Hanging Out in Hated Places with Rick Rule

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The government sees their job is
to steal.

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What they exist for is to take
money from one constituency and

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deliver to constituencies that
vote for them.

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So the idea that the government
will penalize the oil and gas

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business is true, but when the
margin is there, they'll

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penalize the coal business, the
gold, the gold business or any

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other business.
All righty, Rick Rule, it's been

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a a year, a very eventful year
in in markets.

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So we're excited to, to have you
back on to, to pick your brain

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about what's what's hated,
what's unloved, what people

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aren't talking about enough and
where the these sort of

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opportunities are in, in the
resource world.

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So let's start the conversation
right there.

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What, what is the sort of part
of the markets that you find

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most neglected at the moment?
I would say conventional oil and

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gas, it's a very, very good
business.

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It's a big, it's a business
that, you know, the big

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thinkers, Greta Thornburg and
people like that have suggested

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aren't going to exist in 2032 or
whatever it is.

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You know, when securities
analysts do net present values

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on oil and gas companies, they
tend to ignore the tale.

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They tend to believe that they
aren't going to enjoy any cash

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flow after 2030, two, 2033.
I'm pretty convinced that for

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the balance of your life, never
mind mine, that oil and gas is

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going to be a pretty robust
business.

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So if I had to, if I had to put
my finger on the biggest

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opportunity on a global basis,
it's certainly oil and gas.

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I would suggest that even the
biggest of the big, big and the

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best of the best like Exxon
Mobil are probably selling at a

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50% discount to their net
present value.

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If you understand that those net
present values are very long

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cash flow curves and the tail,
the net present value tail is

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extremely fat.
So that would probably be the

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one that attracts me the most.
It's also a very good business.

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You know, in the mining
business, you know, we all pray

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for return of capital employed
and the oil and gas guys talk

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about return on capital
employed.

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It's a very, very different
point of view.

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It's a Better Business.
Not meaning to insult miners, of

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course, but you understand the
point there.

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I always.
Find that fascinating, Rick,

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because Exxon, you know, is the
descendant of like Standard Oil,

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the company that started well
over 150 years ago and it goes

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through ebbs and flows of
consolidation and and

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separation.
And recently we have seen a

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number of big deals and
consolidation.

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So when when you think about
making that bet, do you think

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about like you say, going for
the Exxons of the world or going

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going down the curve and and
buyouts to come?

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You know, when I was a broker, I
used to encourage clients who

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didn't have resource portfolios
to buy market beta to start

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their portfolios with the best
of the best.

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And then after they had
accomplished that, after they

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had accomplished starting a, a
portfolio in an unloved sector,

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then I would take them down the
quality trail, take more risk in

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hopes of greater reward.
But what you learn in resource

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businesses is that when the
sector returns to favor just the

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beta, defining the beta as the
extent to which that sector

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outperforms the broad market is
often incredible.

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And too often people have the
strategy right, but they screw

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up the tactics.
You know, they buy some package

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of nothing nowhere juniors
thinking that because the gold

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price ran, those juniors are
going to run forgetting those

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juniors don't have any damn
gold, you know.

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And so when I constructed oil
and gas portfolios for people, I

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would begin by buying the best
of the best by owning the beta

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and not exposing the customer to
any operational risk whatsoever.

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And then to the extent that the
client exhibited some taste for

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volatility, some patients and
some willingness to learn, then

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we would take the client down
the quality trail looking for

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more alpha.
And that's still the same today.

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If I was constructing an oil an
oil portfolio today, I would

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start with Exxon.
And, and how do you think about

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the, the sort of evolving role
in, in governments here?

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Because I, I totally hear, hear
the bet, but I, I can't help but

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think about what we saw in the
coal industry here in, in QLD

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recently.
And you know, for, for those

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unfamiliar, just a massive
jacking up of the royalty rates

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after, after the fact, after the
investments have been made.

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So does that perhaps tweak how
you think about this bet

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jurisdictionally?
Yeah, but that's the same for

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all commodities.
At the risk of sounding too

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American, and certainly this is
a reflection on American

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politics, The government sees
their job is to steal.

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What they exist for is to take
money from one constituency and

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deliver it to constituencies
that vote for them.

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And so the idea that the
government will penalize the oil

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and gas business is true, but
when the margin is there,

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they'll penalize the coal
business, the gold, the gold

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business, or, or any other
business.

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Their job, they would say their
job is to equalize or transfer

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wealth.
I would suggest to you their job

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is to steal.
You'll notice that governments

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aren't particularly a hindrance
in a sector where the selling

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price of the product is below
the cost of production.

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They're smart enough to know
that you can't steal nothing.

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But when an industry starts to
deliver the free cash flow that

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the Australian coal industry
does.

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There was a famous American bank
robber, I forget the guy's name,

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Willie Sutton I think it was.
And a guy said, well, so Mr.

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Sutton, why do you rob banks?
He said, well, because that's

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where the money is.
And I think that's the way the

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governments think.
They don't pay any attention to

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a A sector until there's some
low hanging fat fruit that they

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can distribute to their
constituents and then of course

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they go to steal it.
We prepare these periods of

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super, super profits in
commodities where, you know,

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commodity prices randomly flex
up but one year in every 10.

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And unfortunately now that comes
with the risk that you'll never

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have a super profit again.
And, you know, it's easy to

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steal from the coal business
because they're hated.

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Oh, yeah, you know, they do bad
things.

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They put smoke in the air and
all that kind of stuff.

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And listen, I'm, you know, I'm
all for reducing the amount of

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deleterious material piped into
the air and pumped into the

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water and stuff.
But here's a couple things that

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maybe the Australian politicians
should reflect on.

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One, around the world, when
people talk about carbon

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emerging in frontier markets,
suggest the carbon quotas

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shouldn't be established
nationally, but rather per

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capita.
We don't like that in the West

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because we don't have too many
capitas.

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The other thing they should
suggest is that historical

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carbon loadings matter, and they
believe that the big economies

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that contributed all the carbon
pollution prior to 10 years ago

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should be penalized for that.
Which is to say, Australian

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voters need to understand that
if you're going to equalize the

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cost of carbon around the world
on a per capita basis,

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Australians are going to really
be punished for their past

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successes.
The other side of the coal trade

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that makes me laugh is that
people say it's a declining

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business.
They say it's going the way the

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dodo.
The problem with that is that

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the biggest year on history for
coal demand was 2024.

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It's set to be eclipsed in 2025.
S Those people are ignoring

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math.
The government wasn't, of

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course, they decided to steal
where the money was.

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But the other thing is people
say, well, the few you know, the

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future is what you have to look
at the future.

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The future is alternative
energy.

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I think I noted once talking to
you guys a year or two years

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ago, and these are slightly old
statistics, but humankind has

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spent about $5 trillion now on
alternative energies and we've

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reduced the energy market share
of fossil fuels from a high of

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83 percent 40 years ago to a low
of 81% today.

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A $5 trillion investment is
reduced the market share of

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fossil fuels by 2% in 40 years.
That's an inconvenient truth for

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certain people.
Not, by the way, for the

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politicians who've decided to
steal money from the Queensland

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Coal shareholders.
I'm afraid that cash cow will

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enrich them for years to come.
But others need to consider

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that.
Yeah, yeah.

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I mean, the, the, the, the flip
side of that one as well is that

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total energy demand around the
world keeps, keeps growing.

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So while, whilst just 2% the,
the, the pie gets bigger and

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bigger there.
While we're on the, the topic of

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government and specifically the,
the US government, as we touched

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on earlier, I can't help but ask
about the, the recent actions in

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the, the rare earths world.
I think this is pretty

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monumental news that we've seen
come out, come out of the States

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and it's going to be replicated
here in Australia and I suspect

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in in other parts of the world
as well.

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How, how did you kind of digest
that all to to start with Rick?

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Rick's talking about rare earths
now.

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There's a rare earth deposit in
Malawi that is going to

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literally going to come into
construction now as a result of

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the entire dynamic being
underwritten by Lucre and the

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Australian government recently.
That deposit, Kakangunde, I

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think it is Malawi delegates
from there and Lindian, the

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operator of that project, all
going to be at Africa Down

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Under, mate.
You're going to want to get up

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to speed on Africa Down Under,
which is kicking off next week,

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September 3rd to September 5th,
in fact.

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We're going to be there this
time next week.

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We are.
We're going to be there.

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Come join us.
Take us through in the show

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notes here.
Dom tell you all about it right

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now.
You know, we hear a lot of

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misconceptions and, and opinions
about Africa a lot of the time

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from people who don't actually
ever travel to Africa.

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So it's the, you know, it, it
literally is straight from the

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source in this regard.
So Malawi, for instance, we can

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hear from the minister there
about how they're trying to

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establish a mining industry.
We have the deputy minister from

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South Africa, you know, such a
complicated, convoluted history

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of mining, but they are really
trying to redraw the script

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there.
So it'll be interesting to hear

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from her.
The the Ghanaian minister, Ghana

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has been in the news a lot
recently with a few battles over

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goldfields and a few other
things.

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We'll be able to hear from him
first hand what, you know, what

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their, what their approach is to
new foreign investment.

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And then other exciting ones
that we haven't heard a lot

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about.
Egypt, you know, Anglo Gold have

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just paid $2 billion for the
Sicari mine.

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It's the only mine in Egypt,
huge 450,000 oz producer, but

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they've never really seen a lot
of foreign investment other than

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that, not even exploration.
So the Egyptian minister's

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coming, which you know, he's
coming WA to try and cut new

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investors and find explorers and
establish companies to come and

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invest in their country.
So, you know, you can get a real

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inside running, whether you're
looking to pick up projects

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there yourself or you know, buy
equities in in these these

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emerging companies who are
prepared to to take that high

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risk approach.
Then you're going to get the

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inside track on on which
countries are serious about

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attracting investment and which
are perhaps not so serious.

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Got to get your tickets.
Well, as a citizen, as a

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taxpayer, I think it's
disgusting.

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As a speculator, I guess it's my
job if they're going to steal

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from me, to steal some back.
I know not so much in the rare

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earths because the United
States, other than Mountain

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Pass, which isn't really a mine
in the uranium business in the

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United States.
I went from being absolutely

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reviled five years ago, from
being somebody who speculated in

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Hiroshima, Nagasaki and Three
Mile Island to now these morons

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want to subsidize me.
And I have to say I felt cleaner

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when I was reviled.
I think what you say is true.

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I think industrial policy in the
West has become afraid enough,

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particularly the Chinese and the
threat by the Chinese to

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weaponize access to rare earths
that they will spend an awful

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lot of money to establish a
China secure supply chain.

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And I, I think what you see in
rare earths you're going to see

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in a lot of different places.
I think it's unfortunate.

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00:13:19,400 --> 00:13:25,200
Personally, I want no government
Nexus in any part of my life,

226
00:13:25,200 --> 00:13:29,040
but in particular in my wallet.
But given that it's going to

227
00:13:29,040 --> 00:13:35,160
occur, I'm sort of duty bound to
take the money.

228
00:13:37,040 --> 00:13:41,560
And and how do you think more
broadly about that, that anti

229
00:13:41,560 --> 00:13:44,760
China or kind of independence
supply lines?

230
00:13:44,760 --> 00:13:46,680
Because like you say, it's not,
it's not just railroads.

231
00:13:46,680 --> 00:13:48,400
It's going to happen in every
single.

232
00:13:48,400 --> 00:13:51,400
I mean, we're speaking about it
in in copper as well with with

233
00:13:51,440 --> 00:13:54,960
projects and and tariffs as as
these sorts of things.

234
00:13:54,960 --> 00:13:56,920
So are there are there other
sort of thoughts that come to

235
00:13:56,920 --> 00:14:00,320
mind apart from the the sheer
concern of the the government

236
00:14:00,320 --> 00:14:03,920
plundering money there?
As you can gather from my

237
00:14:03,920 --> 00:14:08,280
earlier response, I'm not much
of A politician.

238
00:14:08,280 --> 00:14:11,800
I don't know much about
politics, but I've done a lot of

239
00:14:11,800 --> 00:14:16,240
business in China and I would
prefer a circumstance where we

240
00:14:16,240 --> 00:14:22,560
were cooperative with them.
My experience in China has been

241
00:14:23,160 --> 00:14:25,480
largely good.
I'm not trying to say it's been

242
00:14:25,480 --> 00:14:29,320
all good, but there's no place
on the planet where my

243
00:14:29,320 --> 00:14:30,920
experience has been largely
good.

244
00:14:31,320 --> 00:14:35,400
My preference would be, although
we know we're going to compete

245
00:14:35,400 --> 00:14:37,120
with each other, that we
understand that we need to

246
00:14:37,120 --> 00:14:40,880
cooperate too and find avenues
of cooperation.

247
00:14:41,560 --> 00:14:46,760
That's probably not very popular
with jingoistic voters who

248
00:14:46,760 --> 00:14:49,400
would, you know, prefer to have
someone of a different hue that

249
00:14:49,400 --> 00:14:53,920
they could hate.
By the way, on both sides of the

250
00:14:53,920 --> 00:14:59,240
Pacific, the Chinese themselves
are not short of jingoistic

251
00:14:59,240 --> 00:15:05,440
morons, despite my preference
what the Chinese are doing

252
00:15:05,440 --> 00:15:10,800
today, which is to say utilizing
their economic surplus.

253
00:15:11,600 --> 00:15:18,560
Unanimity of purpose, foreign
policy to secure their supply

254
00:15:18,560 --> 00:15:23,400
chains is exactly what the US
did in the 1950s and 1960s.

255
00:15:24,200 --> 00:15:27,680
It's exactly what Europe did in
the 1970s, what Japan did in the

256
00:15:27,680 --> 00:15:31,240
1980s.
We in the United States resent

257
00:15:31,240 --> 00:15:32,760
the fact that we have a
competitor.

258
00:15:34,760 --> 00:15:37,880
We have a competitor that seems
to be more predisposed to

259
00:15:37,880 --> 00:15:45,920
education, more predisposed to
savings, less predisposed to

260
00:15:47,040 --> 00:15:49,120
whatever it is that America's
predisposed to.

261
00:15:49,680 --> 00:15:52,000
So it makes perfect sense to me
that we're getting out competed.

262
00:15:54,320 --> 00:15:59,000
On on that point, Rick, to to
talk back to the rare earths in

263
00:15:59,000 --> 00:16:00,760
particular.
I think 12 months ago you said

264
00:16:00,760 --> 00:16:03,520
that that the easy money in
uranium had already been made.

265
00:16:03,680 --> 00:16:06,280
Has the easy money in rare
earths already been made?

266
00:16:07,280 --> 00:16:13,320
I don't think so for the simple
reason that in the uranium side

267
00:16:13,320 --> 00:16:18,200
we had a fair number of
reasonably good deposits that

268
00:16:18,200 --> 00:16:21,360
were delineated as far back as
pre Fukushima.

269
00:16:22,280 --> 00:16:26,640
And you could see a deposit.
Well, Boss is a great example.

270
00:16:27,840 --> 00:16:31,000
You could see a deposit that had
been delineated that you

271
00:16:31,000 --> 00:16:34,400
understood, you understood the
path to prosperity.

272
00:16:35,280 --> 00:16:38,160
But before they had a chance to
have a problem, the stock was up

273
00:16:38,160 --> 00:16:44,680
by 5 or 600% uranium.
The easy money for me, and by

274
00:16:44,720 --> 00:16:47,800
the way, I I think the big money
is likely ahead of us, but we

275
00:16:47,800 --> 00:16:50,720
can talk about that later.
The easy money is when the

276
00:16:50,720 --> 00:16:53,760
sector passed from being hated
to being tolerated.

277
00:16:55,120 --> 00:17:00,760
As recently as a year ago, you'd
go online and these people who

278
00:17:00,760 --> 00:17:04,200
have been ridiculous bulls on
uranium four or five years ago,

279
00:17:04,200 --> 00:17:08,079
people who had uranium as part
of their Internet handle, we're

280
00:17:08,079 --> 00:17:10,720
bemoaning the day that they ever
learned to spell uranium.

281
00:17:11,520 --> 00:17:14,640
And we're being beginning to
tout, you know, some crypto or

282
00:17:14,640 --> 00:17:17,560
something like that.
The hate that uranium

283
00:17:17,680 --> 00:17:21,800
encountered as a consequence of
the stupidity of the speculators

284
00:17:21,800 --> 00:17:24,839
who was who were commentating
was unbelievable.

285
00:17:25,520 --> 00:17:29,080
And it occurred to me that all
uranium had to do is become

286
00:17:29,080 --> 00:17:31,920
unhated.
And that's what happened.

287
00:17:33,480 --> 00:17:37,120
And and your point on the, the,
the big money there, how do you

288
00:17:37,120 --> 00:17:40,960
say that playing out?
Oh, listen, that's really

289
00:17:40,960 --> 00:17:43,840
exciting.
Well, no, it isn't exciting.

290
00:17:43,960 --> 00:17:47,160
That's well, it's, it's exciting
to people who think and invest,

291
00:17:49,000 --> 00:17:50,920
you know, not to the rhetoric
type.

292
00:17:51,440 --> 00:17:54,120
The structure of the uranium
market is changing and it's

293
00:17:54,120 --> 00:17:59,000
changing a lot.
Right now, uranium is the only

294
00:17:59,000 --> 00:18:05,440
commodity in the world where
producers and consumers can sign

295
00:18:05,440 --> 00:18:08,600
contracts of five years
duration, 10 years duration, 15

296
00:18:08,600 --> 00:18:12,800
years duration that specify
price and volume.

297
00:18:13,640 --> 00:18:19,440
What that means is that if
you're a uranium developer, you

298
00:18:19,440 --> 00:18:23,360
can know with some certainty how
much uranium you're going to

299
00:18:23,360 --> 00:18:26,920
sell and who you're going to
sell it to and for how much.

300
00:18:28,120 --> 00:18:33,240
And to the extent that you are
uranium junior who had no hope

301
00:18:34,400 --> 00:18:37,280
of financing your deposit and
production, you had to sell it,

302
00:18:37,920 --> 00:18:40,640
and you had to sell it to a
fairly narrow range of buyers.

303
00:18:41,320 --> 00:18:46,480
Now you can do 2 things.
You can sign a fixed price

304
00:18:46,480 --> 00:18:52,720
contract to build the mine with
Westinghouse Kamiko and you can

305
00:18:52,720 --> 00:18:56,440
sell contracts so that you can
specify the price and volume 15

306
00:18:56,440 --> 00:18:59,200
years out with investment grade
counterparties.

307
00:18:59,640 --> 00:19:02,200
Tokyo Electric Power, China
General, Nuclear, Southern

308
00:19:02,200 --> 00:19:06,120
Companies.
There is no other resource

309
00:19:06,120 --> 00:19:09,960
sector on the planet that has
certainty as to price and terms

310
00:19:09,960 --> 00:19:12,440
over time with credit grade
counterparties.

311
00:19:13,240 --> 00:19:19,920
Mercifully for this, you know,
quiet old lender Rick Rule or

312
00:19:19,920 --> 00:19:25,520
quite old speculator Rick Rule,
not one investor in 1000 has

313
00:19:25,520 --> 00:19:29,480
cared about the implications of
price and volume certainty over

314
00:19:29,480 --> 00:19:33,320
time.
It it's interesting the slavish

315
00:19:33,320 --> 00:19:39,160
focus on the spot market.
Most days the Sprott Physical

316
00:19:39,160 --> 00:19:43,880
Uranium Trust does more dollar
volume than the spot uranium

317
00:19:43,880 --> 00:19:46,760
market is.
The Sprott market has become the

318
00:19:46,760 --> 00:19:48,960
spot market.
The tail is truly wagging the

319
00:19:48,960 --> 00:19:53,960
dog and the volumes are
ridiculously low, but people pay

320
00:19:53,960 --> 00:19:59,760
attention to it because it's an
easy to grasp or or easy to

321
00:19:59,760 --> 00:20:07,200
obtain.
Data point useless except, you

322
00:20:07,200 --> 00:20:09,640
know, to sell newsletters or get
speculative pulses going.

323
00:20:10,760 --> 00:20:12,960
It really isn't an indication of
the market which is.

324
00:20:12,960 --> 00:20:15,080
Volatility will tell you when
it's volume will tell you if

325
00:20:15,080 --> 00:20:20,480
nothing else does.
But speculators pay slavish

326
00:20:20,480 --> 00:20:22,680
attention to it.
A factoid, sort of.

327
00:20:24,760 --> 00:20:27,520
So, so you're good.
What what you're talking about

328
00:20:27,520 --> 00:20:29,840
with the the price and volume
certainty is, is effectively

329
00:20:29,840 --> 00:20:33,040
like an infrastructure in
infrastructure, a keen funding

330
00:20:33,040 --> 00:20:35,800
dynamic that can can transform
the capital flow into the

331
00:20:35,800 --> 00:20:37,920
sector.
Yeah, exactly.

332
00:20:39,240 --> 00:20:43,640
As a lender, uranium is the only
subject on the the only

333
00:20:43,680 --> 00:20:48,160
commodity on the planet where if
the contracts are set up, the

334
00:20:48,160 --> 00:20:51,760
lender knows the volume of
material that can be sold and

335
00:20:51,760 --> 00:20:56,480
the price it will be sold for.
In every commodity based

336
00:20:56,480 --> 00:20:58,640
construction loan I've ever made
in my life, and I've made

337
00:20:58,640 --> 00:21:03,960
billions, I've done it with my
fingers crossed because I had no

338
00:21:03,960 --> 00:21:07,360
earthly idea 2 years from now
what the selling price of the

339
00:21:07,360 --> 00:21:14,240
commodity would be or who who my
miner or oil company would sell

340
00:21:14,240 --> 00:21:19,600
it to.
There is a startling degree of

341
00:21:19,600 --> 00:21:23,880
certainty around price and
volume in the uranium business

342
00:21:24,720 --> 00:21:29,240
that if the terms are disclosed
to the lenders, should give the

343
00:21:29,240 --> 00:21:33,000
lender a lot of comfort relative
to other businesses and should

344
00:21:33,000 --> 00:21:38,480
ultimately reduce the cost of
capital to particularly below

345
00:21:38,480 --> 00:21:41,080
investment grade uranium
developers.

346
00:21:42,040 --> 00:21:45,120
I would suspect that the
certainty to over the next five

347
00:21:45,120 --> 00:21:49,840
years will be comfortable to
securities analysts.

348
00:21:49,880 --> 00:21:52,440
You know, if you're a lazy old
Securities analyst, say Rick

349
00:21:52,440 --> 00:21:56,560
Rule, and you're trying to do a
net present value calculation on

350
00:21:56,560 --> 00:21:58,560
a uranium developer, but you
don't know how much they can

351
00:21:58,560 --> 00:22:04,040
sell her for what price.
You know that discounted debt

352
00:22:04,040 --> 00:22:06,720
present value analysis becomes
voodoo.

353
00:22:08,200 --> 00:22:10,920
It turns out over the last 50
years most of what I've done has

354
00:22:10,920 --> 00:22:18,880
been voodoo, and the idea that
it becomes less voodoo is very

355
00:22:18,880 --> 00:22:21,160
attractive to me.
You know who's a very big Rick

356
00:22:21,160 --> 00:22:22,920
Roll fan?
He told me.

357
00:22:23,360 --> 00:22:26,080
Tell me Joel.
Joel.

358
00:22:26,080 --> 00:22:29,560
So we've been talking about
Jason O'Rourke, who CEO at Axis

359
00:22:29,720 --> 00:22:31,920
Mineral Services, Ken Crush
Rocks.

360
00:22:31,920 --> 00:22:36,280
But Joel, Joel CEO there, mate,
you'll hate the fact I'm talking

361
00:22:36,280 --> 00:22:37,640
about him.
Shout out Joel.

362
00:22:39,560 --> 00:22:41,680
I know he's a big Rick Roll fan.
He'll be listening to this one.

363
00:22:41,680 --> 00:22:44,000
So we've got we've we've got to
talk about we've got to talk.

364
00:22:44,000 --> 00:22:45,600
We've got to put Joel next to
Rick Rule.

365
00:22:45,680 --> 00:22:48,560
We do and talk about the people
that mineral services.

366
00:22:48,560 --> 00:22:51,480
What do they do mate?
Mate, they crush big rocks into

367
00:22:51,480 --> 00:22:52,920
small rocks.
That's the one thing you've just

368
00:22:52,920 --> 00:22:54,280
got to get into your mind out
there.

369
00:22:54,320 --> 00:22:57,480
If you need to crush big rocks
into small ones, Taxis Mineral

370
00:22:57,480 --> 00:23:00,440
Services are the company.
They have the track record as

371
00:23:00,440 --> 00:23:01,560
well.
Trev, I know you know this.

372
00:23:01,560 --> 00:23:05,240
They've worked with all the top
caliber mining operations in the

373
00:23:05,240 --> 00:23:06,760
goldfields and they're
expanding.

374
00:23:07,120 --> 00:23:09,400
They they do crush big rocks
into little rocks.

375
00:23:09,400 --> 00:23:12,080
They've got an ability to sort
out small rocks from each other

376
00:23:12,080 --> 00:23:12,680
or.
Sorting.

377
00:23:12,800 --> 00:23:17,640
They they, they can now actually
give you an entire front end of

378
00:23:17,640 --> 00:23:20,600
your circuit.
The plant on a Boo model.

379
00:23:20,760 --> 00:23:23,760
Mate, if there's a problem like
your, your rocks are too hard,

380
00:23:23,760 --> 00:23:26,120
well, guess what?
They can bring in dynamic,

381
00:23:26,120 --> 00:23:29,640
dynamic, innovative solutions
like nothing is too foreign for

382
00:23:29,640 --> 00:23:32,040
these guys.
I'm even talking about like

383
00:23:32,040 --> 00:23:36,080
HPGR, like that's a possibility.
All thanks to the fact that Axis

384
00:23:36,080 --> 00:23:38,720
Mineral Services, they've now
got this enhanced capability.

385
00:23:38,760 --> 00:23:40,480
They're part of the Robex
construction group.

386
00:23:40,480 --> 00:23:42,800
And what does that mean?
Things are possible that never

387
00:23:42,800 --> 00:23:45,440
been done before They've.
Got engineering, fire firepower,

388
00:23:45,440 --> 00:23:48,200
financial firepower and they
have a team that just gets it

389
00:23:48,200 --> 00:23:49,680
done.
Can't understate this one enough

390
00:23:49,680 --> 00:23:51,880
mate.
All you have to do is bring your

391
00:23:51,880 --> 00:23:55,080
problem to them and they will
serve the solution to you on a

392
00:23:55,080 --> 00:23:57,080
platter.
Mate and you see the team buy in

393
00:23:57,080 --> 00:23:59,640
they've got so they put they put
up a little snippet of of money

394
00:23:59,640 --> 00:24:02,600
in mine and there were like 8
people that all shared that.

395
00:24:02,600 --> 00:24:05,880
Now that is that is buy in
that's a team with camaraderie

396
00:24:05,880 --> 00:24:07,560
that that has real buy into this
business.

397
00:24:07,560 --> 00:24:09,280
That's a.
Team you'd want to hire for a

398
00:24:09,280 --> 00:24:10,400
job.
You know what?

399
00:24:10,560 --> 00:24:12,080
So get in touch with Axes
Mineral Services.

400
00:24:12,240 --> 00:24:15,880
Go axes there's a there's a
couple added details that that

401
00:24:15,880 --> 00:24:17,520
make it all quite quite
interesting.

402
00:24:17,520 --> 00:24:21,360
So firstly, a lot of these
restart projects that we we

403
00:24:21,440 --> 00:24:24,920
speak about you mentioned boss
paladin, another one that comes

404
00:24:24,920 --> 00:24:28,600
to mind have seen sort of
numerous stumbles in in getting

405
00:24:28,600 --> 00:24:32,040
to that nameplate number.
And then there seems to be a

406
00:24:32,040 --> 00:24:37,000
real apprehension in the market
from the investor perspective to

407
00:24:37,040 --> 00:24:40,680
to sign up to that price
guarantee because that that's

408
00:24:41,520 --> 00:24:44,880
you know, apparently locking
away the the magical upside.

409
00:24:45,120 --> 00:24:48,120
We see it more in the in the
gold market where there's this

410
00:24:48,120 --> 00:24:51,920
massive trend to be an unhedged
gold miner now.

411
00:24:52,000 --> 00:24:54,520
Investors want the volatility
mate, don't take that away from

412
00:24:54,520 --> 00:24:55,440
them.
There for the commodity.

413
00:24:55,600 --> 00:24:58,600
So how do you take on board
those those two sort of notes?

414
00:24:59,920 --> 00:25:02,240
You know what?
I'm an old man.

415
00:25:03,920 --> 00:25:06,760
You can have some of my upside
if you take away my downside.

416
00:25:07,640 --> 00:25:09,720
I'm really good with that.
Print Oh no, These uranium

417
00:25:09,720 --> 00:25:11,720
companies will still give you
downside, I promise you that.

418
00:25:13,520 --> 00:25:17,040
I mean, you know, we we pick on
uranium companies not not

419
00:25:17,040 --> 00:25:19,280
attaining nameplate capacity.
I've been around the gold

420
00:25:19,280 --> 00:25:24,400
business for 50 years and to be
honest with you, it's much more

421
00:25:24,400 --> 00:25:28,960
frequent than not.
You know, when guys announce

422
00:25:28,960 --> 00:25:32,600
economic completion, you'll
notice that often isn't two or

423
00:25:32,600 --> 00:25:37,240
three quarters until the
operation shakes in and they

424
00:25:37,240 --> 00:25:39,240
reach nameplate capacity.
It seems that economic

425
00:25:39,240 --> 00:25:41,720
completion, nameplate capacity
are very different things.

426
00:25:42,680 --> 00:25:45,040
My my favorite is here when they
they announced commercial

427
00:25:45,040 --> 00:25:47,880
production, but but it never
made money and then it and then

428
00:25:47,880 --> 00:25:48,760
it goes broke.
Yeah.

429
00:25:49,200 --> 00:25:51,640
What was commercial like you you
had a day where it made money?

430
00:25:51,800 --> 00:25:55,480
I don't know.
So, you know, I take what you

431
00:25:55,480 --> 00:26:00,560
say about the, the uranium
industry, there's a relatively

432
00:26:00,560 --> 00:26:03,920
small number of data points, but
I suspect that what you talk

433
00:26:03,920 --> 00:26:06,320
about is ubiquitous.
So, you know, not, I mean,

434
00:26:06,320 --> 00:26:09,400
frankly not just in mining.
If, if the three of us started a

435
00:26:09,400 --> 00:26:12,680
carpet mill, you know, we had
some big building and in the

436
00:26:12,680 --> 00:26:16,280
front comes wool and cotton and
oil or whatever goes into a

437
00:26:16,280 --> 00:26:18,680
carpet.
What comes out the back to begin

438
00:26:18,680 --> 00:26:22,080
with isn't carpet.
You know, it takes a way to

439
00:26:22,080 --> 00:26:24,400
shake, it takes a while to shake
these big plants in,

440
00:26:24,400 --> 00:26:27,000
irrespective of what they're
making, sadly.

441
00:26:28,760 --> 00:26:32,480
It it brings me to another kind
of question as well, thinking

442
00:26:32,480 --> 00:26:34,000
about getting these mines
online.

443
00:26:34,000 --> 00:26:38,280
Rick, you, you know, you're in
the, the, the line making world

444
00:26:38,280 --> 00:26:40,720
as well.
How do you think about the, the

445
00:26:40,800 --> 00:26:45,080
dearth of natural resource
institutions funds specifically

446
00:26:45,080 --> 00:26:47,160
set up to invest?
You know, we see it here in

447
00:26:47,160 --> 00:26:49,280
Australia, there's less and less
of them.

448
00:26:49,800 --> 00:26:52,960
How do you think about that and
and what that does to future

449
00:26:52,960 --> 00:26:55,840
demand and supply?
Well, as a check writer, I think

450
00:26:55,840 --> 00:26:59,240
it's a wonderful thing.
The idea that I have fewer

451
00:26:59,240 --> 00:27:02,600
competitors, especially young
smart ones, seems to me to be a

452
00:27:02,600 --> 00:27:05,400
very good thing for the
industry.

453
00:27:05,400 --> 00:27:06,760
Of course, it's not a good
thing.

454
00:27:07,320 --> 00:27:10,880
In truth, I think the biggest
challenge the industry faces,

455
00:27:10,920 --> 00:27:15,240
other than rapacious
governments, is the dearth of

456
00:27:15,240 --> 00:27:17,880
young people coming into the
sector.

457
00:27:18,520 --> 00:27:24,560
I look at the mining industry
and it isn't just because of my

458
00:27:24,560 --> 00:27:28,160
age, but the people I see.
It's very much like I'm looking

459
00:27:28,160 --> 00:27:30,880
in the mirror, you know, old,
fat, bald, white guys.

460
00:27:32,200 --> 00:27:34,600
We've been there for 50 years.
We have experienced, but we

461
00:27:34,600 --> 00:27:41,120
don't have legs anymore and we
meaning the mining industry,

462
00:27:41,160 --> 00:27:47,560
we're not, we're not going to be
able to fill the skills gap.

463
00:27:48,200 --> 00:27:51,000
We're not going to be able to
fill it at the rock face.

464
00:27:51,800 --> 00:27:54,000
We're not going to be able to
fill it in the mill.

465
00:27:54,000 --> 00:27:55,840
We're not going to be able to
fill it in the boardroom.

466
00:27:56,520 --> 00:27:57,680
And that's going to be a
challenge for us.

467
00:27:57,680 --> 00:27:59,480
It will take care of itself over
time.

468
00:27:59,560 --> 00:28:02,760
You know, markets always work.
And if you have a shortage of

469
00:28:02,760 --> 00:28:05,640
people, what you have to do for
a while, like we had to do in

470
00:28:05,640 --> 00:28:08,680
the early part of the 1970s when
mercifully I came into the

471
00:28:08,680 --> 00:28:12,760
market, is you have to pay those
people too much, which is a good

472
00:28:12,760 --> 00:28:14,680
circumstance.
That's how we that's how we

473
00:28:14,680 --> 00:28:16,760
cured this, the shortage in the
early part of the decade and

474
00:28:16,760 --> 00:28:18,440
70s, and it's how we'll do it
again.

475
00:28:19,200 --> 00:28:20,280
But it's going to be a
challenge.

476
00:28:21,400 --> 00:28:25,280
One of the other market based
iterations we've seen on that

477
00:28:25,280 --> 00:28:29,800
financing front is the move
towards streaming as well as

478
00:28:29,800 --> 00:28:32,560
royalties becoming ever kind of
bigger.

479
00:28:32,600 --> 00:28:35,840
What do you make of this kind of
presence, and do you think

480
00:28:35,840 --> 00:28:38,880
there's a natural band that we
get close to hitting up on

481
00:28:38,880 --> 00:28:41,440
there?
No, I think it's strangely

482
00:28:41,440 --> 00:28:45,400
rational.
I think that the speculators in

483
00:28:45,400 --> 00:28:51,440
particular know the investors
too are willing to pay more for

484
00:28:51,480 --> 00:28:54,120
precious metals cash flow
isolated and royal to your

485
00:28:54,120 --> 00:28:58,200
stream.
What that means is that what I'm

486
00:28:58,200 --> 00:29:00,840
competing with Randy Smallwood
over at Wheaton and I'm a

487
00:29:00,840 --> 00:29:06,640
lender.
He knows that that cash flow to

488
00:29:06,640 --> 00:29:11,280
him is going to be valued at 16
or 17 times cash flow.

489
00:29:13,160 --> 00:29:16,880
If I'm looking for a 15%
internal rate of return as a

490
00:29:16,880 --> 00:29:20,360
lender, he's going to beat me
all day long as he should.

491
00:29:20,520 --> 00:29:23,000
He's a lower cost provider of
capital because the capital

492
00:29:23,000 --> 00:29:24,680
markets are give it will give it
to him.

493
00:29:25,360 --> 00:29:28,560
Particularly cash flow that
comes from a, you know, lead

494
00:29:28,560 --> 00:29:31,480
zinc operation, silver cash flow
that comes from a lead zinc

495
00:29:31,480 --> 00:29:35,080
operation or gold cash flow that
comes from a copper operation.

496
00:29:35,880 --> 00:29:38,520
The equities markets will give
that cash flow in a copper

497
00:29:38,520 --> 00:29:42,880
wrapper 6 times cash flow,
whereas they'll give it 15 or 16

498
00:29:42,880 --> 00:29:49,000
times cash flow in a streaming
wrapper.

499
00:29:49,760 --> 00:29:54,720
And a lot of people have said to
me that they think that the big

500
00:29:54,720 --> 00:29:57,720
streaming deals are over, that
the big royalty deals are over.

501
00:29:58,120 --> 00:30:02,320
I heard that at my conference in
Boca Raton and that's Holcomb.

502
00:30:05,560 --> 00:30:10,280
The copper business in
particular probably in 10 years

503
00:30:10,280 --> 00:30:14,800
faces between 100 and $150
billion in front end capital

504
00:30:14,800 --> 00:30:19,280
expense.
And to the extent that they can

505
00:30:19,280 --> 00:30:22,720
sell the gold, silver byproduct
cash flow from that copper

506
00:30:22,720 --> 00:30:30,080
production at some number like
14 or 15 times cash flow and use

507
00:30:30,080 --> 00:30:35,080
that to obviate more equity.
When they're selling at fairly

508
00:30:35,080 --> 00:30:39,680
low multiples of cash flow
themselves or premium priced

509
00:30:39,680 --> 00:30:41,760
debt, there'd be well advised to
do that.

510
00:30:41,760 --> 00:30:45,560
The second thing that's
happening is that a lot of host

511
00:30:45,560 --> 00:30:49,520
governments and frontier markets
would like to own larger pieces

512
00:30:49,520 --> 00:30:53,080
of their resource industry,
politically palatable, all that

513
00:30:53,080 --> 00:30:55,160
kind of stuff.
But they don't have any money

514
00:30:56,360 --> 00:30:59,800
and they're constrained by
arbitration agreements from

515
00:30:59,800 --> 00:31:02,680
stealing it, so they have to buy
it.

516
00:31:03,720 --> 00:31:06,640
Buying something when you don't
have any money is a bit of a

517
00:31:06,640 --> 00:31:09,760
challenge.
And what I suspect is going to

518
00:31:09,760 --> 00:31:15,280
happen is that those companies
will jawbone with the companies,

519
00:31:15,800 --> 00:31:17,480
those those countries, pardon
me, will jawbone with the

520
00:31:17,480 --> 00:31:23,480
companies and they will finance
the company's take by selling a

521
00:31:23,480 --> 00:31:28,960
stream.
I believe that we haven't seen

522
00:31:29,600 --> 00:31:32,240
the biggest streaming or the
biggest royalty deals that we're

523
00:31:32,240 --> 00:31:34,840
going to see.
I believe that the next 10 years

524
00:31:35,360 --> 00:31:39,840
we'll see literally multibillion
dollar streaming deals and

525
00:31:39,840 --> 00:31:44,200
perhaps royalty deals.
Increasingly host governments

526
00:31:44,680 --> 00:31:49,080
are receiving royalty, some of
them extraordinarily generous on

527
00:31:49,080 --> 00:31:53,760
gold production, but somehow
managing to squander all the

528
00:31:53,760 --> 00:31:58,040
money.
Old money, all gone, send new

529
00:31:58,040 --> 00:32:00,160
money.
And I suspect that one of the

530
00:32:00,160 --> 00:32:03,360
ways that they will get new
money is that they'll sell those

531
00:32:03,360 --> 00:32:05,280
royalties to the royalty
companies.

532
00:32:05,280 --> 00:32:08,440
So I believe that the next 10
years for the royalty and

533
00:32:08,440 --> 00:32:11,440
streaming business will be even
better than the last 20 have

534
00:32:11,440 --> 00:32:13,160
been, which have been pretty
good.

535
00:32:14,840 --> 00:32:20,960
So take take take for example,
Panama, I think, I think Panama

536
00:32:20,960 --> 00:32:25,960
has a has a phenomenal royalty
over Cobra Panama and you

537
00:32:25,960 --> 00:32:28,280
suspect that like it's not
beyond the realm of possibility

538
00:32:28,280 --> 00:32:30,840
that the country I don't know
will sell their royalty over

539
00:32:30,840 --> 00:32:32,960
that asset to the likes of
Franco.

540
00:32:34,040 --> 00:32:37,760
Yeah, part of the royalty, one
way that they might reach a

541
00:32:37,760 --> 00:32:42,040
fiscal agreement with Panama,
who wants more money, is to give

542
00:32:42,040 --> 00:32:45,240
Panama some upside of the gold
price or the copper price.

543
00:32:46,040 --> 00:32:51,280
That's called a stream, and
Panama then can turn that into

544
00:32:51,280 --> 00:32:53,680
cash.
Understand that the president of

545
00:32:53,680 --> 00:32:57,120
Panama, despite whatever
pretenses he might have, doesn't

546
00:32:57,120 --> 00:33:01,080
care very much what happens to
the government till after he's

547
00:33:01,080 --> 00:33:04,680
out of office.
He wants to spend money now.

548
00:33:05,040 --> 00:33:09,360
So the construction of a 20 year
stream and then the monetization

549
00:33:09,360 --> 00:33:13,520
of the stream in this guy's term
is extremely attractive to him.

550
00:33:14,520 --> 00:33:17,760
And as a consequence, I think
we'll resolve a lot of problems.

551
00:33:18,880 --> 00:33:21,720
Watching that one closely and,
and I suppose like in the first

552
00:33:21,840 --> 00:33:26,880
first quantum they've, they've
utilized streaming in a, in a,

553
00:33:27,440 --> 00:33:29,960
in a more forthcoming way than
the most minors out there.

554
00:33:30,360 --> 00:33:34,480
Or most recently in relation to
the, the Zambian copper assets

555
00:33:34,480 --> 00:33:38,360
where they they were pretty
advanced, I believe to to sell

556
00:33:38,360 --> 00:33:42,120
down a minority stake to either
Menara or Japanese trading

557
00:33:42,120 --> 00:33:44,160
house.
Neither of those eventuated, but

558
00:33:44,160 --> 00:33:45,720
they've they've opted for
streaming instead.

559
00:33:47,040 --> 00:33:52,040
I can tell you with certainty
that every big mining company in

560
00:33:52,040 --> 00:33:56,760
the world, particularly in the
copper business, is looking at

561
00:33:56,760 --> 00:33:59,720
streaming transactions to
finance construction.

562
00:34:00,880 --> 00:34:06,520
There are no exceptions.
That they might have an added

563
00:34:06,520 --> 00:34:09,800
competitor with the, with the
trend of gold companies coming

564
00:34:09,800 --> 00:34:13,480
in and and looking at at copper
assets as well.

565
00:34:13,480 --> 00:34:16,480
Do you do you think that gets
larger and larger with these,

566
00:34:16,480 --> 00:34:20,719
these big gold names looking at
copper assets individually or

567
00:34:20,719 --> 00:34:26,159
copper companies for takeovers?
I think that'll depend on how

568
00:34:26,159 --> 00:34:33,400
Barrick manages Reik.
Barrick has done better in the

569
00:34:33,400 --> 00:34:36,760
market of late simply because
their gold margins have been

570
00:34:36,760 --> 00:34:39,639
increasing.
But the market doesn't like, I

571
00:34:39,639 --> 00:34:43,239
don't think Barrick migrating to
the copper business.

572
00:34:43,719 --> 00:34:46,199
I've always been sort of
Catholic myself as to where my

573
00:34:46,199 --> 00:34:48,920
cash flow comes from.
My apologies to Catholics.

574
00:34:50,520 --> 00:34:52,960
You know, to me, cash is cash
and I'd take it from sand and

575
00:34:52,960 --> 00:34:58,400
gravel.
But I suspect that gold

576
00:34:58,400 --> 00:35:03,320
companies that are perceived as
being too copper dependent will

577
00:35:03,320 --> 00:35:06,840
suffer a lower cash flow
multiple.

578
00:35:06,920 --> 00:35:10,760
But time will tell if Barrick,
if Barrick makes a huge success

579
00:35:11,760 --> 00:35:16,400
of Rayco Deek, if the market
accepts that cash flow, should

580
00:35:16,400 --> 00:35:20,720
it occur at a reasonable
multiple, I think that's

581
00:35:20,720 --> 00:35:23,400
probably a good Ave. of growth
for the gold mining companies.

582
00:35:23,760 --> 00:35:26,240
They need to be careful because
traditionally the copper miners

583
00:35:26,240 --> 00:35:27,760
have been much more efficient
miners.

584
00:35:29,800 --> 00:35:33,200
I think it would be probably
easier for a copper miner to

585
00:35:33,200 --> 00:35:36,040
come and operate successfully in
the gold space than vice versa.

586
00:35:37,160 --> 00:35:40,360
The copper miners have had a
lower, a, pardon me, a higher

587
00:35:40,360 --> 00:35:43,160
cost of capital than the gold
miners have for a long time.

588
00:35:44,480 --> 00:35:47,280
They've had even more price
volatility than the gold miners

589
00:35:47,280 --> 00:35:50,920
have had for a very long time.
They're pretty good miners in

590
00:35:50,920 --> 00:35:53,800
comparison.
Maybe not good miners as an

591
00:35:53,800 --> 00:35:56,640
example compared to Agnico
Eagle, but they're pretty good

592
00:35:56,640 --> 00:36:01,320
miners and I think the gold
companies might find that to be

593
00:36:01,800 --> 00:36:05,320
a hugely competitive league
should they choose to go down

594
00:36:05,320 --> 00:36:07,600
that route.
Should.

595
00:36:07,600 --> 00:36:10,280
Should they choose to go down
that route or should should the

596
00:36:10,280 --> 00:36:13,840
cash flow at Rico Dico occur?
How are you thinking about the

597
00:36:13,960 --> 00:36:17,520
the potential that a that a
barrack breakup could pan out

598
00:36:17,520 --> 00:36:19,120
over the next next couple of
years?

599
00:36:19,440 --> 00:36:21,560
OK, you know.
Nevada probably be a good thing,

600
00:36:24,040 --> 00:36:29,040
but I mean, there was a time 40
years ago when Bristow listened

601
00:36:29,040 --> 00:36:32,000
to me.
That was a long time ago.

602
00:36:32,440 --> 00:36:35,240
He hasn't needed a check from
Rick for four decades, so.

603
00:36:36,800 --> 00:36:40,640
He's finally signalled that his
his departure is is coming in a

604
00:36:40,720 --> 00:36:42,400
in a couple of years.
They've started a search for a

605
00:36:42,400 --> 00:36:45,080
replacement and the and the
company, famously, you know,

606
00:36:45,400 --> 00:36:47,680
doesn't have an obvious next
Bristow.

607
00:36:47,680 --> 00:36:53,920
Yep, Yep.
I mean there's there's something

608
00:36:53,920 --> 00:36:56,720
to be said for keeping the
company together in the sense

609
00:36:56,720 --> 00:37:00,680
that the size itself
increasingly is a determinative

610
00:37:00,680 --> 00:37:04,680
trading volume and share price
and hence cost of capital.

611
00:37:05,200 --> 00:37:08,520
On the other hand, if the
capital markets can show Bristow

612
00:37:08,520 --> 00:37:13,880
or or show Bristow's successor
that the value of the sum of the

613
00:37:13,880 --> 00:37:16,960
parts is substantially greater
than the price of the whole,

614
00:37:17,640 --> 00:37:19,880
then the board has to listen
because it is a cost of capital

615
00:37:19,880 --> 00:37:21,680
gain.
Barracks certainly gets

616
00:37:21,680 --> 00:37:25,760
penalized as an example for
their W African assets despite

617
00:37:25,760 --> 00:37:32,000
the success of those assets and
they seem to attract a premium

618
00:37:32,000 --> 00:37:36,760
price for the Northern Nevada
assets despite the failure of

619
00:37:36,760 --> 00:37:39,480
the Northern Nevada assets for
several years to make that make

620
00:37:39,480 --> 00:37:47,880
their AIAISC targets.
So I mean perhaps, perhaps a

621
00:37:47,880 --> 00:37:49,440
break up is in the cards.
I don't know.

622
00:37:51,120 --> 00:37:54,800
Evolutions Jake Klein down down
here in Australia, Rick sort of

623
00:37:54,800 --> 00:37:58,760
said a while ago that that 8
feels like a, a natural number

624
00:37:58,760 --> 00:38:01,760
of assets for a, for a mining
company to have or an upper

625
00:38:01,760 --> 00:38:05,400
limit of, of assets for a mining
company to have.

626
00:38:05,480 --> 00:38:06,680
What what are you going to think
of that?

627
00:38:06,680 --> 00:38:09,920
And you know, with with in mind
that that Barico holds a bit

628
00:38:09,920 --> 00:38:13,920
more than that.
I I think it's less important

629
00:38:14,160 --> 00:38:18,320
than the quality of the mines.
I like what Newmont did.

630
00:38:18,320 --> 00:38:23,280
Finally, you know, Newmont grew
for size sake and they grew and

631
00:38:23,280 --> 00:38:27,240
they grew and they grew and they
grew, taking over agglomerations

632
00:38:27,240 --> 00:38:30,600
of Tier 2 mines.
I'm not saying they were small

633
00:38:30,600 --> 00:38:33,240
shitty mines, but they weren't
great mines.

634
00:38:34,200 --> 00:38:37,400
And what Newmont did after they
bought New Crest is they really

635
00:38:37,400 --> 00:38:40,040
cleaned house.
I don't know how many mines they

636
00:38:40,040 --> 00:38:44,440
sold, 11 or 12, and they were
probably mines that could

637
00:38:44,440 --> 00:38:46,720
benefit from the care and
attention that they would get

638
00:38:46,720 --> 00:38:49,440
from a management team who was
focused on that one mine.

639
00:38:50,480 --> 00:38:53,400
What it allowed Newmont to do
was focus their attention on the

640
00:38:53,400 --> 00:38:56,200
minds that mattered.
You know, the 5 million oz

641
00:38:56,200 --> 00:38:58,840
deposits, the 10 million oz
deposits, so deposits that we're

642
00:38:58,840 --> 00:39:02,720
making four hundred 500,000 oz.
So I think it's less important

643
00:39:02,720 --> 00:39:06,360
the number of mines that
somebody operates then the

644
00:39:06,360 --> 00:39:09,600
quality of the mines they
operate and in particular the

645
00:39:09,600 --> 00:39:13,240
concentration.
I'm an old guy now, you know,

646
00:39:13,240 --> 00:39:19,080
I'm old and fat and lazy, but I
would hate to be ACEO and a COO

647
00:39:19,080 --> 00:39:23,520
or a COO and have to fly to
visit mines on 4 continents.

648
00:39:23,720 --> 00:39:28,720
I wouldn't like that.
I interviewed Amar Al Jundi, who

649
00:39:28,720 --> 00:39:34,520
is the CEO of Agnico Eagle, at
my conference a month ago and

650
00:39:34,520 --> 00:39:38,440
was talking to him about the
reason for the absolute and

651
00:39:38,440 --> 00:39:40,240
relative success of Agnico
Eagle.

652
00:39:41,320 --> 00:39:47,000
And he said, you know, really,
we're a really good construction

653
00:39:47,000 --> 00:39:52,160
company and a pretty good
allocator of capital, but we try

654
00:39:52,160 --> 00:39:55,120
to operate in areas where we
have an infrastructure advantage

655
00:39:55,120 --> 00:39:59,240
over our peers.
It's it's not that hard to

656
00:39:59,240 --> 00:40:00,840
figure out.
There were other things he said.

657
00:40:00,920 --> 00:40:04,320
You know, their their corporate
culture where he believes they

658
00:40:04,320 --> 00:40:06,480
treat their people better and
it's a consequence of that.

659
00:40:06,840 --> 00:40:09,880
His turnover is 1/3 of what
other mining companies were.

660
00:40:10,200 --> 00:40:14,240
But an important thing that he
said is that they don't seek to

661
00:40:14,240 --> 00:40:20,360
be all things to all people,
that they are looking for

662
00:40:20,360 --> 00:40:23,480
centers of critical mass.
And if over time they don't

663
00:40:23,480 --> 00:40:26,720
develop the critical mass, they
sell the assets there, go back

664
00:40:26,720 --> 00:40:28,920
to doing what they do.
And I think that's an important

665
00:40:28,920 --> 00:40:30,240
statement.
I don't think that there's a

666
00:40:30,720 --> 00:40:34,040
numerically correct number of
operations that somebody can

667
00:40:34,040 --> 00:40:36,320
operate.
I think operating synergies

668
00:40:36,320 --> 00:40:39,320
matter and I think, you know,
size, scale and durable

669
00:40:39,320 --> 00:40:45,880
competitive advantage matters.
Yeah, that the rubber mill is

670
00:40:45,880 --> 00:40:48,960
always full of what is AG Nico
buying in Australia, for

671
00:40:48,960 --> 00:40:51,840
example.
And of course, I do talk about

672
00:40:51,840 --> 00:40:57,440
the fact that WA has the geology
that is, you know, but I'm, I'll

673
00:40:58,000 --> 00:41:00,200
constantly be skeptical that
they're going to come here in

674
00:41:00,200 --> 00:41:02,480
the next 5 years because they
don't have an infrastructure

675
00:41:02,480 --> 00:41:03,680
advantage here.
They have to acquire an

676
00:41:03,680 --> 00:41:05,840
infrastructure advantage here.
And I think they've done enough

677
00:41:05,840 --> 00:41:09,520
work to to realize that it's
much more complex and higher

678
00:41:09,520 --> 00:41:13,800
cost and the infrastructures,
yeah, it's it's not quite the

679
00:41:13,840 --> 00:41:14,960
advantage and they think it is
here.

680
00:41:15,880 --> 00:41:20,480
Right now they define, or at
least Amar defined competitive

681
00:41:20,640 --> 00:41:25,880
advantage to me as construction
and operation in cold remote

682
00:41:25,880 --> 00:41:30,480
sites.
That doesn't seem to describe WA

683
00:41:30,480 --> 00:41:33,400
to me.
The last time I looked y'all had

684
00:41:33,400 --> 00:41:36,040
a shortage of glaciers.
I got a bluff now.

685
00:41:36,040 --> 00:41:40,480
You'll find some snow sometimes.
A real shortage on the, on the

686
00:41:40,480 --> 00:41:44,000
thinking about, you know,
construction and, and you know,

687
00:41:44,000 --> 00:41:46,600
kind of gets me thinking about
engineering and all these other

688
00:41:46,600 --> 00:41:49,160
parts of the mining business.
You know, I can't help but note,

689
00:41:49,160 --> 00:41:54,160
Rick, a lot of your investments
are tied up in like mining

690
00:41:54,160 --> 00:41:56,360
adjacent type businesses as
well.

691
00:41:56,360 --> 00:42:00,160
So obviously in Sprott there's,
there's a big sort of

692
00:42:00,200 --> 00:42:03,120
shareholding.
So these picks and shovels ways

693
00:42:03,120 --> 00:42:06,440
of playing the market are, are
pretty fascinating.

694
00:42:06,440 --> 00:42:09,560
And we've seen like in the in
the last month in particular,

695
00:42:09,880 --> 00:42:12,520
the mining services business
here in Australia have just

696
00:42:12,920 --> 00:42:15,720
skyrocketed they've.
Multiple expansion is the only

697
00:42:15,720 --> 00:42:17,800
way you can explain it.
Yeah, substantial multiple

698
00:42:17,800 --> 00:42:20,080
expansion.
Substantial multiple expansion

699
00:42:20,080 --> 00:42:22,880
exactly.
And yeah, I mean, I'm curious

700
00:42:22,880 --> 00:42:25,520
just to to peek into this with
you because it's a trend you

701
00:42:25,520 --> 00:42:29,120
play in a in a slightly
different way tacking on to a

702
00:42:29,120 --> 00:42:32,560
potential bull market in in
commodities via a picks and

703
00:42:32,560 --> 00:42:36,880
shovel type approach.
I understand 2 businesses.

704
00:42:38,160 --> 00:42:44,480
Only one is natural resources,
fairly broadly defined, mining,

705
00:42:44,480 --> 00:42:46,440
oil and gas, agriculture and
forestry.

706
00:42:48,680 --> 00:42:50,400
I understand fisheries enough to
avoid it.

707
00:42:50,400 --> 00:42:53,720
I'm no good at it.
And I understand conventional

708
00:42:53,720 --> 00:42:57,280
financial services.
And so the intersection of

709
00:42:57,440 --> 00:43:00,760
financial public services, a
wealth manager and asset manager

710
00:43:00,760 --> 00:43:04,680
and insurance company, a bank
that services the mining of the

711
00:43:04,680 --> 00:43:07,840
oil and gas industry suits me
perfectly.

712
00:43:08,400 --> 00:43:10,320
I understand their underwriting
criteria.

713
00:43:11,240 --> 00:43:13,120
I understand how they think
because that's what I've done

714
00:43:13,120 --> 00:43:17,040
for 50 years.
I've been a fairly unsuccessful

715
00:43:17,040 --> 00:43:21,160
mining services investor.
I've been a successful oil and

716
00:43:21,160 --> 00:43:23,880
gas services investor only
because it's such a good

717
00:43:23,880 --> 00:43:26,400
business that it was tough to
screw it up.

718
00:43:27,040 --> 00:43:32,240
You know, you buy somebody with
a durable technological

719
00:43:32,240 --> 00:43:35,440
advantage like Schlumberger in a
business that doesn't go away

720
00:43:35,440 --> 00:43:38,280
and they do well.
But to be honest with you, the

721
00:43:38,280 --> 00:43:42,320
temptations that I've had and
they've been many over 50 years

722
00:43:42,320 --> 00:43:47,560
to to involve myself in physical
picks and shovels as it relate

723
00:43:47,560 --> 00:43:51,680
to mining, I'd be embarrassed to
show you the results.

724
00:43:53,520 --> 00:43:55,920
The companies that you talk
about like Sprott, which is to

725
00:43:55,920 --> 00:43:59,920
say offering financial services
to minors, that's been a very

726
00:43:59,920 --> 00:44:04,120
different story.
I've done well there when I

727
00:44:04,120 --> 00:44:06,840
compete with those guys, when,
you know, if I was going to look

728
00:44:06,840 --> 00:44:11,760
at 1/4 for Macquarie, I'd know
what I was looking at because

729
00:44:11,760 --> 00:44:13,920
I've borrowed to them.
I've been in syndicates, I've

730
00:44:13,920 --> 00:44:16,920
competed with them, you know,
I've bought them beer.

731
00:44:16,920 --> 00:44:23,360
I've almost thrown beer at them.
So I I have the ability to

732
00:44:23,360 --> 00:44:28,680
understand what they do and that
has been, I think, responsible

733
00:44:28,680 --> 00:44:32,080
for my comfort in financial
services related to mining.

734
00:44:32,320 --> 00:44:35,280
There's there's not a third type
of business you understand well,

735
00:44:35,360 --> 00:44:37,400
well to Rick being media
businesses.

736
00:44:38,600 --> 00:44:43,280
No, I'm just learning that, you
know, I started, I started rural

737
00:44:43,280 --> 00:44:45,960
investment media with no idea
how I was going to monetize it,

738
00:44:45,960 --> 00:44:50,440
to be honest with you, sort of
ready fire aim and mercifully my

739
00:44:50,440 --> 00:44:52,680
customers told me how to
monetize it.

740
00:44:53,360 --> 00:44:55,440
I found, by the way, rich people
are very generous with

741
00:44:55,440 --> 00:44:57,520
information as to how you can
service them better.

742
00:44:59,720 --> 00:45:03,240
The success in rural investment
media has been evolutionary, but

743
00:45:03,240 --> 00:45:05,120
I have a lot to learn in that
business.

744
00:45:06,200 --> 00:45:08,080
Having fun learning it.
I've got a great team.

745
00:45:08,840 --> 00:45:10,880
Yeah.
Well, I, I asked a question kind

746
00:45:10,880 --> 00:45:15,080
of tongue in cheek, but but, but
but genuinely how important is

747
00:45:15,080 --> 00:45:19,440
the, the, the media business to,
to the deal access that you get

748
00:45:19,440 --> 00:45:23,360
in, in the investment space?
Not really.

749
00:45:24,240 --> 00:45:26,400
It I think it's going to become
increasingly important.

750
00:45:27,080 --> 00:45:29,520
What happened to me is I forgot
to die.

751
00:45:29,640 --> 00:45:33,920
You know, I lived a long time
and the people that I grew up

752
00:45:33,920 --> 00:45:38,160
with, the people that I was a
pup with, turned out to be, you

753
00:45:38,160 --> 00:45:42,800
know, movers and shakers.
And so I got included in deals

754
00:45:42,800 --> 00:45:47,640
because I had checks and cashed
and for old time's sake.

755
00:45:48,760 --> 00:45:53,800
Unfortunately for me, you know
the guys I grew up with are

756
00:45:53,800 --> 00:45:57,800
either dead or like Pierre
Lassand, increasingly long of

757
00:45:57,800 --> 00:46:01,680
tooth.
So keeping myself relevant with

758
00:46:01,680 --> 00:46:04,960
100,000 subscribers is probably
my next line of defense.

759
00:46:07,600 --> 00:46:10,720
To, to touch back on the, the
Sprott investment, because

760
00:46:10,720 --> 00:46:13,520
that's, that's one you've held
for for some time.

761
00:46:13,520 --> 00:46:17,720
Do do you think it's
understated, an understated way

762
00:46:17,720 --> 00:46:20,680
of, of playing a natural
resource boom?

763
00:46:20,760 --> 00:46:23,920
You know the the ways in which
they can make money off the back

764
00:46:23,920 --> 00:46:26,840
of growth in, in commodities
through the, the various

765
00:46:26,840 --> 00:46:29,040
products.
And there's similar type ways

766
00:46:29,040 --> 00:46:31,520
you can play that here in, in
Australia as well.

767
00:46:31,520 --> 00:46:35,600
Is sort of notable in its size
in in your portfolio, it kind of

768
00:46:35,600 --> 00:46:40,640
seems.
I think it's safer and it's

769
00:46:40,640 --> 00:46:44,440
capital light, which is
attractive.

770
00:46:47,040 --> 00:46:48,560
It's also, of course, a
business.

771
00:46:48,560 --> 00:46:53,440
I understand the margins in that
business are very, very high.

772
00:46:55,760 --> 00:46:59,320
There's a plethora of low fee
products, in particular the

773
00:46:59,320 --> 00:47:03,320
physical trust in that in that
business, 35 or 40 basis point

774
00:47:03,320 --> 00:47:08,800
products, but they're 35 or 40
basis point products where

775
00:47:09,040 --> 00:47:11,640
there's very little effort
required to run them.

776
00:47:12,680 --> 00:47:18,000
So your gross is your net.
If you think about 40 basis

777
00:47:18,000 --> 00:47:24,560
points on $35 billion, it ends
up being a very large sum and

778
00:47:24,560 --> 00:47:28,080
it's highly leveraged to hire
AUM.

779
00:47:28,200 --> 00:47:33,160
The higher AUM occurs to
different ways organically as

780
00:47:33,160 --> 00:47:37,320
the gold price goes up, more
people are attracted to gold

781
00:47:37,320 --> 00:47:40,400
oriented investments and the
value of the gold owned by

782
00:47:40,400 --> 00:47:43,760
Sprott itself goes up.
So the management fee goes up at

783
00:47:43,760 --> 00:47:47,920
the same time that the multiple
according to that cash flow goes

784
00:47:47,920 --> 00:47:51,440
up.
I would be surprised frankly if

785
00:47:51,480 --> 00:47:55,080
four years from now or five
years from now Sprott didn't

786
00:47:55,080 --> 00:48:00,720
manage $100 billion and I think
they could manage $100 billion

787
00:48:00,720 --> 00:48:05,000
in passive products with
effectively the same AU, pardon

788
00:48:05,000 --> 00:48:10,880
me overhead as they pay today.
And that would be very

789
00:48:10,880 --> 00:48:14,480
attractive for shareholders at
that point in time.

790
00:48:14,480 --> 00:48:20,640
I suspect 100 billion AUM,
somebody like, you know, Credit

791
00:48:20,640 --> 00:48:27,160
Suisse or Manulife or BlackRock,
somebody who was trying to build

792
00:48:27,280 --> 00:48:30,920
a natural resource expertise and
failing because they were 20

793
00:48:30,920 --> 00:48:33,880
years late, which is say, you
know what, I'll have that Sprott

794
00:48:33,880 --> 00:48:37,360
thing.
That's sort of the way I think

795
00:48:37,360 --> 00:48:39,120
it ends.
I think they get 200 billion

796
00:48:39,160 --> 00:48:43,440
AUM.
They become globally relevant.

797
00:48:44,960 --> 00:48:48,560
And then I think we enjoy a
bittersweet exit.

798
00:48:51,400 --> 00:48:53,200
Fascinating sort of way that
that could play out.

799
00:48:53,200 --> 00:48:56,800
And we've sort of seen very sort
of small steps to, to similar

800
00:48:56,800 --> 00:49:00,000
type actions in the, in the
local sort of brokerage market

801
00:49:00,000 --> 00:49:03,440
down here.
I want to change tech now, Rick

802
00:49:03,440 --> 00:49:06,720
and and run through a bunch of
commodities and the, the top of

803
00:49:06,720 --> 00:49:10,440
that list is lithium and, and
why that's top of the list, even

804
00:49:10,440 --> 00:49:12,000
though we've spoken about it a
fair bit lately.

805
00:49:12,000 --> 00:49:17,320
Is that you, you said a year ago
that perhaps it'll take two

806
00:49:17,320 --> 00:49:20,320
years and lithium will be a four
letter word.

807
00:49:20,320 --> 00:49:23,400
It'll be, you know, completely
bombed out and hated and the

808
00:49:23,400 --> 00:49:26,040
last year has been pretty rough.
But it it seems we've seen a, a

809
00:49:26,520 --> 00:49:29,320
kick up in, in prices recently.
Do you think this is temporary

810
00:49:29,320 --> 00:49:32,880
and and there's more hate to to
sort of come or how do you?

811
00:49:32,880 --> 00:49:33,680
Say this.
Yeah, I do.

812
00:49:34,520 --> 00:49:36,120
I, I do.
I think there's more hate to

813
00:49:36,120 --> 00:49:38,520
come.
When we talked about it last

814
00:49:38,520 --> 00:49:40,280
year, that was.
I'm glad you brought that up.

815
00:49:40,280 --> 00:49:42,040
That was unusually prescient.
I thought you were going to

816
00:49:42,040 --> 00:49:43,440
bring up something stupid that I
said.

817
00:49:43,640 --> 00:49:46,240
I'm delighted that you you
managed to dredge out something

818
00:49:46,240 --> 00:49:47,880
smart, I don't think.
You sound stupid.

819
00:49:49,040 --> 00:49:51,640
It was all clever.
Wonders never cease.

820
00:49:53,520 --> 00:49:56,840
You'll recall the lithium boom.
There wasn't a shortage of

821
00:49:56,840 --> 00:49:58,360
elemental lithium.
There was a shortage of

822
00:49:58,360 --> 00:50:04,160
processing capacity, and it was
a critical component of these

823
00:50:04,160 --> 00:50:05,960
lithium ion batteries.
So the price spiked.

824
00:50:07,080 --> 00:50:09,920
People started looking for
lithium and we found a lot.

825
00:50:12,040 --> 00:50:14,080
We hadn't found it before
because we weren't looking for

826
00:50:14,080 --> 00:50:15,720
it.
You know, we had plenty.

827
00:50:15,880 --> 00:50:22,480
So we found a lot and investor
expectations were extremely

828
00:50:22,480 --> 00:50:25,640
high.
We probably found 150 deposits.

829
00:50:25,640 --> 00:50:28,920
I don't know how many deposits,
maybe six or seven of those go

830
00:50:28,920 --> 00:50:32,640
to production.
So the shake out where you take

831
00:50:32,640 --> 00:50:37,120
the 150 aspirants down to, let's
be generous, 10 that succeed,

832
00:50:38,160 --> 00:50:39,680
it's going to piss a lot of
people off.

833
00:50:41,920 --> 00:50:44,680
They aren't going to like it.
They don't like it so far, but

834
00:50:45,560 --> 00:50:50,480
they ain't seen nothing yet.
And I think on top of that, I'm

835
00:50:50,480 --> 00:50:57,600
no technology guy, but I know
Chevron, Occidental, Berkshire

836
00:50:57,600 --> 00:51:02,040
Hathaway, all investing fairly
heavily in direct lithium

837
00:51:02,040 --> 00:51:06,000
extraction from Brine's.
I'm not smart enough to know if

838
00:51:06,000 --> 00:51:11,320
they make that work, but if they
make it work, then things get

839
00:51:11,320 --> 00:51:14,200
truly ugly.
I think I said a year ago, I was

840
00:51:14,200 --> 00:51:16,840
brought up in both the oil and
gas in the geothermal business,

841
00:51:17,520 --> 00:51:22,680
and I always thought of lithium
as a waste element or as

842
00:51:22,680 --> 00:51:25,680
something that you could use in
small doses to calm your nerves.

843
00:51:25,760 --> 00:51:28,840
Because it was a waste element,
you know, it fouled your

844
00:51:28,840 --> 00:51:35,160
equipment.
I when lithium is really, truly

845
00:51:35,160 --> 00:51:41,200
hated, really truly hated, then
I think there'll be good

846
00:51:41,200 --> 00:51:44,160
opportunities there because I
think you'll be able to pick up

847
00:51:44,160 --> 00:51:48,520
companies that have a billion
dollars into a deposit that have

848
00:51:48,520 --> 00:51:51,720
100 million market caps, and
that's always a pleasant

849
00:51:51,720 --> 00:51:55,360
circumstance.
There's there's 11 commodity

850
00:51:55,360 --> 00:51:57,080
that I think is in the hated
bucket.

851
00:51:57,080 --> 00:51:59,480
I'm toying.
I've never never had exposure to

852
00:51:59,480 --> 00:52:02,560
it before, but I'm flirting with
it.

853
00:52:03,760 --> 00:52:08,720
Vanadium.
I'm attracted to vanadium.

854
00:52:08,720 --> 00:52:11,000
Thus far my attraction has been
very painful.

855
00:52:12,760 --> 00:52:17,400
I was a, you know, I got
attracted to the vanadium market

856
00:52:17,400 --> 00:52:19,720
5 or 6 years ago and most people
couldn't spell it.

857
00:52:20,760 --> 00:52:23,640
And the consequence of that I
concentrated my bet on something

858
00:52:23,640 --> 00:52:28,640
called Largo originated a
physical vanadium product, which

859
00:52:28,640 --> 00:52:31,360
didn't work.
And the consequence of my genius

860
00:52:31,360 --> 00:52:35,840
is I'm down sort of 60%.
I just did a $6 million money I.

861
00:52:36,120 --> 00:52:39,520
Just did a $6 million secured
loan on the physical product.

862
00:52:40,200 --> 00:52:42,720
Yeah, it's, it's funky, but you
kind of like you look at it and

863
00:52:42,720 --> 00:52:46,120
you think the prices need to
turn in the next 6 months

864
00:52:46,120 --> 00:52:48,120
because that's that's when they
got to repay it or.

865
00:52:48,920 --> 00:52:50,600
No, I think I think vanadium's a
good idea.

866
00:52:50,600 --> 00:52:52,280
I think you need to be patient.
I think it's going to be

867
00:52:52,280 --> 00:52:58,360
extremely volatile and there's a
lot of applications for lithium,

868
00:52:58,360 --> 00:53:04,520
the vanadium redox battery being
a new application, but the old

869
00:53:04,520 --> 00:53:09,000
applications use a lot of value,
use a lot of volume, pardon me,

870
00:53:09,000 --> 00:53:10,680
and they have very, very, very
high value.

871
00:53:10,680 --> 00:53:12,480
Making steel stronger is a good
thing.

872
00:53:13,720 --> 00:53:14,800
So you're probably on to
something.

873
00:53:14,800 --> 00:53:18,160
It's a very small market and the
people who participate in the

874
00:53:18,160 --> 00:53:23,280
lithium market need to be as
patient as me, which is rare,

875
00:53:23,920 --> 00:53:26,160
and they need to be very
tolerant of volatility.

876
00:53:27,280 --> 00:53:31,120
The other thing I would caution
is that many lithium mines that,

877
00:53:31,320 --> 00:53:34,760
pardon me, vanadium mines that
have grade, don't have size.

878
00:53:35,640 --> 00:53:41,160
And you can be sort of right.
If you get a small mine and

879
00:53:41,160 --> 00:53:45,240
still not make any money, that's
really hard on you.

880
00:53:45,240 --> 00:53:47,160
You know you get everything
right except for the mine, and

881
00:53:47,160 --> 00:53:50,400
you still lose money.
Yeah, you talk, you talk about

882
00:53:50,400 --> 00:53:53,280
that phenomenon where like as a
as a, as a taxpayer, you're

883
00:53:53,280 --> 00:53:57,920
filthy, but as a speculator and
you see opportunity and I, I, I

884
00:53:57,920 --> 00:54:00,520
have a suspicion vanadium's
going to fall into that category

885
00:54:00,520 --> 00:54:04,480
and we'll see something stupid
from government that.

886
00:54:05,520 --> 00:54:07,080
I think you're right.
Yep.

887
00:54:08,200 --> 00:54:10,040
I mean, there's no doubt it's a
critical metal.

888
00:54:11,120 --> 00:54:17,160
I haven't seen very many fields
of human endeavour where

889
00:54:17,640 --> 00:54:20,120
government participation ever
caused any net good.

890
00:54:22,080 --> 00:54:25,920
I wonder why Mining would break
that train.

891
00:54:29,280 --> 00:54:33,480
Another commodity that has seen
substantial government rulings

892
00:54:33,480 --> 00:54:35,920
change it's sort of structure
is, is nickel.

893
00:54:35,920 --> 00:54:37,760
We've, we've touched on it a
couple times.

894
00:54:38,360 --> 00:54:40,240
Are you, are you thinking it's
bombed out enough, Rick?

895
00:54:42,200 --> 00:54:47,040
You know, I'm always early, so
I've been buying some sulfide

896
00:54:47,040 --> 00:54:49,480
nickel stocks.
Guarantee they're going to fall

897
00:54:49,480 --> 00:54:51,560
another 20% if I'm getting
along.

898
00:54:54,720 --> 00:54:58,560
I'm a sucker for sulfide
nickels.

899
00:54:58,560 --> 00:55:02,720
They've treated me
extraordinarily well in my life.

900
00:55:02,720 --> 00:55:07,440
They're rare beasts.
I also, I think maybe you guys

901
00:55:07,440 --> 00:55:10,400
talked to me last time after I
flew back over the lateritic

902
00:55:10,400 --> 00:55:12,240
nickel fields in southern
Sulawesi.

903
00:55:14,320 --> 00:55:17,520
You know, that's a disgusting
sight.

904
00:55:18,120 --> 00:55:21,680
It's a truly disgusting sight
and I don't know how much longer

905
00:55:22,360 --> 00:55:25,080
the Indonesian government of the
Indonesian people will put up

906
00:55:25,080 --> 00:55:29,880
with that.
And to the extent that the

907
00:55:30,240 --> 00:55:35,640
operators are forced to exercise
normal constraints with regards

908
00:55:35,640 --> 00:55:39,200
to the environment, the cost
advantage enjoyed by lateritic

909
00:55:39,200 --> 00:55:43,080
nickels changes very, very, very
rapidly.

910
00:55:44,240 --> 00:55:46,560
The same comment with regards to
rare earths, by the way.

911
00:55:46,560 --> 00:55:49,640
You know, they're not rare.
We haven't looked for rare

912
00:55:49,640 --> 00:55:52,400
earths because the Chinese have
produced them so cheaply.

913
00:55:53,000 --> 00:55:56,400
What a lot of people don't note
is that environmental standards

914
00:55:56,400 --> 00:55:59,920
in western China are advancing
very rapidly, and the

915
00:55:59,920 --> 00:56:03,640
environmental destruction that
the Chinese allowed and we're

916
00:56:03,640 --> 00:56:07,080
willing to endure in Xinjiang
are a thing of the past.

917
00:56:07,880 --> 00:56:11,600
One of the things that they
don't talk about so much is that

918
00:56:11,600 --> 00:56:14,640
the cost of producing rare
earths in China is going up very

919
00:56:14,640 --> 00:56:17,720
quickly.
And that would suggest that the

920
00:56:17,720 --> 00:56:22,240
economic incentive price for the
rest of the world doesn't suffer

921
00:56:22,240 --> 00:56:24,880
as much from the Chinese
advantage that as the market

922
00:56:24,880 --> 00:56:27,880
thinks it does.
The same way in letter, in

923
00:56:27,880 --> 00:56:31,360
nickels that I think the price
in the price advantage enjoyed

924
00:56:32,040 --> 00:56:36,360
by the Indonesian latter rights
begins to dissipate as they're

925
00:56:36,360 --> 00:56:41,520
forced to adapt Western world
environmental standards or if

926
00:56:41,520 --> 00:56:45,080
energy prices go up.
It's that process is extremely

927
00:56:45,080 --> 00:56:51,000
energy dependent.
Another commodity just on on, on

928
00:56:51,000 --> 00:56:55,720
the wrap up, Rick Silver.
Silver's had a a great run and I

929
00:56:56,200 --> 00:56:58,320
I suspect you might think the
the early money's been made

930
00:56:58,320 --> 00:57:03,040
there.
Yeah, silver's an enigma to me.

931
00:57:03,040 --> 00:57:05,880
It's treated me very well.
You confuse yourself thinking

932
00:57:05,880 --> 00:57:07,960
about it as an industrial metal,
which of course it is.

933
00:57:07,960 --> 00:57:12,040
But the price moves are all they
all coincide with precious

934
00:57:12,040 --> 00:57:15,520
metals bull markets.
I don't know why it is, but I

935
00:57:15,520 --> 00:57:19,120
know that it is true that
precious metals bull markets

936
00:57:19,120 --> 00:57:22,080
begin with the fear buyer.
They begin with gold, in effect,

937
00:57:22,120 --> 00:57:26,040
gold bullion.
And as the advance in the gold

938
00:57:26,040 --> 00:57:31,520
bullion price goes faster than
the cost of producing gold, the

939
00:57:31,520 --> 00:57:35,760
gold company margins start to go
and leadership in the precious

940
00:57:35,760 --> 00:57:39,240
metals bull market goes from
physical gold to the best of the

941
00:57:39,240 --> 00:57:41,400
best gold producers, which is
what we've seen this year.

942
00:57:42,360 --> 00:57:43,880
Then it goes to the best of the
rest.

943
00:57:43,960 --> 00:57:47,120
You know, the money moves down
the quality trail at some point

944
00:57:47,120 --> 00:57:49,280
in time, increasing free cash
flows.

945
00:57:49,600 --> 00:57:52,480
And the momentum of the sector
itself validates the precious

946
00:57:52,480 --> 00:57:54,880
metals narrative to the
generalist investor.

947
00:57:55,920 --> 00:57:59,920
And when the generalist investor
comes into the resource space, I

948
00:57:59,920 --> 00:58:02,640
don't know why, I suspect
because of the lower unit value,

949
00:58:02,680 --> 00:58:05,280
silver goes crazy.
I mean, absolutely crazy.

950
00:58:05,280 --> 00:58:06,880
I watched it happen three times
in the past.

951
00:58:07,920 --> 00:58:11,080
And by the way, when that
happens, you won't need Rick

952
00:58:11,080 --> 00:58:15,240
Rule to tell you it happened.
People who haven't lived through

953
00:58:15,240 --> 00:58:19,600
that bull market drives
themselves just literally crazy

954
00:58:19,600 --> 00:58:24,320
with a move from, I don't know,
$31 to $33.75 or something like

955
00:58:24,320 --> 00:58:29,280
that.
We will see in this bull market

956
00:58:30,440 --> 00:58:34,160
that kind of move on a daily
basis happening several days in

957
00:58:34,160 --> 00:58:37,240
a row.
So it was such a fantastic one

958
00:58:37,240 --> 00:58:40,400
because there's just not that
many great ways to to play it

959
00:58:40,400 --> 00:58:43,480
here on on the ASX and and in
Australia more broadly.

960
00:58:43,480 --> 00:58:46,600
So it's it's kind of forgotten
about a little bit, but I get

961
00:58:46,600 --> 00:58:47,440
from.
No, no, no.

962
00:58:47,720 --> 00:58:50,320
There's there's silver bugs out
there, you just got to interact

963
00:58:50,320 --> 00:58:53,080
with them.
They're out there just the ways

964
00:58:53,080 --> 00:58:56,720
of playing it in Australia are
fine at whereas throughout the

965
00:58:56,720 --> 00:59:00,040
Americas you have the the
deposits and the the companies

966
00:59:00,040 --> 00:59:04,000
in in much more abundance.
You know, you all were, you all

967
00:59:04,000 --> 00:59:06,520
were spoiled.
You had Broken Hill, which was

968
00:59:06,520 --> 00:59:10,240
one of the greatest silver mines
in the world in drag, and then

969
00:59:10,240 --> 00:59:14,600
you had Cannington.
So although you haven't had a

970
00:59:14,600 --> 00:59:18,120
lot of starts, you had a lot of
finishes or at least a couple

971
00:59:18,120 --> 00:59:21,120
spectacular finishes.
It's very difficult to duplicate

972
00:59:22,000 --> 00:59:29,000
those successes.
I think that to the extent that

973
00:59:29,000 --> 00:59:34,080
the punter community in
Australia begins to reward the

974
00:59:34,080 --> 00:59:40,200
silver narrative, the Australian
Geo probably will do pretty good

975
00:59:40,200 --> 00:59:44,960
work in the American Cordillera.
I'm not sure how many primary

976
00:59:44,960 --> 00:59:50,360
silver deposits Australia itself
will yield, but I know that the

977
00:59:50,360 --> 00:59:53,720
Australian investor is becoming
much less ethnocentric than he

978
00:59:53,720 --> 00:59:56,720
or she used to be.
It used to be one of the best

979
00:59:56,720 --> 01:00:00,600
ways in the world for a foreign
investor to get value was to buy

980
01:00:00,640 --> 01:00:04,080
a non Australian asset in an
Australian company during an

981
01:00:04,080 --> 01:00:06,640
Australian bear market.
Where are you guys?

982
01:00:06,640 --> 01:00:09,760
I mean you guys even viewed the
New Zealanders as logs, you

983
01:00:09,760 --> 01:00:14,400
know.
Yeah, that day is, from my point

984
01:00:14,400 --> 01:00:17,040
of view, sadly over.
One more commodity that I've got

985
01:00:17,040 --> 01:00:21,240
to ask you about, Rick Tin.
I'm attracted to the tin

986
01:00:21,240 --> 01:00:25,080
business again.
It's very difficult to play it.

987
01:00:27,120 --> 01:00:29,480
You know, the easily the best
tin name in the world is Alpha

988
01:00:29,480 --> 01:00:32,920
Man.
Unfortunately, it's located in

989
01:00:32,920 --> 01:00:35,720
the worst part of one of the
worst countries on the planet.

990
01:00:39,600 --> 01:00:43,600
That's been a challenge, but I'm
I'm quite attracted to tin.

991
01:00:44,080 --> 01:00:48,560
Tin is one of those unheralded
high tech minerals.

992
01:00:49,280 --> 01:00:53,040
You don't have micro circuitry
without tin, period, full stop.

993
01:00:54,480 --> 01:00:56,800
And the whole world is micro
circuitry.

994
01:00:57,960 --> 01:01:00,240
You've you've explained a sort
of similar narrative in the in

995
01:01:00,240 --> 01:01:03,960
the PGM space and you've laid it
through the physical.

996
01:01:03,960 --> 01:01:08,680
Would you do the same here?
The problem with tin in terms of

997
01:01:08,680 --> 01:01:12,520
the physical, I looked at it a
long time ago when I was with

998
01:01:12,520 --> 01:01:15,760
Sprott because we looked at the
success that we enjoyed with the

999
01:01:15,760 --> 01:01:18,360
physical Uranium Trust and said
where can we do this again?

1000
01:01:19,720 --> 01:01:26,680
What happens with materials like
tin and nickel and copper is

1001
01:01:27,000 --> 01:01:30,560
that the price to move it and
the price to store it relative

1002
01:01:30,560 --> 01:01:33,120
to the price of the commodity is
a bit too low.

1003
01:01:35,080 --> 01:01:37,760
It's something that might work
as an example for me personally

1004
01:01:37,760 --> 01:01:40,400
as a speculator, you know, buy a
bunch of tin in some warehouse

1005
01:01:41,120 --> 01:01:43,520
Kuala Lumpur or something like
that and leave it there.

1006
01:01:44,920 --> 01:01:46,320
You know, do something smart.
Nothing.

1007
01:01:47,560 --> 01:01:51,480
But in terms of making it a
financial product, the

1008
01:01:51,480 --> 01:01:55,120
relationship between storage
cost, shipping cost and the

1009
01:01:55,120 --> 01:02:00,480
price of the commodity itself
means that the overhead around

1010
01:02:00,480 --> 01:02:04,400
running the physical trust makes
it less attractive to the

1011
01:02:04,400 --> 01:02:08,880
investor base then say platinum
and Palladium or gold or even

1012
01:02:08,880 --> 01:02:11,760
silver.
I should tell you an anecdote.

1013
01:02:11,760 --> 01:02:16,160
You know, it's brought.
We owned on behalf of investors,

1014
01:02:16,200 --> 01:02:19,000
a lot of gold, billions of
dollars worth of gold.

1015
01:02:20,240 --> 01:02:22,760
And I was, as a consequence of
that, allowed into the Royal

1016
01:02:22,760 --> 01:02:27,880
Canadian Mint to see this gold.
And I have to tell you that the

1017
01:02:27,880 --> 01:02:32,040
pile of gold that constitutes a
few billion dollars is

1018
01:02:32,040 --> 01:02:36,920
distressingly small.
It's really unimpressive.

1019
01:02:38,120 --> 01:02:41,280
After my disappointment, I was
ushered into the room where our

1020
01:02:41,280 --> 01:02:46,720
silver was.
That was much better, much more

1021
01:02:46,720 --> 01:02:49,520
satisfying.
It looked like billions of

1022
01:02:49,520 --> 01:02:51,760
dollars worth of stuff.
I tell you that partially to

1023
01:02:51,760 --> 01:02:56,840
amuse you, but partially to say
that I'm skeptical about the

1024
01:02:57,160 --> 01:03:01,160
efficacy of investment products,
physical investment products

1025
01:03:02,040 --> 01:03:07,680
around commodities where you
know the price relative to scale

1026
01:03:07,920 --> 01:03:11,240
isn't good.
I've got last one for you.

1027
01:03:11,240 --> 01:03:14,520
You always get asked what your
contrarian views are and and you

1028
01:03:14,560 --> 01:03:16,120
are a contrarian through and
through.

1029
01:03:16,120 --> 01:03:18,280
That's your identity.
So what's your most consensus

1030
01:03:18,720 --> 01:03:22,040
view in commodity markets and in
the mining sector right now?

1031
01:03:23,680 --> 01:03:27,800
I'm afraid I'm great.
I'm, I've, I've grown to accept

1032
01:03:27,920 --> 01:03:30,800
the most crowded trade, which is
the anti U.S. dollar trade.

1033
01:03:32,800 --> 01:03:37,920
And I, I, I sort of believe the
US dollar is probably overheated

1034
01:03:37,920 --> 01:03:42,040
in the near term as an
investment theme for a decade.

1035
01:03:42,040 --> 01:03:43,800
I think it's still very much
intact.

1036
01:03:46,360 --> 01:03:51,760
Our political class seems to do
a wonderful job of promoting the

1037
01:03:51,760 --> 01:03:55,000
anti dollar.
Every time I watch our political

1038
01:03:55,000 --> 01:03:58,480
leadership, I feel more
comfortable with the anti dollar

1039
01:03:58,480 --> 01:04:03,560
trade.
I remember, however, and my

1040
01:04:03,560 --> 01:04:08,560
friend Joel Lipman reminds me of
this at our conference, the

1041
01:04:08,560 --> 01:04:11,160
famous quote that the US dollar
is the worst currency in the

1042
01:04:11,160 --> 01:04:14,080
world, with the sole exception
of all of the others.

1043
01:04:17,000 --> 01:04:20,440
While I feel bad about the US
dollar in isolation, I feel less

1044
01:04:20,440 --> 01:04:22,640
bad about it relative to other
currencies.

1045
01:04:25,000 --> 01:04:28,640
All of that by way of saying it
wouldn't surprise me to see gold

1046
01:04:28,640 --> 01:04:34,640
take a breather if the US
Federal Reserve doesn't whack US

1047
01:04:34,640 --> 01:04:38,280
interest rates.
If they whack US interest rates,

1048
01:04:38,280 --> 01:04:42,720
that'll show the world savers
that any concern for the

1049
01:04:42,720 --> 01:04:46,880
legitimacy of the US dollar is a
thing of the past in US society.

1050
01:04:48,280 --> 01:04:54,440
If they don't cut interest
rates, I suspect that the dollar

1051
01:04:54,440 --> 01:04:58,840
price run in the very near term.
I would define very near term is

1052
01:04:58,880 --> 01:05:09,560
less than a year is overdone.
I I literally, I'm pained to say

1053
01:05:10,680 --> 01:05:13,440
that I believe that the
political and social reality of

1054
01:05:13,440 --> 01:05:18,760
the United States is such that
the US dollar in absolute terms,

1055
01:05:18,960 --> 01:05:21,320
not relative to the Australian
dollar or other currencies, but

1056
01:05:21,320 --> 01:05:26,160
rather in absolute terms, will
lose 75% of its purchasing power

1057
01:05:26,160 --> 01:05:29,600
in the next 10 years.
I lived through that before.

1058
01:05:29,600 --> 01:05:31,960
In the decade of the 1970s.
According to the Office of

1059
01:05:31,960 --> 01:05:36,120
Management Budget, the US dollar
lost 75% of its purchasing power

1060
01:05:36,120 --> 01:05:39,320
in 10 years.
That was a character builder,

1061
01:05:39,920 --> 01:05:44,120
and I'm already a character.
It wouldn't surprise me.

1062
01:05:44,480 --> 01:05:47,920
The one must remember in the
decade of the 70s when the US

1063
01:05:47,920 --> 01:05:51,080
dollar lost 75% of its
purchasing power, but the gold

1064
01:05:51,080 --> 01:05:55,680
price increased 30 fold.
I'm not suggesting that the gold

1065
01:05:55,680 --> 01:05:59,000
price is going to go up 30 fold.
It's already up 12 fold since

1066
01:05:59,000 --> 01:06:06,040
2000, but it wouldn't surprise
me at all to see the nominal

1067
01:06:06,040 --> 01:06:09,440
gold price in U.S. dollar terms
mirror the decline in purchasing

1068
01:06:09,440 --> 01:06:13,400
power of the US dollar, which
would suggest a three or four

1069
01:06:13,400 --> 01:06:22,240
fold expansion in 10 years.
So overbought now a commodity of

1070
01:06:22,240 --> 01:06:28,440
necessity over a decade.
Fantastic, Rick, the the the

1071
01:06:28,480 --> 01:06:32,040
parallels to the 70s, a super
interesting one, which we've

1072
01:06:32,040 --> 01:06:34,880
sort of stood over a few times
in the past, but I think they're

1073
01:06:34,880 --> 01:06:37,040
they're endlessly sort of
fascinating and you can talk

1074
01:06:37,040 --> 01:06:39,920
about them at length that.
Despite not living through the

1075
01:06:39,920 --> 01:06:44,440
70s like yourself, I.
Have to have that experience for

1076
01:06:44,440 --> 01:06:45,400
ourselves.
Thanks.

1077
01:06:45,680 --> 01:06:47,880
Thanks again for making the time
and coming on money of mine.

1078
01:06:47,880 --> 01:06:49,240
Rick, as always, it's great to
chat.

1079
01:06:50,200 --> 01:06:52,400
Always a pleasure.
I look forward to visiting with

1080
01:06:52,400 --> 01:06:54,520
the Australian audience.
I look forward next year to

1081
01:06:55,760 --> 01:06:57,720
coming down, looking around,
speaking at a couple of

1082
01:06:57,720 --> 01:06:59,280
conferences.
I look forward to being down

1083
01:06:59,280 --> 01:07:00,440
there.
I've been gone too long.

1084
01:07:00,800 --> 01:07:03,920
And there we go mate, plenty of
contrarian wisdom sprinkled in

1085
01:07:03,920 --> 01:07:05,920
there throughout.
A massive thank you to our

1086
01:07:05,920 --> 01:07:07,800
fantastic partners for making it
all happen.

1087
01:07:08,240 --> 01:07:12,160
Sand Vick Round support, Focus
the platform by market tech,

1088
01:07:12,560 --> 01:07:15,760
Axis Mineral Services and last
but not least, get your tickets

1089
01:07:15,760 --> 01:07:18,640
to Africa Down Under next week.
Go to Rick.

1090
01:07:19,880 --> 01:07:22,720
Now remember, I'm an idiot.
JD is an idiot.

1091
01:07:23,080 --> 01:07:25,160
If you thought any of this was
anything other than

1092
01:07:25,160 --> 01:07:27,840
entertainment, you're an idiot
and you need to read out a

1093
01:07:27,840 --> 01:07:28,360
disclaimer.