Is the Writing on the Wall for MinRes?

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Happy with the framing.
Oh.

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I'm always happy, JD, when
you're in the frame.

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All right, all right, all right,
money miners, we have the.

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Paper.
What an intro.

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We have the pay-per-view special
min raise half year, announced

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Travis Ricardino.
I am very excited.

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It was almost a almost a
sleepless night.

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You'd say we're.
Sleepless.

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Yeah, it was kind of funny.
Like the last 48 hours has been

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an absolute waterfall of of news
from just the yearnings like

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season and we're.
Going to talk about another

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waterfall too.
Yeah, but we're going to talk

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about one company.
We're like, this morning, you

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and I were just like, fuck this,
you know, Glencore's going to

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shit, you know, bring it. 52
week low for Glencore.

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But so he's paid 5 billion for
Roads Ridge.

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US as well.
And we're like, Nah, we just

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want to talk about min res.
I think the approach we've taken

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mate, is hopefully quality, the
quality that the two of us can

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master at least rather than
quantity and spreading ourselves

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too thin.
And half years are a funny 1.

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You know, there's a lot baked in
a lot sort of pre announced and

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all that sort of stuff.
And yeah, just looking by the

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reactions, there were some,
there were some big ones sort of

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Glencore and some others off
seven, 8%, but.

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Fortescue today down down 7
like.

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But Minray is down 20 and a bit
down, down 6% the day before as

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well.
It was.

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So started the week at about 34
bucks, now trading a touch under

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24 when I last looked before.
We, I think it's up a bit to 26

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is when I last looked.
So yeah, it's, it's bounced back

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a bit, a little bit today, but
still off a long, a long way

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before we go into the crux of
what we really think of this

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company.
And yeah, the situation they're

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in right now.
Ding, Ding, Ding out of the way

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for LEG.
So who remains a mineral

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shareholder.
So what's going on mate?

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A lot, there's a lot going on.
We've obviously spoken about the

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sort of covered the the movement
in the share price, seeing the

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the reaction of equity markets
has been really, really

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interesting I think personally.
So just to give people a bit of

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context again because it's moved
quite a bit, I'd say sort of 4.8

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ish billion Aussie market cap
right now.

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Enterprise value is in and
around 10 billion Aussie with

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that net debt fee that sits at
what they reported 5.1.

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You know, people have different
opinions on what's included,

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what's not included in that, but
we'll put that to the side for

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the moment.
So you've got, you've got net

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debt now, now exceeding the the
market gap.

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It's got there.
Yeah, it has got there.

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No currency errors this time.
And to put the movements into a

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bit of further context, about
$250 million worth of stock

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traded hands yesterday.
That was the biggest day of

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trading volume in quite some
time over over a year ish.

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And yeah, that, that's about 5%
of the, the company's paper for,

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for what it's worth.
So I think we should start with

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what, what really stood out.
We had the results come out late

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the afternoon before and then a
call.

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I've got to say, mate, I, I
really love the way they do the

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call.
Full credit to them.

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The ability to see Mark and
Chris's faces, read the body

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language is awesome.
It gives it gives investors, it

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gives sell side analysts.
Yeah, an extra layer that you

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don't get just behind the audio.
It's wicked.

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We can, we can fault some of the
capital allocation, but we can't

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fault the quality of the of the
the analyst calls that you get

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on the both the AGM and the the
half year results.

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So do these like videos?
How good was the lighting at the

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at the AGM?
Yeah, it was like compared to

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some of the the stuff where you
can, you can just feel that it's

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a bunch of people around a
boardroom leaning over trying to

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pick up in the mic like that.
You can actually hear them

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clearly.
You can see them first rate.

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Anyway, the quality of the call
is the least important thing

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about this the business at the
moment, but it will hopefully

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let money miners really capture
the essence of what we're we're

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going to talk about.
Because what really mattered,

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well, the the newspapers will
will tell you what really matter

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was a headline loss of of $800
million for the half year just

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gone.
But the market doesn't care

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about half year results that
much.

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It cares about the outlook.
What's the future, you know, of

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this business look like?
Is the business going to

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generate cash flow required to
justify it's it's share price

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and and importantly pay down
it's debt.

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And then yeah, generate,
generate real cash flow

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thereafter that that's why a
massive focus was, was on the

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whole Rd. itself.
I found this whole call, like

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the whole, the whole update,
the, the number one thing

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discussed, the number one
priority for of concern was the

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whole Rd. itself.
You know, a huge amount of focus

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on the durability of that whole
Rd. because it was, it was

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revealed that after rainfall in
December and January, there's a

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chunky sum of, of, you know,
repair CapEx required at the, at

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the Onslow Hall roads,
specifically what they call

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cement stabilization.
And the entire route of the, the

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whole Rd. will be resurfaced
with asphalt.

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And this, this whole Rd. has
only been in full operational

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use since the, the end of
September, which is, you know,

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just a couple months, right?
So rightly so, the, the market

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is laser focused on this whole
Rd. because this is a critical

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piece of infrastructure.
If the durability of the, the

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whole Rd. is compromised, the
business's ability to service

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the debt evaporates very
quickly.

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So let's just listen to what
Chris has to say on this.

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This road is just simply, it's
brand new.

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It's settling.
We've had the worst weather

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event you can imagine in 40
years.

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We've had more rain than that
region has ever seen.

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And that was followed by another
low five days later that come

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down the coast, followed by this
most recent cyclone.

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So we've had it all.
It's not doing too much to us.

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You know, in the overall scheme
of things, from January 3 to

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June, I think we're going to be
missing 3 or 4,000,000 lbs.

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I mean, no big deal.
It's a civil problem.

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It's got solution.
We have the solution and we are

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building it.
So please don't turn into civil

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engineers and panic.
Just stay out there as analysts

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and we'll be able to do what we
always do.

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Thoughts mate, Let's not turn
into civil engineers.

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Hey, that's, that's Chris.
It is best I'm I'm a fan.

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What did what did you reckon of
the the broader point on that

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one?
It's alarming, right?

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I think it's, yeah, I think it's
alarming, yeah.

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I mean, like this is the the
crux of why, why the market sold

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off.
Is this concern surrounding

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turning the whole Rd.
It's, you know, taking a, a

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single year's weather event to
require like substantial

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remediation CapEx.
There was clearly a, a layer of

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40 to 50 mils of asphalt and now
needs to go across the entire

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Rd., which wasn't done
originally.

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And I think there's like there's
two kind of there's two

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competing theories about what's
really kind of going on here.

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And maybe the the truth is
somewhere in the middle, but one

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goes something like this.
That's that min rez has, you

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know, wanted to maintain it's on
time, on budget kind of mantra

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from the beginning.
And that sort of meant that

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there's, it's actually a bit
more CapEx to go to finish the,

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the job, including that final
layer of, of, of asphalt.

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And then, but in order to
maintain the whole kind of on

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time, on budget sort of
narrative, you know, this is the

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situation they're in.
The the other narrative is that

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the, the whole roads
construction is has given given

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the given the constraints on the
company's financial capability,

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the whole Rd. as construction
and durability might be

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compromised in some fundamental
way, which will require a far

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higher amount of of reparation
and and maintenance CapEx.

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Then sort of anyone has has
factored.

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May even result in, you know,
the requirement to reduce the

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the load itself on the on the
whole road to more trucks or

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less load per truck.
And is it compromised by load or

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by by weather?
Those are those are things that

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are are kind of playing out in
real time.

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Don't know where the truth is on
those, those two sort of, you

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know, competing theories.
But the reality is if if the

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whole word is is compromised in
a serious way, like that's a,

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it's like a, it's like a binary.
It's a binary thing from Inres,

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right?
The company's compromise.

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It is without doubt the most
important detail and you could

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see Chris and and Mark did their
best to address it in the the

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rough hour or so in remarks that
they gave before they open the

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floor to questions.
And then we still had at least

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half the questions on the whole
Rd. itself, much to much to

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Chris's frustration very first
question up and you could sort

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of hear how he came out the
blocks there.

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But yeah, it, it just can't be
overstated, right?

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The the continuation of this
business, the sort of going

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concern nature of it is reliant
on the, the road working.

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Lithium doesn't make money at
these prices that they really

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talked around how much of the
mining services business is

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reliant on tons from min res
owned projects.

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And they use kind of cute
language like 100% owned

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projects when we know that most
of the projects that they don't

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own 100%.
So it's a, it's kind of handy

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way of talking around that
point.

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But all this is just amplified
by the debt.

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We've spoken about this so many
times over the past few years,

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not just with min res, but with
a whole bunch of other

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companies.
And then beyond the debt, you've

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got Morgan Stanley
infrastructure partners.

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They're going to want to get
paid as well.

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That's another press that
they're getting on, on the

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business.
And I, I do acknowledge that

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ramping up anything you're going
to learn as you go.

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There's only so much you can do
beforehand.

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Things like when he speaks about
where the water sort of collects

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150 kilometers is a, a pretty
long way and there's going to be

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a lot of learnings.
But the the clock is really

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ticking on how quickly they can
they can do those learnings

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because they haven't got much
room for error with with that

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debt load.
Yeah.

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And, you know, before we kind of
get to the, the funding dynamics

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because that, that's what really
matters here.

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Like can they service the debt
or not?

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But I, you know, at the start of
Chris's, you know, snippet

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there, he talks about the
climate.

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It was like a one in 40 year
event on the rainfall with the

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amount of rain volume over the,
over the, you know, the

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Christmas period there.
And he said it a couple times in

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the call, One in 40 year event,
one in 40 year event.

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You and I have yeah, both spend
a bit of time looking at the

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publicly available information
on the on the amount of rain

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there.
There are weather stations

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nearby with with balls that
automatically measure these

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things.
And the info is available

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publicly.
For example, run Rundella or

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weather station.
You can, you can Google it.

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The, the website says it's where
this green dot is that I've put

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on this, this map here of drawn
in purple, the approximate whole

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Rd. location, which is, is
certainly not accurate, but

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roughly right.
Or if I, I zoom in, I can be a

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bit more precise.
And on this zoomed in map, I'm

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pretty sure this, this, you
know, where the, where the

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station bore is, is like 17
kilometers from where the, the

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whole Rd. itself is.
And that's a point of the whole

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Rd. that's like almost bang in
the middle of Ken's bore and

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Onslow.
So it's like halfway between and

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what is the, the data say about
that's that's coming out of

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this, this bore?
I don't, I don't want to.

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I want to manipulate the data.
I'll just literally pull up on

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the screen.
Now you can see as I'm clicking

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through the website, this is the
raw numbers here.

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Here's the the rainfall for for
January of this year.

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00:11:46,480 --> 00:11:50,000
So the maximum maximum rainfall
in a single day was 20mm.

225
00:11:50,280 --> 00:11:53,880
The total in the month was 74mm.
For the same by the maximum in a

226
00:11:53,880 --> 00:11:57,880
single day was 30mm.
Total for the month was 57mm.

227
00:11:59,240 --> 00:12:04,200
Go back earlier in that year,
earlier in 2024, February there

228
00:12:04,200 --> 00:12:08,000
was there was a day with more
that was 32 millimetres.

229
00:12:08,600 --> 00:12:11,080
February the year before that
there was a 43 millimetre day, a

230
00:12:11,080 --> 00:12:14,480
38 millimetre day and a 26
millimetre day for a total of

231
00:12:14,480 --> 00:12:16,440
172 millimetres in the whole
month.

232
00:12:16,880 --> 00:12:20,880
January had some days in the
high 20s, low 30s, you know, May

233
00:12:21,320 --> 00:12:24,200
the year before that you had a
single day with 57 millimetres,

234
00:12:24,200 --> 00:12:26,920
another day with 49 millimetres,
another with 29 millimetres.

235
00:12:27,360 --> 00:12:31,280
February that year had five
days, which we're in the high

236
00:12:31,280 --> 00:12:35,040
20s or low 30s for, for whopping
184 millimetres that that month.

237
00:12:35,400 --> 00:12:37,480
I could keep going just clicking
through the previous year

238
00:12:37,480 --> 00:12:39,400
previous year.
But I made my point.

239
00:12:39,400 --> 00:12:42,840
Like I don't see anything
unusual about the quantity of of

240
00:12:42,840 --> 00:12:47,200
rainfall in this data for, you
know, what was what was had in

241
00:12:47,200 --> 00:12:50,640
January and and February.
In fact, it looks extremely

242
00:12:50,640 --> 00:12:54,360
usual and there seemed to be a
lot more unusual or like, you

243
00:12:54,360 --> 00:12:56,960
know, events with much higher
rainfall than than was had in in

244
00:12:57,560 --> 00:12:58,880
any of the days in the last two
months.

245
00:12:58,880 --> 00:13:03,520
And and yes, this is just just
one bore and you can find bores

246
00:13:03,520 --> 00:13:05,960
all over the place that will
tell a similar story.

247
00:13:05,960 --> 00:13:12,440
So I'd love to see the actuarial
tables that min res is referring

248
00:13:12,440 --> 00:13:15,400
to when they when they call it a
one in 40 year rainfall event.

249
00:13:15,680 --> 00:13:18,600
It doesn't doesn't feel like the
right description based on you

250
00:13:19,160 --> 00:13:21,120
know what what an umpty you can
do just Googling.

251
00:13:21,960 --> 00:13:24,280
It was a good bit of fun
spending some time on on bomb

252
00:13:24,280 --> 00:13:26,280
yesterday.
We spent a good hour or so on it

253
00:13:26,680 --> 00:13:28,640
just searching around.
Like you said, there's a whole

254
00:13:28,640 --> 00:13:32,960
bunch of stations around there.
I, I personally don't buy the

255
00:13:32,960 --> 00:13:37,280
narrative that it was one in 40
year event similar to what

256
00:13:37,280 --> 00:13:40,600
you've sort of spoken to there.
But I'll, I'll give them the,

257
00:13:40,760 --> 00:13:43,640
the benefit of the doubt that it
was a pretty nasty downpour that

258
00:13:43,640 --> 00:13:46,520
they had over that Christmas
period.

259
00:13:47,240 --> 00:13:51,080
I'll call out that we, we looked
at 5 plus odd weather stations

260
00:13:51,080 --> 00:13:55,000
in and around that area.
We went back years and years

261
00:13:55,000 --> 00:13:57,880
just to get a feel for, for what
it kind of looked like, what you

262
00:13:57,880 --> 00:14:02,080
showed just before as well.
And something that did stand out

263
00:14:02,080 --> 00:14:05,440
was the variability on the same
day different weather stations

264
00:14:06,160 --> 00:14:09,240
in a roughly kind of similar
area got massively different

265
00:14:09,240 --> 00:14:10,640
mills.
So it's, it's kind of

266
00:14:10,640 --> 00:14:13,640
interesting to kind of put it in
to perspective there.

267
00:14:13,640 --> 00:14:17,520
But I think the the broader
conversation about the company's

268
00:14:17,520 --> 00:14:20,320
attitude to risk here is is
appropriate and really

269
00:14:20,320 --> 00:14:23,960
interesting to have because the
attitude towards risk is

270
00:14:24,000 --> 00:14:27,560
ingrained in this business.
And the the results are spoken

271
00:14:27,560 --> 00:14:29,960
for themselves over three
decades plus.

272
00:14:29,960 --> 00:14:32,480
And it goes all the way back to
the expression that Chris said

273
00:14:32,480 --> 00:14:35,360
once again in this call and he
said 100 times before that

274
00:14:35,720 --> 00:14:39,560
started this business with
10,600 bucks and a credit card.

275
00:14:40,000 --> 00:14:42,920
And my perception is that
attitude to risk has not changed

276
00:14:43,120 --> 00:14:47,960
whatsoever in that time.
The the scale of it has just

277
00:14:48,040 --> 00:14:51,120
changed that they're playing
with vastly bigger sums of money

278
00:14:51,120 --> 00:14:53,280
now to what they were 20-30
years ago.

279
00:14:54,000 --> 00:14:58,240
And why I think it's relevant to
rainfall is looking at a couple

280
00:14:58,240 --> 00:15:00,640
slides.
So one of the slides I'll show

281
00:15:00,640 --> 00:15:04,760
here comes from the Onslow Iron
or outlook from just six months

282
00:15:04,760 --> 00:15:07,600
ago.
And the other slide comes from

283
00:15:07,600 --> 00:15:09,480
the most recent announcement
just the other day.

284
00:15:09,960 --> 00:15:12,320
And specifically what we're
looking at for those listening

285
00:15:12,320 --> 00:15:17,240
is the mine life on Onslow.
One shows a 30 year number, the

286
00:15:17,240 --> 00:15:19,320
other shows A50 year plus
number.

287
00:15:19,320 --> 00:15:22,560
So obviously that 50 year plus
mine life number is what they

288
00:15:22,560 --> 00:15:25,280
previously spoke about and now
they're talking about a 30 year

289
00:15:25,280 --> 00:15:27,800
plus mine life.
And I just wonder if that's got

290
00:15:27,800 --> 00:15:31,080
anything to do with A1 in 40
year weather event.

291
00:15:31,080 --> 00:15:35,240
So a bit a bit sort of tongue in
cheek there, but you get the

292
00:15:35,240 --> 00:15:38,000
point.
The attitude towards risk is not

293
00:15:38,000 --> 00:15:42,400
that we should build something
that'll overcome A1 in 100 year,

294
00:15:42,400 --> 00:15:46,040
you know, it's do the, the sort
of bare minimum you can with

295
00:15:46,040 --> 00:15:48,320
the, the funds you've got
available to get the job done

296
00:15:48,680 --> 00:15:50,560
and that's fine.
You know you can.

297
00:15:50,560 --> 00:15:53,040
You can run it how you want.
You're just exposed to the risks

298
00:15:53,040 --> 00:15:55,960
of that attitude.
Well, there's it was an awesome

299
00:15:55,960 --> 00:15:58,040
quote you told me this morning
from Howard Marks.

300
00:15:59,240 --> 00:16:02,720
Sound like a an old sort of
person when I dust off these

301
00:16:02,720 --> 00:16:06,200
ones, but it is interesting.
Howard marks the the expression

302
00:16:06,200 --> 00:16:10,120
he uses pretty frequently is
about the the six foot tall

303
00:16:10,120 --> 00:16:13,800
person that drowned crossing A5
foot river on average.

304
00:16:14,320 --> 00:16:17,360
So yeah, I think that sort of
speaks to his style of

305
00:16:18,160 --> 00:16:20,120
navigating risk in financial
markets too.

306
00:16:20,400 --> 00:16:22,080
Yeah.
We've got to talk about funding

307
00:16:22,080 --> 00:16:25,080
this, this, the, the repair
CapEx that's required here

308
00:16:25,080 --> 00:16:26,800
because this puts further stress
on the balance sheet.

309
00:16:26,800 --> 00:16:30,360
And I, I don't think it was
particularly clear until today,

310
00:16:30,760 --> 00:16:33,560
you know, who was on the hook
for, for repair and maintenance

311
00:16:33,640 --> 00:16:35,840
of, of that road.
I'll, I'll play it here.

312
00:16:36,320 --> 00:16:39,360
Look, my question is back on the
road as well.

313
00:16:39,920 --> 00:16:43,560
You mentioned the maintenance
costs fall by 25,000,000 a year.

314
00:16:44,000 --> 00:16:47,520
What are the actual running
costs of the road both in terms

315
00:16:47,520 --> 00:16:51,760
of OpEx and CapEx?
And just wondering if the JV

316
00:16:51,760 --> 00:16:58,120
partner bears in those costs as
well as the repair bill of 300

317
00:16:58,160 --> 00:17:00,160
mil or so that you're talking
about today?

318
00:17:02,760 --> 00:17:06,520
So the the answer is no, the JV
partner does not bear any of

319
00:17:06,520 --> 00:17:08,839
that cost.
That's, that's totally our risk

320
00:17:09,720 --> 00:17:13,160
and and yeah, we own it.
So that's, that's for our

321
00:17:13,160 --> 00:17:16,760
account.
In terms of the OpEx and CapEx,

322
00:17:17,599 --> 00:17:21,000
we had an allowance in our
modelling of a cents per ton

323
00:17:21,000 --> 00:17:25,440
figure for the operation
maintenance of the road.

324
00:17:25,720 --> 00:17:28,920
We expect that number to come
down significantly as a result

325
00:17:28,920 --> 00:17:31,760
of this decision to asphalt it.
That's why we're getting to that

326
00:17:31,760 --> 00:17:35,440
number of 20 to 25.
We also, yeah, we also have

327
00:17:35,440 --> 00:17:38,600
benefits associated with
improved fuel efficiency and

328
00:17:38,600 --> 00:17:41,000
tire wear as well.
The factor into that

329
00:17:41,280 --> 00:17:43,560
Fascinating, right?
Like we we shouldn't be

330
00:17:43,840 --> 00:17:46,960
surprised, but I think I think
some of the market what was and

331
00:17:47,080 --> 00:17:49,520
maybe didn't appreciate, you
know, this is a pretty, pretty

332
00:17:49,520 --> 00:17:54,880
important point.
Min min rez is, is sole funding

333
00:17:55,360 --> 00:17:59,520
the, the, this kind of, you
know, CapEx complete to

334
00:17:59,520 --> 00:18:05,200
completion here or the, the, the
rectification remediation CapEx

335
00:18:05,200 --> 00:18:10,200
and, and the maintenance CapEx
as well, which is is clearly,

336
00:18:11,400 --> 00:18:12,840
you know, going to be something
that they have to ensure for

337
00:18:12,840 --> 00:18:16,000
the, for the life of mine.
And depending on the rigidity of

338
00:18:16,000 --> 00:18:20,240
that, that road, what's the real
number of the, the maintenance

339
00:18:20,240 --> 00:18:24,160
CapEx going to be going to be?
So, but it does kind of make

340
00:18:24,160 --> 00:18:26,760
sense, right?
And we were, we were talking

341
00:18:26,760 --> 00:18:30,640
about what are the, what are the
demands of an infrastructure

342
00:18:30,640 --> 00:18:32,560
fund when they make an
infrastructure investment?

343
00:18:32,560 --> 00:18:35,880
This is, this is something that
you and I were talking about

344
00:18:35,880 --> 00:18:38,120
before JD.
They, they need, they need to

345
00:18:38,120 --> 00:18:41,040
protect the, the downside
equation massively.

346
00:18:41,040 --> 00:18:45,480
An infrastructure fund will will
want a a secured guarantee call

347
00:18:45,480 --> 00:18:50,280
it, you know, between 10 and 12%
IRR, something risky like this

348
00:18:50,280 --> 00:18:52,960
12% IRR lock it in.
But you need downside

349
00:18:52,960 --> 00:18:54,040
protection.
How do you get downside

350
00:18:54,040 --> 00:18:57,880
protection?
Well, the only way the the deal

351
00:18:57,880 --> 00:19:02,000
happens is with with min rays
kind of yeah, covering the other

352
00:19:02,000 --> 00:19:04,040
the other part of the equation,
which is the downside risk.

353
00:19:04,640 --> 00:19:06,560
Absolutely, mate.
In a, in a nutshell, you're,

354
00:19:06,640 --> 00:19:08,720
you're not seeking
infrastructure returns and

355
00:19:08,720 --> 00:19:13,240
taking equity risk.
And this sort of ties in with

356
00:19:13,920 --> 00:19:18,040
who the partner is and what
they're sort of expectations are

357
00:19:18,040 --> 00:19:22,320
and importantly what the
contractual terms will be going

358
00:19:22,320 --> 00:19:24,880
forward.
I think everyone's now cottoned

359
00:19:24,880 --> 00:19:28,600
on to this and they'll be
looking and thinking going

360
00:19:28,600 --> 00:19:30,520
forward.
You know, we know now that that

361
00:19:30,520 --> 00:19:34,720
300 odd or whatever the specific
number is that's going in is

362
00:19:34,720 --> 00:19:36,080
coming right out of men's
pocket.

363
00:19:36,680 --> 00:19:40,080
But like another one of the
questions spoke to later in the

364
00:19:40,080 --> 00:19:44,600
call, what are the terms going
forward if future events sort of

365
00:19:45,160 --> 00:19:48,600
happen?
This this question that we're

366
00:19:48,600 --> 00:19:51,320
going to play now, JD I'm so
glad there's a a video of it

367
00:19:51,320 --> 00:19:54,280
because the body language
communicates so much too.

368
00:19:54,840 --> 00:19:58,760
So sorry to the audio listeners,
but this is this is one of those

369
00:19:58,760 --> 00:20:01,320
moments you kind of have to
visually watch.

370
00:20:01,640 --> 00:20:05,640
So firstly, given the issues
with the whole Rd. surface, I'm

371
00:20:05,640 --> 00:20:08,320
really interested if there's any
underpinning protections that

372
00:20:08,320 --> 00:20:12,280
Morgan Stanley Infrastructure
Partners may have written into

373
00:20:12,280 --> 00:20:15,120
the contracts to protect their
investment and ensure that they

374
00:20:15,120 --> 00:20:17,280
were delivered a road that is
fit for purpose.

375
00:20:18,040 --> 00:20:20,160
So to be clear, I'm not talking
about the $200 million

376
00:20:20,160 --> 00:20:23,480
contingent payment that flows to
Min Res 35,000,000 tonne run

377
00:20:23,480 --> 00:20:25,640
rate is achieved within a
certain period of time.

378
00:20:26,120 --> 00:20:29,880
I'm asking if there are any
penalties or clawbacks that may

379
00:20:29,880 --> 00:20:32,800
cause cash to flow back to
Morgan Stanley Infrastructure

380
00:20:32,800 --> 00:20:37,240
Partners if certain volumetric
targets are not met by certain

381
00:20:37,240 --> 00:20:38,920
dates.
Can you please be specific?

382
00:20:39,080 --> 00:20:41,880
Thank you.
To be very specific on that Ben,

383
00:20:41,880 --> 00:20:44,320
there are 0 clawbacks
whatsoever, 0.

384
00:20:46,800 --> 00:20:48,440
So there's no, there's no
penalties.

385
00:20:48,640 --> 00:20:53,680
OK.
Sorry, Mark, did you want to add

386
00:20:53,680 --> 00:20:55,320
anything there?
No.

387
00:20:55,760 --> 00:20:58,160
Just there are no penalties.
There's no clawbacks, there's no

388
00:20:58,160 --> 00:21:02,280
penalties.
Ben, this is OK.

389
00:21:02,480 --> 00:21:03,800
Thank you.
The second one is on.

390
00:21:04,440 --> 00:21:07,720
Ben, this is a purely
operational decision by Min Rez.

391
00:21:09,200 --> 00:21:11,120
What did you make of that,
Jodie?

392
00:21:12,480 --> 00:21:17,160
Wow, yeah, we've watched that
one a couple Times Now trying to

393
00:21:18,320 --> 00:21:22,280
really, really see see what
exactly was kind of said there.

394
00:21:22,280 --> 00:21:25,160
But This is why I'm so thankful
they did it with video.

395
00:21:25,160 --> 00:21:30,280
The the body language is is
really, really fascinating.

396
00:21:30,280 --> 00:21:35,080
And the the question being asked
was was a good one.

397
00:21:35,640 --> 00:21:37,680
No, hindsight's great.
Maybe you would have tweaked the

398
00:21:37,680 --> 00:21:41,360
words slightly to try and
understand it a little better,

399
00:21:41,360 --> 00:21:44,000
but.
The crux of the question is if,

400
00:21:44,040 --> 00:21:47,080
if min rates can't meet a
certain, you know, volume that

401
00:21:47,080 --> 00:21:50,280
goes along the, the whole Rd.
because of a, you know, an error

402
00:21:50,280 --> 00:21:56,400
in the whole Rd. a, a durability
issue or etcetera, is, is there

403
00:21:56,400 --> 00:21:59,320
any economic flow that you know,
well, are they on the hook for

404
00:21:59,320 --> 00:22:02,240
anything?
And yeah, like Chris shut it

405
00:22:02,240 --> 00:22:07,760
down pretty pretty quickly.
You know, let's, let's see if if

406
00:22:07,760 --> 00:22:09,520
it's as easy as that or if
there's there's another

407
00:22:09,520 --> 00:22:13,000
mechanism that, you know, is, is
is in place there.

408
00:22:13,320 --> 00:22:15,720
TBA.
Yeah, Morgan Stanley

409
00:22:15,920 --> 00:22:18,680
infrastructure partners know
just how worthless that road is

410
00:22:18,680 --> 00:22:20,560
if it doesn't work.
That's the thing, if you're

411
00:22:20,560 --> 00:22:23,600
protecting your downside, like
yeah, is there a take or pay is

412
00:22:23,600 --> 00:22:26,200
there, you know, yeah.
Mind you, I think there would be

413
00:22:26,200 --> 00:22:27,920
having some tough conversations
right now.

414
00:22:28,120 --> 00:22:30,160
Oh, totally.
Totally, totally.

415
00:22:30,280 --> 00:22:32,240
Yeah.
And we're like, like, so the

416
00:22:32,240 --> 00:22:35,480
worst case scenario for Morgan
Stanley is the whole Rd. doesn't

417
00:22:35,480 --> 00:22:39,360
work.
And, and which means, you know,

418
00:22:39,360 --> 00:22:42,640
min res is also like, you know,
fact.

419
00:22:43,040 --> 00:22:46,400
And in that scenario, how does
Morgan Stanley protect the

420
00:22:46,400 --> 00:22:48,440
downside?
Well, they if there is some,

421
00:22:48,600 --> 00:22:52,360
some mechanism, take a pay yada,
yada, yada, then like 100%

422
00:22:52,360 --> 00:22:55,080
downside scenario is not OK.
But like an infrastructure fund

423
00:22:55,080 --> 00:22:59,000
never has that you're looking,
you're guaranteed IRR and you've

424
00:22:59,000 --> 00:23:00,840
got your long life asset
hopefully.

425
00:23:00,840 --> 00:23:04,720
But to lose 100% is, is not at
all an acceptable amount of

426
00:23:04,720 --> 00:23:06,240
volatility in an infrastructure
fund.

427
00:23:06,480 --> 00:23:09,520
So if they're like, what's the,
you know, if there is some

428
00:23:09,600 --> 00:23:12,240
residual obligation there,
what's the seniority of that?

429
00:23:12,240 --> 00:23:13,520
I don't know.
We just there's very little

430
00:23:13,520 --> 00:23:15,040
disclosure on, on, on the
mechanics.

431
00:23:15,040 --> 00:23:19,360
And the question put to to Chris
and Mark didn't, didn't reveal

432
00:23:19,360 --> 00:23:22,120
anything that's, you know, not
public.

433
00:23:22,120 --> 00:23:22,880
So.
Yeah.

434
00:23:23,040 --> 00:23:26,480
And to be clear, the whole Rd.
not working at all would be a

435
00:23:26,480 --> 00:23:28,880
very extreme outcome.
And that would be a, you know,

436
00:23:29,600 --> 00:23:31,760
that frankly be a pretty, pretty
awful outcome for a lot of

437
00:23:31,760 --> 00:23:36,760
parties well involved.
Extreme like so let's no, this

438
00:23:36,760 --> 00:23:38,960
is a good thing to talk about.
Like it's not not working.

439
00:23:39,000 --> 00:23:40,960
It's clearly working like trucks
are driving along.

440
00:23:40,960 --> 00:23:43,080
Yeah, when I say not working at
all, I don't mean like.

441
00:23:43,640 --> 00:23:48,080
In the context of nameplate.
Yeah, if, if, if, if the whole

442
00:23:48,080 --> 00:23:51,760
Rd. requires a layer of ash Ford
every 12 months, right, That's

443
00:23:51,760 --> 00:23:53,520
that's the whole Rd. not
working.

444
00:23:53,520 --> 00:23:56,680
If the whole Rd. requires the
load of those trucks to be

445
00:23:56,680 --> 00:24:01,520
reduced by 50% such that you
know you're only getting and you

446
00:24:01,520 --> 00:24:04,920
have to double the number of
trucks now that's the whole Rd.

447
00:24:04,920 --> 00:24:06,440
not working like these.
These are the.

448
00:24:06,440 --> 00:24:09,640
Context is that the project
economics are dependent on

449
00:24:09,640 --> 00:24:11,440
running at 35,000,000 tons per
annum.

450
00:24:11,440 --> 00:24:16,000
Yeah, nameplate.
It is not a ABHB asset in the

451
00:24:16,000 --> 00:24:17,400
Pilbara.
Absolutely not.

452
00:24:17,400 --> 00:24:20,080
This is a much smaller margin
and you need to get to

453
00:24:20,080 --> 00:24:21,560
nameplate.
It's very important.

454
00:24:21,560 --> 00:24:25,960
I think that's lost on a lot of
like, yeah, by side participants

455
00:24:26,080 --> 00:24:28,680
is that this is a marginal
project.

456
00:24:29,600 --> 00:24:32,760
And Chris talks to it himself in
the AGM presentation when he

457
00:24:32,760 --> 00:24:35,560
says this project had 17 studies
done on it and it couldn't

458
00:24:35,560 --> 00:24:37,440
afford a port, it couldn't
afford rail, rail.

459
00:24:37,680 --> 00:24:40,320
So it was our engineering that
unlocked that unlock it, which

460
00:24:40,320 --> 00:24:43,120
is, you know, wonderful for us.
But that's in itself an

461
00:24:43,240 --> 00:24:48,600
admission of the, the marginal
nature of, of the asset, like it

462
00:24:48,760 --> 00:24:50,880
required a low CapEx kind of
startup.

463
00:24:50,880 --> 00:24:53,720
But when you choose a low, low
CapEx startup, guess what, you

464
00:24:53,720 --> 00:24:56,960
have higher OpEx, which means
even lower margin, which means

465
00:24:56,960 --> 00:25:02,920
you're even more susceptible to
the, the, you know, you're even

466
00:25:02,920 --> 00:25:04,880
more susceptible to when you get
shaken a bit.

467
00:25:04,880 --> 00:25:07,880
If you have to have lower volume
and your OpEx shoots up higher

468
00:25:08,360 --> 00:25:11,160
that has that has a
disproportionate impact on on,

469
00:25:11,160 --> 00:25:14,320
on the, you know, financial
outlook of this company in in a

470
00:25:14,320 --> 00:25:18,040
way that is it's not linear.
It ties in with everything as

471
00:25:18,040 --> 00:25:21,600
well the, the refinancing of the
bonds, all these things, you

472
00:25:21,600 --> 00:25:25,040
know, jumping from an 8% to a
double digit, all these things

473
00:25:25,480 --> 00:25:27,960
eat into that sort of thin
margin.

474
00:25:27,960 --> 00:25:31,760
So I think the the context needs
to be appreciated in what we're

475
00:25:31,760 --> 00:25:34,400
talking about there because
it's, it's not like a not like a

476
00:25:34,400 --> 00:25:36,840
zero.
It's saying like things need to

477
00:25:36,840 --> 00:25:40,000
go to plan.
Otherwise, it's very, very,

478
00:25:40,800 --> 00:25:44,600
yeah, it'll be very, very tough.
Totally, Yeah, with all that

479
00:25:44,600 --> 00:25:47,240
context, I think it's you know,
it's it's clear why the

480
00:25:47,240 --> 00:25:48,520
durability of the whole Rd.
matters.

481
00:25:49,120 --> 00:25:52,720
It's that interest expense on
the debt is 500 million bucks

482
00:25:53,160 --> 00:25:56,200
per annum alone right now there
thereabouts.

483
00:25:57,800 --> 00:26:01,560
So not to mention the principal
repayments which ain't going to

484
00:26:01,560 --> 00:26:05,080
need to be met even if they
refine eventually, you know,

485
00:26:05,240 --> 00:26:07,960
you're going to have to make
principal repayments at some

486
00:26:07,960 --> 00:26:11,640
point in time.
So absent a a miracle and

487
00:26:11,640 --> 00:26:14,800
lithium price like Onslow has to
work or or or or I know price

488
00:26:14,800 --> 00:26:16,080
like you know, Onslow has to
work.

489
00:26:16,080 --> 00:26:21,000
The the, the ability to get, you
know, a a a very reasonable

490
00:26:21,320 --> 00:26:24,440
number of tons at A at a decent
enough price is, is fundamental

491
00:26:24,440 --> 00:26:26,280
and the whole Rd. is is is key
there.

492
00:26:26,880 --> 00:26:31,120
And the the analysis is, can
they service that debt or are

493
00:26:31,480 --> 00:26:34,800
they going to get juiced?
And people can probably suspect

494
00:26:34,800 --> 00:26:38,680
this is a Segway into an ad for
the mighty MMS.

495
00:26:38,680 --> 00:26:42,160
Not our best segue, but
nevertheless mate, tell us about

496
00:26:42,160 --> 00:26:46,160
the the mighty team at MMS.
Juice mate reminds me, did you

497
00:26:46,160 --> 00:26:50,240
did you see the MMS guys were
given out free juice at RIU this

498
00:26:50,240 --> 00:26:51,400
week?
Maddie has been out boots on the

499
00:26:51,400 --> 00:26:53,440
ground for the last three days
there flying the flag.

500
00:26:53,440 --> 00:26:55,240
Look at the photo.
If you're walking around the

501
00:26:55,240 --> 00:26:58,720
conference on day two, maybe
three, maybe, maybe harbouring a

502
00:26:58,920 --> 00:27:00,720
bit of a hangover from the
drinks the night before and then

503
00:27:00,720 --> 00:27:02,560
someone offers you a juice, you
know what mate?

504
00:27:02,560 --> 00:27:04,880
I trust those kinds of people.
You, you, you need, you need

505
00:27:04,880 --> 00:27:07,320
trust in this industry.
And MMS is the trusted mining

506
00:27:07,320 --> 00:27:09,920
partner.
You might know them for their

507
00:27:09,920 --> 00:27:13,000
elite contract mining capability
and it is elite which is

508
00:27:13,440 --> 00:27:16,920
industry leading, but that's
just a small sip of the whole

509
00:27:16,920 --> 00:27:19,000
glass of, of what MMS has to
offer.

510
00:27:19,120 --> 00:27:22,600
JD it's no good having a
contract mine if your body isn't

511
00:27:22,600 --> 00:27:25,320
advanced enough to mine it yet.
Good thing MMS is technical

512
00:27:25,320 --> 00:27:27,360
services team will help you with
that.

513
00:27:27,520 --> 00:27:30,240
And, and one thing people
underestimate, mate, it's

514
00:27:30,240 --> 00:27:32,720
ability to deploy a fleet
rapidly.

515
00:27:32,760 --> 00:27:35,080
It's like that, like that, like
that.

516
00:27:35,080 --> 00:27:39,800
I challenge anyone to call
around, ask any mining

517
00:27:39,800 --> 00:27:43,080
contractor how long How long
would it take you to deploy a

518
00:27:43,080 --> 00:27:47,160
mining fleet to to my asset?
We talk about it day in, day

519
00:27:47,160 --> 00:27:50,160
out, how much better the returns
look when you get things done

520
00:27:50,160 --> 00:27:51,440
just like that.
Just like that.

521
00:27:51,440 --> 00:27:53,080
Speed is everything in this
industry.

522
00:27:53,240 --> 00:27:56,000
So if you, if you, if you talk
to any, any mining contractor,

523
00:27:56,000 --> 00:27:57,920
ask around and then then call
MMS.

524
00:27:57,920 --> 00:28:02,000
And if anyone can move half as
fast as MMS, I'll dye my hair

525
00:28:02,000 --> 00:28:04,040
orange.
That's better than the the

526
00:28:04,040 --> 00:28:06,120
Bunnings guarantee mate.
Just like orange juice.

527
00:28:06,120 --> 00:28:08,680
I'm I'm going to dye orange just
like the MMS logo and our logo.

528
00:28:09,280 --> 00:28:10,280
Anyway, mate, back to me in
resin.

529
00:28:10,280 --> 00:28:13,400
They're they're dead.
All righty, we got a bit more to

530
00:28:13,400 --> 00:28:14,920
talk about mate.
There's a there's a couple more

531
00:28:14,920 --> 00:28:18,240
points like general points from
the call, from the announcements

532
00:28:18,240 --> 00:28:21,360
that I want to speak about.
First and foremost is CapEx.

533
00:28:21,880 --> 00:28:25,120
This is a a big one.
So the CapEx from a while ago

534
00:28:25,120 --> 00:28:30,800
was 1.95 billion for FY25.
Now the company then reported

535
00:28:30,800 --> 00:28:33,480
that they'd found savings in
that and that, you know, was

536
00:28:33,480 --> 00:28:36,160
meant to come down to the tune
of a couple $100 million.

537
00:28:36,920 --> 00:28:39,840
Subsequently, it's jumped up
again on the latest numbers to

538
00:28:39,840 --> 00:28:43,000
$2.1 billion.
So we're talking about $350

539
00:28:43,000 --> 00:28:46,840
million up on the price of the
guidance that we've got.

540
00:28:46,840 --> 00:28:48,560
So there's a bit of whiplash in
this one.

541
00:28:48,960 --> 00:28:52,040
For a moment it's being cut.
Then at the quarterly, the

542
00:28:52,040 --> 00:28:55,920
company was quite bizarrely
talking about spending all those

543
00:28:55,920 --> 00:28:59,080
hard earned savings that they've
made, making some seriously

544
00:28:59,080 --> 00:29:02,880
tough decisions on other
ventures like gas appraisals,

545
00:29:02,880 --> 00:29:06,240
all this sort of stuff.
And I, I couldn't quite wrap my

546
00:29:06,240 --> 00:29:09,920
head around that given the the
challenges that the the company

547
00:29:09,920 --> 00:29:13,840
is facing Now the latest
announcement is that that money

548
00:29:13,840 --> 00:29:16,000
is going to need to be sunk on
Onslow.

549
00:29:16,040 --> 00:29:19,800
More money needs to go in in the
order of $300 million on Onslow.

550
00:29:19,800 --> 00:29:22,440
Like we just spoke about fixing
up the road and these sorts of

551
00:29:22,440 --> 00:29:29,760
things and they speak to a $25
million per annum saving, but we

552
00:29:29,760 --> 00:29:34,040
haven't really been informed on
what the OpEx of that road is.

553
00:29:34,040 --> 00:29:35,280
It's not material.
It's not.

554
00:29:35,280 --> 00:29:38,400
Material.
I don't know, $25 million per

555
00:29:38,400 --> 00:29:41,520
annum just for this part.
Who knows what the rest is is an

556
00:29:41,520 --> 00:29:42,320
interesting 1.
So I.

557
00:29:42,400 --> 00:29:44,480
Don't, I don't actually think
they've declared commercial

558
00:29:44,480 --> 00:29:47,160
production at Onslie yet, even
though they use the the language

559
00:29:47,160 --> 00:29:49,200
as free cash flow positive,
right.

560
00:29:49,240 --> 00:29:51,880
Like we're talking operating
cash flow or actual after CapEx

561
00:29:51,880 --> 00:29:55,280
cash flow like use your, but if
it's not commercial production

562
00:29:55,280 --> 00:29:57,680
then it gives you the ability to
capitalize all of your expenses

563
00:29:57,840 --> 00:30:01,000
up until that point too.
So, yeah, I just think big, you

564
00:30:01,000 --> 00:30:06,680
know, yeah, yeah, the the
disaggregation of of cash flow

565
00:30:06,680 --> 00:30:08,600
matters.
Just cash flow matters.

566
00:30:08,600 --> 00:30:12,760
And I think when you when you
look at a lot of the, the CapEx

567
00:30:12,760 --> 00:30:15,440
cash flow that has has happened
over the last few years at at

568
00:30:15,440 --> 00:30:17,880
min res, ask yourself if, if
that CapEx cash flow actually

569
00:30:17,880 --> 00:30:19,320
generated a return like CapEx
should?

570
00:30:19,800 --> 00:30:22,360
Yeah.
And more CapEx no doubt has been

571
00:30:22,360 --> 00:30:25,600
pushed into FY20 6, no doubt
about it.

572
00:30:25,600 --> 00:30:28,480
They, they sort of speak to a
lower number than I kind of had

573
00:30:28,480 --> 00:30:31,480
in my mind.
But regardless, you didn't hear

574
00:30:31,480 --> 00:30:35,120
the words on time and on budget
as much in this call as we have

575
00:30:35,120 --> 00:30:39,440
heard in in previous calls that
the company's done onsite CapEx

576
00:30:39,440 --> 00:30:42,400
is you know, looking seriously
closer to four billion than than

577
00:30:42,400 --> 00:30:46,000
the three billion it was a few
years back when it was initially

578
00:30:46,240 --> 00:30:48,840
put to the market.
And then you've got the timing

579
00:30:48,840 --> 00:30:52,360
delays, you know, albeit Chris
calling them immaterial, there

580
00:30:52,360 --> 00:30:56,320
have been serious delays and
that that hurts returns at the

581
00:30:56,320 --> 00:30:59,280
end of the day.
Yeah, Hurts returns and the

582
00:30:59,560 --> 00:31:03,160
yeah, the the volumetric
downgrade of 3 million tons I

583
00:31:03,160 --> 00:31:07,080
buy by 2026 is another thing I
think that that that hits in

584
00:31:07,080 --> 00:31:11,240
there.
It's interesting, right, because

585
00:31:12,360 --> 00:31:15,640
a lot of the analysts in them,
their models, they're they're

586
00:31:16,000 --> 00:31:19,800
like projecting and anticipating
that min res hits 35,000,000

587
00:31:19,800 --> 00:31:24,400
tons per annum, kind of like by
by, you know, next year, mid

588
00:31:24,400 --> 00:31:26,920
next year.
And and the mid next year date

589
00:31:26,920 --> 00:31:30,480
is actually a contingent payment
kind of kind of date.

590
00:31:30,800 --> 00:31:34,120
That is they'll get an extra
$200 million from from Morgan

591
00:31:34,120 --> 00:31:37,000
Stanley.
If they can reach 35,000,000 ton

592
00:31:37,000 --> 00:31:41,840
per annum run rate on the on the
whole Rd. by by 30th of June

593
00:31:41,880 --> 00:31:45,080
2026.
Now that there that $200 million

594
00:31:45,120 --> 00:31:49,800
contingent payment, it's it's
like a, it's a receivable of

595
00:31:49,800 --> 00:31:51,760
some description.
So if you can see what min res

596
00:31:51,760 --> 00:31:53,720
is internally kind of valuing
that out.

597
00:31:53,720 --> 00:31:56,120
If you dissect the financial
statements that were were

598
00:31:56,120 --> 00:31:58,400
uploaded in the half year
accounts and if you go to think

599
00:31:58,400 --> 00:32:02,480
it's like note 14 where they,
they show the road trust,

600
00:32:02,480 --> 00:32:06,080
there's you can add up the, the
numbers in, in there and you

601
00:32:06,080 --> 00:32:09,320
can, you can easily spot the 1.1
billion of cash that was

602
00:32:09,320 --> 00:32:12,880
received from Morgan Stanley.
And then there's this $9 million

603
00:32:13,480 --> 00:32:17,840
kind of other receivable, which
in my mind can only be the $200

604
00:32:17,840 --> 00:32:22,200
million contingent payment
weighted and marked down at the

605
00:32:22,200 --> 00:32:25,880
probability that min res thinks
they'll actually receive it.

606
00:32:25,880 --> 00:32:28,320
So you assign some probability
of success and discount that

607
00:32:28,320 --> 00:32:31,040
back to today's value and the
mark in that continue payment at

608
00:32:31,040 --> 00:32:32,840
$9 million on on the balance
sheet.

609
00:32:32,960 --> 00:32:34,960
So tells you what they think
you're getting there.

610
00:32:35,440 --> 00:32:37,640
Yeah.
Yeah, it'd be it'd be pressed,

611
00:32:37,680 --> 00:32:40,400
but that that is money that they
will seriously want.

612
00:32:40,440 --> 00:32:43,800
They yeah, that they'd want it
clearly, yeah, at least in the

613
00:32:43,800 --> 00:32:46,080
accounting standards.
Don't don't think it's likely to

614
00:32:46,280 --> 00:32:50,800
come by mid mid next year.
One other point to talk about is

615
00:32:51,000 --> 00:32:54,400
watching us.
So obviously we we raised it on

616
00:32:54,400 --> 00:32:57,360
Tuesday at the back end of the
show, just the report that had

617
00:32:57,360 --> 00:33:01,680
come out of Albemarle called
into question the strip ratio

618
00:33:02,080 --> 00:33:04,440
and the recoveries.
So naturally there were a couple

619
00:33:04,440 --> 00:33:09,560
questions talking about this and
it interestingly without really

620
00:33:09,560 --> 00:33:14,120
being pressed, Chris sort of
spoke to spoke to the point and

621
00:33:14,120 --> 00:33:18,760
said unreservedly that they are
not high grading it and I find

622
00:33:18,760 --> 00:33:23,920
this kind of interesting.
So he comes out and says that,

623
00:33:24,520 --> 00:33:29,640
but in answering a question from
Lynn Lawcock at Baron Joey, he,

624
00:33:30,880 --> 00:33:34,360
he in my mind essentially says
they are just in different

625
00:33:34,360 --> 00:33:36,400
words.
He says, yeah, we've slowed down

626
00:33:36,400 --> 00:33:38,640
on strip focusing on the two
trains.

627
00:33:39,040 --> 00:33:41,360
The only difference we need is
to up the mining fleet if we

628
00:33:41,360 --> 00:33:44,560
wanted to do the three trains.
But we're focusing on cash, all

629
00:33:44,560 --> 00:33:47,360
these sorts of things.
It's a cash conversion focus and

630
00:33:48,800 --> 00:33:52,480
I I I don't blame them like he,
I guess you just want to speak

631
00:33:52,480 --> 00:33:54,200
to the narrative.
But it's not just means

632
00:33:54,240 --> 00:33:56,640
Albemarle need the money just as
much as well.

633
00:33:56,640 --> 00:33:58,640
They're in a a real bit of
stretch.

634
00:33:58,640 --> 00:34:02,760
Then all this covenant light as
min rez sort of say they are.

635
00:34:02,760 --> 00:34:06,200
So they, they have serious
covenants in, you know, changing

636
00:34:06,200 --> 00:34:09,400
over the next few quarters and
they want all the cash they can

637
00:34:09,400 --> 00:34:12,800
kind of get.
So all that's to say that the

638
00:34:12,800 --> 00:34:15,400
CapEx down the track will be
higher.

639
00:34:15,639 --> 00:34:18,040
They'll need to spend that money
on the strip down the track.

640
00:34:18,040 --> 00:34:22,159
You can only do it for so long.
But if I'm in Reza, I'd be doing

641
00:34:22,159 --> 00:34:24,360
it every day of the week.
You know you need the money.

642
00:34:24,840 --> 00:34:26,960
I remember that reading that
technical report and I was like

643
00:34:26,960 --> 00:34:32,239
reading it cover to cover and it
was the the mineral resource

644
00:34:32,239 --> 00:34:35,159
had, you know, effectively 3
components to it.

645
00:34:35,159 --> 00:34:38,480
One one was the an underground
component of the mineral

646
00:34:38,480 --> 00:34:41,920
resource that Wagena and the the
the dock of this mineral

647
00:34:41,920 --> 00:34:44,239
resource.
It said that the underground

648
00:34:44,239 --> 00:34:47,679
resource was based on a cut off
grade of 0.75% and and mining

649
00:34:47,719 --> 00:34:49,639
costs.
Underground mining costs of $40

650
00:34:49,639 --> 00:34:52,920
per tonne of oil, $40 per tonne
of oil for mining costs would be

651
00:34:52,920 --> 00:34:53,880
remarkable.
JDI.

652
00:34:53,920 --> 00:34:56,280
Get your thinking.
It got me thinking I'm I'm just,

653
00:34:56,719 --> 00:34:59,520
I'm, I'm just going to, you
know, throw a suggestion out

654
00:34:59,520 --> 00:35:03,960
there, Minarez Albemarle, make
sure you include everything in

655
00:35:03,960 --> 00:35:07,080
these assumptions, including
ground support, specifically

656
00:35:07,080 --> 00:35:10,920
Sandvik ground support.
Actually may maybe it was Sandy

657
00:35:10,920 --> 00:35:13,200
ground support that lets the
underground mining be so

658
00:35:13,280 --> 00:35:14,720
efficient to get 40 bucks per
tonne.

659
00:35:14,960 --> 00:35:17,720
Sandy ground support is the
industry leading supplier of all

660
00:35:17,920 --> 00:35:21,440
ground support bolts, cables,
mesh, chemicals and grout too.

661
00:35:21,440 --> 00:35:23,600
They have the expertise to make
sure the ground support is

662
00:35:23,600 --> 00:35:26,840
tailored to each operations
requirements because every mine

663
00:35:26,840 --> 00:35:28,800
is different, JD.
That's why Sandy has

664
00:35:29,200 --> 00:35:32,480
manufacturing facilities all
over the world for, for fast

665
00:35:32,520 --> 00:35:35,320
dispatch of customized ground
support consumables.

666
00:35:35,320 --> 00:35:39,080
And as it says on the shirts for
for the Sandvik Ground support

667
00:35:39,080 --> 00:35:42,520
team, keeping people safe.
Keeping people safe.

668
00:35:42,880 --> 00:35:44,480
They're doing God's work.
What more could you want?

669
00:35:44,640 --> 00:35:46,640
You want your costs down and you
want to keep people safe.

670
00:35:47,000 --> 00:35:49,720
Use Sandvik ground support.
Call, Derek Heard.

671
00:35:50,560 --> 00:35:53,920
All righty, let's get to the the
big finale, mate.

672
00:35:54,080 --> 00:35:56,920
What really matters here?
Debt serviceability.

673
00:35:56,920 --> 00:36:00,080
And you know, we're going to tie
into this what comes next.

674
00:36:00,080 --> 00:36:03,760
I think this is the question
everyone is trying to work out

675
00:36:03,760 --> 00:36:06,640
the answer to.
Every analyst, every fund out

676
00:36:06,640 --> 00:36:11,280
there, they are trying to get
at, can this company service the

677
00:36:11,280 --> 00:36:12,760
debt?
How are they going to go about

678
00:36:12,760 --> 00:36:13,640
it?
What are they going to do?

679
00:36:13,640 --> 00:36:16,160
What's the capital structure
going to look like in a few

680
00:36:16,160 --> 00:36:18,760
years time?
And you know, that's, that's

681
00:36:18,760 --> 00:36:21,720
financial analysis, that's a bit
of psychology as well.

682
00:36:21,720 --> 00:36:24,080
You're trying to get into the
characters of the people running

683
00:36:24,080 --> 00:36:26,680
the business to, to work out
what they are going to do.

684
00:36:26,680 --> 00:36:30,000
And there's a super hard
question to answer, but we're

685
00:36:30,000 --> 00:36:33,320
going to have a go anyway and
going to give it our best shot.

686
00:36:33,880 --> 00:36:37,440
I do want to play one more
snippet from Chris Ellison.

687
00:36:37,480 --> 00:36:38,800
I think he's sort of at his best
here.

688
00:36:38,800 --> 00:36:42,320
This question came from Jonathan
Sharp at CLSA.

689
00:36:43,000 --> 00:36:44,400
And I'm not going to play the
question.

690
00:36:44,400 --> 00:36:47,000
I'll just play the back end
because it is a bit of a lengthy

691
00:36:47,280 --> 00:36:49,480
response.
But to to give the money miners

692
00:36:49,480 --> 00:36:52,240
a bit of context, we're talking
about the the whole Rd. here,

693
00:36:52,440 --> 00:36:54,320
but it does go off in a bit of
another direction.

694
00:36:55,200 --> 00:37:00,200
And look, I mean, if anyone give
a size, they go and do a project

695
00:37:00,200 --> 00:37:04,400
or they go and do something or
they analyse a mining company

696
00:37:04,400 --> 00:37:08,400
and they get it 100% right.
I want to be that person.

697
00:37:08,640 --> 00:37:11,960
I mean, it's not possible to go
and build a project like this

698
00:37:11,960 --> 00:37:15,240
and get everything 100% right.
I mean, we've, we've got

699
00:37:15,240 --> 00:37:22,040
everything sort of 9598% right.
But then we do what we do to get

700
00:37:22,040 --> 00:37:26,840
it to that that mark.
So this, if you have a look at

701
00:37:26,840 --> 00:37:31,240
the tons we're forecasting that
should tell you that the road is

702
00:37:31,240 --> 00:37:35,200
95% fine and we're going to keep
running those tons down while

703
00:37:35,200 --> 00:37:38,160
we're doing Rd. repairs with
traffic management, we can do

704
00:37:38,160 --> 00:37:40,120
all of that and still move the
tons.

705
00:37:40,120 --> 00:37:44,680
So if I could get you to more
focus on the share price, if you

706
00:37:44,680 --> 00:37:47,160
could get that up, that would
get my debt ratio down.

707
00:37:47,160 --> 00:37:49,520
That's your part.
This is an instruction to the

708
00:37:49,520 --> 00:37:51,920
analyst, get my share price up
and that helps my debt ratio.

709
00:37:52,120 --> 00:37:56,480
But it's like, OK, so put the,
the road geometry aside, just

710
00:37:56,480 --> 00:37:58,800
focus on the, the share price
going down.

711
00:37:58,800 --> 00:38:00,920
Is, is is bad for his cost of
capital.

712
00:38:01,080 --> 00:38:04,600
And the lower the share price
goes, the higher the interest

713
00:38:04,600 --> 00:38:08,080
rate he's going to have to pay
on refinancing the debt, which I

714
00:38:08,080 --> 00:38:10,680
get the sense they want to do
pretty damn soon, or at least

715
00:38:10,680 --> 00:38:14,200
the at least the, the, the first
bond, which is called well,

716
00:38:14,200 --> 00:38:17,440
which is callable 2027, March
May 2027.

717
00:38:17,840 --> 00:38:21,200
May of this year.
May of I mean raised, but

718
00:38:21,200 --> 00:38:25,120
callable by not callable by by
bondholders at all, yeah.

719
00:38:25,320 --> 00:38:28,120
Yeah God I love the characters
in this industry mate.

720
00:38:28,400 --> 00:38:31,560
I've I've never listened to like
a a tech ASX call or anything.

721
00:38:31,560 --> 00:38:33,080
Like that I.
Don't know what sort of

722
00:38:33,080 --> 00:38:35,960
characters you get, but.
Get my share price up to get my

723
00:38:35,960 --> 00:38:38,200
Geary Gray share low.
God, this is like watching a

724
00:38:38,200 --> 00:38:40,040
movie for me.
This is this is so good.

725
00:38:40,040 --> 00:38:43,600
It's so it's so fun and, you
know, genuinely love it about

726
00:38:43,600 --> 00:38:45,160
the industry.
It makes things entertaining.

727
00:38:46,240 --> 00:38:50,080
Yeah, sort of one-of-a-kind, but
the yeah, the balance sheet is

728
00:38:50,080 --> 00:38:51,760
very strange, like you just sort
of said there.

729
00:38:52,160 --> 00:38:56,240
And those, those levers that we
we spoke about that Chris

730
00:38:56,240 --> 00:38:59,000
referenced probably 18 months or
so ago.

731
00:38:59,000 --> 00:39:03,040
Now that, you know, some of them
have kind of evaporated quite

732
00:39:03,040 --> 00:39:04,720
quickly.
Some of them have been utilized

733
00:39:05,560 --> 00:39:07,760
quite well to to pull in a good
bit of cash.

734
00:39:07,760 --> 00:39:10,920
But that cash has just gone back
into the to the project.

735
00:39:10,920 --> 00:39:14,840
And when the market sort of
senses the weakness, you know,

736
00:39:15,080 --> 00:39:16,880
they, they really put the
squeeze on you.

737
00:39:17,000 --> 00:39:20,280
You can, you can see it the, the
hedges and the, and the big

738
00:39:20,280 --> 00:39:22,400
funds.
They will, they will pressure

739
00:39:22,400 --> 00:39:25,760
you relentlessly, you know, and
they will, they will force the

740
00:39:25,760 --> 00:39:28,040
raise, you know.
That's the that's the question

741
00:39:28,040 --> 00:39:29,760
they're going to cap raise or
not, right?

742
00:39:29,760 --> 00:39:32,600
Like, yeah.
And if you if you didn't have a

743
00:39:32,600 --> 00:39:38,520
a major shareholder who runs the
company's MD who owns 11% and

744
00:39:38,560 --> 00:39:42,160
has has talked profusely about
never diluting the question

745
00:39:42,440 --> 00:39:44,120
every day of the week, the
question would be answered, yes,

746
00:39:44,120 --> 00:39:47,200
you cap raise, but but we've got
a different yeah set of

747
00:39:47,200 --> 00:39:49,320
circumstances here.
Yeah, that share price reaction

748
00:39:49,320 --> 00:39:52,440
does seem like the market is
really starting to price it in

749
00:39:52,440 --> 00:39:54,880
or or make up it's mind in other
words, I reckon.

750
00:39:55,120 --> 00:39:58,600
And yeah, I think we should play
one final snippet, this one

751
00:39:58,600 --> 00:40:02,880
again from Lynn Lawcock who
framed the question on a capital

752
00:40:02,880 --> 00:40:07,520
raise really well in the context
of the governance challenges,

753
00:40:07,680 --> 00:40:10,040
the poor governance at the end
of the day that the company.

754
00:40:10,480 --> 00:40:15,000
Has had in place and yeah, the
the chairperson and how how that

755
00:40:15,000 --> 00:40:19,200
change will tie in with the
decision regarding the capital

756
00:40:19,200 --> 00:40:22,360
structure of the business.
Just secondly, I understand the

757
00:40:22,360 --> 00:40:25,520
debt and you're hesitant your
residents to do anything about

758
00:40:25,520 --> 00:40:28,040
it because of, you know the cash
flow coverage you've got, but

759
00:40:28,480 --> 00:40:31,080
you're going to get a new chair
in June quarter.

760
00:40:31,080 --> 00:40:34,520
You've made it pretty clear if
the new chair comes in and

761
00:40:34,520 --> 00:40:37,680
thinks the leverage ratio is too
high and wants to raise equity,

762
00:40:37,800 --> 00:40:39,920
would you be supportive of the
new chairs position?

763
00:40:41,600 --> 00:40:44,240
Look, I'll be supportive of the
new cheerful stop.

764
00:40:45,360 --> 00:40:48,240
I mean if that's the position
that he and the board take.

765
00:40:48,240 --> 00:40:51,560
Yeah, absolutely.
You know, we, we at the moment

766
00:40:51,560 --> 00:40:53,760
as a company, we don't think
it's necessary.

767
00:40:53,760 --> 00:40:59,000
As Mark said, we've got to
standard a billion dollars in

768
00:40:59,000 --> 00:41:01,280
loans that are owed from our
joint venture partners.

769
00:41:01,280 --> 00:41:03,760
I mean we could probably
monetize that at a discount now

770
00:41:03,760 --> 00:41:06,960
if we wanted to.
We got opportunity of another

771
00:41:06,960 --> 00:41:10,760
$500 million.
I mean if you properly value my

772
00:41:10,800 --> 00:41:15,040
just my mining services business
and get the rest for free, you

773
00:41:15,040 --> 00:41:17,000
know, the debt ratio kind of
disappeared.

774
00:41:17,000 --> 00:41:20,280
So we just don't want to panic
on that.

775
00:41:20,280 --> 00:41:23,840
But look the answers of course.
Let's talk about what we kind of

776
00:41:23,840 --> 00:41:27,040
think happens next.
I think this is the the question

777
00:41:27,040 --> 00:41:31,360
that people want answered.
And you know, if you, if you

778
00:41:31,360 --> 00:41:35,600
want to dive into it, I think
that, you know, the, the timer

779
00:41:35,600 --> 00:41:37,880
is on.
There's no other way to kind of

780
00:41:37,880 --> 00:41:41,920
say it.
Whoever comes in next by June

781
00:41:41,920 --> 00:41:46,760
quarter, as they sort of said,
is not going to be happy with

782
00:41:46,960 --> 00:41:50,200
the capital structure of the
business and they're going to

783
00:41:50,200 --> 00:41:53,320
want to see it fixed either
before or the day they come into

784
00:41:53,320 --> 00:41:57,160
the door, don't you think?
I could see it both, I think I

785
00:41:57,160 --> 00:42:00,120
could see it both ways.
Like if it's like, I don't know,

786
00:42:00,120 --> 00:42:04,400
if there's new 10, new new MD
into course and they're like,

787
00:42:04,400 --> 00:42:09,520
you know, properly kind of
independent and thinking

788
00:42:09,520 --> 00:42:12,200
pragmatically and yada, yada,
then you, yeah, you do want to

789
00:42:12,200 --> 00:42:14,840
take that risk off the risk of,
of complete catastrophe,

790
00:42:15,040 --> 00:42:18,080
catastrophe for the table.
But I don't know what the

791
00:42:18,440 --> 00:42:20,160
selection process.
Like what if you get a friendly

792
00:42:20,760 --> 00:42:23,880
chair to the incumbent kind of,
you know, dynamic and I don't

793
00:42:23,880 --> 00:42:25,680
know.
So I, I think like the most

794
00:42:25,680 --> 00:42:28,200
sensible thing to do would would
be to remove that risk.

795
00:42:28,200 --> 00:42:33,200
I don't think it's necessarily
the the most probable scenario.

796
00:42:35,640 --> 00:42:38,960
Yeah, like you say that the the
culture around risk and

797
00:42:38,960 --> 00:42:43,160
everything is, is one of kind of
maximal risk tolerance, maybe

798
00:42:43,160 --> 00:42:48,440
even risk, risk liking is like a
dominant kind of characteristic

799
00:42:48,440 --> 00:42:52,240
here, which I think, yeah.
It's a huge call who who they

800
00:42:52,240 --> 00:42:55,360
pick is the next year.
It's a a really big call.

801
00:42:55,360 --> 00:42:58,440
And I'm very intrigued to see
what the, the market reaction to

802
00:42:58,440 --> 00:43:01,120
the person that comes in the
door is going to be like.

803
00:43:01,120 --> 00:43:04,200
Whether it's going to be a
person that can stand up to the

804
00:43:05,040 --> 00:43:09,280
to the managing director and,
you know, make their own sort of

805
00:43:09,360 --> 00:43:13,880
decisions and have that more
kind of traditional relationship

806
00:43:13,880 --> 00:43:18,800
between chair and CEO to an MD
or if, if it's the alternative

807
00:43:18,800 --> 00:43:21,200
and sort of seeing what the
alternative can be.

808
00:43:21,880 --> 00:43:23,720
Yeah.
So say say they need to raise

809
00:43:24,080 --> 00:43:30,880
two billion, $2 billion, right?
Had they done that like six

810
00:43:30,880 --> 00:43:34,000
weeks ago, then what, what
would, what would the impact

811
00:43:34,000 --> 00:43:35,200
have been?
Maybe, maybe they would have

812
00:43:35,200 --> 00:43:38,800
added 25% of the shares on
issue, the total shares on

813
00:43:38,800 --> 00:43:40,360
issue.
And if, if they let the share

814
00:43:40,360 --> 00:43:43,320
price get all the way down to 15
bucks before they pull the

815
00:43:43,320 --> 00:43:46,960
trigger on, on raising capital,
well, all of a sudden, you know,

816
00:43:47,000 --> 00:43:50,320
you've got to double your, your
Share Account just to, to raise

817
00:43:50,320 --> 00:43:53,120
the same amount of money.
So like that's, that's the

818
00:43:53,120 --> 00:43:56,520
punitive cost of, of a, of a, of
what debt can do to a capital

819
00:43:56,520 --> 00:44:00,960
structure of, of a company.
So now they, they, they, they

820
00:44:00,960 --> 00:44:03,440
might have other levers to pull
to, to, to get cash.

821
00:44:03,440 --> 00:44:06,600
Of course, they, they point to,
they point to the ability to

822
00:44:06,600 --> 00:44:09,560
monetize the carry loan.
That's just adding more, you

823
00:44:10,520 --> 00:44:14,920
know, well, yeah, monetize the
carry loan, sure, but in effect

824
00:44:14,920 --> 00:44:17,320
adding more debt, you know, in a
real sense.

825
00:44:18,480 --> 00:44:21,200
And you're, you're kicking the
can down the road a little bit.

826
00:44:22,080 --> 00:44:26,560
If you, if you sell down assets
of the business and get cash

827
00:44:26,560 --> 00:44:30,120
into to, to, to hide the, you
know, the balance sheet, then

828
00:44:30,680 --> 00:44:32,920
that's a possibility too.
What can they actually sell?

829
00:44:33,240 --> 00:44:36,560
Well, yeah, gas is gone.
Half the horror is gone.

830
00:44:36,560 --> 00:44:38,480
Maybe they could sell, maybe
they could.

831
00:44:38,880 --> 00:44:40,280
What could they actually get
something for?

832
00:44:41,120 --> 00:44:43,440
It's a good question like.
What do you know, they could get

833
00:44:43,920 --> 00:44:48,000
a 1/2 decent amount of money for
and selling a stake in Onslow.

834
00:44:48,000 --> 00:44:50,040
As much as they don't want to do
that, they don't want to do any

835
00:44:50,040 --> 00:44:52,240
of these things, obviously.
Yeah, but they're, they're the

836
00:44:52,240 --> 00:44:55,720
only two ones that could bring
in a decent amount of money in

837
00:44:55,720 --> 00:44:57,480
my eyes.
Yeah, they're not going to touch

838
00:44:57,480 --> 00:45:00,040
the mining services business.
Yeah, agree.

839
00:45:00,360 --> 00:45:04,320
So I was thinking like, can
they, can they sell?

840
00:45:05,440 --> 00:45:09,960
Yeah, a stake in the in the
lithium business that is, is

841
00:45:09,960 --> 00:45:11,320
reasonable.
And I think they'd have to give

842
00:45:11,320 --> 00:45:14,760
away their share of offtake in
order to actually effectuate any

843
00:45:14,760 --> 00:45:17,040
outcome there.
And maybe maybe that that that

844
00:45:17,040 --> 00:45:18,760
actually fits a buyer as you
know sell.

845
00:45:18,840 --> 00:45:20,240
That's that's not a sticking
point either.

846
00:45:20,280 --> 00:45:23,160
Yeah, they sell the off take in
yeah, to the spot.

847
00:45:23,160 --> 00:45:25,880
So maybe they'd happily do that
part of it.

848
00:45:26,400 --> 00:45:29,520
But you know, you're working
with 50% interest in both cases

849
00:45:29,520 --> 00:45:30,560
anyway.
Yeah.

850
00:45:30,560 --> 00:45:32,560
So what do you, what do you
think actually happens in the in

851
00:45:32,560 --> 00:45:34,320
the next, say, six months if you
got a prediction?

852
00:45:36,000 --> 00:45:42,800
Next six months isn't as
important to me as next like 12

853
00:45:42,800 --> 00:45:49,160
to 36 because I would say, I'm
guessing here, I would say

854
00:45:49,160 --> 00:45:53,600
you're in the camp of the the
the road is going to be like

855
00:45:53,920 --> 00:45:56,280
usable to let them generate some
free cash flow and I'm in the

856
00:45:56,280 --> 00:45:58,040
camp of I don't I don't think
that.

857
00:46:03,880 --> 00:46:08,400
I don't think they are running
at nameplate through 2026.

858
00:46:09,040 --> 00:46:11,440
Do you think, do you think
they'll be able to reach a

859
00:46:12,040 --> 00:46:16,400
volume that enables them to
generate free cash flow at the

860
00:46:16,400 --> 00:46:20,960
project level at Onslow?
Not, not a material amount, no.

861
00:46:22,600 --> 00:46:27,160
They're not making enough cash
to be able to really look after

862
00:46:27,160 --> 00:46:29,560
the debt.
Yeah, there will be changes to

863
00:46:29,560 --> 00:46:31,640
the capital structure.
Yeah, I think, I think the most

864
00:46:31,640 --> 00:46:38,240
probable thing is, is ugly the
ugly, yeah.

865
00:46:39,280 --> 00:46:42,200
A change in the balance sheet
can help an awful lot.

866
00:46:42,360 --> 00:46:44,760
You can.
You can do a lot of things, you

867
00:46:44,760 --> 00:46:47,040
just have to really bite the
bullet and it'll hurt a bit.

868
00:46:47,600 --> 00:46:50,240
Yeah.
And where I struggle to to think

869
00:46:50,240 --> 00:46:54,880
that they'll go there.
It's like another cultural thing

870
00:46:54,880 --> 00:46:57,520
about the company is there's
never a public discussion or

871
00:46:57,520 --> 00:47:00,240
discourse about we were wrong.
There's a big mentality about

872
00:47:00,240 --> 00:47:03,120
kind of sticking to your guns,
always kind of being right in

873
00:47:03,120 --> 00:47:07,320
your decision making and often
kind of standing by the the

874
00:47:07,360 --> 00:47:11,760
decisions that you have made.
So I don't, I, I don't, I don't

875
00:47:11,760 --> 00:47:14,880
know if backtracking on on
balance sheet management when

876
00:47:14,880 --> 00:47:16,840
you share prices dip so much is
something they're capable of,

877
00:47:16,840 --> 00:47:18,000
but it might be something
they're forced to do.

878
00:47:18,480 --> 00:47:21,720
Yeah, I'm, I'm a firm believer
that founders sort of LED

879
00:47:21,720 --> 00:47:25,240
businesses and their culture is
just a reflection of the founder

880
00:47:25,240 --> 00:47:30,000
of the business.
And you know, that's there's no

881
00:47:30,000 --> 00:47:33,560
better example of that than min
rays, but they they could get

882
00:47:33,560 --> 00:47:35,520
forced and they're in a real
point of difficulty.

883
00:47:35,520 --> 00:47:37,920
And there has been a lot of
companies that have had sort of

884
00:47:37,920 --> 00:47:40,640
similar issues and there's been
problems with the founder and,

885
00:47:40,920 --> 00:47:44,320
and things have changed and
things have sort of turned

886
00:47:44,320 --> 00:47:46,800
around when you people come in
the door and these sorts of

887
00:47:46,800 --> 00:47:49,520
things.
So I don't think it's a a

888
00:47:49,520 --> 00:47:52,560
foregone conclusion, but.
Yeah, one of the things I

889
00:47:52,560 --> 00:47:54,600
struggle with in like a lot of
the analysis that he's done and

890
00:47:54,600 --> 00:47:57,480
a lot of the the verbal like
rhetoric is, is everyone like

891
00:47:58,760 --> 00:48:01,040
tries.
Everyone talks about how how big

892
00:48:01,040 --> 00:48:03,720
the margin is going to be at
Onslow based on a 35,000,000 ton

893
00:48:03,720 --> 00:48:06,400
per annum steady state.
But no one, no one sensitizes

894
00:48:06,400 --> 00:48:09,880
that and says what if they can
only do like 25?

895
00:48:09,960 --> 00:48:14,120
What if they have to, you know,
have have 75% more trucks and

896
00:48:14,120 --> 00:48:18,320
less load and like an autonomy
doesn't come in by the start of

897
00:48:18,320 --> 00:48:20,840
next year and you got to pay,
pay the labor for all of that

898
00:48:20,840 --> 00:48:23,440
too.
And what if you're, what if your

899
00:48:23,440 --> 00:48:27,000
CapEx on the on the road is, is
a fair bit higher than you had

900
00:48:27,000 --> 00:48:29,240
in had in your model all that
time?

901
00:48:30,400 --> 00:48:32,960
And then what if, what if they,
what if they do refinance the,

902
00:48:33,720 --> 00:48:38,360
the, the first bond and, and
it's a 11/12/13 percent interest

903
00:48:38,360 --> 00:48:43,240
rate.
Like, yeah, those are just the

904
00:48:43,280 --> 00:48:46,920
like, yeah.
I think they're at this point

905
00:48:46,920 --> 00:48:51,920
where small operational like
deltas have a massive financial

906
00:48:51,920 --> 00:48:54,400
impact.
You know, a small, a small

907
00:48:54,400 --> 00:48:58,520
volumetric thing has, has a, has
a huge implication on your, on

908
00:48:58,520 --> 00:49:02,560
your OpEx.
Yeah, for the logistics for.

909
00:49:02,800 --> 00:49:06,080
Yeah, for an old body that can't
kind of withstand it in a

910
00:49:06,080 --> 00:49:10,080
company, that's a peak stress.
Yeah, you can say the same for

911
00:49:10,080 --> 00:49:14,160
for the lithium people call it a
chemical or a specialty or what

912
00:49:14,160 --> 00:49:16,640
have you, but it's a bulk that
you're trucking a long way.

913
00:49:16,640 --> 00:49:20,040
Every single dollar counts and
that, you know, maybe they get

914
00:49:20,040 --> 00:49:22,440
something in their favor there,
maybe iron ore and lithium

915
00:49:22,440 --> 00:49:25,720
prices move in their favor.
Every dollar would be a blessing

916
00:49:25,720 --> 00:49:29,360
for them on on that front.
You know, and I mean you can see

917
00:49:29,360 --> 00:49:32,560
the changes in the OpEx in by a
couple of dollars just on the

918
00:49:32,560 --> 00:49:35,600
volumes they sort of speak about
can kind of extrapolate that

919
00:49:35,600 --> 00:49:38,960
kind of both ways, see where it
gets your analysis.

920
00:49:38,960 --> 00:49:40,520
But.
Yeah.

921
00:49:40,880 --> 00:49:43,920
Yeah, it's super, super
fascinating.

922
00:49:45,200 --> 00:49:48,400
Absolutely mate.
Think with that, probably gotta

923
00:49:48,400 --> 00:49:51,200
wrap up and thank our partners.
100% mate.

924
00:49:51,640 --> 00:49:55,720
Thanks a bunch to the Champions
at Mineral Mining Services who

925
00:49:55,720 --> 00:49:58,480
we had in the show and Sandvik
Ground Support.

926
00:49:59,440 --> 00:50:04,480
Also a big thank you to Grounded
CRE Insurance, K drill, Saltbush

927
00:50:04,480 --> 00:50:08,240
Contracting, SWIC, Watro Project
Engineering, Cross Boundary

928
00:50:08,240 --> 00:50:10,800
Energy.
And last but not least, if you

929
00:50:10,840 --> 00:50:13,800
are going to the OZ Imam
Underground Operators

930
00:50:13,800 --> 00:50:16,400
Conference, be sure to get your
100 bucks discount in the show

931
00:50:16,400 --> 00:50:20,520
notes Go Australia.
Australia Information contained

932
00:50:20,520 --> 00:50:23,240
in this episode of Money of Mine
is of general nature only and

933
00:50:23,240 --> 00:50:26,200
does not take into account the
objectives, financial situation

934
00:50:26,240 --> 00:50:28,280
or needs of any particular
person.

935
00:50:28,560 --> 00:50:31,600
Before making any investment
decision, you should consult

936
00:50:31,600 --> 00:50:34,680
with your financial advisor and
consider how appropriate the

937
00:50:34,680 --> 00:50:38,360
advice is to your objectives,
financial situation and needs.