Is there really a Copper “Shortage”?

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G'day, money miners.
We've got a exciting chat here

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with the King of Copper, Ahmad.
And Speaking of the the kings of

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industry use Axis mining
technology.

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The kings of true hole
orientation and surveying give

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Sean a call.
They always pick up the phone.

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Not good enough, JD.
It goes like this.

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Access mine and technology of
the trusted advisor and drill.

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I'll survey instrumentation.
You need more access in your

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life 'cause you just know
exactly where everything is in

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space.
Thank God you popped up Maddie.

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I'll hand it back over.
So let's get into, let's get

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into some copper now.
Thanks for coming on.

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No worries, I'm going to say the
same thing I say every time I

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come on here.
You're only as good as your last

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performance, so.
If I farm here.

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You'll never see me again.
You're putting the pressure on

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yourself there.
So we've been, we've been

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planning actually this, this
copper chat for quite a while.

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It's an exciting one for for so
many different reasons.

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There's so many big companies,
small companies, analysts, you

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know, buy side, sell side that
are just bullish about copper

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and it's a it's a super
interesting space.

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You got from a geological
perspective, different deposits

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you've got, you know, from the
smallest miners to the biggest

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out there looking for these
these projects.

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It's probably the most reported
about metal, I'd say, you know,

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by none out there.
So I'm very excited and I think

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the kind of logical place to
start this discussion is exactly

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they're just talking about those
demand projections that we're

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seeing how the world is kind of
going to get there, whether

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those projections are in fact
going to eventuate.

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So you know, plunking that all
on you.

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I want to kind of hear what do
you make of this whole, you know

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there is a complete dearth of
copper projects out there kind

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of discussion point.
I mean, I think as far as

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commodities goes, I, I don't
think there is a higher premium

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in any commodity right now for
finding a significant deposit in

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copper.
I I think that is yeah, like,

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and, and a lot of that is driven
by the demand and, and whether

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you believe the demand curves,
like the timeline of the demand

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curves, all of those things, you
can make a rational argument for

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both, both of those sides.
All right, Like we are

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definitely going to use more
copper.

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Are we going to use it as
quickly as some people are

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projecting?
You know, probably maybe, you

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know, like copper is kind of
directly tied to infrastructure

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and some places it takes a while
to build infrastructure.

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So I don't think it's going to,
you know, like you can make a

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rational argument that some
people's projections are

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aggressive.
You can make an argument that

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some people's projections are
conservative, but in the end I

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think.
You know, like to your point

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that.
There is I think no other

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commodity that has the an actual
as well as a perceived premium

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tied to finding a deposit that
will that will that will be a

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company maker or you know like a
return significant value.

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And I don't think we need to
sort of flesh out the the kind

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of bull side of it too much.
I think the the audience, you

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know, very well understands that
that is the the widely held

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view.
Yeah.

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But I'd love to hear from you.
And we were speaking about this

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before we recorded today, the
kind of contrarian take in it.

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There are a few of these out
there.

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There is a few of these sort of
takes emerging.

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And I think the yeah, so the so
the current view is that, you

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know, we're not finding enough
copper deposits and that's going

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to create this gap in the supply
demand that we're going to have.

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And that's true.
You know, like we we are

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definitely not finding new
copper deposits at at at the

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same rate that we were say 10
years ago or 20 years ago.

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I guess one of the contrarian
views that that we talked about

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and I guess is the kind of the,
the thing that we wanted to talk

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about here is that the sexy bit
is, I think everyone says that

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we should make new discoveries.
But there's a, there's a like a

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body of work that's going to
come out.

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And it's not my body of work.
It's by two people named Richard

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Shoddy, who's who's a consultant
on the Minix Consulting, another

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guy named Pietro Gouge, who
works at the centre of

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exploration targeting at Ewa.
And their study will be it's an

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upcoming paper in a journal
called Geosystems and Geo

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Environment.
So that'll come out later this

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year.
But Richard will also present

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this work at I mark.
So if you're going to I mark,

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you can go watch his talk.
I think it's called What's the

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real story of copper?
And I guess what they've, you

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know, the work that they've done
shows that if you look at

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existing assets, those, the, the
resource growth on these

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existing assets is actually
meeting the copper demand that

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we've had since 2010 till now.
So, so the resources on these

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existing assets, so we're
talking about mines that are

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already in production, you know,
like we call them delineation

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projects.
So, you know, so they're

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delineating more resources or
adding more resources to the

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inventory.
And that has delivered twice as

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much the amount of copper as new
discoveries have in the last or

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since 20/20/10.
So the last decade or last 15

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years now, you know, they've
delivered twice as much on

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existing assets as they have now
in that parlance of what we talk

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about, you know, this is say
call it brownfields discoveries

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or you know.
Expansions.

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Really.
Yeah.

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Like resource expansion,
drilling.

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And so there's, so there's a few
things and you know, like

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sometimes you call it
exploration upside.

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You know, you have a resource
and then you drill it out and it

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becomes double the size.
But the initial resource was

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what you built the mine on.
So you know, so, so new

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discoveries haven't quite filled
the demand that we've had in, in

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the past.
And they're not likely to fill

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the demand that we will have in
the short term either.

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Because if you make a copper
discovery now, you know, it's

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probably going to be 10 years if
it's a substantial copper

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discovery of mine for it to come
into full production.

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And 10 years is probably pretty
aggressive, like it'll probably

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be somewhere in the order like
12 to 15 years that

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realistically that you can kind
of put it into production.

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And I think, I think QB is the
the case in point that a lot of

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people have in their mind and
that was 29 years off the top of

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my head from when they first
discovered it in I think 1992 to

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when it comes online and.
That's why I'm and there's a lot

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of these.
So I mean, the Lost Bronzes is

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another angular one that was
stuck in development hell, you

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know, kind of like that
Hollywood term of development

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hell for like, what, five years
I think it was.

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It still has challenges.
Now Resolution's another one.

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You know, it's been stuck in
this thing for decades.

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Several, you know, Supreme Court
cases on that stuff.

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And these, these aren't, you
know, I mean Chile, they're

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developed countries, you know,
but it's not the quote unquote

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Western world we're actually
talking about.

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And there's been a lot of, you
know, arm raising about what's

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going on in Australia in the
past couple weeks and what's

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been going on in Canada for some
time now.

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But can we just knuckle down for
a moment on, on what's really

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holding up these these projects?
So I mean, to start with, it

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takes a long time to draw them
out and actually get a solid

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understanding, right?
Yep.

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And then and then following
that, you've got the same as in

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Australia, you need to get
native title, right?

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You need to get government
approvals.

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Water is a big challenge.
Yep.

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Are there specific areas that
you think are or challenges that

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are under weighted by by the
market at the moment that just

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take a long time?
For, for, for.

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Like, yeah, I guess this is more
a large, I guess it's more a

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porphyry type question.
Yeah.

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So I think that the the two
major challenges in porphyry

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tend to be usually community or
environment, you know, like they

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they tend to be an environment,
I'll use the bucket term like

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water being one as well.
Because the end, if you're

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taking water from one source,
you're probably affecting

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someone else's ability if you
use that water somewhere else.

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You know, so things like Pebble
pebbles are really big copper

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deposits that's been stuck in
Alaska because it's close to an

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environmentally sensitive area.
It has Native title concerns as

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well.
But I feel like, you know, like

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we're kind of getting into a
point now where community and

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environmental issues, I think we
understand the risk with land

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access or native title, but I
think we're probably now

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starting to understand that
environmentally and community

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wise how these things can be
affected.

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And the environment is, I think,
just a function of that.

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When you build these big minds
like you can go to Google Maps

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and look at how big an.
Escondido, Chuki Kamada are, you

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know, like they affect a
significant amount of real

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estate on on this earth.
So, so the chance that you're

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going to affect the environment
in a certain way or community in

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a certain way is just higher
when you're building such a big

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thing.
Yeah, yeah.

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And sort of anecdotally, given
your experience in in Africa,

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can you comment on on
development timelines as they

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sort of compare with with Latin
America?

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Well, yeah, that's a good
question.

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I mean, Latin America, I think
it's probably becoming harder

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because, you know, particularly
in Chile, you know, air, the

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water is an issue.
The other is like, you know,

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anytime you're building
something on the side of a

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mountain that's 4 or 5000 metres
high is, is problematic as it

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is.
Yeah, like just from a labour

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force like, you know, like if
you're asking people to work at

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4800 metres or something like
that, you know, like there's a

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whole another problem that you
have to manage in Africa.

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It's been, I don't think the
development challenge is, is as

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big, but it's just more
jurisdictional in that, you

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know, like the the government is
not as stable as in places like

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Chile.
So it's always a trade off.

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You know, you trade off the fact
that you can develop things

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really quickly because the
government is happy to take your

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development dollars and and the
revenue that comes out of it.

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But then the government, you
know, like it may not have the

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same residency time as your
asset does.

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And so how you how you kind of
play with that?

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Actually on that jurisdictional
risk side of things, and we sort

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of touched on this in our chat
with Jon Ronsky as well.

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Do you think there's also a bit
of another reason why there's a

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lack of copper discoveries in
the last decade is because

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perhaps more of this sort of
copper prospectivity is in these

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risky jurisdictions and, and
mining companies are too scared

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to to go there and commit the
dollars and, and, and tap into

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that?
Yeah, completely.

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I think, you know, like if
you're, yeah, a company like BHP

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Real, you know, Anglo, Yeah,
like your appetite to go into

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places like the DRC is probably
low.

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You know, like that's why you
see companies like Ivanhoe that

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go into these places and and
they find a Chinese kind of SOE

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that becomes partner with them
because their risk appetite is

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different.
So I think that's definitely the

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case where, I mean, I think, you
know, like part of the

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cannibalization of assets in
places like Chile and South

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America is because everyone
wants to kind of work there and

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so.
You know, so everyone's kind of

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fighting over the same.
You know, like same assets, it's

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the red ocean, blue ocean kind
of thing.

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You know, it's red ocean, it's
fixed assets and everyone's kind

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of fighting over them.
And so the risk appetite for

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people to go and, you know,
explore where others aren't, I,

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I don't think is as high as it's
probably been in the past.

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Yeah.
Do you think that's going to

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change over time?
We we had a discussion with

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Sheppo and a former investment
banking analyst out of South

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Africa and he was very pro.
The development of places like

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Zambia may be a bit less so DRC
that's probably one step further

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in its challenges for a BHP or
one of these sorts of companies.

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But do you see a world where BHP
is in Zambia for example?

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00:11:27,800 --> 00:11:30,120
Yeah, I think so.
I mean, like, to be honest, if

226
00:11:30,120 --> 00:11:32,200
you're serious about copper,
you're going to have to go to

227
00:11:32,200 --> 00:11:35,920
some of these places, right?
Yeah, I would advocate that your

228
00:11:35,920 --> 00:11:39,200
whole portfolio shouldn't sit
in, in a, in a jurisdiction like

229
00:11:39,200 --> 00:11:41,360
Zambia.
But I think you should be able

230
00:11:41,640 --> 00:11:44,480
or you should be willing to take
that risk, you know, to go into

231
00:11:44,480 --> 00:11:46,280
these places.
You should be willing to take

232
00:11:46,280 --> 00:11:50,120
the risk and to go to like
places like IRI and Jaya or, you

233
00:11:50,120 --> 00:11:51,880
know, like PNG and things like
that.

234
00:11:53,520 --> 00:11:57,080
Because you know, like otherwise
you're, you know, it's kind of

235
00:11:57,080 --> 00:12:00,360
like to some degree it becomes a
know sum game, you know, like

236
00:12:00,360 --> 00:12:01,840
you're fighting over the same
assets.

237
00:12:01,840 --> 00:12:05,800
So, so if you're happy to pay
the premium to, to kind of push

238
00:12:05,800 --> 00:12:08,640
someone else out of the way, you
know, like a BHP could probably

239
00:12:08,640 --> 00:12:10,600
do that, right?
Like they could pay a higher

240
00:12:10,600 --> 00:12:15,200
premium and, and, and push other
bidders out of, out of that kind

241
00:12:15,200 --> 00:12:17,200
of race.
But that's not a strategy that's

242
00:12:17,200 --> 00:12:20,440
going to work for everyone.
You know, like the Techs or the

243
00:12:20,440 --> 00:12:23,080
Anglos, you know, like these
guys wouldn't be able to go

244
00:12:23,080 --> 00:12:25,920
compete against the real big
majors if they really had to get

245
00:12:25,920 --> 00:12:30,280
in that fight.
So to, to pull the the chat back

246
00:12:30,280 --> 00:12:33,360
on the path of where discoveries
have sort of happened and where

247
00:12:33,360 --> 00:12:36,120
expansion in copper production
has happened in the past few

248
00:12:36,120 --> 00:12:38,080
decades.
I've seen you've, you've put a

249
00:12:38,080 --> 00:12:41,240
chart here which will Chuck up
on, on the YouTube talking about

250
00:12:41,240 --> 00:12:43,200
the, the changes in cut off
grades.

251
00:12:43,200 --> 00:12:46,520
And you know, specifically as it
relates to some of the biggest

252
00:12:46,520 --> 00:12:48,840
operations in the world.
Just a handful of these

253
00:12:48,840 --> 00:12:51,880
operations can change the
landscape or add a huge amount

254
00:12:51,880 --> 00:12:54,520
of production in a, in a real
global sense.

255
00:12:54,560 --> 00:12:56,520
Can you, can you kind of talk us
through and like what the

256
00:12:56,520 --> 00:12:58,440
takeaways are from your
perspective?

257
00:12:58,520 --> 00:12:59,520
Yeah, yeah.
So, yeah.

258
00:12:59,520 --> 00:13:01,680
So you can put this graph up and
this is again from Richard

259
00:13:01,680 --> 00:13:04,960
Shorty's work, you know, so he
had this graph where he looked

260
00:13:04,960 --> 00:13:11,240
at the top 12 porphyry mines in
1929 and then he showed, you

261
00:13:11,240 --> 00:13:14,240
know, like so at that time in
1929, they had 50 million tonnes

262
00:13:14,240 --> 00:13:15,680
of contained copper at that
time.

263
00:13:15,960 --> 00:13:19,400
Yeah.
So, so 3 billion tonnes at 1.5%

264
00:13:19,400 --> 00:13:23,560
copper and so then you go to
today with like and today was

265
00:13:23,560 --> 00:13:28,280
2008 in that time and you know
see these same mines now have

266
00:13:28,280 --> 00:13:33,480
more than 61 billion tonnes of
.6 and so and that is purely a

267
00:13:33,480 --> 00:13:35,760
function of them dropping the
the cut off grade.

268
00:13:36,200 --> 00:13:39,760
And so my earlier comment about,
you know, like existing assets

269
00:13:39,760 --> 00:13:45,960
have provided twice as much as
twice as much copper inventory

270
00:13:45,960 --> 00:13:48,120
as new discoveries in the last
15 years.

271
00:13:48,480 --> 00:13:51,320
You know, one of the things that
people will argue is they say,

272
00:13:51,320 --> 00:13:54,840
well, is that just a drop in the
cut off grade now from 1929 to

273
00:13:54,840 --> 00:13:56,200
now?
That definitely is a drop in the

274
00:13:56,200 --> 00:13:57,840
cut off grade.
You know, like we were mining

275
00:13:57,840 --> 00:14:02,080
probably 1% copper or 1.5%
copper then and now we are

276
00:14:02,080 --> 00:14:05,120
mining, you know, substantially
lower grades.

277
00:14:06,320 --> 00:14:09,480
But when you look at this
inventory over the last 15 years

278
00:14:09,480 --> 00:14:11,960
that's been added on the
existing mines, that hasn't been

279
00:14:11,960 --> 00:14:15,520
due to cut off grade.
Yeah, that's been at pretty much

280
00:14:15,520 --> 00:14:19,200
the same kind of average grade
that these mines have had for

281
00:14:19,200 --> 00:14:21,120
the whole time.
So that's not a function of

282
00:14:21,120 --> 00:14:22,960
people just dropping cut off
grade and just making the

283
00:14:22,960 --> 00:14:25,840
resource bigger.
That's a function of them just

284
00:14:25,840 --> 00:14:29,200
finding this similar material
they're mining, but just more of

285
00:14:29,200 --> 00:14:31,680
it.
And the, and the point of it was

286
00:14:31,680 --> 00:14:35,480
that if you look at these top 12
mines in 1929, I think it's like

287
00:14:35,560 --> 00:14:38,360
8 or nine of them are still in
production now, right?

288
00:14:38,360 --> 00:14:40,280
So like, you know, so for
example, Bingham Canyon is still

289
00:14:40,280 --> 00:14:42,240
in production.
Chuki Kamata is still in

290
00:14:42,240 --> 00:14:43,440
production.
Morenci.

291
00:14:43,760 --> 00:14:47,120
Yeah, El teniente Morenci from
Miami.

292
00:14:47,400 --> 00:14:48,920
Yeah.
So a lot of these are still

293
00:14:49,080 --> 00:14:52,440
still operating.
And this kind of goes back to, I

294
00:14:52,440 --> 00:14:54,400
guess one of the other things
that, you know, we'll kind of

295
00:14:54,400 --> 00:14:57,880
get into is that, like, why do
big companies look for these

296
00:14:57,880 --> 00:15:00,080
things?
Right, it's because they exist

297
00:15:00,080 --> 00:15:04,160
for 100 years and you can keep
mining them for for essentially,

298
00:15:04,280 --> 00:15:06,960
you know, 100 years and you
because you'll keep finding more

299
00:15:06,960 --> 00:15:09,280
and more material, you know,
like for example, in the chart

300
00:15:09,280 --> 00:15:11,160
that which is made like you
know, you look at it and you go

301
00:15:11,160 --> 00:15:15,600
so the total.
Resource in 1929 in these top 12

302
00:15:15,600 --> 00:15:19,720
mines was 50 million tonnes.
And so from 1929 till now we

303
00:15:19,720 --> 00:15:23,360
have mined 136 million tonnes of
copper out of those.

304
00:15:24,000 --> 00:15:26,920
So, so we've mined three times
the amount of resource that was

305
00:15:26,920 --> 00:15:29,720
listed, you know, like in
19301929.

306
00:15:29,720 --> 00:15:32,360
All right.
I was just going to say quickly

307
00:15:32,360 --> 00:15:35,400
for the benefit of the money
miners as well, just explaining

308
00:15:35,400 --> 00:15:37,560
what what a cut off grade
actually is as well.

309
00:15:37,800 --> 00:15:39,440
Yeah.
So, so cut off grade, and it's

310
00:15:39,440 --> 00:15:43,760
like layman's terms is basically
your economic threshold above

311
00:15:43,760 --> 00:15:45,200
which you think you can make
money.

312
00:15:45,520 --> 00:15:48,880
So, so if a cut off grade, you
know, like if you read it, if it

313
00:15:48,880 --> 00:15:53,200
says 1%, what you're effectively
saying is that any raw material

314
00:15:53,200 --> 00:15:56,000
below 1% copper is something
you're not likely going to make

315
00:15:56,000 --> 00:15:58,400
money on.
So that's your economic line.

316
00:15:59,200 --> 00:16:03,360
And so as copper prices have
increased, that line drops as

317
00:16:03,360 --> 00:16:05,600
well.
So you know, say if the unit

318
00:16:05,600 --> 00:16:09,720
value of 1 tonne of copper
increases, you can then mine

319
00:16:09,800 --> 00:16:12,720
lower grade material because
you're getting a higher unit

320
00:16:12,720 --> 00:16:13,560
value.
Out of it.

321
00:16:13,760 --> 00:16:15,920
Right.
And the example of this is like,

322
00:16:15,920 --> 00:16:18,640
you know, like things like
diamonds or gold or higher unit

323
00:16:18,640 --> 00:16:20,480
value.
So you can mine less gold for

324
00:16:20,480 --> 00:16:23,440
exactly the same economic payoff
as mining something like copper.

325
00:16:24,200 --> 00:16:25,960
Perfect.
So I'm very keen to go down the,

326
00:16:26,240 --> 00:16:32,240
the path of M&A and what the the
major companies are looking for

327
00:16:32,240 --> 00:16:34,440
and you know Philo, these sorts
of things that we've seen

328
00:16:34,440 --> 00:16:36,840
lately.
But to round out on the, the

329
00:16:36,840 --> 00:16:41,000
point about the, the shortage,
you know, the the big question

330
00:16:41,000 --> 00:16:43,000
out there like are we going to
have a shortage?

331
00:16:43,000 --> 00:16:45,000
What is the kind of consensus
you come to?

332
00:16:45,320 --> 00:16:47,600
Perhaps not.
I mean you can maybe break it up

333
00:16:47,600 --> 00:16:50,160
into a short, medium and and
longer term time frame.

334
00:16:50,560 --> 00:16:53,840
I mean, like, so like, I mean,
Richardson Pietro's work shows

335
00:16:53,840 --> 00:16:59,640
and in the short term, existing
assets will fit, will fill any

336
00:16:59,640 --> 00:17:00,960
copper demand we're going to
have.

337
00:17:01,400 --> 00:17:04,720
Now, that doesn't mean that
they're going to like fill this

338
00:17:04,720 --> 00:17:08,040
demand forever, right?
Like resources are, are finite

339
00:17:08,040 --> 00:17:10,200
resources, You know, they're,
they're not renewable.

340
00:17:10,720 --> 00:17:13,000
So at some point they will hit a
line where we're not going to

341
00:17:13,000 --> 00:17:14,599
mine them anymore and they're
going to shut down.

342
00:17:15,040 --> 00:17:18,560
So, so, so the, my, my point is
that we don't need, it's not

343
00:17:18,560 --> 00:17:20,359
that I'm not saying that we
don't need new copper

344
00:17:20,359 --> 00:17:22,280
discoveries.
I'm just saying that I think we

345
00:17:22,280 --> 00:17:24,000
have to be a little bit
realistic about that.

346
00:17:24,000 --> 00:17:27,240
Our copper discoveries that,
that this kind of rhetoric

347
00:17:27,240 --> 00:17:29,280
that's out there now that we got
to go and find new copper

348
00:17:29,280 --> 00:17:31,920
discoveries, Are they really
going to fill the demand that we

349
00:17:31,920 --> 00:17:34,080
have in the short to kind of
medium term?

350
00:17:34,320 --> 00:17:37,800
You know, like I think that's
unrealistic, but we do need new

351
00:17:37,800 --> 00:17:40,520
copper discoveries to fill the
medium to long term kind of

352
00:17:40,520 --> 00:17:42,440
demand that we're going to have
of copper going forward.

353
00:17:42,760 --> 00:17:47,880
Do you think copper recycling
will have any material sort of

354
00:17:47,880 --> 00:17:51,840
impact on perhaps filling that
more medium to longer term

355
00:17:52,160 --> 00:17:55,160
shortage?
I think it will, you know, like

356
00:17:55,240 --> 00:17:57,920
it recycling.
I think if you look at kind of

357
00:17:57,920 --> 00:18:00,920
like when recycling programmes
work and how they work, I think

358
00:18:00,920 --> 00:18:03,880
recycling programmes work when
your demand is kind of fixed to

359
00:18:03,880 --> 00:18:06,800
some degree, right?
Like so you can, you can recycle

360
00:18:06,800 --> 00:18:10,120
material and you can fill the
the fixed demand that you're

361
00:18:10,120 --> 00:18:13,720
going to have going forward.
I think recycling will never

362
00:18:13,720 --> 00:18:17,120
really be a substantial thing if
your demand keeps increasing

363
00:18:17,600 --> 00:18:21,160
because, yeah, like, yeah, like,
and also, I mean, I think JD,

364
00:18:21,160 --> 00:18:23,120
you made the point, right?
Like a lot of copper goes into

365
00:18:23,120 --> 00:18:25,520
infrastructure.
So in order to recycle that,

366
00:18:25,520 --> 00:18:28,400
that would suggest that you have
to take down infrastructure to

367
00:18:28,400 --> 00:18:30,600
to use that in new
infrastructure.

368
00:18:30,800 --> 00:18:33,360
And what we're saying is, you
know, like we don't have the

369
00:18:33,360 --> 00:18:35,480
amount of copper infrastructure
we need to build more.

370
00:18:35,760 --> 00:18:37,840
So I'm just not sure recycling
is ever going to be a

371
00:18:37,840 --> 00:18:39,760
substantial amount in in that
sense.

372
00:18:39,760 --> 00:18:41,200
You can't recycle your way to
growth.

373
00:18:41,680 --> 00:18:43,720
Yeah, exactly.
Like, yeah, I mean, like the

374
00:18:43,720 --> 00:18:45,360
recycling will, I think fill the
void.

375
00:18:45,360 --> 00:18:47,160
And I think it's it's a good
thing we should do.

376
00:18:48,160 --> 00:18:51,160
If that means we have one less
copper mine in the world because

377
00:18:51,160 --> 00:18:53,800
we can recycle enough copper to
to fill that demand, then I

378
00:18:53,800 --> 00:18:56,960
think we should.
And universally, I don't think

379
00:18:56,960 --> 00:18:58,560
we recycle.
Yeah.

380
00:18:58,560 --> 00:19:00,960
Like, we're not very good at
designing things in the way that

381
00:19:00,960 --> 00:19:02,640
we can recycle metals
efficiently.

382
00:19:03,640 --> 00:19:05,880
But I think, yeah, definitely we
should go down that path.

383
00:19:05,880 --> 00:19:09,880
But it's never going to be more
than like a small slice of the

384
00:19:09,880 --> 00:19:11,520
pie, really.
Right.

385
00:19:11,720 --> 00:19:16,160
So let's talk about the
exploration strategies of the

386
00:19:16,160 --> 00:19:20,720
major miners and following on, I
guess we can talk about why

387
00:19:20,960 --> 00:19:24,440
specifically they are always
looking for these porphyry style

388
00:19:24,440 --> 00:19:27,120
projects.
And maybe, you know, you can

389
00:19:27,120 --> 00:19:30,880
throw in a couple of critiques
of the way in which they size

390
00:19:30,880 --> 00:19:35,240
their beds or maybe why they're
opting to to buy this build

391
00:19:35,320 --> 00:19:36,760
projects themselves.
Yeah.

392
00:19:36,760 --> 00:19:40,720
So they, I mean, so you know,
like as a kind of a general

393
00:19:40,720 --> 00:19:45,080
view, you know, like there are
several copper deposit styles

394
00:19:45,080 --> 00:19:48,680
you can go for and it and I find
like, you know, someone that

395
00:19:48,680 --> 00:19:51,480
kind of views this market or has
to comment on it, I find that it

396
00:19:51,480 --> 00:19:55,600
seems to be very like a bimodal
distribution, right, That, you

397
00:19:55,600 --> 00:19:58,400
know, majors only go for very,
very select deposits.

398
00:19:58,400 --> 00:20:00,840
Like yeah, like they will go for
pool free deposits.

399
00:20:01,080 --> 00:20:03,200
And for people that don't know,
like, you know what we mean by

400
00:20:03,200 --> 00:20:06,040
pool freeze, Pool freeze are,
you know, like these large kind

401
00:20:06,040 --> 00:20:09,840
of high tonnage, you know, big
deposits, but they tend to be

402
00:20:09,840 --> 00:20:11,640
low ish grade, you know, like
you're talking about.

403
00:20:11,640 --> 00:20:13,560
Like half a percent to a percent
copper.

404
00:20:14,320 --> 00:20:16,480
If a pore free deposit tends to
be bigger than that, you know,

405
00:20:16,480 --> 00:20:18,800
it's quite a unique kind of
deposit in that sense.

406
00:20:20,200 --> 00:20:22,840
And for, you know, like for
anyone that's a part time

407
00:20:22,840 --> 00:20:24,960
geologist, you know, pore free
deposits are essentially things

408
00:20:24,960 --> 00:20:26,960
that formed in volcanoes Once
Upon a time.

409
00:20:26,960 --> 00:20:28,280
So yeah.
So that's kind of like their

410
00:20:28,280 --> 00:20:32,360
link.
So, yeah, so majors are like

411
00:20:33,200 --> 00:20:36,520
predominantly only really
looking for pore freeze and

412
00:20:36,520 --> 00:20:39,600
these large sediment holster
deposits like the copper belt in

413
00:20:39,600 --> 00:20:41,480
in Africa.
And there's a fundamental

414
00:20:41,480 --> 00:20:43,760
reason, you know, these things
tend to be really big and they

415
00:20:43,760 --> 00:20:46,120
tend to have a great profile
that they can mine these things

416
00:20:46,120 --> 00:20:49,760
for like 50 or 100 years.
And and so majors aren't

417
00:20:49,760 --> 00:20:53,520
interested in copper deposits
that are say small but high

418
00:20:53,520 --> 00:20:57,680
grade, you know, so like things
like what sand fire kind of goes

419
00:20:57,680 --> 00:21:01,160
after things like that in Spain.
You know, these tend to be high

420
00:21:01,160 --> 00:21:04,000
grade, but quite small.
Doesn't mean they're not

421
00:21:04,000 --> 00:21:05,240
economic.
You know, they're quite

422
00:21:05,240 --> 00:21:08,840
economic, but they're not going
to have the like the mine life

423
00:21:08,840 --> 00:21:11,640
that that interests a BHP or
something like that.

424
00:21:13,080 --> 00:21:15,640
And so, yeah, so I think it's,
you know, like over the last

425
00:21:15,640 --> 00:21:19,840
kind of, I could say like 1020
years, I think there's been like

426
00:21:19,840 --> 00:21:24,320
a very like quite a divide in
the industry in that sense.

427
00:21:24,320 --> 00:21:26,640
You know, like, you know, like
we were talking about this, you

428
00:21:26,640 --> 00:21:29,120
know, there's not a lot of
copper meteors now, you know,

429
00:21:29,200 --> 00:21:32,000
they've all been swallowed.
So you have this kite like

430
00:21:32,000 --> 00:21:33,640
dichotomy.
Like, you know, majors will only

431
00:21:33,640 --> 00:21:35,800
look for porphyries in a certain
type of deposits and they're

432
00:21:35,800 --> 00:21:39,080
only interested in those assets.
And then there's juniors who

433
00:21:39,080 --> 00:21:42,880
realistically can't build a big
porphyry mine at like 4 or $5

434
00:21:42,880 --> 00:21:44,920
billion CapEx.
So they'll go look for these

435
00:21:44,920 --> 00:21:47,600
small things, you know, like and
then that's kind of divided the

436
00:21:47,600 --> 00:21:49,720
market really, really clearly I
think.

437
00:21:49,760 --> 00:21:51,640
Yeah.
I mean, it sort of seems to come

438
00:21:51,640 --> 00:21:54,720
from a place and this is
probably far too blunt an

439
00:21:54,720 --> 00:21:59,720
assessment, but bulk commodities
tend to to make serious money

440
00:22:00,040 --> 00:22:03,920
and, you know, smaller
operations.

441
00:22:04,160 --> 00:22:06,200
Yeah.
You know, perhaps they're a bit

442
00:22:06,200 --> 00:22:08,680
more cyclical.
Yeah, as one way to kind of put

443
00:22:08,680 --> 00:22:10,280
them.
But you, you look at all the

444
00:22:10,280 --> 00:22:14,560
majors and it's, it's iron ore
and it's cooking, cooking and

445
00:22:14,560 --> 00:22:17,240
thermal coal.
At least it has been for a long

446
00:22:17,240 --> 00:22:18,280
time.
That's right.

447
00:22:18,280 --> 00:22:20,160
And I think, you know, like you
can understand, like, you know,

448
00:22:20,160 --> 00:22:24,200
a company like BHP really for it
to kind of add the, the gravitas

449
00:22:24,200 --> 00:22:25,920
that it wants inside its
organisation.

450
00:22:25,920 --> 00:22:27,800
You know, it really only goes
for bulk commodities.

451
00:22:28,200 --> 00:22:30,560
And my view is that I think
mages really look at copper as a

452
00:22:30,560 --> 00:22:33,520
bulk commodity, right?
So the sort of go after assets

453
00:22:33,520 --> 00:22:37,080
that filled the, that filled the
kind of bulk commodity view of

454
00:22:37,080 --> 00:22:39,080
the world, right?
They're not looking for things

455
00:22:39,080 --> 00:22:40,720
that have a mine life for 1020
years.

456
00:22:40,720 --> 00:22:43,640
They're looking for something
that you know will will exist

457
00:22:43,640 --> 00:22:46,200
for 50 years or something.
So we're talking about

458
00:22:46,200 --> 00:22:50,200
porphyries.
What other sort of styles of

459
00:22:50,280 --> 00:22:54,320
copper deposits are out there
sort of for for the non

460
00:22:54,320 --> 00:22:58,280
geological minds and sort of
what, why, why are they sort of

461
00:22:58,400 --> 00:23:01,400
what are the differences between
that those and a porphyries as

462
00:23:01,400 --> 00:23:06,360
far as you know the grades and
scales and sort of economics you

463
00:23:06,360 --> 00:23:08,280
can expect from each of them?
Yeah.

464
00:23:08,280 --> 00:23:10,480
So that's a good question.
Yeah.

465
00:23:10,480 --> 00:23:13,720
So porphyries tend to be, like I
said, yeah, it's kind of like

466
00:23:14,880 --> 00:23:17,480
like a continuum, right.
So like porphyries will be at

467
00:23:17,480 --> 00:23:21,440
one end, you know, they tend to
be really, really big, you know,

468
00:23:21,520 --> 00:23:25,240
kind of lowish grade that
usually tend to be.

469
00:23:25,680 --> 00:23:29,080
Not very, you know, like they
don't tend to have a lot of

470
00:23:29,480 --> 00:23:31,280
elements in them.
So, you know, so they tend to be

471
00:23:31,280 --> 00:23:34,120
the copper or they'll be copper,
gold or copper Molly, something

472
00:23:34,120 --> 00:23:38,200
like that, which which makes
them easier from a processing.

473
00:23:38,200 --> 00:23:40,400
Point of view because you don't
have to figure out where all the

474
00:23:40,400 --> 00:23:43,320
elements are going.
And so, you know, sediment

475
00:23:43,320 --> 00:23:46,680
hosted tend to be on on the same
spectrum that they, they can be

476
00:23:46,680 --> 00:23:48,840
really big, they can be also
small.

477
00:23:49,480 --> 00:23:51,880
That's a genesis kind of thing
like how they get formed.

478
00:23:52,160 --> 00:23:54,600
But they tend to be usually
copper or cobalt.

479
00:23:54,680 --> 00:23:57,040
You know, like and they don't
get a lot of other elements

480
00:23:57,120 --> 00:23:59,480
attached into them.
So these are the the Africans,

481
00:23:59,480 --> 00:24:01,280
the DRC.
The yeah, that's fine.

482
00:24:01,520 --> 00:24:03,480
Yeah.
And yeah, like in their yeah.

483
00:24:03,480 --> 00:24:06,120
And then they kind of fit.
I mean, like the Central African

484
00:24:06,120 --> 00:24:09,040
copper belt is kind of like the
type example of them, but

485
00:24:09,040 --> 00:24:11,560
there's also like the Cooper
Shifa, which is one in Poland.

486
00:24:12,400 --> 00:24:13,960
Yeah.
So they tend to be this big

487
00:24:14,840 --> 00:24:17,120
deposits that can be mined for a
long time as well.

488
00:24:17,200 --> 00:24:21,440
And then we've got the, you
know, the Spanish examples, the

489
00:24:21,600 --> 00:24:25,000
the Matzes, Rio Tinto, the
original sort of project.

490
00:24:25,160 --> 00:24:26,840
That's right.
Yeah, that's right.

491
00:24:26,840 --> 00:24:30,040
So they tend to be more of these
deposit style called VMS or

492
00:24:30,040 --> 00:24:32,560
Volcan volcanogenic massive
sulphides.

493
00:24:33,400 --> 00:24:36,840
And they tend to be like much
higher grade usually on that

494
00:24:36,840 --> 00:24:39,760
spectrum, but they tend to have
other things, you know, so

495
00:24:39,760 --> 00:24:44,320
they're often lead or zinc
associated with silver, gold,

496
00:24:44,560 --> 00:24:46,200
you know, like all of these
things kind of come in.

497
00:24:47,200 --> 00:24:50,400
So they tend to be smaller, you
know, metallurgically usually a

498
00:24:50,400 --> 00:24:54,240
little bit more complicated, you
know, like they, they are a

499
00:24:54,240 --> 00:24:56,720
little bit harder to find as
well because they tend to be a

500
00:24:56,720 --> 00:25:00,040
smaller deposit to find.
So you what you find is like,

501
00:25:00,040 --> 00:25:03,080
you know, they're they're the
deposits that you know, smaller

502
00:25:03,080 --> 00:25:05,080
to mid tier kind of companies go
after.

503
00:25:06,160 --> 00:25:08,680
Companies that can't spend, you
know, billions of dollars

504
00:25:08,680 --> 00:25:10,680
building a mine.
And that's the other thing you

505
00:25:10,680 --> 00:25:13,240
know, like sediment hosted and
pull freeze, you know, the CapEx

506
00:25:13,240 --> 00:25:15,840
required for them on the
economic side, it's almost

507
00:25:15,840 --> 00:25:18,400
always a billion plus that you
know, like you're kind of

508
00:25:18,400 --> 00:25:21,640
looking to build.
And then you know, like you have

509
00:25:21,640 --> 00:25:23,760
other things like, you know,
some people target copper

510
00:25:23,760 --> 00:25:27,640
deposits which are associated
with with nickel and mafic

511
00:25:27,680 --> 00:25:30,360
intrusions, you know, like
that's another end member.

512
00:25:31,360 --> 00:25:33,440
So some people target them, but
that's like, you know, most

513
00:25:33,440 --> 00:25:35,280
people don't do it.
Primarily they're looking for

514
00:25:35,280 --> 00:25:38,200
nickel, copper and PG ES and
that that type of stuff that

515
00:25:38,200 --> 00:25:40,800
they find there.
Olympic Dam type IOCG.

516
00:25:41,320 --> 00:25:42,280
Is that the other one?
Yeah.

517
00:25:42,560 --> 00:25:45,520
Yeah.
So IOCGS are another where you

518
00:25:45,520 --> 00:25:48,680
know, like there's some some
IOCGS that can be mined almost

519
00:25:48,680 --> 00:25:51,640
like a bulk kind of operation.
And so, so again, majors are

520
00:25:51,640 --> 00:25:54,920
interested in them.
I think a little bit of that is.

521
00:25:56,160 --> 00:25:58,560
You know, majors go in them,
like particularly BHP goes into

522
00:25:58,560 --> 00:26:00,560
them because they hold Olympic
Dam.

523
00:26:00,560 --> 00:26:04,000
So you know, so it's a deposit
style, they understand, they

524
00:26:04,000 --> 00:26:05,880
understand the processing of it,
they understand the

525
00:26:05,880 --> 00:26:08,160
complications of it.
So you know, so they go down

526
00:26:08,160 --> 00:26:10,680
that path.
But so like I said, like you

527
00:26:10,680 --> 00:26:14,080
know, to answer your question,
there's deposit styles like

528
00:26:14,080 --> 00:26:17,400
IOCG, sediment hosted Porfree,
that's it on one then which are

529
00:26:17,400 --> 00:26:21,320
CapEx intensive, you know,
usually lowish grade but high

530
00:26:21,320 --> 00:26:24,520
tonnage.
And then there's another

531
00:26:24,560 --> 00:26:29,240
spectrum which is more the BMS
and carbonate hosted and a few

532
00:26:29,240 --> 00:26:32,000
other deposit styles that fit in
there and they tend to be higher

533
00:26:32,000 --> 00:26:36,000
grade, but much smaller, but
very low CapEx intensity.

534
00:26:36,840 --> 00:26:38,280
Great.
That's good summary.

535
00:26:38,280 --> 00:26:41,720
So I want to pivot the the
conversation briefly to

536
00:26:41,720 --> 00:26:44,880
commodity price forecasting and
I guess this layers in with what

537
00:26:44,880 --> 00:26:47,280
we'd initially discussed.
We're we're pretty critical on

538
00:26:47,280 --> 00:26:51,200
the show about anyone's kind of
ability.

539
00:26:51,280 --> 00:26:53,920
And I mean, we just just
listening to calls this week,

540
00:26:53,920 --> 00:26:56,480
you kind of heard it.
You know, I think Chris Ellison

541
00:26:56,720 --> 00:26:59,240
said on the min raise, cool,
I've got no idea where lithium

542
00:26:59,240 --> 00:27:00,160
is.
It's going.

543
00:27:00,160 --> 00:27:03,280
I certainly didn't think it was
going under 1000 bucks a tonne.

544
00:27:03,280 --> 00:27:07,440
And yeah, you can you can kind
of see that across the spectrum,

545
00:27:07,440 --> 00:27:11,120
even some companies who pump a
phenomenal amount of money into

546
00:27:11,200 --> 00:27:13,160
into the research side of things
get it wrong.

547
00:27:13,440 --> 00:27:15,720
And you showed me this this
fascinating chart, which again

548
00:27:15,720 --> 00:27:18,880
will will pop up on the YouTube
about long term copper

549
00:27:18,880 --> 00:27:21,160
forecasts.
You know, I think they're kind

550
00:27:21,160 --> 00:27:24,640
of clumping together a whole
bunch of analysts sort of

551
00:27:24,640 --> 00:27:27,240
forming a consensus view.
But what what's your sort of

552
00:27:27,240 --> 00:27:30,160
take away and how you think
about companies forecasting the

553
00:27:30,200 --> 00:27:32,840
the price of commodities?
Yeah.

554
00:27:32,840 --> 00:27:36,760
I mean, I think as a general
statement, I think we do it

555
00:27:36,760 --> 00:27:39,880
pretty badly, I think.
And that's not, not just

556
00:27:39,880 --> 00:27:42,960
commodity price forecast.
I think if you look at forecasts

557
00:27:42,960 --> 00:27:45,840
of other commodities like orange
juice and things like that, you

558
00:27:45,840 --> 00:27:48,640
know, like similar problems
exist in in that space as well,

559
00:27:49,040 --> 00:27:53,560
is that generally most commodity
forecasts tend to be really good

560
00:27:53,560 --> 00:27:56,440
in the short term, but they tend
to be horrible in the long term.

561
00:27:56,560 --> 00:28:00,000
And and it's just because, yeah,
part of that I think, I mean,

562
00:28:00,000 --> 00:28:02,160
this is just my opinion.
Part of that is I think some

563
00:28:02,160 --> 00:28:04,720
commodities don't really have a
relationship to supply demand

564
00:28:04,720 --> 00:28:06,760
curves.
They have more of a relationship

565
00:28:06,760 --> 00:28:09,280
to the futures that people are
investing in them and

566
00:28:09,280 --> 00:28:12,240
speculation of what they think
the future price of certain

567
00:28:12,240 --> 00:28:14,760
commodities is going to be.
I think that's driving commodity

568
00:28:14,760 --> 00:28:17,760
price more.
But the challenge for I think

569
00:28:17,760 --> 00:28:20,320
mining companies is that, I
mean, the reason why I always

570
00:28:20,320 --> 00:28:22,160
like showing this graph is like,
you know, when I worked in

571
00:28:22,160 --> 00:28:25,080
companies, we looked at
consensus price forecast

572
00:28:25,080 --> 00:28:28,000
religiously, right?
And we would use those as a way

573
00:28:28,000 --> 00:28:29,760
of deciding whether we would
build things.

574
00:28:30,120 --> 00:28:32,880
And then when I see this graph,
which you guys report, and just

575
00:28:32,880 --> 00:28:35,200
to explain it, yeah, in that
graph, the black line that you

576
00:28:35,200 --> 00:28:38,600
see is the actual copper price.
And the coloured lines that you

577
00:28:38,600 --> 00:28:42,360
see that end up with a dot are
the consensus price forecast of

578
00:28:42,360 --> 00:28:45,400
what people thought was going to
happen over the next five years.

579
00:28:45,880 --> 00:28:47,720
Right.
So just as a general reference,

580
00:28:47,840 --> 00:28:49,800
the black line is what was the
actual price.

581
00:28:50,080 --> 00:28:52,720
And if you connect all the dots
that you see, the blue dots,

582
00:28:53,000 --> 00:28:55,800
that is what people thought was
actually going to be the copper

583
00:28:55,800 --> 00:28:57,400
price.
Yeah, in the future.

584
00:28:58,240 --> 00:29:00,200
And so you see that there's
absolutely no relationship

585
00:29:00,200 --> 00:29:04,360
offset by about five years.
It's a consensus price forecast.

586
00:29:04,560 --> 00:29:06,520
And for example, on the graph
you can look at like, you know,

587
00:29:06,520 --> 00:29:10,240
look at December 2005.
So just after that, you know,

588
00:29:10,240 --> 00:29:13,080
the the price was nearly $5 per
pound.

589
00:29:13,320 --> 00:29:16,160
And the forecast had predicted a
couple of years before that it

590
00:29:16,160 --> 00:29:20,640
would be close to $1.00, right?
Like that's not really like a

591
00:29:20,640 --> 00:29:23,360
sound mechanism to actually
develop, you know, like whether

592
00:29:23,360 --> 00:29:25,760
you should go ahead with the
decision to build things or not.

593
00:29:26,720 --> 00:29:29,120
But, you know, we used to use
these things as like, you know,

594
00:29:29,120 --> 00:29:31,920
like gospel, like, you know, we
could not not touch these things

595
00:29:31,920 --> 00:29:33,400
at all.
And then when you go and look at

596
00:29:33,400 --> 00:29:35,360
this, I mean, you go actually
our ability to predict this

597
00:29:35,360 --> 00:29:38,000
stuff is we're in this, you
know, like we're, we're going to

598
00:29:38,000 --> 00:29:39,240
be.
Out by a factor of 5.

599
00:29:39,240 --> 00:29:42,520
Like, yeah, that's not really a
good way to kind of operate.

600
00:29:42,640 --> 00:29:43,480
And that's.
Pretty business.

601
00:29:43,640 --> 00:29:46,840
Pretty scary thing, right?
Because, I mean, this is one of

602
00:29:46,840 --> 00:29:52,640
the main tools companies are
using to make decisions on, you

603
00:29:52,640 --> 00:29:54,080
know, whether to develop things
or not.

604
00:29:54,080 --> 00:29:57,120
And most of the time it's wrong.
Yeah.

605
00:29:57,120 --> 00:29:58,240
No, no, no.
That's right.

606
00:29:58,240 --> 00:30:02,320
And so, so, yeah, so the, the, I
guess, I guess I don't have an

607
00:30:02,320 --> 00:30:03,800
alternative to what you do,
right.

608
00:30:04,560 --> 00:30:05,960
Like I wouldn't put you on the
spot like that.

609
00:30:06,120 --> 00:30:07,560
Yeah.
And and so this so this is where

610
00:30:07,560 --> 00:30:10,280
I think kind of the problem
comes and, and to back to, you

611
00:30:10,280 --> 00:30:13,480
know, like one of the topics we
talked about is why do companies

612
00:30:13,880 --> 00:30:17,360
like why are they buying assets
that I say producing now versus

613
00:30:17,360 --> 00:30:20,520
buying things that could be put
into development is because you

614
00:30:20,520 --> 00:30:22,840
don't know what the future kind
of looks like.

615
00:30:23,120 --> 00:30:25,680
Yeah.
So, so it's much better to buy

616
00:30:25,680 --> 00:30:28,320
something now and you know that
the price is probably going to

617
00:30:28,320 --> 00:30:31,040
be right for the next year.
So you know what what you're

618
00:30:31,040 --> 00:30:33,360
what you're kind of buying and
how you can kind of optimise and

619
00:30:33,360 --> 00:30:36,720
then go and then.
And if that works financially, I

620
00:30:36,720 --> 00:30:40,320
think then yeah, you hedge on on
the price in the future doing

621
00:30:40,320 --> 00:30:44,160
something and and you can then
make the the alpha that you want

622
00:30:44,160 --> 00:30:46,320
on that.
By the time the sales process is

623
00:30:46,320 --> 00:30:50,480
closed, most that year is kind
of gone and then it's all yeah,

624
00:30:50,560 --> 00:30:51,200
yeah.
Yeah.

625
00:30:51,240 --> 00:30:55,200
I mean, there's also examples,
like there's a classic example

626
00:30:55,520 --> 00:30:59,720
of when BHP sold its coal asset
in I think is in Colombia, you

627
00:30:59,720 --> 00:31:02,080
know, like, and Glencoe bought
it, you know, like, and by the

628
00:31:02,080 --> 00:31:04,920
time that the deal actually got
finished, you know, Glencoe had

629
00:31:04,920 --> 00:31:08,680
made so much money out of out of
just the coal price moving that

630
00:31:08,680 --> 00:31:11,840
they could just like they could
pay for the purchase of the mine

631
00:31:12,160 --> 00:31:16,360
through just that year's worth
of price movement and, and the

632
00:31:16,360 --> 00:31:18,720
revenue they got out.
Of what a champagne problem to

633
00:31:18,720 --> 00:31:21,240
have, because I was going to say
actually, while we're on that as

634
00:31:21,240 --> 00:31:26,800
well, I mean, I mean that's also
sort of, you know, one reason

635
00:31:26,800 --> 00:31:30,920
why we're we're seeing a lot of
people, you know, buying rather

636
00:31:30,920 --> 00:31:33,800
than, you know, slash building
discovering.

637
00:31:34,280 --> 00:31:36,760
And we saw, you know, so the
recent manoeuvres this, you

638
00:31:36,760 --> 00:31:40,520
know, the BHP and Anglo and then
it went, you know, BHP London

639
00:31:40,520 --> 00:31:42,760
and and the fellow assets as
well.

640
00:31:43,440 --> 00:31:46,760
Do you say that sort of
continuing going forward like

641
00:31:46,760 --> 00:31:51,840
that that focus of you know,
sort of, you know, buying rather

642
00:31:51,840 --> 00:31:54,960
than building in in discovery?
Yeah, I think so.

643
00:31:54,960 --> 00:31:58,000
I think, I think there's more
risk in developing these big

644
00:31:58,000 --> 00:32:02,480
assets and and I think some of
it is perceived, but some of it

645
00:32:02,480 --> 00:32:03,760
is is real.
Yeah.

646
00:32:03,760 --> 00:32:05,680
Like I think it's hard to build
these things.

647
00:32:07,000 --> 00:32:09,680
It's hard to build them on time,
you know, without having cost

648
00:32:09,680 --> 00:32:11,320
blowouts and things like that as
well.

649
00:32:11,960 --> 00:32:14,680
And there's plenty of those, you
know, stories around the traps.

650
00:32:15,560 --> 00:32:18,760
So I think, you know, so
companies I think are now, you

651
00:32:18,760 --> 00:32:21,600
know, like probably happy to pay
a premium to pay for something

652
00:32:21,600 --> 00:32:24,200
that's already in production
that like that they don't have

653
00:32:24,200 --> 00:32:27,000
to worry about how, how they're
going to make it work and they

654
00:32:27,000 --> 00:32:30,160
can expand it along the way.
And that kind of goes back to

655
00:32:30,160 --> 00:32:32,640
the, you know, the research that
Richard and Pietro have done,

656
00:32:32,640 --> 00:32:35,160
which shows that, you know, like
when an asset is already there,

657
00:32:35,440 --> 00:32:38,160
it's it's much easier to grow
that resource base and add it

658
00:32:38,160 --> 00:32:43,720
into into production rather than
have to go find a new mine and

659
00:32:43,720 --> 00:32:46,440
go through the permitting
process of building it and doing

660
00:32:46,440 --> 00:32:47,920
all of all of those things as
well.

661
00:32:47,920 --> 00:32:51,440
So, yeah, so I I think people
will happily pay a premium now

662
00:32:51,440 --> 00:32:53,040
for something that's already in
production it.

663
00:32:53,440 --> 00:32:55,720
It makes the Phyllo example
particularly interesting because

664
00:32:55,720 --> 00:33:00,080
the the the stab they had at
Anglo was for producing assets.

665
00:33:00,280 --> 00:33:03,440
The Phyllo 1 is, you know, very
family development.

666
00:33:03,760 --> 00:33:05,800
Yeah, that's right.
It's, I mean, it'd be

667
00:33:05,800 --> 00:33:07,440
interesting to see how that goes
along.

668
00:33:07,440 --> 00:33:10,360
Like, you know, I mean, you
know, like I'm not completely a

669
00:33:10,360 --> 00:33:13,880
fait with what Filo has done
from a permitting side of things

670
00:33:13,880 --> 00:33:17,120
or whether they've gone down
that path, but I think that's

671
00:33:17,120 --> 00:33:20,280
more of a play as well.
Like, you know, you've got a

672
00:33:20,280 --> 00:33:22,440
number of substantial deposits
close by.

673
00:33:22,720 --> 00:33:24,960
So if you can kind of put them
together, you know, like that

674
00:33:24,960 --> 00:33:28,120
kind of gives them the scale of
operation that probably a

675
00:33:28,120 --> 00:33:31,720
company like BHP is looking for.
So I think it's more of a play

676
00:33:31,720 --> 00:33:33,880
and you know, like how can you
kind of put all of these things

677
00:33:33,880 --> 00:33:37,920
together so you're not
completely dependent on one

678
00:33:37,920 --> 00:33:40,360
asset kind of working, You know,
you can kind of make them work

679
00:33:40,360 --> 00:33:44,800
in in a hub kind of model.
On, on the point on commodity

680
00:33:44,800 --> 00:33:48,360
price for forecasting once more,
do you, do you think this is

681
00:33:48,360 --> 00:33:51,200
something that people from other
industries would kind of look in

682
00:33:51,200 --> 00:33:54,320
at the the mining sector and
just not be able to wrap their

683
00:33:54,320 --> 00:33:58,920
head around how you know, you
can't control, you know, P in

684
00:33:58,920 --> 00:34:03,760
your P * Q equation or you can
just be so horribly wrong in, in

685
00:34:03,760 --> 00:34:07,080
forecasting.
I guess it just hones in focus

686
00:34:07,080 --> 00:34:10,600
on controlling your costs, but
that should be a staple in any,

687
00:34:10,600 --> 00:34:14,120
in any kind of business.
But I mean, do you think there's

688
00:34:14,120 --> 00:34:17,280
sort of gaps like that that lie
in in other sectors that perhaps

689
00:34:17,280 --> 00:34:19,679
I just haven't spent too much
time looking at?

690
00:34:19,800 --> 00:34:21,760
Well, I mean, yeah, like I'll
kind of say this.

691
00:34:21,760 --> 00:34:23,320
I mean, one of the most
challenging things about the

692
00:34:23,320 --> 00:34:25,760
mining industry is that the
companies are price takers and

693
00:34:25,760 --> 00:34:28,480
not price setters.
You know, like the, you know,

694
00:34:28,480 --> 00:34:31,600
like if you're, you know, like
if you're Apple, you can kind of

695
00:34:31,600 --> 00:34:33,920
set the price of your consumer
goods to some degree.

696
00:34:33,920 --> 00:34:35,760
And, and you know, you can back
it up with some level of

697
00:34:35,760 --> 00:34:39,360
marketing and things like that.
You know, like if you had gone

698
00:34:39,360 --> 00:34:43,000
to set to, to, to say to someone
that you could charge $2000.00

699
00:34:43,000 --> 00:34:45,600
for a phone, you know, like,
prior to the advent of

700
00:34:45,600 --> 00:34:47,159
smartphones, like people would
have thought that was

701
00:34:47,159 --> 00:34:49,840
ridiculous, right?
But, but they have created the,

702
00:34:49,880 --> 00:34:52,080
the marketplace.
I think now that that you can

703
00:34:52,080 --> 00:34:55,199
kind of do that, you know,
whereas commodities, you know,

704
00:34:55,199 --> 00:34:58,760
like as a company, there's very
few companies that get to set

705
00:34:58,760 --> 00:35:01,840
their own price, right.
So I mean, companies like

706
00:35:01,840 --> 00:35:04,440
Glencoe can kind of benefit from
the commodity trading point of

707
00:35:04,440 --> 00:35:08,120
view on the other side, but but
you're fundamentally not setting

708
00:35:08,120 --> 00:35:11,520
the price for genuine for a good
reason, you know, like you know,

709
00:35:11,520 --> 00:35:14,760
otherwise it would be a monopoly
kind of set up which which which

710
00:35:14,760 --> 00:35:17,520
wouldn't work for anyone.
I suppose the, the kind of

711
00:35:17,520 --> 00:35:19,920
saving grace or one of the, the
factors that the mining industry

712
00:35:19,920 --> 00:35:22,840
has in its favour is that
there's probably a lot more

713
00:35:23,520 --> 00:35:25,480
continuity.
Like if you're if you're getting

714
00:35:25,480 --> 00:35:28,680
a world class iron ore
operation, you know the the set

715
00:35:28,680 --> 00:35:30,960
of companies that had them 50
years ago are still around,

716
00:35:31,200 --> 00:35:35,080
whereas the set of top tier tech
companies as your example was is

717
00:35:35,440 --> 00:35:37,120
completely different.
That's right.

718
00:35:37,160 --> 00:35:39,400
Yeah, Yeah.
I mean, I think that's, I mean,

719
00:35:39,400 --> 00:35:41,800
that's a really good point in
that, you know, like, I mean,

720
00:35:41,800 --> 00:35:46,000
this is where I think This is
why people like these long life

721
00:35:46,000 --> 00:35:47,960
assets as well.
Like, you know, they exist for a

722
00:35:47,960 --> 00:35:52,080
long time.
Yeah, it's hard to replace them

723
00:35:52,080 --> 00:35:53,280
as well.
Like, you know, if the Pilbara

724
00:35:53,280 --> 00:35:55,920
didn't exist, you know, like
it'll be pretty hard to replace

725
00:35:55,920 --> 00:35:59,360
that amount of iron ore coming
from like, you know, like 10

726
00:35:59,360 --> 00:36:02,280
different kind of kind of mines
as well.

727
00:36:02,520 --> 00:36:05,400
And that's also, I think, you
know, like this is maybe more of

728
00:36:05,400 --> 00:36:08,360
a, like a personal point of view
is that I just think, you know,

729
00:36:08,520 --> 00:36:11,840
also if you're the executive for
a company like BHP, you know,

730
00:36:11,840 --> 00:36:17,160
like it's, I would think it's
much easier to have one or two

731
00:36:17,160 --> 00:36:21,080
kind of assets in your, in your
portfolio that produce rather

732
00:36:21,080 --> 00:36:24,640
than having 20 assets that you
have to manage and like produce

733
00:36:24,640 --> 00:36:26,360
the same amount of copper.
Like, you know, like

734
00:36:26,360 --> 00:36:29,640
operationally and logistically,
that's a much bigger problem

735
00:36:29,640 --> 00:36:32,240
than, you know, like, I'd much
rather take something like

736
00:36:32,240 --> 00:36:34,800
Escondida.
I just have 1 copper asset that

737
00:36:34,800 --> 00:36:38,240
runs for a long time rather than
have, you know, like 20 assets

738
00:36:38,240 --> 00:36:39,600
that produce the same amount of
copper.

739
00:36:39,880 --> 00:36:42,360
But you are at different stages
where you got to build this

740
00:36:42,360 --> 00:36:44,000
thing out, you got to expand
this thing.

741
00:36:44,280 --> 00:36:46,240
You know, that's I think a much
more challenging kind of

742
00:36:46,360 --> 00:36:48,040
operation as well for a large
company.

743
00:36:48,360 --> 00:36:50,840
I'm just churning in light, but
as Ahmed mentioned, verify.

744
00:36:50,840 --> 00:36:54,360
Yet he's always been a serial
verify mentioner.

745
00:36:54,760 --> 00:36:56,720
He.
Has, although is there a verify

746
00:36:56,720 --> 00:37:00,120
model for Eskandida?
How good that is?

747
00:37:00,120 --> 00:37:03,000
I've seen the one for for Kamal
Kakula that's pretty good.

748
00:37:03,000 --> 00:37:07,520
Yes, yes, but yeah, that's well
if it's good enough for Kamal

749
00:37:07,520 --> 00:37:10,000
Kakula, it should be good enough
for Escondida.

750
00:37:10,400 --> 00:37:14,080
Well, and as he's didn't he say
like once in a one in 100 year

751
00:37:14,080 --> 00:37:16,640
discovery?
Yeah, one, one in a 100 year,

752
00:37:16,640 --> 00:37:19,520
you know, And if you got people
like, you know, Robert Friedland

753
00:37:19,600 --> 00:37:21,880
using it, why aren't you?
Why?

754
00:37:21,880 --> 00:37:26,120
Why aren't you trying to find
the next Escondida with a verify

755
00:37:26,120 --> 00:37:29,520
model?
Escondida verify model would

756
00:37:29,520 --> 00:37:32,520
started small.
It's growing into Escondida.

757
00:37:33,000 --> 00:37:35,280
Verify models grow
proportionally to how much you

758
00:37:35,280 --> 00:37:37,160
drill and find.
You know what Escondida means in

759
00:37:37,160 --> 00:37:38,360
Spanish?
What does it mean?

760
00:37:38,400 --> 00:37:39,760
Hidden.
Verify it means hidden.

761
00:37:40,120 --> 00:37:41,720
Yeah, it does.
Yeah, yeah, because it's like

762
00:37:41,720 --> 00:37:45,160
500 means below the surface.
Unlike you out love for verify

763
00:37:45,160 --> 00:37:47,800
which is not hidden.
So prevalent.

764
00:37:48,720 --> 00:37:50,480
Explain your story.
Simply go for news.

765
00:37:50,480 --> 00:37:52,280
Verify.
News verify and go get an

766
00:37:52,280 --> 00:37:55,680
Escondido India.
And the verify AI to actually

767
00:37:55,680 --> 00:37:59,400
find these hidden deposits.
Yes, email Grant and even

768
00:37:59,400 --> 00:38:02,520
better, go have a beer with
Grant 'cause he is AGC.

769
00:38:03,080 --> 00:38:04,680
If you're in Perth as well,
Nathan.

770
00:38:04,840 --> 00:38:07,320
Oh, big knife, yeah.
They're all over.

771
00:38:07,320 --> 00:38:09,880
They're all over the world.
Yeah, yeah, you'll see him at

772
00:38:09,880 --> 00:38:12,560
the bloody IGIS and everything.
They're just everywhere.

773
00:38:15,600 --> 00:38:18,800
Go verify.
Yeah, I think it's a kind of

774
00:38:18,800 --> 00:38:21,320
reflects on the the management
and the CEO and how they are in

775
00:38:21,320 --> 00:38:23,240
their headspace and how they
think about things.

776
00:38:23,240 --> 00:38:26,200
It was interesting to listen to
the the call with Brendan Harris

777
00:38:26,240 --> 00:38:29,840
at Sandfire and he held a
similar view to to you there

778
00:38:30,240 --> 00:38:33,840
talking about not wanting to
develop Black Butte unless it,

779
00:38:34,160 --> 00:38:36,440
you know, reaches substantial
scale because it adds another

780
00:38:36,440 --> 00:38:37,680
time zone.
There's a whole another

781
00:38:37,680 --> 00:38:39,640
workforce.
Yeah, another office.

782
00:38:39,640 --> 00:38:42,880
And, you know, it's kind of
refreshing to to hear that it's,

783
00:38:43,320 --> 00:38:45,120
yeah, like you said, it's so
much harder to have all these

784
00:38:45,120 --> 00:38:49,880
moving parts around.
You actually hone in on BHB, for

785
00:38:49,880 --> 00:38:52,120
example.
And it's perhaps not as

786
00:38:52,360 --> 00:38:54,640
confusing as people may
initially think.

787
00:38:54,640 --> 00:38:57,560
You know, you've got 2/3 of the
revenue iron ore, then you've

788
00:38:57,560 --> 00:39:00,760
got cooking coal now and you've
got copper and there's bits.

789
00:39:00,760 --> 00:39:03,480
They're trying and they're
sinking money into potash here

790
00:39:03,480 --> 00:39:06,000
and there.
But they've done well to to

791
00:39:06,000 --> 00:39:07,480
simplify the kind of narrative
in.

792
00:39:07,560 --> 00:39:09,960
The yeah, and I think that's the
adage, right?

793
00:39:10,040 --> 00:39:13,080
You know, do do less, but
better, right like, you know,

794
00:39:13,080 --> 00:39:15,080
like really know the businesses
you're in.

795
00:39:15,080 --> 00:39:18,280
And I think that's that's that's
a much more effective strategy.

796
00:39:18,560 --> 00:39:20,560
And I think this like
simplification also I think

797
00:39:20,560 --> 00:39:23,400
leads to why, you know, like to
your comment about like

798
00:39:23,400 --> 00:39:25,760
geographical spread.
I think, you know, This is why

799
00:39:25,760 --> 00:39:30,640
also people concentrate on
certain geographies or certain

800
00:39:30,640 --> 00:39:34,680
deposit styles maybe is because
it's, it's much better like, you

801
00:39:34,680 --> 00:39:36,960
know, you remove degrees of
freedom, you know, like, so if

802
00:39:36,960 --> 00:39:40,560
you're a company like BHP or
you're Anglo, you know, you're

803
00:39:40,560 --> 00:39:43,920
in Chile, you know, like there's
not a huge incentive to go take

804
00:39:43,920 --> 00:39:47,400
on the risk of like trying to
develop something in the DRC or

805
00:39:47,400 --> 00:39:49,400
like sub Saharan Africa or
things like that.

806
00:39:49,720 --> 00:39:52,440
You know, like geographically,
you know, you probably

807
00:39:52,440 --> 00:39:55,200
concentrated become a little bit
more conservative because you

808
00:39:55,200 --> 00:39:57,480
know, that jurisdiction, you
know, the way of how to work

809
00:39:57,480 --> 00:39:59,720
with parties and things like
that, you know, like why

810
00:39:59,720 --> 00:40:02,960
complicated by trying to take
on, you know, like 10 different

811
00:40:02,960 --> 00:40:06,040
jurisdictions.
So yeah, so that I think

812
00:40:06,040 --> 00:40:08,200
realistically, if you're a
business, you know, you want to

813
00:40:08,200 --> 00:40:09,600
take complexity out of your
business.

814
00:40:09,600 --> 00:40:11,400
So it makes total sense why you
want to do that.

815
00:40:12,160 --> 00:40:14,480
I want to dive a bit deeper on
on BHB.

816
00:40:15,440 --> 00:40:19,360
So you know, Olympic Dam is been
there since they took over

817
00:40:19,480 --> 00:40:23,000
Western mining 20 some years now
and then they've pulled in the

818
00:40:23,080 --> 00:40:26,280
the odds assets and they've
recently for the first time come

819
00:40:26,280 --> 00:40:30,120
out with a resource at Oak Dam.
So to start with, what were your

820
00:40:30,120 --> 00:40:32,920
thoughts on the the resource
that that came out there?

821
00:40:33,840 --> 00:40:36,240
I mean, to be honest, I think it
was probably a little bit lower

822
00:40:36,240 --> 00:40:37,640
grade than I thought it was
going to be.

823
00:40:38,280 --> 00:40:39,520
Yeah.
Like, I know they have a high

824
00:40:39,520 --> 00:40:42,080
grade component, but I thought
that high grade component would

825
00:40:42,080 --> 00:40:44,520
be a bigger portion of the
overall deposit.

826
00:40:45,120 --> 00:40:46,840
The overall deposit is is quite
big.

827
00:40:46,840 --> 00:40:49,680
It's it's, you know, it's
probably the size of deposit

828
00:40:49,680 --> 00:40:51,720
they would probably look at as A
at a minimum.

829
00:40:52,680 --> 00:40:55,080
But I think at that depth, you
know, like it's probably.

830
00:40:55,080 --> 00:40:56,920
Needed to be a little bit higher
grade.

831
00:40:58,240 --> 00:41:01,280
But they'll probably still get
developed, you know, like as an

832
00:41:01,280 --> 00:41:04,760
asset, you know, maybe in the
BHP world that asset loses

833
00:41:04,760 --> 00:41:06,120
money.
But overall, the business will

834
00:41:06,120 --> 00:41:08,640
probably do really well out of
having having something like Oak

835
00:41:08,640 --> 00:41:09,640
Dam in there.
Yeah.

836
00:41:09,640 --> 00:41:12,560
And and for those curious, the
the numbers that sort of came

837
00:41:12,560 --> 00:41:19,000
out were 1300 and 40 million
tonnes at .66% copper with .33

838
00:41:19,000 --> 00:41:21,960
grammes per tonne in gold and
the, and the ore body was

839
00:41:21,960 --> 00:41:25,400
starting at 650 metres sort of
depth.

840
00:41:25,640 --> 00:41:27,680
Yeah.
So around that 6700 metre kind

841
00:41:27,680 --> 00:41:29,760
of depth.
But this is where I think, you

842
00:41:29,760 --> 00:41:34,640
know, like, you know, there's
some synergies in how there's

843
00:41:34,640 --> 00:41:37,720
some synergy in BHP taking over
Oz because Oz is going through

844
00:41:37,720 --> 00:41:41,000
the process of developing
Carapatina, which is roughly the

845
00:41:41,000 --> 00:41:43,040
same depth.
You know, it's roughly the same

846
00:41:43,040 --> 00:41:46,320
grade profile as well.
So you know, so they're going to

847
00:41:46,320 --> 00:41:47,920
probably learn their lessons
there.

848
00:41:48,080 --> 00:41:51,320
So hopefully Oak Dam should go a
lot smoother because you know,

849
00:41:51,320 --> 00:41:53,360
like they've already kind of
learned that lesson and have

850
00:41:53,360 --> 00:41:56,840
that corporate knowledge to, to
how to mine Oak Dam.

851
00:41:56,960 --> 00:42:00,960
You, you talk about synergy from
an IP sort of sense there,

852
00:42:00,960 --> 00:42:03,080
right?
Yeah, because I, I mean, you

853
00:42:03,080 --> 00:42:05,520
know, like a BHP probably as a
company, you know, like they're

854
00:42:05,520 --> 00:42:09,520
pretty good at large open pits,
you know, like they're not, I

855
00:42:09,520 --> 00:42:11,960
don't think they have many
assets that do large

856
00:42:11,960 --> 00:42:14,360
underground, you know, like bulk
kind of mining.

857
00:42:15,480 --> 00:42:16,880
Yeah.
So that's where that expertise

858
00:42:16,880 --> 00:42:19,240
from Carapatina will kind of
come in, so.

859
00:42:19,360 --> 00:42:20,960
We're going to apply the
learnings there.

860
00:42:21,360 --> 00:42:24,000
Yeah, that's right.
So that makes sense, right.

861
00:42:24,000 --> 00:42:28,000
Like, yeah, they're the same
deposit style, same like

862
00:42:28,000 --> 00:42:30,720
geological domain really.
It's going to have probably the

863
00:42:30,720 --> 00:42:33,720
same level of complexity.
So it makes sense.

864
00:42:34,440 --> 00:42:37,040
I think deep, I think
underground, I think DSI and I

865
00:42:37,040 --> 00:42:40,880
think of like the deeper you go,
the more concentration you need

866
00:42:40,880 --> 00:42:44,640
of DSI bolts in the ground to
keep that bloody joint humming.

867
00:42:44,960 --> 00:42:48,160
Right.
Bloody DSI set up a factory in a

868
00:42:48,440 --> 00:42:50,880
bloody SA with all this shit
happening.

869
00:42:52,200 --> 00:42:55,000
Oh damn is oh it's pretty.
Pretty deep 1,000,000 bucks a

870
00:42:55,000 --> 00:42:59,160
drill is isn't it?
Every every drill hole was like

871
00:42:59,160 --> 00:43:01,400
a yeah, kilometre date, but I
think the world works out.

872
00:43:01,400 --> 00:43:03,240
It's like 750.
Oh mate, there's going to be

873
00:43:03,240 --> 00:43:06,760
millions of bucks worth of DSI
bolts and mesh down in that

874
00:43:06,760 --> 00:43:08,920
joint because who else would you
buy them off?

875
00:43:08,920 --> 00:43:11,360
I don't trying to think.
No, I can't think of anyone.

876
00:43:11,360 --> 00:43:13,200
It's just DSI.
Thank God we've got them.

877
00:43:13,320 --> 00:43:16,040
Take off.
Thank God we've got DSI in

878
00:43:16,040 --> 00:43:17,440
Australia.
Go Australia.

879
00:43:17,440 --> 00:43:20,960
Go DSI, go, Derek heard.
Get on the front foot, BHP.

880
00:43:22,960 --> 00:43:27,240
And So what are your thoughts
about on sandfires, that

881
00:43:27,240 --> 00:43:31,080
position of Metsa and that sort
of whole Spanish region as well?

882
00:43:31,920 --> 00:43:33,920
So this is like, you know, like
stemming off from our

883
00:43:33,920 --> 00:43:36,440
conversation, like if you're a
company like Sandfire, like, you

884
00:43:36,440 --> 00:43:39,600
know, like what type of assets
could you go and buy in, in the

885
00:43:39,600 --> 00:43:41,600
copper space?
You know, like you're probably

886
00:43:41,600 --> 00:43:44,640
not going to be able to buy
like, you know, an Escondido or

887
00:43:44,720 --> 00:43:47,560
or something like that.
You're probably not going to be

888
00:43:47,560 --> 00:43:50,240
able to buy something like Oz,
you know, like the assets they

889
00:43:50,240 --> 00:43:52,800
have.
So, so I think you know, like

890
00:43:52,800 --> 00:43:56,600
Matsa kind of fits, you know,
like if I had to recommend an

891
00:43:56,600 --> 00:43:59,480
asset that that Sanifi would
have to buy, you know, that's

892
00:43:59,480 --> 00:44:03,280
the type of asset that that
you'd probably go for along with

893
00:44:04,520 --> 00:44:07,200
the company that they bought in
Botswana mod, you know, like so

894
00:44:07,200 --> 00:44:09,600
you know, so they kind of fit in
that right kind of profile.

895
00:44:09,800 --> 00:44:13,480
Very different price tags, yeah.
Yeah, I know, I know.

896
00:44:14,640 --> 00:44:16,520
So, yeah.
So I mean, I guess Spain is, you

897
00:44:16,520 --> 00:44:19,360
know, like from a geological
point of view, you know, Spain

898
00:44:19,360 --> 00:44:22,760
is like it's the, the belt is
called the Iberian pyrite belt.

899
00:44:23,000 --> 00:44:25,400
You know, it's been mined since
like the times of the Romans.

900
00:44:26,280 --> 00:44:28,960
You know, it's where Rio Tinto
kind of became Rio Tinto.

901
00:44:30,200 --> 00:44:33,000
And so, so, you know, so Rio
Tinto spent quite a lot of time

902
00:44:33,000 --> 00:44:34,440
exploring that part of the
world.

903
00:44:35,080 --> 00:44:38,120
They didn't find anything big.
You know, they found Las Cruces,

904
00:44:38,120 --> 00:44:40,040
but it probably wasn't the right
size for them.

905
00:44:40,040 --> 00:44:42,440
So they sold it.
So there's been a lot of

906
00:44:42,440 --> 00:44:44,480
discoveries along that along
that belt.

907
00:44:44,480 --> 00:44:47,840
You know, there's about 8 to 10
kind of decent discoveries that

908
00:44:47,840 --> 00:44:51,320
were had, but they're not at a
size where, you know, Major is

909
00:44:51,320 --> 00:44:52,960
going to go in and, and attack
them.

910
00:44:53,160 --> 00:44:56,320
So I think they're the perfect
kind of area for for a meteor

911
00:44:56,320 --> 00:45:00,120
like sand file, which has growth
aspirations to kind of go and go

912
00:45:00,120 --> 00:45:02,680
and take over.
So I look at like, you know,

913
00:45:02,680 --> 00:45:04,880
like why would you buy mats?
You know, it's probably

914
00:45:04,880 --> 00:45:08,600
worthwhile to buy mats where you
have a processing kind of centre

915
00:45:08,600 --> 00:45:10,160
as well.
So you don't have to go down

916
00:45:10,160 --> 00:45:12,240
that path.
Then once you have the

917
00:45:12,240 --> 00:45:16,160
processing centre, it's the old
kind of WA gold adage that you

918
00:45:16,160 --> 00:45:19,240
know the person that has a milk
and then they'll have gold from

919
00:45:19,240 --> 00:45:21,000
all these small things kind of
coming through.

920
00:45:21,000 --> 00:45:22,080
Yeah, what happened?
Spoke.

921
00:45:22,920 --> 00:45:24,800
Yeah.
So that's I think maybe the

922
00:45:24,880 --> 00:45:28,320
like, you know, I'm I'm just
saying this as a external person

923
00:45:28,320 --> 00:45:30,760
that that's I think maybe their
angle is that, you know, the get

924
00:45:30,760 --> 00:45:33,360
a foothold would get a keystone
kind of anchor.

925
00:45:33,600 --> 00:45:36,480
And then a lot of these kind of
other deposits start becoming

926
00:45:36,480 --> 00:45:40,360
live because you know you you
are the only party that they can

927
00:45:40,360 --> 00:45:43,360
sell to are.
You surprised that we haven't

928
00:45:43,360 --> 00:45:46,120
seen any of that consolidation
yet or is that just a factor of

929
00:45:46,120 --> 00:45:49,000
how much debt sand fire kind of
took on and the fact that they

930
00:45:49,000 --> 00:45:51,560
might need to just you know
balance the.

931
00:45:52,760 --> 00:45:56,520
Yeah, I guess, yeah.
Like again, assuming that they

932
00:45:56,520 --> 00:45:58,880
would have probably predicted
copper price to have peaked by

933
00:45:58,880 --> 00:46:00,320
now.
So, so they would have been able

934
00:46:00,320 --> 00:46:03,520
to kind of go and and you know
like a either pay off the debt

935
00:46:03,520 --> 00:46:06,920
so the balance sheet looks
better or be able to go and and

936
00:46:06,920 --> 00:46:10,360
transact on these things.
So maybe they're kind of holding

937
00:46:10,360 --> 00:46:13,960
the powder dry until, you know,
the market kind of allows them

938
00:46:13,960 --> 00:46:17,120
to to expand as quickly or as
aggressively as they want.

939
00:46:17,600 --> 00:46:21,160
And actually on that
consolidations sort of strategy

940
00:46:21,160 --> 00:46:28,160
as well, I mean do you think you
know Sapphire as a say or just

941
00:46:28,160 --> 00:46:32,800
more generally a mid tier is
perhaps the more capable sort of

942
00:46:32,920 --> 00:46:37,560
size company to do that sort of
regional consolidation then

943
00:46:37,560 --> 00:46:39,200
perhaps a major?
Yeah.

944
00:46:39,200 --> 00:46:42,320
I just think, yeah, like the
major would, it'll be too.

945
00:46:42,320 --> 00:46:45,200
It wouldn't be cost effective
for them to do like a lot of

946
00:46:45,200 --> 00:46:49,600
these small things, you know,
like even think like, you know,

947
00:46:49,600 --> 00:46:54,400
things like, you know, like when
even a company like WMC couldn't

948
00:46:54,400 --> 00:46:58,120
kind of hold Cambaldo together,
you know, like even those assets

949
00:46:58,120 --> 00:47:02,680
kind of became too small for a
company like WMCWMC at that time

950
00:47:02,680 --> 00:47:06,720
was probably a mid tier, you
know, like maybe a upper tier

951
00:47:06,720 --> 00:47:09,560
kind of mid tier.
But yeah, so I think they're

952
00:47:09,560 --> 00:47:11,320
just too small.
Like, you know, you there, there

953
00:47:11,320 --> 00:47:15,000
would be so much lost between
the the seat cushions for for

954
00:47:15,000 --> 00:47:18,600
company like BHP to try to put
all of that stuff together that

955
00:47:18,600 --> 00:47:19,960
just wouldn't be worth it for
them.

956
00:47:20,560 --> 00:47:23,160
There there was also speculation
back on sand fire that they

957
00:47:23,160 --> 00:47:27,920
would scoop up Comic cow.
Yeah, they ruled themselves out

958
00:47:28,080 --> 00:47:31,440
relatively early in the in the
process there.

959
00:47:31,440 --> 00:47:36,440
But the company that's ended up
buying at NMGI think you have

960
00:47:36,880 --> 00:47:40,480
experience with back in in the
mid sort of 2010.

961
00:47:40,480 --> 00:47:43,720
So have you, did you make an
assessment at the time of what

962
00:47:43,720 --> 00:47:46,600
you thought of the, the price
they paid the, the asset and

963
00:47:46,600 --> 00:47:47,840
these sorts of things?
Yeah.

964
00:47:47,840 --> 00:47:50,360
So I think, I mean, you're
right, Like I, I would have

965
00:47:50,640 --> 00:47:53,720
predicted if they'd gone after
like a company like MOD, they

966
00:47:53,720 --> 00:47:56,560
would have gone after some of
the other assets there as well.

967
00:47:58,120 --> 00:48:00,400
Yeah, like I'm not sure exactly
why they didn't.

968
00:48:00,400 --> 00:48:04,000
I mean, I think, I think they
could have gone for it, you

969
00:48:04,000 --> 00:48:08,480
know, like the MMG asset is
maybe not the same, same level

970
00:48:08,480 --> 00:48:11,360
as as the mod assets.
So, so maybe they would have

971
00:48:11,360 --> 00:48:13,720
gone for that, like they went
for the the best thing they

972
00:48:13,720 --> 00:48:16,560
could go for.
But yeah, I'm not sure.

973
00:48:16,560 --> 00:48:19,280
Like I think, you know, like
that's also another space.

974
00:48:19,280 --> 00:48:21,800
You know, there's a few deposits
there that found in that belt.

975
00:48:21,800 --> 00:48:24,320
You know, they've grown
significantly since then, you

976
00:48:24,320 --> 00:48:26,760
know, like, so someone can come
along and kind of put that back

977
00:48:26,760 --> 00:48:29,960
together.
But the general view that I have

978
00:48:29,960 --> 00:48:32,840
is I think, yeah, like in
principle, I think it's easy to

979
00:48:32,840 --> 00:48:35,480
say people should go and kind of
put these things together.

980
00:48:35,480 --> 00:48:39,080
But I think the, you know, like
the timing of when like the deal

981
00:48:39,080 --> 00:48:41,280
window for all these assets kind
of aligns.

982
00:48:41,280 --> 00:48:43,120
You know, it's kind of like the
Swiss cheese model, right?

983
00:48:43,120 --> 00:48:44,720
Like all the holes have to kind
of align.

984
00:48:44,960 --> 00:48:46,960
And I think that's, that's
sometimes a little bit hard

985
00:48:47,520 --> 00:48:52,480
unless someone goes and is ultra
aggressive and is happy to pay

986
00:48:52,480 --> 00:48:55,080
premiums to kind of get deals
done because they know it'll

987
00:48:55,160 --> 00:48:58,040
it'll kind of amalgamate and,
and, and there'll be the benefit

988
00:48:58,040 --> 00:49:00,000
down the line.
How do you think about, you

989
00:49:00,000 --> 00:49:03,200
know, given you've got a a few
years of experience on, on me

990
00:49:03,200 --> 00:49:06,960
that the the timing of you know,
acquiring the assets as well as

991
00:49:06,960 --> 00:49:09,440
getting the financing done to to
develop it if we're talking

992
00:49:09,440 --> 00:49:11,640
about acquiring it?
Yeah.

993
00:49:12,600 --> 00:49:14,920
So I think one of the risks
that's kind of coming in now is

994
00:49:14,920 --> 00:49:19,440
that, yeah, like as a
development timeline blows out,

995
00:49:19,760 --> 00:49:21,960
you know, the risk you have.
Is that if?

996
00:49:22,120 --> 00:49:26,520
If you if you're developing an
asset and you miss commodity

997
00:49:26,520 --> 00:49:30,000
price boom, then it's really
hard to get that that money

998
00:49:30,000 --> 00:49:31,920
back, you know, like all over
the time.

999
00:49:32,160 --> 00:49:34,680
So I think that's why, you know,
people are aggressively going

1000
00:49:34,680 --> 00:49:38,280
after assets that are already in
production because then when,

1001
00:49:38,280 --> 00:49:41,800
you know, it's much easier to
expand a mine and you know, I

1002
00:49:41,800 --> 00:49:45,480
can mine more while you're
sitting on the asset than having

1003
00:49:45,480 --> 00:49:48,800
to worry about trying to get a
government to hurry up or, you

1004
00:49:48,800 --> 00:49:52,040
know, like trying to push
environmental permitting through

1005
00:49:52,200 --> 00:49:54,800
when when kind of the price is
kind of booming as well.

1006
00:49:55,120 --> 00:49:58,200
So, yeah, so there's always
these like windows where I think

1007
00:49:58,200 --> 00:50:01,640
people are happy to pay that
premium in M&A because they know

1008
00:50:01,640 --> 00:50:05,280
that, you know, like when the
the market flips, you know, like

1009
00:50:05,280 --> 00:50:07,960
they're in the perfect position
to kind of, you know, like take

1010
00:50:07,960 --> 00:50:11,120
advantage of that price, price
spike that comes along.

1011
00:50:11,120 --> 00:50:13,680
And one of the classic examples
of this is, you know, like when

1012
00:50:13,960 --> 00:50:16,960
when BHP bought WMC, you know,
like, like for all intensive

1013
00:50:16,960 --> 00:50:21,240
purposes, BHP wasn't buying WMC
for for it's nickel assets, you

1014
00:50:21,240 --> 00:50:24,720
know, but they bought it the you
know, the deal was done in 2004,

1015
00:50:24,720 --> 00:50:28,480
2005 and then 678 was probably
one of the the biggest nickel

1016
00:50:28,480 --> 00:50:30,720
booms we've ever seen.
So, you know, at one point

1017
00:50:30,720 --> 00:50:33,640
nickel W was probably making
more profit than other parts of

1018
00:50:34,280 --> 00:50:37,840
BHP just by pure not not
coincidence.

1019
00:50:37,840 --> 00:50:39,920
But yeah, it wasn't probably
something that they had planned

1020
00:50:40,200 --> 00:50:42,840
for nickel.
To go to 50. $1000 per tonne and

1021
00:50:42,840 --> 00:50:45,880
yeah and just be creamy money
out so yeah.

1022
00:50:45,880 --> 00:50:49,560
So they you know, so like the
the numbers that I heard is

1023
00:50:49,560 --> 00:50:53,360
like, you know during that time
the the nickel business would

1024
00:50:53,360 --> 00:50:56,480
have like far outpaid any of its
costs for trying to buy that

1025
00:50:56,480 --> 00:50:59,040
business at that time just over
a couple of years.

1026
00:50:59,240 --> 00:51:03,160
And that was purely because all
those assets were in operation,

1027
00:51:03,440 --> 00:51:06,160
and all PHP had to do was sync
the capital to expand them.

1028
00:51:06,160 --> 00:51:08,400
And they did that pretty
quickly, pretty aggressively.

1029
00:51:08,400 --> 00:51:12,160
And then, you know, they were
kind of off to the races. 11

1030
00:51:12,160 --> 00:51:16,560
region we haven't spoken about
is, is Mongolia with obviously

1031
00:51:16,560 --> 00:51:21,080
the OT being the the flagship
asset in the area there.

1032
00:51:21,080 --> 00:51:24,760
Now that's got a a long and
interesting history with with

1033
00:51:24,840 --> 00:51:28,200
Ivanhoe and then Yep, Turquoise
Hill and Rio Tinto.

1034
00:51:28,720 --> 00:51:32,720
What what are your thoughts?
Not on OT itself, but on juniors

1035
00:51:32,720 --> 00:51:36,120
in in the area.
In Mongolia you mean?

1036
00:51:36,120 --> 00:51:40,040
Yeah, in Mongolia.
I mean, I think that's, I think

1037
00:51:40,040 --> 00:51:43,720
that's a classic kind of case of
your question in that, yeah,

1038
00:51:43,720 --> 00:51:48,240
it's probably a terrain that
majors are probably not going to

1039
00:51:48,240 --> 00:51:49,960
go into.
So it creates a space for

1040
00:51:49,960 --> 00:51:53,680
juniors to go in and then and
then, you know, like, and that's

1041
00:51:53,680 --> 00:51:59,040
I think the part where the
really aggressive kind of

1042
00:51:59,040 --> 00:52:01,040
juniors that are happy to go
into those terrains, you know,

1043
00:52:01,040 --> 00:52:05,000
they can kind of do that work.
And that's where I think their

1044
00:52:05,000 --> 00:52:07,480
space kind of fills in really
well is that they're happy to

1045
00:52:07,480 --> 00:52:09,400
take that risk.
You know, like they don't really

1046
00:52:09,400 --> 00:52:11,480
have much on the line, so they
can kind of go and do that

1047
00:52:11,480 --> 00:52:14,440
stuff.
And so the question really

1048
00:52:14,440 --> 00:52:17,240
becomes is, you know, like when
the junior finds something

1049
00:52:17,240 --> 00:52:19,400
that's bigger than his boots,
like what are they going to do

1050
00:52:19,400 --> 00:52:21,480
with it?
Like are they going to be able

1051
00:52:21,480 --> 00:52:23,800
to raise the money?
You know, like if you're 100

1052
00:52:23,800 --> 00:52:27,680
million like market cap junior
and you got to build a mine for

1053
00:52:27,680 --> 00:52:29,560
$2 billion, like how how are?
You going to?

1054
00:52:29,560 --> 00:52:30,600
How does that work?
Yeah.

1055
00:52:30,600 --> 00:52:33,560
Like how are you going to do the
even the like 6040 debt kind of

1056
00:52:33,560 --> 00:52:35,120
equity thing, like how are you
going to do that?

1057
00:52:35,560 --> 00:52:37,600
Like you're just going to blow
the company up if you go down

1058
00:52:37,600 --> 00:52:40,360
that path.
So, so I think, you know, like

1059
00:52:40,360 --> 00:52:43,280
sometimes, you know, like I, I,
I think it's like, you know,

1060
00:52:43,280 --> 00:52:45,480
sometimes juniors say they're
going into elephant country to

1061
00:52:45,480 --> 00:52:47,800
catch elephants, but you know,
you got to be careful because if

1062
00:52:47,800 --> 00:52:49,520
you catch 1, like, what are you
going to do with it Are?

1063
00:52:49,840 --> 00:52:53,040
You going to get paid for it On,
on the, the theme of, you know,

1064
00:52:53,680 --> 00:52:56,720
juniors rolling the dice in, in
Montgoli, is it kind of right to

1065
00:52:56,720 --> 00:53:01,720
assume, given the, the depth and
the scale of these, you know,

1066
00:53:01,760 --> 00:53:03,440
elephants that you're, you're
looking for?

1067
00:53:03,440 --> 00:53:06,720
Yeah, that exploration is a bit
more expensive, not to mention

1068
00:53:06,720 --> 00:53:09,120
the, the remoteness and, and all
these sorts of things.

1069
00:53:09,120 --> 00:53:10,720
Is it harder to kind of roll the
dice?

1070
00:53:11,200 --> 00:53:13,320
Yeah, I think they, you know,
like this is kind of I guess a

1071
00:53:13,320 --> 00:53:17,640
dichotomy, right?
Like juniors are, are not the

1072
00:53:17,640 --> 00:53:21,600
best agents to go explore in
these areas because you know,

1073
00:53:21,600 --> 00:53:24,880
it's remote, it costs more, you
know, like especially if you add

1074
00:53:24,880 --> 00:53:27,640
in the depth component, you
know, that costs more as well.

1075
00:53:28,560 --> 00:53:33,040
A junior company that has to
that has no revenue and has to

1076
00:53:33,040 --> 00:53:35,920
raise their money to go and and
search for things that are

1077
00:53:35,920 --> 00:53:38,840
expensive, you know, like are
they the best entity to go and

1078
00:53:38,840 --> 00:53:41,360
kind of do this work?
So, yeah.

1079
00:53:41,360 --> 00:53:44,440
So in reality, the best entity
for to do this work would be a

1080
00:53:44,440 --> 00:53:45,560
major.
Yeah.

1081
00:53:45,560 --> 00:53:48,960
Because they like they can go
spend this type of money and

1082
00:53:48,960 --> 00:53:51,280
then it will be a rounding error
in the stationary budget.

1083
00:53:51,720 --> 00:53:56,520
It's so they would like nobody
would care this happened and

1084
00:53:56,560 --> 00:53:58,360
they have.
To roll the dice a lot of times

1085
00:53:58,360 --> 00:54:01,280
to prepare the fruit, which,
yeah, it's hard to wear.

1086
00:54:01,680 --> 00:54:04,480
Yeah, that's why it's and this
is where I guess I'm, I'm a

1087
00:54:04,480 --> 00:54:07,840
little bit critical about when,
when major sometimes say that

1088
00:54:07,840 --> 00:54:10,080
they're looking for these, you
know, when they say they're

1089
00:54:10,080 --> 00:54:12,000
looking for an Escondido or
something like that.

1090
00:54:12,840 --> 00:54:16,280
Is that I think, I think like
genuine, like genuinely like

1091
00:54:16,280 --> 00:54:18,680
we've had one Escondida
discovered in the last 100

1092
00:54:18,680 --> 00:54:21,240
years, right.
That's probably not a great

1093
00:54:21,240 --> 00:54:23,640
thing to go and explore for, you
know, like what you should look

1094
00:54:23,640 --> 00:54:26,440
for is slightly smaller things
that could probably become an

1095
00:54:26,440 --> 00:54:27,840
Escondida.
Alright.

1096
00:54:27,840 --> 00:54:30,440
And then that's a strategy that
Rio is kind of adopting now.

1097
00:54:30,440 --> 00:54:33,640
Yeah, they look for Tier 2 like
large tier twos, and they're

1098
00:54:33,640 --> 00:54:36,520
hoping that they become a tier
one while they're working on it

1099
00:54:36,520 --> 00:54:38,800
along that lines.
Speed it into shape and make it

1100
00:54:38,800 --> 00:54:40,760
a Tier 1 exit of the time.
Yeah, yeah.

1101
00:54:40,760 --> 00:54:43,520
Or or like, you know, like
market conditions change and

1102
00:54:43,520 --> 00:54:46,760
from like it becomes an economic
tier one, right where where you

1103
00:54:46,760 --> 00:54:49,240
can kind of mine it and then and
then pass it on.

1104
00:54:50,040 --> 00:54:52,280
But then, you know, like that
kind of conflicts with with this

1105
00:54:52,280 --> 00:54:55,600
strategy of having a mine that
can just, you know, look exactly

1106
00:54:55,600 --> 00:54:57,880
the same for 50 years, you know,
like that, that that's the

1107
00:54:57,880 --> 00:54:59,520
problem for them.
I like that.

1108
00:54:59,600 --> 00:55:01,960
An economic tier one.
Yeah, Yeah.

1109
00:55:01,960 --> 00:55:04,840
Not a geological Tier 1.
No, because I mean, once you've

1110
00:55:04,840 --> 00:55:07,600
found the resource, like, you
know, like the resource

1111
00:55:07,600 --> 00:55:09,200
relatively doesn't change,
right?

1112
00:55:09,200 --> 00:55:12,960
Like it's, it's, it's fossilised
a long time ago, but it's, it's

1113
00:55:12,960 --> 00:55:15,840
just our, our economic
perception of it or our ability

1114
00:55:15,840 --> 00:55:18,960
to mine it and all those things
that, that change over time, you

1115
00:55:18,960 --> 00:55:20,440
know, like, so the resource is a
resource.

1116
00:55:20,440 --> 00:55:25,040
It's like, you know, if it's 1%
copper, you know, like there's

1117
00:55:25,040 --> 00:55:27,000
not much you can do to get it to
10%, right?

1118
00:55:27,200 --> 00:55:29,080
Like, you know, like it is what
it is.

1119
00:55:29,240 --> 00:55:34,240
You also think it's a bit of a,
you know, let, let explorers do

1120
00:55:34,320 --> 00:55:37,040
what explorers do well.
And then, you know, when it

1121
00:55:37,040 --> 00:55:40,960
comes to that Inflexion point
of, oh, the multi billion dollar

1122
00:55:40,960 --> 00:55:44,960
CapEx bill has come come through
because they've discovered this

1123
00:55:44,960 --> 00:55:46,960
big thing.
Then that's that's the time for

1124
00:55:46,960 --> 00:55:50,720
these big guy or mid tiers or
majors sort of to to step in.

1125
00:55:50,720 --> 00:55:53,720
Basically, yeah, completely.
I think, I think it's like,

1126
00:55:53,720 --> 00:55:57,000
yeah, it's a fundamentally
different skill set, I think to

1127
00:55:57,000 --> 00:56:01,080
go and do like grassroots
exploration as opposed to mine

1128
00:56:01,080 --> 00:56:02,760
development.
You know, like I wouldn't

1129
00:56:02,760 --> 00:56:05,440
advocate people that are good at
doing grassroots exploration to

1130
00:56:05,440 --> 00:56:07,960
go become mine developers, and I
wouldn't advocate mine

1131
00:56:07,960 --> 00:56:09,920
developers to go to grassroots
exploration.

1132
00:56:10,160 --> 00:56:13,320
You know, there's fundamental
drivers in that in that sense.

1133
00:56:14,440 --> 00:56:17,400
So I think like, you know, so
companies that have historically

1134
00:56:17,400 --> 00:56:21,280
been really good explorers, you
know, they tend to be explorers,

1135
00:56:21,280 --> 00:56:24,960
you know, they tend to hold on
to that kind of kind of moniker.

1136
00:56:25,480 --> 00:56:27,600
Whereas, you know, large
companies tend to be really good

1137
00:56:27,600 --> 00:56:30,640
at building, you know, assets
and building mines and running

1138
00:56:30,640 --> 00:56:32,000
them.
You know, like they're probably

1139
00:56:32,000 --> 00:56:35,320
not the best agents to go go and
explore in certain areas.

1140
00:56:35,920 --> 00:56:38,560
So I think that there has to be
that kind of dichotomy.

1141
00:56:39,320 --> 00:56:42,240
It's just a question of how do
you incentivize each party along

1142
00:56:42,360 --> 00:56:45,040
along the path?
Like how do you incentivize

1143
00:56:45,040 --> 00:56:48,480
juniors to do that?
How do you incentivize large

1144
00:56:48,480 --> 00:56:51,800
companies to to accept that, you
know, maybe they're not going to

1145
00:56:51,800 --> 00:56:54,520
be the best explorers, so they
should create an environment

1146
00:56:54,520 --> 00:56:58,680
where other companies, juniors
do a better job, but they still

1147
00:56:58,680 --> 00:57:01,880
get to benefit out of it?
Have you got thoughts on the the

1148
00:57:01,880 --> 00:57:05,920
framework that we discussed with
with John Ronski, his aggregator

1149
00:57:06,320 --> 00:57:08,240
kind of model?
Is that something you've spent

1150
00:57:08,360 --> 00:57:09,320
time thinking about?
Yeah.

1151
00:57:09,440 --> 00:57:13,080
Yeah, quite a bit, yeah.
Like I think, I mean, I think

1152
00:57:13,080 --> 00:57:19,280
John's model is it's probably
the a good jumping off point,

1153
00:57:19,280 --> 00:57:22,200
right, That the, you know, like
a John's model really comes from

1154
00:57:22,200 --> 00:57:23,960
a part of you.
And you know, like him and I

1155
00:57:23,960 --> 00:57:26,400
have had these conversations a
number of times that, you know,

1156
00:57:26,400 --> 00:57:28,400
like we've had these
conversations on this show as

1157
00:57:28,400 --> 00:57:29,840
well.
Is that the funding model

1158
00:57:29,840 --> 00:57:34,920
doesn't incentivize people to go
find things in an appropriate

1159
00:57:35,320 --> 00:57:38,800
time frame or to actually find
the right things either, right?

1160
00:57:38,800 --> 00:57:42,440
Because juniors can't raise the
the amount of money that they

1161
00:57:42,440 --> 00:57:44,600
would realistically need to go
find something.

1162
00:57:45,040 --> 00:57:47,600
Alright.
So, so, yeah, so if you could

1163
00:57:47,600 --> 00:57:51,320
take that funding imperative out
of their hands and you could

1164
00:57:51,320 --> 00:57:54,840
fund them appropriately, then
you could get to a point where

1165
00:57:54,840 --> 00:57:57,040
they, they could hopefully be
better at what they're finding.

1166
00:57:57,360 --> 00:58:00,080
And you find this in, you know,
like this is not a novel idea.

1167
00:58:00,080 --> 00:58:02,800
Like you find this in the
startup world about and, and,

1168
00:58:03,120 --> 00:58:05,680
and most of the VCs or
accelerator programmes that are

1169
00:58:05,680 --> 00:58:08,360
really good at, at taking
companies through, you know,

1170
00:58:08,360 --> 00:58:12,480
they fund companies all the way
to an appropriate point for them

1171
00:58:12,480 --> 00:58:14,640
to develop their product.
You know, they don't go, we're

1172
00:58:14,640 --> 00:58:17,240
going to give you a million
then, you know, come back to us

1173
00:58:17,240 --> 00:58:19,760
in a year, we'll think about
whether you're doing things

1174
00:58:19,760 --> 00:58:21,920
right not and then we'll give
you some more.

1175
00:58:22,160 --> 00:58:24,280
You know, like often the best
accelerator programmes are like,

1176
00:58:24,280 --> 00:58:27,680
you know, we buy a story, we're
not going to give you $5,000,000

1177
00:58:27,680 --> 00:58:30,960
to go execute it.
Now, if you crash the car along

1178
00:58:30,960 --> 00:58:34,480
that way, that's OK, We take
that risk on, but you know,

1179
00:58:34,480 --> 00:58:36,880
we're kind of incentivizing you
to get all the way to the end of

1180
00:58:36,880 --> 00:58:39,480
your your kind of product line.
Yeah.

1181
00:58:39,560 --> 00:58:42,600
And also taking the the
appropriate amount of bets,

1182
00:58:42,720 --> 00:58:44,760
right, If you, if you look at
like, I don't know, Y Combinator

1183
00:58:44,760 --> 00:58:47,280
or something like that, Yeah,
yeah, when you're taking two

1184
00:58:47,280 --> 00:58:50,000
batches of whatever it is 20
twice a year.

1185
00:58:50,480 --> 00:58:52,800
I mean, I did the numbers.
So Y Combinator is probably got

1186
00:58:52,800 --> 00:58:55,680
to be somewhere around 4000
companies now that they're that

1187
00:58:55,840 --> 00:58:59,320
they're invested in, right.
I mean, that's over a long time,

1188
00:58:59,320 --> 00:59:02,840
but still, yeah.
And then out of that, I think

1189
00:59:02,840 --> 00:59:05,640
there were at last time I
counted there was somewhere

1190
00:59:05,640 --> 00:59:09,200
around the 3000 mark, 3200 mark
or something like that when they

1191
00:59:09,200 --> 00:59:12,000
had done 11 unicorns, a billion
dollar companies out of that.

1192
00:59:12,360 --> 00:59:16,320
Yeah, one strike, one Airbnb, a
few drop boxes and those kinds

1193
00:59:16,320 --> 00:59:17,600
of.
Companies and it pays so.

1194
00:59:17,880 --> 00:59:20,240
But that but that, yeah, like,
and you and you talk to people

1195
00:59:20,240 --> 00:59:22,760
in Y Combinator, you know, that
was their strategy.

1196
00:59:22,760 --> 00:59:24,640
They were going to take a lot of
bets.

1197
00:59:24,960 --> 00:59:27,520
Like that was the whole model.
And that means they were going

1198
00:59:27,520 --> 00:59:29,640
to burn a lot of cash along the
way as well.

1199
00:59:30,440 --> 00:59:34,160
But along the lines, you know
they they have made far more

1200
00:59:34,160 --> 00:59:36,200
back by just taking a lot of
bets.

1201
00:59:36,640 --> 00:59:37,960
Yeah.
We've sort of seen that in the

1202
00:59:37,960 --> 00:59:42,760
mining world to some extent with
BH PS Explore programme, which

1203
00:59:42,760 --> 00:59:44,120
you've sort of spoken about
before.

1204
00:59:44,120 --> 00:59:47,800
But I mean, could you also say
that playing out more with

1205
00:59:48,400 --> 00:59:53,240
majors or mid tiers during
strategic investments or JVS or

1206
00:59:53,320 --> 00:59:56,480
you know, something along those
lines into juniors and sort of

1207
00:59:56,680 --> 01:00:00,280
having the exposure having or
some sort of smaller level of

1208
01:00:00,280 --> 01:00:03,600
exposure and then sort of
wanting to take that further.

1209
01:00:03,600 --> 01:00:06,400
Once you know safe something's
discovered or something gets to

1210
01:00:06,400 --> 01:00:09,800
a more economic size and they
can sort of step in and and take

1211
01:00:09,800 --> 01:00:12,760
it from there.
Yeah, I think, I mean, I think

1212
01:00:12,760 --> 01:00:14,600
there's people that have done
that, you know, like a company

1213
01:00:14,600 --> 01:00:17,800
like South 32 at one point I
think had so few people in this

1214
01:00:17,800 --> 01:00:20,320
exploration department that
that's the model that they had

1215
01:00:20,320 --> 01:00:22,040
to use.
You know, they, they work with

1216
01:00:22,040 --> 01:00:25,680
other companies, you know, they
funded them to do the work.

1217
01:00:25,680 --> 01:00:28,320
And then if it got to a point
where it looked interesting

1218
01:00:28,320 --> 01:00:30,400
enough for them, then they would
kind of take over.

1219
01:00:31,440 --> 01:00:35,360
So, yeah, so people have done
those as a as a general

1220
01:00:35,360 --> 01:00:37,320
statement.
I'd say people haven't done it

1221
01:00:38,720 --> 01:00:43,320
at enough of a scale or for long
enough to actually see that kind

1222
01:00:43,320 --> 01:00:47,520
of fruit come through like Y
Combinator has been running for.

1223
01:00:47,760 --> 01:00:49,440
Yeah, it's been like 12 years or
something now.

1224
01:00:49,440 --> 01:00:51,760
All right, So they've done it
for well over a decade

1225
01:00:51,760 --> 01:00:54,360
consistently.
Yeah, even even longer, I think.

1226
01:00:54,400 --> 01:00:56,320
Yeah, I think so.
I mean, like it's at least a

1227
01:00:56,320 --> 01:00:58,440
decade old, right?
Like it's got to be more.

1228
01:00:59,440 --> 01:01:02,000
And you know, so like you said,
you know, they take two cohorts

1229
01:01:02,000 --> 01:01:04,960
every year, you know, without
fail, they fund them, you know,

1230
01:01:04,960 --> 01:01:08,240
they go down that path.
And, and if you look at, you

1231
01:01:08,240 --> 01:01:10,120
know, like the early years, you
know, they didn't have much

1232
01:01:10,120 --> 01:01:13,840
success for, for a while, you
know, because they have to get

1233
01:01:13,840 --> 01:01:16,880
their own ecosystem of how
they're going to help founders

1234
01:01:17,120 --> 01:01:20,920
to kind of go down that path.
And, and so I think, you know,

1235
01:01:20,920 --> 01:01:24,440
like one of the things that we
haven't been very good at doing

1236
01:01:24,440 --> 01:01:27,400
here is that I think people do
it for a while, but then when

1237
01:01:27,400 --> 01:01:30,520
they don't have early success, I
think it's harder to maybe

1238
01:01:30,520 --> 01:01:33,400
justify running them and and
people end up bailing out of

1239
01:01:33,400 --> 01:01:36,560
them.
So, so I think, yeah, like maybe

1240
01:01:37,120 --> 01:01:39,520
a bit of residency time in those
would be good as well.

1241
01:01:39,760 --> 01:01:42,840
Yeah, it's fascinating how many
sort of things could be learned

1242
01:01:42,840 --> 01:01:45,280
from a process like that.
Like it's very structured in

1243
01:01:45,800 --> 01:01:48,600
that they always took 7%.
I forget what the exact number

1244
01:01:48,600 --> 01:01:49,200
was.
Correct.

1245
01:01:49,200 --> 01:01:49,520
Yeah.
They.

1246
01:01:49,520 --> 01:01:51,320
Might have been like they pay
you, I think it's like, I mean

1247
01:01:51,320 --> 01:01:54,120
these numbers might be changed
now, but they pay you $125,000

1248
01:01:54,120 --> 01:01:57,160
to get 7% upfront depending on
what stage of company you're in.

1249
01:01:57,480 --> 01:01:59,520
And if you meet a certain
hurdle, then they'll put in

1250
01:01:59,520 --> 01:02:02,720
another amount which is again
for another 7%, you know.

1251
01:02:02,720 --> 01:02:04,800
So all of these things are kind
of fixed along the way and.

1252
01:02:04,840 --> 01:02:07,880
Then they pass you on to the the
set of growth and investors and

1253
01:02:08,240 --> 01:02:09,800
they they make that sort of
connection.

1254
01:02:10,000 --> 01:02:11,240
That's right.
Like quite simple.

1255
01:02:11,240 --> 01:02:13,720
Yeah.
I mean, the the idea of a group

1256
01:02:13,720 --> 01:02:16,720
of these sort of wealthy
individuals as well as

1257
01:02:16,800 --> 01:02:19,520
endowments and everything to
potentially come into the mining

1258
01:02:19,520 --> 01:02:21,880
industry and, and change the
game.

1259
01:02:21,880 --> 01:02:25,040
And you know, another feature of
them being private companies is,

1260
01:02:25,160 --> 01:02:29,400
is another attribute where you
see the, the markup in

1261
01:02:29,400 --> 01:02:32,760
valuations is, you know, a much
smoother line.

1262
01:02:32,760 --> 01:02:35,720
You know, it might be an
artificial line, but it, it's

1263
01:02:35,720 --> 01:02:38,120
another potential learning that
could get investors more

1264
01:02:38,120 --> 01:02:40,040
comfortable with, that's right,
with mining.

1265
01:02:40,040 --> 01:02:41,640
So.
I mean, this is like, I mean

1266
01:02:41,640 --> 01:02:43,800
like, you know, to back to like
John's kind of aggregator model.

1267
01:02:43,800 --> 01:02:45,880
This is something that you know,
like I think him and I both

1268
01:02:45,880 --> 01:02:48,200
agree with is that I think some
of the early capital will

1269
01:02:48,200 --> 01:02:49,840
probably be better to be
private.

1270
01:02:50,120 --> 01:02:53,320
You know, like I think it's hard
for junior companies to go and

1271
01:02:53,320 --> 01:02:59,880
do you know, such, such risky
things and, and have to like you

1272
01:02:59,880 --> 01:03:03,040
provide market news and all, all
of that type of stuff.

1273
01:03:03,360 --> 01:03:06,840
You know, like I think that ends
up being maybe a distraction not

1274
01:03:06,840 --> 01:03:10,160
just in their execution, but
also financially ends up being a

1275
01:03:10,160 --> 01:03:12,360
distraction in the amount of
money they raise and things like

1276
01:03:12,360 --> 01:03:14,280
that as well.
Probably not the best use of

1277
01:03:14,280 --> 01:03:16,360
their capital as well.
Yeah.

1278
01:03:16,360 --> 01:03:18,720
I mean, I think, yeah, like, I
mean, it's not the best use of

1279
01:03:18,720 --> 01:03:21,000
the capital if they're not
appropriately funded.

1280
01:03:21,120 --> 01:03:23,600
You know, like if they're
raising, you know, $3,000,000

1281
01:03:23,600 --> 01:03:26,560
for say, three years, you know,
like half of that money is

1282
01:03:26,560 --> 01:03:29,600
probably going to go into
listing costs and all, all of

1283
01:03:29,600 --> 01:03:32,200
the other things that they have
to do, you know, like auditing

1284
01:03:32,200 --> 01:03:34,320
and all of that stuff.
You know, like, is that the best

1285
01:03:34,320 --> 01:03:36,680
use of of kind of like money in
that sense?

1286
01:03:37,840 --> 01:03:40,000
And yeah, like, and there's
people that have looked at, you

1287
01:03:40,000 --> 01:03:42,400
know, like how companies have
spent money.

1288
01:03:42,640 --> 01:03:47,520
And what you find is that, you
know, in a in an environment

1289
01:03:47,520 --> 01:03:51,600
where capital is not that
available, you know, like the

1290
01:03:51,760 --> 01:03:54,720
the part of the company's costs
that get cuts is the in ground

1291
01:03:54,720 --> 01:03:56,160
spend.
You know the rest of the stuff

1292
01:03:56,160 --> 01:03:58,640
has to be a baseline cost that
has to be maintained.

1293
01:03:58,960 --> 01:04:00,400
To keep them going.
Yeah.

1294
01:04:00,400 --> 01:04:03,960
So then, you know, so in times
where capital, when when people

1295
01:04:03,960 --> 01:04:06,920
think capital is least efficient
because and then they take it

1296
01:04:06,920 --> 01:04:09,400
away from the market, you
actually incentivize the

1297
01:04:09,400 --> 01:04:12,360
companies to become even more
inefficient because now they're

1298
01:04:12,360 --> 01:04:14,520
just spending that money to just
survive for the next little

1299
01:04:14,520 --> 01:04:16,440
while.
The the time as well, the amount

1300
01:04:16,440 --> 01:04:20,080
of time that a geologist running
these companies might be

1301
01:04:20,080 --> 01:04:22,800
spending on the road trying to
drum up more capital if that

1302
01:04:22,800 --> 01:04:25,240
could.
And yeah, it's, you know, there

1303
01:04:25,240 --> 01:04:26,600
are similarities for private
companies.

1304
01:04:26,600 --> 01:04:28,080
They still need to raise money
and stuff.

1305
01:04:28,080 --> 01:04:30,720
But that's why the amount of
flow on benefits.

1306
01:04:30,720 --> 01:04:32,360
And we do have a lot of the
things that the US have.

1307
01:04:32,360 --> 01:04:36,240
We have got wealthy people, a
phenomenal superannuation system

1308
01:04:36,240 --> 01:04:37,840
here.
We have the mining expertise.

1309
01:04:38,200 --> 01:04:40,480
It'd be.
I mean, the one fundamental

1310
01:04:40,480 --> 01:04:42,720
difference here is obviously is
that the amount of like the

1311
01:04:42,720 --> 01:04:46,920
quantum of money that it takes
to to get to a decision point as

1312
01:04:46,920 --> 01:04:50,960
a junior exploration company on
the project is quite a lot more

1313
01:04:50,960 --> 01:04:53,280
than what a lot of startups can
do, right.

1314
01:04:53,920 --> 01:04:56,560
So, yeah, so that like I, I
fundamentally understand that,

1315
01:04:56,560 --> 01:04:59,000
you know, they especially if
you're like a technology company

1316
01:04:59,000 --> 01:05:01,600
that has a SAS product like a
software as a service product,

1317
01:05:01,840 --> 01:05:04,320
you know, like you're talking
about a few $100,000 to get to a

1318
01:05:04,320 --> 01:05:06,160
point where you could have a
product that you can take to

1319
01:05:06,160 --> 01:05:08,280
market.
And, and, and do that, you know,

1320
01:05:08,280 --> 01:05:12,320
like that's probably not
realistic in, in exploration,

1321
01:05:12,320 --> 01:05:15,760
you know, you're talking about a
few $1,000,000 to get to to at

1322
01:05:15,760 --> 01:05:19,600
least a minimum kind of output.
And so, you know, so to back to

1323
01:05:19,600 --> 01:05:22,560
John's kind of model, that's,
that's part of the reason that

1324
01:05:22,560 --> 01:05:25,520
the aggregator model was that
it's like, you know, if you

1325
01:05:25,520 --> 01:05:27,720
know, you're going to have to
spend this much money to get to

1326
01:05:27,720 --> 01:05:31,440
a like a realistically
conceivable proof of concept or,

1327
01:05:31,720 --> 01:05:34,720
or key decision point, like, you
know, why wouldn't you try to

1328
01:05:34,720 --> 01:05:38,240
make that money as, as efficient
as possible rather than wasting

1329
01:05:38,240 --> 01:05:41,320
half of it on listing fees and
all this other stuff that goes

1330
01:05:41,320 --> 01:05:43,680
on.
Beautiful Ahmad, I think we

1331
01:05:43,680 --> 01:05:46,640
almost solved all of Manning's
problems there.

1332
01:05:46,640 --> 01:05:48,880
But yeah, thanks again for for
coming on.

1333
01:05:48,880 --> 01:05:51,520
It was great to chat about
proper and I'm interested to see

1334
01:05:51,520 --> 01:05:53,840
what we chat about next time.
Sounds good, thanks a lot for

1335
01:05:53,840 --> 01:05:55,280
having me again.
Here's Aman.

1336
01:05:55,600 --> 01:05:59,200
Also a huge thank you to Axis
mining technology, mineral

1337
01:05:59,200 --> 01:06:02,880
mining services, verify smack
power and technology, DSI

1338
01:06:03,240 --> 01:06:06,720
underground, Silverstone, CRE
insurance, Greenlands equipment,

1339
01:06:06,880 --> 01:06:10,720
K drill and use a spark chart.
While you're at it, Odoru.

1340
01:06:10,720 --> 01:06:11,840
Money miners.
Odoru.

1341
01:06:12,800 --> 01:06:15,360
Information contained in this
episode of Money of Mine is of

1342
01:06:15,360 --> 01:06:17,440
general nature only and does not
take into account the

1343
01:06:17,440 --> 01:06:21,040
objectives, financial situation
or needs of any particular

1344
01:06:21,040 --> 01:06:23,080
person.
Before making any investment

1345
01:06:23,080 --> 01:06:26,120
decision, you should consult
with your financial advisor and

1346
01:06:26,120 --> 01:06:29,280
consider how appropriate the
advice is to your objectives,

1347
01:06:29,480 --> 01:06:31,480
financial situation and needs.