to create

886
00:45:26,520 --> 00:45:28,360
value for shareholders by
selling those assets.

887
00:45:28,360 --> 00:45:31,440
And so that it's an opportunity
for us to recycle some of the

888
00:45:31,440 --> 00:45:34,800
capital from the Spartan into
something like a gorilla.

889
00:45:34,800 --> 00:45:36,480
And Simon Lawson's involved in
both.

890
00:45:37,280 --> 00:45:39,160
Some of those assets that might
have only just picked up as

891
00:45:39,160 --> 00:45:41,120
well.
So how do you, how do you sort

892
00:45:41,120 --> 00:45:46,080
of see the the timelines like
the for instance, already just

893
00:45:46,200 --> 00:45:49,200
going going hammer and tongs
with the with the drill rig and

894
00:45:49,320 --> 00:45:51,360
churning out results and stuff.
Yeah, yeah, yeah.

895
00:45:51,800 --> 00:45:54,880
It's interesting, especially
given that was obviously a

896
00:45:54,880 --> 00:45:59,920
Remilius asset as well.
I think that history has shown

897
00:45:59,920 --> 00:46:03,840
us in WA Gold that having a
different view on assets, on the

898
00:46:03,840 --> 00:46:06,400
geology, turning the jewelry
around, drilling in a different

899
00:46:06,400 --> 00:46:10,920
direction, taking a different
lens on on assets has created an

900
00:46:10,920 --> 00:46:13,160
immense amount of value.
And so I wouldn't write any

901
00:46:13,160 --> 00:46:16,240
asset off on the basis that it's
just been acquired for a certain

902
00:46:16,240 --> 00:46:18,760
price and we've just seen this
so many times.

903
00:46:18,920 --> 00:46:20,280
Yeah.
For sure.

904
00:46:20,440 --> 00:46:22,120
Let's talk about a couple of
other commodities.

905
00:46:22,120 --> 00:46:27,040
So to start with copper, I know
you said in the past year you're

906
00:46:27,040 --> 00:46:32,160
a fan of the copper dynamic.
Let's go to North Queensland to

907
00:46:32,160 --> 00:46:35,720
start AIC mines, Aaron Colleron
and the, and the team, you know,

908
00:46:35,920 --> 00:46:38,560
at the, at the smaller end of
the spectrum, but sort of

909
00:46:38,560 --> 00:46:40,640
building a company kind of brick
by brick.

910
00:46:40,760 --> 00:46:42,400
Are you, are you a shareholder
there at the moment?

911
00:46:42,400 --> 00:46:42,680
We are.
Yep.

912
00:46:42,680 --> 00:46:43,320
Yep.
What are you?

913
00:46:43,520 --> 00:46:47,120
What are you sort of thinking
going forward about the the

914
00:46:47,120 --> 00:46:49,880
assets they've got the the
ability to to kind of scale that

915
00:46:49,880 --> 00:46:52,400
production?
Yeah, we're excited about a one.

916
00:46:52,680 --> 00:46:54,920
I think it's a long term, long
term story there.

917
00:46:55,000 --> 00:46:56,960
It's nothing's going to happen
overnight.

918
00:46:57,240 --> 00:46:59,720
They're developing an asset
called Jericho, which will

919
00:46:59,720 --> 00:47:02,240
double production on a on a
three view.

920
00:47:02,280 --> 00:47:04,160
That's the reason why we are
invested.

921
00:47:04,960 --> 00:47:06,240
It's it's a tough road to get
there.

922
00:47:06,240 --> 00:47:08,720
It takes a long time to get
these assets built and

923
00:47:08,720 --> 00:47:11,160
developed, but once they get
there, there is going to be an

924
00:47:11,160 --> 00:47:13,520
immense amount of value for
shareholders.

925
00:47:14,520 --> 00:47:17,520
We would like to see some more
consolidation in that part of

926
00:47:17,520 --> 00:47:20,000
the world as well.
There's a number of smaller

927
00:47:20,000 --> 00:47:24,680
assets that probably don't make
sense to be listed as standalone

928
00:47:25,360 --> 00:47:28,120
entities.
And so part of our thesis there

929
00:47:28,120 --> 00:47:31,000
is that Aaron will be able and
the team will be able to execute

930
00:47:31,000 --> 00:47:34,440
on some some acquisitions over
time and increases the size of

931
00:47:34,440 --> 00:47:36,600
that business.
And to be frank, we've probably

932
00:47:36,600 --> 00:47:39,320
been a bit frustrated and I
think Aaron would say he's been

933
00:47:39,760 --> 00:47:44,520
frustrated as well with how long
it's taken to be able to execute

934
00:47:44,520 --> 00:47:46,720
on some of those.
But you know, you can't force

935
00:47:46,720 --> 00:47:48,800
this stuff.
You have to act in the best

936
00:47:48,800 --> 00:47:50,520
interest for shareholders.
And if people want silly

937
00:47:50,520 --> 00:47:52,760
valuations then then you need to
be prepared to walk away.

938
00:47:53,680 --> 00:47:55,560
Yeah, yeah, for sure.
You kind of get the impression

939
00:47:55,560 --> 00:47:57,920
it's a it's going to be an
overnight success story that

940
00:47:57,920 --> 00:47:59,720
takes kind of 10 years.
I think that's for.

941
00:47:59,720 --> 00:48:03,800
That team maybe 2026 story.
If we if we go to the other end

942
00:48:03,800 --> 00:48:10,320
of the the ASX copper names sand
fire they've you know, it really

943
00:48:10,320 --> 00:48:14,200
does seem overnight become a
very large company and they've

944
00:48:14,640 --> 00:48:18,200
yeah, since since management,
new management came in in like

945
00:48:18,200 --> 00:48:21,880
21 early 22.
The the assets have started to

946
00:48:21,880 --> 00:48:25,240
perform in a Matteo sort of come
online and it's it's doing well.

947
00:48:25,920 --> 00:48:29,160
What do you think about the next
leg for for that business?

948
00:48:32,160 --> 00:48:34,760
We're not currently investors.
I think Brendan Harris has done

949
00:48:34,760 --> 00:48:36,960
an amazing job with that with
that company.

950
00:48:38,680 --> 00:48:42,400
What would really sort of change
the game for us, and speaking as

951
00:48:42,400 --> 00:48:46,120
a former geologist here, is some
exploration success in bots.

952
00:48:46,960 --> 00:48:49,800
I think they've only very
recently come to terms with some

953
00:48:49,800 --> 00:48:53,240
of the genesis of that ore body
and what that means or the

954
00:48:53,240 --> 00:48:55,960
implications of how the ore body
formed for exploration.

955
00:48:56,440 --> 00:48:58,840
And yeah, we're pretty excited
to see what they can do and

956
00:48:58,840 --> 00:49:02,960
tracking that closely.
Yeah, there's obviously, yeah,

957
00:49:02,960 --> 00:49:04,320
further acquisitions that could
make.

958
00:49:04,320 --> 00:49:07,960
I'm not across the the
opportunities out there for that

959
00:49:07,960 --> 00:49:09,480
company.
It sort of sits above our our

960
00:49:09,680 --> 00:49:12,480
market cup spectrum.
But yeah, they've done a great

961
00:49:12,480 --> 00:49:13,560
job.
And I think given the

962
00:49:13,920 --> 00:49:16,560
credibility now and the
valuation that the market

963
00:49:16,560 --> 00:49:19,040
subscribed to that business,
he's got a lot of options to go

964
00:49:19,080 --> 00:49:20,440
out there and and do something
else.

965
00:49:20,440 --> 00:49:22,440
So I'm excited to see what what
that is.

966
00:49:23,480 --> 00:49:26,240
So maybe it'll be one of the
other companies you're holding.

967
00:49:26,240 --> 00:49:29,240
If we look at some of the the
smaller names, we've seen more

968
00:49:29,240 --> 00:49:31,520
and more of these Canadians sort
of come come across.

969
00:49:31,520 --> 00:49:32,960
But what?
What are the copper names that

970
00:49:33,280 --> 00:49:34,680
kind of get you excited at the
moment?

971
00:49:34,880 --> 00:49:37,960
Yeah, it's, I mean, it's crazy
when you look at the market at

972
00:49:37,960 --> 00:49:40,080
the moment, it's every single
gold company.

973
00:49:40,080 --> 00:49:42,160
If you're producing any gold at
all, it seems like you've got a

974
00:49:42,160 --> 00:49:44,160
billion dollar market cap and
everyone loves you.

975
00:49:44,720 --> 00:49:48,080
You transition that to base
metals and there's a number of

976
00:49:48,080 --> 00:49:49,800
companies that that no one cares
about.

977
00:49:49,800 --> 00:49:52,640
We own several of them and we're
excited about their prospects.

978
00:49:53,240 --> 00:49:58,200
So AMI or really metals, we own
Firefly and A1M as as you

979
00:49:58,200 --> 00:50:01,080
mentioned earlier of those, the
one that I'm most excited about

980
00:50:01,400 --> 00:50:05,160
over the short term is Aurelia.
That company today has got a

981
00:50:05,160 --> 00:50:06,160
market cap.
I haven't charged.

982
00:50:06,160 --> 00:50:07,760
It's probably down 10%.
It's.

983
00:50:08,720 --> 00:50:12,640
Don't look.
Yeah, very under, you know, 350

984
00:50:12,640 --> 00:50:14,680
million bucks.
They've got close to $100

985
00:50:14,680 --> 00:50:16,560
million of net cash on the
balance sheet.

986
00:50:16,760 --> 00:50:19,000
They've got a huge amount of
production growth coming up from

987
00:50:19,000 --> 00:50:21,520
a high quality asset they're
developing called Federation.

988
00:50:21,520 --> 00:50:25,920
I was on site 3 weeks ago up in
COBA, which was great.

989
00:50:26,000 --> 00:50:27,680
I mean, it's all coming together
very well.

990
00:50:27,720 --> 00:50:31,280
And we, we see that business
generating 100 million bucks of

991
00:50:31,280 --> 00:50:35,320
free cash flow on what is today
an AV of 250 with a substantial

992
00:50:35,320 --> 00:50:38,480
mine life.
And so it's opportunities like

993
00:50:38,480 --> 00:50:41,160
that for us that are really,
really interesting.

994
00:50:41,160 --> 00:50:44,880
And you know, potentially, you
know, as if we're sitting here

995
00:50:44,880 --> 00:50:46,400
to use time, some of these
companies might be more

996
00:50:46,400 --> 00:50:50,080
mainstream, like we're talking
about Genesis and Vault and some

997
00:50:50,080 --> 00:50:51,160
of the other goals at the
moment.

998
00:50:51,160 --> 00:50:53,560
We just think there's a massive
opportunity there.

999
00:50:54,880 --> 00:50:57,640
Some people have sort of been
banging the table on on

1000
00:50:57,640 --> 00:51:01,640
consolidation in, in the COBA.
Is that like, is that something

1001
00:51:01,640 --> 00:51:03,960
you think needs to happen for
some of these names?

1002
00:51:03,960 --> 00:51:07,160
Is it way overhyped?
What do you what do you kind of

1003
00:51:07,160 --> 00:51:08,800
make of, you know, there's some
bigger names.

1004
00:51:08,800 --> 00:51:11,080
There's a lot of.
Smaller names, yeah, there's a

1005
00:51:11,080 --> 00:51:12,880
couple.
So Poly Metals, what else you

1006
00:51:12,880 --> 00:51:15,800
got Peel Mac as well.
Yeah.

1007
00:51:17,920 --> 00:51:21,440
Look, we don't invest on any
company on the basis that it's

1008
00:51:21,440 --> 00:51:24,160
going to be taken over.
We like to invest in companies

1009
00:51:24,160 --> 00:51:26,400
that can stand on their own 2
feet, generate a lot of cash.

1010
00:51:26,800 --> 00:51:28,640
And it really certainly fits
that bill.

1011
00:51:30,480 --> 00:51:34,200
Yeah, I think Peel and, you
know, makes a lot of sense for a

1012
00:51:34,200 --> 00:51:37,080
couple of companies in that
region, but there's just no onus

1013
00:51:37,080 --> 00:51:40,920
on anyone to to really move.
What's the, where's the, where's

1014
00:51:40,920 --> 00:51:43,600
the pressure point to say, you
know, to bring companies

1015
00:51:43,600 --> 00:51:46,400
together.
M and AI find anyway, it's it's,

1016
00:51:46,600 --> 00:51:49,600
you know, you need someone to be
heavily motivated for, to take

1017
00:51:49,600 --> 00:51:53,440
place and sitting there trying
to time time stuff, it's very,

1018
00:51:53,440 --> 00:51:55,280
very hard.
So, yeah, we're not sort of

1019
00:51:56,600 --> 00:51:59,320
expecting anything imminently
there, but there are deals that

1020
00:51:59,320 --> 00:52:00,600
obviously do make a lot of
sense.

1021
00:52:00,600 --> 00:52:03,360
And particularly with with Peel,
I mean, they've got some pretty

1022
00:52:03,360 --> 00:52:05,000
good resources and they don't
have a meal.

1023
00:52:05,000 --> 00:52:07,720
So you don't need to be rocket
scientists to work out that

1024
00:52:07,720 --> 00:52:10,040
there's synergies there.
And they're probably not of a

1025
00:52:10,040 --> 00:52:11,920
scale that they can finance
their own meal.

1026
00:52:12,680 --> 00:52:16,120
Yeah, speaks to your point on on
a sort of forced or pressured

1027
00:52:16,120 --> 00:52:19,720
seller in in Newmont putting the
clock on themselves with with

1028
00:52:19,720 --> 00:52:23,200
great land and it leading to a
great outcome for for one party

1029
00:52:23,200 --> 00:52:24,680
at least.
Yep, Yep.

1030
00:52:24,960 --> 00:52:28,400
Another company and another
commodity that I'm keen to get

1031
00:52:28,400 --> 00:52:33,200
your thoughts on is Next Gen.
these this is I think in your

1032
00:52:33,200 --> 00:52:37,040
words, the best undeveloped
resource of any commodity

1033
00:52:37,200 --> 00:52:38,080
globally.
It's.

1034
00:52:38,320 --> 00:52:42,960
As distinct from everyone here.
To be clear, it's it is a

1035
00:52:42,960 --> 00:52:46,720
cracker bite by all accounts.
Yeah, let's let's start with the

1036
00:52:46,720 --> 00:52:48,320
resource.
They've they've done drilling

1037
00:52:48,320 --> 00:52:51,080
lately and people have got
pretty excited about it.

1038
00:52:51,160 --> 00:52:55,400
I mean, the, the production
profile that was already kind of

1039
00:52:55,400 --> 00:52:56,960
established was, was quite
enormous.

1040
00:52:56,960 --> 00:52:58,760
But what does that kind of add
to the story for you?

1041
00:53:00,560 --> 00:53:02,760
It's a good question.
I mean, actually on a on a

1042
00:53:02,760 --> 00:53:04,120
spreadsheet, I don't think it
adds much, right?

1043
00:53:04,400 --> 00:53:07,160
Because, you know, you're not
going to build a bigger meal,

1044
00:53:07,160 --> 00:53:10,280
you're not going to increase the
production rate for the 1st 10

1045
00:53:10,280 --> 00:53:13,400
years in our view anyway.
So I don't think it adds much

1046
00:53:13,400 --> 00:53:15,960
from a spreadsheet, but it does
make it much more strategically

1047
00:53:15,960 --> 00:53:20,400
compelling for someone like a
BHP who will take a very long

1048
00:53:20,400 --> 00:53:23,760
term view on these assets and
the expansion potential down the

1049
00:53:23,760 --> 00:53:25,960
track.
Yeah.

1050
00:53:25,960 --> 00:53:29,440
So I think that that part of the
world is underexplored and

1051
00:53:29,440 --> 00:53:32,120
they've demonstrated now that
there's a, you know, highly

1052
00:53:32,120 --> 00:53:36,080
prospective second asset there
that that should in time be a

1053
00:53:36,080 --> 00:53:37,960
mine.
But the thing that's really

1054
00:53:37,960 --> 00:53:41,280
proving difficult there isn't
the geology or the quality of

1055
00:53:41,280 --> 00:53:43,800
the resource as as you know,
it's, it's the permitting

1056
00:53:43,800 --> 00:53:46,680
process and and getting it to
market.

1057
00:53:46,680 --> 00:53:50,720
So, you know, we're not
expecting production until 2029.

1058
00:53:50,840 --> 00:53:52,400
There's no free cash flow until
then.

1059
00:53:52,720 --> 00:53:54,960
And in this sort of environment,
people want free cash flow.

1060
00:53:54,960 --> 00:53:58,240
They want to see, you know, free
cash or cash being added to the

1061
00:53:58,240 --> 00:54:00,280
balance sheet every quarter.
And that's fair enough, but it's

1062
00:54:00,280 --> 00:54:02,120
hard for hard for those
development companies at the

1063
00:54:02,120 --> 00:54:04,640
moment.
We're seeing next Gen. fall from

1064
00:54:04,640 --> 00:54:09,720
what 1213 bucks to to six today.
Nothing has changed in our view.

1065
00:54:10,280 --> 00:54:12,320
And so, yeah, you can probably
imagine where we're taking

1066
00:54:12,320 --> 00:54:13,800
advantage of that for our
investors at the moment.

1067
00:54:14,840 --> 00:54:18,920
What's a uranium place where you
flush through the the decks

1068
00:54:18,920 --> 00:54:21,960
long, long term when you think
about it and you you build your

1069
00:54:21,960 --> 00:54:24,400
your MPV of the the company.
Yeah.

1070
00:54:24,400 --> 00:54:27,120
So we use 85 in our MPV's base
case.

1071
00:54:27,120 --> 00:54:30,040
Obviously once again do a range
of scenarios around that.

1072
00:54:30,680 --> 00:54:33,680
What spot today 64 term price is
80.

1073
00:54:33,680 --> 00:54:36,000
So we do see it going up over
time.

1074
00:54:36,240 --> 00:54:40,320
We think 8085 is the minimum
incentive prices required for

1075
00:54:40,320 --> 00:54:43,640
brownfields project like a
Paladin Lang Heinrich as an

1076
00:54:43,640 --> 00:54:47,520
example.
And probably 90 to 100 is, is

1077
00:54:47,520 --> 00:54:50,120
the incentive price for for
greenfields projects that will

1078
00:54:50,120 --> 00:54:54,120
be required post 2030.
So that's the way we're thinking

1079
00:54:54,120 --> 00:54:55,520
about it.
Yeah.

1080
00:54:55,520 --> 00:54:58,320
It's, it's been a frustrating
one, the uranium trade, but

1081
00:54:58,320 --> 00:55:00,680
we're we're very confident
nothing's really changed from a

1082
00:55:00,680 --> 00:55:02,720
fundamental supply and demand
perspective.

1083
00:55:02,720 --> 00:55:04,960
And so we're backing ourselves
in on that one.

1084
00:55:06,080 --> 00:55:09,720
Politically, there's been a fair
bit of upheaval in in Canada,

1085
00:55:09,880 --> 00:55:12,680
you know, at a federal level
over the past kind of six

1086
00:55:12,680 --> 00:55:15,320
months.
And they've got an election at

1087
00:55:15,320 --> 00:55:19,160
the end of this month already.
Does does that kind of give you

1088
00:55:19,160 --> 00:55:21,520
give you hope or have you heard
any kind of whispers that

1089
00:55:21,840 --> 00:55:25,160
there's a different regime?
We'd already seen the, you know,

1090
00:55:25,240 --> 00:55:30,360
Carney, the new progressive, if
you like, later trying to do

1091
00:55:30,360 --> 00:55:34,560
what they possibly can to to win
a few votes and and push mining

1092
00:55:34,560 --> 00:55:36,840
along the kind of trajectory
that it needs to be for for

1093
00:55:36,840 --> 00:55:39,000
Canada.
And you can imagine on the the

1094
00:55:39,000 --> 00:55:41,280
other side of the aisle, it's
even more of that kind of voice.

1095
00:55:41,280 --> 00:55:43,200
Do you, do you have faith in
that kind of do?

1096
00:55:44,520 --> 00:55:50,440
You have faith in politicians.
I mean, for an asset like this,

1097
00:55:50,440 --> 00:55:52,760
I mean the world.
The world needs the uranium.

1098
00:55:54,040 --> 00:55:57,720
You know, it's, it's a fantastic
high quality resource with low

1099
00:55:57,720 --> 00:56:00,120
environmental impacts.
It's going to benefit the local

1100
00:56:00,120 --> 00:56:02,160
communities, it's going to
benefit the government.

1101
00:56:02,200 --> 00:56:05,240
It's going to, you know, produce
low carbon electricity for the

1102
00:56:05,240 --> 00:56:07,000
world.
I'll say no reason why it

1103
00:56:07,000 --> 00:56:12,000
shouldn't be accelerated and you
know, investment allowed and I'm

1104
00:56:12,000 --> 00:56:14,160
hopeful that it gets
accelerated, but I I don't know

1105
00:56:14,160 --> 00:56:15,480
not.
Gonna hold your breath on that

1106
00:56:15,480 --> 00:56:16,760
one.
No, I won't hold my breath.

1107
00:56:16,880 --> 00:56:20,320
If if we come back to Australia
on the uranium names, there are

1108
00:56:20,320 --> 00:56:24,280
some pretty, pretty hefty shorts
on on Boss and and Paladin.

1109
00:56:24,560 --> 00:56:26,800
Yeah, at at the moment.
What do you what do you make of

1110
00:56:26,800 --> 00:56:31,360
the the sentiment around the the
uranium trade being so kind of

1111
00:56:31,360 --> 00:56:34,360
whipsaw over the past year?
Yeah, yeah, it's frustrating.

1112
00:56:34,360 --> 00:56:36,880
One, I think a lot of people
liken it to the lithium boom.

1113
00:56:36,880 --> 00:56:38,400
I've spoken to a lot of
investors.

1114
00:56:38,400 --> 00:56:41,800
Often my mates will call me off
and say, hey, what's this

1115
00:56:41,920 --> 00:56:43,520
uranium thing?
Is it like lithium, you know,

1116
00:56:43,640 --> 00:56:45,640
five years ago?
Should I, should I invest my

1117
00:56:45,640 --> 00:56:48,640
house in it?
And they're just so

1118
00:56:48,640 --> 00:56:52,400
fundamentally different because
with lithium, the demand side

1119
00:56:52,400 --> 00:56:55,280
can move around much more.
It's dependent on EB sales or

1120
00:56:55,680 --> 00:56:58,840
stationary storage sales, all
that sort of stuff, which is

1121
00:56:59,320 --> 00:57:02,400
susceptible to consumer
sentiment in any given year.

1122
00:57:02,400 --> 00:57:05,400
And what's happening in global
auto markets, once you turn a

1123
00:57:05,400 --> 00:57:07,800
nuclear power plant on, you
don't turn it off, right,

1124
00:57:07,800 --> 00:57:09,440
because of the capital costs
involved.

1125
00:57:09,680 --> 00:57:13,680
And so being able to forecast
demand for uranium is very, very

1126
00:57:13,680 --> 00:57:17,040
easy.
You know, my 4 year old could do

1127
00:57:17,040 --> 00:57:19,240
it pretty easily.
It's 2 to 3% per annum or

1128
00:57:19,240 --> 00:57:21,680
slightly under at the moment,
but moving to that level.

1129
00:57:22,000 --> 00:57:26,000
And so, yeah, much more steady
demand outlook.

1130
00:57:26,200 --> 00:57:30,120
And then on the supply side,
we've seen just a huge explosion

1131
00:57:30,480 --> 00:57:33,320
in supply that frankly we didn't
see coming out of Africa in

1132
00:57:33,320 --> 00:57:35,600
lithium.
And you know, the Chinese have

1133
00:57:35,600 --> 00:57:38,960
once again proven their ability
to to bring on huge amounts of

1134
00:57:38,960 --> 00:57:42,880
supply very quickly to fulfil
their needs in the uranium

1135
00:57:42,880 --> 00:57:44,560
space.
We've just been talking about

1136
00:57:44,560 --> 00:57:46,640
next Gen. not producing until
2039.

1137
00:57:47,520 --> 00:57:52,800
There is assets like Paladin and
Boss that are struggling to come

1138
00:57:52,800 --> 00:57:54,760
back into production as quickly
as what we thought.

1139
00:57:54,760 --> 00:57:58,000
So on both counts, you're just
looking at a very different

1140
00:57:58,000 --> 00:58:00,320
market.
And we're still burning roughly

1141
00:58:00,320 --> 00:58:05,000
25% more uranium every year in
power plants than is being drawn

1142
00:58:05,000 --> 00:58:07,600
out of the ground.
So for us, that's just a

1143
00:58:08,000 --> 00:58:11,840
fantastic setup.
Do you put it kind of to to

1144
00:58:11,840 --> 00:58:15,840
market dynamics as well the the
impacts of sort of like faster

1145
00:58:15,840 --> 00:58:19,680
money if you like that these
short positions can can build so

1146
00:58:19,680 --> 00:58:23,080
quickly or do you think it is
kind of to your point they're

1147
00:58:23,280 --> 00:58:27,880
quite a Broadway of playing a
short term bearish outlook on on

1148
00:58:27,880 --> 00:58:30,840
uranium?
Look, I don't know about the

1149
00:58:30,840 --> 00:58:32,840
short, short interest.
I mean, with those, both those

1150
00:58:32,840 --> 00:58:35,680
companies, they're going through
ramp UPS and as as we all know,

1151
00:58:35,760 --> 00:58:39,080
any company going through a ramp
up is a very high risk time and

1152
00:58:39,080 --> 00:58:40,440
more often than not, things do
go wrong.

1153
00:58:40,480 --> 00:58:43,080
Unfortunately, it's rare for a
company to bring on an asset

1154
00:58:43,080 --> 00:58:45,720
very smoothly.
And sorry, I can understand why

1155
00:58:46,160 --> 00:58:47,400
there's that level of short
interest.

1156
00:58:47,400 --> 00:58:49,840
It does surprise me though,
given where the uranium price is

1157
00:58:49,840 --> 00:58:51,760
and what the outlook is over the
medium term.

1158
00:58:51,760 --> 00:58:54,680
And certainly if there's any
sort of positive news in both

1159
00:58:54,680 --> 00:58:58,480
those companies, then investors
will be or short sellers will be

1160
00:58:58,760 --> 00:59:00,240
in for a pretty rude shock, I
think.

1161
00:59:00,760 --> 00:59:03,960
But but you know, particularly
in the case of Paladin, there's

1162
00:59:03,960 --> 00:59:05,720
issues potentially around
funding.

1163
00:59:06,600 --> 00:59:11,440
So, yeah, so there's, I can see
it from both, both sides, yeah.

1164
00:59:12,760 --> 00:59:16,800
If we if we look at a couple
more commodities quickly just to

1165
00:59:16,920 --> 00:59:22,720
to fly through you called METCO
your your best or your highest

1166
00:59:23,600 --> 00:59:26,040
conviction pick I believe for
for 2025.

1167
00:59:26,040 --> 00:59:28,400
Yep, standing strong.
Yeah, it was always AQ four

1168
00:59:28,400 --> 00:59:29,040
story man.
Yeah.

1169
00:59:30,280 --> 00:59:32,040
It's going.
To come in the market Q4, don't

1170
00:59:32,200 --> 00:59:33,520
worry about.
That when you when you look

1171
00:59:33,520 --> 00:59:37,640
around the names out there, what
White Haven like just looking at

1172
00:59:37,640 --> 00:59:41,440
it earlier today and seeing the,
the, the metrics on which the

1173
00:59:41,640 --> 00:59:45,640
the 30% sale got got done.
You know that that outweighs the

1174
00:59:45,640 --> 00:59:48,160
market cap of the whole company
right now.

1175
00:59:48,680 --> 00:59:51,080
Is that one kind of lens you,
you look at it through or do you

1176
00:59:51,080 --> 00:59:54,600
think you know, with contingent
payments and and other sort of,

1177
00:59:56,240 --> 00:59:59,960
you know, costs coming up and
where, where they are given

1178
00:59:59,960 --> 01:00:02,120
they're a sort of met and
thermal player, there is pretty

1179
01:00:02,120 --> 01:00:04,920
valid concerns.
What do you mean by concerns?

1180
01:00:05,200 --> 01:00:07,640
For for the company being able
to make some of those payments

1181
01:00:07,680 --> 01:00:09,760
and.
Stuff, Yeah, I mean, gosh, with

1182
01:00:09,760 --> 01:00:12,200
the with the coke and call price
where it is and the thermal call

1183
01:00:12,200 --> 01:00:14,160
price where it is, I mean,
there's no secret they're not

1184
01:00:14,160 --> 01:00:16,200
generating a huge amount of
cash.

1185
01:00:16,520 --> 01:00:17,760
Do we think they need to raise
equity?

1186
01:00:17,760 --> 01:00:20,040
Absolutely not.
We, we think they'll get through

1187
01:00:20,240 --> 01:00:22,000
and, and make those payments no
problems.

1188
01:00:23,160 --> 01:00:25,640
And you know, you have to look
at the counterparties there as

1189
01:00:25,640 --> 01:00:27,120
well, right?
They're not exactly, you know,

1190
01:00:27,120 --> 01:00:28,120
you're not dealing with
Glencore.

1191
01:00:29,320 --> 01:00:31,880
So I think I think that'll be
fine.

1192
01:00:32,160 --> 01:00:35,000
What's really interesting for me
is just what's happened to the

1193
01:00:35,000 --> 01:00:39,680
Metco market and the fact that
you now have Coronado and

1194
01:00:39,680 --> 01:00:44,880
Stanmore in far worse positions.
And, and really, I mean, if

1195
01:00:44,880 --> 01:00:47,880
Whitehaven are only generating a
little bit of cash, then

1196
01:00:47,880 --> 01:00:50,240
companies like Coronado and
Stanmore are in a world of pain.

1197
01:00:50,240 --> 01:00:54,520
And So what does that mean for,
for royalties for for costs in

1198
01:00:54,520 --> 01:00:57,000
the sector?
What can we do to increase the

1199
01:00:57,000 --> 01:00:59,680
overall competitiveness and, and
what does it mean for M&A as

1200
01:00:59,680 --> 01:01:01,760
well?
So I think there's some, some

1201
01:01:01,760 --> 01:01:03,760
great opportunities there.
The best time to invest in a

1202
01:01:03,760 --> 01:01:07,560
commodity is when it's in the
cost curve like lithium now like

1203
01:01:07,560 --> 01:01:11,160
Coke and Co now it's not when
it's trading 10 times marginal

1204
01:01:11,160 --> 01:01:13,080
costs like lithium was at
80,000.

1205
01:01:13,360 --> 01:01:16,000
And so these are the sorts of
periods that create

1206
01:01:16,000 --> 01:01:18,720
opportunities for people that
want to take a three-year view.

1207
01:01:20,240 --> 01:01:24,720
Amazing one one other commodity
I know you'd talked about and

1208
01:01:24,720 --> 01:01:29,280
you were you were quite excited
was kind of bauxite, aluminium

1209
01:01:29,400 --> 01:01:32,760
supply chain and Metro mining
was the the name you'd

1210
01:01:32,760 --> 01:01:33,440
mentioned.
Now.

1211
01:01:33,960 --> 01:01:36,560
These guys have have leverage
in, in certain sort of parts.

1212
01:01:36,560 --> 01:01:40,520
They, you know, previously were
heavily operationally and

1213
01:01:40,520 --> 01:01:43,240
financially leveraged, but
things are kind of changed

1214
01:01:43,240 --> 01:01:45,480
there.
You're still still a holder and

1215
01:01:45,480 --> 01:01:47,440
still sort of along for the
journey.

1216
01:01:47,560 --> 01:01:48,320
Absolutely.
Yeah.

1217
01:01:48,320 --> 01:01:52,760
We love the metros, another good
example of of why debt is very

1218
01:01:52,760 --> 01:01:55,240
good for investment banks and
fees and increases number of

1219
01:01:55,240 --> 01:01:57,560
shares an issue.
There's a lot of shares an issue

1220
01:01:57,560 --> 01:02:00,800
for Metro Mining and we are in
yes, a fair proportion of them.

1221
01:02:01,480 --> 01:02:05,200
We're very positive on the
outlook their operations as far

1222
01:02:05,200 --> 01:02:08,840
as where we continue to ramp up
really well post the wet season,

1223
01:02:09,200 --> 01:02:11,880
the books are prices held in
incredibly well.

1224
01:02:13,040 --> 01:02:16,840
We don't expect spot bauxite
pricing to stay where it is

1225
01:02:16,840 --> 01:02:19,040
forever.
We value the company very

1226
01:02:19,040 --> 01:02:22,000
conservatively and on that basis
we think the business can

1227
01:02:22,000 --> 01:02:26,000
generate 125 mil of post tax
free cash flow per annum.

1228
01:02:27,040 --> 01:02:30,000
The the current cap is only two
5300.

1229
01:02:30,880 --> 01:02:33,960
And so yeah, we're really
looking forward to seeing a

1230
01:02:33,960 --> 01:02:36,560
couple of quarters, hopefully
the next two quarters where

1231
01:02:36,560 --> 01:02:39,520
there's forty $50 million put
away to the balance sheet.

1232
01:02:39,520 --> 01:02:44,880
And we think that, you know,
that will see a big reaction in

1233
01:02:44,880 --> 01:02:47,280
the equity or it should because
people have to stand up and take

1234
01:02:47,280 --> 01:02:49,840
notice then.
Fantastic.

1235
01:02:49,840 --> 01:02:52,400
I think I've taken more enough,
more than enough of your time.

1236
01:02:52,400 --> 01:02:53,680
Fisty.
Thanks for making the time for

1237
01:02:53,680 --> 01:02:55,320
us and coming on money of mine.
No worries.

1238
01:02:55,320 --> 01:02:58,520
Thank you.
Awesome, big thanks to Fisty for

1239
01:02:58,520 --> 01:03:02,360
for joining us on money of Mine
and I hope the money miners out

1240
01:03:02,360 --> 01:03:03,800
there got a kick out of that
one.

1241
01:03:03,800 --> 01:03:06,160
And a massive thank you as well
to all our partners.

1242
01:03:06,160 --> 01:03:09,880
Firstly, JRX, get your tickets
discounts in the show notes.

1243
01:03:09,880 --> 01:03:12,560
The conference will be at the
back end of May.

1244
01:03:13,080 --> 01:03:16,280
And to the legend at Mineral
Mining Services, Grounded Sandy

1245
01:03:16,280 --> 01:03:20,120
Ground Support, CRA Insurance, K
Drew, WA Water, Quattro, Project

1246
01:03:20,120 --> 01:03:23,520
Engineering, KCA Site Services,
Black Drummond Drilling

1247
01:03:23,520 --> 01:03:26,480
Services, Cross Boundary Energy,
Hodoro Hodoro.

1248
01:03:27,040 --> 01:03:29,680
Information contained in this
episode of Money of Mine is of

1249
01:03:29,680 --> 01:03:31,760
general nature only and does not
take into account the

1250
01:03:31,760 --> 01:03:35,360
objectives, financial situation
or needs of any particular

1251
01:03:35,360 --> 01:03:37,400
person.
Before making any investment

1252
01:03:37,400 --> 01:03:40,480
decision, you should consult
with your financial advisor and

1253
01:03:40,480 --> 01:03:43,600
consider how appropriate the
advice is to your objectives,

1254
01:03:43,840 --> 01:03:45,800
financial situation and needs.