Horror Week for Boss, Greatland and Liontown

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No, this is a huge movement in
the share price, like 50% like

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you said.
You want to try and answer the

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question, were there any
indications or could you as

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average punter on the street
have had any foresight or

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suspicions that something like
this would have happened?

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Mate, what a quarterly season.
Stocks that are responding to

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results mate all.
Those pawn shops mate.

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Boss has been beaten up, line
line town kind of got out a

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little bit unscathed.
Well, relatively speaking.

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Huge movement, so emerald they
were down over 10 plus percent.

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Greatland 2424% on the day.
Greatland smashed and.

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Unfortunately, not too many big
jumps.

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On the upside, I think it's a
bit of a result of the the short

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interest that build up and
dwindled over time.

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But lots to chat about.
Right.

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There's been big stock movements
this reporting season, mate.

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And in addition to some of the
quarterly results that have come

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out, I want to talk about some
some some grassroots shareholder

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activism that is emerging.
None of them word art resources,

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which have, you know, the board
there has accepted a deal from

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Capricorn shareholders.
Unsurprisingly, they're not

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happy, mate.
We've been hounded to talk about

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this one.
They're mate, it's amazing the

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organic interest in in, in Word
I've been, I've been truly like

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surprised at the level of level
of interest in the, the

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shareholder base there, but I've
been compelled to talk about it.

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So I'm I'm gonna get to that
later on too.

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Alrighty mate, let's let's start
with boss.

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I think that's the the natural
place to start because that was

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the the biggest share movement.
So the.

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How far down is that since they
put out the quarterly like it's

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like?
So it notched off again the the

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following days.
So obviously we're. 50 odd

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percent down like yeah, it's
been that since the quarterly

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come out it's.
Been a bit of a haircut for the

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companies that were that were
long, the investors that were

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long.
But yeah, so in in quotation

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marks, the highly successful
ramp up is having a few question

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marks thrown around specifically
that that the outlook has

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disappointed.
And obviously for context, mate,

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the week prior had seen a
management change.

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So Duncan Crabb, MD is going to
step down through September,

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reported to come back early next
year as an Ed, but a change in

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leadership at an interesting
point of time.

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So we'll, we'll lead into the
outlook by talking about the

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quarterly cash flow.
So the looking at the waterfall

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chart here, you can get a bit of
a flavor for how they did.

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And it's an it's an interesting
one because they sold way less

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pounds compared to what they
produced.

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So it, it looks a bit funny, But
if if you back it out, you know,

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bearing in mind this was a, a
good quarter where they're

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digging into to honeymoon, which
they know a bit more about as a,

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as a resource.
They would have earned $4

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million if you assumed that they
had earned 31 and a half,

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$1,000,000 in extra revenue,
assuming they would have sold

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everything so.
But all in cash has actually

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gone gone down.
It's gone down.

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So it's a bit over what is it
like 36 million odd dollars as

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it stands with a bunch of
inventories that they kind of

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market $85 on the assumption
that they can assume it via this

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sort of carry trade that they've
performed for a little while.

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But the the market probably well
OK, they'll acknowledge the the

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operational performance of that
quarter, but the stock doesn't

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fall like 40 plus percent in a
single day on the back of 1 bad

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quarter.
It's the guidance update that

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came contemporaneously with the
quarterly which has spooked the

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market big time here.
Yeah, yeah, absolutely.

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So rounding out on the on the
quarter, because there's,

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there's hints of it and then
they come out with a separate

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announcement like you say, which
is guidance FY20 6, but they

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talk about increase reagent
cost.

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Hence your, your cost profile
for FY20 6 is heightened.

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And essentially what we're
getting at is there there's a

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lower uranium concentration in
the the PLS that comes out means

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you got to pump more and process
more to kind of get to the same

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amount.
So that PLS to IX 10 are that

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they speak about is going from a
number in the high 80s to to the

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50s.
And they speak about a long term

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life and mind average of a
number around 50, which meaning,

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you know, when you think about
the fact that they were in the

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80s and to average that out,
they're going to in due course

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fall below that, which is a bit
of a concern.

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So that number of £2.45 million
per annum is what they'd guided

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to.
And if you go back to the, the

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AFS, the, the feasibility study
they'd done, I think that came

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out in 2021, they were meant to
hit that number in year 3 of

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production.
And that's all been thrown into

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doubt now.
So guidance is £1.6 million per

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annum for the coming year.
And then they indicated on the

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call that they expect to have a
similar number the following

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year.
And then it's a bit up in the

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air because there was a lot of
talk about, you know, the

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continuity isn't great and we
just need to assess it.

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We need to do work.
We're meeting our continuous

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disclosure obligations by
talking about it now.

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But we don't have enough answers
was the kind of rhetoric on the

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call.
So I think it's worth playing

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One question from Glenn Lowcock,
he asked this one try not really

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hammer it home at at the three
factors.

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I'll play it now so you can get
a flavour for it.

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Hey, I'm still a little bit
confused.

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So you say you've identified
challenges that would may arise

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in achieving nameplate capacity
which is the 2.45 and you talk

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about continuity of the
resource.

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So is that leading to less
volume coming out or less grade

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or less recovery?
Like what do you?

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What is the one of those three
that must be causing you to make

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that statement?
Volume it's it's made the volume

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aspect like pounds on deluge.
So you know we have to look at

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the well field design and the
pounds under leach and what you

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want is continuity and results
to give you that that sort of

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confidence in your well field
design.

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And you know what we're saying
now is the resources there

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additional wells are required
that's leading to an increase in

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sustained capital that we're
seeing in our all in sustaining

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cost for FY20 6.
But yeah, the challenge there

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could lead to volume under
Leach, so.

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Is that, is that because you
have you Max out what you can

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put down the pipe back to the
plant?

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I just, I mean if you just if
it's more CapEx for more well

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fields and you didn't have you
need more well fields to get the

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volume ultimately wants it.
Doesn't that still get you the

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nameplate?
What else is missing?

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You need to make the statement
that you can't get there.

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You're right, it can and that's
where that can still get you to

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nameplate, but that's where we
want to do this assessment and

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just say, you know what that
economic cost outlay is and the

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capital costs around oilfield
infrastructure.

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So the resource is there.
It's just a question of of as

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you say, the cost to do so.
You know, at the moment there's

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the margins are still healthy
for 1.6 going to FY20 7.

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We're confident that we'll get
at least £1.6 million.

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It's just a question now of how
we how we go about that.

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So, yeah, it's just I guess,
yeah, we just wanted to flag

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that, that we need to do a
review and and assess against

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our enhanced feasibility study
assumptions.

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But this is an assessment of the
economics then more or less you

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know like a more well fields,
more CapEx, more OpEx.

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Can you still then make an
economic model?

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But I would have thought with an
$80 a pound uranium price and

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even with the cost and CapEx
you're now incurring for £1.6

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million, surely it would be
economic or you think there's

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going to be even more costs to
come?

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No, Glenn, certainly that can be
the case.

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Yeah, absolutely.
That was a.

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Fascinating bit of a bit of
audio mate.

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I love to follow up kind of line
of questioning that Glenn takes.

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It's it's it's sort of simple as
a grade continuity, like, yeah,

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you know, number of.
We might be fumbling him a bit

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because I'm going to play
another snippet from him, yeah,

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later on.
But the the clarity and thinking

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and the breaking it down is, is
super, super simple, right?

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And yeah, I love that sort of
breaking it down to to what

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really matters.
And the question to ask as an

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investor, what you want to kind
of know is, no, this is a huge

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movement in the share price,
like 50%, like you said, like

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you want to try and answer the
question, what were there any

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indications or could you as
average punter on the street

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have had any foresight or, you
know, suspicions that something

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like this would have happened?
Like that's what in any case,

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just to, to learn for going
forward in, in your, your future

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investments.
And I think it's worth going

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back a year and listening to
the, the, the geological whiz,

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Mike Bevan and what he said on,
on the show in June of 2024.

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So a bit over a year ago now.
Uranium, when it occurs in your

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payday channels and, and
sandstone hosted, you really

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want to have a, a good interval
of, of sandstone or with high

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porosity, right?
But you get good flows and you

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really want the uranium to be
mostly within that sandstone

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layer.
Now, sometimes what you do get

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is you'll get uranium, but it's
either in clays or it's in a

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very narrow band of, of
sandstone which is in contact

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with the clays.
And if it is at that contact as

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well, what you'll often find is
the uranium is actually stuck to

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the clays right or bound in the
clays at the surface of those

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contact between those two
layers.

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Now clays is not porous, right?
You can't push uranium, you

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can't push a solution through it
and and extract it.

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And also when you're when you're
putting down your well right,

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you're pumping your solution
down, which is then going to

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travel through a a little
logical layer and get pumped up.

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You know, the amount of actual
interaction with that uranium

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that's stuck to a roof of that
sandstone is quite limited.

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So when that company went from
well that was us that did that,

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right.
So when they went from when they

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first took over the project,
when they cut the when they cut

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the resource rate from 500 PPM
to 250 PPM, it increased the

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resource as well.
But a lot of that resource was

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within really quite confined
pathologies.

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Now The thing is as well though,
is that in the process of doing

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that.
Review.

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There are very little cross
sections available of their

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resource, right?
So I can only make that

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inference from the information
that's available.

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I wish his I wish his YouTube
channel was still up Mike, but

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he's now that he's now that he's
endeavoured on a new life.

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I think he I think he's his
YouTube channel's unfortunately

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gone, but we've still got that
little nugget so.

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So if we try and refresh
listeners or people that didn't

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listen to to the segment right
breakdown the the sort of thesis

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that he had looking at their
work from the time.

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Yeah, I remember him kind of
saying like the, the the horizon

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within the paleo channel that
has the the best grades and is

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the most amenable to leaching is
the lower, the lower one.

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Right now, Uranium One, they
originally set that that cut off

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grade to 500 PPM and that's what
they mined the horizon above it,

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which you know, you can see in
that that cross section, that's

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a, a thinner interval of, of
sandstone.

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The grade is lower and the grade
often occurs at contacts between

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the sandstone and the upper
layer, which is like sort of a

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clay material.
When you've got the uranium

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concentrated at that horizon, it
can be difficult to extract

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because it's more stuck to the
clays than it is the sandstone.

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Or at least that's how I
remember kind of MM retelling

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it.
So so the sandstone is more

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coarse.
You can get the lex Evian to to

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flow through it versus the clay,
which is you know, it's not not

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permeable and you can't flush
that lexivium that can't collect

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the uranium and be pumped back
out.

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It's, it is also interesting,
like I know you've, you've

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dropped into our show notes
here, JD, like you can see the

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the Paleo Channel resource
honeymoon to the left is Brooks

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00:10:59,520 --> 00:11:01,840
Dam to the, to the right is East
Calgaroo.

224
00:11:02,440 --> 00:11:07,160
And what you can see is there's
like they've actually colour

225
00:11:07,160 --> 00:11:10,000
coded certain well fields and
from like, I think it was the

226
00:11:10,080 --> 00:11:11,280
Macquarie presentation they put
up.

227
00:11:11,280 --> 00:11:14,240
They basically say there's,
there's three well fields in

228
00:11:14,240 --> 00:11:18,080
honeymoon there, which are set
to kind of come on online in, in

229
00:11:18,080 --> 00:11:22,560
the first kind of 3/4 of if
financial year 2026.

230
00:11:22,560 --> 00:11:24,200
The next three kind of quarters
to report.

231
00:11:24,360 --> 00:11:27,200
We'll still see production from
from honeymoon like well fields

232
00:11:27,200 --> 00:11:29,440
kind of coming online and, and
that that delivering the

233
00:11:29,440 --> 00:11:31,560
production.
Then it's East Kilcaroo well

234
00:11:31,560 --> 00:11:34,360
fields per this sort of
schedule, which are you know

235
00:11:34,360 --> 00:11:37,480
marching or or accounting for a
huge proportion of the the

236
00:11:37,480 --> 00:11:40,680
production here.
Yeah, that's B6 through to B9,

237
00:11:40,680 --> 00:11:43,480
those Far East Kaikaru ones that
will come online.

238
00:11:44,400 --> 00:11:48,760
I've, I have personally been
surprised at how few people I've

239
00:11:48,760 --> 00:11:53,400
kind of talked to about, about,
about boss, how few people knew

240
00:11:53,400 --> 00:11:56,240
about the great differential
between East Kilkeroo and and

241
00:11:56,240 --> 00:11:57,040
honeymoon.
So it's.

242
00:11:57,200 --> 00:11:58,560
A pretty substantial difference
as well.

243
00:11:58,560 --> 00:12:01,360
Again, if if you go back to the
2016 mineral resource and I'll

244
00:12:01,360 --> 00:12:03,840
keep referring to that one
because it's been scantly

245
00:12:04,480 --> 00:12:07,840
updated.
And yeah, anyway this, this one

246
00:12:08,560 --> 00:12:13,760
you can see E kilkeroo is 640
PPM versus like honeymoon there,

247
00:12:13,760 --> 00:12:17,000
they've got nearly 1300 PPM.
So it's a pretty substantial

248
00:12:17,000 --> 00:12:18,880
difference.
A bit over double, yeah.

249
00:12:19,280 --> 00:12:23,120
It's fascinating to, to, to
flick back to the market

250
00:12:23,120 --> 00:12:26,480
reaction, you can see that there
was a sort of flash through of

251
00:12:26,720 --> 00:12:28,960
changes in substantial ownership
and a lot of them were sort of

252
00:12:28,960 --> 00:12:31,200
prime brokers.
You can't get a, a big tail, but

253
00:12:31,200 --> 00:12:34,040
there was one from a, a
shareholder who rents $51

254
00:12:34,040 --> 00:12:38,000
million of stock on the day at
an average share price of a bit

255
00:12:38,000 --> 00:12:40,360
over 2 bucks.
So I don't think they'll be

256
00:12:40,360 --> 00:12:44,280
sending a BOSS a Christmas card
anytime soon, but I'm sure

257
00:12:44,280 --> 00:12:47,160
there'll also be plenty of hedge
funds on the short side that'll

258
00:12:47,160 --> 00:12:51,080
be kicking themselves too.
Because we've spoken a lot about

259
00:12:51,080 --> 00:12:54,200
this sort of short factor
squeeze over the the past

260
00:12:54,200 --> 00:12:56,840
quarter roughly.
And what that's sort of

261
00:12:56,840 --> 00:13:00,600
reflected in with regards to
Boss is the short interest

262
00:13:00,600 --> 00:13:04,480
falling pretty substantially.
So it fell from about 25% all

263
00:13:04,480 --> 00:13:09,480
the way down to 12 or 13% as
these equities across the

264
00:13:09,480 --> 00:13:12,640
market, uranium, lithium, some
of the names that sort of come

265
00:13:12,640 --> 00:13:16,680
to mind, they those share prices
rise and people had to sort of

266
00:13:16,680 --> 00:13:18,000
bail out of their positions,
right.

267
00:13:18,000 --> 00:13:21,720
So I'm sure a few of them won't
be as pleased as they might

268
00:13:21,720 --> 00:13:24,360
otherwise have been.
And I would expect in due

269
00:13:24,360 --> 00:13:27,280
course, you know, once the the
changes that we've seen in the

270
00:13:27,280 --> 00:13:29,600
past couple of days flush
through another sort of change

271
00:13:29,600 --> 00:13:31,360
in that short interest, but an
interesting one.

272
00:13:31,360 --> 00:13:34,840
No one ever feels sorry for a
short seller, but but but I do

273
00:13:34,840 --> 00:13:37,040
feel sorry for shareholders.
And I think like your to circle

274
00:13:37,040 --> 00:13:38,960
back to your, your question,
which is like, could you have

275
00:13:38,960 --> 00:13:40,560
predicted this?
Could you have seen it coming?

276
00:13:41,920 --> 00:13:44,840
Yeah, like I think like what are
the other questions you can ask

277
00:13:44,840 --> 00:13:48,360
as a shareholder is like, you
know, why, why?

278
00:13:48,560 --> 00:13:53,360
Why are they, why are there no
cross sections of of East Kakuru

279
00:13:53,400 --> 00:13:55,160
in any of the mineral resource
statements?

280
00:13:55,160 --> 00:13:59,360
Why is the mineral resource of,
of honeymoon kind of through to

281
00:13:59,600 --> 00:14:03,120
East Kakuru not actually been
updated to the market since 2019

282
00:14:03,120 --> 00:14:04,320
despite a bunch of drilling on
it?

283
00:14:04,800 --> 00:14:07,560
You know why, You know, why is,
why is there such scant kind of

284
00:14:07,560 --> 00:14:09,720
information about about some of
this stuff?

285
00:14:09,840 --> 00:14:12,720
And you know, if you're if
you're asking those kinds of

286
00:14:12,720 --> 00:14:14,760
questions, maybe get closer to
being able to predict this.

287
00:14:15,080 --> 00:14:18,960
Yeah, yeah, well said.
OK mate, tell us about Line

288
00:14:18,960 --> 00:14:21,200
Town.
Line town, another interesting

289
00:14:21,200 --> 00:14:23,360
one mate.
So first thoughts on line town,

290
00:14:23,560 --> 00:14:25,920
I'm not sure if you had the
chance to listen to the, to the

291
00:14:25,920 --> 00:14:29,760
quarterly here, mate, but they
spoke for 40 minutes and left

292
00:14:29,800 --> 00:14:31,520
less than 20 minutes for the
Q&A.

293
00:14:31,640 --> 00:14:35,040
And I, I, I think that's kind of
interesting framing, right?

294
00:14:35,040 --> 00:14:38,240
Because I think you can just
chuckle that in a sort of

295
00:14:38,240 --> 00:14:40,480
written form of commentary from
management.

296
00:14:41,080 --> 00:14:43,600
No problems with speaking 10 or
15 minutes, but you want to hear

297
00:14:43,600 --> 00:14:46,280
as many questions from the
analysts as possible.

298
00:14:46,440 --> 00:14:49,040
Yeah, yeah.
If your scripted component is is

299
00:14:49,520 --> 00:14:54,560
2/3 of the analysts call, then
what do you, Yeah, come on, come

300
00:14:54,560 --> 00:14:55,720
on.
You've got, you've got the,

301
00:14:55,720 --> 00:14:57,360
you've got the announcement,
you've got the presentation and

302
00:14:57,360 --> 00:14:58,840
put all your your script and
stuff in there.

303
00:14:58,840 --> 00:15:00,360
That is what it's for.
Yeah.

304
00:15:00,440 --> 00:15:01,640
Anyway can?
Count on you to say anyway.

305
00:15:01,640 --> 00:15:03,200
Punch your way, I'll forgive.
Them this time off.

306
00:15:03,520 --> 00:15:07,360
So what what really matters in
the the quarterly call and

307
00:15:07,480 --> 00:15:09,400
report, I think there's a few
things to circle around.

308
00:15:09,400 --> 00:15:12,640
So obviously a lot of eyes on
what's happening on the ROM pad

309
00:15:12,920 --> 00:15:14,840
there.
So ROM stocks are are dwindling

310
00:15:14,840 --> 00:15:17,040
and they did flag this right.
So they are going from that

311
00:15:17,040 --> 00:15:19,720
transition from open pit mining
to underground.

312
00:15:19,720 --> 00:15:23,000
By Q3 of this financial year,
they're going to be fully

313
00:15:23,000 --> 00:15:26,160
operating from the underground.
So they built up the stockpiles

314
00:15:26,160 --> 00:15:28,680
there.
And one of the the

315
00:15:28,680 --> 00:15:32,760
repercussions, again not a
surprise is that there has been

316
00:15:32,760 --> 00:15:36,560
elevated gabro content going
through the plant, meaning

317
00:15:36,560 --> 00:15:38,120
recoveries have dropped down
substantially.

318
00:15:38,120 --> 00:15:41,800
So we saw them take up to that
sort of 70% level and then they

319
00:15:41,800 --> 00:15:46,480
dropped down this quarter to 57%
and we're expecting in the

320
00:15:46,480 --> 00:15:51,080
coming half year a a number
between 60 and 65%.

321
00:15:51,080 --> 00:15:55,240
And then beyond that, expecting
them to get to that 70 and

322
00:15:55,240 --> 00:15:58,600
really beyond that 70% as they,
as Tony put it, can be a bit

323
00:15:58,600 --> 00:16:01,560
more surgical about the all that
they pluck out from underground

324
00:16:01,560 --> 00:16:04,080
and they're going to need to do
that to make the unit economics

325
00:16:04,360 --> 00:16:06,800
stack up.
They talk about 222 types of

326
00:16:06,800 --> 00:16:09,960
all.
OSP is all sorting product which

327
00:16:09,960 --> 00:16:13,480
is unsorted like or effectively
it's it's got.

328
00:16:13,480 --> 00:16:15,080
Dilution and stuff you don't
want.

329
00:16:15,120 --> 00:16:18,640
And then there's clean ore,
which is, you know, post post

330
00:16:18,640 --> 00:16:21,320
sorting.
Yeah, yeah, which, but it's

331
00:16:21,320 --> 00:16:23,600
just, it is, it's striking when
you just look at the impact of

332
00:16:23,600 --> 00:16:28,240
recoveries as a result of
putting more of the, the OSP

333
00:16:28,480 --> 00:16:31,080
through the mill.
But the big question is, is

334
00:16:31,080 --> 00:16:33,640
like, well, well, like, like
what?

335
00:16:33,640 --> 00:16:34,280
What?
What?

336
00:16:34,480 --> 00:16:37,680
Why did you have to put through
so much, you know, OSP through

337
00:16:37,680 --> 00:16:38,280
the middle?
Yeah.

338
00:16:38,280 --> 00:16:41,120
And and it ties in with the
broader question of where are

339
00:16:41,280 --> 00:16:44,240
unit costs heading.
There is an expectation out

340
00:16:44,240 --> 00:16:48,040
there that these unit costs peel
down and you can see in almost

341
00:16:48,040 --> 00:16:51,080
every analyst's model that they
they're going to fall

342
00:16:51,080 --> 00:16:54,360
substantially between now and
say FY 30.

343
00:16:55,080 --> 00:16:58,920
And the company hasn't really
updated on these costs in in

344
00:16:58,920 --> 00:17:01,520
quite some time.
So you're working off a steer

345
00:17:01,520 --> 00:17:04,240
from the company and you're
making assumptions as an

346
00:17:04,240 --> 00:17:06,760
analyst.
But as you'd suspect, there were

347
00:17:06,760 --> 00:17:08,680
a lot of questions around this.
So we'll play one from Kate

348
00:17:08,680 --> 00:17:12,040
McCutcheon, which I think covers
this quite well as they look to

349
00:17:12,040 --> 00:17:13,400
get a bit more clarity on this
point.

350
00:17:14,160 --> 00:17:17,200
And then in Slide 16, you've
told us that you expect FOB cost

351
00:17:17,200 --> 00:17:21,000
to come down 20 to 25% in 27.
So that implies a little over

352
00:17:21,000 --> 00:17:24,560
800 a ton Aussie, which is kind
of similar to Linda's question,

353
00:17:24,560 --> 00:17:27,560
is that level of cost out also
how we should think about all in

354
00:17:27,560 --> 00:17:30,640
sustaining costs?
And would it be unfair to assume

355
00:17:30,640 --> 00:17:35,520
that's a A level going forward?
So a lot of the drop.

356
00:17:35,560 --> 00:17:39,400
In FY20 7 is because we start
getting efficiencies, a lot of

357
00:17:39,400 --> 00:17:42,920
the mining costs underground are
fixed and as we ramp up volumes,

358
00:17:42,920 --> 00:17:46,960
we we wash the fixed costs more
cleanly over over more tons.

359
00:17:46,960 --> 00:17:49,560
From a sort of go forward
perspective.

360
00:17:50,440 --> 00:17:54,280
You know, I think I mean as you
can see in the the meal chart

361
00:17:54,280 --> 00:17:58,400
there, we do have high capital
development costs at the moment

362
00:17:58,400 --> 00:18:00,760
and we expect those to to
moderate over time.

363
00:18:01,640 --> 00:18:04,600
So as we've previously, just to
build on what Graham said Kate,

364
00:18:04,640 --> 00:18:08,000
as we move into the thicker bulk
zones of the ore body, which we

365
00:18:08,000 --> 00:18:11,280
anticipate doing in the back end
of FY20 6 and inch 27, we will

366
00:18:11,280 --> 00:18:12,920
definitely get economies of
scale.

367
00:18:13,120 --> 00:18:15,600
We will be able to wash over the
fixed costs of the contract

368
00:18:15,600 --> 00:18:18,680
mining over more tons as we get
into those larger Stopes.

369
00:18:19,920 --> 00:18:22,600
I find this so interesting.
I'll I'll let, I'll let you,

370
00:18:22,600 --> 00:18:25,440
I'll let you continue point
here, JDI.

371
00:18:25,440 --> 00:18:27,520
Trust Tony to, to hammer home
the point.

372
00:18:27,600 --> 00:18:30,160
I, I think it's really
interesting.

373
00:18:30,160 --> 00:18:34,200
The the obvious thing to say is
that how could underground

374
00:18:34,200 --> 00:18:38,440
mining costs be lower than open
pit mining costs?

375
00:18:38,800 --> 00:18:42,240
And when you look at those
models, I, I hear what they're

376
00:18:42,240 --> 00:18:47,440
saying because the tons coming
out accelerate and they, and the

377
00:18:47,440 --> 00:18:51,600
tons ultimately produced a
significantly higher in 2728

378
00:18:52,000 --> 00:18:54,400
than what they are and, and have
been going back.

379
00:18:54,400 --> 00:18:57,920
But really I think it's, it's a
thumb suck.

380
00:18:57,920 --> 00:19:01,640
We, we, we don't really know.
And it's a, it's a relatively

381
00:19:01,640 --> 00:19:03,760
big assumption to make that
they're going to peel off.

382
00:19:03,760 --> 00:19:05,800
But what?
What do you think on this one

383
00:19:05,800 --> 00:19:07,760
mate?
Who who's who's mining

384
00:19:07,760 --> 00:19:09,640
underground cheaper than our
computer mining?

385
00:19:09,640 --> 00:19:11,960
Just unit economics don't quite
work that way.

386
00:19:12,320 --> 00:19:15,560
Yeah, it it, it's a tough one to
to touch on a positive point.

387
00:19:15,800 --> 00:19:18,800
The lithium market has ticked up
over the last month.

388
00:19:18,840 --> 00:19:21,680
And I think that that provides a
bit of context to what really

389
00:19:21,680 --> 00:19:25,280
matters at the end of the day.
And that is what is cash and

390
00:19:25,280 --> 00:19:28,160
what is cash going to look like
in in a year, in two years?

391
00:19:28,160 --> 00:19:31,800
And can they see themselves
through this, this pretty tough

392
00:19:31,800 --> 00:19:35,240
period in, in lithium pricing.
So straight away you can forget

393
00:19:35,360 --> 00:19:37,400
positive operating cash flow
that kind of goes out the door a

394
00:19:37,400 --> 00:19:40,240
lot of costs being capitalized.
But we'll play another question

395
00:19:40,240 --> 00:19:45,000
from from the Q&A, which I think
breaks this down in in in really

396
00:19:45,040 --> 00:19:46,960
simple to understand terms.
Skid math.

397
00:19:47,240 --> 00:19:50,720
Skid Math.
Just trying to if I run a very,

398
00:19:51,200 --> 00:19:54,200
if I run a very simple model of
the midpoints of all your

399
00:19:54,200 --> 00:19:57,320
guidance including CapEx
etcetera plus all the interest

400
00:19:57,320 --> 00:20:01,720
payments, principal payments,
you're going to spend over 660

401
00:20:01,720 --> 00:20:04,760
million Australian this year
before inventory adjustment.

402
00:20:05,360 --> 00:20:10,360
You know that means you know
your break even is about 1050

403
00:20:10,360 --> 00:20:14,320
USA ton.
On an SC six equivalent basis

404
00:20:17,360 --> 00:20:19,480
just based on your guidance,
just running the skid math.

405
00:20:19,960 --> 00:20:21,520
So maybe you?
Haven't had chance to do.

406
00:20:21,520 --> 00:20:24,160
That so assume you're right.
So we're yeah.

407
00:20:24,240 --> 00:20:28,240
So what's the question?
So I guess, you know that would

408
00:20:28,400 --> 00:20:34,440
today's price of $800 a ton cash
burn of 100 got 156.

409
00:20:34,440 --> 00:20:38,320
So that's fine because I guess
just you know, like what are you

410
00:20:38,320 --> 00:20:39,880
doing?
You've got your extra 100

411
00:20:39,880 --> 00:20:43,480
million of debt you can you're
allowed to get maybe you can get

412
00:20:43,480 --> 00:20:45,920
forward to defer.
I just just curious, what are

413
00:20:45,920 --> 00:20:47,200
you doing?
OK.

414
00:20:47,560 --> 00:20:49,480
To make sure you additional
liquidity.

415
00:20:50,040 --> 00:20:52,240
OK.
So that's the the question.

416
00:20:53,000 --> 00:20:56,160
OK, well look there's a couple
of things we're going to focus

417
00:20:56,160 --> 00:20:57,920
on.
Well, clearly we're going to

418
00:20:57,920 --> 00:21:01,640
focus more on cost optimization
and we're going to pull that

419
00:21:01,640 --> 00:21:04,600
lever.
The second thing is, you know,

420
00:21:04,600 --> 00:21:07,840
we've got a strong balance to
start with 156,000,000.

421
00:21:08,960 --> 00:21:11,600
Thirdly, you know, we've got a
track record.

422
00:21:11,600 --> 00:21:14,600
Well, there's a bit of a price
improvement, but we've also got

423
00:21:14,600 --> 00:21:17,960
a track record of finding
funding solutions with our

424
00:21:17,960 --> 00:21:23,040
customers and other parties.
So we will continue to look at

425
00:21:23,040 --> 00:21:27,800
those funding options as we
progress forward, as simple as

426
00:21:27,800 --> 00:21:30,360
that.
But it depends really on where

427
00:21:30,360 --> 00:21:33,920
the market goes.
Yeah.

428
00:21:33,960 --> 00:21:36,240
And and Glenn just to add to
that, I mean we, we haven't

429
00:21:36,240 --> 00:21:40,040
pulled the lever on prepayments
like a lot of our peers have

430
00:21:40,040 --> 00:21:41,880
done.
We you know as we've just

431
00:21:41,880 --> 00:21:44,640
demonstrated in 27 and beyond,
we have a significant amount of

432
00:21:44,640 --> 00:21:47,400
more volume to place.
You know that could be spot,

433
00:21:47,400 --> 00:21:50,200
could be long term offtake.
So, you know, we still have

434
00:21:50,200 --> 00:21:52,440
quite a lot of options ahead of
us.

435
00:21:53,040 --> 00:21:55,800
Everyone's got levers.
Always levers, mate.

436
00:21:56,480 --> 00:21:58,880
Prepaid.
That's a, that's a, That's a

437
00:21:58,880 --> 00:22:01,600
lever, yeah.
I think the broader question of

438
00:22:01,960 --> 00:22:05,960
going more down the debt route,
which is all they seem to be

439
00:22:05,960 --> 00:22:09,760
interested in doing as opposed
to raising equity is an

440
00:22:09,760 --> 00:22:12,800
interesting thing to think
through because they've still

441
00:22:12,800 --> 00:22:16,280
got a huge market cap, right?
Like it wouldn't be the most

442
00:22:16,440 --> 00:22:19,920
dilutive raise for a company in
their, in their situation to, to

443
00:22:19,920 --> 00:22:23,640
perform.
So of course you're always going

444
00:22:23,800 --> 00:22:26,480
to talk about the debt route,
even if you're thinking in the

445
00:22:26,480 --> 00:22:27,960
back of your mind, you're going
to raise equity because you

446
00:22:27,960 --> 00:22:30,520
don't want to scare the market
off and make that a higher sort

447
00:22:30,520 --> 00:22:32,160
of cost of capital than it needs
to be.

448
00:22:32,800 --> 00:22:35,760
But I don't know what are what
are your thoughts on the the

449
00:22:35,760 --> 00:22:38,240
levers or the types of capital
they could pull in?

450
00:22:38,840 --> 00:22:41,200
I feel like there's a bit of a
Mexican stand off amongst a

451
00:22:41,440 --> 00:22:44,760
bunch of a bunch of like, yeah,
lithium producers.

452
00:22:45,320 --> 00:22:48,680
Everyone else kind of gets a bit
of a bump if someone else, you

453
00:22:48,680 --> 00:22:51,200
know, curtails their supply and
it doesn't make a substantial

454
00:22:51,200 --> 00:22:54,920
difference to to the market.
And I do feel a bit for Lontown

455
00:22:54,920 --> 00:22:57,840
because they, it's a single
asset developer.

456
00:22:57,840 --> 00:23:00,040
It's not, they're not in the
same situation as a lot of the

457
00:23:00,040 --> 00:23:03,040
other players where they've got
other operations, a bigger

458
00:23:03,040 --> 00:23:06,680
balance sheet, a larger company.
It's I don't need to be a

459
00:23:06,680 --> 00:23:09,000
position like I think it's a
tricky situation to be in.

460
00:23:09,080 --> 00:23:10,920
There's no doubt.
What would I do?

461
00:23:13,720 --> 00:23:14,840
Yeah.
I would explore some of those

462
00:23:14,840 --> 00:23:17,080
like unique kind of funding
options, but I wouldn't be

463
00:23:17,080 --> 00:23:19,160
averse to dilutive funding
options as well.

464
00:23:19,280 --> 00:23:21,040
Yeah, I'm with you.
Like we all want to see them

465
00:23:21,160 --> 00:23:23,800
kind of get through this and get
at the the end of it.

466
00:23:23,800 --> 00:23:26,640
And there are certainly a number
of ways in which they can do

467
00:23:26,640 --> 00:23:29,360
that.
And yeah, I don't think hoping

468
00:23:29,360 --> 00:23:32,240
for the lithium price to tick up
is it's necessarily the best

469
00:23:32,240 --> 00:23:33,800
strategy as much as you want
that to happen.

470
00:23:33,800 --> 00:23:36,360
But let's sort of wait and see.
I think that the last bit we

471
00:23:36,360 --> 00:23:38,680
have to play is probably the
best bit of the call.

472
00:23:38,680 --> 00:23:43,000
And this was a little comment
that Tony O made to to Linden on

473
00:23:43,000 --> 00:23:44,280
the way out.
Let's give it a play now.

474
00:23:44,280 --> 00:23:46,640
Yes.
Volume goes up, so volume goes

475
00:23:46,680 --> 00:23:47,080
up.
Yep, Yep.

476
00:23:49,480 --> 00:23:50,120
Got it.
OK.

477
00:23:50,120 --> 00:23:51,240
That's helpful.
Thanks.

478
00:23:52,840 --> 00:23:54,240
Yeah, look, that's pretty much
all I had.

479
00:23:54,320 --> 00:23:56,680
Thanks guys.
You're going to change your

480
00:23:56,680 --> 00:24:02,440
rating on us, Linden?
It's cricket.

481
00:24:02,440 --> 00:24:03,360
Next question.
Thanks.

482
00:24:04,680 --> 00:24:08,560
But mate, Linden Fagan, he
answered the question when JP

483
00:24:08,560 --> 00:24:11,520
Morgan brought out an updated
research report later that

484
00:24:11,520 --> 00:24:14,200
evening.
Retain underweight 30 cent price

485
00:24:14,200 --> 00:24:15,280
target.
So he didn't change that.

486
00:24:15,480 --> 00:24:16,840
He did not change the rating on
Lyntown.

487
00:24:17,320 --> 00:24:20,240
Next time, next time.
But you know what gives me

488
00:24:20,240 --> 00:24:22,120
confidence in in Lyntown?
Tell me.

489
00:24:22,520 --> 00:24:25,640
Knowing just how close they are
to the Sandvik Ground Support

490
00:24:25,720 --> 00:24:28,640
Kewdale manufacturing facility.
That makes sense mate.

491
00:24:28,640 --> 00:24:31,200
Kewdale, It is just just out of
Perth.

492
00:24:31,200 --> 00:24:33,920
Well, it's in Perth, but that is
close proximity.

493
00:24:34,320 --> 00:24:38,160
You can have your bespoke ground
support needs manufactured right

494
00:24:38,160 --> 00:24:41,240
here and delivered in no time.
A. 100% and how good is the

495
00:24:41,240 --> 00:24:43,120
strategy?
Like this isn't just the Kewdale

496
00:24:43,120 --> 00:24:45,560
facility, Sandvik ground
support, They do this all around

497
00:24:45,560 --> 00:24:46,680
the world.
They're in every corner.

498
00:24:46,680 --> 00:24:50,120
They can get that order to your
stat and I know you're a you're

499
00:24:50,120 --> 00:24:52,000
a big fan of the the apps out
there mate.

500
00:24:52,000 --> 00:24:53,680
Are you on the ground support
app from Sandy?

501
00:24:54,280 --> 00:24:56,960
Duh, mate.
How good is that out right?

502
00:24:56,960 --> 00:24:59,600
If you want to Chuck in an order
you want to sort of size up what

503
00:24:59,600 --> 00:25:01,680
you might need for your bolts
and your mesh, you can just

504
00:25:01,680 --> 00:25:03,400
Chuck it in right there and then
on the app.

505
00:25:03,440 --> 00:25:06,560
Elite, elite, elite.
And it's not just the app

506
00:25:06,840 --> 00:25:09,920
either, mate, R&D, these guys
are at the the bleeding edge of

507
00:25:09,920 --> 00:25:13,000
making underground operations as
cheap as they can possibly be.

508
00:25:13,040 --> 00:25:15,480
Personally, I think the app is
part of the R&D vision, but it's

509
00:25:15,480 --> 00:25:16,640
all part of the same puzzle
mate.

510
00:25:16,640 --> 00:25:19,400
That is, but the innovation
comes to the ground support the

511
00:25:19,400 --> 00:25:22,400
dynamic resin bolts mate.
Far out that is, that is taking

512
00:25:22,400 --> 00:25:24,800
off.
All born out of Derek Hurd's own

513
00:25:24,800 --> 00:25:27,480
creativity, right?
Boy, and he's and he's wonderful

514
00:25:27,480 --> 00:25:28,440
team.
That's it.

515
00:25:28,480 --> 00:25:31,320
It's the whole team takes all
the whole team's responsible.

516
00:25:31,560 --> 00:25:34,040
All this is to say mate, that
Sandvik Ground Support can help

517
00:25:34,040 --> 00:25:37,600
you drive down your costs and
drive up your profitability.

518
00:25:37,600 --> 00:25:39,320
So get in touch with Sandvik
Ground Support.

519
00:25:39,320 --> 00:25:41,560
While keeping people safe.
Thank you, Derek Hurd, and thank

520
00:25:41,560 --> 00:25:42,960
you Sandvik Ground Support.
Go Sandvik.

521
00:25:43,640 --> 00:25:47,640
To boss tank long town kind of
scared to buy from just like

522
00:25:47,640 --> 00:25:50,080
share price perspective.
It wasn't it wasn't like a super

523
00:25:50,080 --> 00:25:51,760
mover.
Great land on the other hand,

524
00:25:51,760 --> 00:25:55,560
smashed, absolutely smashed.
They tried to close to $7.00 a

525
00:25:55,560 --> 00:25:58,040
share 2 days ago.
Now they're in the low fives,

526
00:25:58,040 --> 00:26:01,560
peeling back 24% on the day of
the quarterly.

527
00:26:01,680 --> 00:26:03,240
Yeah, mate, tough, tough day in
the office.

528
00:26:03,280 --> 00:26:07,160
I think the the the consolation
is that they've been on a hell

529
00:26:07,160 --> 00:26:08,440
of a tear.
Big tear.

530
00:26:08,600 --> 00:26:10,920
Yeah, big tear.
So it's not all that bad to dive

531
00:26:10,920 --> 00:26:13,480
in.
What's going on part of it is

532
00:26:13,480 --> 00:26:15,880
backward looking while the
market reacted this way and sort

533
00:26:15,880 --> 00:26:19,320
of reflecting on the
underperformance or the perhaps

534
00:26:19,320 --> 00:26:22,040
disappointment regarding grade
and and reconciliation,

535
00:26:22,800 --> 00:26:27,040
especially when you're talking
about the the stockpiled or but

536
00:26:27,040 --> 00:26:29,680
then of course, you've got the
the outlook again, similar to

537
00:26:29,680 --> 00:26:34,880
boss the the outlook was not
quite what it had been expected

538
00:26:34,880 --> 00:26:37,920
to be in the market.
So those who purchase stock in

539
00:26:37,920 --> 00:26:41,960
the IPO, not a heap of people,
although a bunch bought off the

540
00:26:41,960 --> 00:26:45,000
the Newmont sell down, they're
underwater by 20%.

541
00:26:45,000 --> 00:26:47,240
But I'm sure, like we said,
there's plenty of shareholders

542
00:26:47,680 --> 00:26:49,600
that'll be sitting quite pretty
still.

543
00:26:50,400 --> 00:26:52,760
So what's actually happened from
a garden's perspective?

544
00:26:52,920 --> 00:26:56,400
So breaking it down in in simple
terms to try not to run through

545
00:26:56,400 --> 00:27:01,200
so many numbers, but looking at
the midpoint of what gardens had

546
00:27:01,200 --> 00:27:05,840
previously been indicated to be
you had 320,000 oz at 2500

547
00:27:05,840 --> 00:27:09,760
Aussie all in sustaining cost.
Now what we're looking at is

548
00:27:10,560 --> 00:27:16,760
285,000 oz at 2600.
So you know, call it 40 ish 1000

549
00:27:16,760 --> 00:27:19,680
less answers and A and a
marginally higher cost profile

550
00:27:19,680 --> 00:27:22,480
there.
If you reflect on the all and

551
00:27:22,480 --> 00:27:25,680
sustaining cost of the quarter
just gone, that's coming out at

552
00:27:25,680 --> 00:27:28,480
about 1000 bucks higher.
Now, granted, they they've

553
00:27:28,480 --> 00:27:31,680
benefited from purchasing these
stockpiles and a bit of

554
00:27:31,680 --> 00:27:35,440
accounting and them not having
to speak for the the mining

555
00:27:35,440 --> 00:27:38,960
costs in the in the stockpile
product there, but it it's a big

556
00:27:39,040 --> 00:27:40,920
tick upwards.
And what?

557
00:27:41,080 --> 00:27:42,160
Why?
Like I said, why the

558
00:27:42,160 --> 00:27:45,160
readjustment?
So firstly, you've got this

559
00:27:45,160 --> 00:27:48,560
grade reconciliation issues.
So the the gold grade

560
00:27:48,560 --> 00:27:51,280
expectations in the stockpiles
have been lowered down.

561
00:27:51,280 --> 00:27:54,760
In super simple terms, they
talked a lot about risk

562
00:27:54,760 --> 00:28:01,280
adjustment, but it's gone from
0.64 down to 0.5 seven in the

563
00:28:02,000 --> 00:28:03,880
the higher grade stockpile that
they have because they have

564
00:28:03,880 --> 00:28:09,360
these low grade stock page that
run at about .3 also reflected

565
00:28:09,360 --> 00:28:13,240
in a bit of the open pit or as
well.

566
00:28:13,240 --> 00:28:17,200
So they've been feeding a decent
portion of this stockpile

567
00:28:17,200 --> 00:28:20,440
product through the plant, 2.2
million tons in in the past

568
00:28:21,160 --> 00:28:24,640
quarter alone.
And then you've got another big

569
00:28:24,640 --> 00:28:27,960
adjustment in the growth capital
that they're going to spend over

570
00:28:27,960 --> 00:28:29,800
Fr 26.
So this has previously been

571
00:28:29,800 --> 00:28:33,000
guided at 80 million that's
jumped up to about 250 million.

572
00:28:33,000 --> 00:28:36,360
So they're going to be doing a
heap more drilling 240,000

573
00:28:36,360 --> 00:28:40,760
meters over the coming year.
And this all sort of ties in

574
00:28:40,760 --> 00:28:43,720
with really wanting to extend
that that mine life because if

575
00:28:43,720 --> 00:28:45,640
you remember when they purchased
thing, there was only a couple

576
00:28:45,640 --> 00:28:46,920
years of mine life in it.
So they want to.

577
00:28:47,400 --> 00:28:50,640
I'm going to push that out
whilst they approach FID on.

578
00:28:50,640 --> 00:28:52,400
Have your own.
Yeah, yeah.

579
00:28:52,400 --> 00:28:54,640
And they've got, they probably
argue with the fact there's only

580
00:28:54,640 --> 00:28:56,680
a couple of years in my life and
they'll talk about the future

581
00:28:56,680 --> 00:29:00,840
cutbacks to Telford etcetera.
But the the reconciliation issue

582
00:29:00,840 --> 00:29:03,760
is interesting.
You do this is just, you get,

583
00:29:03,840 --> 00:29:05,920
you get punished by the market
when you, you're, you're

584
00:29:05,920 --> 00:29:08,280
disappointed on guidance or
expectations and you get, you

585
00:29:08,280 --> 00:29:10,680
get punished in a
disproportionate way then might

586
00:29:10,680 --> 00:29:14,560
be warranted.
But at the moment you have one

587
00:29:14,560 --> 00:29:18,160
reconciliation issue in, in, you
know, in one area, everyone

588
00:29:18,160 --> 00:29:21,120
starts wondering and
extrapolating, are the lower

589
00:29:21,120 --> 00:29:23,120
grade stockpiles maybe going to
have reconciliation issue as

590
00:29:23,120 --> 00:29:25,960
well?
It's the those high grade ones

591
00:29:26,160 --> 00:29:28,080
that were recently mined.
So was it an all body

592
00:29:28,080 --> 00:29:29,240
reconciliation issue and the
model?

593
00:29:29,240 --> 00:29:31,920
Has been used and there's
flashbacks as well to to Newmont

594
00:29:31,920 --> 00:29:34,800
because they had problems with
this asset back in the day with

595
00:29:35,000 --> 00:29:38,000
certain reconciliation problems.
So shareholders do not want to

596
00:29:38,000 --> 00:29:41,640
say that again, if we try and
peel into like how much cash are

597
00:29:41,640 --> 00:29:44,160
they actually going to make over
the foreseeable because they've

598
00:29:44,160 --> 00:29:47,160
come in at the back of six
months where they've harvested a

599
00:29:47,160 --> 00:29:49,640
fair chunk of cash.
But if you look forward and this

600
00:29:49,640 --> 00:29:52,560
is, you know, really back of the
envelope type numbers, But if

601
00:29:52,560 --> 00:29:54,760
you assume the midpoints of
their guidance over the next

602
00:29:54,760 --> 00:29:58,920
year and assume the current gold
price, 5100 Aussie bucks,

603
00:29:59,720 --> 00:30:03,080
multiply the all in sustaining
cost by 1.3 to give you a

604
00:30:03,080 --> 00:30:05,680
relatively friendly assumption
for cake.

605
00:30:07,000 --> 00:30:10,520
That gives you $490 million.
Now you minus the midpoints of

606
00:30:10,520 --> 00:30:14,800
CapEx, that's 370 million.
You get 120 in, in free cash

607
00:30:14,800 --> 00:30:17,280
flow there.
Now you also have to bear in

608
00:30:17,280 --> 00:30:20,280
mind that at the end of this
year, they're going to reach FRD

609
00:30:20,280 --> 00:30:24,200
on heavier on.
And I, I don't think it's out of

610
00:30:24,200 --> 00:30:27,560
the realm of possibility to, to
see them spend 500 million plus

611
00:30:28,000 --> 00:30:33,600
over FY20 7 on CapEx, including,
you know, the, the asset build

612
00:30:33,600 --> 00:30:36,520
and everything else they're
going to spend on over that

613
00:30:36,520 --> 00:30:38,760
year.
But all that's to kind of say

614
00:30:38,760 --> 00:30:42,480
that there might not be an awful
lot of cash flow over the next

615
00:30:42,480 --> 00:30:47,880
few years as they sort of bring
on have Iran and increase the,

616
00:30:47,960 --> 00:30:51,040
the sort of profile and extend
the mine life and these sorts of

617
00:30:51,040 --> 00:30:52,480
things.
It could be way off base, but

618
00:30:52,480 --> 00:30:54,680
they're just sort of rough
numbers on that one.

619
00:30:55,400 --> 00:30:57,400
They're they're, they're going
to, they're probably going to

620
00:30:57,400 --> 00:31:00,000
argue their case that you've
double punished them on, on

621
00:31:00,000 --> 00:31:03,400
CapEx for applying cake and then
mining CapEx again.

622
00:31:03,640 --> 00:31:06,240
But.
I I would argue back.

623
00:31:06,280 --> 00:31:08,600
Yeah.
You would argue back the the,

624
00:31:09,560 --> 00:31:14,080
the, the 370 CapEx that you
subtracted there is that

625
00:31:14,280 --> 00:31:18,360
including like you know the
bunch of kind of work going on

626
00:31:18,400 --> 00:31:21,200
in the the decline for Haveron?
70 million bucks.

627
00:31:21,200 --> 00:31:21,600
OK.
OK.

628
00:31:21,680 --> 00:31:23,760
So there's partial, partial work
into Haveron as well through

629
00:31:23,760 --> 00:31:25,240
that, OK.
Yeah, Yeah, that's right.

630
00:31:25,240 --> 00:31:28,760
So I think like overall the the
asset is clearly in the hands of

631
00:31:29,440 --> 00:31:31,240
a company that cares more about
it.

632
00:31:31,240 --> 00:31:33,920
And I think the asset's
improving and I think all the

633
00:31:33,920 --> 00:31:37,400
drilling they're going to do
here is it's a good sign, right?

634
00:31:37,400 --> 00:31:39,280
Because it's going to extend the
mine life and it's going to help

635
00:31:39,280 --> 00:31:41,560
them understand.
So you don't have these shocks

636
00:31:41,560 --> 00:31:44,240
with like the, the drill spacing
is coming down quite

637
00:31:44,240 --> 00:31:46,800
dramatically.
So you've got other positives

638
00:31:46,800 --> 00:31:48,400
like recoveries being at 15 year
highs.

639
00:31:48,400 --> 00:31:51,600
If you look at the, the full
financial year and they're

640
00:31:51,600 --> 00:31:53,520
sitting on a relatively healthy
pile of cash.

641
00:31:53,520 --> 00:31:58,040
So the the readjustment has been
pretty harsh and it's a bit of

642
00:31:58,680 --> 00:32:02,160
pill to kind of swallow.
Is the business like 24% worse

643
00:32:02,160 --> 00:32:04,680
than it was the day before?
I don't really think, I don't

644
00:32:04,760 --> 00:32:08,040
think you're going to mark down
NAV 24% on the back of these

645
00:32:08,040 --> 00:32:10,160
results.
So I think it's more of a factor

646
00:32:10,160 --> 00:32:12,400
of people getting a bit carried
away with how good things could

647
00:32:12,400 --> 00:32:15,760
have been previously and
extending those sort of

648
00:32:15,760 --> 00:32:18,520
expectations going forward.
I think things are still, you

649
00:32:18,520 --> 00:32:20,960
know, like it's, it's there for
them to deliver, right?

650
00:32:21,360 --> 00:32:24,120
Let's let's get into a bit of
activism, a bit of M&A with

651
00:32:24,120 --> 00:32:27,040
Capricorn and Warda.
I've been compelled to do this

652
00:32:27,040 --> 00:32:31,120
segment, JD, from the flurry of
of emails and DMS and everything

653
00:32:31,120 --> 00:32:33,680
that I've had from Warda
shareholders.

654
00:32:33,680 --> 00:32:35,400
I didn't know there were so many
of them out there, did you?

655
00:32:36,840 --> 00:32:40,400
Antimony yeah, retail connecting
a few dots I didn't know

656
00:32:40,400 --> 00:32:42,440
beforehand, but looking
backwards.

657
00:32:42,920 --> 00:32:45,320
Yeah.
Well, anyway, I'm now very well

658
00:32:45,320 --> 00:32:48,520
aware.
So Capricorn, they've agreed a

659
00:32:48,640 --> 00:32:52,320
script deal to buy Word and it's
triggered a wave of kind of

660
00:32:52,320 --> 00:32:54,800
grassroots pushed back mostly
from the the retail shareholders

661
00:32:54,800 --> 00:32:58,560
of of Word who feel that the
deal undervalues them.

662
00:32:58,560 --> 00:33:02,200
Those shareholders, they're
voicing their dissatisfaction

663
00:33:02,200 --> 00:33:05,080
and they're organising on stock
forums to try and force a

664
00:33:05,080 --> 00:33:07,680
different outcome compared to
the deal on hand right now.

665
00:33:07,800 --> 00:33:09,880
OK.
If we step back, what?

666
00:33:09,880 --> 00:33:12,680
What is the deal?
The terms are kind of simple.

667
00:33:12,760 --> 00:33:16,960
You know, what are our
shareholders for every 62 shares

668
00:33:16,960 --> 00:33:18,880
they own, they're going to get
one Capricorn shares.

669
00:33:18,880 --> 00:33:22,560
And what does that merger ratio
kind of back out or the 15 1/2

670
00:33:22,560 --> 00:33:26,720
cent kind of per share price
for, for your word, our

671
00:33:26,720 --> 00:33:28,600
shareholding.
That's a, that's a 29% premium

672
00:33:28,600 --> 00:33:30,480
toward our last close before the
deal was announced.

673
00:33:30,840 --> 00:33:34,080
And the whole company has $190
million equity value all in

674
00:33:34,080 --> 00:33:37,200
Capricorn script.
Everyone knows Capricorn best in

675
00:33:37,200 --> 00:33:40,240
class kind of execution of
building gold mines and

676
00:33:40,240 --> 00:33:42,760
shareholder value.
Team team is elite.

677
00:33:42,840 --> 00:33:44,480
You know, they, they've got a
premium for a reason.

678
00:33:44,480 --> 00:33:46,840
They execute their long term
thinkers.

679
00:33:46,840 --> 00:33:49,920
They're now they're they're of
course, you know, making money

680
00:33:49,920 --> 00:33:51,160
color window.
They're expanding that.

681
00:33:51,440 --> 00:33:54,560
The development project for some
time has been Mount Gibson gold

682
00:33:54,560 --> 00:33:59,120
project, which is in the
vicinity of Wardas Golden Range

683
00:33:59,120 --> 00:34:03,040
project and and associated kind
of deposits there Ward are still

684
00:34:03,040 --> 00:34:05,480
in pre development phase.
They've got you know, they've

685
00:34:05,480 --> 00:34:08,040
got some promising Oz,
particularly at our I'm going to

686
00:34:08,040 --> 00:34:10,320
call it Ricky Otto because it's
spelled Ricky Otto, but they

687
00:34:10,320 --> 00:34:13,520
probably pronounce it Ricardo,
but you'd know better namesake

688
00:34:13,520 --> 00:34:17,880
mate.
Anyway, the Antimony adds some

689
00:34:17,880 --> 00:34:20,679
complexity, but it's also
strategic value, and it's also

690
00:34:20,679 --> 00:34:24,239
probably the reason the stock
has the retail following it

691
00:34:24,239 --> 00:34:26,639
does.
Yeah, they're not in an awfully

692
00:34:26,639 --> 00:34:30,360
unfamiliar position for a
company like like them, right?

693
00:34:30,400 --> 00:34:33,520
No, no, I don't think so.
And like the, you know, the

694
00:34:33,520 --> 00:34:35,520
truth of the position that
they're in is it's like, you

695
00:34:35,520 --> 00:34:37,880
know, the classic challenge of
pre cash flow junior, I mean,

696
00:34:38,080 --> 00:34:39,760
gold mark has been great.
So a lot of these companies have

697
00:34:39,760 --> 00:34:42,400
been ripping, but you know,
they, they're trying to convert

698
00:34:42,400 --> 00:34:45,080
the exploration momentum into
institutional interest.

699
00:34:45,400 --> 00:34:48,719
Like, you know, you're funding
long enough to advance without

700
00:34:48,719 --> 00:34:51,840
dilution, getting the market to
pay attention for more than 5

701
00:34:51,840 --> 00:34:52,960
minutes.
All of that stuff's tough.

702
00:34:52,960 --> 00:34:55,320
And they'd started to build a
strong following.

703
00:34:55,320 --> 00:34:58,160
That following now feels like
the board sold the company too

704
00:34:58,160 --> 00:35:01,680
early and too cheaply so.
What do you think mate?

705
00:35:02,200 --> 00:35:05,160
I have a bias to usually
sympathize with the shareholders

706
00:35:05,160 --> 00:35:07,440
who feel aggrieved or done wrong
by a board.

707
00:35:07,600 --> 00:35:09,720
I'm usually in their court like
90% of the time.

708
00:35:10,200 --> 00:35:13,520
This time I'm not, I'm not
convinced it's a bad outcome for

709
00:35:13,520 --> 00:35:15,920
shareholders.
But to explain that, I'm going

710
00:35:15,920 --> 00:35:17,280
to try and contextualize what I
mean.

711
00:35:17,280 --> 00:35:21,440
Like I think the shareholders
are they're comparing like I see

712
00:35:21,440 --> 00:35:24,600
a lot of them talk about this,
you know, EV per Oz and they'll

713
00:35:24,600 --> 00:35:27,320
compare it to to Spartan and
other recent deals.

714
00:35:27,360 --> 00:35:30,320
And you know, you know how I
kind of think about some of

715
00:35:30,320 --> 00:35:32,440
that, like the value of
announced in the ground is not

716
00:35:32,440 --> 00:35:33,840
the same as the value of
announced in the ground

717
00:35:33,840 --> 00:35:36,440
somewhere else with higher grade
and all that kind of stuff.

718
00:35:36,440 --> 00:35:40,640
What's what's more though is I
think, I think where our

719
00:35:40,640 --> 00:35:42,920
shareholders they might not
fully appreciate like

720
00:35:42,920 --> 00:35:45,800
Capricorn's motivations and
their motivations aren't as

721
00:35:45,800 --> 00:35:47,720
straightforward as you know what
you just read in the deal

722
00:35:47,720 --> 00:35:50,000
rationale that's come to market.
Yeah, OK.

723
00:35:50,040 --> 00:35:51,920
So I mean, let's peel out What?
Why?

724
00:35:51,920 --> 00:35:56,000
It's an OK deal then.
So shareholders like, well, a

725
00:35:56,000 --> 00:35:58,920
big group of shareholders appear
to think that the board has done

726
00:35:58,920 --> 00:36:02,280
a bad deal for them.
And you remember, like you can

727
00:36:02,280 --> 00:36:06,760
actually read the the scheme,
yeah, the Sid when it comes up

728
00:36:06,760 --> 00:36:08,560
and the deal's announced and you
can figure out when the

729
00:36:08,560 --> 00:36:10,440
confidentiality agreement was
signed.

730
00:36:10,840 --> 00:36:14,720
Now, in this case, ACA was
signed between Capricorn and

731
00:36:14,800 --> 00:36:17,720
Warda on the 25th of March.
So that's four months before the

732
00:36:17,720 --> 00:36:21,360
deal was actually announced.
Warda stock was six cents then.

733
00:36:21,360 --> 00:36:24,480
And I don't think it's
immediately apparent to everyone

734
00:36:24,480 --> 00:36:26,680
what is like happening when ACA
gets signed.

735
00:36:26,680 --> 00:36:30,920
But the usual, the usual
process, you know, for ACA to

736
00:36:30,920 --> 00:36:34,640
actually get signed is, you
know, a, a, a bidder or someone

737
00:36:34,640 --> 00:36:37,400
who has interest in a target
that will, that will, you know,

738
00:36:37,400 --> 00:36:40,800
give the chair of the, the
target company and NBIO and the

739
00:36:40,800 --> 00:36:44,840
NBIO will say, you know, like,
subject to mutual due diligence,

740
00:36:44,840 --> 00:36:46,600
be interested in pursuing a
corporate transaction.

741
00:36:46,600 --> 00:36:49,400
Sometimes they'll often name a
price, sometimes they don't name

742
00:36:49,400 --> 00:36:51,680
a price.
And the, the receiver, like

743
00:36:51,760 --> 00:36:55,200
their defence strategy might,
might initially debate to knock

744
00:36:55,200 --> 00:36:57,240
it back or to argue for an
uplifting price.

745
00:36:57,240 --> 00:37:01,120
So by the time you actually get
to the point where ACI is

746
00:37:01,120 --> 00:37:04,240
executed, like the, there's
already been a bit of a

747
00:37:04,240 --> 00:37:07,360
negotiation on price, sort of
subject to subject to further

748
00:37:07,360 --> 00:37:10,800
due diligence or maybe maybe you
agreed to, to share some initial

749
00:37:10,800 --> 00:37:13,440
kind of material.
But the full amount of, you

750
00:37:13,440 --> 00:37:15,800
know, DD required comes a little
bit later.

751
00:37:15,800 --> 00:37:18,280
But you get close on price
before you actually sign that

752
00:37:18,280 --> 00:37:20,600
CA.
And, and for Capricorn to

753
00:37:20,600 --> 00:37:23,960
actually like sign that CA 6 of
March, like they're going to,

754
00:37:23,960 --> 00:37:26,520
they're going to put a bunch of
conditions in the NBIO that's

755
00:37:26,520 --> 00:37:29,040
actually sent to, to worry
around in the 1st place.

756
00:37:29,040 --> 00:37:31,080
And one of the conditions you're
kind of always going to put in

757
00:37:31,080 --> 00:37:33,960
these situations is something
like, no, for like, you know,

758
00:37:33,960 --> 00:37:36,560
where this is conditional on the
current share structure, which

759
00:37:36,560 --> 00:37:37,720
looks like this.
And you're not going to raise

760
00:37:37,720 --> 00:37:39,160
any more equity.
So it's all of these kind of

761
00:37:39,160 --> 00:37:41,720
pricing things are conditional
on the capital structure at that

762
00:37:41,720 --> 00:37:43,640
point in time.
And no, no material change.

763
00:37:44,040 --> 00:37:46,480
So they've, they've actually
entered the CIA four months ago

764
00:37:46,680 --> 00:37:49,760
with a, with a date.
And when I see that, I usually

765
00:37:49,760 --> 00:37:54,520
assume that a price is agreed
four months ago and, and it's

766
00:37:54,520 --> 00:37:56,640
going to be conditional and no
change to the capital structure.

767
00:37:57,200 --> 00:38:02,160
Now 4 months ago, word our stock
was six cents and the capital

768
00:38:02,160 --> 00:38:04,720
structure looked different too,
because word our raised

769
00:38:04,720 --> 00:38:08,560
$19,000,000 in May and they said
they'd spend that drilling out

770
00:38:08,560 --> 00:38:12,040
50,000 meters.
In one sense, you know, that's

771
00:38:12,040 --> 00:38:16,200
kind of a curious thing because
like, you know, Capricorn is

772
00:38:16,200 --> 00:38:19,320
there, they've agreed, they've
agreed enough to get the CIA

773
00:38:19,320 --> 00:38:22,360
signed and they wouldn't want
the race to be that.

774
00:38:22,360 --> 00:38:24,680
No one wants to acquire cash
with a print for a premium.

775
00:38:24,680 --> 00:38:26,640
Like, you know, you don't want
that race to happen, right?

776
00:38:27,000 --> 00:38:29,280
But on the other hand, I
actually think word I kind of

777
00:38:29,280 --> 00:38:32,200
needed to do that because their,
their own cash balance was

778
00:38:32,200 --> 00:38:33,960
dwindling by that point.
I think it was like it would

779
00:38:33,960 --> 00:38:36,240
have been less to less than
5,000,000 bucks at the time they

780
00:38:36,240 --> 00:38:39,200
did the race.
Now, if they're negotiating with

781
00:38:39,200 --> 00:38:41,880
Capricorn, Capricorn kind of has
a bit of leverage because word

782
00:38:41,880 --> 00:38:44,600
has come raise.
So the so the word I bought

783
00:38:44,600 --> 00:38:48,680
raises money and doing so
they're kind of playing hardball

784
00:38:48,680 --> 00:38:51,200
with Capricorn.
It's risky, you know, Capricorn

785
00:38:51,360 --> 00:38:54,920
could walk, but they don't, and
it's potentially let them get in

786
00:38:55,600 --> 00:38:59,840
an even higher eventual price.
Explain that further mate.

787
00:39:00,000 --> 00:39:03,200
What do you mean there?
So assuming the price is agreed

788
00:39:04,000 --> 00:39:08,520
when the NBI, like you know when
the CIA was signed and when the

789
00:39:08,520 --> 00:39:13,560
stock was $0.06, right?
No way was a price then agreed

790
00:39:13,560 --> 00:39:15,840
between the parties going to be
15.5 cents.

791
00:39:15,840 --> 00:39:18,800
I'd imagine like a $0.10, you
know, a healthy premium was was

792
00:39:18,920 --> 00:39:20,040
maybe agreed between the
parties.

793
00:39:20,040 --> 00:39:23,360
But Warda stock runs to $0.13 in
short order.

794
00:39:23,720 --> 00:39:25,600
Capricorn needs to get
comfortable with much higher

795
00:39:25,600 --> 00:39:27,720
price now or or walk away
entirely.

796
00:39:28,040 --> 00:39:31,360
And if Warda has no money, it's
harder to kind of negotiate from

797
00:39:31,360 --> 00:39:32,840
that position.
They need options.

798
00:39:33,200 --> 00:39:35,040
And one option is to solicit,
you know, others.

799
00:39:35,040 --> 00:39:37,120
Another option is to to go with
a loan.

800
00:39:37,720 --> 00:39:39,920
It says only ACI was signed.
So we don't know if there was

801
00:39:39,920 --> 00:39:42,080
exclusivity yet.
Don't you know, I'm not not sure

802
00:39:42,080 --> 00:39:44,840
on that from, but at least the
CIA was, was, was signed.

803
00:39:45,160 --> 00:39:48,880
To me it looks like the the race
kind of forced Capricorn to lift

804
00:39:48,880 --> 00:39:51,600
their price, you know, forced
them to, to to get their own

805
00:39:51,600 --> 00:39:53,960
value, even though from the
point they signed the CIA like

806
00:39:53,960 --> 00:39:57,320
this, you know, this is this is
a much healthier price stock.

807
00:39:57,680 --> 00:39:59,360
So it's a risque defence
strategy.

808
00:39:59,360 --> 00:40:01,880
So I mean, what do you think the
real value is and?

809
00:40:02,360 --> 00:40:05,640
To expand the conversation, you
know, you can, you can sort of

810
00:40:05,640 --> 00:40:08,000
speak to that for Capricorn and
potentially others out there.

811
00:40:10,360 --> 00:40:13,520
I, I think like when I think of
Capricorn, like, you know, we,

812
00:40:13,520 --> 00:40:15,560
we, we spend a lot of time
trying to understand the

813
00:40:15,600 --> 00:40:17,120
different Dnas of different
companies.

814
00:40:17,800 --> 00:40:23,520
Capricorn like long term
thinking from their side, like

815
00:40:23,880 --> 00:40:25,200
acquiring the project makes
sense.

816
00:40:25,200 --> 00:40:28,520
Golden Range sits like 90
kilometres South of Mount

817
00:40:28,520 --> 00:40:30,920
Gibson.
This obvious synergy, some

818
00:40:30,920 --> 00:40:35,160
people will point to a model
that Capricorn might embark on

819
00:40:35,160 --> 00:40:37,640
like, like, like, you know, it's
done with Dukeden.

820
00:40:37,640 --> 00:40:41,720
You got kind of 22 mills, you
know, it's like 100 KS part.

821
00:40:41,720 --> 00:40:44,880
And you know, various feeds, you
get optionality.

822
00:40:45,160 --> 00:40:46,920
You know, you can bring on
different things at different

823
00:40:46,920 --> 00:40:49,800
times and, and avoid the, you
know, when you're long or you

824
00:40:49,800 --> 00:40:52,320
can avoid some some of the lost
value that comes from things

825
00:40:52,320 --> 00:40:54,080
being deferred till till later
in the mine plan.

826
00:40:54,760 --> 00:40:59,240
And if you look at Mount Gibson
specifically like Capricorn will

827
00:40:59,240 --> 00:41:02,520
be long or there that like they
they did a first drill program

828
00:41:03,040 --> 00:41:06,000
which was outside the Mount
Gibson resource recently on the

829
00:41:06,000 --> 00:41:10,280
highway prospect that hit 28
meters at 8.6g a ton, something

830
00:41:10,280 --> 00:41:14,880
like that.
You know, is it like, you know,

831
00:41:14,880 --> 00:41:16,360
it's early stage, it's got to be
proved up.

832
00:41:16,360 --> 00:41:19,400
Is it which part of the mine
planet Mount Gibson is it going

833
00:41:19,400 --> 00:41:20,440
to go into?
It's got to be trucked as

834
00:41:20,440 --> 00:41:22,640
opposed to being like right near
the mill, but you get

835
00:41:22,640 --> 00:41:25,600
optionality by actually tracking
that to a different location, be

836
00:41:25,600 --> 00:41:29,400
it be it where, you know, word
as existing plant which requires

837
00:41:29,400 --> 00:41:33,160
refurbishment is or an
alternative plant as well.

838
00:41:33,160 --> 00:41:35,440
Because if you look in that
region, you've also got Golden

839
00:41:35,440 --> 00:41:38,560
Grove and that meal at Golden
Grove is already set up to

840
00:41:38,560 --> 00:41:42,320
process complex ores.
And that's what like, you know,

841
00:41:42,320 --> 00:41:46,680
word as and like met
requirements may actually kind

842
00:41:46,680 --> 00:41:49,400
of require a plant without, you
know, capacity.

843
00:41:51,000 --> 00:41:52,520
Yeah.
So I mean, flicking that over,

844
00:41:53,080 --> 00:41:55,800
the Warrior shareholders say
they want to hear a bit more.

845
00:41:56,120 --> 00:41:57,600
Where do you think it kind of
leaves them?

846
00:42:00,720 --> 00:42:03,160
From my perspective, this is
probably as good a scripted as

847
00:42:03,160 --> 00:42:07,320
warrior was likely to get right,
and that will fiercely disagree

848
00:42:07,400 --> 00:42:10,320
with me on this, but that's OK.
Many views makes a market.

849
00:42:11,360 --> 00:42:14,000
You have to you have to think
through the alternatives for

850
00:42:14,000 --> 00:42:17,120
warrior like and it should be
said nothing.

851
00:42:17,120 --> 00:42:20,400
Nothing here is precluding
someone else from bidding a

852
00:42:20,400 --> 00:42:22,120
higher bid.
Like a third party can come

853
00:42:22,120 --> 00:42:26,720
along and bid higher and happy
days, but absent that, you know,

854
00:42:26,920 --> 00:42:30,040
like what, what a word ours
options or why would

855
00:42:30,040 --> 00:42:32,120
shareholders be grave?
Because the, the you know, the

856
00:42:32,120 --> 00:42:34,440
board is and the shareholders,
they're choosing between two

857
00:42:34,440 --> 00:42:37,880
things.
Go it alone or try and advocate

858
00:42:37,880 --> 00:42:40,600
for an uplift or accept the, the
the you know, the the existing

859
00:42:40,600 --> 00:42:44,800
Capricorn offer.
I think like just zoom out

860
00:42:45,520 --> 00:42:47,920
really, really long term.
Keep it simple, kind of just

861
00:42:48,200 --> 00:42:50,800
getting on the Capricorn train
has been a fruitful strategy

862
00:42:50,800 --> 00:42:54,200
historically speaking.
So, you know, that said, the

863
00:42:54,200 --> 00:42:57,520
scheme still needs 75%
shareholder approval and the

864
00:42:57,520 --> 00:43:00,120
forums allowed the retail
sentiment.

865
00:43:00,360 --> 00:43:03,000
It does matter here.
There's I've seen people allege

866
00:43:03,000 --> 00:43:07,400
numbers as much as a, a 30%
block of retail shareholders are

867
00:43:07,400 --> 00:43:08,760
going to vote against this and
that.

868
00:43:08,760 --> 00:43:13,400
And that clearly, you know,
doesn't, doesn't, doesn't,

869
00:43:13,400 --> 00:43:15,720
doesn't, doesn't exactly work
for a, for a scheme.

870
00:43:16,440 --> 00:43:18,960
So there might be a recap or
there might be, maybe it's a

871
00:43:18,960 --> 00:43:22,600
bluff and maybe the bluff will
be cold, or maybe, maybe, maybe

872
00:43:22,600 --> 00:43:23,680
it won't.
Maybe there'll be an uplift.

873
00:43:23,680 --> 00:43:27,200
Like maybe, maybe the structural
change all of that is to play

874
00:43:27,200 --> 00:43:29,120
out.
I'm following it closely.

875
00:43:29,520 --> 00:43:33,000
I I usually, I do empathize with
shareholders and everyone wants

876
00:43:33,000 --> 00:43:35,880
more, but, but I would just
encourage word our shareholders

877
00:43:35,880 --> 00:43:39,840
to think of like, you know, the,
the, yeah, sixth sense versus 15

878
00:43:39,840 --> 00:43:41,160
1/2.
It's always hard to when you're

879
00:43:41,160 --> 00:43:43,880
anchoring based on, you know,
the day before the deal was

880
00:43:43,880 --> 00:43:44,560
announced.
But yeah.

881
00:43:45,440 --> 00:43:47,600
I'm with you mate.
I think that's a a great spot to

882
00:43:47,720 --> 00:43:49,800
to leave it.
Let's thank our fantastic

883
00:43:49,800 --> 00:43:52,280
partners that grounded sanded
ground support and cross

884
00:43:52,280 --> 00:43:55,360
boundary energy.
Who to read mate over the

885
00:43:55,360 --> 00:43:59,160
weekend.
Now remember, I'm an idiot.

886
00:43:59,440 --> 00:44:01,880
JD is an idiot.
If you thought any of this was

887
00:44:01,880 --> 00:44:04,400
anything other than
entertainment, you're an idiot.

888
00:44:04,760 --> 00:44:05,920
Then you need to read out a
disclaimer.