From Royalties to Real Assets: Smallwood, Awram, and Jay Martin

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We're recording live on air at
Imark here in the mighty Sydney

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mate.
Your favorite city in Australia?

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Why do you put on a voice when
you come to Sydney?

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It's the conference voice.
Big energy, mate.

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Yeah, no, your voice normally
runs out by day three of your

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conferences, mate.
I'm pumped.

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We've got a couple of a couple
of conversations that we teed up

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in preparation for our ship here
to Sydney Carson, our editor

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legend.
You've mashed them all together.

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Money minds are going to watch
an amalgamation of three

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conversations that we've we just
had with two royalty companies

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and one real assets big finger.
Absolutely, mate.

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So we've got Randy Smallwood
coming up who runs wheat and

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precious metals.
This is a huge company.

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This is a huge, huge company
that flies a bit under the radar

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where we come from, just like
the whole streaming and

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royalties industry does here in
Australia.

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Behemoth, behemoth.
But as as Randy has said in the

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past, 42 employees, $47 billion
market cap, not so bad, though.

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It's.
A decent ratio, yeah.

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And then we've got David as well
who who we speak with, he was

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one of the founding partners of
Sandstorm Royalties.

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Now money miners might have seen
that they had a fantastic

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transaction.
They just got bought by Royal

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Gold.
So new business coming out of

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the back of that after this big
sort of deal that they've done.

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And again, lovely to to sort of
dig into how they sort of think

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about royalties, about asset
lives, about MPVS.

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Don't get all the.
Way, that's just a teaser.

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That's just a teaser.
And then Jay Martin, right, a

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fellow podcaster who hosts some
pretty some pretty wicked

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conversations with people like
you said in the hard assets in

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the geopolitical kind of realm.
So I want you to whip them in

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there.
Yeah.

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Always pops up on my recommended
to watch feed.

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I'm sure you've seen Jay Jay
Martin on your YouTube feed

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before as well, mate.
It's great 3 great

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conversations.
We've we've had great fun here

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at imark.
Time to clock off and have some

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beers I reckon mate.
Here we go Yeah, deal like deal

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completed Sandstorm Royal Gold,
new Royal gold.

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I should say pretty like
interesting amalgamation of of 2

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two companies sandstorm with a,
you know, phenomenal kind of

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history in, in, in, in a brief
period of time going from a

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shell to now what what was
valued at $3.5 billion in this

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takeover.
It's a strange feeling, saying

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goodbye to to what would have
been a pretty formidable part of

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your life, Dave.
Listen, absolutely.

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I think from my participation in
this industry, I mean, I've been

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in the industry for a long time,
since about 1993, but I think

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I'm really mostly defined by my
experience in sandstorm and what

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sandstorms been.
So for sure, it's a weird

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feeling.
It's a weird feeling to take a

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look at these notes from all
these banks saying we're

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discontinuing coverage of
Sandstorm after really all these

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years.
At least it's not a sell seize

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coverage, you know it's.
Yeah, I know exactly.

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At least it's not sell.
So, so that's The thing is that

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at least you kind of it feels,
it feels a little bit more like

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you're you're going out.
I don't think we're at the top

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of the market, but certainly
it's better than kind of, you

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know, relinquishing yourself in
the bottoms of the market

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because you just can figure out
how to make things work in the

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company well.
It was structured in a in a

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share way so that you guys can
sort of participate.

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We demand it.
We, we made sure that it was

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going to be part of the shareway
because listen, we're real big

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believers in what this new rogue
Royal Gold looks like.

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Now the real back story is, and
I don't know if you guys want to

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get into it now, but please,
the, the back story is, is that

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we had talked to Royal Gold a
number of times.

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Listen, the bottom line is in
North America, we don't have

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that many royalty and streaming
companies.

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They're big companies.
They're all very big companies,

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but there's really just six big
companies out there.

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There's a number of smaller ones
that are interesting and they've

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been doing some good work and
fill a role there.

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But we've all kind of had just
about the same management team

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of those six companies since the
beginning.

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We've all known each other as
these companies have emerged,

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things like Triple flag as
they've come up, those companies

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have been, we've known the
management, we've known all of

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them.
So there we've always talked.

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We we know each other
implicitly.

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We understand how everybody does
deals.

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It was royal in us that we're
talking most frequently over

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time, even 10 years ago.
Plus, we would talk to their

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former CEO who's Tony Silver and
touch base every once in a

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while, talk about what our
future plans were, where we

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wanted to go, what we were.
It was really just this last

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time which came together
actually relatively quickly as

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of effectively March of, of this
year, where it's felt like it

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was another one of those touch
points.

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But then it it became abundantly
clear that Royal was very, very

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interested in moving forward and
investigating this a little bit

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forward.
Where does the kind of

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consolidation go from here with
the industry?

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It's already fairly consolidated
like you said there.

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Listen, you know, in the end,
the beauty of a royalty or

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streaming company is that
consolidation can happen really

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easily in these assets.
Honestly, I there's very little

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need for a management team of
royalty and streaming company.

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You know that I've always told
people this, that if the entire

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senior management of Sandstorm
all died on a plane crash next

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day, the stock price would go up
because we wouldn't be in a

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position to waste any more money
on bad deals or anything.

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Because the underlying assets,
the beauty of what it is, this

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was underlying assets operate
completely independently of

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where management sits.
So consolidation I think is

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almost a little bit limitless
between all of these companies.

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I don't think you can get a
company that's too big that just

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does royalty in streams.
I think we've kind of proven

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that before we had Sandstorm, we
had, you know, we had done 5.

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We bought five other companies
in our history up to this point

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prior to selling to Royal Gold
and we would have been content

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to continue down that path.
And but honestly, when I see

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what's going on and where it is,
I think it's just a matter of

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right time, right place for
these companies to figure out

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how to combine and consolidate
even further.

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Sandstorms acquisitive nature
like eased in the you know like

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leading up the the couple of
couple of years leading into

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this transaction was that is
there an implicit statement

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there on how you evaluated
valuations in the sector you

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were more happy to be acquired
than doing acquiring yourself?

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Well, I think for us, the
challenge for us was is that we

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were kind of in a little bit of
an awkward space.

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We weren't quite big enough to
do these billion dollar size

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transactions in that space.
We weren't really small enough

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to make these $50 million
transactions accretive to us as

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well too meaningful to our
shareholders.

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I still like, listen, I still
always like doing small deals.

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I like them doing whatever based
on the underlying asset, quality

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of the underlying asset.
But we were in a bit of an

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awkward space.
We didn't have a lot of capital

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available to us because we
attend some big, big

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acquisitions in 2022.
We're paying down the cash flow,

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we're with our cash flow, paying
down debt.

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So we were in that space where
we were looking to do, you know,

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some type of transaction, but we
couldn't really make these big

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having, you know, a 2 + 2 1/2
billion dollar, $2 billion

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market cap and not being able to
do really $500 million size

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deals.
That was going to be a challenge

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for us.
And it wasn't a lot that we're

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in that space.
There's been more deals kind of

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in that billion dollar size
transaction level and a bunch of

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deals again, that are not
smaller.

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So we were, I think concerned
that we would struggle to really

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get the transactions done that
we wanted to that we're going to

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make sense, which meant, listen,
just hang on grow size, see how

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that portfolio developments,
which is a great market that

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we're in right now to see those
types of things development

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develop.
However, we, we when we were

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presented with this ability to
combine with Royal, we brought

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something to the table that was
really important to them, which

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was growth to 2030 and a long
life beyond that.

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They brought like a tremendous
amount of cash flow, a big

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portfolio of assets that even
though they're mature, they

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still have a relatively long
life associated with them.

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So when we looked at it from
that perspective of OK, well

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what are we bringing to the
table, what are they bringing to

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the table, It made a lot of
sense right there, right at the

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gate because we brought that
like that big growth over this

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period where we're seeing higher
and growing and rising commodity

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price environments.
And we brought that really

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strong big back end of these big
projects that we're going to

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last for decades and decades.
That of course these are

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important components of any good
royalty and streaming company

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get those maximum multiples.
When you think about about the

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the journey, it was 18 years you
were from from.

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Pretty close, yeah.
Pretty close from the shell at

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least, yeah.
Yeah.

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What are the sort of like two or
three big sort of moments,

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whether they're transactions or
you know, where you might get

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might get close to the brink
that kind of defined the the

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story in creating billions of
dollars in in value.

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Yeah, I think when you look
back, there's there are a couple

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of big turning points.
I think for us, I think one of

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the real key ones was in 2015,
at the end of 2015, we had done

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a transaction with Humana Gold.
This is where we got a copper

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stream from Chapata.
We got a silver stream from

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Sarah Morel in Argentina.
And then we also got this weird

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optionality bid that was on the
Mara, what's now today the Mara

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project in Glencore's hands.
So to me, that was a big

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difference.
That was the first time we had

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really done a big over $100
million size transaction.

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It was at a very, very low part
of the commodity cycle.

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It was just so little equity and
so little financing capabilities

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out there.
But it was a stretch for us.

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It worked well for us.
It really created a lot more

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mass within our portfolio than
what we had had before and it

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gave us a lot of good
production.

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It gave us good exposure to
copper.

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And at that time between kind of
2015 and 2020, that was a real

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renaissance of the copper price
as well too.

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So we ended up doing very, very
well.

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That was just really kind of
lack of timing.

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That was a really key part for
us.

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But of course I think probably
the most important thing for us

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was these transactions in 2022.
We it was a big risk.

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We had acquired both no man, a
public royalty company that was

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based out of Canada and then
Basecore.

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Basecore was a private owned by
both Ontario Teachers Pension

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Fund and Glencore.
Those were two big chunks.

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That was over a billion dollars
worth of transactions for us and

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it will really set us up for
attachment to these really Long

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live big projects like Antimina
and Antimina in a couple of

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different ways and into some of
these other bigger projects like

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Plat Reef which would really
cement this really long term

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base of assets are going to have
multiple decades associated

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there with their life.
On on the flip side, I mean, in

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your business shot selection is,
is everything because you write

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a pretty chunky up sized check
and if there's for sure, if

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there's no return associated
with it or, or the return

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doesn't quite match what you
evaluated and it's, it's, it's

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consequential for for
shareholders.

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It's on the flip side, what was
the the best deals you didn't do

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the ones, the ones you were
happy to, they're happy to, you

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know, not write the check in the
end.

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But maybe you got close.
Yeah.

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Listen, it's there.
There were certainly a couple of

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them.
I don't really want to kind of

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poke holes at some of these
things.

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But yeah, there were a couple of
deals that had popped up that

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for sure you you're, you're glad
that you kind of dodged the

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bullet on some of these things.
That being said, from really

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2012 onwards, we spent a lot of
time just focusing on quality of

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00:12:40,840 --> 00:12:43,240
these underlying assets.
You know, listen, the

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00:12:43,240 --> 00:12:45,360
interesting thing about the
royalty and streaming business

229
00:12:45,360 --> 00:12:49,320
is that it makes sense to those
real spreadsheet junkies.

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00:12:49,680 --> 00:12:52,240
Like if you're CFA, if you're
really been working an

231
00:12:52,240 --> 00:12:56,160
investment bank, you take a look
at what our model looks like and

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00:12:56,160 --> 00:12:59,320
on the spreadsheet it looks
extraordinarily kind of input

233
00:12:59,640 --> 00:13:01,960
these numbers from the
feasibility study.

234
00:13:02,200 --> 00:13:05,040
You kind of crank out this, you
see what it looks like and then

235
00:13:05,040 --> 00:13:07,520
you can figure out really
quickly what you think your

236
00:13:07,520 --> 00:13:09,920
return on this.
All of us who have been in the

237
00:13:09,920 --> 00:13:12,800
mining industry though,
understand that it's way

238
00:13:12,800 --> 00:13:16,160
different than just taking a big
bag of money pushing across the

239
00:13:16,160 --> 00:13:19,280
table and saying, hey, I got a
royalty and streaming company.

240
00:13:20,120 --> 00:13:22,680
You really have to focus on the
quality of those underlying

241
00:13:22,680 --> 00:13:24,880
assets.
You know, a key principle I've

242
00:13:24,880 --> 00:13:28,400
been talking about for royalty
and streaming companies is that

243
00:13:28,400 --> 00:13:31,400
we're really that ultimate long
term investor in these projects.

244
00:13:32,320 --> 00:13:37,160
So what's important, you know,
you're going to outlift probably

245
00:13:37,160 --> 00:13:39,720
the owners and the management of
this company, you're going to

246
00:13:39,720 --> 00:13:42,440
outlive almost all of the equity
investors that are going to be

247
00:13:42,920 --> 00:13:46,120
at rotating in and out of that.
You're going to outlive any of

248
00:13:46,120 --> 00:13:48,280
the debt that's on these
projects.

249
00:13:48,560 --> 00:13:52,080
So what you really need to be
certain about is the underlying

250
00:13:52,080 --> 00:13:55,120
quality of the asset.
To me, that's always been the

251
00:13:55,120 --> 00:13:57,480
important part of it is focusing
on it.

252
00:13:57,840 --> 00:14:00,000
Maybe there's some hair around
the management team, maybe

253
00:14:00,000 --> 00:14:03,920
there's some hair around how the
government is dealing with them

254
00:14:03,920 --> 00:14:08,000
without particular jurisdiction.
But I think what a long term

255
00:14:08,000 --> 00:14:12,160
proven fact in this industry is
that you pick and you latch on

256
00:14:12,160 --> 00:14:15,920
to those really high quality
assets that on a technical

257
00:14:15,920 --> 00:14:18,840
basis, eventually you're going
to get some kind of good payout

258
00:14:18,960 --> 00:14:23,880
on it as long as you can, you
know, keep your your association

259
00:14:23,880 --> 00:14:26,000
with that project.
That's the other challenge too.

260
00:14:26,280 --> 00:14:29,200
So that that's not as always the
the easiest thing in the world

261
00:14:29,200 --> 00:14:32,640
to do in the space, but that's
the important part of really

262
00:14:32,640 --> 00:14:35,280
kind of figuring out how these
transactions in the future are

263
00:14:35,280 --> 00:14:36,760
going to work for you and how
you look at them.

264
00:14:37,240 --> 00:14:40,000
Yeah.
That, that optionality dynamic,

265
00:14:40,000 --> 00:14:42,680
that's something Trevor and I
have have spoken about a lot

266
00:14:42,720 --> 00:14:45,400
lately.
And there's, there's a number of

267
00:14:45,400 --> 00:14:48,480
fantastic CE OS in the business
that really under score how

268
00:14:48,480 --> 00:14:51,120
optionality is often
undervalued.

269
00:14:51,120 --> 00:14:54,800
How is your thinking on that
like evolved over the 18 years?

270
00:14:54,840 --> 00:14:56,880
Is that something you felt like
you appreciated and that might

271
00:14:56,880 --> 00:14:59,800
have been your edge coming into
the business that other people

272
00:14:59,800 --> 00:15:02,320
are under appreciating?
Certainly, I mean that goes back

273
00:15:02,320 --> 00:15:08,080
to like even in some 2013 we did
this transaction with Android

274
00:15:08,080 --> 00:15:12,480
resources was associated with
not oh, you told why the open

275
00:15:12,480 --> 00:15:16,600
pit mine that Turquoise hill now
Rio is operating, but the joint

276
00:15:16,600 --> 00:15:19,040
venture area that was around
where the block cave would

277
00:15:19,040 --> 00:15:22,480
really kind of start not even
start getting developed in, but

278
00:15:22,480 --> 00:15:27,120
it's certainly expand into no.
So it was clear like right from

279
00:15:27,120 --> 00:15:28,840
the beginning.
It's no, it's not like I had

280
00:15:28,840 --> 00:15:32,440
some kind of magical X-ray
glasses to see this.

281
00:15:32,720 --> 00:15:35,640
Everybody knew that as you got
onto that joint venture ground,

282
00:15:35,960 --> 00:15:39,120
this area was going to be the
most prolific or that you were

283
00:15:39,120 --> 00:15:42,040
going to find in that or you
told noy area you go to the

284
00:15:42,040 --> 00:15:46,200
South of really where it was the
Saruga 18,000,000 oz established

285
00:15:46,200 --> 00:15:51,680
kind of let's call it by 2000
and nine 2010 on on a project

286
00:15:51,680 --> 00:15:54,600
that wasn't finding a place in
the mine plan yet.

287
00:15:54,600 --> 00:15:57,120
But you know it totally it's
going to it's clear.

288
00:15:57,440 --> 00:15:59,880
And so thinking about that
optionality, we did that

289
00:15:59,880 --> 00:16:02,640
transaction, we got killed by
the market.

290
00:16:02,640 --> 00:16:05,000
Our investors hated it.
They thought it was terrible.

291
00:16:05,000 --> 00:16:10,320
In fact, we had we were at the
BMO conference in Florida that

292
00:16:10,320 --> 00:16:13,440
year when it got announced.
We had one investor come up to

293
00:16:13,440 --> 00:16:15,120
say, say how could you do that
deal?

294
00:16:15,280 --> 00:16:18,640
How can you do a deal where cash
flows not coming for another 12

295
00:16:18,640 --> 00:16:22,320
or 15 years?
And I justified it by saying,

296
00:16:22,320 --> 00:16:25,760
listen you, this is going to be
one of the most important, like

297
00:16:25,760 --> 00:16:28,880
top three most important copper
projects in the world that's

298
00:16:28,880 --> 00:16:31,400
getting developed.
It's the only copper mega

299
00:16:31,400 --> 00:16:35,440
project in the world that is
getting being built, developed

300
00:16:35,440 --> 00:16:38,400
and built over maybe a 10 year
period or so.

301
00:16:38,800 --> 00:16:41,080
So yes, it takes a long time to
get it.

302
00:16:41,080 --> 00:16:43,280
But when you're associated with
something like this and a

303
00:16:43,280 --> 00:16:47,160
royalty, your payout on that
just going to be enormous.

304
00:16:47,440 --> 00:16:49,960
That may have mattered almost
nothing to him.

305
00:16:49,960 --> 00:16:54,000
That same investor though came
up to us just 2-3 years ago and

306
00:16:54,000 --> 00:16:56,600
said I was totally wrong you
guys.

307
00:16:56,600 --> 00:17:01,240
That was maybe the best deal
that you guys did because for

308
00:17:01,240 --> 00:17:04,359
that $20 million investment that
we're making off of that, that

309
00:17:04,359 --> 00:17:08,680
royalty, just the royalty
portion of it will pay that much

310
00:17:08,800 --> 00:17:13,720
for perhaps per year and perhaps
for 80 year was probably 80 year

311
00:17:13,720 --> 00:17:17,560
mine life on that.
So you know, that's the thing I

312
00:17:17,560 --> 00:17:21,359
think that that you know royalty
companies do trade at a really

313
00:17:21,359 --> 00:17:25,040
high valuation.
But I would certainly argue that

314
00:17:25,040 --> 00:17:29,680
it's still lower when you factor
in that optionality aspect of it

315
00:17:30,040 --> 00:17:34,920
and how these projects and the
extraordinarily excellent way

316
00:17:34,920 --> 00:17:38,520
that a royalty captures
optionality in a project.

317
00:17:40,680 --> 00:17:45,840
That's I think, you know, that's
really why royalty companies I

318
00:17:45,840 --> 00:17:50,000
think trade at discounts to
really what mining companies are

319
00:17:50,360 --> 00:17:53,240
because you get all that
optionality, you get all that

320
00:17:53,240 --> 00:17:56,440
upside on these projects without
having to be exposed to that

321
00:17:56,840 --> 00:18:02,320
CapEx issues, the shutdown
issues, the cost issues

322
00:18:02,320 --> 00:18:04,520
associated and cost inputs into
it.

323
00:18:04,840 --> 00:18:08,840
To me they're still dirt cheap
compared to actual royalty

324
00:18:08,840 --> 00:18:11,960
companies even though they trade
those on multiple multiples.

325
00:18:12,760 --> 00:18:16,000
The royalty companies sound like
far more enjoyable companies and

326
00:18:16,000 --> 00:18:18,520
businesses to run.
I'd certainly rather own one for

327
00:18:18,520 --> 00:18:21,000
every for every billionaire
we've got in Australia that

328
00:18:21,000 --> 00:18:24,200
became a billionaire by virtue
of creating a a mining company.

329
00:18:24,480 --> 00:18:27,440
We've got more that actually got
rich from owning royalties.

330
00:18:27,440 --> 00:18:31,000
Yeah.
And yeah, I just, I just wonder

331
00:18:31,000 --> 00:18:33,840
like zoom out big trends
happening in in the royalty

332
00:18:33,840 --> 00:18:36,680
space in general.
And, and, and some, you know,

333
00:18:36,680 --> 00:18:40,120
since since the announcement of
the deal with Royal Gold, it's

334
00:18:40,120 --> 00:18:42,600
undeniable the amount of
attention and and thought and

335
00:18:42,600 --> 00:18:46,720
focus there is on Tether's clear
entrance into the industry by

336
00:18:46,720 --> 00:18:49,440
virtue of their mistaken in
elemental the support of the

337
00:18:49,440 --> 00:18:51,720
merger with EMX.
Tether might be the only

338
00:18:51,720 --> 00:18:54,240
business in the world that has a
lower cost of capital than some

339
00:18:54,240 --> 00:18:56,840
of the best royalty companies
out there that you know, that

340
00:18:56,840 --> 00:18:59,200
they've certainly got comparable
headcount per revenue.

341
00:19:00,080 --> 00:19:03,840
It I just, I just wonder if you
think that like what, what do

342
00:19:03,840 --> 00:19:05,280
you think Teddler's going to do?
What do you think the

343
00:19:05,280 --> 00:19:08,720
underpinning trends are for the
royalty businesses in general?

344
00:19:08,800 --> 00:19:10,280
The publicly listed ones?
Yeah.

345
00:19:10,280 --> 00:19:12,840
Well, listen, I think you you
hit the nail on the head there.

346
00:19:12,840 --> 00:19:17,080
And and I didn't really realize
how successful Tethers business

347
00:19:17,080 --> 00:19:20,240
model was until it really, I
think it was actually your

348
00:19:20,240 --> 00:19:22,080
podcast.
That I really.

349
00:19:22,400 --> 00:19:25,320
That that somebody sent to me
and I really kind of started

350
00:19:25,320 --> 00:19:27,000
understanding what their
position was.

351
00:19:27,000 --> 00:19:33,760
But yeah, their model is really
extraordinary as I've as that

352
00:19:33,760 --> 00:19:37,360
deal got announced and I started
to get to know them a little bit

353
00:19:37,360 --> 00:19:40,640
more, I really listen, I think
they're they're hitting the nail

354
00:19:40,640 --> 00:19:43,600
right on the head for their
business model too, which is

355
00:19:43,600 --> 00:19:48,200
really this struggle with Fiat
currencies, this really strong

356
00:19:48,200 --> 00:19:53,120
belief in hard assets, a link to
resources one way or another.

357
00:19:53,440 --> 00:19:57,800
And I think they identified it.
And when they did their dive

358
00:19:57,800 --> 00:20:00,440
into the mining industry, they
looked at it the right way.

359
00:20:00,680 --> 00:20:03,280
They said, listen, mining is a
tough, tough industry.

360
00:20:03,560 --> 00:20:07,680
It is filled with all sorts of
minefields that you just, not

361
00:20:07,680 --> 00:20:11,160
only are you, you know, there's
just so many problems that you

362
00:20:11,160 --> 00:20:13,240
can't predict what those
potential problems are going to

363
00:20:13,240 --> 00:20:16,680
be, but.
The royalty and streaming part

364
00:20:16,680 --> 00:20:20,280
of it is just so much more
effective way at attaching it.

365
00:20:20,560 --> 00:20:24,120
They understand that idea of the
optionality that that really is

366
00:20:24,120 --> 00:20:28,640
captured by the royalties.
They understand really that lack

367
00:20:28,640 --> 00:20:31,680
of risk associated with it
because you don't have that

368
00:20:31,680 --> 00:20:35,080
exposure to the single and they
love the diversification of it.

369
00:20:35,360 --> 00:20:38,040
I think it's, it's, it's going
to have a huge impact in our

370
00:20:38,040 --> 00:20:39,960
space.
It has already.

371
00:20:40,160 --> 00:20:43,280
It's still will have a whole
impact on the on the space of

372
00:20:43,280 --> 00:20:47,360
mining.
Last one from me, David, if you

373
00:20:47,360 --> 00:20:49,280
could own any royalty in the
world, you're giving it for

374
00:20:49,280 --> 00:20:50,680
free.
It's got to be an existing.

375
00:20:50,680 --> 00:20:53,040
Royalty.
And it's yours, you get to keep

376
00:20:53,040 --> 00:20:55,600
it.
What is the best royalty in the

377
00:20:55,600 --> 00:20:59,440
world to own?
Boy, that's a that's a good

378
00:20:59,440 --> 00:21:01,840
question.
I have thought about this for

379
00:21:01,840 --> 00:21:04,560
sure.
When I think about the royalties

380
00:21:05,800 --> 00:21:09,840
that are in that we're sitting
in Pat Sandstorm's portfolio

381
00:21:09,840 --> 00:21:11,640
that really liked, really liked
those.

382
00:21:11,640 --> 00:21:14,400
So you told the royalties that
are on that joint venture area

383
00:21:14,800 --> 00:21:18,760
because that links you to,
because to me that's a project

384
00:21:18,760 --> 00:21:21,160
that probably operates for 100
years plus.

385
00:21:21,160 --> 00:21:24,440
If I wanted to really kind of
leave a legacy to a family, to

386
00:21:24,440 --> 00:21:26,800
an institution, to somebody
holding on to something like

387
00:21:26,800 --> 00:21:31,960
that and who knows, like where's
the price of gold going to be 50

388
00:21:31,960 --> 00:21:33,440
years from now?
Where's it going to be 20 years

389
00:21:33,440 --> 00:21:36,680
from now?
I don't know what it will be,

390
00:21:36,680 --> 00:21:38,640
but I know that production is
going to come from that.

391
00:21:39,040 --> 00:21:44,360
The other one is also these
valet royalties that we owned in

392
00:21:44,360 --> 00:21:47,880
the portfolio as well too.
So their royalties on valets,

393
00:21:47,880 --> 00:21:50,600
Northern system and now the
Southeastern system is kicking

394
00:21:50,600 --> 00:21:54,240
in.
These were created when CVRD was

395
00:21:54,240 --> 00:21:58,040
spun out as a government owned
entity to a private entity.

396
00:21:58,320 --> 00:22:01,080
And these royalties kind of sat
around to me, those are

397
00:22:01,080 --> 00:22:04,240
extraordinary royalties.
Again, you know, some of the

398
00:22:04,240 --> 00:22:07,600
best iron ore in the world, it's
going to operate forever.

399
00:22:07,600 --> 00:22:10,760
You're always going to need high
quality iron ore and that's

400
00:22:10,760 --> 00:22:13,080
where it's going to come from.
You're going to get payment out

401
00:22:13,080 --> 00:22:15,680
of that.
To me, those are two really

402
00:22:15,680 --> 00:22:19,040
extraordinary royalties that
would just, they would that

403
00:22:19,120 --> 00:22:21,680
they're just going to produce a
tremendous amount of cash flow

404
00:22:21,680 --> 00:22:25,960
over the next 30-40, fifty,
sixty, 8000 years.

405
00:22:26,560 --> 00:22:30,360
Putting your your geologist hat
back on, what are the the one or

406
00:22:30,360 --> 00:22:33,360
couple jurisdictions or parts of
the world that you're most

407
00:22:33,360 --> 00:22:36,440
excited about in just terms of
their prospectivity and

408
00:22:36,880 --> 00:22:38,960
underexplored nature?
Yeah.

409
00:22:38,960 --> 00:22:42,800
Listen, I think the two areas
that really have my eye upon

410
00:22:42,800 --> 00:22:46,400
them are Central Asia all the
way, kind of from Uzbekistan to

411
00:22:46,400 --> 00:22:48,560
Kazakhstan and then Saudi
Arabia.

412
00:22:48,560 --> 00:22:51,440
To me, these are really
interesting jurisdictions

413
00:22:51,840 --> 00:22:54,960
because they're really opening
up their door.

414
00:22:55,200 --> 00:22:58,600
They're allowing work, they're
allowing they they've understood

415
00:22:58,600 --> 00:23:01,160
really, especially places like
Kazakhstan.

416
00:23:01,160 --> 00:23:05,920
Kazakhstan really understands
well what it takes to really for

417
00:23:05,920 --> 00:23:09,160
a junior company to really come
in, explored, start developing

418
00:23:09,160 --> 00:23:10,560
something that's going to be
meaningful.

419
00:23:11,000 --> 00:23:13,080
Projects coming out of
Kazakhstan on the copper side

420
00:23:13,080 --> 00:23:15,200
are going to be gigantic.
They're going to be really

421
00:23:15,200 --> 00:23:18,840
remarkable coming off of there
in Saudi Arabia.

422
00:23:18,840 --> 00:23:21,480
What I really like about the
geology that they have there,

423
00:23:21,480 --> 00:23:25,240
because I've been a big fan of
the Arabian Nubian Shield for

424
00:23:25,360 --> 00:23:28,720
for decades.
I know some of those VMS

425
00:23:28,720 --> 00:23:31,800
deposits that come out of there,
man, really remarkable.

426
00:23:31,800 --> 00:23:36,440
You're going to find these 100
million ton plus VMS deposits

427
00:23:36,440 --> 00:23:39,520
that might be sitting at
multiple percent copper plus the

428
00:23:39,520 --> 00:23:41,200
gold projects that are in there
too.

429
00:23:41,560 --> 00:23:44,880
To me, I think these are good
jurisdictions and but they have

430
00:23:44,880 --> 00:23:49,560
these collaborative governments,
governments that really not only

431
00:23:49,640 --> 00:23:53,360
are allowing you to really kind
of do work and understand that

432
00:23:53,360 --> 00:23:57,240
timeline that it takes and the
the, the issues behind that

433
00:23:57,240 --> 00:24:00,040
exploration process.
Because you're spending so much

434
00:24:00,040 --> 00:24:05,360
time and so much money and
shrinking that timeline down is

435
00:24:05,360 --> 00:24:07,400
such a huge, enormous help for
these companies.

436
00:24:07,400 --> 00:24:10,480
Because I am really passionate
about this idea that junior

437
00:24:10,480 --> 00:24:15,240
explorers need access to capital
and build that and the Saudi

438
00:24:15,240 --> 00:24:17,320
government to really good
encourage.

439
00:24:17,320 --> 00:24:20,320
And not only that, but they're
providing grants for the

440
00:24:20,320 --> 00:24:25,440
exploration, for the development
and that support to really get

441
00:24:25,440 --> 00:24:29,600
projects through that first
really difficult over that first

442
00:24:29,600 --> 00:24:32,520
difficult hump and then getting
into that development phase.

443
00:24:32,800 --> 00:24:35,120
I think those are two great
jurisdictions that both have the

444
00:24:35,120 --> 00:24:37,640
geology and the support from the
government think they're great.

445
00:24:38,000 --> 00:24:40,000
Yeah, heaps of exciting stuff
happening there.

446
00:24:40,080 --> 00:24:43,200
Last question, you've had an
awesome 18 year spell.

447
00:24:43,240 --> 00:24:45,520
What is next for for you and the
team at Sandstorm?

448
00:24:45,760 --> 00:24:49,560
Yeah, Lee, listen, it's it's it
was a clean cut from Royal.

449
00:24:49,560 --> 00:24:52,080
So we've got to go back.
We've got to start thinking

450
00:24:52,080 --> 00:24:53,680
about what the next things we're
going to do.

451
00:24:54,480 --> 00:24:57,880
Royalty companies and streaming
companies I think are great.

452
00:24:57,880 --> 00:25:00,600
They're wonderful.
My skill set, our skill set I

453
00:25:00,600 --> 00:25:05,240
think works really best when the
market isn't nearly as prolific

454
00:25:05,240 --> 00:25:07,840
with capital and availability to
it.

455
00:25:07,840 --> 00:25:12,600
So I think time is now is to sit
back, start dreaming about what

456
00:25:12,600 --> 00:25:15,360
the next best investments
anywhere in the world might be,

457
00:25:16,440 --> 00:25:19,560
Maybe kind of foster some of
these these assets forward.

458
00:25:20,240 --> 00:25:23,280
But maybe there is a royalty or
streaming company, but it's

459
00:25:23,280 --> 00:25:26,840
probably several years off
before we start that up again.

460
00:25:27,400 --> 00:25:28,480
Beautiful.
Thanks a lot for your time

461
00:25:28,480 --> 00:25:29,560
today.
Thanks.

462
00:25:29,560 --> 00:25:31,400
You guys really appreciate being
here.

463
00:25:31,920 --> 00:25:35,920
Thousands of mining services
companies here at at imark, as

464
00:25:35,920 --> 00:25:38,200
there is every year and you go
to every single exhibition, you

465
00:25:38,200 --> 00:25:39,840
speak with these mining services
businesses.

466
00:25:40,160 --> 00:25:43,840
Every time I learn about a new
company, mate, I'm just reminded

467
00:25:43,840 --> 00:25:46,600
by how awesome Sandy Ground
support is.

468
00:25:46,640 --> 00:25:48,920
Like I just, they're just the
reference point in my head.

469
00:25:48,920 --> 00:25:50,800
I can't get out because it's
phenomenal.

470
00:25:51,000 --> 00:25:55,600
They're phenomenal business run
by phenomenal team led by Derek

471
00:25:55,600 --> 00:25:57,120
Hurd.
The €1 billion man.

472
00:25:57,120 --> 00:25:59,440
Derek Hurd yeah, having a lot of
conversations here about how

473
00:25:59,440 --> 00:26:02,840
mining's going underground, the,
the future tech that's driving

474
00:26:02,840 --> 00:26:04,000
mining, all these sorts of
things.

475
00:26:04,240 --> 00:26:06,160
And we know Sandvik, grand
Supporter, the Champions made

476
00:26:06,360 --> 00:26:09,360
spend a lot of money on R&D so
they can make your operation

477
00:26:09,360 --> 00:26:11,200
safer.
They can make the ground support

478
00:26:11,200 --> 00:26:14,120
even better so that you can get
more tons out of the ground.

479
00:26:14,480 --> 00:26:17,360
And that's all thanks to the the
the powerful team that they have

480
00:26:17,360 --> 00:26:20,320
headquartered up in Newcastle,
but hundreds of employees all

481
00:26:20,320 --> 00:26:23,040
around Australia and the the
whole world, don't they?

482
00:26:23,200 --> 00:26:24,960
It's actually in the name Ground
Support.

483
00:26:25,200 --> 00:26:26,280
Ground support, that's what they
do.

484
00:26:26,360 --> 00:26:28,280
Mining industry support is what
they do.

485
00:26:29,560 --> 00:26:31,920
Go go DSI, go send the ground
support.

486
00:26:32,680 --> 00:26:34,960
Go Derek.
Randy Smallwood, thank you so

487
00:26:34,960 --> 00:26:37,920
much for for for joining us.
We've been.

488
00:26:37,920 --> 00:26:40,160
Truly a pleasure, thank you.
Pleasure's all ours.

489
00:26:40,160 --> 00:26:43,560
We're Yeah.
I mean, there's, there's you can

490
00:26:43,560 --> 00:26:46,000
go down a rabbit hole studying
the, the history of royalty

491
00:26:46,240 --> 00:26:48,560
companies.
And one thing you learn pretty

492
00:26:48,560 --> 00:26:51,280
quickly is the prevalence of
streaming.

493
00:26:51,280 --> 00:26:54,240
And Wheaton pioneered the
streaming model, which has

494
00:26:54,240 --> 00:26:57,360
become tremendously successful
over the course of, you know,

495
00:26:57,480 --> 00:26:59,160
recent history.
Why?

496
00:26:59,240 --> 00:27:02,680
Why is streaming so effective,
and why did it take Wheaton to

497
00:27:02,680 --> 00:27:05,680
sort of pioneer this model?
Well, it's a good question.

498
00:27:06,000 --> 00:27:08,240
And I come from the operating
background.

499
00:27:08,240 --> 00:27:11,920
I'm a geological engineer and I
spent what, 20 years working in

500
00:27:11,920 --> 00:27:15,000
operations before we spent over
25 years probably working in

501
00:27:15,000 --> 00:27:17,680
operations.
And to be honest, we had

502
00:27:17,680 --> 00:27:19,600
royalties on a lot of the assets
that I was running.

503
00:27:20,240 --> 00:27:22,200
And I never wanted to be that
royalty going.

504
00:27:22,480 --> 00:27:25,800
That guy, the, the royalty is a
registration on land.

505
00:27:25,800 --> 00:27:29,280
It's send me a check every three
months and send in the auditor

506
00:27:29,280 --> 00:27:31,440
once a year to make sure you're
not getting it's, it's just not

507
00:27:31,440 --> 00:27:33,840
a positive relationship.
And so when we created the

508
00:27:33,840 --> 00:27:37,440
streaming model back in 2004,
we've purposely always tried to

509
00:27:37,440 --> 00:27:39,560
differentiate ourselves.
We don't want to be that royalty

510
00:27:39,560 --> 00:27:40,920
guy.
We want to be a streaming

511
00:27:40,920 --> 00:27:43,440
company.
A stream is based on partnership

512
00:27:43,520 --> 00:27:46,640
with the operators and all of
our stakeholders, our

513
00:27:46,640 --> 00:27:48,320
shareholders.
We deliver what I think is the

514
00:27:48,320 --> 00:27:51,280
best way to invest in the
precious metals through

515
00:27:51,280 --> 00:27:54,800
streaming and it's through a, a,
a contractual partnership, a

516
00:27:54,800 --> 00:27:58,400
relationship with an operator
where we're constantly trying to

517
00:27:58,400 --> 00:28:01,160
find ways to help our partner be
stronger because the stronger

518
00:28:01,160 --> 00:28:03,200
our operating partners are, the
stronger we are.

519
00:28:03,480 --> 00:28:06,000
And I think that's the success
that's differentiated mid

520
00:28:06,000 --> 00:28:09,440
streaming, such a success.
And now even the traditional

521
00:28:09,440 --> 00:28:12,360
royalty companies generate most
of their revenue from streams,

522
00:28:12,680 --> 00:28:16,240
but streams are are they have so
much inherent flexibility and

523
00:28:16,240 --> 00:28:19,600
they create more value on a per
oz basis than a royalty does to

524
00:28:19,600 --> 00:28:21,080
the operators.
And so there's just so many

525
00:28:21,080 --> 00:28:24,400
advantages to the streaming
model and that shows by by the

526
00:28:24,400 --> 00:28:26,960
continued uptake in streaming
and in most parts of the world,

527
00:28:26,960 --> 00:28:29,160
not so much here in Australia,
but most parts of the world.

528
00:28:29,520 --> 00:28:33,400
So that that alignment and
flexibility as like a, you know,

529
00:28:33,400 --> 00:28:37,040
a miner might endure ramp up is,
is something to like, I think

530
00:28:37,040 --> 00:28:38,760
really hone in on.
And you make your last point

531
00:28:38,760 --> 00:28:40,640
there is not as popular in
Australia.

532
00:28:40,640 --> 00:28:43,400
Now we we reflect on the gold
bull market that we're having

533
00:28:43,400 --> 00:28:45,160
here.
There's most gold miners have

534
00:28:45,160 --> 00:28:46,800
really participated, some
haven't.

535
00:28:46,800 --> 00:28:49,400
The one that truly hasn't
participated in the in the bull

536
00:28:49,400 --> 00:28:51,960
market, Bellevue Gold, because
they've gone through ramp up

537
00:28:51,960 --> 00:28:54,840
with the hedge book that's
exposed and the production

538
00:28:54,840 --> 00:28:56,000
hasn't been what they're
forecast.

539
00:28:56,680 --> 00:29:01,480
Had they have finance their
project with a stream instead of

540
00:29:01,680 --> 00:29:05,280
your conventional project,
finance with debt and hedging,

541
00:29:05,720 --> 00:29:07,480
they'd have alignment through
this process.

542
00:29:07,960 --> 00:29:14,360
How do you convince the broader
public who maybe doesn't see

543
00:29:14,360 --> 00:29:18,600
things like that, that there is
alignment at times where it it's

544
00:29:18,600 --> 00:29:21,600
necessary to have flexibility in
the life of a, of a, of a single

545
00:29:21,600 --> 00:29:23,600
asset development?
Look, I've got enough silver

546
00:29:23,600 --> 00:29:27,520
hair on my head to to remember
the heavy hedging days back in

547
00:29:27,520 --> 00:29:31,760
the 1990s, last century.
And, and you know, we were

548
00:29:31,760 --> 00:29:34,400
fortunate in the sense that when
I was building the first mine

549
00:29:34,400 --> 00:29:36,800
that I built and operated, we
had to hedge there too.

550
00:29:36,800 --> 00:29:39,120
But we were in a down market.
And so we were able to collapse

551
00:29:39,120 --> 00:29:42,200
those hedges for a profit every
year, reset them, reprice them

552
00:29:42,200 --> 00:29:44,920
and continue going forward.
So it worked well for us, but

553
00:29:45,040 --> 00:29:47,520
you know, the negative with
hedging is that it's a true lock

554
00:29:47,520 --> 00:29:50,480
in and and it has to be
delivered into right.

555
00:29:50,480 --> 00:29:52,640
The stream is much more of a
partnership.

556
00:29:53,160 --> 00:29:56,680
I differentiate to being a we're
an equity partner, we're a Co

557
00:29:56,680 --> 00:29:59,840
investor into the asset versus a
hedge is more like a banking

558
00:29:59,840 --> 00:30:02,400
relationship.
And and you've just got these

559
00:30:02,400 --> 00:30:06,080
demands that that have to be met
irrespective and, and, and

560
00:30:06,080 --> 00:30:07,760
really such a lack of
flexibility.

561
00:30:08,560 --> 00:30:11,360
Again, reiterating the fact that
that streaming is based on a

562
00:30:11,360 --> 00:30:15,440
partnership where we're here to
try and make you the strongest

563
00:30:15,440 --> 00:30:18,320
you can because we have an
overlaying mantra in our company

564
00:30:18,320 --> 00:30:20,440
that the stronger our partners
are, the stronger we are.

565
00:30:20,440 --> 00:30:21,840
So we're always looking for
ways.

566
00:30:22,120 --> 00:30:24,800
So even when we enter into a
streaming contract, as mines

567
00:30:24,800 --> 00:30:27,560
mature, there may have to be
changes to those streams.

568
00:30:27,560 --> 00:30:29,760
I would say more than half of
our contracts have been slightly

569
00:30:29,760 --> 00:30:33,120
modified or altered to unlock
additional value to make sure

570
00:30:33,120 --> 00:30:36,040
that that the stream is actually
working in a true win win

571
00:30:36,040 --> 00:30:38,160
situation, delivering value to
both parties.

572
00:30:38,640 --> 00:30:41,920
That being said, you know, a
stream does give us access to,

573
00:30:42,000 --> 00:30:46,040
you know, very well priced gold,
but the benefit of course, for

574
00:30:46,040 --> 00:30:50,800
the operators that they haven't
had to latch in to, to demand

575
00:30:50,800 --> 00:30:52,800
notes like hedge books and like
debt.

576
00:30:53,480 --> 00:30:57,120
A stream is an equity partner.
If the mine slows down, we slow

577
00:30:57,120 --> 00:31:00,000
down.
If the mine expands, that comes

578
00:31:00,000 --> 00:31:02,360
down to us and our own
selectivity about what we invest

579
00:31:02,360 --> 00:31:06,320
into and, and it's that inherent
flexibility, but it that, that

580
00:31:06,760 --> 00:31:09,520
allows, makes it such an
attractive source of capital

581
00:31:09,520 --> 00:31:11,640
for, for an operator as they're
building a mine.

582
00:31:11,920 --> 00:31:15,880
It's just that, that, that we
ride the wave, whatever the wave

583
00:31:15,880 --> 00:31:18,840
is, it's a good strong wave,
then we all benefit from it.

584
00:31:18,840 --> 00:31:22,680
But if it if the wave hurts and
you're not held to the, to the,

585
00:31:22,840 --> 00:31:26,360
to the debt terms or the hedge
terms that that that that

586
00:31:26,400 --> 00:31:28,880
usually come with, you know,
traditional financing methods.

587
00:31:30,000 --> 00:31:33,800
What do you make of the view the
streamers trade at a premium to

588
00:31:33,960 --> 00:31:37,680
to the mining companies?
Well, I, I disagree with it

589
00:31:37,680 --> 00:31:40,360
because our risk profile is
substantially below a mining

590
00:31:40,360 --> 00:31:42,760
company.
So, so it only calculates as a

591
00:31:42,760 --> 00:31:45,960
medium if you're using the same
discount rates, the same risk

592
00:31:45,960 --> 00:31:47,960
ratings that you use for mining
companies.

593
00:31:48,240 --> 00:31:51,840
The advantages that a streaming
company has is our operating

594
00:31:51,840 --> 00:31:54,520
costs are fixed and defined and
they're not subject to

595
00:31:54,520 --> 00:31:57,320
inflationary pressures, right.
One of the challenges that we

596
00:31:57,320 --> 00:32:00,280
always see in this industry is
as commodity prices climb, so do

597
00:32:00,280 --> 00:32:03,800
operating costs, mainly because
higher grade waste becomes low

598
00:32:03,800 --> 00:32:06,800
grade ore and lower grade ore is
more expensive on a per oz or

599
00:32:06,800 --> 00:32:09,800
per pound basis to process.
You don't see that with a

600
00:32:09,800 --> 00:32:12,520
streaming company.
Our cost per oz is the same

601
00:32:12,520 --> 00:32:15,680
whether it comes from high grade
or low grade or our cost per oz

602
00:32:15,680 --> 00:32:17,680
is fixed and it's the same all
the way through that.

603
00:32:18,000 --> 00:32:21,000
So the, the risk profile on the
cost side and that's usually the

604
00:32:21,000 --> 00:32:24,040
biggest miss in any mining
investment is cost delivery, not

605
00:32:24,040 --> 00:32:26,600
so much actually delivering the
oz, but how much does it cost?

606
00:32:26,600 --> 00:32:28,440
What, what is the profit when
that gets delivered.

607
00:32:28,840 --> 00:32:32,720
And so my argument is that the,
that, that we supply a much

608
00:32:32,720 --> 00:32:35,040
lower risk way of investing into
precious metals.

609
00:32:35,040 --> 00:32:37,840
And therefore we only look
overvalued if you're treating

610
00:32:37,840 --> 00:32:40,520
us, if you're valuing us with
the same risk parameters that

611
00:32:40,520 --> 00:32:42,840
you use in a mining company or
not a mining company.

612
00:32:43,160 --> 00:32:46,520
And, and I think that's best
exemplified by the terms of our

613
00:32:46,520 --> 00:32:48,480
revolver.
We've got a 2 1/2 billion dollar

614
00:32:48,480 --> 00:32:51,080
revolver unused right now
because we're generating so much

615
00:32:51,080 --> 00:32:54,440
cash.
But our debt ratings, our our

616
00:32:54,440 --> 00:32:57,680
interest rates on that revolver
are less than half of what most

617
00:32:57,680 --> 00:32:59,880
mining companies pay.
So the banks understand there

618
00:32:59,880 --> 00:33:03,640
were much lower risk profile.
The only reason we come up as

619
00:33:03,640 --> 00:33:05,880
being overvalued is because
people start using the same

620
00:33:05,880 --> 00:33:09,320
discount rates that they use to
to value mining companies.

621
00:33:09,320 --> 00:33:11,640
It's a much lower risk way of
investing into the space.

622
00:33:12,960 --> 00:33:18,080
The the the tax advantages of a
of a stream versus a royalty

623
00:33:18,080 --> 00:33:19,600
like can you tease this out for
me?

624
00:33:19,640 --> 00:33:22,960
Is is it as simple as like if
you write a primary royalty you

625
00:33:22,960 --> 00:33:26,880
have to pay substantial amount
of tax the day it is it is

626
00:33:26,880 --> 00:33:30,800
written and the the the burden
of that actually is paid by the

627
00:33:30,800 --> 00:33:32,800
writer being the money for
themselves which doesn't have

628
00:33:32,920 --> 00:33:34,640
the revenue yet?
Yeah, yeah.

629
00:33:34,640 --> 00:33:37,880
No, it's a royalty and I'm going
to talk in general terms because

630
00:33:37,880 --> 00:33:40,440
it's a global environment.
So most of our experience of

631
00:33:40,440 --> 00:33:42,360
course is out of Canada, we're a
Canadian company.

632
00:33:42,560 --> 00:33:44,640
But I'm going to take and talk
in global terms.

633
00:33:45,120 --> 00:33:48,960
A royalty is considered a
passive financial instrument.

634
00:33:49,040 --> 00:33:51,880
And I say passive.
It's it's you, you receive a

635
00:33:51,880 --> 00:33:55,400
check and you cash the check and
everyone suddenly said in an

636
00:33:55,400 --> 00:33:57,640
honor, but there's not a lot of
brains required.

637
00:33:57,880 --> 00:34:00,320
It's not actively managed.
It's simply a matter of

638
00:34:00,320 --> 00:34:03,200
transferring that check and
depositing it in a royalty, a

639
00:34:03,200 --> 00:34:05,600
stream.
However, we get metal delivered

640
00:34:05,600 --> 00:34:07,360
to us, we get a share of the
metal delivered to us.

641
00:34:07,360 --> 00:34:11,320
So when a copper mine produces
10,000 ounces of gold and we get

642
00:34:11,320 --> 00:34:15,639
25%, that company will
ultimately deliver us 2500

643
00:34:15,639 --> 00:34:17,840
ounces of gold.
Now we have a choice.

644
00:34:17,840 --> 00:34:20,280
We can take it in physical
doesn't make sense.

645
00:34:20,280 --> 00:34:23,080
Why would you risk all the cost
of security and management and

646
00:34:23,280 --> 00:34:26,199
materials handling?
Or you can take it in credit

647
00:34:26,199 --> 00:34:29,320
form and, and for gold and for
silver.

648
00:34:29,320 --> 00:34:31,800
We, we generally take it in
credit form mainly because we

649
00:34:31,800 --> 00:34:34,199
just don't want the extra costs
and security challenges.

650
00:34:34,600 --> 00:34:38,239
But nevertheless, we own gold,
we own silver and that's a

651
00:34:38,239 --> 00:34:40,080
difference.
It's considered an actively

652
00:34:40,080 --> 00:34:43,840
managed financial instrument and
most tax authorities around the

653
00:34:43,840 --> 00:34:47,760
world always treat passively
managed instruments more

654
00:34:47,760 --> 00:34:49,560
aggressively than actively
managed.

655
00:34:49,560 --> 00:34:53,040
So we have a metals trading team
that takes our gold, takes our

656
00:34:53,040 --> 00:34:55,159
silver, takes our Lugia, a
little bit of Palladium, a

657
00:34:55,159 --> 00:34:57,240
little bit of platinum, coming,
a little bit of cobalt.

658
00:34:57,560 --> 00:35:01,200
We have a active metals trading
team that that optimizes and

659
00:35:01,200 --> 00:35:05,680
tries to beat LME averages in
terms of pricing that we get for

660
00:35:05,680 --> 00:35:08,000
our materials going out.
And so it's a, it's a much more

661
00:35:08,000 --> 00:35:09,960
actively managed financial
instrument.

662
00:35:10,240 --> 00:35:14,000
And for that tax authorities
treat it less, less aggressively

663
00:35:14,760 --> 00:35:16,320
and, and that's the huge
advantage.

664
00:35:16,600 --> 00:35:20,560
Now there's no tax leakage an
operation, we'll still pay the

665
00:35:20,560 --> 00:35:22,600
same amount of taxes that it
normally would.

666
00:35:22,600 --> 00:35:25,760
Our operators are paying taxes
based on the spot price of the

667
00:35:25,760 --> 00:35:27,880
metal when they produce the
metal.

668
00:35:28,080 --> 00:35:31,160
That's the huge difference.
Royalties are a crystallized

669
00:35:31,560 --> 00:35:35,080
taxable crystallization of value
upfront a stream.

670
00:35:35,120 --> 00:35:37,600
The tax is payable when the
metal is actually delivered to

671
00:35:37,600 --> 00:35:39,320
us.
And that's the big difference

672
00:35:39,320 --> 00:35:43,080
because operating companies have
a lot more capacity to manage

673
00:35:43,080 --> 00:35:45,080
taxes appropriately.
They've just got more expenses,

674
00:35:45,080 --> 00:35:47,760
they've got capital expenses,
they've got operating cover GNA

675
00:35:47,760 --> 00:35:50,760
and stuff like this.
Our small streaming company not

676
00:35:50,760 --> 00:35:54,880
very efficient with taxes and
so, so there's no tax leakage,

677
00:35:55,280 --> 00:35:59,240
but tax is left in the hands of
the operator and that's where it

678
00:35:59,240 --> 00:36:02,240
is most effectively applied.
And so that's that's the big

679
00:36:02,240 --> 00:36:04,400
difference and that's the extra
value that you unlock.

680
00:36:04,840 --> 00:36:08,440
A stream is always valued on a
pre tax basis and and that

681
00:36:08,440 --> 00:36:10,800
difference makes it.
That's why streaming is taking

682
00:36:10,800 --> 00:36:13,320
over for royalties.
How do you think about, you

683
00:36:13,320 --> 00:36:16,400
know, in this environment, an
increasingly louder conversation

684
00:36:16,400 --> 00:36:20,960
around maintaining gold, silver
PGMS on the balance sheet as

685
00:36:20,960 --> 00:36:23,360
opposed to just cash?
Well, it all comes down to

686
00:36:23,600 --> 00:36:26,000
needing capital and sourcing
what the most competitive is.

687
00:36:26,000 --> 00:36:29,680
And there's certain times like
we're, we live in a cynical

688
00:36:29,680 --> 00:36:32,040
industry and I'm not silly
enough to think that we're

689
00:36:32,040 --> 00:36:34,040
always going to be the most
attractive source of capital.

690
00:36:34,760 --> 00:36:37,520
We typically are considered, I
mean we're an equity investor,

691
00:36:37,520 --> 00:36:39,120
right?
We ride the wave with the

692
00:36:39,120 --> 00:36:41,720
operator as, as the asset does
well, we do well.

693
00:36:41,720 --> 00:36:44,280
If the asset does poorly, we do
poorly along with the operator,

694
00:36:44,280 --> 00:36:46,400
right.
And so we're, we're not always

695
00:36:46,400 --> 00:36:50,040
going to be the most competitive
in a frothy bull market where

696
00:36:50,040 --> 00:36:52,840
equity prices are trading at
high prices.

697
00:36:53,240 --> 00:36:55,920
We're happy to sit back and
harvest from our existing

698
00:36:55,920 --> 00:36:58,920
portfolio and we've got a great
portfolio with very strong

699
00:36:58,920 --> 00:37:01,520
growth.
The next 6-7 years, we'll see 60

700
00:37:01,520 --> 00:37:04,240
to 70% growth.
We're climbing over 1,000,000

701
00:37:04,240 --> 00:37:06,160
golden coin an ounce is
something that no streaming or

702
00:37:06,160 --> 00:37:08,120
royalty company has ever been
anywhere near.

703
00:37:08,920 --> 00:37:11,480
And that's our current portfolio
that's now counting new

704
00:37:11,480 --> 00:37:13,360
acquisitions.
That's just growth in there.

705
00:37:13,360 --> 00:37:17,240
So, so we don't need to chase
growth and, and we're not going

706
00:37:17,240 --> 00:37:20,800
to be inefficient and there's
going to be times there's, I

707
00:37:20,800 --> 00:37:23,960
call it the seasons of streaming
times.

708
00:37:23,960 --> 00:37:27,760
We fund development times, we
fund balance sheet repair and

709
00:37:27,760 --> 00:37:30,480
then harvest times.
Harvest times means we sit back

710
00:37:30,480 --> 00:37:33,960
and let those frothy periods and
build up a war chest and, and

711
00:37:33,960 --> 00:37:36,800
get prepared for the next round.
Because typically right after

712
00:37:36,800 --> 00:37:39,360
the harvest season comes a
balance sheet repair season.

713
00:37:39,360 --> 00:37:41,480
And that's where some of the
true world class opportunities

714
00:37:41,480 --> 00:37:42,240
come into play.
So.

715
00:37:42,440 --> 00:37:44,720
So where are we at right now?
If you if you gauge it on

716
00:37:44,720 --> 00:37:45,960
frothiness.
Still a.

717
00:37:46,440 --> 00:37:48,920
Still a strong, especially in
the gold and silver space, still

718
00:37:48,920 --> 00:37:54,120
a strong development phase.
We're not seeing the equity

719
00:37:54,120 --> 00:37:57,920
spaces starting to catch up, but
we're not seeing companies trade

720
00:37:57,920 --> 00:38:01,360
at, at, at frothy premiums or or
even close to NAV.

721
00:38:01,360 --> 00:38:03,520
We're still seeing the
development companies trade at

722
00:38:03,520 --> 00:38:05,840
pretty healthy discounts to NAV,
which of course will always make

723
00:38:05,840 --> 00:38:08,800
it attractive to do a stream.
A stream is valued at one times

724
00:38:08,800 --> 00:38:11,080
NAV.
Why would you issue shares at .6

725
00:38:11,080 --> 00:38:13,240
times NAV if you can do a stream
at one times NAV?

726
00:38:13,600 --> 00:38:15,960
We're a fellow equity investor.
Ours is just based on the

727
00:38:15,960 --> 00:38:17,400
commodity, not on the share
price.

728
00:38:17,520 --> 00:38:20,120
So you don't have to worry about
your undervalued shares being

729
00:38:20,120 --> 00:38:22,840
issued.
And so it's it's still a very

730
00:38:22,840 --> 00:38:26,880
good market for us.
The the great opportunities for

731
00:38:27,080 --> 00:38:30,640
for streamers, balance sheet
repair project project

732
00:38:30,640 --> 00:38:33,560
development like you say also
play an important role in

733
00:38:33,560 --> 00:38:37,520
acquisition finance at times.
What has been the best stream

734
00:38:37,520 --> 00:38:39,120
that week has ever written and
why?

735
00:38:39,520 --> 00:38:43,280
Well, I, I mean, the valet
Solobo mine is an incredible

736
00:38:43,280 --> 00:38:44,880
asset.
It's our flagship asset.

737
00:38:45,360 --> 00:38:50,280
It's, it's a truly a world class
copper gold and I think it's a

738
00:38:50,280 --> 00:38:54,240
great example of, of, of the
power of streaming where we

739
00:38:54,240 --> 00:38:57,440
supplied over 80% of the capital
to get that mine built for the

740
00:38:57,440 --> 00:39:00,720
search through phases.
And we only take away about 15

741
00:39:00,720 --> 00:39:03,600
to 20% of the, of the revenue.
And, and in terms of that.

742
00:39:03,600 --> 00:39:07,080
And so for valet shareholders,
they, they get capital payback

743
00:39:07,160 --> 00:39:10,360
every year from that mine and
it's got 30 to 40 years of life

744
00:39:10,360 --> 00:39:12,080
in front of it.
It's an incredible asset,

745
00:39:12,600 --> 00:39:16,200
produces well over close to
300,000 oz a year to our credit.

746
00:39:16,600 --> 00:39:19,640
And you can imagine if that's
only 15 to 20%, you can imagine

747
00:39:19,640 --> 00:39:21,560
how much value that delivers to
valet shareholders.

748
00:39:21,880 --> 00:39:24,120
An incredible asset, definitely
our flagship asset.

749
00:39:24,440 --> 00:39:27,840
But I really do like the the
Montage Gold Kone project that

750
00:39:27,840 --> 00:39:30,160
we've just signed.
It's in construction right now

751
00:39:30,440 --> 00:39:32,760
and it's a unique one because it
was a one stop shop.

752
00:39:32,760 --> 00:39:36,120
It's the first major project
where we supplied all of the

753
00:39:36,120 --> 00:39:38,200
capital.
And it's a unique one because it

754
00:39:38,320 --> 00:39:40,800
it, it not only does it have a
normal stream in it, but we've

755
00:39:40,800 --> 00:39:44,040
also got an adjustable threshold
structure over and above.

756
00:39:44,280 --> 00:39:46,880
And really because what happened
was when this single asset

757
00:39:46,880 --> 00:39:51,360
company, Montage Gold went out
the price debt to help fund with

758
00:39:51,360 --> 00:39:54,560
the equity that we were putting
in the debt was so expensive.

759
00:39:54,720 --> 00:39:57,040
And they came back to us and
said, is there a way we can grow

760
00:39:57,040 --> 00:39:59,160
this stream to supply all the
capital?

761
00:39:59,520 --> 00:40:02,240
And the structure has got
inherent flexibility.

762
00:40:02,240 --> 00:40:05,480
There's no demand loans.
There's no risk of cash sweeps.

763
00:40:05,840 --> 00:40:07,680
They're building this mine.
It's on track.

764
00:40:07,680 --> 00:40:09,520
In fact, it looks like it's
going to be ahead of schedule.

765
00:40:09,520 --> 00:40:11,880
It's moving forward in, in Cord
d'ivoire.

766
00:40:12,840 --> 00:40:17,960
And and what we've got is
inherent flexibility in terms of

767
00:40:18,520 --> 00:40:22,440
we get 20% of the gold dropping
down to 10% of the gold dropping

768
00:40:22,440 --> 00:40:25,520
down to 5% of the gold as they
meet certain production

769
00:40:25,520 --> 00:40:29,240
objectives all the way through.
So you know, if, if they're

770
00:40:29,240 --> 00:40:34,320
late, we add on Oz at the end,
but we don't ever put them at

771
00:40:34,320 --> 00:40:36,560
risk in terms of that.
And that's the difference

772
00:40:36,560 --> 00:40:39,800
between how you can work with a
streaming company to come up

773
00:40:39,800 --> 00:40:43,440
with a, a good support of strong
financing package that is truly

774
00:40:43,440 --> 00:40:45,240
win, win for them and win, win
for this.

775
00:40:45,280 --> 00:40:47,320
All you have to do is look at
Montage's share price.

776
00:40:47,600 --> 00:40:50,080
Once we announce this
transaction when, when all the

777
00:40:50,080 --> 00:40:52,000
shareholders out there realized
there wasn't going to be

778
00:40:52,000 --> 00:40:55,160
dilutive shares coming to market
to help finance this

779
00:40:55,160 --> 00:41:00,240
construction, it's been truly a
very prosperous solution for

780
00:41:00,240 --> 00:41:03,640
both them and us.
Forecasting the gold price

781
00:41:03,640 --> 00:41:06,800
forward on on future deals you
might do or silver, whatever the

782
00:41:06,800 --> 00:41:09,480
metal might be is it's been a
point of contention.

783
00:41:09,480 --> 00:41:12,880
So we've spoken about what the
broker consensus is lately and

784
00:41:12,880 --> 00:41:16,080
that is far, far below where
where we are right now.

785
00:41:16,080 --> 00:41:17,680
How do you kind of think about
it when you're looking at

786
00:41:17,960 --> 00:41:21,000
prospective deals going forward?
Well, we, we only look at broker

787
00:41:21,000 --> 00:41:23,120
consensus when we're trying to
measure what kind of a public

788
00:41:23,120 --> 00:41:25,320
response we're going to get when
we announce the transaction.

789
00:41:25,320 --> 00:41:29,520
We don't use brokers consensus
to, to guide our evaluations and

790
00:41:29,520 --> 00:41:32,200
to guide our investment
decisions because they're no

791
00:41:32,200 --> 00:41:34,560
smarter than than we are.
And I've been in this business

792
00:41:34,560 --> 00:41:36,240
for close to 40 years.
I still can't tell you what

793
00:41:36,240 --> 00:41:38,680
gold's going to do tomorrow.
It's a, it's a, it's a

794
00:41:38,680 --> 00:41:40,160
frustrating business from that
perspective.

795
00:41:40,160 --> 00:41:41,600
So we don't put a lot of effort
in.

796
00:41:41,960 --> 00:41:43,800
I, I will tell you that when it
comes to our investment

797
00:41:43,800 --> 00:41:48,120
decisions though, we, we don't
as bullish as I am on gold and

798
00:41:48,120 --> 00:41:50,240
silver, we don't invest our
shareholders capital on that

799
00:41:50,240 --> 00:41:53,640
belief.
We invest such that if the

800
00:41:53,640 --> 00:41:56,600
commodity price stays where it
is right now, we will deliver a

801
00:41:56,600 --> 00:42:00,400
reasonable rate of return to our
investors, a reasonable rate of

802
00:42:00,400 --> 00:42:02,680
return even if there's no price
appreciation.

803
00:42:02,960 --> 00:42:05,400
Now we get to share that price
appreciation if we, if we, if

804
00:42:05,400 --> 00:42:07,240
it, if it comes.
But I'm not going to, I'm not

805
00:42:07,240 --> 00:42:09,640
going to spend that money before
we see that that's, that's

806
00:42:09,640 --> 00:42:12,160
irresponsible.
And I know some of our peers

807
00:42:12,160 --> 00:42:14,200
have been overpaying for assets
trying to get their foot in the

808
00:42:14,200 --> 00:42:16,120
door.
Not the right approach, right?

809
00:42:16,320 --> 00:42:19,200
That's what we like to deliver
to our shareholders is, is that

810
00:42:19,200 --> 00:42:21,880
upside potential.
So, so we typically use a

811
00:42:21,880 --> 00:42:26,360
backwards curve that has a long
term price that's ranges on the

812
00:42:26,360 --> 00:42:29,920
market sentiment of anywhere
between 95% of spot price down

813
00:42:29,920 --> 00:42:32,640
to as low as 60% of spot price.
I can tell you we're still very

814
00:42:32,640 --> 00:42:35,600
bullish on gold and silver.
So our long term price is still

815
00:42:35,760 --> 00:42:40,040
pretty close to the spot price
in the 90 to 85 to 90% range

816
00:42:40,080 --> 00:42:42,240
right now.
And and that's been that's been

817
00:42:42,240 --> 00:42:44,920
effective enough to keep us
competitive in in this market

818
00:42:44,920 --> 00:42:47,040
and keep us still making
acquisitions so.

819
00:42:47,760 --> 00:42:52,080
You talked about the pure
landscape there, and there's no

820
00:42:52,080 --> 00:42:55,160
denying that scale makes a hell
of a lot of difference to your

821
00:42:55,200 --> 00:42:57,600
ability to out compete your
peers.

822
00:42:57,840 --> 00:43:00,200
In fact, financing the montage
deal, would it have been

823
00:43:00,200 --> 00:43:03,480
something possible for Wheaton
in a much earlier iteration of

824
00:43:03,480 --> 00:43:04,600
its life cycle?
Probably not.

825
00:43:04,600 --> 00:43:09,280
So do you think the peers may be
paying overs to get sufficient

826
00:43:09,280 --> 00:43:12,200
scale or a quality asset
consolidation in order to have,

827
00:43:12,400 --> 00:43:14,240
you know the?
Balance sheet, there's a

828
00:43:14,240 --> 00:43:17,680
misbelief in the industry that
scale is the driving factor in

829
00:43:17,680 --> 00:43:21,280
terms of, you know, access to
capital and and cheap cost of

830
00:43:21,280 --> 00:43:24,480
capital.
I would argue that quality is

831
00:43:24,480 --> 00:43:26,200
the most important driving
factor.

832
00:43:26,200 --> 00:43:29,320
And so I've never aimed to be
the biggest company.

833
00:43:29,320 --> 00:43:32,400
What we have always aimed at, at
Wheaton is to be the best.

834
00:43:33,520 --> 00:43:35,800
The size is a result.
It's not a target.

835
00:43:35,800 --> 00:43:38,200
It wasn't an objective.
The the objective has always

836
00:43:38,200 --> 00:43:40,440
been to be the best partner
possible.

837
00:43:40,600 --> 00:43:44,200
And I think our track record in
terms of repeating deals with

838
00:43:44,200 --> 00:43:48,000
past partners, over 50% of our
current, you know, the

839
00:43:48,000 --> 00:43:50,280
transaction we've done in the
last 5-6 years have been with

840
00:43:50,320 --> 00:43:52,680
people or companies that we've
done transactions with in the

841
00:43:52,680 --> 00:43:55,160
past.
We are a service industry.

842
00:43:55,560 --> 00:43:57,720
That's what Wheaton does.
We supply a service to the

843
00:43:57,720 --> 00:44:01,360
mining industry, supply capital.
The Holy Grail of the service

844
00:44:01,360 --> 00:44:04,960
industry is the repeat customer.
What we want is happy customers

845
00:44:04,960 --> 00:44:06,720
that come back every time they
need capital.

846
00:44:06,880 --> 00:44:09,120
We are blessed with an industry
that always needs capital.

847
00:44:09,120 --> 00:44:14,080
And so, so as long as as, as
they call us up and, and want to

848
00:44:14,080 --> 00:44:16,280
talk to us first and they're
confident that we will give them

849
00:44:16,280 --> 00:44:19,560
a fair transaction that gives us
an inside track in the space.

850
00:44:19,560 --> 00:44:22,480
And so as long as we keep on
building on that, we're going to

851
00:44:22,480 --> 00:44:25,280
continue to have success.
So when when we think about

852
00:44:25,280 --> 00:44:27,600
other and when we talk about
other sources of capital and

853
00:44:27,600 --> 00:44:31,200
disruptions in the routine
streaming space, Tether is a

854
00:44:31,200 --> 00:44:33,280
name that's come up quite a bit
recently.

855
00:44:33,560 --> 00:44:36,160
How do you how do you kind of
think about their approach and,

856
00:44:36,240 --> 00:44:39,840
and then getting the foot in the
door in, in, in your arena?

857
00:44:41,480 --> 00:44:46,040
Well, the First off quite happy
to have someone in the crypto

858
00:44:46,040 --> 00:44:49,240
space and and discover that gold
is just like a natural Bitcoin.

859
00:44:49,640 --> 00:44:53,520
I'm quoting, quoting someone
long been a believer that

860
00:44:53,520 --> 00:44:56,800
Bitcoin wasn't required.
We already had gold, but but

861
00:44:56,800 --> 00:44:58,680
there's lessons to be learnt
from the crypto space.

862
00:44:59,080 --> 00:45:00,760
A tether isn't really a crypto
company.

863
00:45:00,760 --> 00:45:03,640
They're more of a stablecoin
company right there.

864
00:45:03,760 --> 00:45:06,280
There's their Goldback
stablecoin has not done well,

865
00:45:06,280 --> 00:45:09,240
hasn't been a success.
It's it's challenged and, and I

866
00:45:09,240 --> 00:45:12,200
and I would say that that it's
identified It's, it's really

867
00:45:12,200 --> 00:45:14,640
highlights one of the challenges
that we have in the gold

868
00:45:14,640 --> 00:45:17,600
industry when it comes to
investors coming into the space.

869
00:45:17,600 --> 00:45:20,760
And that is trust is trying to
build up higher levels of trust

870
00:45:20,760 --> 00:45:24,360
and confidence about the
fungibility gold and the, the,

871
00:45:24,720 --> 00:45:27,000
the Providence of gold behind
it.

872
00:45:27,000 --> 00:45:30,920
And so, so in my eyes, the
whole, that, that whole crypto

873
00:45:30,920 --> 00:45:33,400
and stablecoin experience has
opened up opportunities for us.

874
00:45:33,400 --> 00:45:35,880
And I can tell you that my work
at the World Gold Council and

875
00:45:35,880 --> 00:45:38,600
our work at the World Gold
Council in terms of delivering a

876
00:45:38,600 --> 00:45:42,040
digital token is not far off.
And, and we're hoping to elevate

877
00:45:42,040 --> 00:45:44,560
the level of trust and
digitalize the way you can

878
00:45:44,560 --> 00:45:47,680
actually own gold to make it
easy and free to move it around

879
00:45:47,960 --> 00:45:52,920
quickly at low costs and, and,
and dramatically improve trust

880
00:45:52,920 --> 00:45:55,720
levels.
I'm honored that Tether has

881
00:45:55,720 --> 00:45:58,520
chosen gold as a way to invest
their profits.

882
00:45:58,920 --> 00:46:02,160
And, and as I understand it, the
bulk of, of that investment is

883
00:46:02,160 --> 00:46:04,440
coming from the operating
profits of their main U.S.

884
00:46:04,440 --> 00:46:08,680
dollar Treasury USD T.
And, and so the fact that

885
00:46:08,680 --> 00:46:11,200
they're pushing that into the
gold space is, is a recognition

886
00:46:11,200 --> 00:46:13,560
that I think is supportive of
why we all need gold.

887
00:46:14,000 --> 00:46:17,040
I think that they're going
through what so much of the rest

888
00:46:17,040 --> 00:46:19,320
of the world is going through
right now, which is a lack of

889
00:46:19,320 --> 00:46:22,680
faith in the US dollar.
And that's what has me so

890
00:46:22,680 --> 00:46:24,880
excited.
I personally see gold easily

891
00:46:24,880 --> 00:46:28,600
climbing to $5000 here in the
next while, definitely by the

892
00:46:28,600 --> 00:46:31,080
end of next year, possibly even
by the end of this year, the way

893
00:46:31,080 --> 00:46:33,600
the trends have been going.
And I wouldn't surprise me to

894
00:46:33,600 --> 00:46:36,200
see gold at $10,000 announced by
the end of this decade.

895
00:46:36,200 --> 00:46:39,760
By 20-30.
There's just a real concern

896
00:46:39,760 --> 00:46:42,160
about long term strength of the
US dollar.

897
00:46:42,520 --> 00:46:45,440
And is it really the measuring
stick that that we should be

898
00:46:45,440 --> 00:46:49,920
using the reserve currency, that
we should be using gold forever?

899
00:46:49,920 --> 00:46:53,240
Up until 1970, gold really stood
as the reserve currency of the

900
00:46:53,240 --> 00:46:55,000
world.
And so this is a pretty short

901
00:46:55,000 --> 00:46:57,600
term experiment here.
And on a, on a relative thing, I

902
00:46:57,600 --> 00:47:00,240
can say that as a geological
engineer, 50 years is nothing.

903
00:47:00,600 --> 00:47:04,640
But, you know, I, I, I think
that this experiment is rapidly

904
00:47:04,640 --> 00:47:06,440
failing.
And that lack of confidence is

905
00:47:06,440 --> 00:47:09,640
what's driving groups like
Tether and just about every

906
00:47:09,640 --> 00:47:13,440
sovereign bank and central bank
in the world to shift out of

907
00:47:13,520 --> 00:47:17,240
U.S. dollar and into gold.
The irony that the profits come

908
00:47:17,240 --> 00:47:20,640
from AUS dollar product.
They they can't be wait, wait to

909
00:47:20,640 --> 00:47:24,160
be deployed to hard money.
Yeah, the yeah, your purview

910
00:47:24,240 --> 00:47:26,320
from the World Gold Council lens
is interesting as well.

911
00:47:26,320 --> 00:47:29,560
Do you think there are any, any
important narratives or or

912
00:47:29,560 --> 00:47:33,160
stories about the composition of
of gold buying at the moment

913
00:47:33,160 --> 00:47:35,280
that maybe aren't mainstream
yet, that mainstream should be

914
00:47:35,280 --> 00:47:36,840
focused?
On well, one of the aspects that

915
00:47:36,840 --> 00:47:39,200
I'm excited about is
digitalizing gold trade, the

916
00:47:39,200 --> 00:47:41,680
gold trade itself.
And and you would argue that to

917
00:47:41,720 --> 00:47:44,240
a certain extent it is there.
You can go and buy a gold DTF,

918
00:47:44,240 --> 00:47:47,120
but it trades like a share on a,
on a, on a Stock Exchange and

919
00:47:47,120 --> 00:47:50,000
access to it.
It's not readily fluid.

920
00:47:50,000 --> 00:47:52,440
It's not easy to move around,
can't be fractionalized to a

921
00:47:52,440 --> 00:47:56,480
certain extent you can, but, but
you know, what we're looking at

922
00:47:56,480 --> 00:47:59,440
is the next level of
digitalization and that is a

923
00:47:59,440 --> 00:48:03,120
gold token, a gold backed token
that has through the miracle of

924
00:48:03,120 --> 00:48:06,240
blockchain, which people always
take blockchain and sort of

925
00:48:06,240 --> 00:48:09,600
correlate it to crypto world.
Blockchain is a unique separate,

926
00:48:09,640 --> 00:48:12,440
you know, shared Ledger database
that allows that.

927
00:48:12,440 --> 00:48:15,280
And so the miracle of
blockchain, you can get to the

928
00:48:15,280 --> 00:48:18,960
point where you have a gold
token system that allows you to

929
00:48:19,040 --> 00:48:23,480
use gold as a currency.
Gold backed the provenance that

930
00:48:23,760 --> 00:48:27,000
in that you get through through
blockchain will allow you to

931
00:48:27,000 --> 00:48:29,680
have confidence in terms of not
only where that gold came from,

932
00:48:29,680 --> 00:48:33,720
where it's stored, what, what,
what, what bar in which vault

933
00:48:33,720 --> 00:48:36,280
around the world is backing the
token that the tokens that you

934
00:48:36,280 --> 00:48:39,040
have on your digital wallet that
you're using for your payment

935
00:48:39,040 --> 00:48:41,160
scheme and having that level of
trust.

936
00:48:41,160 --> 00:48:45,560
And so so you know, we've, we've
got a group of the approach of

937
00:48:45,560 --> 00:48:48,120
the world go Council is taking
is to focus more on

938
00:48:48,240 --> 00:48:50,880
institutional and regulatory
support 1st.

939
00:48:51,240 --> 00:48:55,560
And so we've got a quite a large
working group of most of the

940
00:48:55,560 --> 00:48:59,920
major, in fact all of the major
bullion banks, traders,

941
00:49:00,240 --> 00:49:05,440
regulators, all working towards
this, this gold backed token

942
00:49:05,640 --> 00:49:08,520
that that we hope will be
releasing before the end of next

943
00:49:08,520 --> 00:49:10,320
year.
We've got a trial program

944
00:49:10,320 --> 00:49:12,040
running amongst our member
companies.

945
00:49:12,040 --> 00:49:17,480
Some of the biggest banks in the
world, the HSBCSICBC, JP Morgan,

946
00:49:17,520 --> 00:49:20,840
UBS, they're all involved in
this in terms of building this

947
00:49:20,840 --> 00:49:22,920
forward.
And once we have a good working

948
00:49:22,920 --> 00:49:26,680
system amongst that group, then
we expect to release that to the

949
00:49:26,680 --> 00:49:29,400
retail world.
And I just think the appetite, I

950
00:49:29,400 --> 00:49:33,640
think the world is really trying
to find a better reserve

951
00:49:33,640 --> 00:49:38,080
currency than the US dollar.
And, and I think gold has has

952
00:49:38,120 --> 00:49:39,880
supplied that in the past.
There's no reason it can't

953
00:49:39,880 --> 00:49:43,040
supply it in the future.
It's very it's a whole different

954
00:49:43,040 --> 00:49:47,240
aspect in terms of increasing
the appetite for gold that that

955
00:49:47,240 --> 00:49:49,640
I think even increases my
excitement about where gold

956
00:49:49,640 --> 00:49:53,120
prices can go.
Are there other currencies, sort

957
00:49:53,120 --> 00:49:55,760
of thinking about Chinese
currency that might come to mind

958
00:49:55,760 --> 00:49:58,840
that comes up in conversation
with the world where gold cancel

959
00:49:58,840 --> 00:50:01,160
and others?
There's no doubt China wants its

960
00:50:01,160 --> 00:50:03,360
currency to be as respected as
the US dollar.

961
00:50:03,720 --> 00:50:06,680
The one challenge that I think
China has and anyone has that's

962
00:50:06,680 --> 00:50:10,360
trying to to support a reserve
currency, a reference currency,

963
00:50:10,640 --> 00:50:14,040
is that for it to be a reserve
slash reference currency, it

964
00:50:14,040 --> 00:50:16,120
needs to be abject of political
influence.

965
00:50:16,120 --> 00:50:18,200
It can't be subject to political
influence.

966
00:50:18,520 --> 00:50:20,320
And I would argue that one of
the reasons we're seeing such

967
00:50:20,320 --> 00:50:23,280
weakness in the US dollar, you
know, the one unique aspect

968
00:50:23,280 --> 00:50:26,680
about the United States is the
Constitution and how it how it

969
00:50:26,880 --> 00:50:30,080
separates or tries to separate
the one that controls the US

970
00:50:30,080 --> 00:50:31,800
dollar.
It's a unique aspect of the

971
00:50:31,800 --> 00:50:35,400
United States that has clearly
been an important aspect that's

972
00:50:35,400 --> 00:50:38,440
brought the United States dollar
to be the reserve currency of

973
00:50:38,440 --> 00:50:40,440
the world.
Now, what we're seeing in the

974
00:50:40,440 --> 00:50:43,600
current administration in the
United States is, is, you know,

975
00:50:44,440 --> 00:50:47,760
a real effort to try and extend
political influence into the

976
00:50:47,760 --> 00:50:49,320
Fed.
And that independence, that lack

977
00:50:49,320 --> 00:50:52,120
of independence is concerning.
And that's one of the reasons

978
00:50:52,120 --> 00:50:54,360
we're seeing such a shift away
from the US dollar.

979
00:50:55,200 --> 00:50:58,080
My concern is I'm not sure if
China will ever be able to, to

980
00:50:58,080 --> 00:50:59,960
get to that kind of a level of
trust.

981
00:51:00,240 --> 00:51:02,480
And so you'll trade with the
renminbi, you'll trade with

982
00:51:02,480 --> 00:51:05,080
Chinese currencies, but are you
ever going to put it away

983
00:51:05,080 --> 00:51:08,040
somewhere and be confident that
it's not not going to be subject

984
00:51:08,040 --> 00:51:10,560
to political influence?
That's, that's something that

985
00:51:10,560 --> 00:51:13,400
I'm China needs to do a lot of
work before they can ever get to

986
00:51:13,400 --> 00:51:16,040
that level of trust on a
worldwide basis.

987
00:51:16,320 --> 00:51:19,000
They're they're big enough that
they can force trade to occur in

988
00:51:19,000 --> 00:51:21,760
the renminbi.
And, but, but it'll always be a

989
00:51:21,760 --> 00:51:23,320
forced Ave.
It won't be something where

990
00:51:23,320 --> 00:51:27,600
people hold value and, and, and
they'll, they won't want to

991
00:51:27,600 --> 00:51:29,760
carry their value in that in a
long term basis.

992
00:51:29,760 --> 00:51:32,640
And so I, I just think as long
as you have political influence,

993
00:51:32,640 --> 00:51:34,720
you have political risk.
And as long as you have

994
00:51:34,720 --> 00:51:36,720
political risk, there's a
concern.

995
00:51:36,880 --> 00:51:40,480
And that's the beauty about gold
is that gold is accepted

996
00:51:40,520 --> 00:51:44,280
universally by everyone,
respected universally by

997
00:51:44,280 --> 00:51:47,320
everyone and never not
controlled by anyone.

998
00:51:48,480 --> 00:51:52,760
If we put your bet on gold.
Being $10,000 by the end of the

999
00:51:52,760 --> 00:51:55,520
decade aside for a moment, do
you have other sort of high

1000
00:51:55,520 --> 00:51:58,680
conviction perspectives or views
that you think are

1001
00:51:58,680 --> 00:52:01,200
underappreciated across the
market at the moment?

1002
00:52:02,960 --> 00:52:05,280
I love silver.
Precious metals is cheap, yeah.

1003
00:52:07,200 --> 00:52:08,840
I I.
I love silver.

1004
00:52:08,840 --> 00:52:10,960
I spent three years as the chair
of the World Gold Council, and I

1005
00:52:10,960 --> 00:52:12,480
constantly get asked, what's
your favorite medal?

1006
00:52:12,480 --> 00:52:14,720
And I said, you know, I love
gold, but I really love silver.

1007
00:52:14,840 --> 00:52:17,160
Is that still contrarian at this
point in time, though?

1008
00:52:17,200 --> 00:52:18,680
You.
Know it's it's definitely what I

1009
00:52:18,720 --> 00:52:20,880
what I think we're.
Seeing now is the start of a

1010
00:52:20,880 --> 00:52:23,880
recognition that that we've been
operating in a deficit.

1011
00:52:23,880 --> 00:52:26,920
You know, the demand for silver
has exceeded supply for many

1012
00:52:26,920 --> 00:52:28,920
years now and we're running out
of the reserves.

1013
00:52:28,920 --> 00:52:31,800
The vaults are empty.
And I can tell you that I just

1014
00:52:31,800 --> 00:52:35,000
spent last week in London at the
LME conference and the number of

1015
00:52:35,000 --> 00:52:38,880
media interviews I had on
silver, which is very unusual

1016
00:52:38,880 --> 00:52:40,760
for Europe.
Silver is usually an America

1017
00:52:40,760 --> 00:52:43,640
focused commodity.
That's where we get all the

1018
00:52:43,640 --> 00:52:46,440
questions on that.
And just, you know, the, the and

1019
00:52:46,440 --> 00:52:49,360
so, yeah, it's, it's not so
contrarian I guess, because that

1020
00:52:49,360 --> 00:52:51,200
wave has started.
But I still think it's got a

1021
00:52:51,200 --> 00:52:53,280
long ways to go.
And when you sit and think about

1022
00:52:53,280 --> 00:52:57,000
traditional silver, gold ratio,
that's typically in the 30 to 40

1023
00:52:57,000 --> 00:52:58,720
range.
It's usually operates in those

1024
00:52:58,720 --> 00:53:01,280
kind of levels and we're still
just below 80.

1025
00:53:01,280 --> 00:53:04,440
And so there's a potential for
silver to see $100.00 an ounce,

1026
00:53:05,120 --> 00:53:08,080
and that would put it in the
right range relative to gold and

1027
00:53:08,080 --> 00:53:11,080
how gold is has reacted.
And so that's, you know, that's

1028
00:53:11,360 --> 00:53:13,640
silver.
Silver always lags and then

1029
00:53:13,640 --> 00:53:15,720
outperforms.
And it's only recently started

1030
00:53:15,720 --> 00:53:17,720
that outperformance, but I don't
think it's finished by any

1031
00:53:17,720 --> 00:53:19,560
means.
Yeah.

1032
00:53:19,560 --> 00:53:23,960
And then Wheaton, I mean, our
business model, our growth, you

1033
00:53:23,960 --> 00:53:26,880
know, our official forecast has
us reaching 1,000,000 oz by by

1034
00:53:26,880 --> 00:53:29,280
2031.
But you know, with these high

1035
00:53:29,280 --> 00:53:32,080
prices, every one of our
partners is trying to wait,

1036
00:53:32,240 --> 00:53:34,600
trying to find a way to
accelerate their expansions,

1037
00:53:35,080 --> 00:53:37,880
invest into exploration, move
forward and bring forward.

1038
00:53:37,880 --> 00:53:40,640
And I'm confident that we'll see
a million golden cold announces

1039
00:53:40,640 --> 00:53:44,560
a year by 2029, not our official
forecast, but we've just got so

1040
00:53:44,560 --> 00:53:47,760
many partners coming forward
with accelerated plans for

1041
00:53:47,760 --> 00:53:50,480
expansion.
It's incredible exciting times

1042
00:53:50,480 --> 00:53:53,160
and we've got such a good,
strong portfolio, the strongest

1043
00:53:53,160 --> 00:53:58,520
growth portfolio in the industry
and good, good quality assets.

1044
00:53:58,520 --> 00:54:01,400
Again, one of the huge
advantages of, of, of Wheaton is

1045
00:54:01,400 --> 00:54:04,720
the fact that most of our gold,
most of our silver comes from

1046
00:54:04,720 --> 00:54:08,320
copper from big base metal
assets and, and these assets

1047
00:54:08,320 --> 00:54:10,760
have very long reserve and
resource lives.

1048
00:54:10,760 --> 00:54:13,480
And so we're, we're in an
incredible position.

1049
00:54:13,520 --> 00:54:15,920
I think we are delivering the
best way to invest into precious

1050
00:54:15,920 --> 00:54:20,160
metals the the.
Adventist sort of streaming over

1051
00:54:20,160 --> 00:54:23,400
the past. 20 years has a quite a
big change in how mines got

1052
00:54:23,400 --> 00:54:25,640
financed.
Do you think a lot about

1053
00:54:26,040 --> 00:54:29,240
potential new innovations in the
financing of of mines going

1054
00:54:29,240 --> 00:54:32,960
forward and have any hunches,
hunches on, on where that could

1055
00:54:32,960 --> 00:54:34,480
come from over the next 20
years?

1056
00:54:34,480 --> 00:54:37,400
Yeah, we mentioned earlier on
the montage transaction.

1057
00:54:37,400 --> 00:54:40,720
And, and in there we used what
we call an adjustable threshold

1058
00:54:40,720 --> 00:54:43,360
structure to add.
So, so you know, a bit of

1059
00:54:43,360 --> 00:54:45,760
background on montage, they
originally started out like

1060
00:54:45,760 --> 00:54:48,560
every company does, OK, how are
we going to finance this mine

1061
00:54:48,560 --> 00:54:50,800
build a little bit of debt, a
little bit of equity, right.

1062
00:54:50,960 --> 00:54:53,880
The equity we can do, we can use
a stream to satisfy the equity

1063
00:54:53,880 --> 00:54:55,720
need.
So they came to us, we gave them

1064
00:54:55,720 --> 00:54:58,440
a sort of a basic equity, you
know, a basic streaming

1065
00:54:58,440 --> 00:55:02,840
proposal, 7% dropping to 5% long
term, 250 million bucks.

1066
00:55:02,960 --> 00:55:06,520
They need about $700 million,
six, $150 million to build it.

1067
00:55:06,520 --> 00:55:09,360
They went out and priced the
debt, couldn't find it, came

1068
00:55:09,360 --> 00:55:10,960
back to us.
And So what we did was

1069
00:55:10,960 --> 00:55:12,960
incorporate, it's a new, it's a
new mechanism.

1070
00:55:12,960 --> 00:55:17,560
They didn't want the long term
tail to climb any.

1071
00:55:17,560 --> 00:55:19,760
So the long term tails, 5% of
the gold.

1072
00:55:19,760 --> 00:55:22,000
They didn't want that to claim,
but they wanted a bunch of

1073
00:55:22,000 --> 00:55:23,160
money.
So what we had to do is come up

1074
00:55:23,160 --> 00:55:26,720
with a mechanism that's kind of
replicates debt from the

1075
00:55:26,720 --> 00:55:30,200
financial impact on the asset in
terms of forward loaded got to

1076
00:55:30,200 --> 00:55:34,760
pay it off, but doesn't have the
same requirements, the same

1077
00:55:34,760 --> 00:55:37,280
limitations that debt has.
And so that's where this

1078
00:55:37,280 --> 00:55:39,080
adjustable threshold mechanism
comes in.

1079
00:55:39,320 --> 00:55:41,800
So now instead of taking, you
know, we've still got that base

1080
00:55:41,800 --> 00:55:46,320
stream in there, 7% dropping to
5%, but now we get 20% dropping

1081
00:55:46,320 --> 00:55:50,920
to 10%, then dropping to 5%.
And that extra block of material

1082
00:55:50,920 --> 00:55:54,720
of Oz getting delivered to us
early on in the project replaces

1083
00:55:54,720 --> 00:55:56,480
their need for debt.
They have no debt.

1084
00:55:57,440 --> 00:56:00,920
So Can you imagine being a
single asset company building a

1085
00:56:00,920 --> 00:56:04,640
mine that's going to produce
300,000 oz a year at below $1000

1086
00:56:04,640 --> 00:56:08,600
an ounce cash cost and you have
no debt the first year of

1087
00:56:08,600 --> 00:56:11,160
production.
They're they're going to be

1088
00:56:11,560 --> 00:56:16,120
profiting at 75% operating
margins this mine now they have

1089
00:56:16,120 --> 00:56:19,520
to deliver US 20%.
And so that modification, that

1090
00:56:19,520 --> 00:56:22,600
adjustable threshold and, and if
now what what they had to do is

1091
00:56:22,600 --> 00:56:25,000
commit to a production profile
and if they're late, we get to

1092
00:56:25,000 --> 00:56:28,400
modify that production profile,
but at least the cost of those

1093
00:56:28,400 --> 00:56:31,920
delays is pushed out to the end
of the of the threshold point,

1094
00:56:31,920 --> 00:56:34,040
right?
So it's incredibly flexible for

1095
00:56:34,040 --> 00:56:34,920
them.
They have a choice.

1096
00:56:34,920 --> 00:56:39,840
They can over deliver and keep
us whole or they can they can

1097
00:56:40,440 --> 00:56:42,560
push out the cost of that as
they're working their way

1098
00:56:42,560 --> 00:56:45,000
through the start up.
Now all things being said,

1099
00:56:45,560 --> 00:56:47,520
Montage is doing a great job
building this mine.

1100
00:56:47,520 --> 00:56:49,080
It doesn't look like this is
going to be an issue.

1101
00:56:49,080 --> 00:56:52,200
It's not normal in the industry,
but Montage is doing a great job

1102
00:56:52,480 --> 00:56:54,040
and actually looks like they're
ahead of schedule.

1103
00:56:54,240 --> 00:56:56,840
Very rare in this industry.
Not too many mines I've seen

1104
00:56:57,120 --> 00:56:58,840
finished ahead of schedule and
under budget.

1105
00:56:58,840 --> 00:57:00,560
Montage is doing a great job on
that front.

1106
00:57:01,000 --> 00:57:07,520
And so, but that mechanism has
just created such to me, it's

1107
00:57:07,520 --> 00:57:10,560
streaming 2.0.
It's it's the next level of

1108
00:57:10,560 --> 00:57:14,160
streaming where where we can
have that flexibility and and

1109
00:57:14,160 --> 00:57:17,040
can incorporate that we're
protecting our shareholders.

1110
00:57:17,280 --> 00:57:19,640
You know, our risk profile is
much lower than the than the

1111
00:57:20,480 --> 00:57:22,800
than the montage shareholders
because it's a mining liberty.

1112
00:57:22,800 --> 00:57:26,320
But but at the same time they
haven't gone through dilution

1113
00:57:26,400 --> 00:57:29,720
and they get the benefit of a
good profitable operation that

1114
00:57:30,200 --> 00:57:33,560
that the shareholders the exist,
the original shareholders still

1115
00:57:33,560 --> 00:57:35,800
own their piece of they didn't
go through excessive dilution to

1116
00:57:35,800 --> 00:57:38,440
finance it going forward.
It's a real win win situation.

1117
00:57:38,600 --> 00:57:41,120
One implication of that that
model I can.

1118
00:57:41,120 --> 00:57:45,560
Think of for, for Wheaton, is it
even front ends the, the, the,

1119
00:57:45,720 --> 00:57:47,720
the cash flow attributable to
Wheaton or the, you know, the

1120
00:57:47,720 --> 00:57:50,560
additional gold equivalent
ounces in the early years.

1121
00:57:50,880 --> 00:57:53,600
And so, so I know, you know,
like streamers, royalty

1122
00:57:53,600 --> 00:57:55,600
companies, they tend to benefit
over the long run.

1123
00:57:55,920 --> 00:57:59,080
Rising commodity prices mean
that, you know, cash flow grows

1124
00:57:59,080 --> 00:58:01,360
year and year in general.
But when you've got like a a

1125
00:58:01,840 --> 00:58:06,120
very substantially front ended
proportion of the, you know,

1126
00:58:06,200 --> 00:58:10,080
life of mine revenue to Wheaton
in those early years, then does

1127
00:58:10,080 --> 00:58:13,040
the market maybe get ahead of
itself on on actually projecting

1128
00:58:13,200 --> 00:58:15,560
a company like Wheaton's
operational cash flow in the

1129
00:58:15,560 --> 00:58:18,040
multiples you trade on are
actually not set to grow.

1130
00:58:18,040 --> 00:58:19,520
They might diminish over time.
You thought about the

1131
00:58:19,520 --> 00:58:21,720
implications of of of that.
It just means that we have to

1132
00:58:21,720 --> 00:58:23,480
take that cash flow and keep on
reinvesting it.

1133
00:58:23,480 --> 00:58:26,240
Back into new opportunities.
So you're right when we drop

1134
00:58:26,240 --> 00:58:29,280
from 20% to 10% and then 10
percent, 5%, that's going to be

1135
00:58:29,280 --> 00:58:32,040
a drop in our production.
So we better make sure we've got

1136
00:58:32,040 --> 00:58:34,160
other projects coming in and we
are blessed with an industry

1137
00:58:34,160 --> 00:58:36,960
that always has other projects.
The one thing about record high

1138
00:58:36,960 --> 00:58:39,920
gold and silver prices, there's
sure a lot of, you know,

1139
00:58:39,920 --> 00:58:43,040
generally most of our business
traditionally has been non core

1140
00:58:43,040 --> 00:58:45,840
byproducts from copper mines.
But in the last four or five

1141
00:58:45,840 --> 00:58:48,640
years most of the deals we've
done, our core gold streams on

1142
00:58:48,640 --> 00:58:52,400
gold mines and the demand with
these prices, there's lots of

1143
00:58:52,400 --> 00:58:54,160
opportunities out there.
So as long as we keep on

1144
00:58:54,160 --> 00:58:56,600
reinvesting that capital, we'll
be able to fill those holes.

1145
00:58:56,720 --> 00:58:58,720
Randy, appreciate your time and
looking forward to seeing more

1146
00:58:58,720 --> 00:58:59,600
deals here.
In Australia.

1147
00:59:01,040 --> 00:59:02,560
Thanks for that.
I I am.

1148
00:59:02,560 --> 00:59:03,800
Looking forward to love
Australia.

1149
00:59:03,800 --> 00:59:05,760
So love the love to spend more
time down here.

1150
00:59:06,080 --> 00:59:08,640
JD we we are we bumped into J
Martin.

1151
00:59:10,080 --> 00:59:13,080
Famously of the the Jay Martin
Show and the Vancouver Resource

1152
00:59:13,080 --> 00:59:15,640
Investment Conference.
Jay, you've been talking about,

1153
00:59:15,640 --> 00:59:18,320
you know, the merit of of real
assets much longer than we have.

1154
00:59:18,920 --> 00:59:20,760
Big fan of the work you you put
out there.

1155
00:59:20,760 --> 00:59:24,240
And I suppose having been in and
around this investment thematic

1156
00:59:24,240 --> 00:59:27,240
for so long, now that it's
finally becoming popular and

1157
00:59:27,240 --> 00:59:30,160
more mainstream, are you feeling
a bit different about it?

1158
00:59:31,560 --> 00:59:32,960
Yeah.
First of all, thank you, Travis.

1159
00:59:33,360 --> 00:59:35,840
Super generous of you to say I'm
stoked to be here chatting with

1160
00:59:35,840 --> 00:59:40,920
you guys Yeah, there's, there's
core behavioral behavior that

1161
00:59:40,920 --> 00:59:43,200
I've noticed since the market
got a bit hot, right?

1162
00:59:43,520 --> 00:59:46,080
Because gold is suddenly cool.
Like we haven't been cool for a

1163
00:59:46,080 --> 00:59:49,240
very long time, right?
The last 15 years, nobody cared

1164
00:59:49,240 --> 00:59:51,800
about our our industry.
And now people do.

1165
00:59:52,400 --> 00:59:56,000
And what I've noticed is that
gold bugs and gold investors and

1166
00:59:56,000 --> 01:00:00,080
silver investors, it's almost
like they have so much PTSD from

1167
01:00:00,080 --> 01:00:04,960
the last 12-15 years that they
forgot what a bull market feels

1168
01:00:04,960 --> 01:00:06,800
like.
Because as soon as.

1169
01:00:07,160 --> 01:00:11,400
Any generalist investor or
mainstream financial media

1170
01:00:11,400 --> 01:00:13,320
pundit starts talking about
gold.

1171
01:00:13,560 --> 01:00:16,040
Gold investors start saying this
must be the top.

1172
01:00:16,200 --> 01:00:19,160
It's getting too frothy, right?
But that's what a bull market

1173
01:00:19,160 --> 01:00:21,520
is.
It's when the generalists start

1174
01:00:21,520 --> 01:00:24,360
showing up, the mainstream
investors start showing up.

1175
01:00:24,400 --> 01:00:28,640
And by the way, even though
that's begun to happen to a

1176
01:00:28,640 --> 01:00:31,000
slight degree, I would say it's
a slight degree.

1177
01:00:31,120 --> 01:00:34,360
You know, I was I, I have this
little group of entrepreneurs

1178
01:00:34,360 --> 01:00:36,880
that I travel with every year
and we were in Japan a month

1179
01:00:36,880 --> 01:00:39,200
ago.
Successful guys, they all, you

1180
01:00:39,200 --> 01:00:41,880
know, founders of seven and
eight figure companies, critical

1181
01:00:41,880 --> 01:00:45,080
thinkers got a bit of cash.
They're in the market.

1182
01:00:45,920 --> 01:00:48,960
Not one of them would even think
about putting a dollar into the

1183
01:00:48,960 --> 01:00:51,640
gold market.
They're just Chuck in cash at

1184
01:00:51,640 --> 01:00:53,560
the QQQ or the broad equities
market.

1185
01:00:53,560 --> 01:00:56,600
Like it is the most obvious
thing that any investor should

1186
01:00:56,600 --> 01:00:59,040
do.
And I just use that example

1187
01:00:59,040 --> 01:01:03,040
because inside the industry like
we are, we feel the froth

1188
01:01:03,080 --> 01:01:04,720
because the froth wasn't here
two years ago.

1189
01:01:05,040 --> 01:01:08,280
So it's very noticeable to us.
But on the outside, like we're

1190
01:01:08,280 --> 01:01:10,360
not even a blip on the radar
yet.

1191
01:01:10,600 --> 01:01:14,480
And so, you know, early innings
in this precious metals bull

1192
01:01:14,480 --> 01:01:17,400
market, that's my take so far
with that, that PTSD you talk

1193
01:01:17,400 --> 01:01:18,520
about, it's really interesting
because.

1194
01:01:18,520 --> 01:01:21,000
It's not just the investors,
it's the, it's the companies as

1195
01:01:21,000 --> 01:01:23,400
well.
The, the companies are so scared

1196
01:01:23,400 --> 01:01:26,640
of, of misbehaving, of doing
expensive acquisitions and all

1197
01:01:26,640 --> 01:01:28,520
these sorts of things.
And we're starting to see the

1198
01:01:28,520 --> 01:01:31,600
early signs of good cash flow
coming through.

1199
01:01:31,600 --> 01:01:33,840
And I think they all think eyes
are on us.

1200
01:01:33,840 --> 01:01:37,000
We we need to, we need to behave
here and, and show investors

1201
01:01:37,000 --> 01:01:38,800
that we can reward them and
those sorts of things.

1202
01:01:39,040 --> 01:01:40,720
Would you agree same in same in
Canada.

1203
01:01:40,800 --> 01:01:43,320
Yeah, 100% and and that's a
really good.

1204
01:01:43,320 --> 01:01:46,360
Observation, because the PTSD is
a very positive thing, right?

1205
01:01:46,360 --> 01:01:48,440
Especially for the company
executives that are very

1206
01:01:48,440 --> 01:01:51,280
concerned about how they're
spending their treasury.

1207
01:01:51,600 --> 01:01:53,840
Are they being good stewards of
shareholder capital?

1208
01:01:54,040 --> 01:01:59,880
Because it was extraordinarily
bad behavior in 2010, 2011, 2012

1209
01:02:00,360 --> 01:02:04,080
that put the market into this
1012 year hangover, right?

1210
01:02:04,080 --> 01:02:08,120
It was egregious.
GNAI mean, I remember the market

1211
01:02:08,120 --> 01:02:10,600
in those days.
It was loud, it was noisy, it

1212
01:02:10,600 --> 01:02:12,880
was pink socks and flamboyant
promoters.

1213
01:02:12,880 --> 01:02:16,240
And and I don't miss it at all,
to be honest.

1214
01:02:16,240 --> 01:02:21,040
Like I love that I cut my teeth
in this industry from 2013 to to

1215
01:02:21,040 --> 01:02:24,760
now, you know, because the easy
money wasn't here.

1216
01:02:25,240 --> 01:02:28,680
So the easy money investors,
brokers, promoters, they left

1217
01:02:29,120 --> 01:02:32,760
and anybody who stayed was down
to work really hard to make

1218
01:02:32,760 --> 01:02:34,040
money.
You know, it should be hard to

1219
01:02:34,040 --> 01:02:35,680
make money.
It shouldn't be easy, you know.

1220
01:02:36,120 --> 01:02:40,400
And so I hope, I hope that
company executives keep those

1221
01:02:40,400 --> 01:02:43,600
memories front and center.
And I hope investors do too

1222
01:02:43,600 --> 01:02:47,440
because, you know, as the market
heats up, people are making

1223
01:02:47,440 --> 01:02:49,360
money.
Like we're seeing returns in the

1224
01:02:49,360 --> 01:02:52,040
speculative market that we
haven't seen in a long time.

1225
01:02:52,600 --> 01:02:55,120
And I'm in a handful of sort of
whatsapping signal investor

1226
01:02:55,120 --> 01:02:58,680
groups and gold and silver
investors are celebrating big

1227
01:02:58,680 --> 01:03:01,640
wins, 300 percent, 400 percent,
600% wins.

1228
01:03:02,080 --> 01:03:04,480
But they're not taking any
principal off the table yet.

1229
01:03:04,520 --> 01:03:07,120
They've got some price target in
their imagination and they're

1230
01:03:07,120 --> 01:03:12,000
like, I'm holding out for that.
But you know, it's very

1231
01:03:12,000 --> 01:03:16,320
important when the market hands
you a gift like this that you do

1232
01:03:16,320 --> 01:03:18,840
de risk a little bit from those
speculative positions.

1233
01:03:18,840 --> 01:03:21,560
Now, I think we're in a secular
bull market.

1234
01:03:21,560 --> 01:03:24,760
I'm very convicted about that.
And you can park your cash in

1235
01:03:24,760 --> 01:03:28,120
certain companies to ride out a
secular bull market, but those

1236
01:03:28,120 --> 01:03:30,920
are high quality cash flowing
companies with good

1237
01:03:30,920 --> 01:03:34,240
jurisdictional diversification
companies like Agnico, Newmont,

1238
01:03:34,520 --> 01:03:37,440
Wheaton, Precious Metals.
Park your cash there and ride

1239
01:03:37,440 --> 01:03:40,400
out the near term volatility
that exists in a long term

1240
01:03:40,400 --> 01:03:42,520
market because both things can
be true.

1241
01:03:42,520 --> 01:03:46,200
We're in a sick secular uptrend,
but inside of that, traders will

1242
01:03:46,200 --> 01:03:48,040
trade up and trade down and
trade up and trade down.

1243
01:03:48,040 --> 01:03:50,440
And we'll see a lot of
volatility in that uptrend.

1244
01:03:50,440 --> 01:03:53,320
But in the speculative market,
that's not a place where you

1245
01:03:53,320 --> 01:03:55,920
part cash for the long term
because you're not relying on

1246
01:03:55,920 --> 01:03:58,440
quarterly earnings.
You're relying on a catalyst

1247
01:03:58,680 --> 01:04:00,880
that may or may not come that
would appreciate that share

1248
01:04:00,880 --> 01:04:02,560
price.
Maybe that catalyst is a

1249
01:04:02,560 --> 01:04:05,240
discovery.
Maybe it's market sentiment and

1250
01:04:05,240 --> 01:04:07,160
momentum.
Well, that's here now, right?

1251
01:04:07,160 --> 01:04:10,760
So if you're up 100 percent, 300
percent, 400%, I'm not saying

1252
01:04:11,240 --> 01:04:13,480
take it all off the table, but
take some, right?

1253
01:04:13,480 --> 01:04:15,760
Because rule #1 is stay alive,
right?

1254
01:04:15,760 --> 01:04:18,120
Don't lose money.
And all the best investors in

1255
01:04:18,120 --> 01:04:21,240
our industry and every industry
became that because they stayed

1256
01:04:21,240 --> 01:04:22,920
at the table longer than anybody
else, right?

1257
01:04:22,920 --> 01:04:24,400
It was duration that won the
game.

1258
01:04:24,960 --> 01:04:27,720
And, and the only way you
participate in duration is by

1259
01:04:27,720 --> 01:04:30,600
staying alive.
So take some principle off de

1260
01:04:30,600 --> 01:04:33,600
risk, still capture the upside,
but take care of yourself first.

1261
01:04:33,920 --> 01:04:37,280
One thing I noticed here though,
is that in Australia there is

1262
01:04:37,600 --> 01:04:40,800
far stronger government support
than I see back home.

1263
01:04:40,920 --> 01:04:43,640
I mean, at every region of
Australia, we have Canadian

1264
01:04:43,640 --> 01:04:45,240
governments.
Government of Ontario is present

1265
01:04:45,240 --> 01:04:47,560
here.
I've seen India, many countries

1266
01:04:47,840 --> 01:04:51,000
we don't have that kind of
representation or participation

1267
01:04:51,000 --> 01:04:54,320
yet in the Canadian market.
And that's curious to me.

1268
01:04:54,320 --> 01:04:56,160
I think it's whatever they're
doing, they're doing a great

1269
01:04:56,160 --> 01:04:57,560
job.
You know, I'm, I'm impressed.

1270
01:04:58,800 --> 01:05:00,520
Yeah.
I don't think it's remarkably.

1271
01:05:00,520 --> 01:05:04,160
Different to Canada in the sense
like most of the support is

1272
01:05:05,800 --> 01:05:08,680
there's low hanging fruit, right
to, to really move the dial in,

1273
01:05:08,840 --> 01:05:11,000
in like you know, the minerals
extraction industry and a lot of

1274
01:05:11,000 --> 01:05:13,560
that is just getting out of the
way of private industry and our

1275
01:05:13,560 --> 01:05:15,360
government doesn't do a great
job at that.

1276
01:05:15,360 --> 01:05:18,280
In fact, a lot of the support
comes in forms that are, you

1277
01:05:18,280 --> 01:05:21,160
know, much more, you know,
onerous or inconvenient or it's

1278
01:05:21,160 --> 01:05:23,400
financing projects that
shouldn't be financed in the 1st

1279
01:05:23,400 --> 01:05:26,280
place and that's not good for
capital formation in any sense

1280
01:05:26,280 --> 01:05:27,840
of it.
So like I think in general

1281
01:05:28,280 --> 01:05:30,520
pretty similar to to Canada.
Yeah.

1282
01:05:30,520 --> 01:05:32,720
Well, and that's, that's astute
and I think that.

1283
01:05:32,920 --> 01:05:35,200
I'm on the same page as you.
I'm a small business

1284
01:05:35,200 --> 01:05:39,480
entrepreneur, I'm a free market
guy, but we're, I believe about

1285
01:05:39,480 --> 01:05:43,120
to see a lot of state creep into
our industry that we haven't

1286
01:05:43,120 --> 01:05:45,840
seen before.
And if you look just at the

1287
01:05:45,840 --> 01:05:47,920
moves of the American
administration in like the last

1288
01:05:47,920 --> 01:05:53,080
six months, you know, we've got
15% equity and MP materials, 10%

1289
01:05:53,080 --> 01:05:55,400
equity and Intel, it's chips,
but it's, you know, it's the

1290
01:05:55,400 --> 01:06:00,840
same premise, 10% in Trilogy
medals, 5% in US antimony, 10%

1291
01:06:00,840 --> 01:06:05,440
in Lithium Americas. the US
administration is moving into

1292
01:06:05,440 --> 01:06:10,200
the mining market in a way that
is more akin to what you would

1293
01:06:10,200 --> 01:06:13,080
see in China, right?
The public private partnership

1294
01:06:13,400 --> 01:06:17,160
where the, the the government
provides a bit of steroids to

1295
01:06:17,160 --> 01:06:20,440
the private market, right, to
help boost them along and direct

1296
01:06:20,440 --> 01:06:23,880
capital flows and adjust policy
where required and even public

1297
01:06:23,880 --> 01:06:25,720
sentiment.
And we're beginning to see that

1298
01:06:25,720 --> 01:06:27,320
now.
And you know, the trilogy medals

1299
01:06:27,320 --> 01:06:30,560
up in Alaska, that's a that's a
key example because the

1300
01:06:30,560 --> 01:06:34,160
government's not just a new
activist investor at the table

1301
01:06:34,160 --> 01:06:36,680
providing capital.
They have the ability to move

1302
01:06:36,680 --> 01:06:38,880
policy.
And the big barrier with that

1303
01:06:38,880 --> 01:06:41,480
project for the last five years
was that under the Biden

1304
01:06:41,480 --> 01:06:44,040
administration, they brought,
they blocked the access Rd. and

1305
01:06:44,040 --> 01:06:45,480
it's called the Ambler Rd.
Yeah.

1306
01:06:45,680 --> 01:06:50,520
And, and now this new investor
is, you know, throwing their

1307
01:06:50,520 --> 01:06:52,480
weight behind policy changes
that need to occur.

1308
01:06:52,720 --> 01:06:55,440
I'm not for it, just like for
the record, but it doesn't

1309
01:06:55,440 --> 01:06:57,920
matter how I feel about it.
This change is coming.

1310
01:06:58,400 --> 01:07:01,560
And I think it's got to come
because, you know, we're in this

1311
01:07:01,560 --> 01:07:03,320
new sort of geopolitical
landscape.

1312
01:07:03,600 --> 01:07:05,840
The globe is more competitive
than it's ever been.

1313
01:07:06,360 --> 01:07:09,280
Whatever era we're moving into,
we're definitely moving out of

1314
01:07:09,280 --> 01:07:11,160
globalization.
The the era where if you have

1315
01:07:11,160 --> 01:07:13,400
the cash or the credit, you
could buy whatever you wanted

1316
01:07:13,400 --> 01:07:15,920
from whoever you wanted.
And, and that's done.

1317
01:07:16,000 --> 01:07:18,000
And I don't think we know what
happens next.

1318
01:07:18,000 --> 01:07:20,520
A lot of people have ideas.
I think we're just going to have

1319
01:07:20,520 --> 01:07:24,280
to let time tell us.
But governments are aware that

1320
01:07:24,280 --> 01:07:27,280
they have to get a lot more
aggressive at securing their

1321
01:07:27,280 --> 01:07:30,320
supply over the key materials
that they used to just take for

1322
01:07:30,320 --> 01:07:32,480
granted, right?
We can just buy rare earths.

1323
01:07:32,480 --> 01:07:35,200
We can just buy copper, we can
just buy nickel if we need it.

1324
01:07:35,680 --> 01:07:37,320
Those days are far less certain
now.

1325
01:07:37,320 --> 01:07:40,160
And so I think we're going to
see more activism from

1326
01:07:40,160 --> 01:07:42,680
governments into the supply
chain of raw materials as a

1327
01:07:42,680 --> 01:07:45,760
consequence.
And yeah, I think I think it's

1328
01:07:45,760 --> 01:07:48,680
common Stay creep the the
geopolitics, Jay, you've been

1329
01:07:48,680 --> 01:07:50,640
like.
As in the weeds, talking with

1330
01:07:50,640 --> 01:07:53,440
the most connected people in
geopolitics for for a really

1331
01:07:53,440 --> 01:07:57,440
long time as it relates to
conviction in like a a precious

1332
01:07:57,480 --> 01:08:00,080
bull market has any of the
rationale for the debasement

1333
01:08:00,080 --> 01:08:03,280
trade or the you know, the the
bull thesis for gold like

1334
01:08:03,320 --> 01:08:06,240
changed or revolved in any way,
shape or form in like the last

1335
01:08:06,240 --> 01:08:09,480
five months.
For me it has not.

1336
01:08:09,960 --> 01:08:13,480
If you're asking like has the
incentive to head yourself

1337
01:08:13,480 --> 01:08:17,359
against dollar uncertainty
decreased?

1338
01:08:17,359 --> 01:08:22,040
I'd say it has not whatsoever.
I think that if we go back to

1339
01:08:22,040 --> 01:08:24,319
you could you know, pick your
moment when you where you're

1340
01:08:24,319 --> 01:08:26,399
going to say this gold bull
market began, right?

1341
01:08:26,399 --> 01:08:30,359
Some would say 2016, some would
say, you know, 2020, but you

1342
01:08:30,359 --> 01:08:32,920
know, around 2022 is when we saw
the record central bank gold

1343
01:08:32,920 --> 01:08:35,200
buying.
And that was kind of the first

1344
01:08:35,200 --> 01:08:36,680
move.
And what's materialized since

1345
01:08:36,680 --> 01:08:40,520
then into what I would call like
the most textbook and patient

1346
01:08:40,520 --> 01:08:43,359
and methodical precious metals
bull market I can imagine.

1347
01:08:43,760 --> 01:08:46,960
And that we saw a move in the
physical three years ago.

1348
01:08:47,359 --> 01:08:50,960
Two years ago we saw a move in
the best in class equities, you

1349
01:08:50,960 --> 01:08:54,240
know, cash flowing companies
like royalties and major

1350
01:08:54,240 --> 01:08:56,120
producers, Newmont's, Wheaton's,
all these guys.

1351
01:08:56,520 --> 01:08:58,840
And then now the funded
developers are catching a bid

1352
01:08:58,840 --> 01:09:00,560
and it's slowly tricking through
the sector.

1353
01:09:00,880 --> 01:09:06,040
But that origin in 2022 was
built off of 2 assumptions, 1

1354
01:09:06,040 --> 01:09:10,279
being we assume the US dollar
will continue to be devalued in

1355
01:09:10,279 --> 01:09:12,600
the future.
We assume we're going to keep

1356
01:09:12,600 --> 01:09:15,720
printing that currency.
And the second is we assume

1357
01:09:16,120 --> 01:09:18,439
American geopolitical strategy
is going to be less certain than

1358
01:09:18,439 --> 01:09:22,080
it was the last 40-40 years.
So unless those two assumptions

1359
01:09:22,080 --> 01:09:25,120
are no longer true, and I think
they are, I don't see that

1360
01:09:25,120 --> 01:09:27,800
thesis is any different.
And I think central banks, I

1361
01:09:27,800 --> 01:09:30,760
think institutions and, and
retail investors alike still

1362
01:09:30,760 --> 01:09:34,319
believe in those two things.
And so they're still in any way

1363
01:09:34,319 --> 01:09:37,000
they can looking for
optionality, right?

1364
01:09:37,000 --> 01:09:40,080
And gold is like a nice adjacent
bet, right?

1365
01:09:40,080 --> 01:09:42,479
It's highly liquid.
It's the most liquid asset in

1366
01:09:42,479 --> 01:09:46,080
the world next to U.S. dollars.
And so it's a good lifeboat to

1367
01:09:46,080 --> 01:09:50,439
park your your treasury in.
I'm curious to hear, Jay, how

1368
01:09:50,479 --> 01:09:52,800
you're thinking on.
State ownership of assets has

1369
01:09:53,160 --> 01:09:58,000
has changed because clearly we
have been on on a track that is

1370
01:09:58,000 --> 01:10:00,760
unsustainable.
China has bit by bit increased

1371
01:10:00,760 --> 01:10:05,600
its refining, smelting and
production of nearly every

1372
01:10:05,720 --> 01:10:08,840
single metal.
And if they can't, they they buy

1373
01:10:08,840 --> 01:10:11,760
these assets in Africa.
And I think we probably all come

1374
01:10:11,760 --> 01:10:14,920
from a from a similar kind of
perspective of free markets know

1375
01:10:14,920 --> 01:10:17,560
best.
But there there does feel like a

1376
01:10:17,600 --> 01:10:20,920
a point where we can't have it
all in the hands of someone who

1377
01:10:20,920 --> 01:10:22,880
doesn't think about the world or
a country that doesn't think

1378
01:10:22,880 --> 01:10:26,080
about politics and these sorts
of things the same way as we do.

1379
01:10:26,160 --> 01:10:28,720
Yeah, I think the the big trend
we're going.

1380
01:10:28,720 --> 01:10:32,160
To see is governments waking up
with the fact that they have to

1381
01:10:32,160 --> 01:10:34,760
be involved, right.
And whether or not they want to,

1382
01:10:34,760 --> 01:10:38,080
I mean, the United States, you
know, it's it's been funny

1383
01:10:38,080 --> 01:10:41,680
watching the announcements come
out of the US administration in

1384
01:10:41,680 --> 01:10:44,360
the last few months because
people have been cheering on the

1385
01:10:44,360 --> 01:10:45,960
tariff policy.
And this is going to raise a

1386
01:10:45,960 --> 01:10:48,240
bunch of money.
And this is how America became

1387
01:10:48,240 --> 01:10:50,160
wealthy back in the day.
And it's like, I don't know,

1388
01:10:50,160 --> 01:10:52,640
like America became great
because it was the biggest free

1389
01:10:52,640 --> 01:10:54,480
market economy in the world.
Like that's what made that

1390
01:10:54,480 --> 01:10:57,640
country great, right?
It didn't become prosperous

1391
01:10:57,680 --> 01:10:59,400
through regulation.
It was the opposite of that.

1392
01:10:59,440 --> 01:11:02,000
So you can't regulate yourself
to growth, but they're going to

1393
01:11:02,000 --> 01:11:04,920
try.
And some strategies may work

1394
01:11:04,920 --> 01:11:07,960
better than others.
I think state investment in the

1395
01:11:07,960 --> 01:11:10,400
commodity sector will have a
positive effect.

1396
01:11:10,440 --> 01:11:14,880
And it's if only because it's
like you guys are called Lance

1397
01:11:14,880 --> 01:11:17,800
Armstrong.
He was the seven time, yeah,

1398
01:11:17,800 --> 01:11:20,360
Tour de France winner, right?
And there was all this

1399
01:11:20,360 --> 01:11:22,280
controversy for so many years.
Was he doping?

1400
01:11:22,280 --> 01:11:23,600
Was he not doping all this
stuff?

1401
01:11:23,600 --> 01:11:26,480
And eventually he admitted he's
like, yes, I was doping.

1402
01:11:26,520 --> 01:11:29,120
But here's the thing, Everybody
else is too, right?

1403
01:11:29,120 --> 01:11:32,600
And then you saw the report that
came out about Lance and proved

1404
01:11:32,600 --> 01:11:35,960
that he was doping, also proved
that the second place winner in

1405
01:11:35,960 --> 01:11:39,000
each of those seven years that
he won was also indicted on

1406
01:11:39,000 --> 01:11:41,840
doping, right?
So that's just to say that like

1407
01:11:43,680 --> 01:11:46,040
he didn't become a champion
because of the juice, but it

1408
01:11:46,040 --> 01:11:49,120
just gave him that extra two 3%
to keep him competitive, right.

1409
01:11:49,440 --> 01:11:51,720
And that's kind of where the
United States finds itself

1410
01:11:51,720 --> 01:11:55,160
today, right?
They they need to participate in

1411
01:11:55,160 --> 01:12:00,040
funding strategic, strategic
industries because their biggest

1412
01:12:00,040 --> 01:12:01,920
competitor is already doing
that, right?

1413
01:12:01,920 --> 01:12:06,120
I mean, yeah.
And so, so they don't their,

1414
01:12:06,280 --> 01:12:09,680
their backs kind of against the
wall here now it's, it's like

1415
01:12:09,680 --> 01:12:11,240
doping.
It's a slippery slope, right?

1416
01:12:11,240 --> 01:12:14,640
Like you do as much as you can
to stay as competitive as

1417
01:12:14,640 --> 01:12:16,560
possible until suddenly you
cross the line and you don't

1418
01:12:16,560 --> 01:12:18,640
know when that happened.
But before you know it, it's too

1419
01:12:18,640 --> 01:12:21,120
late, right?
And I, I see state intervention

1420
01:12:21,120 --> 01:12:23,920
as exactly the same, you know, a
little 5% piece here.

1421
01:12:23,920 --> 01:12:25,280
Let's move this project along
here.

1422
01:12:25,280 --> 01:12:27,280
Let's get this road built up in
Alaska there.

1423
01:12:28,080 --> 01:12:30,280
But that barn door is open now,
right?

1424
01:12:30,280 --> 01:12:34,720
And that's a, that's a seductive
path for any future leader, any

1425
01:12:34,720 --> 01:12:38,080
future politician to use and
abuse in the future, you know,

1426
01:12:38,080 --> 01:12:40,680
And so I think it, it does
change the game in a, in a

1427
01:12:40,680 --> 01:12:43,760
handful of ways.
And it's unclear to me yet

1428
01:12:43,760 --> 01:12:47,200
exactly how this materializes,
except that I think for

1429
01:12:47,200 --> 01:12:51,120
commodity investors, it can't be
very bullish if you are looking

1430
01:12:51,120 --> 01:12:54,040
at projects that are favourable
from jurisdictions you're

1431
01:12:54,040 --> 01:12:55,920
friendly with, right?
And so if you're looking at

1432
01:12:55,920 --> 01:13:00,440
projects that are that are
preferable for the Australian

1433
01:13:00,440 --> 01:13:02,120
government, the American
government, the Canadian

1434
01:13:02,120 --> 01:13:05,880
government, you know, it's, it's
probable, it's more likely today

1435
01:13:06,000 --> 01:13:08,800
that you'll actually have the
government on your side pushing

1436
01:13:08,800 --> 01:13:12,840
that project forward as compared
to the last 12 years where

1437
01:13:12,840 --> 01:13:16,040
definitely in Canada
specifically, we just vilified

1438
01:13:16,040 --> 01:13:19,680
the extraction industry to no
end, you know, and it destroyed

1439
01:13:19,680 --> 01:13:24,120
Canada's economy for 10 years.
And Canada is a very simple

1440
01:13:24,120 --> 01:13:26,360
country.
Like it's got, it's got the

1441
01:13:26,360 --> 01:13:30,040
largest coastline in the world,
three oceans and the largest

1442
01:13:30,040 --> 01:13:32,960
land border on the other side of
which is the world's wealthiest

1443
01:13:32,960 --> 01:13:36,440
and hungriest customer.
And we're commodity rich, got

1444
01:13:36,800 --> 01:13:39,680
everything the world needs from
softwood lumber to potash, you

1445
01:13:39,680 --> 01:13:41,400
know, you name it nickel, oil
and gas.

1446
01:13:42,040 --> 01:13:45,600
And but we had an administration
that for 10 years vilified all

1447
01:13:45,600 --> 01:13:47,920
those industries, and it just
crippled the Canadian economy

1448
01:13:48,440 --> 01:13:52,920
and all the like, you know, talk
about Canada being annexed and

1449
01:13:52,920 --> 01:13:54,680
becoming the 51st state.
It's like a joke.

1450
01:13:54,760 --> 01:13:56,480
You know, there's no actual
substance to that.

1451
01:13:56,760 --> 01:13:59,320
Galvanized the base though dude,
it did right?

1452
01:13:59,520 --> 01:14:02,360
And important to note that.
If Canada had become the 51st

1453
01:14:02,360 --> 01:14:05,840
state, it would be the third
poorest state on AGDP per capita

1454
01:14:05,840 --> 01:14:08,160
basis in the United States,
right next to Alabama.

1455
01:14:08,960 --> 01:14:12,880
And that's an important data
point because in 2008, Canada

1456
01:14:12,880 --> 01:14:16,160
came through the GFC with a
healthier balance sheet than any

1457
01:14:16,160 --> 01:14:18,800
other G7 nation.
It was it was a country that was

1458
01:14:18,800 --> 01:14:22,040
managed properly, candidates
simple, you manage the

1459
01:14:22,040 --> 01:14:25,080
commodities and the export.
And if you get that right, then

1460
01:14:25,080 --> 01:14:28,040
you can have all the ancillary
industries that are funded by

1461
01:14:28,040 --> 01:14:29,920
that income.
But you can't just have the

1462
01:14:29,920 --> 01:14:32,600
ancillary industries and vilify
the pillar industry.

1463
01:14:32,600 --> 01:14:34,400
That doesn't work right.
And that's what we've been

1464
01:14:34,400 --> 01:14:36,120
doing.
So, you know, I'm seeing

1465
01:14:36,120 --> 01:14:39,120
positive changes in Canada.
I'm seeing positive changes in

1466
01:14:39,240 --> 01:14:41,920
in America and globally right
now where governments are

1467
01:14:41,920 --> 01:14:43,960
stepping in to support the raw
material sector.

1468
01:14:44,320 --> 01:14:46,160
And that is bullish for
commodity investors.

1469
01:14:47,000 --> 01:14:50,480
I'm curious to hear you you.
Mentioned base metals has been a

1470
01:14:50,600 --> 01:14:53,680
huge focus of your time as well.
COP is obviously the the

1471
01:14:53,680 --> 01:14:56,240
elephant in the room, but are
there other pockets there that

1472
01:14:56,240 --> 01:14:58,280
you're particularly excited
about that just don't get the

1473
01:14:58,280 --> 01:15:00,920
air time?
I think nickel is really

1474
01:15:00,920 --> 01:15:04,880
interesting right now.
And I think that if you look at

1475
01:15:04,920 --> 01:15:08,360
why the nickel price, why that
chart looks different from

1476
01:15:08,360 --> 01:15:10,720
pretty much every other hard
commodity chart over the last

1477
01:15:10,720 --> 01:15:14,720
couple of years, you know, it's
one you mentioned.

1478
01:15:14,960 --> 01:15:17,280
If China doesn't have the
resource and finds it somewhere

1479
01:15:17,280 --> 01:15:19,160
else.
Well, I just flew in from

1480
01:15:19,160 --> 01:15:21,160
Indonesia last night.
That's where all of our nickels

1481
01:15:21,160 --> 01:15:24,400
coming from right now about, you
know, they've got about 65% of

1482
01:15:24,400 --> 01:15:26,760
the refined nickel market under
their thumb.

1483
01:15:26,800 --> 01:15:30,240
And it was financed by the
Chinese the tune of about $65

1484
01:15:30,240 --> 01:15:34,280
billion.
But if you are willing to cede

1485
01:15:34,280 --> 01:15:36,760
all environmental
considerations, which they have,

1486
01:15:36,800 --> 01:15:40,040
the South Salwassee Islands are
an absolute disaster.

1487
01:15:40,960 --> 01:15:43,080
But if you're willing to make
those concessions and leverage

1488
01:15:43,080 --> 01:15:46,280
your cheap labor, you can.
And they are producing cheaper

1489
01:15:46,280 --> 01:15:48,920
nickel than anywhere else on the
planet and pricing all their

1490
01:15:48,920 --> 01:15:50,800
competitors and eating up that
market share.

1491
01:15:51,480 --> 01:15:54,720
I don't know if that's
sustainable, or at least for how

1492
01:15:54,720 --> 01:15:58,040
long.
I look at the way Indonesia's

1493
01:15:58,040 --> 01:16:01,120
modernizing, and I'm seeing very
positive changes.

1494
01:16:01,160 --> 01:16:04,960
And the new government, although
he tanked the stock market and

1495
01:16:04,960 --> 01:16:08,440
the currency, it's because he's
bringing in regulation that that

1496
01:16:08,440 --> 01:16:13,440
country needs in the sense that
this is a country that really

1497
01:16:13,440 --> 01:16:17,040
fast tracked its recovery after
the Asian financial crisis in

1498
01:16:17,040 --> 01:16:20,160
the late 90s.
And and many of the islands took

1499
01:16:20,160 --> 01:16:22,440
capital investment so quickly
without really thinking it

1500
01:16:22,440 --> 01:16:25,560
through.
And so it's far over built, the

1501
01:16:25,560 --> 01:16:28,800
infrastructure is lacking, it's
cracking, permitting's a mess.

1502
01:16:29,880 --> 01:16:32,760
And the new president is very
focused on cleaning up that

1503
01:16:32,760 --> 01:16:36,240
image and modernizing, you know,
the most densely populated

1504
01:16:36,240 --> 01:16:37,600
country in Southeast Asia,
right?

1505
01:16:37,600 --> 01:16:40,120
It's got a lot of potential and
a very favorable demographics.

1506
01:16:40,440 --> 01:16:44,280
So if they can get it right, I'm
very bullish on Indonesia.

1507
01:16:44,280 --> 01:16:47,280
We're, you know, we're, we're
investing there from a, from a

1508
01:16:47,280 --> 01:16:49,160
life standpoint.
My kids go to school there now

1509
01:16:49,160 --> 01:16:50,880
we spend, it's become a second
home.

1510
01:16:52,240 --> 01:16:54,720
Part of that will be meeting the
global standards of

1511
01:16:54,720 --> 01:16:57,040
environmental considerations.
And that is what I think will

1512
01:16:57,040 --> 01:17:00,400
eventually come to head for
Indonesia's nickel market and

1513
01:17:00,440 --> 01:17:03,240
all the Canadian and Australian
mines that have been sort of put

1514
01:17:03,240 --> 01:17:05,040
on care and maintenance because
they can't compete at these

1515
01:17:05,040 --> 01:17:07,120
prices will become relevant
again.

1516
01:17:07,120 --> 01:17:09,360
I don't think that's a one year
thesis.

1517
01:17:09,360 --> 01:17:10,920
I think it's more of a five year
thesis.

1518
01:17:11,680 --> 01:17:14,720
But I see that as a place for
opportunity depending on your

1519
01:17:14,720 --> 01:17:17,160
time horizon.
No one's talking about nickel

1520
01:17:17,160 --> 01:17:20,000
right now because people talk
about things that are at all

1521
01:17:20,000 --> 01:17:22,160
time highs, not all time lows,
right?

1522
01:17:22,440 --> 01:17:24,480
But the opportunity in nickel, I
think is substantial.

1523
01:17:24,800 --> 01:17:28,000
And I think that will
materialize because, you know,

1524
01:17:28,000 --> 01:17:30,760
it's the most important alloy in
any steel product.

1525
01:17:30,760 --> 01:17:34,640
You you can't build without it.
You know, when again, when the

1526
01:17:34,640 --> 01:17:37,720
Americans talk about reassuring
their steel manufacturing and

1527
01:17:37,720 --> 01:17:40,440
making Pittsburgh the steel
capital of the world again, it's

1528
01:17:40,440 --> 01:17:43,160
like, that's great.
But you can't do that without

1529
01:17:43,160 --> 01:17:44,920
nickel, right?
Like you need to make sure you

1530
01:17:44,920 --> 01:17:46,560
can secure the ingredients to do
so.

1531
01:17:46,560 --> 01:17:48,800
Otherwise it's just lip service
and politics.

1532
01:17:49,400 --> 01:17:51,040
And so, yeah, nickel is
interesting to me.

1533
01:17:51,040 --> 01:17:54,560
Copper, you know, I'm, I'm, I'm
quite bullish on copper, but my

1534
01:17:54,560 --> 01:17:56,800
time horizon is far more
flexible.

1535
01:17:58,280 --> 01:18:00,800
You know, what's interesting is
that copper investors tend to

1536
01:18:00,800 --> 01:18:03,840
have one of two theses.
They either they're, they're a

1537
01:18:03,840 --> 01:18:07,440
bull because they say, look at
the energy demand coming from AI

1538
01:18:07,440 --> 01:18:10,400
in these data centers, look at
the demand coming from renewable

1539
01:18:10,400 --> 01:18:13,280
energy and all of this just
advanced technology in general.

1540
01:18:13,280 --> 01:18:15,560
This is going to be a crazy bull
market for the next 5-10 years.

1541
01:18:16,120 --> 01:18:19,320
And then the bears come in and
say, yes, but we're probably on

1542
01:18:19,320 --> 01:18:22,080
the cusp of some kind of a
globally coordinated recession

1543
01:18:22,360 --> 01:18:24,120
and that's going to crush demand
and so on.

1544
01:18:24,120 --> 01:18:28,120
Bearish, right And if you look
at copper supply and demand and

1545
01:18:28,120 --> 01:18:31,440
you can go back like 50 years
and if you step out to like a 10

1546
01:18:31,440 --> 01:18:34,920
year window, right what you'll
see is a very steady incremental

1547
01:18:34,920 --> 01:18:38,360
growth of about four to
6,000,000 metric tons per decade

1548
01:18:38,400 --> 01:18:43,480
in demand from 1970 to 19.
Eighty 1992 thousand 20/10/2020

1549
01:18:43,840 --> 01:18:47,640
and supply pretty much met
demand on the nose every decade

1550
01:18:47,680 --> 01:18:50,800
until about 2015.
Then it started to falter a

1551
01:18:50,800 --> 01:18:52,680
little gap started to open up in
2020.

1552
01:18:52,880 --> 01:18:55,160
That gap opened up a lot wider
because we just stopped

1553
01:18:55,160 --> 01:18:57,120
investing in new supply.
But demand kept going.

1554
01:18:57,480 --> 01:19:00,880
I mean, my biggest thesis as an
investor is like I am long human

1555
01:19:00,880 --> 01:19:02,560
ingenuity in progress.
Like we're going to keep

1556
01:19:02,560 --> 01:19:04,680
building amazing stuff.
Our lives will keep getting

1557
01:19:04,680 --> 01:19:06,880
better over the long term.
There'll be blips in the road,

1558
01:19:06,880 --> 01:19:08,520
but that's the direction we're
going.

1559
01:19:08,520 --> 01:19:10,920
So demand will follow suit.
If you don't invest in supply,

1560
01:19:10,920 --> 01:19:14,280
these opportunities open up.
But the point of that like 50

1561
01:19:14,280 --> 01:19:18,040
year perspective on copper is
that inside of those 50 years,

1562
01:19:18,400 --> 01:19:22,080
you'll find massive
technological innovation booms,

1563
01:19:22,080 --> 01:19:23,240
right?
The dawn of the Internet,

1564
01:19:23,880 --> 01:19:26,840
personal smart devices, right?
The laptop computer, the home

1565
01:19:26,840 --> 01:19:29,400
computer, like none of this
stuff existed in the 70s, right?

1566
01:19:29,400 --> 01:19:33,800
So we saw this boom in tech
advancement and adoption, but

1567
01:19:33,800 --> 01:19:36,600
the trajectory of demand was
still remarkably consistent

1568
01:19:36,600 --> 01:19:39,160
decade after decade.
We also saw massive globally

1569
01:19:39,160 --> 01:19:42,480
coordinated recessions, yet the
decade over decade demand was

1570
01:19:42,480 --> 01:19:44,720
remarkably consistent.
So everything that people are

1571
01:19:44,920 --> 01:19:48,680
building their near term copper
thesis on top of has happened in

1572
01:19:48,680 --> 01:19:51,240
the last 10 years, 20 years, 30
and 40.

1573
01:19:51,880 --> 01:19:54,280
Yes, demand was remarkably
consistent, right?

1574
01:19:54,280 --> 01:19:57,640
And so if you step back far
enough, it gives me the

1575
01:19:57,640 --> 01:20:01,000
conviction that I may have a
near term thesis on gold.

1576
01:20:01,400 --> 01:20:03,720
I have a medium to long term
thesis on copper.

1577
01:20:03,840 --> 01:20:05,320
I don't know if we're going to
see.

1578
01:20:05,600 --> 01:20:08,080
I mean, look, the entire U.S.
equity market is held up right

1579
01:20:08,080 --> 01:20:10,080
now by like 4 AI companies like
this.

1580
01:20:10,480 --> 01:20:13,040
This is the House of Cards.
And when it falls, we're all

1581
01:20:13,040 --> 01:20:14,360
going to get hit a little bit,
right?

1582
01:20:14,480 --> 01:20:17,160
And everything gets sold in
those environments, right?

1583
01:20:17,160 --> 01:20:19,640
Like everything gets whacked for
U.S. dollars so that people can

1584
01:20:19,640 --> 01:20:20,920
make their payment obligations,
right?

1585
01:20:21,320 --> 01:20:23,360
Gold will get waxed, silver will
get whacked, copper will get

1586
01:20:23,360 --> 01:20:25,720
whacked, all of it for a period
of time, right?

1587
01:20:25,720 --> 01:20:27,440
I don't know when that's going
to happen, but eventually we'll

1588
01:20:27,440 --> 01:20:28,760
recover, right?
And I'm.

1589
01:20:28,840 --> 01:20:31,240
I'm bullish copper with those
conditions.

1590
01:20:31,320 --> 01:20:32,840
Does that make sense?
Yeah.

1591
01:20:33,040 --> 01:20:34,240
You interview a lot of people,
Jay.

1592
01:20:34,680 --> 01:20:36,760
The last time you spoke with
someone and they changed your

1593
01:20:36,760 --> 01:20:38,480
mind about something, what was
it?

1594
01:20:39,280 --> 01:20:44,120
So man, that's a good question.
Last week I had Peter Zion on

1595
01:20:44,120 --> 01:20:49,040
the podcast, you know who he is,
big geopolitical analyst and he,

1596
01:20:50,080 --> 01:20:53,720
you know, I spent a lot of time
studying the US China dynamic

1597
01:20:53,760 --> 01:20:57,920
because I just, I feel like if
you have a good filter mechanism

1598
01:20:58,920 --> 01:21:01,600
to understand headlines as they
come up, like as global

1599
01:21:01,600 --> 01:21:05,400
developments occur, if you can
view them through the lens of a

1600
01:21:05,400 --> 01:21:07,840
bigger thesis that you believe
in, things often become a lot

1601
01:21:07,840 --> 01:21:10,160
more clear.
I tend to view a lot of major

1602
01:21:10,160 --> 01:21:12,640
global developments through the
lens of US China

1603
01:21:12,640 --> 01:21:17,160
competitiveness, right?
And as a student of that thesis,

1604
01:21:17,720 --> 01:21:21,280
I honestly find it very hard to
see angles that the United

1605
01:21:21,280 --> 01:21:23,120
States recovers from this trade
war.

1606
01:21:23,120 --> 01:21:26,680
I I don't really see it.
You know, I look, my family's

1607
01:21:26,680 --> 01:21:29,240
American, my wife's American, my
kids are American, I'm Canadian.

1608
01:21:29,440 --> 01:21:31,160
I'd love to see it.
I just don't, I can't see the

1609
01:21:31,160 --> 01:21:32,560
angle.
But empires fall.

1610
01:21:32,560 --> 01:21:35,840
Look at this happens, right?
We've seen five empires in the

1611
01:21:35,840 --> 01:21:38,760
last 600 years, so we know how
fast the puck gets passed.

1612
01:21:39,160 --> 01:21:41,360
And turns out London's still a
great place to visit, right?

1613
01:21:41,360 --> 01:21:44,120
So New York will be as well.
But the game will change.

1614
01:21:44,240 --> 01:21:48,000
And Zyhan's highly convicted
that I'm dead wrong on that.

1615
01:21:48,000 --> 01:21:52,040
And the reason is, is because
China's demographics are far

1616
01:21:52,040 --> 01:21:55,640
worse than we understand.
He puts the fertility rate in

1617
01:21:55,640 --> 01:21:59,920
China around .25%.
So replacement rate being 2.1,

1618
01:21:59,920 --> 01:22:03,200
that's disastrous and that's,
you know, that's a consequence

1619
01:22:03,200 --> 01:22:05,880
of state creep going too far,
right.

1620
01:22:05,880 --> 01:22:08,480
A little bit is helpful.
Too much is disastrous.

1621
01:22:08,480 --> 01:22:11,520
If you're going to engineer some
resource sectors that might be

1622
01:22:11,520 --> 01:22:13,880
advantageous.
If you're going to engineer like

1623
01:22:13,880 --> 01:22:16,680
social engineer, like one child
policy that can really hurt you

1624
01:22:16,680 --> 01:22:19,400
down the road.
So you know, that's the

1625
01:22:19,400 --> 01:22:23,120
situation that he claims there
in his forecast for the Chinese

1626
01:22:23,120 --> 01:22:25,000
economy is the inside of 10
years.

1627
01:22:25,280 --> 01:22:28,160
They've become irrelevant
because of demographic of a

1628
01:22:28,160 --> 01:22:33,040
demographic crisis.
You know, I, I, I don't buy it

1629
01:22:33,040 --> 01:22:35,760
yet, but I spent the last week
chewing on it and trying to wrap

1630
01:22:35,760 --> 01:22:38,960
my mind around his thesis
because it's, you know, it's,

1631
01:22:39,360 --> 01:22:41,920
you want to, right?
If somebody disagrees with you

1632
01:22:41,960 --> 01:22:44,080
aggressively, you want to
understand, right?

1633
01:22:44,080 --> 01:22:46,120
And try to be able to make their
argument just for your own sake.

1634
01:22:46,640 --> 01:22:50,280
And I'm, I'm spending the week
on that because they're not the

1635
01:22:50,280 --> 01:22:53,440
worst demographics in the world.
I mean, Japan is, is 20 years

1636
01:22:53,440 --> 01:22:56,280
ahead of them, right?
And I was there a month ago.

1637
01:22:56,280 --> 01:22:57,840
It's a high functioning economy,
right?

1638
01:22:59,080 --> 01:23:04,160
It's different for sure, but
that's a pretty audacious one.

1639
01:23:04,480 --> 01:23:07,400
It counters everything I believe
and I'm trying to trying to

1640
01:23:07,400 --> 01:23:10,240
understand it myself.
Curious to hear, are there sort

1641
01:23:10,240 --> 01:23:13,160
of other things that you think?
Are not quite spoken about now,

1642
01:23:13,200 --> 01:23:16,760
for they aren't sort of
understood widely at the moment.

1643
01:23:17,880 --> 01:23:21,680
I mean adjacent I guess to the.
Debasement trade would be the

1644
01:23:22,280 --> 01:23:25,280
sort of creep of D dollarization
in the global market.

1645
01:23:25,440 --> 01:23:30,760
And you know how that will, I
think continue to destabilize

1646
01:23:30,760 --> 01:23:33,720
the American economy over the
sort of medium term, I'd say.

1647
01:23:33,720 --> 01:23:37,040
And, and actually I'm, I'm sure
you guys saw this, but it was

1648
01:23:37,920 --> 01:23:41,560
end of September.
You know, China imports more

1649
01:23:41,560 --> 01:23:43,880
Australian iron ore than anybody
else in the world, like

1650
01:23:43,880 --> 01:23:47,680
719,000,000 tons per year.
It's like $75 billion worth of

1651
01:23:47,680 --> 01:23:49,120
iron ore.
And at the end of September,

1652
01:23:49,680 --> 01:23:52,200
they, this came from, from the
top.

1653
01:23:52,280 --> 01:23:56,520
We are pausing all new orders of
Australian iron ore from BHP and

1654
01:23:56,600 --> 01:24:00,040
U.S. dollars and we're not
pausing iron ore imports, we're

1655
01:24:00,040 --> 01:24:02,120
pausing iron ore imports in U.S.
dollars.

1656
01:24:02,720 --> 01:24:07,200
And as I understand how those
negotiations have landed, BHP

1657
01:24:07,840 --> 01:24:12,640
agreed to sell 30% of their iron
ore and renminbi and 70% in U.S.

1658
01:24:12,640 --> 01:24:15,280
dollars, right.
And so of spot sales, yeah.

1659
01:24:15,280 --> 01:24:18,080
So they the the long term.
Contract stuff hasn't changed,

1660
01:24:18,160 --> 01:24:23,240
but they're yeah, you're like
what you're talking about is is

1661
01:24:23,440 --> 01:24:26,800
is correct.
There's been a pretty, the, the

1662
01:24:26,800 --> 01:24:30,600
negotiations with CMRG are like
very hard to figure out what's

1663
01:24:30,600 --> 01:24:34,080
going on, but there's some funny
games being played between BHP

1664
01:24:34,120 --> 01:24:36,840
and and CMRG.
On the flip side, it's like,

1665
01:24:36,840 --> 01:24:38,200
well, how does this, how does
this unfold?

1666
01:24:38,240 --> 01:24:41,160
Where can, where can the iron
ore exporters actually like

1667
01:24:41,240 --> 01:24:45,280
negotiate from in return?
We almost need an OPEC for the

1668
01:24:45,280 --> 01:24:48,760
iron ore producers to, to
consolidate their, their selling

1669
01:24:48,760 --> 01:24:50,280
power.
At the same time, if if the

1670
01:24:50,280 --> 01:24:52,080
funny game is being played, I
don't know, I don't know how far

1671
01:24:52,120 --> 01:24:54,240
you've thought that one through
or I'll consider it.

1672
01:24:54,640 --> 01:24:56,320
Yeah, Well, 100%.
I mean, what your biggest

1673
01:24:56,320 --> 01:25:00,200
customer?
Makes a claim like that and, you

1674
01:25:00,200 --> 01:25:02,840
know, it'd be easy to say, well,
there's there's no possible way

1675
01:25:02,840 --> 01:25:05,800
China stops importing iron ore.
I mean, manufacturing steel is

1676
01:25:05,800 --> 01:25:09,000
such a pillar of their economy.
It's obviously a bluff, right?

1677
01:25:09,840 --> 01:25:11,920
But they have a lot of political
will, you know, and.

1678
01:25:11,960 --> 01:25:15,200
And they can yeah.
And I think, I think you're, I

1679
01:25:15,200 --> 01:25:17,800
think that.
Point you're right, but now,

1680
01:25:17,920 --> 01:25:21,680
this time right now is different
for a few reasons. 11, they

1681
01:25:21,680 --> 01:25:24,480
built up like tremendous
stockpile plus you've got

1682
01:25:24,480 --> 01:25:26,400
Simandu coming online at the
same time and then when you've

1683
01:25:26,400 --> 01:25:30,000
got the growth of CMRG like I
just thought I thought it was a

1684
01:25:30,000 --> 01:25:37,320
remarkable towel that the BHP
seeded not not not CMRG agreed,

1685
01:25:37,640 --> 01:25:39,200
agreed yeah and you got to think
like.

1686
01:25:39,680 --> 01:25:41,560
I mean, there's a handful of
like ripple effects from that.

1687
01:25:41,560 --> 01:25:43,560
Number one, the rest of the
world wanted that deal to

1688
01:25:43,560 --> 01:25:45,040
happen, right?
Because the rest of the world

1689
01:25:45,040 --> 01:25:47,720
doesn't care what's in BHP's
treasury.

1690
01:25:47,720 --> 01:25:51,160
They don't care what currency,
you know, CMRG and BHP are

1691
01:25:51,160 --> 01:25:54,640
training in, they care that 75%
of the world that relies on

1692
01:25:54,640 --> 01:25:57,600
Chinese cheap steel, that steel
keeps arriving, right?

1693
01:25:57,600 --> 01:26:00,160
So whatever deal you have to get
done, just get it done.

1694
01:26:00,160 --> 01:26:02,600
As long as what I need keeps
arriving, right?

1695
01:26:02,600 --> 01:26:05,800
Because every economy's first
priority is themself, right?

1696
01:26:05,800 --> 01:26:07,760
Their own prosperity and
stability.

1697
01:26:08,360 --> 01:26:12,120
And so, and, and now BHP is in
the position, I suppose, where

1698
01:26:12,120 --> 01:26:14,440
they're going to start
accumulating A renminbi treasury

1699
01:26:14,440 --> 01:26:17,240
and have to spend that somewhere
they could just convert to U.S.

1700
01:26:17,240 --> 01:26:20,600
dollars.
But like, as any non-us business

1701
01:26:20,600 --> 01:26:22,640
owner knows, like currency risk
is a real thing.

1702
01:26:22,640 --> 01:26:24,120
It's annoying, it's expensive,
right?

1703
01:26:24,120 --> 01:26:26,360
And when you're dealing with 10s
of billions of dollars, that's a

1704
01:26:26,360 --> 01:26:28,720
real headache.
So I, I don't see that as the

1705
01:26:28,720 --> 01:26:30,960
best option, although it's
probably the near term most

1706
01:26:30,960 --> 01:26:34,000
probable one.
It's more appealing if they can

1707
01:26:34,000 --> 01:26:36,320
find a home for that renminbi,
another supplier that will

1708
01:26:36,320 --> 01:26:39,040
accept renminbi per transaction,
right?

1709
01:26:39,040 --> 01:26:43,200
And so there's a perspective
here that I think BHP is now

1710
01:26:43,200 --> 01:26:47,880
incentivized to see more major
companies or economies de

1711
01:26:47,880 --> 01:26:51,640
dollarized so that they have a
home for that renminbi treasury.

1712
01:26:52,240 --> 01:26:56,280
You know, I think the biggest
win here is that China can now

1713
01:26:56,280 --> 01:26:59,520
go to the rest of the world and
say this is new precedence.

1714
01:26:59,960 --> 01:27:03,560
This wasn't a deal with
Indonesia or Vietnam or Brazil

1715
01:27:03,560 --> 01:27:06,760
or India.
This was BHP in Australia.

1716
01:27:07,280 --> 01:27:10,200
They'll now transacted renminbi
if we put our foot down.

1717
01:27:10,760 --> 01:27:12,400
So this is how we do business
now.

1718
01:27:12,400 --> 01:27:14,560
It was good enough for BHP, so
it'll be good enough for you.

1719
01:27:15,200 --> 01:27:17,360
And I think that's, you know,
when these things happen, it's

1720
01:27:17,360 --> 01:27:21,080
always like the start of or the
part of a trajectory, right?

1721
01:27:21,120 --> 01:27:23,640
It's never one off events.
So if I put myself in the shoes

1722
01:27:23,640 --> 01:27:26,800
of the negotiator on the Chinese
side, it's a big win just from,

1723
01:27:26,840 --> 01:27:28,800
if nothing else, just publicity,
right?

1724
01:27:28,800 --> 01:27:31,320
This is now something you can
take to other tables and say

1725
01:27:31,320 --> 01:27:34,640
this is how we do business now
and and precedent set, right?

1726
01:27:34,640 --> 01:27:36,640
So yeah, it's a bit of a shift
in that regard.

1727
01:27:37,040 --> 01:27:39,480
It's been great chatting Jay,
Love getting you your takes.

1728
01:27:39,720 --> 01:27:42,320
Hearing your perspectives on a
whole bunch of geopolitical

1729
01:27:42,320 --> 01:27:46,440
issues and the conference you
got coming up in late January.

1730
01:27:46,720 --> 01:27:47,680
That's right.
Yeah.

1731
01:27:47,960 --> 01:27:49,240
Thanks, Jonas.
It's been great.

1732
01:27:49,240 --> 01:27:52,720
Chatting with you guys too, so
love to see you guys there in

1733
01:27:52,720 --> 01:27:56,280
Vancouver.
January 25th and 26th, it's the

1734
01:27:56,280 --> 01:27:57,880
Vancouver Resource Investment
Conference.

1735
01:27:58,440 --> 01:28:02,360
It's an investor centric event,
so we have about 9000 investors

1736
01:28:02,360 --> 01:28:05,400
that attend.
I fly in around 100 keynote

1737
01:28:05,400 --> 01:28:08,320
speakers and when you walk into
the conference, it's like a

1738
01:28:08,320 --> 01:28:12,200
marketplace of junior mining
investment opportunities and

1739
01:28:12,200 --> 01:28:14,960
there'll be around 300 companies
exhibiting at the show this

1740
01:28:14,960 --> 01:28:18,120
year.
The the purpose of the event is

1741
01:28:18,120 --> 01:28:21,960
to help retail investors, folks
like myself, make better

1742
01:28:21,960 --> 01:28:25,160
decisions in the metals market.
And so the keynotes that we

1743
01:28:25,160 --> 01:28:28,480
invite or anybody who's got a
amazing track record of

1744
01:28:28,480 --> 01:28:30,760
allocating capital into the
metals market for the previous

1745
01:28:30,760 --> 01:28:33,600
5/10/20, in some cases 45 years,
right?

1746
01:28:34,760 --> 01:28:36,960
And they come to share where
they're putting capital in the

1747
01:28:36,960 --> 01:28:40,360
year ahead.
It's a it's a ton of fun.

1748
01:28:40,360 --> 01:28:45,840
It's two days, it's jam packed
and love to see you guys there.

1749
01:28:45,880 --> 01:28:47,640
It's a good time.
Awesome, appreciate it.

1750
01:28:47,640 --> 01:28:49,120
Jay, we will share some details
in the show.

1751
01:28:49,120 --> 01:28:51,280
Notes and that's all money minus
hope you enjoyed those

1752
01:28:51,280 --> 01:28:53,600
conversations with our three
guests.

1753
01:28:53,600 --> 01:28:57,320
We've had a blast here recording
live on air at imark and a huge

1754
01:28:57,320 --> 01:29:00,040
thanks to our other great, great
partners, mate Sandy ground

1755
01:29:00,040 --> 01:29:03,800
support focused platform by
market tech and Intralinks.

1756
01:29:03,800 --> 01:29:05,840
Check them out.
Hudaru Hudaru.

1757
01:29:06,960 --> 01:29:08,640
Now remember.
I'm an idiot.

1758
01:29:08,880 --> 01:29:11,360
JD is an idiot.
If you thought any of this was

1759
01:29:11,360 --> 01:29:13,960
anything other than
entertainment, you're an idiot

1760
01:29:14,240 --> 01:29:15,440
and you need to read out a
disclaimer.