How Northern Star Became Australia's Biggest Gold Miner

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JD, you have got a story to tell
today.

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We're good to RIP it mate.
We are good.

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Let's RIP in Northern Star.
This is been a pet project of

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yours for a little while.
You've gone through the entire

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history of Northern Star.
You know, one of those ones,

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those those little projects you
make for yourself, actually, you

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know, you're the perfect person.
You know all about this because

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this is how this office kind of
came about.

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But you start working on these
projects and you kind of get

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deeper and deeper and deeper,
and then you've got to be like,

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enough is enough.
Let's RIP it in this case.

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And what you've done is figure
out how Northern Star came to

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become Northern Star.
I've tried to, I, I wouldn't say

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I've sort of narrowed it yet,
but yeah, Northern Star,

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Australia's biggest gold miner,
you know, $30 billion market

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cap.
It is just amazing what they've

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done and they, they really went
from no mines.

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They were a shell right at the
beginning of 2010, no mines.

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And now they've got multiple
mines.

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There are multiple continents
they've they own the Super bit

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like that.
That is an incredible story.

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The stock has gone from, I mean
depends which point in time you

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pick, but one or two cents, you
know, call it four or five cents

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when they, when they scoop up
Paulson's to north of 20 bucks,

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it's just a remarkable story.
It's there's got to be a lot of

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lessons that can be like learned
from that Northern * playbook

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And so many of the industry's
future leaders, you know, have

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have come out of that company.
And I'm really excited to to

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tease out with you what you've
uncovered or learned as a result

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of going deep into the DNA of
this company, how they created

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value, how they allocated
capital, how they how they kind

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of culture LED them to do
interesting deals that were very

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creative, how they got them
done.

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Yeah.
It's not often you kind of

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reflect and talk about a gold
miner that created a tremendous

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amount of value, but this one
did.

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Yeah, it's, it's such a cool
story and it's also one of those

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ones, you know, around Perth
where you know someone that

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works there or you know, a
friend of a friend who who's

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worked there.
You even hear a couple of those

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stories about, you know, people
earned 100,000 shares back in

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time, like the the one that kind
of got away.

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You hear all those wicked
stories.

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And there's, like you said,
there's so many cool lessons

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that go go far beyond just mine,
even if you're, you know, not

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even right in the mining
industry, Like there are so many

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lessons, business lessons and
the like, yeah, that it's cool

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to just crack it open, try and
glean a bit off it and see what

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we can learn.
So we're going to focus a lot on

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that early part of the journey.
That's when the, the company was

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put on its path to becoming the
business it is today.

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So a lot around sort of pulsings
and trying to understand the

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the, the culture of the company
and see what kind of stands out.

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And yeah, we'll kind of take it
from there though.

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There's, there's also
characters, right?

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And that's the other part of
the, the story.

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I mean, you can't tell the story
of Northern Star without it

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clearly interweaving with the
story of Bill Beaman and his his

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emergence in, in the in in the
industry.

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Yeah, and and I guess the story
kind of culminates with the the

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coronation or the the knighting
of the the King of Kalgoorlie,

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as the AFR put it in in 2020
shortly before him and and rally

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as well.
It's Harrison, which was its own

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remarkable journey, stepped off
and gave Northern Star, you

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know, let it sort of fly on its
on its own with new leadership

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who'd of course been there, been
there a long time and went and

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had another crack with new
ventures of their own.

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So if this story starts with
Paulson's, Paulsen's is

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obviously now in the hands of
Black Cat.

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Black Cat have restarted mining
there, but they're producing

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gold from their Myri project,
also in Kabuli.

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They are right.
That that one thanks to MMSJD

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mineral mining services similar
to Northern Star, MMS has come

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onto the scene out of nowhere
and are now a true market leader

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similar to Northern Star get it
done attitude.

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Yeah, you can't under score that
one enough, mate.

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Northern Star get it done.
MMS get it done.

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And if you have a deposit and a
desire to turn it into cash

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flow, MMS is the team that will
help you at every step along

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that journey.
From tech services to contract

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mining, they are the trusted
mining partner.

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Get in touch with MMS today.
Details are in the show notes.

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OK, JD, start us off with
Paulson's.

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May 2010, mate.
In May they come out with an

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announcement they're going to
acquire the Paulson's Goldmine.

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The company has a mighty market
cap of under 8 million and the

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share price is 4 1/2 cents.
Unbelievable.

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How's that for a starting point?
You've got Bill Bayman,

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obviously managing director at
the company.

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And to to round out the board,
you've got Chris Rowe who's the

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non exec chair remain in that
row till that role rather till

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2016.
You've got Michael Fodius as a

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non exec director whose various
investment entities along with

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its supporters own upwards of
40% of the company.

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And Peter Faris, who's also an
investment nominee, makes that

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four people on the board there.
So Baiman from his contracting

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days at Barminco had become
fairly familiar with the asset.

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Paulson's, I would imagine that
gave him the idea that hey, we

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can run this better than the
current owners.

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The current owners being
intrepid minds.

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So they had a asset that they
were going to focus on in

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Indonesia.
Paulson's wasn't a key part of

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their plans.
Isn't.

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That funny thinking that you'd
focus on the Indonesian assets

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anyways.
The the key detail is that the

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mine essentially had seven
months left in it.

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Yeah, didn't even have a
reserve.

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So these guys come in $15
million in cash plus 12 million

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in relatively lot short term
royalties.

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So they're more or less, you
know, they call them royalties,

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but they're more or less
milestone payments up to 60,000

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oz.
And they put a bit of spin on

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it.
They frame it as that cash

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component essentially
reimbursing Intrepid.

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The CapEx has just been spent on
the mine and Bill would later

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sail say that a lot of these
assets throughout the journey of

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Northern Star, they, they
weren't for sale, They just

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approached them and say hey.
It's a bilateral deal.

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Yeah.
Can we do a bit of DD?

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Can we put forward a an offer
and you can tell us what you

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reckon so?
So Barminco were a contractor at

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the mine beforehand and Bill
Bill was familiar with the

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asset.
Yeah, that's right.

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So it's obviously a pretty
prominent role that he'd had

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years prior at at at Barminco
before he sort of joined

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Northern Star, before the
financial crisis and had done

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his own contracting venture.
Gotcha as well.

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So how'd they, how'd they fund
that?

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That I mean this is a
consideration even though it was

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like only 15,000,000 upfront,
they were shell.

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So yeah, you gotta fund that
somehow.

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It's pretty remarkable.
And they didn't even match the

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the ambitions they had in
financing.

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So they raised under 4 million
in equity and they banked

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15,000,000 bucks in debt, which
you know, that was less than

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what they'd wanted, but it kind
of had to do.

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And they also factored in like
you see with a lot of these

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shells, there was a just a
plethora of options outstanding

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that these would be banked.
Those options were below the

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share price already.
They were in the money.

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So they were banking like
6,000,000 bucks coming in the

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door from that.
And funnily enough, if we jump

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forward a bit it would say we
had 5000 bucks in the bank the

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day the deal closed.
That was a quote.

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Yeah, that that, that that's a
classic.

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And we're going to see some of
these ripping presentations.

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The, the sort of 2010 period is
a goldmine for for Microsoft

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PowerPoint and the presentations
that were being put forward by

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the company.
Just four kind of classic photos

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there and one phrase, you know,
a pretty, pretty honest ambition

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just to build a build a company.
We'll we'll get back to how that

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ambition evolves over time at
Northern Star.

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What are those four photos?
One is the ASX building, one is

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just a just a generic mine,
one's a drill rig and one's a

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box cut and AI was.
Confused about that?

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It's good stuff.
Paulson's right, worth a couple

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of comments on, on the asset.
So it had been running for for

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about 5 years at that point in
time doing about 75,000 oz high

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grade sort of stuff, 12 grams a
tonne we're talking.

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But like I said, seven months
left that it didn't have a

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reserve resource was like less
than two years at that rate, so.

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Was it making money at the time
they they bought it?

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Like was Intrepid making money
from this?

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From the cash cost that were put
forward, I reckon they were.

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So gold is in the realm of $1400
Aussie.

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Yeah.
And this has a cash cost in the

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low 6 hundreds in all in
sustaining around 900 ish, Yeah,

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give or take.
I mean, they're the sort of cost

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inferring from what Northern
Star do and they improve it

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straight away, but.
If they didn't have a reserve

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they probably weren't putting
heaps of capital into that mine

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though.
This asset needed capital and

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Intrepid weren't putting it in
whatsoever.

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And there was also a case to be
made that, you know, you could

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mine a fair bit up above the
current mining levels because

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the gold price had accelerated
at this point in time and they

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were using a yeah, $627.00 gold
price.

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So gold is well over double that
at that point in time.

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So there were it was low hanging
fruit if you're a kind of agile

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and understanding mine manager
and mining company, right.

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So that stage 1 plan had just
45,000 ounces in it.

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Now they came out with this plan
that would net them 25,000,000

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bucks over that period of time,
bearing in mind they were taking

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on debt to do this so that there
was that risk but.

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How much debt?
$15 million.

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OK, yeah.
But if you read back right, you

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can, you can see the, the
confidence without explicitly

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saying so because there's no,
you know, they don't have the,

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the, the geological capability
to come out and say we know

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there's way more here, but they
were just going to put heaps of

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cash into the ground, drill it
out.

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But you can sort of feel it
through the announcement.

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If, if I know, if you know what
I mean, like they're saying

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there's, there's heaps of
remnants above where we're

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mining.
We think, you know, Voyager one

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in this case is it's going to
extend and potentially like a

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little open pit which they they
put forward later on.

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They also sort of spoke about
dropping the cut off grade,

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which was 4G a ton down to 3
grams a ton.

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So they're kicking about all
these ideas and then they've

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also got stage 2 and stage 3.
These are the the plans that

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they're hoping to to unlock,
which would see them at a five

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year mine life essentially, you
know, extending production for a

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number of years beyond the seven
months.

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Was, was there like an element
of exploration success that was

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had like a new load actually
discovered or, or was it was it

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the case of what you know, what
they could tell during DD or

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their knowledge?
It was just there was a lot of

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blow hanging fruit that could be
picked.

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There was absolutely exploration
success, what, 100%, but we're

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jumping a bit ahead, mate.
They hadn't actually locked up

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the asset yet in that month.
Between May and June, the gold

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price rips Intrepid come in and
say we've had some exploration

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success.
Oh, no way.

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We want more money.
No way.

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It's gold.
So the gold price jumps over 10%

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in that month and the Intrepid
board say we've got kind of cold

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feet about this one.
They review that negotiations

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have been happening in the
background.

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Northern Star had come forward,
offered an extra 5,000,000 bucks

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cash and 10 million options,
which today would be worth

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hundreds of millions of dollars.
Had it already been publicly

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disclosed at this point?
So do you reckon that someone

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else tried to come in over the
top and it never got revealed

225
00:11:23,240 --> 00:11:25,000
because it looked like a pretty
good deal?

226
00:11:25,640 --> 00:11:27,920
I'm not sure if somebody else
came in or if they just thought

227
00:11:27,920 --> 00:11:30,600
they were going to look
particularly bad that these guys

228
00:11:30,600 --> 00:11:34,360
were going to come in and make a
decent amount of cash and not

229
00:11:34,480 --> 00:11:37,520
really pay an awful lot.
Normally don't get to negotiate

230
00:11:37,560 --> 00:11:40,200
higher, you know.
Yeah, you normally don't, but

231
00:11:40,200 --> 00:11:45,320
Northern Star, yeah, they kicked
down the the can of their AGM

232
00:11:45,320 --> 00:11:47,560
which they put forward to, to to
vote on this.

233
00:11:47,560 --> 00:11:53,760
And Intrepid said there's, you
know, clear rationale for you

234
00:11:53,760 --> 00:11:56,680
guys making at least 19,000,000
bucks more given that the

235
00:11:56,680 --> 00:12:00,560
changes that have happened, we
want more cash so.

236
00:12:00,560 --> 00:12:04,160
And they got Opies as well.
They said no to that.

237
00:12:04,760 --> 00:12:08,120
Oh, no way.
So, so, so it gets better.

238
00:12:08,480 --> 00:12:11,400
They said no to the 10 million
options and the 5,000,000 bucks

239
00:12:11,440 --> 00:12:12,880
in cash.
They said that's not good

240
00:12:12,880 --> 00:12:14,720
enough.
And eventually by the end of

241
00:12:14,720 --> 00:12:19,080
June, they strike a new deal.
This goes from the initial up to

242
00:12:19,080 --> 00:12:23,240
27.
Now it's up to $40 million total

243
00:12:23,280 --> 00:12:26,960
and that's mainly through a lift
in short term royalties.

244
00:12:27,160 --> 00:12:29,600
You know, that's, that's a few
1,000,000 bucks extra in that

245
00:12:29,600 --> 00:12:31,680
one there.
And the the structuring is

246
00:12:31,680 --> 00:12:33,680
great.
This is like one of the standout

247
00:12:33,680 --> 00:12:36,160
lessons and it's not the first
time I've seen it with some of

248
00:12:36,160 --> 00:12:39,440
these awesome resource
entrepreneurial stories where

249
00:12:39,440 --> 00:12:41,160
you structure that first deal,
phenomenal.

250
00:12:41,160 --> 00:12:43,200
You, you get creative.
You don't have the cash to do

251
00:12:43,200 --> 00:12:44,560
it, but you have to do something
about that.

252
00:12:44,560 --> 00:12:48,200
Like they raised 4,000,000 bucks
in equity and they bought an

253
00:12:48,200 --> 00:12:51,320
asset for up to 40 million.
They were a company before the

254
00:12:51,320 --> 00:12:55,600
deal that had a market cap in
the in the $7,000,000 range and

255
00:12:55,600 --> 00:12:58,080
they got the deal done.
Remarkably minimally dilutive

256
00:12:58,080 --> 00:13:01,040
given given the position of that
company beforehand.

257
00:13:01,040 --> 00:13:03,600
Yeah, and they kept the downside
as well by making these

258
00:13:03,600 --> 00:13:06,880
performance based royalties.
These were like many hundreds of

259
00:13:06,880 --> 00:13:10,600
dollars, over 300 bucks per oz
when the gold price was in the

260
00:13:10,680 --> 00:13:12,720
the thousands.
Yeah, right, but it would stop

261
00:13:12,760 --> 00:13:15,840
after X number of Oz.
It would stop at that stage, one

262
00:13:15,840 --> 00:13:18,280
that I referenced.
So what they end up doing is

263
00:13:18,280 --> 00:13:21,680
getting it done by March of
201188 or so months.

264
00:13:22,640 --> 00:13:24,480
They smash it out.
So wow, isn't that?

265
00:13:24,920 --> 00:13:28,960
That's kind of a yeah.
A, a, a clever.

266
00:13:29,120 --> 00:13:32,040
It's vendor financing in some,
some ways, but at least you, you

267
00:13:32,040 --> 00:13:34,800
have alignment.
And if things take like longer

268
00:13:34,800 --> 00:13:37,400
than you expected, then then at
least it doesn't kind of, you

269
00:13:37,400 --> 00:13:39,600
know, put you in a, in a very
precarious situation like

270
00:13:39,600 --> 00:13:40,960
happens with project finance.
Yeah.

271
00:13:41,120 --> 00:13:43,280
Such a clever way to finance it.
Yeah, right.

272
00:13:43,280 --> 00:13:47,000
So deals done.
Northern Star is a bona fide

273
00:13:47,440 --> 00:13:50,200
mining company, $12 million
market cap.

274
00:13:50,800 --> 00:13:52,280
First priority Pay down the
debt.

275
00:13:52,440 --> 00:13:54,520
Get the milestone payments out
the way.

276
00:13:54,520 --> 00:13:56,840
Are they are they owner
operators from like day one?

277
00:13:56,840 --> 00:13:58,880
Does Bill put no.
So who's there?

278
00:13:59,200 --> 00:14:04,080
So Bamingo, Bamingo and there's
a contract they become owner

279
00:14:04,080 --> 00:14:06,760
operator at some time in 2011.
Gotcha.

280
00:14:07,160 --> 00:14:09,960
So it's worth reflecting on on
the gold price.

281
00:14:09,960 --> 00:14:14,040
Just just quickly here, you can
see this is a theme throughout

282
00:14:14,040 --> 00:14:18,200
the the whole story throughout
the 20 tens that it, it is more

283
00:14:18,200 --> 00:14:20,800
or less a tailwind.
It's you know, it's not always

284
00:14:20,840 --> 00:14:25,000
up, but it, it helps the
exchange rate. the US dollar,

285
00:14:25,000 --> 00:14:29,480
Aussie dollar is a big tailwind
particularly in that sort of

286
00:14:29,480 --> 00:14:33,840
2013 period as well.
But we're talking to sort of

287
00:14:33,840 --> 00:14:37,200
1400 ish dollar gold price at
this point in time.

288
00:14:37,200 --> 00:14:40,200
And almost immediately these
guys hit the ground running

289
00:14:40,240 --> 00:14:42,360
operationally.
They are putting out monthly

290
00:14:42,360 --> 00:14:45,400
reports and they're smashing
records, whether that's sort of

291
00:14:45,400 --> 00:14:48,640
tons processed dirt pulled out
Oz.

292
00:14:49,200 --> 00:14:51,400
The debt is just being
obliterated.

293
00:14:51,400 --> 00:14:53,320
They're paying it down so, so
quickly.

294
00:14:53,640 --> 00:14:57,320
It, you know, it's really
impressive to to look back and.

295
00:14:57,360 --> 00:15:00,320
Was that from their initial,
yeah, the Remnant mining,

296
00:15:00,840 --> 00:15:02,800
etcetera, etcetera, those sorts
of things that they were doing?

297
00:15:02,880 --> 00:15:07,120
That took a bit longer to sort
of pull into the the plan.

298
00:15:07,120 --> 00:15:10,200
They just from what the mine
plan was in front of them, they

299
00:15:10,200 --> 00:15:13,200
just smashed into that and paid,
paid down.

300
00:15:13,200 --> 00:15:15,000
Yeah.
I mean, they're not adding to

301
00:15:15,480 --> 00:15:17,480
their cash position, but they're
paying down what they've got to

302
00:15:17,480 --> 00:15:20,680
pay down, right?
And in terms of what the market

303
00:15:20,680 --> 00:15:24,120
believes, they are adding
serious value from the drill

304
00:15:24,120 --> 00:15:25,600
bit.
And like, yet you can't

305
00:15:25,600 --> 00:15:28,600
emphasize this enough.
This, you see, with every asset

306
00:15:28,600 --> 00:15:31,480
they picked up, they put the
capital in, they invested in the

307
00:15:31,480 --> 00:15:35,360
assets and they drilled a shit
load of meters here.

308
00:15:36,040 --> 00:15:38,920
This asset went from having like
next to no mine life within a

309
00:15:38,920 --> 00:15:41,480
year to having a 5 plus year
mine life.

310
00:15:41,480 --> 00:15:46,360
They, you know, voyage of 1
ended up extending and extending

311
00:15:46,400 --> 00:15:49,800
and extending and you can sort
of see in in the cross section

312
00:15:49,800 --> 00:15:53,560
there, but they hit pretty soon
after taking over Voyager 2,

313
00:15:53,560 --> 00:15:57,000
which was a couple 100 meters
roughly below the bottom of the

314
00:15:57,000 --> 00:16:01,480
mine plan that they had already.
Some of the extensions they're

315
00:16:01,480 --> 00:16:04,800
hitting in Voyager 1, you know,
20 grams per ton plus type

316
00:16:04,800 --> 00:16:07,120
grade.
And you start seeing some wicked

317
00:16:07,120 --> 00:16:09,400
announcements, you know, Bonanza
that's flying around.

318
00:16:09,720 --> 00:16:13,400
It's, it's pretty cool to to
read back and and reflect on and

319
00:16:13,400 --> 00:16:18,080
you start to think about the,
the debate, which becomes a

320
00:16:18,080 --> 00:16:21,000
common one for Northern star of
who's adding more value?

321
00:16:21,000 --> 00:16:23,680
Is it the mining engineers and
the people on site, the miners

322
00:16:23,680 --> 00:16:26,120
on site?
Or is it the, the G OS?

323
00:16:26,160 --> 00:16:29,520
Where's the, what's the market
kind of liking more is maybe

324
00:16:29,520 --> 00:16:32,080
another way to kind of phrase
that one.

325
00:16:32,080 --> 00:16:36,440
And you know, you can see these
guys are operating the asset

326
00:16:36,440 --> 00:16:40,840
cheaper and they're producing
great cash flow, but the, the

327
00:16:40,840 --> 00:16:45,240
value add from going from less
than a year mine life into 5

328
00:16:45,240 --> 00:16:48,800
plus year my life just by
investing capital, giving the

329
00:16:49,280 --> 00:16:53,480
the geos free reign to to test
ideas is it's pretty immense.

330
00:16:53,840 --> 00:16:57,120
You can, you can see there like
I'm looking at that cross

331
00:16:57,120 --> 00:17:00,120
section you brought up and one
thing I can notice about that

332
00:17:00,120 --> 00:17:04,160
cross section is the, the, the
level drill drive that allowed

333
00:17:04,160 --> 00:17:07,359
them to drill out and get to
that Voyager 2 Discovery.

334
00:17:07,359 --> 00:17:10,280
I'm, I'm presuming so part of
that would have been the capital

335
00:17:10,280 --> 00:17:13,920
that needed to be deployed to
presumably put in that drill

336
00:17:13,920 --> 00:17:17,200
drive to facilitate the
discovery of what was ultimately

337
00:17:17,800 --> 00:17:22,000
an asset changing like load.
Yeah, yeah, it, it, it's sort of

338
00:17:22,000 --> 00:17:24,240
phenomenal.
And and it would go on and on

339
00:17:24,240 --> 00:17:25,560
and on.
And This is why it becomes the

340
00:17:25,560 --> 00:17:28,760
foundational asset, because they
were willing to put the capital

341
00:17:28,760 --> 00:17:30,840
in that the previous owner
wasn't.

342
00:17:30,840 --> 00:17:34,280
And reading through the
announcements throughout the

343
00:17:34,280 --> 00:17:38,440
back half of 2010, you get this
awesome sense of, of things just

344
00:17:38,440 --> 00:17:40,280
happening.
The company's got this urgency

345
00:17:40,280 --> 00:17:42,480
about it, like production is
just churning away.

346
00:17:43,120 --> 00:17:46,640
They're hitting records.
The the GOS are drilling holes

347
00:17:46,640 --> 00:17:49,520
left, right, centre.
They are coming out with

348
00:17:49,520 --> 00:17:51,560
exploration announcements pretty
frequently.

349
00:17:51,920 --> 00:17:54,280
They're coming out with debt
repayment announcements pretty

350
00:17:54,280 --> 00:17:56,400
frequency.
The milestones are being hit.

351
00:17:56,800 --> 00:17:59,920
Mine life is being added to by
November already.

352
00:18:00,000 --> 00:18:02,840
All the debt is repaid now.
They've just got these kind of

353
00:18:02,840 --> 00:18:07,280
chunky royalties left to to make
good on shares are already

354
00:18:07,280 --> 00:18:10,520
changing hands at 2425 cents.
So that's a that's A5 bag

355
00:18:11,000 --> 00:18:13,840
already and the the company has
an enterprise value of about 80

356
00:18:13,840 --> 00:18:16,840
million bucks.
How is this in the space of how

357
00:18:16,840 --> 00:18:18,360
long a year?
Like a no, no, no.

358
00:18:18,800 --> 00:18:20,240
This is in the space of that
five months.

359
00:18:20,720 --> 00:18:22,720
Five in five months time it's a
5 bagger.

360
00:18:22,760 --> 00:18:26,080
Yeah, from, from the rays.
Wow, Yeah, that's, that's

361
00:18:26,080 --> 00:18:29,600
phenomenal.
Yeah, it's you can see why

362
00:18:29,600 --> 00:18:34,040
people call Paulson's a company
making asset because before,

363
00:18:34,520 --> 00:18:38,800
before you're at Shell and after
you're a gold miner like with

364
00:18:39,120 --> 00:18:41,120
without even balance sheet risk
in no time.

365
00:18:41,240 --> 00:18:44,680
Yeah.
And almost straight away the the

366
00:18:44,680 --> 00:18:48,680
company's ambitions grow.
So we showed that presentation

367
00:18:48,720 --> 00:18:51,880
opening slide before.
Now they've added a second line

368
00:18:51,880 --> 00:18:54,280
to that and the second line
reads for those on the on the

369
00:18:54,280 --> 00:18:57,760
potty acquire assets that add
value when reassessed.

370
00:18:58,040 --> 00:19:03,240
So it's no longer just mining
and expiration, you know, with

371
00:19:03,240 --> 00:19:05,560
the asset that they have.
M&A is part of the strategy.

372
00:19:05,640 --> 00:19:08,480
M&A is a cornerstone to, to the
strategy.

373
00:19:08,480 --> 00:19:13,440
So yeah, it's, it's, it's all
kind of happening and they, they

374
00:19:13,440 --> 00:19:16,120
do hit a bit of a blip late
2010.

375
00:19:16,320 --> 00:19:18,400
So it's not, it's not all plain
sailing.

376
00:19:18,680 --> 00:19:21,960
There's a, there's a fire up at
the plant and then there's a

377
00:19:22,200 --> 00:19:25,000
shortage of liquid oxygen which
is needed for the, for the

378
00:19:25,000 --> 00:19:28,200
processing.
There always a risk with with a

379
00:19:28,200 --> 00:19:30,640
single asset And you know, it's,
it looks easy in hindsight

380
00:19:31,120 --> 00:19:34,840
because they nailed it, but you
always have and it's amplified

381
00:19:34,840 --> 00:19:38,960
when you have that debt as well.
Mate, this is my contribution to

382
00:19:38,960 --> 00:19:42,000
your entire episode because I
was kind of curious when we were

383
00:19:42,000 --> 00:19:45,920
talking about this fire before.
And when you've got debt, single

384
00:19:45,920 --> 00:19:48,000
asset, it wouldn't have taken
much and history could have

385
00:19:48,120 --> 00:19:49,920
looked very different.
All right?

386
00:19:49,920 --> 00:19:52,520
This could have been the end of
Northern Star story before it

387
00:19:52,520 --> 00:19:54,600
even started.
Absolutely, Absolutely.

388
00:19:54,720 --> 00:19:56,520
Yeah.
I dug up this article in The

389
00:19:56,520 --> 00:19:58,840
West Australian from 3rd of
November 2010.

390
00:19:59,440 --> 00:20:03,040
Fire halts operations at
Paulson's and you see the saving

391
00:20:03,040 --> 00:20:04,280
grace?
Third paragraph.

392
00:20:04,320 --> 00:20:08,320
JD says it is understood the
company was fully insured and

393
00:20:08,320 --> 00:20:11,400
does not expect to record a
financial loss from the fire,

394
00:20:11,400 --> 00:20:14,440
although it will mean temporary
disruption in mining.

395
00:20:14,520 --> 00:20:18,160
Insurance mate saved the day.
Clearly they had sufficient

396
00:20:18,160 --> 00:20:20,080
coverage.
Mate, that brings us to a little

397
00:20:20,080 --> 00:20:24,520
word from the guy, the folks,
the people that make fires and

398
00:20:24,520 --> 00:20:26,640
events like this.
No drama at all.

399
00:20:26,680 --> 00:20:29,640
CRE Insurance.
They don't do cookie cutter

400
00:20:29,640 --> 00:20:32,360
cover mate.
Siri builds insurance

401
00:20:32,360 --> 00:20:34,960
specifically for mining
underground open pit.

402
00:20:35,280 --> 00:20:38,040
Whether it's your your office
for the for the mining company

403
00:20:38,040 --> 00:20:41,760
or West African Bush flood fire,
or even the contractor who

404
00:20:41,760 --> 00:20:44,000
thinks reversing beepers are
optional.

405
00:20:44,400 --> 00:20:46,920
CRE has seen it and they've
priced it.

406
00:20:47,080 --> 00:20:49,160
They've covered it.
They've helped you sleep easy.

407
00:20:49,880 --> 00:20:53,560
Mate, you want insurance that
actually works when things hit

408
00:20:53,560 --> 00:20:56,440
the fan, not just the the
premiums when they come due.

409
00:20:56,720 --> 00:21:00,320
Get in touch with Dave, Adam and
Steve at CRE Insurance.

410
00:21:01,000 --> 00:21:04,440
Tell them Moneymind sent ya and
let them put out your future

411
00:21:04,440 --> 00:21:08,360
fires for you with insurance
that covers all of the risks.

412
00:21:08,960 --> 00:21:13,040
Go to CRE so.
Tell me what happens next.

413
00:21:13,040 --> 00:21:16,160
So we get into 2011 and back end
of 2010 now.

414
00:21:16,240 --> 00:21:17,840
Yeah.
So, so they're kind of treading

415
00:21:17,840 --> 00:21:20,920
water for a for 1/4 at the back
end of 2010 because of those

416
00:21:20,920 --> 00:21:24,480
disruptions and the acquisition
payments.

417
00:21:24,480 --> 00:21:26,160
So I'm talking about their cash
position.

418
00:21:26,280 --> 00:21:28,560
They're getting it done.
And there is that line of sight

419
00:21:28,560 --> 00:21:30,720
to actually making a lot of
money.

420
00:21:30,880 --> 00:21:33,120
The the debt is behind them.
They've got a few more months of

421
00:21:33,120 --> 00:21:35,440
these kind of hefty royalty
payments.

422
00:21:35,440 --> 00:21:37,960
So they actually kind of lost
money on the quarter if you take

423
00:21:37,960 --> 00:21:40,640
it all into account.
But the market is saying the

424
00:21:40,640 --> 00:21:43,160
other finance payments.
Yeah, exactly.

425
00:21:43,160 --> 00:21:47,800
So they're, they're sort of
margin, if you like, goes up to

426
00:21:47,880 --> 00:21:51,560
an all in sustaining at about
900 ish bucks, but add another

427
00:21:51,560 --> 00:21:55,320
500 ish for the payments that
they need to make.

428
00:21:55,760 --> 00:21:58,240
And there's, there's not much
money going to the to the bottom

429
00:21:58,240 --> 00:22:00,720
line for them.
But market doesn't care.

430
00:22:00,880 --> 00:22:04,360
Mine life's being extended.
The stock is approaching $0.40

431
00:22:04,880 --> 00:22:09,120
in early 2011 market cap of
about $100 million.

432
00:22:09,120 --> 00:22:10,840
So there there's a lot of
confidence even though they

433
00:22:10,840 --> 00:22:13,520
haven't officially said that the
mine life is going to be

434
00:22:13,520 --> 00:22:15,960
extended yet.
There's confidence in the market

435
00:22:15,960 --> 00:22:18,320
from the results that they've
put out, the exploration being

436
00:22:18,320 --> 00:22:22,960
done, the the presentations and
the like that we are not pulling

437
00:22:22,960 --> 00:22:25,760
up stumps in February and.
Wow.

438
00:22:26,200 --> 00:22:28,480
Yeah, it it sees them actually
get to their first deal.

439
00:22:28,480 --> 00:22:30,800
This is just a a bit of a minor
one, but they pick up the

440
00:22:30,800 --> 00:22:33,160
Ashburton Gold project off C
part is.

441
00:22:33,760 --> 00:22:38,440
That the same Ashburton that
came into the Gray via Is it

442
00:22:38,440 --> 00:22:41,360
Kalamazoo I I.
Believe it is, yeah.

443
00:22:41,360 --> 00:22:44,320
So it's been around a long time.
There is an old plant there at

444
00:22:44,880 --> 00:22:47,920
Mount Olympus.
This was for a period in time

445
00:22:47,920 --> 00:22:50,120
gonna be a part of the growth
story.

446
00:22:50,120 --> 00:22:52,840
It was, yeah.
It would have needed to be

447
00:22:53,680 --> 00:22:56,240
tracked is what they eventually
laid out.

448
00:22:56,240 --> 00:22:57,960
They were essentially just
paying royalties for this.

449
00:22:57,960 --> 00:23:02,560
So that kind of indicates the
value that CPA saw in it.

450
00:23:02,880 --> 00:23:06,120
And yeah, it it never ended up.
Being part of my.

451
00:23:06,200 --> 00:23:09,520
Plan bearing fruit or anything
like that because there was a

452
00:23:10,120 --> 00:23:13,040
bigger and better ambitions.
I guess you could say by March

453
00:23:13,320 --> 00:23:15,120
all the obligations are paid
off.

454
00:23:15,200 --> 00:23:20,600
At Paulson's you get the much
anticipated resource upgrade, a

455
00:23:20,600 --> 00:23:24,800
couple 100,000 oz.
They get a clear plan for 2011.

456
00:23:25,120 --> 00:23:29,400
Gonna do 60 to 75,000 oz.
Cut off grade is dropped and

457
00:23:29,480 --> 00:23:31,360
things are things are moving
ahead.

458
00:23:31,960 --> 00:23:33,520
Isn't that remarkable?
Yeah.

459
00:23:33,520 --> 00:23:36,520
A year you've had, you've had
exploration success, you've paid

460
00:23:36,520 --> 00:23:39,400
down all your debt and it's kind
of crazy.

461
00:23:39,680 --> 00:23:41,560
Yeah.
And Northern Star, like we just

462
00:23:41,560 --> 00:23:43,560
sort of touched on, they're
sniffing around for deals

463
00:23:43,560 --> 00:23:47,000
already as as I mentioned, Bill
Beaman would later say we're

464
00:23:47,000 --> 00:23:49,760
just cold, cold companies and
they've they've started doing it

465
00:23:49,760 --> 00:23:54,320
throughout He he speaks back
around this period of time and

466
00:23:54,320 --> 00:23:57,800
maybe it's a a bit later that
there are a lot of deals that

467
00:23:57,800 --> 00:23:59,480
almost got done that didn't
quite get done.

468
00:23:59,480 --> 00:24:04,400
So history could have been a bit
different, but they were, yeah,

469
00:24:04,400 --> 00:24:07,320
they were very clear in their
target of getting these assets

470
00:24:07,320 --> 00:24:10,880
that weren't a priority.
Cold calling MD's, what a

471
00:24:10,880 --> 00:24:12,840
strategy and it's it's a
different time, right?

472
00:24:12,840 --> 00:24:17,640
Like gold wasn't, you know, the
the crazy hot thing that it is

473
00:24:17,840 --> 00:24:20,080
today.
No, no, gold is at this point in

474
00:24:20,080 --> 00:24:23,120
time gold was was lot flying
really.

475
00:24:23,120 --> 00:24:25,120
Yeah, yeah, yeah, it had it had
run.

476
00:24:25,280 --> 00:24:27,920
This is in the years after the
financial crisis.

477
00:24:28,000 --> 00:24:31,320
Yeah.
So it's it's very much in

478
00:24:31,320 --> 00:24:34,960
fashion.
It's 2013 when it when it falls

479
00:24:34,960 --> 00:24:37,480
out of fashion, it falls out of
fashion pretty, pretty quickly.

480
00:24:37,480 --> 00:24:40,000
And in the space of a month,
U.S. dollar gold drops at 30 odd

481
00:24:40,000 --> 00:24:41,200
percent.
Yeah, yeah.

482
00:24:41,200 --> 00:24:45,040
So we're not quite there, but
what we are close to, mate, is

483
00:24:45,040 --> 00:24:48,440
the best ever presentation cover
Northern Star put out.

484
00:24:49,440 --> 00:24:52,200
I think this is in the sort of
pantheon of great presentation

485
00:24:52,200 --> 00:24:54,040
open openers.
You can, you can let me know

486
00:24:54,040 --> 00:24:57,920
what you reckon, mate.
It's just it's just stuff you

487
00:24:57,920 --> 00:24:59,000
don't see today.
So.

488
00:24:59,000 --> 00:25:03,760
This cover.
I'm a big fan and this is a

489
00:25:03,760 --> 00:25:07,120
company with confidence now.
Enterprise value of about 150

490
00:25:07,120 --> 00:25:09,960
million bucks.
They're targeting 90,000 oz gone

491
00:25:09,960 --> 00:25:11,520
into the year.
They want 40 million bucks of

492
00:25:11,520 --> 00:25:15,360
cash flow, everything's paid off
and they're starting to get this

493
00:25:15,360 --> 00:25:19,000
real sort of swagger about
themselves and you start to see

494
00:25:19,000 --> 00:25:21,280
the first sell downs on the
register.

495
00:25:21,360 --> 00:25:23,200
Hang on, mate.
Hang on for for the audio

496
00:25:23,200 --> 00:25:26,240
listeners who can't see the
cover of this presentation,

497
00:25:27,360 --> 00:25:29,600
we're looking, we're looking at
the title of the cover says why

498
00:25:29,600 --> 00:25:33,240
today's wise men should Follow a
Northern Star, and there is a

499
00:25:33,240 --> 00:25:36,120
confusing picture of the three
wise men on the front cover of

500
00:25:36,120 --> 00:25:38,160
this Northern Star investor
deck.

501
00:25:38,160 --> 00:25:40,480
Phenomenal.
With the northern star shining

502
00:25:40,480 --> 00:25:45,600
bright above them and that's one
year into being a mine owner.

503
00:25:45,600 --> 00:25:49,040
It's pretty remarkable and on on
the back of the share price

504
00:25:49,040 --> 00:25:52,440
running so hard mate the the
early backers, the major

505
00:25:52,440 --> 00:25:54,200
shareholders are starting to
take a couple chips off the

506
00:25:54,200 --> 00:26:00,040
tables that Fodis related
investment group down to 17 1/2%

507
00:26:00,240 --> 00:26:03,000
and the the capital structure is
being cleaned up like you you

508
00:26:03,000 --> 00:26:07,400
saw just the the sheer quantum
of options before was kind of

509
00:26:07,400 --> 00:26:09,600
staggering.
They're getting exercised.

510
00:26:09,600 --> 00:26:12,800
It's, it's becoming a bit more
of a, a proper company in a

511
00:26:12,800 --> 00:26:15,680
sense who.
Was was investment like the

512
00:26:15,680 --> 00:26:18,320
provider of the debt as well
because there was a piece of

513
00:26:18,320 --> 00:26:19,840
debt?
That was Invest Tech.

514
00:26:20,160 --> 00:26:21,120
Wow, OK.
OK.

515
00:26:21,120 --> 00:26:23,480
Yeah.
So, so investment was the share

516
00:26:23,640 --> 00:26:25,200
up Peter Farris, the other
nominee?

517
00:26:25,560 --> 00:26:27,000
Yep.
And people who'd backed the

518
00:26:27,000 --> 00:26:29,080
Shell?
Essentially, yeah.

519
00:26:29,240 --> 00:26:31,080
Invest tech with the debt.
OK, gotcha.

520
00:26:31,080 --> 00:26:31,840
Follow.
Yeah.

521
00:26:31,840 --> 00:26:36,520
So companies adding cash in one
quarter, mate, they added $15

522
00:26:36,520 --> 00:26:39,920
million.
Like you think about what they

523
00:26:39,920 --> 00:26:42,520
paid for this.
It's only 15,000,000 upfront

524
00:26:42,520 --> 00:26:46,000
cash start with and then yeah.
Yeah, it's, it's remarkable.

525
00:26:46,000 --> 00:26:50,920
And you know, 2011 they net
north of 40 million in cash.

526
00:26:51,080 --> 00:26:53,200
They're on to a winning formula.
They end up actually raising

527
00:26:53,200 --> 00:26:57,280
another 45,000,000 bucks.
So they got 80 million capped at

528
00:26:57,280 --> 00:27:00,440
$380 million all of a sudden.
What was the rationale for the

529
00:27:00,440 --> 00:27:03,280
raise?
The rash, I mean you, you got to

530
00:27:03,280 --> 00:27:06,440
assume it was to to do a deal.
That was the mandate I would

531
00:27:06,440 --> 00:27:08,400
imagine, but it didn't come with
a deal attached.

532
00:27:08,400 --> 00:27:09,600
It would.
Have been spun of something

533
00:27:09,680 --> 00:27:11,600
else, yeah.
Yeah, and they would have also

534
00:27:11,600 --> 00:27:14,880
sort of seen just how well their
share price had done and they

535
00:27:14,880 --> 00:27:17,320
didn't want to miss the chance.
I I would imagine, you know,

536
00:27:17,320 --> 00:27:20,800
looking back at it, Paulson's is
in in good nick.

537
00:27:20,800 --> 00:27:23,160
The plant's actually being
upgraded, being scaled up to to

538
00:27:23,160 --> 00:27:26,920
450,000 tons per annum.
Development sort of years ahead,

539
00:27:26,920 --> 00:27:29,920
my life 5:00-ish years.
Like you touched on, owner

540
00:27:29,920 --> 00:27:32,720
operator that's coming in at
this point in time, they're

541
00:27:32,720 --> 00:27:35,800
trying to spread those fixed
costs over a bigger profile,

542
00:27:36,120 --> 00:27:39,160
more throughput, more production
areas, more answers.

543
00:27:39,200 --> 00:27:42,800
Ultimately they're targeting
100,000 plus now and before they

544
00:27:42,800 --> 00:27:47,600
know it, stock is $1.20 X in
about two years.

545
00:27:47,600 --> 00:27:51,400
They paid a dividend in 2012.
That would have been a joke to

546
00:27:51,400 --> 00:27:53,800
have said that in early 2010
that this company would pay a

547
00:27:53,800 --> 00:27:57,000
dividend out kind of standing
stuff.

548
00:27:57,000 --> 00:28:01,160
And yeah, back to the register.
Investment sells a bit more.

549
00:28:01,160 --> 00:28:04,280
They're now just holding 5%.
Peter Farris, one of the

550
00:28:04,280 --> 00:28:08,240
nominee, steps off Bill Bateman
sells a third of his holding at

551
00:28:08,240 --> 00:28:11,760
this point in time.
James, don't you regret for it?

552
00:28:11,760 --> 00:28:13,240
Well, knowing what's still to
come, yeah.

553
00:28:13,400 --> 00:28:18,160
Well, it's it's an interesting
one because he sells stock at in

554
00:28:18,160 --> 00:28:23,960
the $1.00 thirties range.
Market cap runs to $650 million.

555
00:28:23,960 --> 00:28:28,720
This is all within like two 2
1/2 years of owning the asset.

556
00:28:29,200 --> 00:28:33,320
They're in the ASX 200 already.
The stock jumps to $1.50.

557
00:28:33,320 --> 00:28:37,600
Look at this this screenshot
from one of the presentations.

558
00:28:37,600 --> 00:28:39,360
They are, they are.
They're feeling themselves mate.

559
00:28:39,360 --> 00:28:41,520
They're confident.
Look at you got a lot.

560
00:28:41,520 --> 00:28:45,920
Up and to the right 4600% share
price gain yeah, things are

561
00:28:45,920 --> 00:28:49,160
flying and as things tend to do
when they're just going too

562
00:28:49,160 --> 00:28:52,880
good, this thing comes out of it
as I mentioned, gold price just

563
00:28:53,280 --> 00:28:56,840
traders pretty quickly the stock
drops more than 60% so.

564
00:28:57,040 --> 00:28:59,120
Yeah, but they don't have debt.
They're they?

565
00:28:59,240 --> 00:29:00,880
Don't have debt?
Yeah, OK.

566
00:29:01,000 --> 00:29:02,680
But.
Pay down debt, but maybe they're

567
00:29:02,680 --> 00:29:04,680
not feeling too bad about
offloading a few shares in the.

568
00:29:04,680 --> 00:29:07,040
Yeah, yeah, the buck $30.40 kind
of range, right?

569
00:29:07,120 --> 00:29:09,560
Yeah.
So trading at about $0.70 in

570
00:29:09,560 --> 00:29:12,120
early 2013.
And that just kind of shows you

571
00:29:12,120 --> 00:29:15,600
that the journey is not linear.
No, you can, you can zoom in on

572
00:29:15,600 --> 00:29:18,280
the stock chart and get very
kind of in the weeds, but it's

573
00:29:18,280 --> 00:29:20,560
it's handy to zoom back out and
you can sort of see.

574
00:29:20,800 --> 00:29:27,200
To yeah, to wear a 60% downfall
in in any yeah, in any sense is

575
00:29:27,200 --> 00:29:28,840
is a is a hard thing to ensure,
yeah.

576
00:29:28,880 --> 00:29:30,240
Yeah.
And I'm and I'm sure you get

577
00:29:30,240 --> 00:29:34,680
people at the time sound got
sold and you know, just zoom out

578
00:29:34,680 --> 00:29:37,480
a bit more like they, they have
to put cost cutting measures in

579
00:29:37,480 --> 00:29:39,880
place, all that sort of stuff.
They reduce the regional cap

580
00:29:40,400 --> 00:29:44,560
capital expenditure that they're
kind of doing on on drilling, on

581
00:29:44,560 --> 00:29:47,120
developing Ashburton as well as
in the office.

582
00:29:47,760 --> 00:29:51,680
But but this this gold price
selling off probably in some

583
00:29:51,680 --> 00:29:56,520
ways allowed them to actually
capitalize and do more deals

584
00:29:56,520 --> 00:29:59,440
because counterparties are now
looking to exit, exit their

585
00:29:59,440 --> 00:30:03,000
market or sell down assets right
as a result. 100% gold price

586
00:30:03,080 --> 00:30:04,720
peeling off.
It's the best thing that ever

587
00:30:04,720 --> 00:30:05,880
happened to Northern Star I
reckon.

588
00:30:06,320 --> 00:30:08,640
Like, I mean, I'd almost say
that without a doubt.

589
00:30:08,640 --> 00:30:11,080
Right?
So it is time for the second

590
00:30:11,080 --> 00:30:12,560
deal.
Platonic mate.

591
00:30:12,680 --> 00:30:17,440
This one gets forgotten.
It does, and yeah, they didn't

592
00:30:17,440 --> 00:30:18,120
know.
I forgot.

593
00:30:18,120 --> 00:30:21,360
I forgot they owned it.
Yeah, we'll, we'll cut to the to

594
00:30:21,360 --> 00:30:22,760
the chase here.
They didn't own it for that

595
00:30:22,760 --> 00:30:27,200
long, but December 2013 they
come out and everyone is just

596
00:30:27,200 --> 00:30:31,240
comparing this to to Paulson's
straight away the team knew the

597
00:30:31,240 --> 00:30:34,520
asset, you know, check just like
Paulson's 25,000,000 bucks.

598
00:30:34,560 --> 00:30:37,440
It's not a massive bet paying it
out of cash reserve.

599
00:30:37,440 --> 00:30:40,600
They were kept it a bit under
300 on the day of the deal.

600
00:30:41,000 --> 00:30:42,960
It's an operating mine.
They're not trying to construct

601
00:30:42,960 --> 00:30:45,840
anything.
The asset is being bought off a

602
00:30:45,840 --> 00:30:47,240
major.
This is the the.

603
00:30:47,440 --> 00:30:49,360
First time they're buying from a
major here in Barrick.

604
00:30:49,440 --> 00:30:53,040
Yep, Yep, being bought off
Barrick, A immaterial asset

605
00:30:53,040 --> 00:30:55,760
you'd say for for Barrick,
that's another check.

606
00:30:56,400 --> 00:30:59,200
High grade, we're talking 6 plus
grams per ton.

607
00:31:00,120 --> 00:31:02,480
They have all in sustaining
costs in their mind a bit over

608
00:31:02,480 --> 00:31:04,760
1000 bucks.
Gold in Aussie dollar terms, I'm

609
00:31:04,760 --> 00:31:06,640
talking here is still about
1500.

610
00:31:06,640 --> 00:31:08,960
So there's room to kind of
manoeuvre there.

611
00:31:09,280 --> 00:31:12,240
I mean, they knew Platonic
wasn't the best asset in the

612
00:31:12,240 --> 00:31:14,480
world, but you've got a bit of
room to to operate.

613
00:31:14,960 --> 00:31:19,000
This is a mine that had done
north of 300,000 ounces in a

614
00:31:19,000 --> 00:31:21,080
year.
That was in the early 2000s.

615
00:31:21,720 --> 00:31:25,120
It was doing north of 100,000
when they picked it up.

616
00:31:25,960 --> 00:31:28,800
And again, another part of the
playbook reserves were a couple

617
00:31:28,800 --> 00:31:31,920
100,000 oz, very short mine life
there.

618
00:31:32,760 --> 00:31:34,800
And they had, they had a plan,
they had a lot of targets, they

619
00:31:34,800 --> 00:31:36,920
wanted to come and drill
straight away.

620
00:31:37,760 --> 00:31:39,840
And they were aiming actually
with relatively kind of little

621
00:31:39,840 --> 00:31:43,680
capital to just pull all these
answers into production, extend

622
00:31:43,680 --> 00:31:46,120
the mine life, just rinse and
repeat like what they've done at

623
00:31:46,120 --> 00:31:48,840
Paulson's.
And the market liked it up 7%.

624
00:31:49,200 --> 00:31:52,480
But this this mine like like I
said, Paulson's was different in

625
00:31:52,480 --> 00:31:56,120
the sense that make like
Paulson's appeared past its

626
00:31:56,120 --> 00:31:58,360
prime, but they had exploration
success and then it was kind of

627
00:31:58,560 --> 00:32:01,280
back-to-back to kind of glory
days gravy.

628
00:32:01,280 --> 00:32:05,120
But Platonic was past its prime.
Yeah, yeah.

629
00:32:05,120 --> 00:32:07,000
But they, I mean, they also
thought there was low hanging

630
00:32:07,000 --> 00:32:10,360
fruit about South Barrick had
been running this, this mine

631
00:32:10,360 --> 00:32:15,880
with north of 400 people and
Northern Star would run it with

632
00:32:16,240 --> 00:32:19,400
South of 300.
So Bill, Bill would sort of say

633
00:32:20,440 --> 00:32:23,840
by the by the time you sort of
pay, feed, fly everything you

634
00:32:23,840 --> 00:32:26,960
need for a FIFO miner, it's 200
grand per head.

635
00:32:27,600 --> 00:32:29,640
You drop 100 people, that's 20
million bucks a year.

636
00:32:29,640 --> 00:32:32,680
That gives you a lot of room to
to kind of maneuver, a lot more

637
00:32:33,000 --> 00:32:37,040
room to maneuver than you kind
of have with the the way majors

638
00:32:37,040 --> 00:32:38,560
operate.
Underpins that strategy of

639
00:32:38,560 --> 00:32:42,560
buying from majors because there
are, yeah, day one kind of cost

640
00:32:42,560 --> 00:32:44,640
efficiencies that can be had
when you remove the typical

641
00:32:44,640 --> 00:32:47,600
bloke that's in those machines.
Yeah, yeah, 100%.

642
00:32:47,600 --> 00:32:49,840
But with all that kind of said
it, it didn't work out here.

643
00:32:49,840 --> 00:32:53,600
And in FY20 15, the first full
year of ownership, it did 80,000

644
00:32:53,600 --> 00:32:57,520
oz that was a a record low for
Plutonic.

645
00:32:57,520 --> 00:32:59,800
Things just turned out to be a
bit harder than than they would

646
00:32:59,800 --> 00:33:04,200
have thought.
And as you sort of see with

647
00:33:04,200 --> 00:33:08,680
lower production numbers, your
costs per oz exceed what you

648
00:33:08,680 --> 00:33:12,400
thought you were going to do.
Operational EBIT is a loss of

649
00:33:12,400 --> 00:33:18,720
$21 million for that year.
And by Feb 2016, jumping forward

650
00:33:18,760 --> 00:33:21,320
a little bit, they start this
sort of formal sales process.

651
00:33:22,080 --> 00:33:23,200
The, the asset just wasn't
there.

652
00:33:23,200 --> 00:33:24,960
They recognized that.
And by that point in time they'd

653
00:33:24,960 --> 00:33:26,800
outgrown it.
It, it went very quickly from

654
00:33:26,800 --> 00:33:30,440
being the kind of second child
to a kind of forgotten 4th or

655
00:33:30,440 --> 00:33:34,280
5th child.
So by late 2016, they've agreed

656
00:33:34,320 --> 00:33:37,840
the deal with company that
becomes superior gold and they

657
00:33:37,840 --> 00:33:42,880
get kind of 12:00-ish in cash
and 18 in in shares upon IPO and

658
00:33:42,880 --> 00:33:44,400
a few sort of milestone
payments.

659
00:33:44,440 --> 00:33:46,840
So they're kind, they're kind of
accepting a little bit of a a

660
00:33:46,840 --> 00:33:49,640
loss in some ways.
They're selling it.

661
00:33:49,960 --> 00:33:53,120
The share this IPO shares, you
probably weren't necessarily

662
00:33:53,120 --> 00:33:56,320
banking on them being, you know,
yeah, a super, super valuable

663
00:33:56,320 --> 00:33:58,640
piece or at least not liquid,
yeah.

664
00:33:58,640 --> 00:34:01,400
Yeah, that they undoubtedly lost
money on it like that.

665
00:34:01,400 --> 00:34:04,560
That year of -20 million was
just one of the years they would

666
00:34:04,560 --> 00:34:06,960
have been money.
I'm sure that was sunk in the

667
00:34:06,960 --> 00:34:08,400
asset.
That's not included in that $20

668
00:34:08,400 --> 00:34:10,480
million.
You got the the cost on top to

669
00:34:10,480 --> 00:34:12,520
buy it.
It wasn't a winner to.

670
00:34:12,560 --> 00:34:15,040
Become the 4th or 5th favorite
child.

671
00:34:15,280 --> 00:34:16,960
It means they must have acquired
something else.

672
00:34:17,440 --> 00:34:20,800
In very short order, literally
one month after the Platonic

673
00:34:20,800 --> 00:34:25,040
deal mate, they announced a
bigger and frankly better deal.

674
00:34:25,040 --> 00:34:28,800
So Northern Star kept it over
400 million bucks on deal day

675
00:34:28,920 --> 00:34:31,440
share price, if you think about
what I said earlier, actually

676
00:34:31,440 --> 00:34:33,639
jumped quite a bit between the
Platonic deal on this one.

677
00:34:34,040 --> 00:34:37,679
So they're blocking down a bell
and Kendana again from Barrack.

678
00:34:38,120 --> 00:34:42,320
Again, shopping from Barrack,
mate, get this. 2013 Barrack

679
00:34:42,320 --> 00:34:47,239
reported A10 US billion dollar
plus financial loss.

680
00:34:47,239 --> 00:34:50,960
Now that's largely off the back
of a bunch of impairments with

681
00:34:50,960 --> 00:34:53,679
the gold price falling, as we
said, and that sort of forced

682
00:34:53,679 --> 00:34:56,800
them to reconsider their assets,
put a lot of them on the

683
00:34:56,800 --> 00:34:59,800
chopping block.
Was Barrack amongst that cohort

684
00:34:59,800 --> 00:35:02,720
of gold miners at the time with
these, you know, enormously

685
00:35:03,360 --> 00:35:06,360
enormous hedge hedge book
liabilities that they ultimately

686
00:35:06,360 --> 00:35:11,000
had to yeah, have have asset
sales and and equity raises to

687
00:35:11,080 --> 00:35:15,640
to to to reduce.
I, I believe that cycle had

688
00:35:15,640 --> 00:35:18,320
happened a few years before that
with the, the buy out the equity

689
00:35:18,320 --> 00:35:19,760
raises to fix the debt
positions.

690
00:35:19,760 --> 00:35:23,880
That was a, a late 2000s yeah
thing that a lot of these

691
00:35:23,880 --> 00:35:27,360
companies did, but uh huh, M and
a kind of gone wrong and, and

692
00:35:27,360 --> 00:35:30,040
overspending and over investment
in assets.

693
00:35:30,080 --> 00:35:32,200
I I think is what was the cause
of this one.

694
00:35:32,200 --> 00:35:34,920
And at the end of the day,
balance sheet needed help.

695
00:35:35,440 --> 00:35:38,640
They've got US $13 billion of
debt at the end of that year.

696
00:35:39,000 --> 00:35:42,200
And as Jake Klein puts it, you
get a full seller A.

697
00:35:42,920 --> 00:35:44,080
Beautiful thing.
Beautiful thing.

698
00:35:44,240 --> 00:35:45,160
Beautiful thing.
Beautiful.

699
00:35:45,160 --> 00:35:47,320
Thing if you're a buyer, so if
you're a seller.

700
00:35:47,320 --> 00:35:49,520
So they're backing down a Bell
and Kandana.

701
00:35:49,960 --> 00:35:52,360
I want to know about the deal,
but I also, I'm just thinking if

702
00:35:52,360 --> 00:35:55,280
this deal came a month after
Platonic and both of them are

703
00:35:55,280 --> 00:35:58,840
from Barrick, I wonder if we
should really be evaluating

704
00:35:59,480 --> 00:36:03,000
Platonic in conjunction with
these deals.

705
00:36:03,000 --> 00:36:06,960
Because maybe, maybe the, but
like in buying Platonic, you

706
00:36:06,960 --> 00:36:10,720
established this bilateral
relationship with Barrick that

707
00:36:10,720 --> 00:36:13,520
enabled you to be the
successful, you know, bidder of,

708
00:36:13,600 --> 00:36:15,840
of, of Kanada Bell and Kendana.
Like if they didn't buy

709
00:36:15,840 --> 00:36:17,880
platonic, if they didn't buy
Platonic, would they have been

710
00:36:17,880 --> 00:36:20,120
able to buy Kanada, Bell and
Kendana is my question.

711
00:36:20,400 --> 00:36:23,760
Yeah, it's, it's one you'd have
to get inside the room to ask if

712
00:36:23,760 --> 00:36:26,640
you if you have to just buy kind
of if you, if you group it as

713
00:36:26,640 --> 00:36:30,120
all three, there's kind of a lot
of operations in there.

714
00:36:30,120 --> 00:36:32,760
But if you group it as those
three, you're paying 100 million

715
00:36:32,760 --> 00:36:33,640
bucks.
Do it.

716
00:36:34,040 --> 00:36:36,800
Yeah, I mean, in hindsight, it's
2020, but you just do it.

717
00:36:36,800 --> 00:36:41,360
So what they're buying here is
51% of the East Kendana JV EKJV.

718
00:36:41,360 --> 00:36:45,640
Yep, partnered with the the
famous Anton Billis and.

719
00:36:45,800 --> 00:36:48,440
Yeah, he's a very mysterious
company's brand and tribune,

720
00:36:48,440 --> 00:36:50,720
which we, I don't know if we
talked about enough on the

721
00:36:50,720 --> 00:36:52,480
party, but.
Certainly not enough.

722
00:36:52,480 --> 00:36:55,360
No, they they were the and the
seats are open, Anton, if you

723
00:36:55,360 --> 00:36:56,760
want to come.
On yeah, I would love that.

724
00:36:56,800 --> 00:37:03,720
And then 100% of Kananabel KB.
So KB has the plant with the

725
00:37:03,720 --> 00:37:09,760
with the sort of roaster, the
ore from the EKJV is being sent

726
00:37:09,760 --> 00:37:13,880
sort of 4050 KS E to to KB.
Yep.

727
00:37:14,080 --> 00:37:19,680
So 1 transaction, $75 million,
they add 50 in new debt, the

728
00:37:19,680 --> 00:37:22,880
launch of capital raising which
actually lets them about $130

729
00:37:22,880 --> 00:37:26,000
million all up.
The account of take takeovers on

730
00:37:26,000 --> 00:37:30,080
that production profile jumps to
350,000 ounces.

731
00:37:31,040 --> 00:37:35,120
EKJV has reserves actually a bit
more than what they'd sort of

732
00:37:35,120 --> 00:37:37,000
previously looked at and done
deals on.

733
00:37:37,000 --> 00:37:39,840
So about 5:00-ish years and KB
has got about three years.

734
00:37:40,560 --> 00:37:44,800
And again, you got management
with close experience at these

735
00:37:44,800 --> 00:37:48,160
assets say at time and time
again, they knew what they were

736
00:37:48,160 --> 00:37:50,600
buying, right.
And to minimize the risk here

737
00:37:50,600 --> 00:37:53,320
the sign up some hedges for the
short term for about 12 months.

738
00:37:54,200 --> 00:37:56,720
Northern * If you sort of read
through the announcements at the

739
00:37:56,720 --> 00:38:00,960
time that they were clearly more
excited with the EKJV that was

740
00:38:00,960 --> 00:38:06,600
running at a good few 100 bucks
an ounce lower clip than what KB

741
00:38:06,600 --> 00:38:09,520
was producing at, but you get
them both together.

742
00:38:09,880 --> 00:38:16,320
So they, they 7075 million is
all they're paid in total, but

743
00:38:16,320 --> 00:38:20,720
they've raised more than that to
enable just I suppose more

744
00:38:20,720 --> 00:38:23,920
optionality for future deals or
for, to, to for some capital

745
00:38:24,560 --> 00:38:26,760
invest.
In the assets, not invest in the

746
00:38:26,760 --> 00:38:31,760
assets, these are these are
assets that like we see

747
00:38:31,760 --> 00:38:34,120
throughout needed money to be
spent on them.

748
00:38:34,120 --> 00:38:36,840
They needed things to be proved
out for, you know, for a number

749
00:38:36,840 --> 00:38:39,440
of reasons for the market to
appreciate the the gem that you

750
00:38:39,440 --> 00:38:44,400
just kind of bought or just to
extend the my lives and all

751
00:38:44,400 --> 00:38:46,520
those sorts of things that you
kind of have to do anyway that

752
00:38:46,520 --> 00:38:47,440
there's a number of.
Reasons.

753
00:38:47,440 --> 00:38:50,720
And when you're selling any
asset, first thing you do is you

754
00:38:50,720 --> 00:38:54,480
stop putting in your capital.
So I don't know how long Barrick

755
00:38:54,840 --> 00:38:57,160
had got invested for a while.
Yeah, absolutely.

756
00:38:57,160 --> 00:39:02,120
And the exploration potential
obviously, obviously I'm, I'm

757
00:39:02,120 --> 00:39:05,480
not a CHEO, but it looks like
pretty remarkable when you look

758
00:39:05,480 --> 00:39:07,640
back.
So Pegasus is this one deposit

759
00:39:07,640 --> 00:39:12,200
it had already been discovered
within sort of 12 months it like

760
00:39:12,280 --> 00:39:15,960
leading up to the sale, but
we're already talking about

761
00:39:15,960 --> 00:39:21,240
350,000 oz there at about 10
grams per ton like it's falling

762
00:39:21,240 --> 00:39:24,080
over the infrastructure just
needs 10 bucks in capital to

763
00:39:24,080 --> 00:39:27,760
unlock it.
Less than six months later, it's

764
00:39:27,760 --> 00:39:31,200
sort of doubled the resource
there and the the grade has

765
00:39:31,280 --> 00:39:33,880
increased.
So that looks like a gem

766
00:39:34,680 --> 00:39:37,240
Millennium, which they end up
developing and actually proven

767
00:39:37,240 --> 00:39:40,840
to the market that they can
develop kind of from scratch an

768
00:39:40,840 --> 00:39:41,960
asset.
That's something that they

769
00:39:41,960 --> 00:39:46,000
discover within six months of
the deal that has, you know,

770
00:39:46,160 --> 00:39:49,160
pretty high grade sort of staff,
50,000 oz per annum that ends up

771
00:39:49,680 --> 00:39:53,960
contributing from 2017 onwards.
And then if you look at KB, that

772
00:39:53,960 --> 00:39:58,080
was, you know, a fairly known
kind of entity around Kalgoorlie

773
00:39:58,080 --> 00:39:59,680
if you'd like.
It's very close to Kalgoorlie.

774
00:40:00,040 --> 00:40:03,720
It had been operating from the
early 90s and the late 90s had

775
00:40:03,720 --> 00:40:07,800
been full underground.
A a roaster is absolutely a

776
00:40:07,800 --> 00:40:10,600
strategic asset.
You know, the ability to, to

777
00:40:10,800 --> 00:40:13,160
process the types of ores that a
roaster can.

778
00:40:13,240 --> 00:40:16,240
Yeah, in a permitted way.
Don't think there's another one

779
00:40:16,440 --> 00:40:18,880
like it's still still permitted.
Exactly.

780
00:40:18,880 --> 00:40:22,160
The plant is key there.
Production from the underground

781
00:40:22,160 --> 00:40:25,040
had been sort of stepping down a
little bit at that at that point

782
00:40:25,040 --> 00:40:27,360
in time.
But super, super strategic as

783
00:40:27,360 --> 00:40:30,360
you say.
And if you reflect on the first

784
00:40:30,440 --> 00:40:36,880
full financial year, operational
EBIT, AKJV did about 70 and KB

785
00:40:36,880 --> 00:40:41,120
did north of 30, so over 100
million right there first

786
00:40:41,120 --> 00:40:46,400
financial year.
First year EBIT 2025% N of the

787
00:40:46,400 --> 00:40:48,680
purchase price.
And obviously you, you got tax

788
00:40:48,680 --> 00:40:51,640
greater overheads, but that's
close to paying itself down.

789
00:40:51,640 --> 00:40:57,200
And if we flash forward to 2021,
you've got the EKJV and the

790
00:40:57,200 --> 00:41:01,600
surrounding assets being sold to
Evos 400 million bucks, that's

791
00:41:01,640 --> 00:41:04,360
seven years later.
That made a lot more sense for

792
00:41:04,400 --> 00:41:06,840
Evos at that point.
In time synergies to own their

793
00:41:06,840 --> 00:41:11,000
meal was much closer.
But I mean Northern Stars kept

794
00:41:11,000 --> 00:41:12,960
the kept the roast of the kept
canal.

795
00:41:12,960 --> 00:41:16,760
That's just the EKJV.
It's gone to, it's gone to

796
00:41:16,760 --> 00:41:19,680
evolutions for 400 million.
Yeah, it's a remarkable markup.

797
00:41:19,680 --> 00:41:22,960
You can call that plus all of
the cash flow that would have

798
00:41:22,960 --> 00:41:25,680
been made in the in the interim,
you can call that a a a stellar

799
00:41:25,680 --> 00:41:26,440
deal.
Yeah.

800
00:41:26,480 --> 00:41:29,440
And we couldn't go without
talking about the the frosty

801
00:41:29,440 --> 00:41:33,120
relationship between Northern
Star and their JV partners, so.

802
00:41:33,240 --> 00:41:35,600
They didn't get along mate.
No Northern Star tried to buy

803
00:41:35,600 --> 00:41:40,080
them out late 2018. 150 million
bucks that got that got

804
00:41:40,080 --> 00:41:42,240
rejected.
Obviously maybe history would

805
00:41:42,240 --> 00:41:44,720
have been a bit different if if
something had been accepted.

806
00:41:44,720 --> 00:41:47,240
Maybe it was never really
seriously considered, but.

807
00:41:47,360 --> 00:41:51,520
Do you have an argument over the
accounting of the gold coming

808
00:41:51,520 --> 00:41:53,120
from the JV?
They had a lot of the

809
00:41:53,120 --> 00:41:54,960
reconciliation of it.
Yeah, Yeah.

810
00:41:54,960 --> 00:41:58,240
So the bill is kind of related
companies, if you like.

811
00:41:58,240 --> 00:42:02,000
They sued Northern Star around
that same sort of time.

812
00:42:02,080 --> 00:42:05,360
It actually got chucked out by a
judge later on, but yeah.

813
00:42:06,200 --> 00:42:08,800
You know, at one point, those
two entities ran the Tribune.

814
00:42:09,040 --> 00:42:11,040
They had cross shareholdings in
each other.

815
00:42:11,320 --> 00:42:12,480
You're not allowed to do that
anymore.

816
00:42:12,480 --> 00:42:16,680
But that was one way you could
effectively, yeah, have a

817
00:42:16,680 --> 00:42:19,160
defensive strategy from an
interloper.

818
00:42:19,160 --> 00:42:21,920
But it's, you know, a little bit
from here, a little bit from

819
00:42:21,920 --> 00:42:23,360
there.
And now no one can buy me.

820
00:42:24,560 --> 00:42:25,440
That's so good.
Yeah.

821
00:42:25,520 --> 00:42:28,880
If we just reflect on KB for a
SEC along with the South

822
00:42:28,880 --> 00:42:31,760
Kalgoorlie OPS, which we'll
mention in a sort of SEC they

823
00:42:31,760 --> 00:42:36,040
got they, they sort of form
Northern Stars cow OPS a part of

824
00:42:36,040 --> 00:42:41,440
it now 10 plus years in reserve
valued in in the low 1 billions

825
00:42:41,440 --> 00:42:45,920
by brokers today.
So yeah, undoubtedly a success.

826
00:42:45,920 --> 00:42:49,280
These investments undoubtedly
took Northern Star to the next

827
00:42:49,280 --> 00:42:51,400
level.
Again, undoubtedly an

828
00:42:51,400 --> 00:42:54,960
improvement on Paulson's and
electronic generated cash grew

829
00:42:54,960 --> 00:42:58,840
the profile, but there was no
slowing down mate.

830
00:42:58,960 --> 00:43:02,360
I'm really excited for this bit
because you've been preparing

831
00:43:02,360 --> 00:43:05,120
this episode for about a week
and, and every morning you come

832
00:43:05,120 --> 00:43:07,640
in and you're like, mate, I've
fallen more and more in love

833
00:43:07,640 --> 00:43:10,600
with John Dee.
Oh, I love John Dee.

834
00:43:11,800 --> 00:43:15,520
It's a beauty.
So May 2014 again, just like a

835
00:43:15,520 --> 00:43:19,960
couple months after like another
deal, 82 and a half, $1,000,000

836
00:43:20,200 --> 00:43:23,760
cash acquisition of John Dee,
this time from Newmont.

837
00:43:23,920 --> 00:43:26,400
So, so this, this has come a
couple of months after the Ek.

838
00:43:26,400 --> 00:43:29,240
So there's 33 acquisitions here.
Bang, Bang, bang.

839
00:43:29,320 --> 00:43:32,280
In like 4 months.
Quite much ish, yeah.

840
00:43:32,320 --> 00:43:35,240
Wow.
They were busy, wow, they were

841
00:43:35,240 --> 00:43:36,600
busy.
People sort of saying have you,

842
00:43:36,680 --> 00:43:38,000
have you bitten off a bit too
much?

843
00:43:38,760 --> 00:43:42,160
So the cash that they did raise,
the equity raise they did for

844
00:43:42,160 --> 00:43:44,360
EKJV kind of comes in handy here
if it was part of the

845
00:43:44,360 --> 00:43:45,920
consideration for for Jundee
too.

846
00:43:46,360 --> 00:43:49,240
Yeah, it would have been a bit
more debt came on board, but I'm

847
00:43:49,600 --> 00:43:52,240
going to digress for a moment to
talk about the history of Jundee

848
00:43:53,200 --> 00:43:56,160
yet maybe it's relevant.
It's it's fascinating

849
00:43:56,200 --> 00:43:59,320
regardless.
So the mine had been brought

850
00:43:59,320 --> 00:44:03,480
online in 1995.
Now the Dundee Nimri area was

851
00:44:03,480 --> 00:44:07,880
pegged by Creasey in the 80s.
In the late 80s, he tried to tie

852
00:44:07,880 --> 00:44:11,400
up a deal with Chevron, and
Chevron actually stalled until

853
00:44:11,400 --> 00:44:13,320
the end of the kind of reporting
time.

854
00:44:13,360 --> 00:44:15,160
Was was Chevron an explorer back
then?

855
00:44:15,200 --> 00:44:17,000
Is that what?
You yeah, all the oil, oil

856
00:44:17,000 --> 00:44:19,080
companies back back in the day.
We had time.

857
00:44:19,280 --> 00:44:22,240
Yeah, yeah.
No, look, uranium and everything

858
00:44:22,240 --> 00:44:27,960
back in the day, but that
actually left crazy in in a bit

859
00:44:27,960 --> 00:44:31,440
of a pickle because they pulled
out the deal late and it meant

860
00:44:31,440 --> 00:44:34,080
the the cash hadn't been spent
on on the tenement.

861
00:44:34,120 --> 00:44:36,640
That kind of needed to be and he
needed to drop half the tenement

862
00:44:36,640 --> 00:44:41,640
as was the rules.
So by late 1991, Great Central

863
00:44:41,640 --> 00:44:46,120
mines came into the fold.
Now they formed AJV with crazy

864
00:44:46,400 --> 00:44:49,600
JCM, Great Central Mines.
This is a company that was led

865
00:44:49,600 --> 00:44:53,600
by Rabbi Diamond Joe Gutnick.
He's a known entity.

866
00:44:53,800 --> 00:44:56,400
Diamond Joe, yes.
So from Melbourne, previous

867
00:44:56,400 --> 00:44:58,040
president of the Melbourne footy
club.

868
00:44:58,720 --> 00:45:02,240
And he'd been told by a rabbi to
to go to the desert, look for

869
00:45:02,240 --> 00:45:06,280
gold, look for diamonds.
And so he did and came good.

870
00:45:06,280 --> 00:45:08,840
He is the same person
responsible for overseeing the

871
00:45:08,840 --> 00:45:12,720
discovery of none other than
platonic, coincidentally a bit

872
00:45:12,720 --> 00:45:14,600
before.
So he's got a bit to do with

873
00:45:14,600 --> 00:45:20,920
this. 1/19/93 The JV is locked
onto 8 deposits together called

874
00:45:20,920 --> 00:45:23,520
Jundee in the in this kind of
area here.

875
00:45:23,520 --> 00:45:25,680
This JV between Gutnick and
Creasy.

876
00:45:26,200 --> 00:45:26,840
Correct.
Yeah.

877
00:45:27,080 --> 00:45:31,720
And they they come up with this
initial resource at a grade of

878
00:45:31,720 --> 00:45:37,120
2.7g per ton, but a few years
later they hit button deeps, 2.2

879
00:45:37,200 --> 00:45:43,320
million oz at 12 grams plus.
So it's just stonking grade.

880
00:45:43,680 --> 00:45:47,400
Yeah.
So by 1995, GCM has agreed to

881
00:45:47,400 --> 00:45:51,600
buy Creasey out of his ownership
in Jundee and Brunswing for just

882
00:45:51,600 --> 00:45:55,800
under $120 million.
I don't know why I must mean the

883
00:45:55,800 --> 00:45:58,800
tax law at the time, but this is
tax free for Creasey.

884
00:45:59,240 --> 00:46:02,680
He is a rich rich man.
After this and that same year.

885
00:46:02,760 --> 00:46:06,520
Get this even more astounding in
this day and age, they pour

886
00:46:06,520 --> 00:46:10,760
first gold GCM late in the year,
in December, 2 years after

887
00:46:10,760 --> 00:46:14,600
coming out with a resource pour
the gold like that is just not

888
00:46:14,600 --> 00:46:16,080
achievable.
Unfortunately, in in this day

889
00:46:16,080 --> 00:46:17,080
and age, the.
Speed.

890
00:46:17,080 --> 00:46:19,360
You could get things done.
Yeah, it it's kind of mind

891
00:46:19,360 --> 00:46:22,960
blowing and.
And crazy like he might have got

892
00:46:23,000 --> 00:46:25,480
that tax free, but he would have
put all that money back in the

893
00:46:25,480 --> 00:46:28,760
ground eventually over time.
Absolutely.

894
00:46:28,800 --> 00:46:34,280
And by the way, those other
tenements that he dropped, they

895
00:46:34,280 --> 00:46:37,200
turned out to host the nimmery
gold deposits.

896
00:46:37,280 --> 00:46:43,000
And two years later, 1997 GCM
consolidated them with the help

897
00:46:43,000 --> 00:46:46,360
of Normandy, who played a big
role in that journey for another

898
00:46:46,360 --> 00:46:49,600
$330 million.
So there's a story that what

899
00:46:49,600 --> 00:46:51,520
could have been crazy.
Story to that.

900
00:46:51,680 --> 00:46:57,880
Yep, a few years later in 2002,
Newmont consolidated after they

901
00:46:58,280 --> 00:46:59,760
the other owners fall on hard
times.

902
00:46:59,760 --> 00:47:03,200
But that's a bit of a sidetrack.
A very interesting one in my

903
00:47:03,200 --> 00:47:04,480
opinion.
Super interesting.

904
00:47:04,480 --> 00:47:07,800
One day I want to tell the story
about Audax Holdings and yeah,

905
00:47:07,800 --> 00:47:11,080
the interplay there with
entering South and has to be

906
00:47:11,080 --> 00:47:14,400
told some interesting characters
and maybe, you know, some some

907
00:47:14,520 --> 00:47:17,160
some dubious actions from people
working at regulators, but.

908
00:47:17,520 --> 00:47:20,760
Never, never.
So John Day at this point in

909
00:47:20,760 --> 00:47:25,160
time mate, 200,000 oz per annum
operation only two years reserve

910
00:47:25,160 --> 00:47:29,360
life again a very common thing
here, 4G per ton plus.

911
00:47:29,360 --> 00:47:35,640
So the, the head grade had been
over 8g per ton in, in prior

912
00:47:35,640 --> 00:47:37,560
years.
It it was on the way down there

913
00:47:37,760 --> 00:47:41,520
about a 1.5 million tonne per
annum plant sort of more or less

914
00:47:41,520 --> 00:47:42,800
depending on what you're putting
through it.

915
00:47:42,800 --> 00:47:44,400
This is how.
This is how the mine is at the

916
00:47:44,400 --> 00:47:47,920
time that Northern Star buy it.
Yes, that that, that is correct.

917
00:47:48,000 --> 00:47:53,280
And it's paid for with the
addition of $100 million in debt

918
00:47:53,280 --> 00:47:56,280
facilities.
So the company Northern Star has

919
00:47:56,280 --> 00:47:59,920
now $40 million in cash, 70
million in drawn debt.

920
00:48:00,360 --> 00:48:04,000
We're in the middle of 2014.
The company now has a sort of

921
00:48:04,000 --> 00:48:08,280
profile of north of 1/2 a
million oz per annum.

922
00:48:08,440 --> 00:48:14,120
Big, big, big profile.
And yeah, a yeah, just a

923
00:48:14,120 --> 00:48:17,360
dramatic growth.
Just a few a few short years and

924
00:48:17,520 --> 00:48:22,200
really in in six months.
But there's one more nugget to

925
00:48:22,200 --> 00:48:24,960
this deal to wrapping up Jundee
that has to be told.

926
00:48:24,960 --> 00:48:28,800
So in May they come out with a
deal, but none other than Mark

927
00:48:28,800 --> 00:48:34,400
Creasey has a roofer, a writer
first refusal to buy the asset.

928
00:48:34,640 --> 00:48:37,080
Right.
Dating back to those days, yes.

929
00:48:37,800 --> 00:48:43,480
One, yeah, you can like assume
it was dating back 20 plus years

930
00:48:43,480 --> 00:48:46,240
that he had this right.
So Newmont is selling it.

931
00:48:46,240 --> 00:48:50,640
Crazy's got a right to match.
I, I presume the deal on the

932
00:48:50,640 --> 00:48:54,600
table from from Northern Star
and whenever, whenever that

933
00:48:54,600 --> 00:48:58,880
dynamics there, it kind of
always limits the appeal or

934
00:48:58,880 --> 00:49:01,320
capability to get any deal done
because you're always just

935
00:49:01,320 --> 00:49:04,840
wondering if the person who has
the right exercise, the right

936
00:49:05,840 --> 00:49:09,280
had Northern * navigated.
Amazingly, $10 million payment

937
00:49:09,440 --> 00:49:13,120
in the form of Northern Star
shares to Crazy announced in

938
00:49:13,120 --> 00:49:16,080
June.
Yeah, legend has it something

939
00:49:16,080 --> 00:49:18,320
else, but.
Well, I know, I know, Crazy's

940
00:49:18,320 --> 00:49:20,120
got a spectacular collection of
rocks.

941
00:49:20,440 --> 00:49:22,040
Maybe you got a couple of rocks
from the mine too.

942
00:49:22,040 --> 00:49:27,640
Maybe a few samples, yeah.
Anyway, they, yeah, I, I think

943
00:49:27,640 --> 00:49:29,840
we actually need to dive deeper
for a SEC on how they managed to

944
00:49:29,840 --> 00:49:32,760
get this deal because this is an
outstanding asset.

945
00:49:33,160 --> 00:49:36,280
They were again buying from a
seller who was not in pristine

946
00:49:36,360 --> 00:49:40,200
financial health, who didn't
have the asset as a priority,

947
00:49:40,680 --> 00:49:42,760
who was coming up to a point in
time where they would have to

948
00:49:42,760 --> 00:49:45,080
sink capital in it.
Otherwise the mine was going to

949
00:49:45,080 --> 00:49:47,480
shut down.
And just look at these numbers

950
00:49:47,480 --> 00:49:50,560
here like I'm going to read out
the cash flow just gone back a

951
00:49:50,560 --> 00:49:55,400
few years in U.S. dollar terms
going going backwards USA $160

952
00:49:55,400 --> 00:49:58,080
million in one year $300
million, three $110 million, two

953
00:49:58,080 --> 00:50:01,440
$100 million.
They bought this asset for 82

954
00:50:01,440 --> 00:50:04,480
and a half million Aussie.
It is like it's kind of hard to

955
00:50:04,480 --> 00:50:07,440
comprehend that and in its first
full year of Northern Star

956
00:50:07,440 --> 00:50:11,400
ownership does over $100 million
Aussie in cash flow.

957
00:50:11,400 --> 00:50:14,960
They come out in the same year
and prove that enormously the

958
00:50:14,960 --> 00:50:22,520
reserves and and the resources
there like just wow, this is.

959
00:50:23,160 --> 00:50:26,600
This is unbelievable.
And Newmont, I presume we're in

960
00:50:26,600 --> 00:50:28,160
a just a similar predicament to
Barrack.

961
00:50:28,160 --> 00:50:30,760
Too much debt, gold prices
falling off you're you're

962
00:50:30,760 --> 00:50:32,640
exposed.
You have to have forced asset

963
00:50:32,640 --> 00:50:34,960
sales.
This asset never should have

964
00:50:34,960 --> 00:50:36,200
been, never should have been
sold.

965
00:50:36,760 --> 00:50:38,640
This this this shouldn't have.
Been sold that cheap.

966
00:50:39,120 --> 00:50:42,120
Yeah, it it shouldn't have been
sold that cheap, but it's so it

967
00:50:42,120 --> 00:50:45,440
just seems to me like the kind
of asset that you shouldn't you

968
00:50:45,440 --> 00:50:50,040
just shouldn't have sold This is
this is AI mean it was a a cash

969
00:50:50,040 --> 00:50:54,800
printer, a Tier 1 mine in my in
my eyes, I think it proved to

970
00:50:54,800 --> 00:50:56,760
be.
Yeah, and I mean, maybe it

971
00:50:56,760 --> 00:51:01,080
doesn't fit the the sort of tier
one of of Newmont, you know,

972
00:51:01,080 --> 00:51:04,200
maybe it doesn't do half a
million oz a year and have a

973
00:51:04,600 --> 00:51:06,520
have a 10 year mine life or or
whatever.

974
00:51:06,840 --> 00:51:11,680
Maybe they were wanting to focus
more on open pit.

975
00:51:11,680 --> 00:51:16,400
They were they were kind of
keenly lowering their exposure

976
00:51:16,400 --> 00:51:18,600
to it to Australia kind of
interestingly.

977
00:51:18,600 --> 00:51:20,560
But that's, that's the decision
they sort of made.

978
00:51:20,560 --> 00:51:24,360
And this became the deal that
every future Northern Star deal

979
00:51:24,360 --> 00:51:26,520
is benchmarked against.
And frankly, a lot of other

980
00:51:26,520 --> 00:51:28,960
deals are benchmarked against
because it's just kind of

981
00:51:29,600 --> 00:51:32,400
phenomenal.
And if you, yeah, if you look

982
00:51:32,400 --> 00:51:38,040
through the assets now at this
point in time, mid 2014, Jundee

983
00:51:38,040 --> 00:51:41,040
is a huge step up on Platonic.
Everyone can sort of see that.

984
00:51:41,040 --> 00:51:43,280
I mean, it would have been so
interesting just to be a flaw on

985
00:51:43,280 --> 00:51:45,760
the wall at Northern Star at
this point in time trying to

986
00:51:46,160 --> 00:51:49,320
hear their thinking.
We never know with with

987
00:51:49,320 --> 00:51:52,160
Platonic, but perhaps there's a
bit of regret that they jumped

988
00:51:52,160 --> 00:51:54,120
too early.
I don't think it really matters.

989
00:51:54,120 --> 00:51:57,760
You know, they they didn't end
up losing what in the scheme of

990
00:51:57,760 --> 00:52:01,840
things was a massive amount of
capital, but gold had peeled off

991
00:52:02,000 --> 00:52:04,080
the Aussie dollar kind of
sheltered them in their

992
00:52:04,280 --> 00:52:06,520
position.
They hadn't been a big gold

993
00:52:06,520 --> 00:52:08,840
mining company around that 2010
time.

994
00:52:09,080 --> 00:52:13,720
So they hadn't loaded up on debt
and, you know, fallen to to all

995
00:52:13,720 --> 00:52:17,720
the others kind of other tricks
that a lot of the other gold

996
00:52:17,720 --> 00:52:19,280
miners had at that point in
time.

997
00:52:19,440 --> 00:52:22,200
Is their gearing remaining
pretty modest this entire time,

998
00:52:22,200 --> 00:52:23,720
even when they've added some
debt to get?

999
00:52:23,720 --> 00:52:26,200
The deal done and whenever they
did add debt, they just paid it

1000
00:52:26,200 --> 00:52:29,080
down very, very quickly.
They got, you know, they got

1001
00:52:29,080 --> 00:52:33,360
cash now, they got a healthy
balance sheet, they got

1002
00:52:33,400 --> 00:52:35,880
institutional backing.
People are keen to back them.

1003
00:52:35,880 --> 00:52:38,840
They've got a track record.
They've got the mandate as as we

1004
00:52:38,840 --> 00:52:41,120
kind of often hear about to do
M&A.

1005
00:52:41,120 --> 00:52:43,880
They've been telling
shareholders for years about it

1006
00:52:44,320 --> 00:52:48,280
and they they executed on it.
It took more than good luck.

1007
00:52:48,280 --> 00:52:51,920
There was, yeah.
Yeah, there's skill, real skill

1008
00:52:51,920 --> 00:52:56,280
there. 100% it's, it's the the
combination of of a lot of hard

1009
00:52:56,280 --> 00:52:58,160
work colliding with a few other
factors, right.

1010
00:52:58,160 --> 00:53:02,760
And yeah, I mean, if we, if we
zoom in again on, on John D for

1011
00:53:02,760 --> 00:53:05,960
a moment, like grade was
declining, costs were were

1012
00:53:05,960 --> 00:53:08,480
creeping up.
Yes, it had so much life in it

1013
00:53:08,600 --> 00:53:11,680
still, even though it needed
money to to go into it.

1014
00:53:13,400 --> 00:53:16,880
I I kind of am at a bit of a
loss that why they kind of sold

1015
00:53:16,880 --> 00:53:19,760
it so cheaply.
Maybe cash upfront marginally

1016
00:53:19,760 --> 00:53:21,280
helped for for a company in
trouble.

1017
00:53:21,280 --> 00:53:23,920
It's, it's not a big to get for,
for a Newmont.

1018
00:53:23,920 --> 00:53:27,400
But you Fast forward 10 years
and the thing does a bit less

1019
00:53:27,400 --> 00:53:30,840
than 300,000 oz all in
sustaining costs.

1020
00:53:30,840 --> 00:53:33,760
That's like 1/3 of the the
current gold price.

1021
00:53:34,120 --> 00:53:37,040
Many years of reserve, many
million ounces in resource.

1022
00:53:37,040 --> 00:53:40,680
It's yeah, it's a it's a crazy
one to to look back at.

1023
00:53:40,680 --> 00:53:43,720
But here's a super interesting
thing from the investors

1024
00:53:43,720 --> 00:53:46,840
perspective.
It had been a volatile year and

1025
00:53:46,840 --> 00:53:49,440
commodities by and large were on
the way down in 2014.

1026
00:53:49,920 --> 00:53:53,040
At the end of that year, you
could still buy shares for

1027
00:53:53,040 --> 00:53:56,000
around a dollar.
This company is completely

1028
00:53:56,000 --> 00:53:58,440
transformed.
Like they've even started paying

1029
00:53:58,440 --> 00:54:01,520
down the debt that they did take
on at that point in time because

1030
00:54:01,520 --> 00:54:03,960
these these assets were printing
cash straight away.

1031
00:54:03,960 --> 00:54:07,600
The quality of the assets has
has improved into like this is

1032
00:54:08,640 --> 00:54:11,160
it's got hold of John D you've
got hold of yeah.

1033
00:54:11,200 --> 00:54:14,320
And you can and you can pick up
the shares for in and around the

1034
00:54:14,320 --> 00:54:17,200
same range as you could at the
beginning of the year.

1035
00:54:17,200 --> 00:54:19,840
That's that's a crazy little
tidbit in my eyes.

1036
00:54:20,000 --> 00:54:22,240
Do you ever just like add up all
of the free cash flow that

1037
00:54:22,240 --> 00:54:25,360
probably has come out of Dundee
since that acquisition?

1038
00:54:25,560 --> 00:54:29,960
I, I haven't, you can't really
do it outside a Northern Star.

1039
00:54:29,960 --> 00:54:33,400
I mean, you could try and and do
it, but because of the

1040
00:54:33,400 --> 00:54:37,840
production centres that Northern
Star now has, you know, like

1041
00:54:38,040 --> 00:54:41,560
Thunder Box and the whole area
there, it's hard to break it out

1042
00:54:41,560 --> 00:54:46,200
on its own.
But yeah, the the assets worth 2

1043
00:54:46,200 --> 00:54:49,720
and a half $3 billion today.
Cash has been spent on it

1044
00:54:49,720 --> 00:54:53,000
obviously.
But yeah, an an unbelievable

1045
00:54:53,000 --> 00:54:57,320
deal by by all accounts.
Stella, if you if you kind of

1046
00:54:57,320 --> 00:55:02,720
take a step back from the deals,
JD, how do you just reflect

1047
00:55:03,360 --> 00:55:05,920
corporately on them and
leadership at this point?

1048
00:55:07,160 --> 00:55:13,080
So if I mean, if we step forward
to 2016, it's it's a bit of a

1049
00:55:13,080 --> 00:55:16,040
year of change.
So Chris Rowe becomes a non

1050
00:55:16,040 --> 00:55:18,280
exec, Bill becomes the exec
chair.

1051
00:55:18,720 --> 00:55:22,280
Stu Tonkin takes over the CEO
role he had been for a little

1052
00:55:22,280 --> 00:55:26,320
while.
The CEO also formerly of of BAM

1053
00:55:26,320 --> 00:55:29,680
Incon highly rated and pursued
by Bill part.

1054
00:55:29,920 --> 00:55:32,000
Of the wasn't, yeah.
Yeah.

1055
00:55:32,000 --> 00:55:36,760
And if we, if we then look at
the, the assets as well at this

1056
00:55:36,760 --> 00:55:39,440
point in time, it's a good point
to look at them in my eyes

1057
00:55:39,440 --> 00:55:41,760
because it had capital spent on
them.

1058
00:55:41,760 --> 00:55:45,480
So FY16 is, is a kind of good
point in time to, to kind of

1059
00:55:45,480 --> 00:55:49,640
take a step back and already
kind of assess what you've done

1060
00:55:49,640 --> 00:55:51,400
and what the position of the
business is.

1061
00:55:51,400 --> 00:55:53,520
Because they're in like a deal
winter here, if you like.

1062
00:55:53,520 --> 00:55:55,520
They're investing super heavily
in the assets.

1063
00:55:56,560 --> 00:55:59,680
Mid 2016 cash is in the hundreds
of millions.

1064
00:55:59,680 --> 00:56:02,280
They are debt free.
The mine lives have been

1065
00:56:02,280 --> 00:56:04,880
extended like pretty
dramatically.

1066
00:56:04,880 --> 00:56:08,920
The reserves have been kicked
out years despite million plus

1067
00:56:08,920 --> 00:56:12,240
ounces of production over the
previous couple years.

1068
00:56:13,520 --> 00:56:18,400
They they spend over that period
$250 million on the assets and

1069
00:56:19,000 --> 00:56:22,920
like I sort of said the the
market kept jump jumped up kind

1070
00:56:22,920 --> 00:56:25,520
of quickly, but that was still a
big sum for them.

1071
00:56:25,520 --> 00:56:29,560
So that was over a three-year
period and the majority of that

1072
00:56:29,560 --> 00:56:32,520
was on drilling and then you got
a bit of kind of expansionary

1073
00:56:32,600 --> 00:56:36,760
capital as well.
But they start advertising then

1074
00:56:36,760 --> 00:56:43,160
if we go into 2017, a period of
falling CapEx and profit

1075
00:56:43,160 --> 00:56:46,440
harvesting, but you, you kind of
get the sense we're inching

1076
00:56:46,440 --> 00:56:49,400
closer to another deal.
Interesting.

1077
00:56:49,640 --> 00:56:52,240
Interesting.
I actually didn't realize that.

1078
00:56:52,240 --> 00:56:56,280
Stuart Duncan came in as a CEO
as early as as that, as like

1079
00:56:56,280 --> 00:56:58,800
2016.
I mean, like I didn't really

1080
00:56:58,920 --> 00:57:01,920
join capital markets until,
yeah, much later, but yeah.

1081
00:57:01,920 --> 00:57:04,840
I hadn't realized he was the CEO
so, so early in the in the

1082
00:57:04,840 --> 00:57:09,440
journey, but yeah, I mean a
super, super highly regarded

1083
00:57:09,440 --> 00:57:11,440
operator.
Yeah, from, from everything,

1084
00:57:11,800 --> 00:57:15,200
from all the comments and the,
you know, the calls and stuff I

1085
00:57:15,200 --> 00:57:18,160
listened back to and yeah, yeah,
smoking very highly of.

1086
00:57:18,480 --> 00:57:22,000
So what are they buying now?
So this, this one would be just

1087
00:57:22,000 --> 00:57:24,480
a brief mention mate, because
they scoop up the South Cal

1088
00:57:24,480 --> 00:57:28,680
Gorli OPS in March 2018.
So they were four years since

1089
00:57:28,680 --> 00:57:32,680
they'd done a deal and they
spent 80 million bucks.

1090
00:57:32,680 --> 00:57:35,600
But at this point in time, there
are $4 billion market cap

1091
00:57:35,920 --> 00:57:38,080
company.
So it's no longer a huge buy. 60

1092
00:57:38,080 --> 00:57:41,880
goes out in script, 20 in cash.
Just a couple page announcement

1093
00:57:41,880 --> 00:57:43,280
kind of tells you what you need
to know.

1094
00:57:43,520 --> 00:57:45,880
They're they're buying
processing capacity 1.2 million

1095
00:57:45,880 --> 00:57:49,160
tons per annum.
The the Jubilee plant of West

1096
00:57:49,160 --> 00:57:52,960
Gold here.
So it sits to the South of like

1097
00:57:52,960 --> 00:57:56,520
50 KS to the South of KB as they
call it, because they're kind of

1098
00:57:56,520 --> 00:57:59,720
group it together in the Cal OPS
like we touched on earlier.

1099
00:57:59,720 --> 00:58:04,960
And I mean only 30 to 40,000 oz
was coming out of this at that

1100
00:58:05,280 --> 00:58:09,600
point in time.
And only a portion of that was

1101
00:58:09,600 --> 00:58:11,560
West Gold Fiona.
The rest was being kind of told

1102
00:58:11,560 --> 00:58:15,520
traded so.
This this meal is is in care

1103
00:58:15,520 --> 00:58:19,520
maintenance right now.
It is as of 2023 they chucked it

1104
00:58:19,520 --> 00:58:23,320
into to care and maintenance.
So they had previously at this

1105
00:58:23,320 --> 00:58:25,720
point in time been mill
constrained in COW and they no

1106
00:58:25,720 --> 00:58:30,000
longer were given flexibility
with their EKJV assets and

1107
00:58:30,000 --> 00:58:32,120
everything else they were doing
that Millennium like I mentioned

1108
00:58:32,120 --> 00:58:34,680
was coming online.
So they were picking up

1109
00:58:34,760 --> 00:58:38,000
exploration ground all around
Kalgoorlie and presumably this

1110
00:58:38,480 --> 00:58:41,640
may be opened up.
Yeah, flexibility to process

1111
00:58:41,640 --> 00:58:42,600
some of that stuff.
Yeah.

1112
00:58:42,600 --> 00:58:45,840
And the asset is on care and
maintenance now, the plan

1113
00:58:45,920 --> 00:58:48,520
rather.
But the Underground still adds

1114
00:58:48,760 --> 00:58:53,360
ounces to Northern Star today.
Now Pogo, JD, this is when we

1115
00:58:53,360 --> 00:58:57,320
came into capital markets, there
wasn't much love for this deal.

1116
00:58:57,320 --> 00:59:02,320
There wasn't much love at all
for ultimately was Australians

1117
00:59:02,320 --> 00:59:04,400
going into North America, but it
wasn't always that way.

1118
00:59:04,480 --> 00:59:05,680
People were excited to start
with.

1119
00:59:06,040 --> 00:59:10,480
They were super excited to to
start with and yeah, you're spot

1120
00:59:10,480 --> 00:59:11,760
on.
For a couple of years this was

1121
00:59:12,680 --> 00:59:16,960
not spoken of so fondly, but
it's, it's a super interesting

1122
00:59:16,960 --> 00:59:19,600
deal, right.
So after that flurry deal was in

1123
00:59:19,600 --> 00:59:23,680
2014, there's a four year kind
of break where they invest in

1124
00:59:23,680 --> 00:59:28,280
the assets they've got and they
generate cash and then they are

1125
00:59:28,280 --> 00:59:30,000
starting to to look around
again.

1126
00:59:30,040 --> 00:59:33,440
And I mean actually that's not
totally right.

1127
00:59:33,440 --> 00:59:35,240
They've been looking for a long
time and they put in a lot of

1128
00:59:35,240 --> 00:59:37,760
bids for other assets, but they
actually get get one over the

1129
00:59:37,760 --> 00:59:40,400
line.
So the acquisition of Pogo

1130
00:59:40,400 --> 00:59:45,840
announced in August 2018 US $260
million or 350 Aussie from

1131
00:59:45,840 --> 00:59:50,640
Sumitomo.
As as rumor has it, JD, this,

1132
00:59:51,360 --> 00:59:54,840
there was a, an inbound call to
the reception of Northern Star

1133
00:59:54,840 --> 00:59:58,720
from Sumitomo and that's how
kind of a deal was brought to

1134
00:59:58,720 --> 01:00:01,800
them actually an inbound call to
reception like so maybe they

1135
01:00:01,800 --> 01:00:03,840
weren't looking in North
America, North America came to

1136
01:00:03,840 --> 01:00:06,640
them.
Maybe like like you mentioned

1137
01:00:06,640 --> 01:00:09,800
though, a lot of Aussies looking
around talking about relative

1138
01:00:09,800 --> 01:00:12,040
values of the the Aussie
Goldie's, I mean it's not

1139
01:00:12,040 --> 01:00:15,480
totally applicable here because
they didn't pay with script and

1140
01:00:15,800 --> 01:00:19,840
they went buying off a Canadian
company or a North American

1141
01:00:19,840 --> 01:00:21,880
company, but.
It's a bit of a major selling

1142
01:00:21,880 --> 01:00:23,040
like it.
I don't assume a term.

1143
01:00:23,040 --> 01:00:26,000
It's not a major in the sense of
typical age of the way we think

1144
01:00:26,000 --> 01:00:28,000
about it, but.
Yeah, yeah.

1145
01:00:28,120 --> 01:00:30,160
I mean the the other ones, you
know, that come to mind like St.

1146
01:00:30,160 --> 01:00:33,040
Barb's going in, we saw
Silverlight go in, Evo's go in

1147
01:00:33,040 --> 01:00:35,800
as well.
But to to knuckle down on this

1148
01:00:35,800 --> 01:00:41,320
deal, Northern Star launched a
$175 million placement and they

1149
01:00:41,840 --> 01:00:44,760
are all about promoting the
similarities with this deal and

1150
01:00:44,760 --> 01:00:47,600
Jundee.
So the same team doing the DD

1151
01:00:47,920 --> 01:00:51,120
here did it for Jundee.
Lot of sort of repeating

1152
01:00:51,160 --> 01:00:54,240
references and the similarities
go a bit beyond that as well.

1153
01:00:54,240 --> 01:00:56,560
The the head grade had been on
the way down.

1154
01:00:56,760 --> 01:00:58,520
Production had been declining
for eight years.

1155
01:00:58,920 --> 01:01:03,080
It wasn't an awfully old asset
for the 2005 six is when it

1156
01:01:03,680 --> 01:01:05,960
first started producing, but
costs were rising.

1157
01:01:06,920 --> 01:01:12,400
All that said, the asset did
about 100 in US in Retax free

1158
01:01:12,400 --> 01:01:15,480
cash flow, what they sort of
reported in the year prior to

1159
01:01:15,480 --> 01:01:17,920
the deal.
So compare that to the 260

1160
01:01:17,920 --> 01:01:23,280
you're paying, it had 750,000
ounces in reserve.

1161
01:01:23,280 --> 01:01:27,200
So that's about 3:00-ish years
at the the rate they were

1162
01:01:27,200 --> 01:01:28,840
looking to mine maybe a touch
less.

1163
01:01:29,320 --> 01:01:32,240
And yeah, 1,000,000 tonne per
annum plant.

1164
01:01:33,040 --> 01:01:35,760
But same playbook heavily invest
in the asset.

1165
01:01:35,760 --> 01:01:37,400
They throw 8 rigs at it straight
away.

1166
01:01:37,400 --> 01:01:40,600
They want to shore up the
resource and reserve.

1167
01:01:40,600 --> 01:01:45,320
They actually need to convert
the, the reporting into to joke

1168
01:01:45,320 --> 01:01:47,600
straight away, but they're
pumping cash in.

1169
01:01:47,600 --> 01:01:51,760
And I think the big, the big
question here was kind of clear.

1170
01:01:52,280 --> 01:01:56,000
Could Northern Star implement
their operating model outside

1171
01:01:56,200 --> 01:01:57,720
Australia?
That's what people wanted to

1172
01:01:57,720 --> 01:02:00,920
know.
Like people didn't doubt that

1173
01:02:00,920 --> 01:02:03,800
the gold was, was sort of there,
you know what I mean?

1174
01:02:03,800 --> 01:02:07,640
Like they wanted to see and
there's this kind of view that

1175
01:02:07,800 --> 01:02:10,480
we can mine better here in
Australia than than they do in

1176
01:02:10,480 --> 01:02:12,880
North America.
But could Northern Star

1177
01:02:12,880 --> 01:02:16,720
successfully implement that
approach in North America?

1178
01:02:16,720 --> 01:02:20,360
And it gave the company a clear
target to, to work for.

1179
01:02:20,360 --> 01:02:24,080
And as a result of this, they
were importing talent, you know,

1180
01:02:24,080 --> 01:02:28,600
FIFO workers from Australia
going over to to Alaska for a

1181
01:02:28,600 --> 01:02:33,480
long time, like only 5060% of
the workers were local in Alaska

1182
01:02:34,280 --> 01:02:36,160
for years and years and years
so.

1183
01:02:36,360 --> 01:02:40,800
There was an an assumption, an
assumption that that Northern

1184
01:02:40,800 --> 01:02:44,480
Star had that you could you
could export your mining

1185
01:02:44,480 --> 01:02:47,480
methods, you could export your
work ethic, the ways that think

1186
01:02:47,520 --> 01:02:50,680
things are done.
But reality proved to be a bit

1187
01:02:51,000 --> 01:02:52,320
trickier.
Yeah.

1188
01:02:52,320 --> 01:02:55,000
I mean, what one of the
reactions we heard when doing a

1189
01:02:55,000 --> 01:02:57,440
bit of research for this one was
that this was kind of peak

1190
01:02:57,800 --> 01:02:59,920
Northern Star hubris this moment
in time.

1191
01:02:59,960 --> 01:03:04,800
And it it's not a dig on the
quality of asset.

1192
01:03:04,800 --> 01:03:09,240
Pogo has proven to be a highly
valuable asset, but perhaps just

1193
01:03:09,240 --> 01:03:12,080
a comment on on how confident
they were that they could pull

1194
01:03:12,080 --> 01:03:16,240
this off so quickly.
Like they set expectations much

1195
01:03:16,240 --> 01:03:17,920
higher.
And I've even heard Bill say

1196
01:03:17,920 --> 01:03:20,720
this in retrospect, like we
should have said, it will take

1197
01:03:20,720 --> 01:03:24,000
three years as opposed to 18
months to to get it right.

1198
01:03:24,000 --> 01:03:26,240
But at the time the market
lapped it up.

1199
01:03:26,560 --> 01:03:29,760
The the stock jumped 20% on the
day of the deal.

1200
01:03:29,960 --> 01:03:31,240
Wow.
And they did a big raise.

1201
01:03:31,240 --> 01:03:34,920
Like I said, never mind, let the
stock. 20% higher not than the

1202
01:03:34,920 --> 01:03:36,720
offer price, but from the last
price.

1203
01:03:37,240 --> 01:03:41,560
Yeah, I mean it was done at a
tight discount, but left, left

1204
01:03:41,560 --> 01:03:43,680
20%.
So that is not a bad reaction at

1205
01:03:43,680 --> 01:03:46,200
all to to buying.
And I mean Northern Stars are a

1206
01:03:46,200 --> 01:03:48,240
market darling.
Well and truly at this point in

1207
01:03:48,240 --> 01:03:52,400
time roaring stock price,
commodity price is doing well.

1208
01:03:52,400 --> 01:03:55,600
You got deals and capital raises
to get the brokers happy.

1209
01:03:56,360 --> 01:03:58,840
Like research has been written
like here's a couple of the

1210
01:03:58,840 --> 01:04:00,880
headlines from some of the notes
at the time.

1211
01:04:01,480 --> 01:04:04,440
We believe the hype plenty more
upside at Pogo and another one

1212
01:04:04,440 --> 01:04:08,280
was Pogo site visit which they
did shortly after everything

1213
01:04:08,280 --> 01:04:10,600
promised and more increased
price target 20%.

1214
01:04:10,600 --> 01:04:12,720
So there was bullishness in the
market.

1215
01:04:12,880 --> 01:04:15,280
Now this.
The price tag paid here like in

1216
01:04:15,280 --> 01:04:18,160
Aussie dollar terms, 350
million, this is way more than

1217
01:04:18,160 --> 01:04:19,920
they've spent on any other asset
today.

1218
01:04:20,360 --> 01:04:23,920
So it's like, granted, gold
prices has gone like higher over

1219
01:04:23,920 --> 01:04:27,200
time and those sorts of things,
but this is like, this is by far

1220
01:04:27,200 --> 01:04:29,320
and above the most.
They're paid for something.

1221
01:04:29,600 --> 01:04:32,760
Yeah, it, it is.
But they're a much, much, much

1222
01:04:33,080 --> 01:04:34,600
bigger company at this point in
time.

1223
01:04:34,600 --> 01:04:37,760
So it's yeah, I, I mean, I
didn't run the numbers, but it'd

1224
01:04:37,760 --> 01:04:42,200
be interesting to see like how
the the ratio of market kept to

1225
01:04:42,200 --> 01:04:45,240
kind of deal size if you like
compared, yeah, nothing

1226
01:04:45,240 --> 01:04:48,160
compared.
Yeah, that that, that's a

1227
01:04:48,160 --> 01:04:52,760
cracker.
But yeah, perhaps a few people

1228
01:04:52,760 --> 01:04:55,400
were surprised they went to
Alaska as well.

1229
01:04:55,960 --> 01:04:59,920
Maybe an interesting one.
But yeah, no surprises.

1230
01:04:59,920 --> 01:05:04,120
They did a deal, deal making is
is the MO of Northern Star and

1231
01:05:04,920 --> 01:05:07,080
people were keen to see if they
could kind of deliver.

1232
01:05:07,600 --> 01:05:12,520
And how did the asset perform?
Early on like performance wasn't

1233
01:05:12,560 --> 01:05:17,680
wasn't good it was disappointing
right and if you look at one of

1234
01:05:17,680 --> 01:05:20,520
the first quarters after owning
it, owning it like they kind of

1235
01:05:20,560 --> 01:05:23,040
backdated their ownership, but
one of the first ones with them

1236
01:05:23,040 --> 01:05:28,080
operating there it it does less
than 40,000 oz they're targeting

1237
01:05:28,280 --> 01:05:32,280
north of 250.
So you can you can sort of do

1238
01:05:32,280 --> 01:05:35,840
the math and realize that's not
a great quarter by any means.

1239
01:05:35,840 --> 01:05:39,920
And I mean this results in
Northern Stars overall all in

1240
01:05:39,920 --> 01:05:44,440
sustained cost guidance jumping
over 100 bucks and they didn't

1241
01:05:44,440 --> 01:05:48,480
even meet that exceeded the
revised up guidance.

1242
01:05:48,480 --> 01:05:51,200
So it was it was a tough little
period that that sort of put it

1243
01:05:51,200 --> 01:05:53,520
down to change over related
activities.

1244
01:05:53,520 --> 01:05:56,920
There was late deliveries of
fleet that was coming in.

1245
01:05:57,480 --> 01:06:00,080
There was a lot of firsts that
they were doing here.

1246
01:06:00,080 --> 01:06:02,280
They were completely changing
the mining method from from cut

1247
01:06:02,280 --> 01:06:05,680
and feel like these this was the
first operation in North America

1248
01:06:05,680 --> 01:06:09,200
to have, you know, Bolton
meshing being done by a by a

1249
01:06:09,200 --> 01:06:12,000
jumbo.
There was a lot of changes being

1250
01:06:12,960 --> 01:06:18,440
like addressed here and they
ultimately tried to change a bit

1251
01:06:18,440 --> 01:06:21,720
too quick, a bit too soon is
what the you know, what a lot of

1252
01:06:21,720 --> 01:06:23,960
people told us.
Ultimately, that's that's how

1253
01:06:23,960 --> 01:06:28,560
they went about it.
And yeah, you can see by the

1254
01:06:28,560 --> 01:06:32,520
fact that a lot of the
announcements in 2019 are

1255
01:06:32,520 --> 01:06:35,120
specifically on Pogo.
This is a big company at this

1256
01:06:35,120 --> 01:06:38,000
point in time and they're
putting out updates,

1257
01:06:38,000 --> 01:06:41,200
presentations purely on Pogo
that another site visit.

1258
01:06:42,360 --> 01:06:44,840
A couple days before the site
visit, they put out all these

1259
01:06:44,840 --> 01:06:50,440
exploration results and they
decide to upgrade the processing

1260
01:06:50,440 --> 01:06:53,520
plant capacity like 3 days
before the site visit.

1261
01:06:54,520 --> 01:06:57,560
Yeah.
It, it, it was all sort of part

1262
01:06:57,560 --> 01:07:00,760
of the journey that they kind of
had to go on in a way to get to

1263
01:07:00,760 --> 01:07:03,480
a point where it's now an
awesome asset, but it's, it's

1264
01:07:03,480 --> 01:07:07,480
took a long time to get there.
Like enduring that period where

1265
01:07:08,000 --> 01:07:11,520
things cost longer, you've got
more, more capital that's

1266
01:07:11,520 --> 01:07:15,160
needed, your own expectations
like you, you have to revisit

1267
01:07:15,160 --> 01:07:17,800
those assumptions and that means
the market has to as well.

1268
01:07:18,320 --> 01:07:21,520
It's probably cash flow negative
for a fair bit of time.

1269
01:07:21,760 --> 01:07:24,960
Like this is a thing that I've
seen commonly in some of these

1270
01:07:24,960 --> 01:07:27,080
successful companies.
But the thing that still makes

1271
01:07:27,080 --> 01:07:30,480
those companies like super
successful was they had a cash

1272
01:07:30,480 --> 01:07:33,000
printer elsewhere in the
portfolio that helped like

1273
01:07:33,080 --> 01:07:36,400
removes the blemishes, I think
of Cow or for Evolution when

1274
01:07:36,560 --> 01:07:38,640
they were facing all the issues
at Red Lake.

1275
01:07:39,120 --> 01:07:41,680
Like that thing just overcomes
all the blemishes.

1276
01:07:41,760 --> 01:07:45,080
Yeah, they, they had the, the
resiliency in the, in the cash

1277
01:07:45,080 --> 01:07:48,000
flow to, to weather the storm.
And then they did about 100,000

1278
01:07:48,000 --> 01:07:52,440
oz, 180,000 ounces, the first
full financial year in which

1279
01:07:52,440 --> 01:07:55,640
they're guided to over 250.
Like it was a it was a big miss

1280
01:07:55,640 --> 01:08:00,320
and it was kind of quarter after
quarter which disappointed the

1281
01:08:00,320 --> 01:08:03,320
market, I mean, kind of for the
first time on, on this sort of

1282
01:08:03,320 --> 01:08:07,040
scale.
But yeah, there was a lot of

1283
01:08:07,040 --> 01:08:09,920
other things starting to happen
around the company at this point

1284
01:08:09,920 --> 01:08:12,120
in time.
They, they didn't own it for too

1285
01:08:12,120 --> 01:08:13,720
long before kind of COVID comes
as well.

1286
01:08:13,720 --> 01:08:15,960
And then implementing
operational change probably gets

1287
01:08:15,960 --> 01:08:20,279
like far more complex and
challenging too. 100% like it

1288
01:08:20,279 --> 01:08:22,359
really would have been a
headache like there's no other

1289
01:08:22,359 --> 01:08:25,000
way to put it owning an asset
like this when everything else

1290
01:08:25,000 --> 01:08:29,439
is here in in our patch in WA
have an asset on the other side

1291
01:08:29,439 --> 01:08:31,920
of the planet would have been
would have been a bit of a

1292
01:08:31,920 --> 01:08:36,880
headache to say the least.
But no like eventually it it it

1293
01:08:36,960 --> 01:08:39,600
comes good like does it
initially compared to John Day.

1294
01:08:40,359 --> 01:08:42,800
No, not, not in its early days,
but if you look at the value of

1295
01:08:42,800 --> 01:08:47,520
the asset nowadays between 3:00
and $4 billion, like it's hard

1296
01:08:47,520 --> 01:08:50,760
to disentangle the gold price
going up 3X since then.

1297
01:08:51,680 --> 01:08:54,680
I mean, you can can direct that
by saying operating costs have

1298
01:08:54,760 --> 01:08:59,520
have doubled.
But it it yeah, if you're going

1299
01:08:59,520 --> 01:09:02,840
to buy an asset and seven years
later the commodity price up 3X,

1300
01:09:03,319 --> 01:09:04,960
you'll have likely have done
pretty well.

1301
01:09:05,240 --> 01:09:07,640
Gold was there.
It was just going to take time

1302
01:09:08,000 --> 01:09:11,560
to get people on board with how
things are done, the new methods

1303
01:09:11,560 --> 01:09:13,800
and.
It's a big contributor to the

1304
01:09:13,840 --> 01:09:16,319
free cash flow today.
Yeah, yeah.

1305
01:09:16,319 --> 01:09:20,399
I mean, we'll check up some some
more sort of screenshots.

1306
01:09:20,399 --> 01:09:24,640
You can see even in the early
twenty 20s like here, here's one

1307
01:09:25,439 --> 01:09:31,319
for FY22 to FY23 operational
cash flow about half a billion

1308
01:09:31,319 --> 01:09:35,520
each from Kalgoorlie and and
Yandel production centers and

1309
01:09:35,520 --> 01:09:39,080
poker does $30 million.
So it, it has taken time and

1310
01:09:39,080 --> 01:09:41,319
that that is a point in time,
you know, you can, you can get

1311
01:09:41,319 --> 01:09:43,640
any numbers to, to find your
argument.

1312
01:09:43,960 --> 01:09:46,680
But if we if we look at it
today, it's making good, good

1313
01:09:46,680 --> 01:09:48,439
money.
That was operational cash flow.

1314
01:09:48,439 --> 01:09:51,000
So not even accounting for
CapEx, that was probably still

1315
01:09:51,000 --> 01:09:52,399
going into it.
Yeah, yeah.

1316
01:09:52,640 --> 01:09:55,880
And now, like today, what's it
doing?

1317
01:09:56,600 --> 01:10:00,840
It, it's much closer to par with
those with those assets there,

1318
01:10:00,840 --> 01:10:03,760
the margins, the like the, the
EBITDA margins, what they report

1319
01:10:03,760 --> 01:10:08,680
is in the, the high 40s percent,
you know, so it needed a lot of

1320
01:10:08,680 --> 01:10:11,720
investment to go in, but it's a,
it's a valuable asset that's

1321
01:10:11,720 --> 01:10:14,400
just going to go on for years
and years and years.

1322
01:10:14,560 --> 01:10:21,320
So that's that.
Yeah, it's $350 million and it's

1323
01:10:21,320 --> 01:10:24,640
worth close to 4 today.
You can't really call it,

1324
01:10:24,880 --> 01:10:26,800
despite all the headaches are a
bad deal, Kenya.

1325
01:10:27,200 --> 01:10:31,560
No, no, you it's.
It is hard to evaluate because

1326
01:10:32,280 --> 01:10:37,000
them having like raise the money
as well, bigger market cap, all

1327
01:10:37,000 --> 01:10:41,400
of that kind of all those deals
incrementally give you a little

1328
01:10:41,400 --> 01:10:46,160
bit more firepower to do the
ultimate deal which would come

1329
01:10:46,200 --> 01:10:49,920
later being the Super pit.
But before then, yeah.

1330
01:10:50,080 --> 01:10:54,120
Bronze wing Bronze wing Echo
Resources This is a funny 1 so

1331
01:10:54,120 --> 01:10:59,440
late 2019 Northern Star lob a
$0.33 cash off of Echo.

1332
01:11:00,320 --> 01:11:05,400
That's a 40% premium to what had
been like a rising echo share

1333
01:11:05,400 --> 01:11:08,840
price.
Northern Star had owned over 20%

1334
01:11:08,840 --> 01:11:10,480
of the company already.
So they're they're gonna have to

1335
01:11:10,480 --> 01:11:13,600
fork out of it a couple 100
million bucks extra.

1336
01:11:13,600 --> 01:11:16,880
Now this deal was done to
consolidate the the Yandel

1337
01:11:16,880 --> 01:11:21,640
Greenstone belt.
So like north of Kalgoorlie for

1338
01:11:21,640 --> 01:11:24,320
simple terms, north of Leonora,
if you're, if you're more

1339
01:11:24,320 --> 01:11:29,680
familiar with WA and they, they
take an ownership of a fairly

1340
01:11:29,680 --> 01:11:32,160
dated plant as well in the, in
the bronze wing plant.

1341
01:11:32,640 --> 01:11:37,600
And late 2019 is a busy time for
this company and people don't

1342
01:11:37,600 --> 01:11:41,560
end up caring an awful lot about
this deal.

1343
01:11:41,560 --> 01:11:44,360
I mean, it, it does well to
consolidate $200 million.

1344
01:11:44,360 --> 01:11:46,120
There's still a fair bit of
capital that investors going to

1345
01:11:46,520 --> 01:11:50,040
going to question.
And yeah, it's all, it's all

1346
01:11:50,040 --> 01:11:52,680
gone to a good cause to be a
part of the, the Yandel

1347
01:11:52,680 --> 01:11:56,040
Production center now.
But they've got bigger fish to

1348
01:11:56,040 --> 01:11:59,280
fry in late 2019, mate.
Did they?

1349
01:11:59,520 --> 01:12:04,400
Did they pay this in cat?
It was cash offer but they

1350
01:12:04,400 --> 01:12:05,560
didn't.
They didn't do a raise off the

1351
01:12:05,560 --> 01:12:07,200
back of it.
This was just all existing cash

1352
01:12:07,320 --> 01:12:09,200
preserves at this point.
Yeah, at this point in time,

1353
01:12:09,200 --> 01:12:11,600
there are many, many, many
billion dollar market cap

1354
01:12:11,600 --> 01:12:13,360
company.
Yeah, wonderful.

1355
01:12:13,400 --> 01:12:19,360
And there's, there's someone
once told me a story about I I

1356
01:12:19,360 --> 01:12:22,680
suppose it speaks to the like
Bill Beeman's been a phenomenal

1357
01:12:22,680 --> 01:12:26,240
salesman and anytime you, you
listen to him talk, he's like

1358
01:12:26,360 --> 01:12:30,560
done, yeah, a wonderful job at
promoting Northern Star along

1359
01:12:30,560 --> 01:12:33,280
the way, hence why and they've
done well performance, hence why

1360
01:12:33,280 --> 01:12:36,400
they've gotten the management
premium and the, the mandates do

1361
01:12:36,400 --> 01:12:39,160
more M&A over time and time.
And there's this story about

1362
01:12:39,160 --> 01:12:45,040
Bill at Diggers that year kind
of playing, yeah, getting asked

1363
01:12:45,040 --> 01:12:48,320
a question about, you know, his
interest in Echo and he

1364
01:12:48,320 --> 01:12:49,920
completely knocks it back.
I think.

1365
01:12:49,960 --> 01:12:52,280
I don't even know if it was a
public speech or not, but.

1366
01:12:52,400 --> 01:12:54,280
He might have.
It might have even been the year

1367
01:12:54,280 --> 01:12:58,440
before or so.
Yeah, straight back, not

1368
01:12:58,440 --> 01:13:00,280
interested at all.
And there was a start.

1369
01:13:00,720 --> 01:13:01,840
There was a bit behind the
scenes.

1370
01:13:01,840 --> 01:13:02,840
Clever.
It was a clever way.

1371
01:13:03,920 --> 01:13:06,760
There had been a blocking stake,
there had been a change in

1372
01:13:06,760 --> 01:13:08,720
management.
All these things culminated in

1373
01:13:09,080 --> 01:13:11,080
in them eventually getting their
hands on Echo, which had been a

1374
01:13:11,080 --> 01:13:14,600
little while in in the making.
But this is the big one mate.

1375
01:13:15,520 --> 01:13:19,880
the Super bit I mentioned to
talk about this one, like this

1376
01:13:19,880 --> 01:13:22,040
deal had been years in the
making.

1377
01:13:22,440 --> 01:13:26,720
They had put offer after after
forward the barrack stake

1378
01:13:26,720 --> 01:13:31,560
actually from as early as 2016
to get their hands on 50% of the

1379
01:13:31,560 --> 01:13:33,880
Super bid.
And like rumours have been

1380
01:13:33,880 --> 01:13:38,520
swirling pretty intensely very
publicly in the lead up in 2019

1381
01:13:38,520 --> 01:13:40,240
to a deal eventually getting
announced.

1382
01:13:41,400 --> 01:13:44,840
But they get pipped to the
barrack stake by none other than

1383
01:13:44,840 --> 01:13:49,760
Raleigh Finlayson's Saracen.
So they agreed to pay 1.1

1384
01:13:49,760 --> 01:13:54,480
billion Aussie for that 50%.
And yeah, there there's a bit

1385
01:13:54,480 --> 01:13:56,680
more to that.
Like I sort of said, as you can

1386
01:13:56,680 --> 01:13:59,320
imagine, people have been sort
of prying and seeing if they

1387
01:13:59,320 --> 01:14:02,160
could do a deal with Barrick for
quite a while.

1388
01:14:02,360 --> 01:14:05,360
Prior to this bill had put
forward a few offers.

1389
01:14:05,360 --> 01:14:07,320
He tried to get his board
comfortable.

1390
01:14:07,320 --> 01:14:10,600
He tried to get financing
because this was a big bite, big

1391
01:14:10,800 --> 01:14:14,440
and big.
China's Minjar agreed to you in

1392
01:14:14,440 --> 01:14:19,840
late 2016, $1.3 billion and they
couldn't get the financing

1393
01:14:19,840 --> 01:14:20,800
together.
What?

1394
01:14:21,240 --> 01:14:24,160
Legend has it.
So Oh my God, typical Minjar.

1395
01:14:24,200 --> 01:14:25,720
Yeah, always over promising
enough delivery.

1396
01:14:27,760 --> 01:14:30,360
I'm sure there's a bit more to
that story as well, but but

1397
01:14:30,360 --> 01:14:33,480
never mind.
There's a a pit wall failure

1398
01:14:34,120 --> 01:14:35,680
which is very widely known.
You could.

1399
01:14:35,760 --> 01:14:37,480
You could drive past the Super
pit and see it.

1400
01:14:37,480 --> 01:14:42,000
That was 2018. 2018 and that
made the owners of the asset,

1401
01:14:42,160 --> 01:14:43,680
Newmont Barrick, reassess
things.

1402
01:14:43,680 --> 01:14:48,880
Yeah, blocked access on yeah,
into part of the pit there and

1403
01:14:48,880 --> 01:14:50,200
lots.
Of remediation work needed,

1404
01:14:50,200 --> 01:14:52,360
yeah.
Years and lots of dollars to fix

1405
01:14:52,360 --> 01:14:55,280
that one.
That probably puts the asset in

1406
01:14:55,840 --> 01:14:58,640
for for them from the tier one
category into the into the Tier

1407
01:14:58,640 --> 01:15:01,080
2 category and then.
Yeah, potentially does, right,

1408
01:15:01,080 --> 01:15:02,920
so.
Paves the paves the way for them

1409
01:15:02,920 --> 01:15:05,440
to to sell it, but but the sale
process right.

1410
01:15:05,960 --> 01:15:11,120
So Barrick announces they're
selling their half and Saracen,

1411
01:15:11,120 --> 01:15:15,280
who this entire time has been on
a very similar trajectory to

1412
01:15:15,280 --> 01:15:18,400
northern star.
Like we could do a similar

1413
01:15:18,400 --> 01:15:20,920
episode on Saracen and maybe we
we we ultimately should.

1414
01:15:22,720 --> 01:15:25,880
They've been the open pit guys.
They've been like the open pit

1415
01:15:25,880 --> 01:15:28,800
experts in northern stars been
the the underground guys built

1416
01:15:28,800 --> 01:15:32,040
the company both built it by by
execution delivery M and a

1417
01:15:32,520 --> 01:15:36,200
similar mentalities.
Saracen wins.

1418
01:15:36,440 --> 01:15:41,120
Saracen wins this one right So
that was announced in November

1419
01:15:41,240 --> 01:15:47,640
2019, December 2019 bang like
that Northern Star agreed to buy

1420
01:15:47,640 --> 01:15:51,360
50% off Newmont 800 million U.S.
dollars.

1421
01:15:51,360 --> 01:15:55,440
So touch more than Saracen and.
How many months later is that

1422
01:15:55,480 --> 01:15:57,880
one one month.
So I've got I've got something

1423
01:15:57,960 --> 01:16:04,480
inside word about that chair.
I, I think that the, the

1424
01:16:04,480 --> 01:16:07,560
agreement with Newmont was done
in a weekend.

1425
01:16:07,800 --> 01:16:09,160
I'm pretty sure it was done in a
weekend.

1426
01:16:09,400 --> 01:16:14,080
And I think the moment you had
Barrack sell theirs, well,

1427
01:16:14,080 --> 01:16:17,800
anytime a JV partner sells the
other JV partner and the JV

1428
01:16:17,800 --> 01:16:22,040
agreement had the right to match
the deal, guess what?

1429
01:16:23,240 --> 01:16:25,920
Newmont didn't match the deal,
which probably meant that they

1430
01:16:25,920 --> 01:16:28,880
were also a willing seller at
relatively same value.

1431
01:16:28,920 --> 01:16:31,920
And I'm I'm in in the space of a
weekend.

1432
01:16:31,920 --> 01:16:34,000
I'm pretty sure a, a deal was
done.

1433
01:16:34,000 --> 01:16:37,320
But what might have also like
led to that was in the in the

1434
01:16:37,320 --> 01:16:42,320
process when, when Rao was
raising money for to to buy

1435
01:16:42,360 --> 01:16:48,200
Saracen's share of that, there
were yeah, fund managers who who

1436
01:16:48,200 --> 01:16:49,760
were wondering if this was a
good deal or not.

1437
01:16:49,800 --> 01:16:51,080
Those fund managers, what do
they do?

1438
01:16:51,160 --> 01:16:54,120
They called Bill and said, what
do you what do you think of what

1439
01:16:54,120 --> 01:16:56,440
do you think of this this deal
to buy the Super pit for this

1440
01:16:56,440 --> 01:16:58,960
price?
And rumour has it Bill Bill in a

1441
01:16:59,200 --> 01:17:01,640
lot of people would just kind
of, you know, knock their

1442
01:17:01,640 --> 01:17:04,400
competitor and bill goes
cracking deal.

1443
01:17:04,400 --> 01:17:07,320
Great value, awesome asset.
We could do, you know, like

1444
01:17:07,560 --> 01:17:12,280
really talked it up and you
know, Saracens love for doing

1445
01:17:12,280 --> 01:17:14,880
the deal.
It's a hoot, but it also kind of

1446
01:17:15,080 --> 01:17:17,320
pipes the way for a future JV
partnership.

1447
01:17:17,760 --> 01:17:21,560
Yeah, as as Bill later said
rally owes me 1 and in hand

1448
01:17:22,040 --> 01:17:25,680
never paid me back for that.
But yeah there was a conference

1449
01:17:25,680 --> 01:17:30,800
I believe in Sydney right after
and he talked it up Well he yeah

1450
01:17:31,080 --> 01:17:35,360
praised Rally praise Harrison
and the deal and yeah pretty,

1451
01:17:35,360 --> 01:17:39,000
pretty commendable And that
speaks to a lot that we see

1452
01:17:39,000 --> 01:17:43,840
later on in the in the story.
And no sales process for Newmont

1453
01:17:43,840 --> 01:17:48,120
State deal is wrapped up from
being announced to completing is

1454
01:17:48,120 --> 01:17:54,720
a couple weeks and bang you've
got the Super pit and Australian

1455
01:17:54,720 --> 01:18:00,280
full Australian ownership again
you've yeah, it's pretty

1456
01:18:00,280 --> 01:18:02,600
remarkable like it's a wicked
story.

1457
01:18:02,640 --> 01:18:05,360
It's this is when we had started
working as well.

1458
01:18:05,360 --> 01:18:07,560
So it was cool to see it was, it
was really exciting kind of

1459
01:18:07,560 --> 01:18:09,640
stuff and.
It was electric, man.

1460
01:18:09,640 --> 01:18:12,160
Like, yeah, I grew up in
Kalgoorlie and it was like this

1461
01:18:12,160 --> 01:18:16,840
was, this was like, I mean,
there were fantasy footy teams.

1462
01:18:16,840 --> 01:18:19,400
Would you know, Northern Star
and Saracen, like those people

1463
01:18:19,400 --> 01:18:21,800
were kind of so invested in each
of these kind of companies.

1464
01:18:21,800 --> 01:18:23,800
They were the cult companies of
the town.

1465
01:18:23,920 --> 01:18:28,720
Yeah, it, it's wicked from led
by two individuals who'd both

1466
01:18:30,800 --> 01:18:33,480
studied at the School of mines
there and everything.

1467
01:18:33,480 --> 01:18:35,640
So that's a, that's a story that
people have kind of heard, but

1468
01:18:35,640 --> 01:18:38,000
it's it's fascinating.
So you've got an asset that's

1469
01:18:38,000 --> 01:18:42,160
done north of half a million oz
and that's the kind of reduced

1470
01:18:42,160 --> 01:18:44,320
profile whilst it needs a bit of
fixing up.

1471
01:18:44,960 --> 01:18:47,200
Northern Star doing $800 million
plus.

1472
01:18:47,200 --> 01:18:50,400
So 815 is the exact number
equity raised at 9 bucks a

1473
01:18:50,400 --> 01:18:53,320
share.
And yeah, it was, it was a

1474
01:18:53,320 --> 01:18:55,360
different deal for Northern Star
for a number of reasons.

1475
01:18:55,520 --> 01:18:58,720
One, it was way bloody bigger.
Two, it was an open pit

1476
01:18:58,720 --> 01:19:00,480
operation.
Obviously there's going to be

1477
01:19:00,480 --> 01:19:05,840
many decades of of underground
at Northern Star there owning

1478
01:19:05,840 --> 01:19:09,280
the Super pit.
But it was also AJV and Bill had

1479
01:19:09,280 --> 01:19:13,960
said JVS are shit.
They start out great and they

1480
01:19:14,000 --> 01:19:15,880
always end up shit.
And he's not the first person to

1481
01:19:15,880 --> 01:19:19,840
say that, right.
So from here the clock is

1482
01:19:19,840 --> 01:19:24,520
ticking on a Saracen tie up and
yeah, the the flirting becomes

1483
01:19:24,520 --> 01:19:27,400
quite public between Northern
Star and Saracen.

1484
01:19:28,240 --> 01:19:33,000
Bill sort of says to own KCGM in
partnership with Saracen makes

1485
01:19:33,000 --> 01:19:36,280
the acquisition even more
valuable to to Northern Star.

1486
01:19:36,280 --> 01:19:39,640
So, yeah, I mean, it really
takes us to to the culmination

1487
01:19:39,640 --> 01:19:43,160
and and the final deal of this,
of this kind of run through of

1488
01:19:43,160 --> 01:19:46,360
the history of Northern Star.
So Northern Star, they buy it a

1489
01:19:46,360 --> 01:19:48,200
month later, they pay a little
bit.

1490
01:19:48,200 --> 01:19:50,720
They actually pay a little bit
more than Saracen too.

1491
01:19:52,160 --> 01:19:56,920
It would say it's not an apples
to apples, but make up your own

1492
01:19:56,920 --> 01:19:58,600
mind on that one.
Maybe coal price went up a

1493
01:19:58,600 --> 01:19:59,040
little bit.
Yeah.

1494
01:19:59,920 --> 01:20:01,480
OK.
And that sets the stage.

1495
01:20:02,160 --> 01:20:05,480
This was inevitable.
There would have been it was it

1496
01:20:05,480 --> 01:20:08,520
was, yeah.
The the the final kind of.

1497
01:20:09,520 --> 01:20:13,640
Not to the story, or at least of
our story in the the formation

1498
01:20:13,640 --> 01:20:17,160
and growth of Northern Star.
It has to be the merger with

1499
01:20:17,160 --> 01:20:21,120
Saracen. $16 billion merger of
equals Northern Star and

1500
01:20:21,120 --> 01:20:23,000
Saracen, as you say, mate, tying
up the knot.

1501
01:20:23,000 --> 01:20:26,760
So but they're two of the best
value creation stories.

1502
01:20:26,760 --> 01:20:29,520
There's a couple other out there
in the the sort of small to

1503
01:20:29,520 --> 01:20:31,240
midcap gold space over this
period of time.

1504
01:20:31,240 --> 01:20:35,320
But these are two of the kind of
stand out ones in what is by all

1505
01:20:35,320 --> 01:20:40,200
accounts super harmonious steel.
And it's the biggest gold deal

1506
01:20:40,200 --> 01:20:43,760
since New Crest were here,
funnily enough, which had been

1507
01:20:43,760 --> 01:20:48,880
about a decade before.
And how it actually ends up sort

1508
01:20:48,880 --> 01:20:51,160
of taking shape is that Saracen
shareholders are going to get

1509
01:20:51,160 --> 01:20:53,360
shares in Northern Start.
They're going to get a special

1510
01:20:53,360 --> 01:20:57,280
divvy for their troubles as
well, 6436% split.

1511
01:20:58,040 --> 01:21:00,880
If you look at it from from
Northern Stars perspective,

1512
01:21:01,440 --> 01:21:03,760
you're wrapping up Saracen for
no premium.

1513
01:21:04,240 --> 01:21:06,360
That's pretty good, right?
What you call the special divvy,

1514
01:21:06,360 --> 01:21:10,560
a little premium.
I think it's 3.8 cents, you know

1515
01:21:10,600 --> 01:21:14,600
breaking the bank there and
you've got assets in close

1516
01:21:14,600 --> 01:21:16,080
proximity.
You've got, you've got actually

1517
01:21:16,080 --> 01:21:19,040
synergies like a lot sort of
said and unsaid out there like

1518
01:21:19,040 --> 01:21:22,480
you've got Thunder box, you've
got carousel down.

1519
01:21:22,480 --> 01:21:25,160
They're all sort of pieces in.
You've got a obviously the, the

1520
01:21:25,160 --> 01:21:29,600
JV at the Super Pier, there's
tax and other sort of native

1521
01:21:29,600 --> 01:21:33,640
title parts that to my
understanding have added real

1522
01:21:33,640 --> 01:21:36,120
value to this and the market
liked it.

1523
01:21:36,120 --> 01:21:41,000
Both, both companies shares were
up over 10% on the news.

1524
01:21:41,680 --> 01:21:45,080
They talked about $2 billion up
to 2 billion in synergies and

1525
01:21:45,080 --> 01:21:47,160
right there you know that's
that's over 2 1/2 billion

1526
01:21:47,160 --> 01:21:51,080
dollars in in cumulative gain.
The shares up 10% on the day

1527
01:21:51,440 --> 01:21:56,440
kind of so there's a couple
memories I have from this deal.

1528
01:21:56,760 --> 01:22:03,040
1 was that Raoul was very public
in his rationale of why, why he

1529
01:22:03,040 --> 01:22:06,360
was doing a, why he agreed to a
a deal with no premium.

1530
01:22:06,360 --> 01:22:08,680
And whenever you do a no premium
merger, you've always got to

1531
01:22:08,680 --> 01:22:11,240
justify it to shareholders.
And he explicitly comes out and

1532
01:22:11,240 --> 01:22:15,160
says a bank has shown us the the
data in it.

1533
01:22:15,240 --> 01:22:18,200
And you effectively see that
historically new premium mergers

1534
01:22:18,200 --> 01:22:20,680
perform better in the aftermath.
So this is actually value

1535
01:22:20,680 --> 01:22:22,800
creation.
Yeah, like great response.

1536
01:22:22,840 --> 01:22:24,240
Well, it didn't quite pan out
that way.

1537
01:22:24,240 --> 01:22:27,040
Like it was, it was like short
term real exuberance.

1538
01:22:27,040 --> 01:22:29,600
But then Northern stock kind of
had a few years of, of Lowell

1539
01:22:29,600 --> 01:22:31,720
that that came and that's
coincided with gold price.

1540
01:22:31,960 --> 01:22:36,240
However, the other thing I
remember was I remember being I

1541
01:22:36,320 --> 01:22:38,760
was I was like a first year bank
and I just remember being like

1542
01:22:38,760 --> 01:22:43,480
confused why these two
individuals in in Rell and Bill

1543
01:22:43,480 --> 01:22:48,160
who were clearly like the
stewards of capital, the faces

1544
01:22:48,160 --> 01:22:51,720
of their businesses.
This deal was also a declaration

1545
01:22:51,720 --> 01:22:55,920
and an announcement of their
like pending departure from the

1546
01:22:55,920 --> 01:22:58,560
business or stepping back from
from, you know, very kind of

1547
01:22:58,720 --> 01:23:03,000
public and public and, and
workload related roles at least

1548
01:23:03,000 --> 01:23:05,240
in the, in the, in the, in the
near term.

1549
01:23:05,560 --> 01:23:08,800
Yeah, Yeah.
They'd they'd wanted out, RA

1550
01:23:08,800 --> 01:23:15,240
becomes MD, Stu Tonkin remains
CEO, Bill as as chair there.

1551
01:23:15,240 --> 01:23:17,880
But there there is.
It's clear to the market that

1552
01:23:17,880 --> 01:23:21,000
they're both going to be gone in
relative short order.

1553
01:23:21,160 --> 01:23:24,320
This is an exit at the same time
as it is a a marriage of two

1554
01:23:24,320 --> 01:23:27,040
enormous value creation stories.
Yeah, absolutely.

1555
01:23:27,600 --> 01:23:31,480
It's the most logical M and a
deal in mining decades, said

1556
01:23:31,480 --> 01:23:33,960
Bill.
And it just creates an abundance

1557
01:23:33,960 --> 01:23:37,480
of value for shareholders, you
know, trademark sort of stuff

1558
01:23:37,480 --> 01:23:40,720
there.
But yeah, as as he also sort of

1559
01:23:40,720 --> 01:23:44,040
said, running an ASX 100 or an
ASX 50 company is shit.

1560
01:23:44,160 --> 01:23:45,280
So.
Not as fun.

1561
01:23:45,400 --> 01:23:48,000
Yeah.
And now these guys each have the

1562
01:23:48,000 --> 01:23:53,160
personal net worth to go and
have another go, have another

1563
01:23:53,160 --> 01:23:56,720
crack and have a lot more of the
equity from day dot and give it

1564
01:23:56,720 --> 01:23:58,320
another crack like both of them
have done.

1565
01:23:58,320 --> 01:24:00,240
And it that's an awesome thing
to see, right?

1566
01:24:00,240 --> 01:24:04,120
So Northern Star had gone from
10 million market cap to $11

1567
01:24:04,120 --> 01:24:07,200
billion on the day of the year
or roughly on the day of the

1568
01:24:07,200 --> 01:24:09,280
deal.
Along the way that issued

1569
01:24:09,280 --> 01:24:13,040
another 1.3 billion in equity
and they paid out over 500

1570
01:24:13,040 --> 01:24:16,440
million in dividends.
So within a few years, we see

1571
01:24:16,440 --> 01:24:19,840
New Crest gobbled up by Newmont
and it makes Northern Star the

1572
01:24:19,840 --> 01:24:22,600
biggest gold miner in the
country, makes them the ninth

1573
01:24:22,600 --> 01:24:25,680
biggest gold miner by market cap
globally, that is.

1574
01:24:26,600 --> 01:24:30,280
Yeah, that's a phenomenal,
phenomenal journey and ripe with

1575
01:24:30,280 --> 01:24:33,280
lessons.
Right from a shell to the ninth

1576
01:24:33,400 --> 01:24:37,360
biggest gold miner in the space
of a decade.

1577
01:24:37,680 --> 01:24:38,440
Like.
Yeah.

1578
01:24:38,440 --> 01:24:40,840
That, that ninth biggest is from
today.

1579
01:24:41,040 --> 01:24:42,920
Yeah.
So we're we're in a few years,

1580
01:24:42,920 --> 01:24:46,000
but awesome.
It's crazy.

1581
01:24:46,120 --> 01:24:50,480
It's a, it's a crazy story.
In an industry where success

1582
01:24:50,480 --> 01:24:52,800
stories are the anomaly.
This is, this is a phenomenal

1583
01:24:52,800 --> 01:24:54,320
success story.
Yeah.

1584
01:24:54,320 --> 01:24:57,840
It's like like you can you can
list on one hand the number of

1585
01:24:57,840 --> 01:25:00,600
like true rags to riches sort of
stories.

1586
01:25:00,600 --> 01:25:03,440
There are from a, from a, from a
shell to like Fortescue's, the

1587
01:25:03,440 --> 01:25:06,000
other one from a shell to like
a, a major.

1588
01:25:06,000 --> 01:25:07,080
Probably worth its own.
Story.

1589
01:25:07,080 --> 01:25:07,920
Yeah.
Big yeah.

1590
01:25:08,320 --> 01:25:13,760
And in a period where so many
goldies like struggled, so many

1591
01:25:13,760 --> 01:25:15,920
of them went backwards over this
period of time, like how many

1592
01:25:15,920 --> 01:25:18,640
times have we heard people say,
look at the gold equity

1593
01:25:18,640 --> 01:25:24,840
performance from that high
around 2012 to now, like these

1594
01:25:24,840 --> 01:25:28,880
guys blew it out the water.
And yeah, to wrap up, we've got

1595
01:25:28,880 --> 01:25:31,000
to talk about a couple of the
the learnings here because

1596
01:25:31,000 --> 01:25:33,560
there's like sort of timeless,
timeless things.

1597
01:25:33,560 --> 01:25:36,880
I'm going to start with the M
and a style because the company

1598
01:25:36,880 --> 01:25:41,240
was made on deals, right?
So they bought assets with short

1599
01:25:41,240 --> 01:25:44,080
mine lives.
That is, you know, part of their

1600
01:25:44,240 --> 01:25:49,680
MO and they just invested
capital in them, expanded that

1601
01:25:49,920 --> 01:25:53,640
dramatically.
They had management team that

1602
01:25:53,640 --> 01:25:55,960
knew the assets they were buying
super, super.

1603
01:25:55,960 --> 01:25:58,120
Clearly they had confidence they
could run it better.

1604
01:25:58,200 --> 01:26:00,520
They were short reserves lifes,
but they were long mine lifes if

1605
01:26:00,520 --> 01:26:02,640
you actually extended.
Yeah, the gold was there.

1606
01:26:02,640 --> 01:26:04,400
The gold was there, yeah.
Exactly.

1607
01:26:04,880 --> 01:26:07,080
They did asset deals, they
didn't buy companies.

1608
01:26:07,600 --> 01:26:09,480
So that made things a bit
snappier.

1609
01:26:09,480 --> 01:26:12,400
That's just a a smaller detail,
but it's an interesting kind of

1610
01:26:12,400 --> 01:26:14,480
one because a lot of the deals
closed very quickly.

1611
01:26:16,080 --> 01:26:18,960
Northern Star, when they would
come in, they would, they would

1612
01:26:18,960 --> 01:26:22,280
keep the people there like we,
we obviously spoke about, you

1613
01:26:22,280 --> 01:26:26,000
know, having to, to lay off a, a
few people to, to right size the

1614
01:26:26,000 --> 01:26:28,040
operation.
But they would keep by and large

1615
01:26:28,040 --> 01:26:30,760
everyone there except the GM and
they would put in the the right

1616
01:26:30,760 --> 01:26:34,200
person for that job.
And those GMs are running

1617
01:26:34,200 --> 01:26:38,120
companies now have gone on to
incredible heights, but that is

1618
01:26:38,120 --> 01:26:40,160
what they would do when they
would come into these assets and

1619
01:26:40,600 --> 01:26:44,000
it worked phenomenally for them.
And on the the Paulson's deal,

1620
01:26:44,000 --> 01:26:47,640
the last one in sort of how they
thought about M&A, the deal

1621
01:26:47,640 --> 01:26:49,960
structure to get themselves
going was incredible.

1622
01:26:50,280 --> 01:26:52,720
Like just being super creative
and not letting a shortage of

1623
01:26:52,720 --> 01:26:56,800
cash or a minuscule share price
stop you from getting the job

1624
01:26:56,800 --> 01:26:59,840
done is incredible.
They make, they make decisions

1625
01:26:59,840 --> 01:27:02,760
like nimbly, you know, they,
they, they did that from the

1626
01:27:02,760 --> 01:27:05,000
beginning.
There was these majors, they

1627
01:27:05,000 --> 01:27:07,880
move so slow, the behemoths.
You can't like a lot of these

1628
01:27:07,880 --> 01:27:11,040
opportunities came up
opportunistically and they acted

1629
01:27:11,040 --> 01:27:14,080
and reacted quickly.
They took like a very fast view

1630
01:27:14,080 --> 01:27:19,200
on the, the technical stuff.
And then they had the backing of

1631
01:27:19,200 --> 01:27:21,760
the the capital markets to
support them in, in the

1632
01:27:21,760 --> 01:27:24,520
acquisitions that they
ultimately talk, but a a major

1633
01:27:24,520 --> 01:27:27,400
couldn't move as fast as they
did to the opportunities that

1634
01:27:27,400 --> 01:27:29,800
popped up when they did.
Yeah, undoubtedly.

1635
01:27:29,800 --> 01:27:33,360
And if you, if you look at the,
the culture more broadly at

1636
01:27:33,360 --> 01:27:36,400
Northern Star beyond just the
the deal making like the speed

1637
01:27:36,400 --> 01:27:39,280
of operation just just
incredible like you can, you can

1638
01:27:39,280 --> 01:27:41,360
feel it reading through the
announcements how how quick

1639
01:27:41,360 --> 01:27:44,080
things are happening.
It's it's awesome.

1640
01:27:44,080 --> 01:27:46,880
And like the, the people that
have gone on to to leverage

1641
01:27:47,240 --> 01:27:51,760
using that Northern Star badge
on their resume now is, is quite

1642
01:27:51,760 --> 01:27:53,360
an incredible.
You look around the industry,

1643
01:27:53,360 --> 01:27:56,560
you can see it everywhere.
And these guys tended to promote

1644
01:27:56,960 --> 01:28:00,280
within people like started there
relatively young.

1645
01:28:00,280 --> 01:28:03,480
They did their time there and.
It's an ownership mentality.

1646
01:28:03,480 --> 01:28:05,840
Like people had real ownership
of their decisions.

1647
01:28:05,840 --> 01:28:10,040
They had autonomy that gave
them, you know, yeah, the

1648
01:28:10,320 --> 01:28:14,320
ability to test things, learn
things, move.

1649
01:28:14,320 --> 01:28:18,160
I don't think it's a coincidence
that every leader of a midcap

1650
01:28:18,360 --> 01:28:20,680
gold company is ex Northern
Star.

1651
01:28:20,880 --> 01:28:22,560
There's some there was something
special.

1652
01:28:22,560 --> 01:28:25,320
He's was something special about
the culture of the growth of

1653
01:28:25,320 --> 01:28:28,160
that company that created a lot
of leaders in today.

1654
01:28:28,280 --> 01:28:29,720
Yeah.
And, and then when they sort of

1655
01:28:29,720 --> 01:28:32,000
had the chance, they, they paid
for talent as far as I could

1656
01:28:32,000 --> 01:28:34,920
see, right?
Because the value add on an

1657
01:28:34,920 --> 01:28:39,720
operation that just completely
hums is worth paying the few 100

1658
01:28:39,720 --> 01:28:44,280
grand or whatever it is more for
the absolute best person for,

1659
01:28:44,320 --> 01:28:46,120
for the job.
And you've got the budget to do

1660
01:28:46,120 --> 01:28:47,400
that.
Like Bill, Bill's always kind of

1661
01:28:47,400 --> 01:28:50,880
said that, you know, he'll pay
overs on the market because get

1662
01:28:50,880 --> 01:28:53,440
the best people.
And what that does to your stock

1663
01:28:53,440 --> 01:28:58,040
price is multiple multiples.
And you know, the, the last one

1664
01:28:58,040 --> 01:29:00,920
on the couch is that they
actually, they took risk, they

1665
01:29:00,920 --> 01:29:04,040
backed themselves and they took
risk where they felt they had an

1666
01:29:04,040 --> 01:29:06,080
edge.
And they didn't jump at every

1667
01:29:06,080 --> 01:29:10,080
deal, but almost every deal
turned out to be a cracker.

1668
01:29:10,320 --> 01:29:13,360
So yeah, it's it's remarkable.
They took.

1669
01:29:13,360 --> 01:29:16,320
They took equity risk, you know,
and they did take risk, but they

1670
01:29:17,000 --> 01:29:20,400
like they, they, they were
actually pretty sensible in

1671
01:29:20,400 --> 01:29:22,440
debt, right?
Like that became part of the

1672
01:29:22,440 --> 01:29:26,080
story, especially the Super pit.
But yeah, that whole growth

1673
01:29:26,320 --> 01:29:28,880
path, like you talked about
minimal debt along that way.

1674
01:29:28,880 --> 01:29:30,280
When they did, they paid it off
quickly.

1675
01:29:30,720 --> 01:29:35,200
They didn't get clever on like
being too smart about sort of,

1676
01:29:35,320 --> 01:29:39,440
yeah, being geared and having
hedging in place and all those

1677
01:29:39,440 --> 01:29:42,200
sort of things that brought
larger companies on stock.

1678
01:29:43,640 --> 01:29:47,640
Yeah, yeah, absolutely.
And there's a big debate as well

1679
01:29:47,640 --> 01:29:52,520
now at Northern Star or looking
back between where the value add

1680
01:29:52,520 --> 01:29:54,560
came from, from the the mine
engineers to the GS.

1681
01:29:55,640 --> 01:29:58,160
It was, you know, I always said
it was the the mine engineers.

1682
01:29:58,160 --> 01:30:02,920
But yeah, the the limelight was
pushed or the spotlight was

1683
01:30:02,920 --> 01:30:07,680
pushed towards the G OS because
the value added at the at the

1684
01:30:07,680 --> 01:30:11,560
drill bit was remarkable.
So if you're trying but

1685
01:30:11,560 --> 01:30:18,400
disentangle where the biggest
value drivers were, it's like

1686
01:30:18,400 --> 01:30:21,880
the the value in sound Geo.
Detention of the ore body at

1687
01:30:21,880 --> 01:30:23,880
death.
Yeah, and giving them the the

1688
01:30:23,880 --> 01:30:26,960
capital they need to run was was
remarkable.

1689
01:30:26,960 --> 01:30:28,520
I don't think Bill was oblivious
to that.

1690
01:30:28,520 --> 01:30:31,680
He yeah, yeah.
I mean, I mean, I, I there's a

1691
01:30:31,680 --> 01:30:35,440
growth story simultaneous of AUD
which which, you know, Bill was

1692
01:30:35,440 --> 01:30:39,440
a shareholder of too.
But he's prey yeah, he was

1693
01:30:39,440 --> 01:30:44,240
praised Fodius for that.
He Fodius being a GO saying, you

1694
01:30:44,240 --> 01:30:47,400
know, look at the value you can
add by given the G OS free

1695
01:30:47,400 --> 01:30:49,800
reign.
So that that's something that

1696
01:30:49,800 --> 01:30:53,800
really stuck out to me and
thinking about optionality.

1697
01:30:53,800 --> 01:30:56,200
Again, it's something we talk
about a lot on the short on the

1698
01:30:56,200 --> 01:30:58,960
show.
But like these assets with quote

1699
01:30:58,960 --> 01:31:03,000
UN quote short line lives like
John Day is the the prime

1700
01:31:03,000 --> 01:31:07,960
example of this.
Like the the optionality was was

1701
01:31:07,960 --> 01:31:12,280
remarkable for a a mine that's
just trying to go on and on and

1702
01:31:12,280 --> 01:31:16,640
on.
Like maybe as an investor, it's

1703
01:31:16,640 --> 01:31:19,920
another way to kind of interpret
this like if you can understand

1704
01:31:20,160 --> 01:31:22,000
that this isn't actually a two
year mine life like.

1705
01:31:22,440 --> 01:31:26,200
Yeah, like if you ran an NPV on
the date that Northern Star

1706
01:31:26,360 --> 01:31:30,520
bought this using the consensus
gold price with the reserves

1707
01:31:30,520 --> 01:31:33,080
life that it had at that point
in time, maybe it was 85,000,000

1708
01:31:33,080 --> 01:31:35,040
bucks, right?
But my God, that thing is

1709
01:31:35,040 --> 01:31:37,400
printed because of the
optionality that came with it.

1710
01:31:37,600 --> 01:31:42,800
Yeah, absolutely.
And 2nd last point, if you look

1711
01:31:42,800 --> 01:31:45,640
at this like what to learn from
an investor's mindset is also

1712
01:31:45,640 --> 01:31:51,080
super interesting because taking
a long term view is 1 lesson, I

1713
01:31:51,080 --> 01:31:52,760
reckon.
Like you can see the, the

1714
01:31:52,760 --> 01:31:55,160
journey is not linear.
There was like kind of year

1715
01:31:55,160 --> 01:31:58,400
periods where you could skew the
data in your favour and you'd

1716
01:31:58,400 --> 01:32:00,440
find the share price went down
over a couple year period or

1717
01:32:00,440 --> 01:32:03,720
whatever.
And that just shows you that

1718
01:32:03,720 --> 01:32:06,680
it's not linear one way going
upwards, right.

1719
01:32:06,680 --> 01:32:10,680
But this company set out what
their intentions were.

1720
01:32:10,720 --> 01:32:12,560
They said, these are our
ambitions.

1721
01:32:12,560 --> 01:32:16,800
And nine times out of 10 they
hit them and over the longer

1722
01:32:16,800 --> 01:32:19,360
term they got rewarded for that
the share price.

1723
01:32:20,240 --> 01:32:23,160
At the same time, you know, if
you if you do like looking at

1724
01:32:23,160 --> 01:32:28,320
kind of single asset type plays
from when they did Paulsen's to

1725
01:32:28,320 --> 01:32:30,720
the end of that year was about a
six month period in which they

1726
01:32:30,720 --> 01:32:33,480
like 8X D.
Like that's also a pretty cool

1727
01:32:33,480 --> 01:32:36,120
kind of strategy.
That's from, you know, mid year

1728
01:32:36,120 --> 01:32:40,160
to the end of 2010.
And that's a that's a RIP and

1729
01:32:40,160 --> 01:32:42,520
return from if you get in the
weeds and understand that, hey,

1730
01:32:42,520 --> 01:32:44,520
maybe this team can really
execute on what they're saying

1731
01:32:44,520 --> 01:32:46,880
on maybe there is more mine life
here.

1732
01:32:47,640 --> 01:32:49,040
That's a pretty handsome return,
isn't it?

1733
01:32:49,280 --> 01:32:54,680
Remarkable mate, remarkable.
There's one one other like thing

1734
01:32:54,720 --> 01:32:58,480
which is a factor here.
They wrote a bull market too

1735
01:32:58,520 --> 01:33:00,800
like well, I don't know if it's
a bull market per SE, it was

1736
01:33:00,800 --> 01:33:03,560
definitely that blip.
But gold prices has trended

1737
01:33:03,560 --> 01:33:07,720
upwards and upwards and upwards.
And it's undoubtedly that helps

1738
01:33:07,720 --> 01:33:09,440
along the way to the costs have
gone up of course.

1739
01:33:09,440 --> 01:33:14,360
But yeah, it's that that that
helps the the flywheel of M&A

1740
01:33:14,400 --> 01:33:16,920
kind of just work you rewrite,
you've got lower cost of

1741
01:33:16,920 --> 01:33:19,320
capital, you can get bigger
deals done etcetera, etcetera

1742
01:33:19,320 --> 01:33:21,240
it.
It wouldn't have worked if the

1743
01:33:21,240 --> 01:33:26,680
car prices 100% that is.
That is a tailwind just blowing

1744
01:33:26,680 --> 01:33:29,920
pretty consistently throughout.
It's a bit of luck and a lot of

1745
01:33:29,920 --> 01:33:33,720
skill, and it's created a $30
billion company.

1746
01:33:33,920 --> 01:33:35,760
Got to create your own luck
mate, don't you reckon?

1747
01:33:36,440 --> 01:33:37,640
Yeah.
What do you think of the company

1748
01:33:37,640 --> 01:33:38,960
today?
I know you haven't written any

1749
01:33:38,960 --> 01:33:41,320
words because you wanted to
focus on like.

1750
01:33:42,000 --> 01:33:44,480
I mean the growth, the growth
story is so much more exciting,

1751
01:33:44,680 --> 01:33:48,120
right?
It it is just just read an

1752
01:33:48,120 --> 01:33:50,520
annual report from the early
twenty 10's and read an annual

1753
01:33:50,520 --> 01:33:53,480
report today and they're very
different thing to read.

1754
01:33:54,080 --> 01:33:56,440
There's a lot more pages in
there that aren't as

1755
01:33:56,440 --> 01:33:57,520
interesting.
Yeah.

1756
01:33:57,520 --> 01:33:59,960
So it's just a completely.
It's a bigger company.

1757
01:33:59,960 --> 01:34:02,280
Different based and they're
playing, they're playing a

1758
01:34:02,280 --> 01:34:06,360
different a different game.
Now the deals that actually move

1759
01:34:06,360 --> 01:34:08,680
the needle have to be way
bigger.

1760
01:34:08,880 --> 01:34:10,880
Yeah.
Like it's a it's a harder in a

1761
01:34:10,880 --> 01:34:13,960
way plan to execute on.
They still have an appetite for

1762
01:34:13,960 --> 01:34:17,080
risk, which I mean, and like
Stuart Duncan was there for

1763
01:34:17,240 --> 01:34:19,880
years and years before.
Sorry.

1764
01:34:20,360 --> 01:34:22,200
Yeah, look at me.
They've taken a lot of there's

1765
01:34:22,240 --> 01:34:24,000
risk appetite's still there,
Yeah.

1766
01:34:24,000 --> 01:34:28,000
Despite it being enormous, yeah.
Undoubtedly it's it.

1767
01:34:28,080 --> 01:34:30,680
It's a they.
Still care about expiration even

1768
01:34:30,680 --> 01:34:32,560
though they don't talk about in
their announcements all the time

1769
01:34:32,560 --> 01:34:34,160
like they they do.
Invest in that a lot.

1770
01:34:34,320 --> 01:34:37,600
That part of the the way in
which they operate hasn't hasn't

1771
01:34:37,600 --> 01:34:39,440
changed.
It's it's still there.

1772
01:34:39,440 --> 01:34:44,000
And you know, there's the, the
way of thinking that the majors,

1773
01:34:44,000 --> 01:34:47,360
the ones that get capital in, in
a bull market, if you're

1774
01:34:47,360 --> 01:34:49,680
thinking about it from
investment perspective.

1775
01:34:49,680 --> 01:34:51,920
So maybe they they do kind of
win out.

1776
01:34:51,920 --> 01:34:54,720
I mean, we've seen specifically
like in the last 6:00-ish months

1777
01:34:55,120 --> 01:34:58,120
of the gold price run, these
guys have been a huge benefactor

1778
01:34:58,120 --> 01:35:00,920
of that, so.
What was your favorite deal of

1779
01:35:00,920 --> 01:35:02,160
the lot?
John Damon.

1780
01:35:02,360 --> 01:35:05,080
Yeah, undoubtedly.
Yeah.

1781
01:35:05,440 --> 01:35:08,280
What was it?
Was there anything that you had

1782
01:35:08,280 --> 01:35:11,080
a misconception of before during
this deep dive?

1783
01:35:11,960 --> 01:35:16,920
I I did not know like a fraction
of what what we've just sort of

1784
01:35:16,920 --> 01:35:19,960
gone through like, yeah, you
know it kind of roughly, but you

1785
01:35:19,960 --> 01:35:24,760
don't know half the details.
So yeah, yeah, there was, there

1786
01:35:24,760 --> 01:35:27,160
was so many, so many learnings
that were new for me and.

1787
01:35:27,600 --> 01:35:30,960
You think, do you think you like
going through the history?

1788
01:35:31,800 --> 01:35:36,360
If another like, you know,
Northern Star esque kind of

1789
01:35:36,360 --> 01:35:39,840
company pops up on the radar,
you think you'd be able to spot

1790
01:35:40,480 --> 01:35:43,920
like signs that would indicate
to you that this is this is the

1791
01:35:43,920 --> 01:35:46,760
real deal and can be a real kind
of value creator.

1792
01:35:47,520 --> 01:35:49,760
I'm not, I'm not going to say I
can spot them because that's,

1793
01:35:49,760 --> 01:35:53,680
that's a much harder thing.
But the idea of just stepping

1794
01:35:53,680 --> 01:35:56,120
back and looking at companies
that put out a plan and say this

1795
01:35:56,120 --> 01:35:58,400
is what we're going to do.
And then, you know, if you're in

1796
01:35:58,400 --> 01:36:01,120
a fortunate position to, to meet
management and have them go

1797
01:36:01,120 --> 01:36:04,560
through that same list and say,
yeah, we delivered on 123 like

1798
01:36:04,560 --> 01:36:08,160
we said we would a year ago,
like we said two years ago, like

1799
01:36:08,560 --> 01:36:11,440
take the long term view on that
sort of stuff because that is a,

1800
01:36:12,560 --> 01:36:14,960
that is a big indicator in my
mind.

1801
01:36:14,960 --> 01:36:19,360
A. 100%.
Like, yeah, a company with the

1802
01:36:19,360 --> 01:36:22,880
management just knows the the
assets and they know their

1803
01:36:22,880 --> 01:36:25,160
business from A-Z.
They know it inside out.

1804
01:36:25,640 --> 01:36:29,120
They know every, you know, sort
of asset.

1805
01:36:29,120 --> 01:36:30,800
If they're a multi asset
company, they know the the

1806
01:36:30,800 --> 01:36:33,680
people, they know the the Geo
team, they know the the

1807
01:36:33,680 --> 01:36:36,200
engineering team, everything.
Like that is something you

1808
01:36:36,200 --> 01:36:39,680
always hear about them.
Management knew it like the

1809
01:36:39,680 --> 01:36:41,240
company inside out.
They're on top of it.

1810
01:36:41,680 --> 01:36:44,320
Like not not in an ivory tower,
so to speak.

1811
01:36:44,880 --> 01:36:47,320
That's it.
So I think that's a a wicked

1812
01:36:47,320 --> 01:36:49,920
spot to kind of leave it, mate,
unless you've got any sort of

1813
01:36:49,920 --> 01:36:53,400
big takeaways from that one.
I'm, I, I've thoroughly enjoyed

1814
01:36:53,400 --> 01:36:54,800
this mate.
I've like, I've learned an

1815
01:36:54,800 --> 01:36:57,360
absolute like boatload from the
history.

1816
01:36:57,360 --> 01:37:00,720
And I've got like more respect
and appreciation for the company

1817
01:37:00,720 --> 01:37:03,720
and the people that built that
company, like hearing the, the,

1818
01:37:03,800 --> 01:37:06,720
the journey, the decisions that
were made along the way.

1819
01:37:06,720 --> 01:37:10,120
Yeah, It's, it's, it's, it's,
it's pretty cool.

1820
01:37:10,240 --> 01:37:11,720
It's a really cool story.
It's yeah.

1821
01:37:11,720 --> 01:37:15,240
It's worth celebrating.
Absolutely worth celebrating

1822
01:37:15,240 --> 01:37:17,320
mate.
And I'm sure I've got a bunch

1823
01:37:17,320 --> 01:37:20,840
wrong, so feel free to, to
e-mail me and correct me.

1824
01:37:20,840 --> 01:37:23,240
I'm sure there's some cool
details as well from people that

1825
01:37:23,240 --> 01:37:25,800
were on the other side of the
table.

1826
01:37:26,320 --> 01:37:28,880
If you want to share any of
them, let us know.

1827
01:37:28,880 --> 01:37:32,600
And yeah, a shout out actually
to, to somebody who wrote in and

1828
01:37:32,600 --> 01:37:34,200
said it'd be cool to do an
episode on the history of

1829
01:37:34,200 --> 01:37:37,080
Northern Star.
You, you are the one that gave

1830
01:37:37,080 --> 01:37:40,680
me inspiration to, to actually
for us to do this so.

1831
01:37:40,760 --> 01:37:43,080
So if you've got, if you've got
any other recommendations, money

1832
01:37:43,080 --> 01:37:45,680
miners let they didn't know what
you want, what your, what

1833
01:37:45,680 --> 01:37:50,000
history or what company growth
or execution or deal or topic

1834
01:37:50,480 --> 01:37:52,440
that would be interesting to go
down a rabbit hole on.

1835
01:37:52,680 --> 01:37:55,120
Yeah, I think that's a a wicked
spot to leave it, mate.

1836
01:37:55,120 --> 01:37:58,880
And a massive thank you to our
phenomenal partners to make it

1837
01:37:58,880 --> 01:38:01,640
all happen.
NMS Grounded, Sandvik Ground

1838
01:38:01,640 --> 01:38:05,120
support, CRE insurance, K Drill
Cross Boundary Energy.

1839
01:38:05,320 --> 01:38:06,240
Mood root.
Mood root.