Has MinRes Really Turned the Corner?

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They're suggesting it's possible
they'll reach that name blank

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kind of haulage rate while half
the road is is still being

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repaired, which would be a
tremendous feat if truly

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achievable.
All right, money miners.

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Mr. Ricardinho, we are in the
thick of cordly season and we

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picked out a couple stories to
chat about Minrez and Emerald

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amongst the sort of flurry of
announcements.

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Or Northern Star was getting a
bit of a boat in after they had

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to revise their gardens and a
few other ones.

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But we've picked a couple
goodies in in Minarez and

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Emerald.
I reckon pick.

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The two stories you yeah, you're
keen to to tell the most amongst

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them.
Don't you find like when when

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the when the month of April ends
because you had you had three

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public holidays in short order
True enough.

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All all this time everyone just
all released their their

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operational quarterly at the
same time.

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I'd hate to be an analyst that
actually had to write research

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reports and update my model and
and get all of that out today

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because.
It'd be a stinker.

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Yeah, he.
Covered a few, you'd be under

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the pump today and tomorrow.
Plenty of of calls as we are in

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the second last day, but it is
what it is man.

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Speaking of plenty of calls man
you know who who would be

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getting plenty of calls right
now?

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Especially the gold price is
going up and people are spending

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money on expiration once again
looking for gold.

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Who were they calling?
Kay Drew 100% mate.

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They are an experienced
specialist team.

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Would you believe 90 years of
combined fueled experience?

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Now that is, that is not one
individual person with 90 years.

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There's no 90 year olds on that
team.

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You know the 90 year olds get to
retire.

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But 90 years combined fueled
experience mate.

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Unbelievable.
Mate, when you're an exploration

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company or you're a miner and
the lifeblood of your business

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is finding gold, finding
lithium, finding copper,

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whatever it might be, you want
to go with the experienced team,

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don't you?
You want experienced team, You

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want people that know how to use
their rigs and get the most out,

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and we're talking about RC and
diamond drilling cut in their

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blood.
This is specific expertise that

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you know it traverses
geographies and geology.

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It is it is they are capable in
challenging terrains all across

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WA and when you get in touch
with K dual mate, you deal

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directly with people who have
the field credibility, not

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layers of admin.
They get stuff done, they're

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approachable, they're pragmatic,
you know, and when conditions

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get tough, guess what?
That experience matters because

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these are people that can be
very resilient and and and

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operate when get get tricky
there.

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Safe, reliable, productive
drilling.

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Coal K drill.
The Champions in RC and diamond

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drilling.
The irony of segwaying when you

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say safe, reliable, productive.
And now we're going to talk

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about min raising.
All right, all right.

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Let's not, let's not get ahead
of ourselves.

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It was an interesting quarterly
and yeah, the market is liking

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it.
Let's let's get into it mate.

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I think they've they've eased
some of the market fears today

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with the with the quarterly and
yeah, the, you know, min res

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quarterly, they always seem to
be a pretty interesting day on

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the market.
Lots of other companies reported

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today, but but a ton of vision
for the minerals call.

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And the important thing to to
mention upfront is that the

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market liked it that the share
price is up a giant 15% today.

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You know, in response to the
disclosure.

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And I used the word disclosure
on ironically for once on on

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minerals, because this quarter
actually provided much more

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granularity on on areas of the
business that are forefront on

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the minds of investors.
And we have to commend them for

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for doing that upfront.
Specifically as it relates to

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the whole road and ramp up of
Onslow, we get some really good

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detail about what they're doing,
what their plans are and how

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they intend to, to reach their
targets.

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It's it's been a tumultuous few
weeks just in the lead up to

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this release, JD, notably the
departure of three board members

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in very quick succession.
And also the, the news about the

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class action that dropped
earlier this month too.

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But the, you know the talking
points that that come out of the

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the quarterly today and the
things I want to I want to touch

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on in conversation with you,
it's all all relation to the

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operating health of this
business.

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We're talking the balance sheet,
how Onslow's going, how's the

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the haulage ramp up and
bottlenecks going given the road

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repairs there, what's the status
of the lithium business and and

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what's happening to the mining
services margins.

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Yeah, absolutely.
And all the the sort of

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tumultuous events that you
mentioned there don't even

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encapsulate what's happened at a
broader macro level, which has

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been particularly wild as it
relates to minres.

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FX has fluctuated pretty wildly
and mine or steel making is a

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commodities that demand
fluctuates with the growth in

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the GDP of sort of developing
nations and countries all around

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the world.
So let's get into it at a micro

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level now with the balance
sheet.

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That's the the first spot that
people have always looked or

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have looked at Glitz for the
past couple of years, Minres.

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Yeah.
I, it's, it's no secret that

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their balance sheet is
stretched.

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And when your balance sheet is
stretched, what really matters

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is what's your, what's your
quarter on quarter change in

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cash.
And for, for Minres in their

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March quarter, they, they ended
that, they ended the quarter

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with, with $250 million less
cash.

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So there are some, you know,
operational wins that they've,

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they've kind of point to and
they've, they've certainly kind

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of had in various, various areas
this quarter.

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But I think the money miners
should always just remember to

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contextualize, you know, what,
what could be potentially

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accounting wins when the
business is still losing

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substantial cash.
I think it's always, always

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important to kind of keep us,
you know, a questioning eye if,

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if your cash is still not moving
in the right direction.

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But if you look at look at what
they've got, they've got this

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$800 million revolving credit
facilities undrawn at the at the

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quarter end.
They've got $450 million of of

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cash and cash equivalents
remaining at a quarter end.

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So combine those two and they
point to to this $1.25 billion

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of liquidity they called in at
debt 5.4 billion as at the 31st

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of March.
What that has baked into it, you

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know, which isn't immediately
apparent is, is the, the

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revaluation on the on the US
denominated like bonds thanks

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to, you know, a slight FX
movement is $80 million

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favorable.
It's also that 5.4 is also

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excluding the the the the
physical line or deliveries that

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they that they have to do under
the the prepaid with traffic

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here too.
Yeah.

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And and what about the the sort
of levers as it relates to the

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what the company has flexed or
spoken about the potential to to

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flex if things get tighter going
down the track?

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I thought there was like a
noteworthy, noteworthy

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difference in the way that CFO
Mark Wilson discussed this.

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I'll play a snippet for for you
guys to to evaluate yourself.

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And do you have any sort of
active testing of the market on,

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on, on the asset sales at the
moment?

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And if you do, how do you
actually order those options?

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How do you think about actually
ordering the those levers and or

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asset sales?
The way I think about it is

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this, there's a cost associated
with every choice, right equity

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raise as we keep being
encouraged to do so by by

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aspects of the market that in my
mind has a huge cost at today's

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price, huge impact on
shareholders who don't

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participate.
So I think of that as an extreme

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high cost alternative.
At the other extreme, I've got

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precedent transactions for the
road at over a billion for half

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of it that I know I could
transact on if I needed to.

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Again, I'm not saying it's a
priority or preference, but I'm

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giving an example.
We've talked previously about

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opportunity to do something with
the carry loan, which is sitting

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at 800 million.
So there's a lot of capital tied

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up in those two assets alone.
So normally when I, when I've

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heard Mark talk about levers and
it's a common question, but like

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you often mentioned the carry
loan first from my memory, I

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mean, before they sold the gas,
you'd mentioned the gas 1st and

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then before they sold the, the
the whole Rd. you mentioned the

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whole road first.
But I, I always read into a bit

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the first thing you mentioned.
And this time around, the first

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thing you mentioned was the
other half of the whole Rd.

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selling, selling it for another
billion dollars.

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I mean, that's an intriguing
point and kind of count me

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doubtful that Minres would would
be able to get a billion dollars

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for the other half, but it's
it's surely worth something.

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And it's interesting that that
was the first thing that that

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came to his mind and came out of
his mouth when he when he was

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talking about it.
You know, the Australians also

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talked about them selling bald
Hill in in recent days.

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I could say that too.
And of course, you know, there's

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there's there's genuine
potential of of minority sell

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down in the in the broader
lithium business or, or discrete

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minds.
That's all of that's impossible

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or even a prepaid as it relates
to the to lithium too.

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The big elephant in the room and
one of the reasons the market

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has responded the way it has
today, I think is the hardline

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sort of stance that Minrez has
presented in its its messaging

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around equity raising.
That that's basically it's like

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on the front page, no equity
raising is being considered.

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And yeah, so I think the market
market reads that, interprets

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that and thinks, great, you
know, there's like there's,

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there's, yeah, like no immediate
short term risk of a cap raise.

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And that, that's a, that
explains a short term price

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movement sometimes.
And then to, to round out the

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balance sheet.
I do think you've always got to

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talk about their, their bonds as
well.

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And if you yeah, like, like
historically mean, as I've

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talked about refinancing their,
you know, near term maturity

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bonds.
They've got some that mature, I

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think in, in June 2027.
They're the, they're the

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earliest ones where the, you
know, big chunky principal

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repayment June 2027.
Now the, the bond market is, has

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moved a lot in recent history,
specifically Min Reza's bond

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markets have been been very
volatile themselves.

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And, and yeah, Mark Wilson
himself kind of spoke to the

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fact that if they were to to
refinance the near term maturity

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instead of paying an 8% coupon,
which they are at the moment,

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they'll be looking down the
barrel of like a 12% coupon

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right now that even though they
can refinance as of May.

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So, you know, in just days
really without actually wearing

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a, an, an early, an early cost
associated with doing so.

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They, you know, he he he
actually played down the

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potential of, of refinancing in
the near term because I'd rather

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wait out for that, You know, the
implied coupon to to lower as

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they ramp up and do risk.
Now, whether that happens or not

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sort of is all up in the air.
But I found that kind of

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interesting to know what you
thought, JD.

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Yeah, yeah, fascinating.
I mean I think we should talk

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about ONS on the performance of
Onslow because you can't really

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talk about the bonds without you
know discussing the manner in

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which Rampart is going and the
additional color which they gave

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specifically on the on the whole
Rd.

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I think this is a big thing to
wrap your head around.

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FY25 guidance has peeled back
slightly.

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March quarter volumes are are
are are disappointing.

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But Min Res has provided great
detail on how it is navigating

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its current haulage constraints.
And and don't get me wrong, the

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plan seems pretty ambitious, but
the detail details good.

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And you can see on this map here
the haulage route right right

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now Minrose is hauling ore from
Ken's Bore to port via both.

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Its like they've got their own
big jumbos, the big Minrose

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jumbos which can take up to 330
tons and also some kind of

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normal sized Rd. trains, which
are largely third party

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contractor Rd. trains that
they're they're utilizing now

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they're they're undertaking
upgrades on their whole Rd.

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itself.
That was that was announced

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earlier in the year pretty
substantial upgrades going on

226
00:10:56,800 --> 00:10:59,320
there.
So the and as they're doing

227
00:10:59,320 --> 00:11:02,040
these upgrades on the whole road
and as faulting it, etcetera,

228
00:11:02,600 --> 00:11:05,760
the the jumbos are actually
continuing to use the whole Rd.

229
00:11:06,400 --> 00:11:10,920
while the contractor trucks are
running on the parallel access

230
00:11:10,920 --> 00:11:14,200
Rd. for the first half of the
the leg, then then on public

231
00:11:14,200 --> 00:11:15,640
highways for the second-half of
the route.

232
00:11:15,640 --> 00:11:18,960
Like you can see on the yellow
line here, minerals say that the

233
00:11:19,600 --> 00:11:25,200
the volumes of vinyl being hold
in April in total is 1.3 to 1.4

234
00:11:25,840 --> 00:11:28,240
million tons.
And now this, this table I'll

235
00:11:28,360 --> 00:11:31,800
flash up here, this table breaks
down the trucks, the payloads on

236
00:11:31,800 --> 00:11:34,920
the on the trucks and the cycles
per day of the trucks.

237
00:11:34,920 --> 00:11:38,200
It's, it's, you know, it's great
granularity of what is being

238
00:11:38,440 --> 00:11:43,120
done in April.
And that's 1.4 you know,

239
00:11:43,120 --> 00:11:46,600
1,000,000 tons per month
annualized is just 15,000,000

240
00:11:46,600 --> 00:11:48,160
tons per annum.
That's a that's a long way from

241
00:11:48,160 --> 00:11:50,320
the name blade of 35,000,000
tons per annum.

242
00:11:50,320 --> 00:11:51,920
That min resonates right?
So status quo.

243
00:11:52,040 --> 00:11:56,240
Yeah, 15 to 17 ish tons per
annum at that run rate, but they

244
00:11:56,240 --> 00:11:58,800
give more detail on the next two
months.

245
00:11:59,400 --> 00:12:01,160
Exactly.
So this is, this is interesting,

246
00:12:01,160 --> 00:12:02,680
right?
Exact same table, flash it up of

247
00:12:02,680 --> 00:12:06,920
what they expect in May, May to
June, the remaining two months

248
00:12:06,920 --> 00:12:08,040
of the quarter.
They say they're going to be

249
00:12:08,040 --> 00:12:11,720
able to get 2.7 to 2.9 million
tons per month in May and June

250
00:12:11,960 --> 00:12:15,080
and 2.9 million tons per month
annualized is 35,000,000 tons

251
00:12:15,080 --> 00:12:16,920
per annum.
They're suggesting it's possible

252
00:12:16,920 --> 00:12:21,040
to reach that name plate kind of
haulage rate while half the road

253
00:12:21,040 --> 00:12:24,720
is is still being repaired,
which would be a tremendous feat

254
00:12:24,880 --> 00:12:27,840
if truly achievable and how
they're going to do it.

255
00:12:27,840 --> 00:12:30,240
Well, you can, you can just
interrogate the table.

256
00:12:30,240 --> 00:12:33,880
They're doubling the number of
contractor trucks while getting

257
00:12:33,880 --> 00:12:37,040
25% more cycles out of the
contractor trucks.

258
00:12:37,080 --> 00:12:42,240
Plus they're adding 14 new of
the new jumbos of their own

259
00:12:42,240 --> 00:12:45,000
while getting 25% more cycles
out of their own.

260
00:12:45,040 --> 00:12:47,120
Yeah, jumbos.
All while keeping the truck

261
00:12:47,120 --> 00:12:50,680
payload constant, notably
restricting their jumbos to 260

262
00:12:50,680 --> 00:12:52,440
ton payload.
Not, not 330 ton, Yeah.

263
00:12:53,480 --> 00:12:56,520
And they're going to heavily
utilize those additional routes,

264
00:12:56,520 --> 00:12:59,000
which obviously wasn't
previously the plan.

265
00:12:59,000 --> 00:13:02,160
But this is the, this is one of
the points that the the market

266
00:13:02,160 --> 00:13:03,520
must have really liked, I'd
imagine.

267
00:13:04,080 --> 00:13:04,960
Right, big time.
Yeah.

268
00:13:04,960 --> 00:13:08,440
And there's even this like quote
saying the above forecasted

269
00:13:08,440 --> 00:13:11,280
cycles per day are currently
being achieved.

270
00:13:11,280 --> 00:13:15,080
So it's, you know, like a very
ambitious thing to just double

271
00:13:15,080 --> 00:13:17,360
the, you know, your wholeage
bottleneck.

272
00:13:17,600 --> 00:13:19,480
You've got a bottleneck in
haulage right now and that's

273
00:13:19,840 --> 00:13:23,480
reported to be capable of being
kind of doubled month on month

274
00:13:23,520 --> 00:13:26,200
effectively.
That is, that's ambitious, but

275
00:13:27,160 --> 00:13:30,600
it's, it's also like if they're
providing, you know, guidance

276
00:13:30,600 --> 00:13:32,520
and confidence to it.
That's what I think is really

277
00:13:32,520 --> 00:13:34,640
driving the, the market
sentiment today.

278
00:13:34,640 --> 00:13:37,320
And, and, you know, part of the
reason why share prices, I think

279
00:13:37,320 --> 00:13:40,840
has responded so, so strongly
and it's back in the 20s is, is

280
00:13:40,840 --> 00:13:43,080
some belief that this might be,
might be possible.

281
00:13:43,080 --> 00:13:46,200
I think that that, you know, the
challenge is still going to be

282
00:13:46,200 --> 00:13:47,840
for them to do it.
You know, I don't think it's any

283
00:13:48,360 --> 00:13:51,640
main feat to just kind of double
your, your haulage month on

284
00:13:51,640 --> 00:13:53,520
month.
And keep in mind that they are,

285
00:13:53,720 --> 00:13:55,960
of course, you know, that
they've got, they're, they're

286
00:13:55,960 --> 00:13:59,600
doing upgrades on the road.
The more of their own trains

287
00:13:59,600 --> 00:14:01,400
that they add to that road, the
more productivity they get out

288
00:14:01,400 --> 00:14:04,200
of those trains and all that's
going to inhibit the kind of the

289
00:14:04,200 --> 00:14:06,000
traffic flow management that
they've got.

290
00:14:06,000 --> 00:14:08,560
So those two things are kind of
going to be working against each

291
00:14:08,560 --> 00:14:11,480
other.
And then on the on the

292
00:14:11,480 --> 00:14:15,960
contractor trucks, yeah, I mean
it's, they're also adding like

293
00:14:16,000 --> 00:14:18,320
pretty significant volumes of
them and, and of course they

294
00:14:18,320 --> 00:14:20,040
can't carry as as much of A
payload.

295
00:14:20,040 --> 00:14:24,080
So the, the, the frequency that
that those those contractor

296
00:14:24,080 --> 00:14:28,080
trucks are using the highway is,
is, is pretty frequent as well.

297
00:14:28,120 --> 00:14:30,280
Meanwhile, you know, relying on
the Access Rd. pretty heavily

298
00:14:30,280 --> 00:14:31,600
so.
Because the speeds have come

299
00:14:31,600 --> 00:14:34,880
down as well.
The speeds, the speed's an

300
00:14:34,880 --> 00:14:38,560
interesting point, right,
Because the, the contractor

301
00:14:38,560 --> 00:14:41,440
trucks can run at different
speeds to the to the jumbo

302
00:14:41,440 --> 00:14:42,160
trucks.
That's.

303
00:14:42,760 --> 00:14:46,920
They tend to be smaller.
Smaller and go faster and I

304
00:14:46,920 --> 00:14:49,760
think that's why they're they're
now operating on effectively

305
00:14:49,760 --> 00:14:53,120
separate routes because your
contractor trucks were, were

306
00:14:53,120 --> 00:14:54,960
getting stuck behind Jumbo's
presumably.

307
00:14:55,680 --> 00:14:58,080
And if you're stuck behind a
Jumbo that's going slower

308
00:14:58,080 --> 00:15:00,880
because the it's got a bigger
payload and it can't get up to

309
00:15:00,880 --> 00:15:03,800
speed as fast, then that's a big
issue for your contractor.

310
00:15:03,800 --> 00:15:07,200
So we're getting paid per tonne
they're moving, but they're

311
00:15:07,400 --> 00:15:09,640
they're they're limited by how
fast they can go because they're

312
00:15:09,640 --> 00:15:11,840
stuck behind the jumbo.
So now all of a sudden they're

313
00:15:11,840 --> 00:15:15,600
separate routes and, and
potentially a, you know, a path

314
00:15:15,600 --> 00:15:19,240
forward, albeit it requires, you
know, considerable scaling of,

315
00:15:19,360 --> 00:15:20,760
of contract trucks.
Yeah.

316
00:15:20,760 --> 00:15:24,920
And then and then sort of spoke
to breaking up the repairs or

317
00:15:24,920 --> 00:15:27,280
that really the redo of of the
road in parts.

318
00:15:27,280 --> 00:15:29,720
And I think the market took a
bit of liking that one of the

319
00:15:29,720 --> 00:15:32,200
smaller stages is already
notched off that progress is

320
00:15:32,200 --> 00:15:36,320
really being made on that.
But if we if we look now at

321
00:15:36,800 --> 00:15:39,960
mining services because mining
services again relates because a

322
00:15:39,960 --> 00:15:45,080
lot of the tons come from Onslow
tons and you've got a yeah,

323
00:15:45,080 --> 00:15:48,840
changes in, in EBITDA from half
one to half 2 is quite

324
00:15:48,840 --> 00:15:52,160
anticipated as as management had
sort of outlined what's the,

325
00:15:52,160 --> 00:15:53,840
what's the latest thinking.
There, I think there's a really

326
00:15:53,840 --> 00:15:57,720
big point the mining services
business is, is there's a

327
00:15:57,720 --> 00:16:03,080
perception it's just that the
backbone of min res and these

328
00:16:03,080 --> 00:16:05,960
are its infrastructure like
income, long life contracts,

329
00:16:05,960 --> 00:16:07,560
margins just keep expanding over
time.

330
00:16:08,360 --> 00:16:14,160
But what we've seen in in in the
quarterly today, I think

331
00:16:14,160 --> 00:16:18,640
challenges that assumption.
Now what what Min Rez recorded

332
00:16:18,640 --> 00:16:22,880
for their their their earnings
when they came out for the first

333
00:16:22,880 --> 00:16:25,040
half of this financial year,
they said that EBITDA per tonne

334
00:16:25,040 --> 00:16:28,120
in the mining services business
was $2.60 per tonne.

335
00:16:28,480 --> 00:16:30,880
And that was, that was record
EBITDA, you know big charts

336
00:16:30,880 --> 00:16:35,520
going up and to the right, you
know of them doing more tons and

337
00:16:35,520 --> 00:16:38,960
getting more out of it now.
To their credit, they didn't

338
00:16:38,960 --> 00:16:41,360
want to pin the markets hopes on
that and they said even at the

339
00:16:41,360 --> 00:16:45,400
call at the time that don't put
that in your model going

340
00:16:45,400 --> 00:16:47,880
forward, which they really
emphasized again today.

341
00:16:47,880 --> 00:16:48,520
I.
Don't.

342
00:16:48,640 --> 00:16:51,320
I don't know if the market was
prepared for what eventuated

343
00:16:51,320 --> 00:16:56,360
today because in Res is
forecasting FY25 mining services

344
00:16:56,360 --> 00:16:58,800
EBITDA to be just $2.20 per
tonne.

345
00:16:58,800 --> 00:17:01,800
Now that's for the full
financial year. 25 S forecast

346
00:17:01,800 --> 00:17:04,880
tons for the second-half isn't
changing that much for EBITDA

347
00:17:04,880 --> 00:17:09,200
per ton to come down to 220.
That means the second-half

348
00:17:09,240 --> 00:17:11,839
EBITDA per ton will be $1.60
thereabouts.

349
00:17:12,079 --> 00:17:15,359
That's a massive erosion of, you
know, margin in the, in the

350
00:17:15,359 --> 00:17:18,760
mining services business, $2.60
to to 160 1/2 year.

351
00:17:19,440 --> 00:17:22,839
You know, annualized that $1.00
per ton is like $260 million of

352
00:17:22,880 --> 00:17:26,000
EBITDA from the mining services
business kind of gone from,

353
00:17:26,800 --> 00:17:29,360
from, you know, what might have
been in some people's heads and

354
00:17:29,360 --> 00:17:30,920
why?
Well, it's, it's the mining

355
00:17:30,920 --> 00:17:33,240
services business that has to
weigh the cost of the third

356
00:17:33,240 --> 00:17:36,680
party trucking at Onslow.
This is, yeah, I think this is

357
00:17:36,680 --> 00:17:38,200
kind of an interesting point,
right?

358
00:17:38,200 --> 00:17:42,640
Because the, the mine code
itself, the economics to the

359
00:17:42,640 --> 00:17:44,760
mine code, which Minrez has JV
partners.

360
00:17:44,880 --> 00:17:47,000
Well, they're paying like a
predetermined rate for the

361
00:17:47,000 --> 00:17:50,880
haulage.
However, Minrez is, is, is on

362
00:17:50,880 --> 00:17:54,760
the hook to, to, to contract out
the all the cost of the third

363
00:17:54,760 --> 00:17:57,600
parties to actually conduct
haulage where it's clearly had

364
00:17:57,640 --> 00:18:00,040
had some limitations.
And that's that's going to, it

365
00:18:00,040 --> 00:18:02,600
has to come out of something.
And it's certainly hitting the,

366
00:18:03,200 --> 00:18:05,160
you know, the, the earnings of
the mining services business for

367
00:18:05,160 --> 00:18:07,040
the time being.
Yeah, it really speaks to your

368
00:18:07,040 --> 00:18:09,960
point of looking at cash at a,
at a group level for, for a

369
00:18:09,960 --> 00:18:13,280
company sort of nature and
putting it all in into context

370
00:18:13,280 --> 00:18:17,440
where you do the work on each
individual bucket Here, you

371
00:18:17,640 --> 00:18:20,320
know, in certain aspects Peter's
going to be paying Paul and vice

372
00:18:20,320 --> 00:18:22,000
versa.
So you want to make sure the

373
00:18:22,000 --> 00:18:24,920
company's making making money at
A at a group level.

374
00:18:25,040 --> 00:18:28,640
Well, that's, and that's like, I
think that's the the point to,

375
00:18:29,120 --> 00:18:33,360
to kind of dwell on a bit like
I'm trying to get a grasp of the

376
00:18:33,400 --> 00:18:37,200
economics of of Mineco and you
can sort of infer that by what

377
00:18:37,200 --> 00:18:41,400
happens to the carry loan.
So the, the carry loan, like the

378
00:18:41,400 --> 00:18:45,160
way that the carry loan works
out is min res, it's kind of

379
00:18:45,160 --> 00:18:48,720
entitled to to priority free
cash flow out of out of Mineco

380
00:18:48,720 --> 00:18:50,120
when it's sort of free cash flow
positive.

381
00:18:50,400 --> 00:18:53,520
And that for for people just
quickly wondering that's money

382
00:18:53,520 --> 00:18:57,280
that Mineco sort of sits there
that is owed to.

383
00:18:57,840 --> 00:19:00,600
To min res from its JV partners.
Correct.

384
00:19:00,720 --> 00:19:04,520
And that that didn't really move
too much.

385
00:19:04,520 --> 00:19:07,040
It kind of got paid down sort of
I think it was like single digit

386
00:19:07,320 --> 00:19:08,480
digit.
Yeah, it went down 5 million,

387
00:19:08,480 --> 00:19:11,960
5,000,000 bucks.
So you know what that tells me

388
00:19:11,960 --> 00:19:15,680
is that that Mineco is is kind
of still washing its face at

389
00:19:15,680 --> 00:19:17,240
current volumes.
It needs more volumes to

390
00:19:17,240 --> 00:19:20,280
actually generate free cash flow
out of out of Mineco when you

391
00:19:20,280 --> 00:19:23,480
really factor in kind of all,
all of the cash flows there.

392
00:19:23,840 --> 00:19:28,960
And that's keep in mind not
factoring in the cost of

393
00:19:28,960 --> 00:19:32,880
contractor, you know, trucking
because Minres is wearing that

394
00:19:32,880 --> 00:19:35,920
separately at 100% sort of
Minres, you know, Mineco is only

395
00:19:35,920 --> 00:19:39,480
paying the the predetermined
mining services right on the on

396
00:19:39,480 --> 00:19:42,560
the haulage on that front.
So yeah, I find that kind of

397
00:19:42,560 --> 00:19:45,160
interesting to start with.
The other thing that's kind of

398
00:19:45,160 --> 00:19:47,480
interesting when you think of
like Mineco economics is Minres

399
00:19:47,480 --> 00:19:52,720
Steel hasn't declared commercial
production on, on, you know, on,

400
00:19:53,080 --> 00:19:54,320
on, on, on Onslow.
Yeah.

401
00:19:54,360 --> 00:19:57,440
And that's an accounting thing.
Once you, once you do declare

402
00:19:57,440 --> 00:19:59,480
commercial production, all of a
sudden, you know, you can't

403
00:19:59,480 --> 00:20:02,520
capitalize OpEx.
The extent they're doing that

404
00:20:02,520 --> 00:20:05,240
still kind of unknown entirely
in my mind.

405
00:20:05,240 --> 00:20:07,720
So I just, I just find all of
that kind of interesting.

406
00:20:08,640 --> 00:20:11,560
But that's why I always just
think like you really want to

407
00:20:11,560 --> 00:20:14,920
look at a group level changing
cash to really get a snapshot of

408
00:20:14,920 --> 00:20:16,600
the health of the business at a
point in time.

409
00:20:16,760 --> 00:20:19,760
Yeah, and and to be in min res's
corner for a second, you

410
00:20:19,760 --> 00:20:23,320
wouldn't expect them at A at a
run rate of 15,000,000 tons per

411
00:20:23,320 --> 00:20:26,160
annum when they call it
35,000,000 being name plate to

412
00:20:26,160 --> 00:20:28,080
have called commercial
production just yet.

413
00:20:28,160 --> 00:20:30,000
Yeah.
Well, well, sometimes you call

414
00:20:30,000 --> 00:20:32,000
commercial production when as
soon as you start to get, you

415
00:20:32,000 --> 00:20:34,240
know, sustainable free cash
flow, but yeah.

416
00:20:35,240 --> 00:20:38,120
I, I know a bit different to
that sort of products and stuff,

417
00:20:38,120 --> 00:20:41,000
but there's like you sort of
mentioned ramifications of

418
00:20:41,080 --> 00:20:42,720
calling commercial production
so.

419
00:20:42,960 --> 00:20:44,560
Totally.
And and sometimes you kind of

420
00:20:44,560 --> 00:20:46,840
have to call it even when you're
not profitable.

421
00:20:46,840 --> 00:20:49,560
I mean, like, yeah, line is
finally declared commercial

422
00:20:49,560 --> 00:20:51,560
production at at their Kabuli
facility.

423
00:20:51,560 --> 00:20:54,240
But yeah, show me the positive
operating cash from that and

424
00:20:54,240 --> 00:20:57,480
I'll I'll give you a Fredo Frog
for free one day.

425
00:20:57,480 --> 00:20:59,640
One day.
What what about Ken's more just

426
00:20:59,640 --> 00:21:01,360
quickly I.
Want to do some more work here?

427
00:21:01,360 --> 00:21:07,400
I, I find I found it intriguing
that min min res like like

428
00:21:07,440 --> 00:21:09,360
there's OK, there's three things
that are intriguing to me about,

429
00:21:09,400 --> 00:21:11,440
about the, the actual like mind
gate.

430
00:21:12,560 --> 00:21:14,960
So Ken's bore we all know was,
you know, where, where they

431
00:21:15,400 --> 00:21:17,320
like, where the whole road goes,
where the camp is, where they're

432
00:21:17,320 --> 00:21:19,160
bringing online initial volumes
from.

433
00:21:19,360 --> 00:21:21,600
It's a resort.
It's resort yes.

434
00:21:22,920 --> 00:21:28,520
Now what they've been like doing
is rapidly advancing to other

435
00:21:28,600 --> 00:21:34,320
areas of their of of the of the
project being it's Carter bore

436
00:21:34,320 --> 00:21:37,440
East and upper cane.
Now those are, those are kind of

437
00:21:37,440 --> 00:21:39,760
like 15 kilometers ish away from
Ken's bore.

438
00:21:39,760 --> 00:21:42,760
So there's more kind of
logistics to get it through the

439
00:21:42,760 --> 00:21:43,840
whole road and all that sort of
stuff.

440
00:21:43,840 --> 00:21:47,160
But but it's those, those are
smaller deposits.

441
00:21:47,160 --> 00:21:50,600
So you don't have like as much
kind of economies of scale, but

442
00:21:50,600 --> 00:21:53,880
it's, but they do have slightly
higher grade and slightly lower

443
00:21:53,880 --> 00:21:57,160
impurities.
And what Minres talk about is,

444
00:21:57,200 --> 00:21:59,680
you know, the ability to kind of
blend it all and, and all that

445
00:21:59,680 --> 00:22:02,320
sort of stuff.
And Ken's ball becomes the, the

446
00:22:02,320 --> 00:22:03,880
central hub where you can do all
of that.

447
00:22:04,920 --> 00:22:08,360
Yeah, I find it intriguing.
I I, I really want to dig into

448
00:22:08,360 --> 00:22:12,320
this a bit more because I, I
find it a bit, yeah, like a bit

449
00:22:12,320 --> 00:22:15,200
suspicious that that, that, that
may be there.

450
00:22:15,280 --> 00:22:19,160
You know, was this always, was
this always the mine plan to, to

451
00:22:19,160 --> 00:22:20,920
bring these areas on as fast as
they are?

452
00:22:21,200 --> 00:22:24,600
Or is this kind of like a, you
know, a strategy in order to, to

453
00:22:24,600 --> 00:22:28,960
really maximize the cash flow
potential of your early product

454
00:22:28,960 --> 00:22:31,280
because it's got the better
grade and the lower impurities,

455
00:22:31,840 --> 00:22:33,360
but there are longer term
ramifications?

456
00:22:33,600 --> 00:22:36,280
Or is, or is there also a
statement about, you know, the,

457
00:22:36,360 --> 00:22:39,640
the, the quantity of material
that is actually, you know,

458
00:22:39,760 --> 00:22:42,880
suitable at, at, at, at these
enough realizations.

459
00:22:42,880 --> 00:22:45,560
Atkins bore itself, which had a
pretty big step up in its own

460
00:22:45,560 --> 00:22:49,120
strip ratio in, in the quarter.
I just, I just need to do more

461
00:22:49,120 --> 00:22:51,120
work.
Here is the gist of what I'm

462
00:22:51,120 --> 00:22:52,200
saying.
I don't have the answers.

463
00:22:52,200 --> 00:22:54,080
I'm just, I'm very, I'm just
curious.

464
00:22:54,360 --> 00:22:58,000
Probably goes back to not
actually two years ago seeing a

465
00:22:58,160 --> 00:23:02,560
study come out on on the
project, right, that it's harder

466
00:23:02,560 --> 00:23:05,440
to to reconcile.
But obviously it's in their

467
00:23:05,440 --> 00:23:07,720
interest to pull down payback
and all those sorts of things.

468
00:23:08,360 --> 00:23:11,360
Yeah, you know, not at the
forsake of the the long term

469
00:23:11,360 --> 00:23:15,640
life of the mind, but.
And there was the the the leaked

470
00:23:16,560 --> 00:23:20,040
technical report that the Finn
talked about, which spoke to the

471
00:23:20,040 --> 00:23:23,720
fact that, you know, that some
of the material games bore has a

472
00:23:23,720 --> 00:23:27,800
lot of like these, like Tang
material and clays and wash

473
00:23:27,800 --> 00:23:31,200
plant for part of it.
Now that that might be true

474
00:23:31,480 --> 00:23:34,240
below the water table or it
might be true for some, you

475
00:23:34,240 --> 00:23:35,960
know, in the stuff that they're
at mine at the moment.

476
00:23:35,960 --> 00:23:38,840
I don't, I don't know right.
But if if you've got a portion

477
00:23:38,840 --> 00:23:41,080
of material and you're
selectively kind of stockpiling

478
00:23:41,080 --> 00:23:44,040
and then you're kind of, you
know, the stuff that's got like,

479
00:23:44,240 --> 00:23:46,920
you know, less clays and it's
got, you know, better

480
00:23:46,920 --> 00:23:49,160
realizations and you you've been
quite selective about what

481
00:23:49,160 --> 00:23:52,800
you're putting on the whole Rd.
then I could understand that.

482
00:23:53,000 --> 00:23:55,760
But I do think that that's kind
of a, you know, part of the

483
00:23:55,760 --> 00:23:58,720
economics that that typical
analyst isn't really thinking

484
00:23:58,720 --> 00:24:01,680
about the implications of 2.
So I just need to do more work

485
00:24:01,680 --> 00:24:03,240
here.
If people have have answers or

486
00:24:03,240 --> 00:24:06,280
insight, please reach out to
metravis@moneymind.com.

487
00:24:06,280 --> 00:24:07,480
I'd love to know all.
Right.

488
00:24:07,480 --> 00:24:10,040
Let's talk a bit about the
lithium business, just quickly

489
00:24:10,040 --> 00:24:13,440
to book in this one.
So the lithium business they

490
00:24:14,000 --> 00:24:16,880
yeah, the reported cost
improvements in the, in the

491
00:24:16,880 --> 00:24:19,920
lithium business like certainly
stand out on, on paper.

492
00:24:19,920 --> 00:24:24,240
They're, they're so remarkable,
it's tricky to plausibly believe

493
00:24:24,240 --> 00:24:26,480
in their entire entirety.
Like to the extent these cost

494
00:24:26,480 --> 00:24:29,840
savings are, you know, have been
legitimately realized from, from

495
00:24:29,880 --> 00:24:32,640
the, you know, savings and
headcount reductions in, in

496
00:24:32,640 --> 00:24:36,040
various areas like, you know,
kudos.

497
00:24:36,600 --> 00:24:37,600
Yeah.
Take Wodgina.

498
00:24:37,600 --> 00:24:40,800
So this quarter they shipped 12%
less product than last quarter.

499
00:24:41,480 --> 00:24:43,400
They moved 4% more material than
last quarter.

500
00:24:43,400 --> 00:24:47,480
The grade was 7% lower than last
quarter and yet somehow the unit

501
00:24:47,480 --> 00:24:53,760
costs were lower, 23% lower at
$775 per tonne SA 6.

502
00:24:54,560 --> 00:24:57,400
I just can't reconcile where
that cost saving has come from.

503
00:24:58,320 --> 00:25:00,960
Yeah, I mean that can't all be
recovery.

504
00:25:00,960 --> 00:25:03,520
It's like, yeah, it's just
really, really fascinating.

505
00:25:03,560 --> 00:25:07,760
Like it's just a question mark
that how they how they get that

506
00:25:07,760 --> 00:25:09,200
one.
So yeah.

507
00:25:09,440 --> 00:25:11,080
Yeah.
And I think you know, digging

508
00:25:11,080 --> 00:25:15,160
into the detail there, costs
have been overshooting guidance

509
00:25:15,880 --> 00:25:19,760
year to date so far before this
one, but they hadn't gotten rid

510
00:25:19,760 --> 00:25:23,240
of that guidance.
So they were expecting

511
00:25:23,240 --> 00:25:27,120
improvement and then they
factored in cuts in in costs.

512
00:25:27,400 --> 00:25:29,240
But how do you get the, how do
you get the physicals to match

513
00:25:29,240 --> 00:25:31,120
the unit costs there when I
don't know just.

514
00:25:32,440 --> 00:25:34,600
I would think there's a lot of
sort.

515
00:25:34,600 --> 00:25:37,200
Of accounting tricks.
A lot of accounting and you

516
00:25:37,400 --> 00:25:39,640
know, pretty much everything
that doesn't need to be spent,

517
00:25:39,880 --> 00:25:44,240
which again talks to the the
long term treatment of the asset

518
00:25:44,240 --> 00:25:47,480
being being cut for the sake of
near term survival.

519
00:25:48,320 --> 00:25:51,000
Yeah.
But there's a few leaders on

520
00:25:51,000 --> 00:25:54,000
that front to be pulled.
There are so I I just think it's

521
00:25:54,000 --> 00:25:56,440
worth kind of, you know,
wrapping up with with our

522
00:25:56,440 --> 00:25:59,440
thoughts of, of where you know,
where we think business is at

523
00:25:59,440 --> 00:26:02,280
right now.
JD, what are what are your

524
00:26:02,280 --> 00:26:04,400
thoughts kind of having listened
to the call yourself?

525
00:26:04,680 --> 00:26:08,960
I think they've really addressed
some of the concerns or played

526
00:26:08,960 --> 00:26:11,120
into what they thought the
market wanted, which is what it

527
00:26:11,120 --> 00:26:15,120
did, which is the reason why
it's jumped up so substantially.

528
00:26:15,120 --> 00:26:18,640
They haven't alleviated a lot of
those concerns.

529
00:26:18,640 --> 00:26:21,520
They've just given more color as
to how they're going to do that,

530
00:26:21,880 --> 00:26:24,120
mainly on the road.
It's it's the sort of be all and

531
00:26:24,120 --> 00:26:27,120
end all, you know.
So there is still the execution

532
00:26:27,120 --> 00:26:28,360
risk.
They still need to get up to

533
00:26:28,360 --> 00:26:32,480
that 35,000,000 ton per annum
run rate for all the reasons we

534
00:26:32,480 --> 00:26:35,080
outlined when we spoke about the
last a couple months ago.

535
00:26:35,720 --> 00:26:40,680
So yeah, kudos to them for for
giving the market what it kind

536
00:26:40,680 --> 00:26:43,760
of wanted on that front.
But it's still, you know,

537
00:26:43,800 --> 00:26:46,480
execution, execution, execution
on that front.

538
00:26:46,480 --> 00:26:51,480
And that debt pile is getting
closer by the day.

539
00:26:51,480 --> 00:26:54,720
And yeah, we know what a
refinancing kind of looks like

540
00:26:54,720 --> 00:26:56,880
on on that front.
What about you?

541
00:26:56,880 --> 00:27:02,200
What do you think?
Yeah, I, I think I echo your

542
00:27:02,200 --> 00:27:06,680
sentiment entirely.
I think the the execution, so

543
00:27:06,680 --> 00:27:09,240
it's like what they've got to do
in May and June is effectively

544
00:27:09,240 --> 00:27:11,880
double the whole age throughput
where they've got real

545
00:27:11,880 --> 00:27:16,440
constraints on the road.
And and it's not going to be

546
00:27:16,640 --> 00:27:18,000
like when you're kind of just
doubling that.

547
00:27:18,000 --> 00:27:21,640
It's not going to be fully known
what the risks are of doing that

548
00:27:22,000 --> 00:27:24,360
until you you do it.
And then you put in pressures in

549
00:27:24,360 --> 00:27:26,920
certain areas along the way.
So whether they can do it or

550
00:27:26,920 --> 00:27:29,600
not, like, I don't know if it's
possible if, like if they can,

551
00:27:29,600 --> 00:27:33,680
if they can, yeah, kind of
double, double the throughput on

552
00:27:33,680 --> 00:27:35,800
the road while half the road is
offline.

553
00:27:35,800 --> 00:27:38,800
I think that's a tremendous win.
And I think like the, you know,

554
00:27:38,800 --> 00:27:41,880
the short term is, is rosy.
If they can do that, that's a

555
00:27:41,880 --> 00:27:45,400
big if it's a big if, right?
Because yeah, like there's,

556
00:27:46,360 --> 00:27:48,800
there's a lot of stuff that can
still go, go wrong.

557
00:27:48,880 --> 00:27:54,680
And then I think on the longer
term horizon, the way, the way I

558
00:27:54,680 --> 00:27:56,680
interpret like what's going on
with the actual road and the

559
00:27:56,680 --> 00:27:58,200
repairs on the road and
everything like that.

560
00:27:58,200 --> 00:28:00,840
So there's like the asphalting,
there's a cement and foam fill

561
00:28:01,600 --> 00:28:06,160
now that's going to give the
road sort of, you know, rigidity

562
00:28:06,280 --> 00:28:08,400
repair for certainly the short
term.

563
00:28:08,400 --> 00:28:11,240
And while the months are colder,
you would actually expect it to

564
00:28:11,680 --> 00:28:13,480
to certainly be more, more
durable.

565
00:28:14,120 --> 00:28:19,640
It's going to be like the
January, February where pressure

566
00:28:19,640 --> 00:28:22,520
is going to come to that road.
And that's when I think we'll

567
00:28:22,520 --> 00:28:27,440
know if the repairs have been
sufficient or not or if there

568
00:28:27,920 --> 00:28:30,440
are further fundamental issues
that come about with the road at

569
00:28:30,440 --> 00:28:31,760
the moment.
The road's forecast to be

570
00:28:32,320 --> 00:28:36,640
upgraded by September, like they
could have some phenomenal like

571
00:28:36,960 --> 00:28:40,120
performance on that road from
the month of September to

572
00:28:40,120 --> 00:28:42,320
December, while the while the
month's still cool enough to

573
00:28:42,760 --> 00:28:44,520
don't put that road under too
much pressure.

574
00:28:44,640 --> 00:28:46,960
If they're also, you know,
restricting the payload of the

575
00:28:46,960 --> 00:28:49,520
trucks to 260, they're up that
to 3:30.

576
00:28:49,520 --> 00:28:52,000
It's a very big difference
because yeah, your Rd. damage

577
00:28:52,320 --> 00:28:55,120
scales exponentially with, with,
with with a load it's.

578
00:28:55,800 --> 00:28:57,640
Got to be built to last that
debt balance, right?

579
00:28:57,920 --> 00:29:01,440
And the debt, the debt like,
yeah, so cash went down to 100

580
00:29:01,920 --> 00:29:08,000
this quarter, but I don't know
if the yeah, all of the interest

581
00:29:08,000 --> 00:29:10,320
repayments and on all of their
bonds were actually kind of

582
00:29:11,000 --> 00:29:12,680
payable in this quarter.
They might have actually been in

583
00:29:12,680 --> 00:29:14,640
a second-half like a second
quarter thing in this half.

584
00:29:14,640 --> 00:29:18,200
So, yeah, it's not to be
understated like the impact that

585
00:29:18,560 --> 00:29:22,880
$400 million of interest
payments alone can have.

586
00:29:23,520 --> 00:29:29,200
The good news is that, yeah,
there's, there's, there's this

587
00:29:29,200 --> 00:29:31,920
quarter could have been a lot
worse as well, like 250 million

588
00:29:31,920 --> 00:29:33,640
cash play.
This could have been, they could

589
00:29:33,640 --> 00:29:36,240
have lost, you know, cash could
have gone down by $200 million

590
00:29:36,240 --> 00:29:38,200
more than that this quarter.
And that wouldn't have been a

591
00:29:38,200 --> 00:29:40,760
massive surprise.
So I do think I do look at it in

592
00:29:40,760 --> 00:29:42,880
the context of like, things
could be much worse.

593
00:29:43,160 --> 00:29:45,080
Cash is still going down.
That's not good.

594
00:29:45,160 --> 00:29:47,800
They've painted a picture where
it looks like next quarter could

595
00:29:47,800 --> 00:29:50,120
be a positive cash flow if
everything kind of goes right.

596
00:29:50,200 --> 00:29:51,640
And that'll be a big turning
point.

597
00:29:52,520 --> 00:29:55,040
But I don't think that's a sure
thing at all.

598
00:29:55,040 --> 00:29:57,280
In fact, I think it could very
much go either way on that

599
00:29:57,280 --> 00:29:58,160
front.
Yeah.

600
00:29:58,160 --> 00:30:02,120
And of course, we had the
revisions just 6 odd halfway

601
00:30:02,120 --> 00:30:05,640
through the quarter.
We were revised on guidance and

602
00:30:05,880 --> 00:30:08,360
sorts of things.
So weren't coming totally out of

603
00:30:08,360 --> 00:30:09,880
the blue into this quarter?
Yeah.

604
00:30:09,960 --> 00:30:12,880
And overlaying all of that is
just a commodity backdrop.

605
00:30:12,880 --> 00:30:15,600
Like you're when you're very
leveraged, you're also just

606
00:30:15,600 --> 00:30:18,520
super susceptible to changes in
in commodity prices that can

607
00:30:18,600 --> 00:30:21,480
that can, that can be a
wonderful thing or a dreadful

608
00:30:21,480 --> 00:30:23,320
thing.
So it's just vulnerability

609
00:30:23,320 --> 00:30:26,920
still.
Yeah, it's kind of keep on

610
00:30:26,920 --> 00:30:31,080
chipping away at it though.
And as you're chipping away at

611
00:30:31,080 --> 00:30:33,520
it and as you're doing your,
your earthworks on the road and

612
00:30:33,520 --> 00:30:36,280
everything like that, you kind
of need, you need some yellow

613
00:30:36,280 --> 00:30:38,400
gear, JD, when you're doing
earthworks.

614
00:30:38,400 --> 00:30:40,040
What do you think of when you
think of Yellow Gear Man?

615
00:30:40,040 --> 00:30:43,400
I I need people, I need kit, I
need equipment that can help me

616
00:30:43,480 --> 00:30:46,040
with my civils and that is KCA
site services.

617
00:30:46,040 --> 00:30:50,520
JD just call KCA.
Equipment, recruiting services,

618
00:30:50,520 --> 00:30:53,080
equipment recruiting services,
KCA.

619
00:30:53,160 --> 00:30:55,600
You just got to hammer those
ones together because if you

620
00:30:55,600 --> 00:30:58,200
need either of those equipment
or recruiting services, just

621
00:30:58,200 --> 00:31:00,240
call KCA, right here's.
Some of the equipment they've

622
00:31:00,240 --> 00:31:04,040
got for hire right now anyways
call them 412 C to Toyota Hiichi

623
00:31:04,040 --> 00:31:07,920
4 by 4 mine spec buses mix of
issue fuse O tip a truck Volvo

624
00:31:07,960 --> 00:31:11,640
5T5 ton excavator.
You've got 2 brand new ITS If

625
00:31:11,640 --> 00:31:15,120
you need anything from ITS to
surface trucks to LVS to

626
00:31:15,120 --> 00:31:21,520
excavators to greatest call KCA.
Just call KCA and if you need

627
00:31:21,520 --> 00:31:24,320
people they've got service crew
charger bugger operators

628
00:31:24,560 --> 00:31:27,160
underground shift supervisors,
mobile crusher operators open

629
00:31:27,160 --> 00:31:29,560
pit all rounders underground HD
fitters on all sorts of

630
00:31:29,560 --> 00:31:32,520
different rosters.
KCA, the name to remember for

631
00:31:32,520 --> 00:31:34,160
all your recruitment and
equipment higher needs.

632
00:31:34,200 --> 00:31:38,960
Go KCA site services.
Now join us, JD Jonas, Benedict,

633
00:31:39,040 --> 00:31:42,840
JBD.
I'm really, I'm really

634
00:31:42,840 --> 00:31:44,800
interested in what's going on
with emerald.

635
00:31:44,800 --> 00:31:48,240
I've got to admit Emerald, you
know, we know they they produce

636
00:31:48,240 --> 00:31:51,360
gold from Cambodia, but my
knowledge is it's, it's not as

637
00:31:51,400 --> 00:31:54,640
as elaborate as it would be for
some of the other ASX listed

638
00:31:54,640 --> 00:31:56,360
kind of more, more domestic
producers.

639
00:31:57,240 --> 00:32:00,280
But I'm very curious in the fact
that they've, yeah, they've had

640
00:32:00,280 --> 00:32:03,320
a big, big drop down in what
they actually produced this

641
00:32:03,320 --> 00:32:04,960
quarter versus last.
What's going on?

642
00:32:05,000 --> 00:32:07,480
Yeah, there's, there's a number
of reasons to be interested in

643
00:32:07,480 --> 00:32:08,960
Emerald.
I'm I'm sort of attracted to

644
00:32:08,960 --> 00:32:10,840
them because they're a bit
quirky in the sense that they're

645
00:32:10,840 --> 00:32:14,000
not just yet run-of-the-mill
goldfields, mid size or mid cap

646
00:32:14,000 --> 00:32:17,440
Goldie here.
They operate in a a bit more of

647
00:32:17,480 --> 00:32:19,720
a colorful jurisdiction in, in
Cambodia.

648
00:32:20,680 --> 00:32:23,440
And they're also one of those
companies that have been a long

649
00:32:23,440 --> 00:32:25,840
time performer now since they
got Ochville up and running.

650
00:32:25,840 --> 00:32:28,240
So they've got the, the quote UN
quote management premium

651
00:32:28,560 --> 00:32:32,320
attached to them and they've got
a lot of growth factored into

652
00:32:32,320 --> 00:32:34,080
the story.
You might be paying for that

653
00:32:34,360 --> 00:32:36,320
already.
So I think for those reasons, I

654
00:32:36,320 --> 00:32:40,520
was, I was keen to to get into
what this company is looking

655
00:32:40,520 --> 00:32:42,680
like today, what it could look
like in a couple years and to

656
00:32:42,680 --> 00:32:48,640
really kind of dig into why they
had that that downgrade on March

657
00:32:48,640 --> 00:32:51,200
quarter production as you
mentioned first up.

658
00:32:52,560 --> 00:32:55,880
Tell me mate, why did they miss?
Yeah.

659
00:32:56,440 --> 00:33:00,800
So to put the missing context,
they did about 19,000 oz this

660
00:33:00,800 --> 00:33:04,960
quarter at a bit over 1300 US
all in sustaining cost.

661
00:33:05,240 --> 00:33:10,280
Now the quarter before that,
they'd done 32,000 at 8:50.

662
00:33:10,280 --> 00:33:15,560
So that's a pretty big drop off.
And as you suspect, the unit

663
00:33:15,560 --> 00:33:18,400
costs commensurately jumped up
quite substantially.

664
00:33:18,400 --> 00:33:24,160
So putting the miss into context
why it's kind of happened, I

665
00:33:24,160 --> 00:33:26,640
think it was a little while in
the making, they don't spell it

666
00:33:26,640 --> 00:33:27,640
out.
They give you kind of three dot

667
00:33:27,640 --> 00:33:30,400
points when they pre flagged
this a month ago.

668
00:33:31,120 --> 00:33:35,880
Now cutback activities at the
operation in Cambodia limited

669
00:33:35,880 --> 00:33:38,000
access to all.
And they didn't say this

670
00:33:38,000 --> 00:33:41,400
specifically, but I suspect this
kind of stems back to an

671
00:33:41,400 --> 00:33:44,880
announcement of from September
last year where there was a bit

672
00:33:44,880 --> 00:33:49,520
of a pit wall slip that saw them
do these cutback activities a

673
00:33:49,520 --> 00:33:51,680
bit earlier.
So they would have been doing

674
00:33:51,680 --> 00:33:53,680
these otherwise.
It was, you know, all planned

675
00:33:53,680 --> 00:33:56,160
out already.
It just spurred them on to do it

676
00:33:56,160 --> 00:34:01,400
a bit sooner.
Now that unfortunately led to

677
00:34:01,400 --> 00:34:03,280
limited access to, to other
parts.

678
00:34:03,280 --> 00:34:06,560
And that leads to the second
challenge that they had where

679
00:34:06,720 --> 00:34:10,679
the areas that they did have
access to didn't reconcile well

680
00:34:10,679 --> 00:34:12,880
with the reserve grade.
Now that's a, that's a big

681
00:34:12,880 --> 00:34:13,960
problem.
It's the first time we've sort

682
00:34:13,960 --> 00:34:17,800
of seen a problem of this nature
at like I'm sure they've had it

683
00:34:17,800 --> 00:34:20,000
in sort of parts, but they've
been able to compensate

684
00:34:20,440 --> 00:34:22,960
throughout the quarters by going
to to other areas.

685
00:34:22,960 --> 00:34:26,080
But given they had limited
access to the other areas of the

686
00:34:26,080 --> 00:34:28,480
pit, they were, they were stuck
with this one.

687
00:34:28,480 --> 00:34:30,679
And hence they were able to
guard the market in March

688
00:34:30,679 --> 00:34:32,920
already that hey, this, this
wasn't going to be a good

689
00:34:33,280 --> 00:34:35,480
quarter because they knew they
couldn't do an awful lot.

690
00:34:35,679 --> 00:34:39,560
So there's, there's two issues
there. 1 is, yeah, reduced

691
00:34:39,560 --> 00:34:42,320
access to, to good areas.
And the other one is, you know,

692
00:34:42,360 --> 00:34:44,480
reconciliation.
It's the reconciliation that

693
00:34:44,480 --> 00:34:46,760
would would worry me much more
as a, as a, as a shareholder

694
00:34:46,760 --> 00:34:49,360
because you worry about a, a
potential for a, for that trend

695
00:34:49,360 --> 00:34:52,520
to be expanded for life of mine
or for a period of time.

696
00:34:52,840 --> 00:34:55,400
Yeah, 100% it's a it's a real
cause for concern.

697
00:34:55,400 --> 00:34:57,800
It's something you really want
to dig into and the company

698
00:34:57,800 --> 00:35:01,080
understands this fully and tries
to alleviate all the concerns of

699
00:35:01,080 --> 00:35:02,760
the shareholders.
So I'll just read out the line

700
00:35:02,760 --> 00:35:04,920
that they said to describe this
quickly.

701
00:35:05,760 --> 00:35:08,360
The forward-looking grade
control indicates that the

702
00:35:08,440 --> 00:35:11,040
uncharacteristic
underperformance of the reserve

703
00:35:11,080 --> 00:35:14,840
in the areas access this quarter
is an anomaly and not a trend

704
00:35:14,840 --> 00:35:17,840
specific to like the the point
that you mentioned there.

705
00:35:17,840 --> 00:35:20,720
You don't want this to be a
trend, you want it to to be a

706
00:35:20,720 --> 00:35:24,840
one off.
And yeah, they reiterate further

707
00:35:24,840 --> 00:35:28,240
on that the cutback limited
their ability to mitigate the

708
00:35:28,240 --> 00:35:30,600
performance.
And I'd be lying.

709
00:35:30,600 --> 00:35:33,800
I'd be talking out of my ass if
I could say whether this is

710
00:35:33,800 --> 00:35:36,080
going to be a problem down the
track.

711
00:35:36,080 --> 00:35:39,360
I think that's a challenge that
a geologist could sort of dig

712
00:35:39,360 --> 00:35:42,120
into.
But Even so, you've got limited

713
00:35:42,120 --> 00:35:45,640
information standing outside the
walls of the company.

714
00:35:45,640 --> 00:35:47,520
So it's just something you're
going to have to scrutinize

715
00:35:47,520 --> 00:35:50,840
quite a bit in many of the many
of the quarters to come.

716
00:35:51,320 --> 00:35:54,320
And the company gave pretty
specific guidance quarter by

717
00:35:54,320 --> 00:35:56,360
quarter going forward as well
as.

718
00:35:56,720 --> 00:36:00,080
Through.
FY20 6 to really address these

719
00:36:00,080 --> 00:36:03,840
challenges and to just spell it
out a bit more, if you if you

720
00:36:03,840 --> 00:36:07,520
look at the physicals table
here, you can see a head grade

721
00:36:08,560 --> 00:36:14,560
of 1.2g per ton in the quarter.
We go back the past 3/4, we're

722
00:36:14,560 --> 00:36:18,520
talking about about 2G a ton,
about 1.8 and about 2.1g.

723
00:36:18,520 --> 00:36:22,360
So that's a big, big drop off.
And that puts into context the

724
00:36:22,360 --> 00:36:24,440
challenge that they faced over
this quarter.

725
00:36:25,080 --> 00:36:28,720
On the positive side, they put a
lot of work into improving

726
00:36:28,760 --> 00:36:31,320
recoveries and they're sort of
bearing the fruit of that.

727
00:36:31,320 --> 00:36:35,680
So if you look at the recoveries
line there, you can see 85.6%

728
00:36:35,680 --> 00:36:41,240
for a quote, UN quote refractory
ore body is is not too bad and

729
00:36:41,240 --> 00:36:44,000
it's been improving quarter by
quarter.

730
00:36:44,000 --> 00:36:46,200
Especially scrapes coming off
for recovery.

731
00:36:47,400 --> 00:36:49,840
Exactly.
So that's a real positive that

732
00:36:50,440 --> 00:36:53,600
shouldn't be missed because the
the benefits of working on your

733
00:36:53,600 --> 00:36:57,560
recoveries as they have been in
that sort of way is you know,

734
00:36:57,680 --> 00:37:00,320
it's a really positive thing and
hopefully they can keep them up

735
00:37:00,320 --> 00:37:03,480
there as I'm sure they will
because they did invest the

736
00:37:03,480 --> 00:37:05,680
capital needed to to unlock
that.

737
00:37:05,680 --> 00:37:09,040
So I.
Did look at the like like cash.

738
00:37:09,200 --> 00:37:13,400
Cash actually went backwards for
for emerald.

739
00:37:13,400 --> 00:37:15,640
I mean, they did have some big
one offs, but it was surprising

740
00:37:15,640 --> 00:37:18,800
to see such AI think they're
almost the lowest cost producer

741
00:37:18,920 --> 00:37:22,880
historically on the news on that
sex in in some quarters to to

742
00:37:22,880 --> 00:37:26,280
actually, you know, have cash
balance go backwards was very

743
00:37:26,280 --> 00:37:28,040
surprising to see.
Yeah, yeah.

744
00:37:28,040 --> 00:37:30,600
Let's talk about cash.
So to to your point on lowest

745
00:37:30,600 --> 00:37:35,200
cost producer, even next year
they are flagging guidance all

746
00:37:35,200 --> 00:37:37,960
in sustaining costs to be under
1000 US an ounce.

747
00:37:37,960 --> 00:37:40,040
So that that is pretty
competitive.

748
00:37:40,800 --> 00:37:46,120
If we look at cash, 210 million
cash and bullion is what they

749
00:37:46,120 --> 00:37:50,440
closed this quarter at and they
were about 243,000,000 where

750
00:37:50,440 --> 00:37:55,000
they ended the year at.
So the big one offs is the 50

751
00:37:55,000 --> 00:38:00,480
million plus in tax that was for
FY24 that that's a big one off

752
00:38:01,000 --> 00:38:02,600
that they had to wear this
period.

753
00:38:02,600 --> 00:38:06,480
But on the on the positive side
for the the cash they actually

754
00:38:06,480 --> 00:38:10,520
sold 55000 oz more than they
produced over the last quarter.

755
00:38:10,520 --> 00:38:14,040
So yeah, you know, ebbs and
flies, that's a positive, but.

756
00:38:14,480 --> 00:38:18,080
I've got a growth project in WA
from the acquisition of

757
00:38:18,080 --> 00:38:19,920
Bullseye.
Where is that at?

758
00:38:20,080 --> 00:38:21,320
Yeah.
Let's talk about the growth

759
00:38:21,320 --> 00:38:22,760
projects.
This is pretty exciting for the

760
00:38:22,760 --> 00:38:25,160
company.
So camp installation is

761
00:38:25,160 --> 00:38:27,760
happening.
This is north of Laverton for

762
00:38:27,760 --> 00:38:30,040
those wondering, and we'll flash
up a map so you can get a feel

763
00:38:30,040 --> 00:38:32,080
for it.
But 6,000,000 was invested in

764
00:38:32,080 --> 00:38:35,640
the asset over the last quarter
on, you know, develop, not an

765
00:38:35,640 --> 00:38:38,440
awful lot on development and on
the feasibility studies, but

766
00:38:38,440 --> 00:38:39,560
there's been a bit of a hold up
here.

767
00:38:39,560 --> 00:38:44,360
So you got a project with a
million oz at a bit over 1.1g

768
00:38:44,360 --> 00:38:46,960
per ton.
And if you go back to the annual

769
00:38:46,960 --> 00:38:50,760
report which came at mid 2024,
it was planned for the DFS to

770
00:38:50,760 --> 00:38:53,800
already be at, this was meant to
come out before year end in the

771
00:38:53,800 --> 00:38:56,160
December quarter.
That didn't happen.

772
00:38:56,280 --> 00:38:59,640
So they spoke about some of the
work they were focusing on.

773
00:38:59,640 --> 00:39:02,160
That's resource definition which
did happen.

774
00:39:02,160 --> 00:39:06,160
We had that updated mineral
resource come out in the

775
00:39:06,160 --> 00:39:08,480
December quarter.
And the second point was that

776
00:39:08,480 --> 00:39:10,360
they were working on the
completion of environmental

777
00:39:10,360 --> 00:39:12,720
assessments which leads into
permitting.

778
00:39:12,840 --> 00:39:15,520
And I would suspect that's been
the hold up.

779
00:39:15,520 --> 00:39:18,600
They didn't say explicitly what
has held them up, but given

780
00:39:18,600 --> 00:39:22,680
everything going on across
Australia in WA, look at Matt

781
00:39:22,680 --> 00:39:27,280
Gibson and other sort of similar
projects, permitting has been

782
00:39:27,320 --> 00:39:30,160
the hold up.
It continues to be the hold up.

783
00:39:30,160 --> 00:39:34,080
And I think those sorts of
reasons the, the company doesn't

784
00:39:34,080 --> 00:39:36,120
want to, you know, put the cart
before the horse.

785
00:39:36,120 --> 00:39:37,400
They don't want to talk too much
about it.

786
00:39:37,400 --> 00:39:41,200
They just rather keep doing the
work that's within their, within

787
00:39:41,200 --> 00:39:44,520
their sort of graphs, the things
they can do and wait because

788
00:39:44,520 --> 00:39:48,400
there's been a lot of changes on
this front and it's really not

789
00:39:48,440 --> 00:39:51,200
in the the hands of the company.
So, I mean, we've spoken about

790
00:39:51,200 --> 00:39:54,000
it at length over the past 6 to
12 months.

791
00:39:54,240 --> 00:39:57,760
Yeah, I think you let you let
you let permitting like decent

792
00:39:57,760 --> 00:39:59,760
permitting pushes back
timelines.

793
00:40:00,240 --> 00:40:04,680
To let that be like a a slow
release of expectations to, you

794
00:40:04,680 --> 00:40:07,520
know, constantly possibly push
back rather than all at once.

795
00:40:07,840 --> 00:40:09,760
Yeah.
Nevertheless, they still did say

796
00:40:09,760 --> 00:40:14,240
that they expect to make FID and
commence developing this year.

797
00:40:14,240 --> 00:40:18,280
And there's a bunch of tenements
like if you if you look in the

798
00:40:18,280 --> 00:40:23,200
map we flashed up before the
chart on the left, that's a 90

799
00:40:23,200 --> 00:40:28,000
kilometer long sort of area
where they've got tenements are

800
00:40:28,000 --> 00:40:29,480
adjoining.
And then the the child on the

801
00:40:29,480 --> 00:40:32,160
right is a sort of zoomed in
area of the yellowy sort of

802
00:40:32,160 --> 00:40:36,520
spots there.
So they have mining licenses

803
00:40:36,520 --> 00:40:39,320
that were granted in 2021 on a
number of those areas.

804
00:40:39,520 --> 00:40:44,040
Other ones are, as you can see,
expiration licenses and whatnot.

805
00:40:44,120 --> 00:40:46,520
But I think it's a bit out of
their hands.

806
00:40:46,520 --> 00:40:49,320
You know, you can't build a
project with kind of half the

807
00:40:49,320 --> 00:40:50,760
permits.
You need it all to kind of be in

808
00:40:50,760 --> 00:40:52,880
place so.
They call this project Dingo

809
00:40:52,880 --> 00:40:54,520
Range.
What?

810
00:40:54,520 --> 00:40:56,600
What kind of production profile
are they expecting from it?

811
00:40:57,800 --> 00:41:00,280
They don't give you too much
color on this, but what they do

812
00:41:00,280 --> 00:41:03,360
say is they want to be a 300 out
of 1000 oz per annum producer

813
00:41:03,840 --> 00:41:06,880
with many operations.
So I'll speak to Memet, which is

814
00:41:06,880 --> 00:41:09,920
another growth project in
Cambodia in, in a moment.

815
00:41:09,920 --> 00:41:17,720
But given the 1,000,000 oz, the
1.1g per ton style of this, this

816
00:41:17,720 --> 00:41:21,120
ore body, I would sort of
benchmark it to 100,000 oz per

817
00:41:21,120 --> 00:41:23,680
annum with A10 year mine life to
to kind of start.

818
00:41:23,680 --> 00:41:26,240
I'm sure other people have more
kind of specific numbers on it,

819
00:41:26,240 --> 00:41:29,320
but I think it's a rough kind of
rule of thumb that you could

820
00:41:29,600 --> 00:41:32,640
use.
And yeah, I'll talk in a moment

821
00:41:32,640 --> 00:41:35,400
actually about what what cost
could kind of look like for this

822
00:41:35,400 --> 00:41:38,320
because it's interesting to look
at the cash position and tied it

823
00:41:38,320 --> 00:41:40,480
all in together.
If we look at Mamet for a

824
00:41:40,480 --> 00:41:44,960
second, this is similar again,
1,000,000 oz, 1.65g per ton, so

825
00:41:44,960 --> 00:41:48,320
slightly better grade than than
Dingo, very similar stage.

826
00:41:48,320 --> 00:41:51,720
Feasibility studies are
underway.

827
00:41:51,720 --> 00:41:54,440
They're looking to permit and do
all these sorts of things, very

828
00:41:54,440 --> 00:41:58,800
similar spend over the quarter.
If we look at kind of what CapEx

829
00:41:58,800 --> 00:42:04,120
could look like here, given I
think this is a similar scale to

830
00:42:04,400 --> 00:42:07,800
Okvale and even to Dingo range,
I think we're all in that sort

831
00:42:07,800 --> 00:42:11,120
of 100,000 oz plus or minus
area.

832
00:42:11,760 --> 00:42:16,160
Okvale cost about 150 million
Aussie to build, 2 million ton

833
00:42:16,160 --> 00:42:20,360
per annum plant.
That was 6-7 years ago when the

834
00:42:20,360 --> 00:42:23,840
DFS came out.
So we've seen cost inflation

835
00:42:23,920 --> 00:42:26,960
since then.
That size plant would seem them

836
00:42:26,960 --> 00:42:29,160
it to about 90,000 oz.
I think it has to be slightly

837
00:42:29,160 --> 00:42:31,880
bigger.
It would be a very similar

838
00:42:31,880 --> 00:42:35,600
processing plant.
Recoveries are 85% plus is what

839
00:42:35,600 --> 00:42:38,960
they call it.
So I would sort of suspect

840
00:42:39,280 --> 00:42:42,080
Aussie 200 million plus if
they're going to build something

841
00:42:42,080 --> 00:42:46,080
similar.
And to go back to what Dingo

842
00:42:46,080 --> 00:42:48,640
could kind of look like.
I think Mount Gibson is a good

843
00:42:48,640 --> 00:42:52,400
proxy that one.
Now Capricorn we know they

844
00:42:52,520 --> 00:42:57,440
raised late last year, they had
initially about $260 million

845
00:42:57,440 --> 00:43:01,320
earmarked for for Mount Gibson
similarly being held up on a on

846
00:43:01,320 --> 00:43:04,600
a permitting front.
But I think just to keep things

847
00:43:04,600 --> 00:43:08,040
fairly simple, benchmark it in
and around that same kind of

848
00:43:08,040 --> 00:43:10,880
cost, 250 ish million.
I mean, Capricorn have a great

849
00:43:10,880 --> 00:43:13,640
reputation for getting stuff
done time on budget.

850
00:43:13,640 --> 00:43:17,120
You know, obviously when it's in
their hands, Emerald with

851
00:43:17,160 --> 00:43:19,560
Ochville, again, that's a
similar sort of reputation.

852
00:43:19,560 --> 00:43:22,720
They got it delivered and
exceeded a lot of people's

853
00:43:22,720 --> 00:43:25,200
expectations.
So I think you're, you're

854
00:43:25,200 --> 00:43:27,840
feasibly looking at 400 to $500
million.

855
00:43:27,840 --> 00:43:30,680
I know I saw just one other
estimate out there were hard to

856
00:43:30,680 --> 00:43:34,400
come across info, but people
were putting it a bit under 400

857
00:43:34,400 --> 00:43:36,000
million.
I'd, I'd be surprised if your

858
00:43:36,800 --> 00:43:39,800
total CapEx for both of these
projects comes in under 400

859
00:43:39,800 --> 00:43:44,400
million, but who's to say.
So you've got a company which by

860
00:43:44,400 --> 00:43:49,040
mid year could have 250 million
and I think Okvao could deliver

861
00:43:49,040 --> 00:43:52,520
them another $250 million over
FY20 6.

862
00:43:52,800 --> 00:43:56,880
A lot of numbers here, but yeah,
working Outback of the envelope,

863
00:43:56,880 --> 00:43:58,400
potentially a bit of a funding
gap.

864
00:43:58,400 --> 00:44:01,240
So it brings about the question,
how do you address that?

865
00:44:01,400 --> 00:44:04,600
Well that that's a funny gap if
they were so ambitious as to to

866
00:44:04,600 --> 00:44:08,400
build 2 minds simultaneously.
I think in reality you rarely

867
00:44:08,400 --> 00:44:10,440
ever see that.
Exactly, exactly.

868
00:44:10,440 --> 00:44:12,720
I think what you do is you kind
of offset them, which is kind of

869
00:44:12,720 --> 00:44:16,400
interesting if you dig into the
details to see that they've, you

870
00:44:16,400 --> 00:44:18,160
know, they've lined them up.
They want to start development,

871
00:44:18,320 --> 00:44:21,400
both of them this year.
You would have thought perhaps

872
00:44:21,400 --> 00:44:26,040
they they staged them already
and just plant expectations nice

873
00:44:26,040 --> 00:44:27,040
and early that they're on a
stage.

874
00:44:27,080 --> 00:44:28,440
But that's, that's not what
they've done today.

875
00:44:28,440 --> 00:44:32,360
Maybe they'll do that in future.
But for a whole, you know, range

876
00:44:32,360 --> 00:44:34,120
of reasons.
They don't have any debt right

877
00:44:34,120 --> 00:44:35,120
now.
They've they've paid off the

878
00:44:35,120 --> 00:44:39,240
last bit just recently.
But yeah, do they look at

879
00:44:39,240 --> 00:44:41,680
signing up a bit more debt just
to see them through that period?

880
00:44:42,680 --> 00:44:44,880
They're they're valued fairly
strongly.

881
00:44:44,880 --> 00:44:47,840
There's growth built into the
share price as it stands right

882
00:44:47,840 --> 00:44:49,440
now.
You know, I said maybe doing

883
00:44:49,440 --> 00:44:53,160
$250 million in cash flow for a
company that's capped at $2.6

884
00:44:53,160 --> 00:44:55,080
billion.
Yeah, A2.

885
00:44:55,480 --> 00:44:59,480
Point $6 billion and and all of
its production day from Cambodia

886
00:44:59,680 --> 00:45:03,640
two 2/3 in the into the future
ones all growth is online still

887
00:45:03,640 --> 00:45:07,480
in Cambodia and and yeah just
always kind of question marks on

888
00:45:08,120 --> 00:45:13,760
on that Cambodia is not WA but.
Yeah, 5 to 10% dilution would

889
00:45:13,760 --> 00:45:16,480
not be the end of the world by
by any means.

890
00:45:16,480 --> 00:45:20,560
It would give them a big pile of
cash to just go at this again.

891
00:45:20,560 --> 00:45:23,240
I still think they'd they'd
likely stage them to an extent.

892
00:45:23,240 --> 00:45:26,240
I think permitting will do that
for them potentially.

893
00:45:26,800 --> 00:45:30,400
So it'll be interesting to see
which, which route they go down.

894
00:45:30,400 --> 00:45:33,560
We've, we've spoken at length
about the risks of pulling in

895
00:45:33,560 --> 00:45:37,640
debt and it, it's particularly
when things are rosy and things

896
00:45:37,640 --> 00:45:40,400
are good.
Paladin comes to mind last year

897
00:45:40,400 --> 00:45:43,760
when uranium price is flying
there, they're starting to to

898
00:45:44,040 --> 00:45:47,640
work through the, the stockpiles
of the previously mined product

899
00:45:47,640 --> 00:45:50,000
there and then you sign up the
debt.

900
00:45:50,000 --> 00:45:52,200
So it's, it's always when times
are really good that people

901
00:45:52,200 --> 00:45:54,400
look, hey, we can, we can lever
up the balance sheet a little

902
00:45:54,400 --> 00:45:56,040
bit.
So I'd be curious to see what

903
00:45:56,040 --> 00:45:57,920
they do.
I think they they can work

904
00:45:57,920 --> 00:46:00,400
through it, but that's what you
always kind of think right until

905
00:46:00,640 --> 00:46:01,240
you.
Can't.

906
00:46:01,600 --> 00:46:05,480
Yeah.
The good news is like, and if

907
00:46:05,480 --> 00:46:07,320
they were so ambitious as to
build both at once, they're

908
00:46:07,320 --> 00:46:10,240
still probably not going to need
a ton of debt given gold prices,

909
00:46:10,240 --> 00:46:11,560
operating cash flow and all that
sort of stuff.

910
00:46:11,560 --> 00:46:15,440
It would be tricky to find like
to think in your head that they

911
00:46:15,440 --> 00:46:17,800
would get debt that would be
onerous to the company.

912
00:46:17,920 --> 00:46:21,000
And furthermore, they wouldn't
need to get project finance

913
00:46:21,040 --> 00:46:23,520
either because they've had to
find assets that have a

914
00:46:23,520 --> 00:46:26,720
corporate facility far less
restrictive and a lot more

915
00:46:26,720 --> 00:46:29,640
flexibility to to navigate some
of the things that can be, you

916
00:46:29,640 --> 00:46:32,760
know, pitfalls for for single
asset developers.

917
00:46:32,960 --> 00:46:35,160
Yeah, that, that can't be
understated enough.

918
00:46:35,560 --> 00:46:37,360
Debt can be super, super
onerous.

919
00:46:37,360 --> 00:46:39,560
If you've got your one project
that you're trying to get into

920
00:46:39,560 --> 00:46:43,880
production, the the more you
produce, the, the more cash you

921
00:46:43,880 --> 00:46:46,720
produce, the more assets you
have, the terms become more and

922
00:46:46,720 --> 00:46:48,560
more favorable to you.
So.

923
00:46:48,800 --> 00:46:54,600
One thing I do wonder with
Emerald is like if there were, I

924
00:46:54,600 --> 00:46:57,360
wonder, I wonder how motivated
they are to diversify their

925
00:46:58,080 --> 00:47:00,600
their geographical risk.
And clearly that's been a

926
00:47:00,600 --> 00:47:03,520
motivation for them to enter
Australia by dingo range.

927
00:47:03,520 --> 00:47:06,440
And like, I think I think, yeah,
when they knock the I was their

928
00:47:06,440 --> 00:47:07,640
only asset.
They were, they were certainly

929
00:47:07,640 --> 00:47:10,120
pretty hungry for something in
Australia and they they got a

930
00:47:10,320 --> 00:47:13,200
pretty, pretty interesting and
good deal away to to get that

931
00:47:13,200 --> 00:47:16,640
growth project.
I do wonder if that will like,

932
00:47:16,640 --> 00:47:19,800
yeah, increasingly look to
diversify that geographical

933
00:47:19,800 --> 00:47:23,480
risk, be it by buying, you know,
more assets.

934
00:47:24,560 --> 00:47:26,760
Yeah, we've talked in the past
about what's for sale in

935
00:47:26,920 --> 00:47:29,840
Laverton and like you actually
do something that's synergistic

936
00:47:29,840 --> 00:47:32,960
when you when you group that
together with with Dingo range

937
00:47:33,320 --> 00:47:37,560
plus the other option they could
have is actually just is, is is,

938
00:47:37,920 --> 00:47:41,640
yeah, merging with one of the
any mid tier gold producers that

939
00:47:41,640 --> 00:47:44,880
we have with Australian domestic
production, but no growth.

940
00:47:45,640 --> 00:47:49,160
If you merge with them, they
they suddenly they get growth.

941
00:47:50,440 --> 00:47:52,760
I just think there's probably a
bit of spread and everyone got

942
00:47:52,760 --> 00:47:55,000
to get comfortable with that.
But if the motivations are high

943
00:47:55,000 --> 00:47:58,480
enough, I think it's also a
possibility that probably can't

944
00:47:58,480 --> 00:48:00,400
be discounted as well.
Yeah, absolutely.

945
00:48:00,400 --> 00:48:02,800
For the same reasons we spoke
about the capital raise,

946
00:48:02,800 --> 00:48:04,440
potential capital raise just a
moment ago.

947
00:48:04,840 --> 00:48:08,080
Doing a deal could be favorable.
They'd argue the opposite,

948
00:48:08,080 --> 00:48:09,640
saying they're coming into
growth and all this sort of

949
00:48:09,640 --> 00:48:12,040
stuff.
But yeah, given where they are,

950
00:48:12,040 --> 00:48:13,480
I'm sure they'd be looking at
their options.

951
00:48:14,800 --> 00:48:18,240
Very interesting mate.
I think that's a good spot to

952
00:48:18,240 --> 00:48:21,280
leave it mate, as we come into
our last day of court at least

953
00:48:21,280 --> 00:48:23,360
tomorrow.
I can't wait for it to be over

954
00:48:23,600 --> 00:48:27,320
and I similarly am just very
thankful to all our partners.

955
00:48:27,920 --> 00:48:31,440
Yeah, let's run through it.
JRX, get your tickets to the

956
00:48:31,440 --> 00:48:34,120
conference, the Mining
Innovation Conference.

957
00:48:34,160 --> 00:48:38,360
You need to get tickets to May
20 to May 22nd in Brisbane and a

958
00:48:38,360 --> 00:48:41,120
big thank you to Mineral Mining
Services, Grounded Sandy Ground

959
00:48:41,120 --> 00:48:44,760
Support, CRE Insurance, K Drill,
WA Water Bulls, Quattro Project

960
00:48:44,760 --> 00:48:48,360
Engineering, KCA Site Services,
Black Diamond Drilling Services

961
00:48:48,360 --> 00:48:49,920
and Cross Boundary Energy.
Who Duru?

962
00:48:49,920 --> 00:48:51,920
Who Duru?
The information contained in

963
00:48:51,920 --> 00:48:54,720
this episode of Money of Mine is
of general nature only and does

964
00:48:54,720 --> 00:48:57,520
not take into account the
objectives, financial situation,

965
00:48:57,560 --> 00:48:59,600
or needs of any particular
person.

966
00:48:59,880 --> 00:49:02,920
Before making any investment
decision, you should consult

967
00:49:02,920 --> 00:49:05,960
with your financial advisor and
consider how appropriate the

968
00:49:05,960 --> 00:49:09,640
advice is to your objectives,
financial situation and needs.