Paladin Pummelled 29% on Production Downgrade

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Oh well, big news out of big
news out of Paladin and mate,

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we're going deep into Namibia.
Mate, it's AI.

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Can't make a water related joke
without getting cut off the air.

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So anyway, there's a bit about
water.

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So, Jada, you've got Kingsgate
going as well, Copper.

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Yeah, quite an interesting story
there.

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So I thought we'd chat about
that one.

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But let's start off with
Paladin, the big one.

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They're getting smashed mate.
Ding Ding fucking Ding.

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Unfortunately down bloody oh,
2527% today.

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Not good.
That's off the back of the body

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quarterly as well where they
dropped probably what, 11%?

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I did 1115 or something on that.
So in a bit of context on water

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in Namibia and there's a bit of
water related stuff here.

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It's like Namibia's in a bit of
a horrific drought.

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Currently I've seen newspaper
articles sign once in a century.

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So it's and we're gonna go into
where the water is, who owns the

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water, how the Water Works in
Namibia.

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So, OK, so in addition to what
was disclosed in the quarterly

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where they said lower than
expected stockpile grades from

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the historic stuff that was
mined there.

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So they'll they've overcalled
what was going through at this

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point and recovery issues.
They've also disclosed today

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that there's been water supply
disruptions from Name Water in

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October, which has seen them now
drop their guidance for Langa

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Heinrich.
Originally it was four and a

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four to four and a half,
£1,000,000 for FY25.

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Now they've dropped it back to
three to £3.6 million.

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That's a bit.
That's a big change of guidance.

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Yeah.
So about a million million wiped

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off for the for the year.
Remember we're halfway through

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the year, so they're dropping,
effectively dropping off a

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million for 3/4.
So now bit of a double whammy

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actually not related to this,
but there was actually a one and

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a half million pound RFP issued
last night by US utility for a

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four to five year term.
So about a million come out from

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Paladin.
Then there's been requests for

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another one and a half million
pounds to be supplied, one of

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not one of the not one of the
big three utilities, but another

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one of the big ones.
So that was interesting, so.

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Might be worth a quick just a
quick one line on RFP.

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Request for proposal.
Yeah.

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So demand, yeah.
So it's a, it's an on, it's an

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on market tender effectively for
uranium instead of an off market

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discussion between two parties,
they put it out for tender and

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everyone says I'll sell you that
much for this much.

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Yeah, which is one of those
catalysts we've sort of talked

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about in the past.
Yeah.

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I think the thing with the news
out from Paladin today is like

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did you know, did we have any
idea that they were having some

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water issues with near water in
the quarterly?

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That I looked, I looked back at
the quarter, there was nothing

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that specifically said anything
about water supply disruptions.

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And we'll go through a lot of
the responses from the ISX aware

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letter in the back end.
And a lot was around the

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tailings water recovery, the,
you know, issues with the, the

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thickness and stuff like that.
So yeah, we'll figure out what

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is it name water's the problem
or is the processing plant that

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there might be some issues with.
But we're going to give a bit of

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a, I'll get a bit of a landscape
of like Namibia 'cause it all

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ties in together.
So they did have a call this

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morning and look a couple of
comments for it.

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They they effectively they're
saying that they haven't been

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able to fill all the water in
like the they said, they

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mentioned bladders.
I wonder if they got I'll get

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wet bladders over there.
I'll assume they do haven't been

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able to fill all that up due to
like water supply from near

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water, which comes from a
pipeline from the coast.

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I'll bring I'll bring a map up
here and that that's fed from,

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you know, some aquifers that go
into this like base reservoir

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and also a desal plant that's
owned by Rano.

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So I'll give a bit of history
there, buddy.

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Oh, see you, Paul.
Take it easy, babe.

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Oh, the W as best podiatrist
just dropped me off some thongs

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after I had a blowout.
Mr GC you call him legend and

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then there it sounded a lot the
water rights even for the

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processing of that variable
because of on a on a daily basis

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where they just can't just just
doesn't sound like pardon the

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pun flowing.
So sometimes they get over

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deliveries of water, some days
under regardless.

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They haven't been able to fill
up their spare capacity.

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Yeah.
So intermittent, Yeah, yeah.

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And they said, they said there's
got, there's a two week shutdown

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coming up in November and
they're saying.

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They're shutting the plan.
Yeah, yeah.

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That will give them time to fill
up their water storage and give

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them about an 8 day buffer.
So, yeah.

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And the, and the question was
asked about their contracts now

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that they're taking £1,000,000
off the off the guidance, is

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that going to say them
effectively do they have to go

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into the spot market to fill
fulfil contracts?

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But they said they're confident
on meeting customer delivery

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obligations and they have flex
in the contracts.

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So there's a bit of variance you
can have in the contracts.

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And I said they've utilised that
flex already so.

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And the, the call was really
interesting, right, because the,

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you know, the analysts kind of
didn't let up on, on the water

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questions.
And I think anytime analysts are

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sort of caught off guard on
something, they're pretty,

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they're pretty keen to hurry at
that point.

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And I didn't get heaps in
return, but I clicked together

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some of the some of the
questions from them just for the

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money minus to get some context
here.

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Gary, you Trav.
Thanks, Mike.

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And we also think that the
issues with the supply on them,

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water where we had some outages
are temporary and readily

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resolvable over the next little
while.

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What data point should we be
watching for to give us comfort

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that the water issues have been
resolved?

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I think it's pretty clearly our
quarterly reports going forward

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will be pretty transparent as we
have been with as you saw with

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our September quarter.
Yeah, I guess I was looking more

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for a specific you know data
point with relation to the water

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itself.
You know they're saying that Nam

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water deliverability has been an
issue and and also then tailings

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recovery.
So those sorts of data points

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will will ever be provided and
and when do you expect to be

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able to to give us confidence
that they have been that they

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are not on no longer ongoing,
ongoing.

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We expect to give a full update
with our next quarterly in

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January and by then we'll
certainly know if our bladders

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are full and that's resolved our
issues with Nam Water.

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And we'll also report on how the
Nam Water deliveries have gone

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at the end of the quarter as
well.

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And we'll also provide full
transparency on the grade.

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And as we always do, Mitch,
we'll also update our guidance

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position in a continuous basis.
Yeah.

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Good morning, Ian and Anna.
Thank you for your time.

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Just a question around the water
issues specifically with Nam

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Water.
Was it a sort of a regional

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issue?
Is it statewide or is it more

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sort of specific around the
delivery to the pallet?

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And like a Heinrich line, I mean
what's the risk that your

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allocation for water like a
Heinrich gets to the revised law

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from from Nam water?
You see, the analysts are

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pretty.
They kept up.

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They kept going out and kept
asking, Yeah.

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And, and I won't lie, till today
I didn't have a, you know, a

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full appreciation of how this
Water Works in Namibia.

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So I thought, if I don't know
something, why don't I tell

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everyone another bastard that's
listening as.

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Well, and teachers.
I'm learning with you money

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miners.
So oh, it seems like water is

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it's a big ticket item in
Namibia very and especially

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where where all the uranium
mines are located in that sort

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of western part.
It's pretty bloody arid.

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And I've coupled with a drought
at the moment.

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Let's not discount the country
is in a drought at the moment

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either.
So now, as I said, name water.

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They're like the state owned
water name or Namibia.

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So they've got like reservoirs
hooked into aquifers.

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You can see it swap Cottman just
for Cottman that's on the coast

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there.
And then you've got the Arana

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Desalina tion plant just north
of that.

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And that's because that was
actually, that was originally

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constructed for the Trochopgi
uranium mine, which was then

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Arriva before Arriva came in
Urana.

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And that was actually it was
built for that mine, but the

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mine that never actually got to,
you know, full scale production

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placed on care and maintenance
in 2012.

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So and it still is owned by
Arano.

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And Arano actually sell that
water to name water.

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So I'll have to look in to see
what's going on with that bloody

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mind.
So, and you can see on the map

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here where where that water is
and where the big mines are.

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So you bet your big mines in
Namibia that are operating, you

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got the Rossing mines that's
owned by CNNC China, £10 million

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per annum.
So they're pretty decent size.

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That was four 4 1/2 percent of
global production in 2023.

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They produced 6 1/2 last year,
but it's got £10 million

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capacity, 3350 PPM.
So she's funny looking at the

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Namibian mines to the next Gen
and all that.

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So, so it relies heavily on that
Orongo desal plan, which is

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Orongo's, the name of it, Orano
is the owner of it.

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So, and, but in 2022, so Rossing
Uranium Limited, that's the, the

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company it operates under.
So they built, they actually

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built 6 new water reservoirs in
addition to there was I think 3

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existing reservoirs that are
operated by name water.

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So you can see and there's a bit
of a theme here of what gets put

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into Namibia by those Chinese
companies.

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So then you've got then there's
Whosat that's operated under

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Swacop Uranium, 90% owned by
CGN, the other Chinese nuclear

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company and then the other 10%
is Namibia state owned mining

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enterprise.
So that's £13 million capacity.

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That's that's the big one
produced a bit under 12 million

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00:10:22,560 --> 00:10:25,960
last year, so 15,000,000 tonne a
year and two open pits.

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So and that also relies on the
Orongo desal plan.

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So, but they've CGN has and it
was announced just recently.

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I think it's been approved.
They're they're financing

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another desal plan to be built.
And so it's not name water

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funding it because they were
going to have to fund it.

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CGN are funding the whole thing.
So I'd said Namibian 3 billion,

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which I think is a bit, it looks
about Aussie 250,000,000.

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So that's due to be gone by end
of 26, probably 2027.

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Interesting, but you wouldn't
assume that you know some

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someone other than like CGM
would just make their capacity

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00:11:06,960 --> 00:11:09,240
available to anyone other than
themselves, right?

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00:11:09,520 --> 00:11:12,160
I'm I'm not sure.
I assume they will get priority

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00:11:12,160 --> 00:11:14,640
if they're financing it, but I
would assume if they're not

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using the whole thing, it will
be similar to the existing one

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where they would sell, sell the
water and buy back off to near

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water and near water will
distribute the extra.

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00:11:25,360 --> 00:11:28,800
So it's, it sounds like it's
heading towards there will be a

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00:11:28,800 --> 00:11:31,840
lot more capacity for water in
the future.

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00:11:32,080 --> 00:11:36,680
But until it gets to that, you
know, 2027 point now, Langa

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00:11:36,680 --> 00:11:39,600
Heinrich, the one in question
today, remember that's it's not

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fully owned by Paladin, 25%
owned by CNNC.

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So not without help of the
Chinese.

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And they, they primarily depend
on like ground.

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There's groundwater extracted
from boreholes in the Swakop

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River Valley.
But then there's also water

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deliveries from Nam, water from
that Swaka Bund.

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00:11:58,360 --> 00:12:01,480
Bloody God, I'm butchering that.
But I'm bloody JD.

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00:12:01,480 --> 00:12:02,720
Do you know how to pronounce
that?

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00:12:02,840 --> 00:12:04,720
Swakman.
Swakman, that'll do.

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00:12:04,720 --> 00:12:05,720
Thank.
You doing well mate?

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00:12:05,720 --> 00:12:09,760
That base reservoir there, which
is fed by actors in the diesel

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00:12:09,760 --> 00:12:11,720
plant.
So it's like the bloody the hub.

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00:12:13,320 --> 00:12:16,760
There are other ones that are
potential development projects.

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00:12:16,760 --> 00:12:18,640
So you got like deep yellows too
much.

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So they, they've got to actually
build a 65 kilometre water

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pipeline to that base reservoir
and then again purchase the

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water off Nam water, which
equates to about 12% of the

224
00:12:29,800 --> 00:12:32,320
processing cost to to buy that
water.

225
00:12:33,440 --> 00:12:36,680
And then Bannerman's a Tango
project, same thing.

226
00:12:37,000 --> 00:12:39,280
They've got to put a pipeline in
to hook into that base

227
00:12:39,280 --> 00:12:41,880
reservoir, purchase the water
pipeline.

228
00:12:41,880 --> 00:12:43,240
They're a lot closer to the
coast.

229
00:12:43,240 --> 00:12:50,120
So the pipeline isn't as long,
but it obviously name water have

230
00:12:50,120 --> 00:12:52,760
got the control over the water.
But it looks like China has a

231
00:12:52,760 --> 00:12:56,200
big influence in Namibia, like
the fact that they've they've

232
00:12:56,200 --> 00:12:59,120
invested in, they're investing
in that desal plant that built

233
00:12:59,120 --> 00:13:02,160
those six reservoirs, which you
would assume would have taken

234
00:13:02,160 --> 00:13:04,720
pressure off because that water
is not just for mining.

235
00:13:04,720 --> 00:13:09,880
That's to supply the what the
towns and everything there as

236
00:13:09,880 --> 00:13:12,560
well in the communities.
It's not just for mining.

237
00:13:12,560 --> 00:13:16,080
That is the sort of like a very
water dependent area.

238
00:13:17,040 --> 00:13:23,960
So I think I've I've heard also
that the the desal plant because

239
00:13:23,960 --> 00:13:29,760
it can occasionally face these
like algal blooms and like

240
00:13:29,760 --> 00:13:32,720
sulphur eruptions in the
Atlantic Ocean and that causes

241
00:13:32,720 --> 00:13:36,000
like temporary shutdowns because
a lot of the impurities affect

242
00:13:36,280 --> 00:13:41,840
the desalina tion process and
you can't actually, you know,

243
00:13:42,800 --> 00:13:45,440
create clean water from it.
So it's unreliability.

244
00:13:45,560 --> 00:13:46,760
Yeah.
So there's I think and I've

245
00:13:46,760 --> 00:13:49,640
heard it's only for maybe two
months of the year, but it is a

246
00:13:49,640 --> 00:13:51,400
factor.
So there there is, I think

247
00:13:51,400 --> 00:13:54,600
sometimes cases where the desal
plant mightn't be feeding as

248
00:13:54,600 --> 00:13:57,720
what it should and then there's
reliance on reservoir.

249
00:13:57,720 --> 00:14:01,120
But then you couple that with
the drought as well over there

250
00:14:01,120 --> 00:14:04,160
at the moment.
It's whether that's, I'm not

251
00:14:04,160 --> 00:14:06,880
sure if that I don't, I don't
know if that's happening now.

252
00:14:06,880 --> 00:14:09,520
I'm just saying it is something
that can happen with that desal

253
00:14:09,520 --> 00:14:12,360
plan apparently.
So interesting that you look at,

254
00:14:12,840 --> 00:14:16,080
you look at, well, obviously
there's the Chinese ownership on

255
00:14:16,080 --> 00:14:19,160
the 100% mines, the big ones.
Then obviously the stake in

256
00:14:19,160 --> 00:14:21,640
Langer as well.
Interesting that like Deep

257
00:14:21,640 --> 00:14:24,400
Yellow and Batterman, they've
got 100% stakes in their

258
00:14:24,400 --> 00:14:27,240
projects at the moment.
So I'm interested to see if over

259
00:14:27,240 --> 00:14:33,280
time they maintain 100%
ownership forever or if like

260
00:14:33,280 --> 00:14:36,160
Namibia will take a on a stake
at some point.

261
00:14:36,400 --> 00:14:38,960
Dunno.
I always thought that, yeah,

262
00:14:40,280 --> 00:14:43,400
like an exit to the Chinese was
on the table for at least one of

263
00:14:43,400 --> 00:14:45,240
those two companies, yeah.
Yeah.

264
00:14:45,240 --> 00:14:49,600
Well, yeah, it definitely looks,
looks possible now when you look

265
00:14:49,600 --> 00:14:51,960
at the landscape.
So I guess the question from

266
00:14:51,960 --> 00:14:56,080
today, getting back to Paladin
dropping the guidance, is it

267
00:14:56,080 --> 00:15:00,000
because they can't get enough
water from name water in

268
00:15:00,000 --> 00:15:03,480
addition to the lower stockpile
grades or are there other

269
00:15:03,480 --> 00:15:04,920
issues?
Big question.

270
00:15:04,920 --> 00:15:07,720
They did state that if there was
like an infrastructure upgrade

271
00:15:07,960 --> 00:15:10,600
on a, you know, a part of the
network that was specific to

272
00:15:10,600 --> 00:15:13,960
just them and their project that
was required near water to

273
00:15:13,960 --> 00:15:18,400
actually, you know, work on.
But that was so kind of cagey in

274
00:15:18,440 --> 00:15:21,320
in providing any timeline on
when that would be, you know,

275
00:15:21,760 --> 00:15:23,560
remediated.
So it's a very valid question

276
00:15:23,560 --> 00:15:26,560
you raised and I'm curious to
know what you where you got to.

277
00:15:26,640 --> 00:15:31,600
Well, it's if you piece it all
together from like pre, like the

278
00:15:31,600 --> 00:15:38,560
quarterly, the ASX Aware and
today so says it from the ASX

279
00:15:38,560 --> 00:15:40,080
Aware queer and I'll bring up
the screenshot.

280
00:15:40,080 --> 00:15:42,840
It says they're experiencing
lower than anticipated tailings

281
00:15:42,840 --> 00:15:45,440
water recovery, which adjusted
their water balance.

282
00:15:45,440 --> 00:15:49,080
So tailings water recovery is
effectively one of the water

283
00:15:49,080 --> 00:15:53,480
supplies for Langa Heinrich, in
addition to that Swakop River

284
00:15:53,480 --> 00:15:56,240
and the name water that they
purchase.

285
00:15:56,520 --> 00:16:00,520
So effectively, if you're not,
if they're not recovering enough

286
00:16:00,520 --> 00:16:02,760
out of the tilings, it means
they've got to get more from

287
00:16:03,040 --> 00:16:07,560
elsewhere, whether that's
already been fully allocated or

288
00:16:07,560 --> 00:16:09,440
not.
And that's why they've ran into

289
00:16:09,720 --> 00:16:12,760
so like, is it near water hasn't
been able to supply enough water

290
00:16:12,760 --> 00:16:16,720
or they haven't been recovering
enough from the tilings because

291
00:16:16,720 --> 00:16:18,760
they're fully allocated there?
That's the question.

292
00:16:18,760 --> 00:16:21,240
So and then because and then
they talked about like lower

293
00:16:21,240 --> 00:16:25,120
levels of fines rejects.
So my understanding is that not

294
00:16:25,120 --> 00:16:27,480
removing the fines from the
slurry.

295
00:16:27,480 --> 00:16:31,200
So the real fine shit sometimes
waste, but it can contain some

296
00:16:31,240 --> 00:16:35,960
uranium.
It results in what apparently

297
00:16:37,160 --> 00:16:41,160
what my research has indicated,
that fines materials are a high

298
00:16:41,160 --> 00:16:46,160
surface area to a low volume,
which can mean that some uranium

299
00:16:46,160 --> 00:16:50,720
can adsorb onto those fines.
So if you don't remove the fines

300
00:16:50,800 --> 00:16:54,720
before the processing, they
absorb some of the uranium and

301
00:16:54,720 --> 00:16:57,720
then piss it out to tiles, which
is why they alluded to the fact

302
00:16:57,720 --> 00:17:01,480
that they were getting the lower
fines rejects resulted in lower

303
00:17:02,080 --> 00:17:03,960
overall recoveries in the
quarterly.

304
00:17:04,319 --> 00:17:08,079
So and then they talked about
flow variability in the counter

305
00:17:08,079 --> 00:17:12,880
current decantation due to pump
and pipe sizing issues.

306
00:17:12,880 --> 00:17:16,720
So all changes needed.
So they're effectively the

307
00:17:16,720 --> 00:17:19,760
thickening system.
So thickeners are what gets the

308
00:17:19,760 --> 00:17:22,880
friggin gets the water out.
So your slurry's got the optimum

309
00:17:22,880 --> 00:17:26,200
density for the uranium recovery
process.

310
00:17:26,200 --> 00:17:30,240
So if you combine that all
together, all those different

311
00:17:30,240 --> 00:17:34,840
factors, it just looks like it
just the plant performance and

312
00:17:34,840 --> 00:17:38,480
yes, it is in ramp up, but it
just doesn't look like it's in

313
00:17:38,480 --> 00:17:39,960
balance at the moment.
And there's a lot of

314
00:17:40,080 --> 00:17:42,840
modifications and improvements
that have to take place to get

315
00:17:42,840 --> 00:17:45,120
it all talking to itself
properly.

316
00:17:45,120 --> 00:17:49,720
So because if if it's like if
the thickeners aren't operating

317
00:17:49,720 --> 00:17:54,120
consistently, the density of the
slurry's too wet for process and

318
00:17:54,120 --> 00:17:57,080
not enough finds being rejected,
not enough water is then getting

319
00:17:57,080 --> 00:18:00,040
recycled back out of that
because the the tailings are

320
00:18:00,640 --> 00:18:03,280
like it's too wet so you're
losing more water.

321
00:18:03,600 --> 00:18:08,960
It's just is that all more of
the issue then name water not

322
00:18:08,960 --> 00:18:10,680
being able to supply enough
water.

323
00:18:10,680 --> 00:18:13,240
It's kind of amazing because
this was a mine in operation for

324
00:18:13,240 --> 00:18:14,960
a long time.
Now they've they've tweaked the

325
00:18:14,960 --> 00:18:17,120
process.
It's not the exact same, but

326
00:18:17,120 --> 00:18:20,240
you'd think if if anyone's got
half a chance it's a restart

327
00:18:20,400 --> 00:18:21,880
project.
I'll take the other view.

328
00:18:22,960 --> 00:18:25,400
I think restart projects are
restart projects for a reason.

329
00:18:25,480 --> 00:18:28,080
They didn't last the cycle.
They're they're, they're

330
00:18:28,080 --> 00:18:31,760
definitionally going to have.
Challenging, but the your own

331
00:18:31,760 --> 00:18:36,320
impulse absolutely fucking shit
itself. 100% but plenty of your

332
00:18:36,320 --> 00:18:40,520
own minds lasted the cycle.
These are these not Yeah, I get

333
00:18:40,520 --> 00:18:42,000
you.
This is the marginal production

334
00:18:42,000 --> 00:18:45,240
that is coming back online like
you know, I tweeted.

335
00:18:45,240 --> 00:18:48,520
That, that that's true 100% but
you can, you know, you can go

336
00:18:48,520 --> 00:18:51,360
through those numbers when you
do the, the restart studies and

337
00:18:51,360 --> 00:18:53,560
all of those things.
You don't have to price it as

338
00:18:53,560 --> 00:18:56,280
aggressively because you've got
that backlog of all the

339
00:18:56,280 --> 00:18:59,800
knowledge you've got.
Yes, I just, you know, my

340
00:18:59,840 --> 00:19:04,960
broader point is like name me a
restart project in the last five

341
00:19:04,960 --> 00:19:08,000
years that's ramped up smooth.
Name.

342
00:19:08,000 --> 00:19:10,240
Name a new project that's ramped
up smooth.

343
00:19:10,240 --> 00:19:12,600
Yeah, yeah, yeah.
In the last five years,

344
00:19:13,080 --> 00:19:15,160
Capricorn, Emerald, like that's
it.

345
00:19:15,280 --> 00:19:17,680
Yeah.
Restart project, They're old.

346
00:19:18,040 --> 00:19:20,960
Like, you know, they're, they're
effectively all distressed

347
00:19:20,960 --> 00:19:24,520
assets, right.
North America, I don't agree

348
00:19:24,520 --> 00:19:26,000
with that.
Yeah.

349
00:19:26,320 --> 00:19:30,600
But the so, yeah, that's the
question.

350
00:19:30,600 --> 00:19:32,240
Yeah, that's the question.
Is it water?

351
00:19:32,240 --> 00:19:35,560
Is it or of that, is there more
to come in the actual

352
00:19:35,560 --> 00:19:38,520
performance even if the water
gets sorted and then it starts

353
00:19:38,520 --> 00:19:40,720
raining there again?
Yeah, there's a, there's a sort

354
00:19:40,720 --> 00:19:44,560
of difference between running at
a higher cost and not running

355
00:19:44,560 --> 00:19:46,400
or, or working.
And that's kind of the the

356
00:19:46,400 --> 00:19:48,400
distinction here.
I sort of accept that

357
00:19:48,400 --> 00:19:51,240
Langhahanrich will operate at a
higher cost relative to the the

358
00:19:51,240 --> 00:19:55,080
ones that sort of endured.
But these technical challenges,

359
00:19:55,120 --> 00:19:58,320
you know, yeah, like I said, I
would have thought they they

360
00:19:58,320 --> 00:20:00,520
have some of the knowledge to
try and maybe tackle a bit

361
00:20:00,520 --> 00:20:02,560
better.
But you know, fingers crossed to

362
00:20:02,560 --> 00:20:04,520
sort of get there and again, get
there in the end.

363
00:20:04,520 --> 00:20:07,240
And in time, we actually find
out a bit more information on

364
00:20:07,240 --> 00:20:08,920
what what's the real, real hold
up.

365
00:20:09,000 --> 00:20:13,560
Yeah, and and their process and
lower grade stockpiles effective

366
00:20:13,560 --> 00:20:14,840
compared to what they're going
to mine.

367
00:20:14,840 --> 00:20:16,960
So like that changes the whole
plant and everything.

368
00:20:16,960 --> 00:20:20,440
So once I get this right, what's
if they're going to be any

369
00:20:20,440 --> 00:20:23,080
changes or anything needed for
when they actually start mining?

370
00:20:23,080 --> 00:20:27,640
Or will it all be In Sync?
I assume it will be, but that's

371
00:20:28,240 --> 00:20:30,040
waiting for that point.
But this, I guess this was

372
00:20:30,040 --> 00:20:35,080
supposed to be the the point in
time where it was low cost, just

373
00:20:35,080 --> 00:20:40,400
processing, no mining, make the
cash to get them through, but

374
00:20:40,480 --> 00:20:44,080
which is probably a good time to
talk about financing and cash.

375
00:20:44,760 --> 00:20:48,360
Big time, Big time.
I'm keen to talk about it.

376
00:20:48,360 --> 00:20:51,480
I mean, in January, Paladin,
remember when they executed that

377
00:20:51,480 --> 00:20:54,120
$150 million debt facility?
At the time, their share price

378
00:20:54,120 --> 00:20:56,600
was 12 bucks, 30.
And it didn't stop there.

379
00:20:56,600 --> 00:20:58,360
They ran all the way up to 1780,
right?

380
00:20:58,360 --> 00:21:01,400
But at the time when they
executed that debt facility, I

381
00:21:01,920 --> 00:21:04,000
was critical about the decision
to do so.

382
00:21:04,000 --> 00:21:07,520
This is what I said then.
I actually don't think I would

383
00:21:07,520 --> 00:21:10,680
have taken a debt facility here.
And this might be a bit of a

384
00:21:10,680 --> 00:21:14,040
controversial opinion and I'm
sure the uranium bulls will

385
00:21:14,040 --> 00:21:17,680
disagree with my take here, but
I would have simply raised it in

386
00:21:17,680 --> 00:21:20,120
equity looking fit there
traffic.

387
00:21:20,120 --> 00:21:25,160
Yeah, I know.
Plus mate, other than that mate,

388
00:21:25,160 --> 00:21:29,000
like so.
So I completely stand by like,

389
00:21:30,040 --> 00:21:32,320
you know, that there wasn't
there was there's no need to put

390
00:21:32,360 --> 00:21:34,600
there was no need to put debt in
the capital structure, which now

391
00:21:34,600 --> 00:21:37,120
raises sort of, you know,
balance sheet fuck like

392
00:21:37,120 --> 00:21:39,800
overhanging in a in a, in a more
material way than was was

393
00:21:39,800 --> 00:21:42,080
necessary like of that.
Especially the fucking share

394
00:21:42,080 --> 00:21:44,400
price up there.
And this is the thing, this is

395
00:21:44,400 --> 00:21:47,480
like, you know, I, I would
describe and we've seen it

396
00:21:47,480 --> 00:21:51,000
across like a lot of different,
you know, ramp up companies.

397
00:21:51,000 --> 00:21:56,040
Is, is, is degree of like
overconfidence or even arrogance

398
00:21:56,040 --> 00:21:58,560
in being able to control all of
the variables.

399
00:21:58,560 --> 00:22:01,160
You think everything is a known
known and there's unknowns, you

400
00:22:01,160 --> 00:22:03,640
know, and that's why you don't
want to unnecessarily put debt

401
00:22:03,640 --> 00:22:06,360
in your capital structure.
If you're a marginal project of

402
00:22:06,360 --> 00:22:08,120
that, you know, USA 150 million
bucks.

403
00:22:08,440 --> 00:22:11,520
They've drawn down 95,000,000
bucks as it 30th of September.

404
00:22:11,520 --> 00:22:14,880
And here we are.
The stock is 7 bucks 33 like at

405
00:22:14,880 --> 00:22:18,280
the moment it's 40% lower than
they were in that January share

406
00:22:18,280 --> 00:22:21,000
price when they put the debt in
place instead of making free

407
00:22:21,000 --> 00:22:23,960
cash flow by processing the
stockpiles, the cash is been

408
00:22:23,960 --> 00:22:27,640
going in the opposite direction.
They've had these unexpected

409
00:22:27,640 --> 00:22:29,360
water issues.
You know the grade is

410
00:22:29,360 --> 00:22:31,040
disappointed.
On the downside, there's a plant

411
00:22:31,040 --> 00:22:34,360
stuff like you talked about and
that's exactly I'm so strong in

412
00:22:34,360 --> 00:22:37,040
my opinion that marginal
producers should over capitalise

413
00:22:37,040 --> 00:22:39,760
with equity especially,
especially when they were it was

414
00:22:39,760 --> 00:22:42,280
priced at 1.3 times an Ave in
January when I made those

415
00:22:42,280 --> 00:22:44,160
comments.
I tweeted it this morning.

416
00:22:44,160 --> 00:22:46,160
This is my restart.
You know, restart projects.

417
00:22:46,160 --> 00:22:49,560
They're restarting for a reason.
They are in general tough.

418
00:22:49,560 --> 00:22:52,120
They won't be smooth expect the
unexpected and manage your

419
00:22:52,120 --> 00:22:55,640
balance sheet accordingly.
And you've you've got debt in

420
00:22:55,640 --> 00:22:58,080
the capital structure now
Paladin, which admittedly you're

421
00:22:58,080 --> 00:22:59,760
still small compared to their
market cap.

422
00:22:59,960 --> 00:23:02,280
They could always pay back with
equity of current like price.

423
00:23:02,280 --> 00:23:05,720
But what would have been a mere
6% dilution in January is like

424
00:23:05,720 --> 00:23:08,200
now 12/13/14 percent dilution,
right?

425
00:23:08,200 --> 00:23:10,240
Just to you know, if you wanted
to remove that from yeah, from

426
00:23:10,240 --> 00:23:11,560
your gap structure.
And that's the thing.

427
00:23:11,560 --> 00:23:13,960
I'm not not saying they won't
make it all work in the long

428
00:23:13,960 --> 00:23:17,400
run.
I'm saying why unnecessarily add

429
00:23:17,400 --> 00:23:20,480
financial leverage in the most
risky phase of of the mine.

430
00:23:20,480 --> 00:23:23,440
That's the that's a big that can
really hurt shareholders down

431
00:23:23,440 --> 00:23:25,320
the track via the unnecessary
dilution.

432
00:23:25,320 --> 00:23:28,200
It's when that single asset
developer, you know, has trouble

433
00:23:28,200 --> 00:23:31,120
in ramp up and then they don't
have the flexibility to, to ride

434
00:23:31,120 --> 00:23:32,880
it out because they put, they
put debt in there.

435
00:23:33,040 --> 00:23:34,520
You know, that's the, that's the
thing.

436
00:23:34,520 --> 00:23:37,480
Marginal projects should over
capitalise with equity in my

437
00:23:37,480 --> 00:23:40,040
opinion if if they're able to
fund it that way and not not

438
00:23:40,040 --> 00:23:42,680
every producer can, but they
certainly could have.

439
00:23:43,800 --> 00:23:46,800
Like, you know when they talk
the the focus, the notorious

440
00:23:46,800 --> 00:23:49,680
rule of thumb like oh, you
capital raises dilute

441
00:23:49,680 --> 00:23:53,800
shareholders, but you dilute
15%, or you can have a commodity

442
00:23:53,800 --> 00:23:56,400
price swing or a sentiment swing
and your share price reduces by

443
00:23:56,400 --> 00:23:58,960
50%.
Wouldn't you rather just dilute

444
00:23:58,960 --> 00:24:01,400
and take the risk away?
That's the thing you're going to

445
00:24:01,400 --> 00:24:05,200
have to dilute way more like,
you know, in the distress case,

446
00:24:05,320 --> 00:24:08,960
like it's, it's, it's just
understanding what the value of

447
00:24:08,960 --> 00:24:12,000
your grip actually is at any
point in time and, and being

448
00:24:12,000 --> 00:24:15,200
kind of either opportunistic or
not in that context.

449
00:24:15,840 --> 00:24:19,840
Look at the look at the short
interest, like the latest data

450
00:24:19,960 --> 00:24:24,680
short man, like nearly 15%.
And sure, some people will say a

451
00:24:24,680 --> 00:24:27,440
good chunk of that is like M and
ARB funds that, you know, buy

452
00:24:27,440 --> 00:24:29,720
the, buy the target shortly
acquire to completion.

453
00:24:30,000 --> 00:24:32,480
I don't believe that's a huge
component here, especially when

454
00:24:32,480 --> 00:24:34,280
there's still deal completion
risk with the, you know,

455
00:24:35,520 --> 00:24:38,400
Investment Canada Act and all
that sort of stuff, Especially

456
00:24:38,400 --> 00:24:42,960
now like I think that the short
thesis goes something like this.

457
00:24:43,560 --> 00:24:46,520
Troubled operations, debt in the
cap structure, uncertainty on

458
00:24:46,520 --> 00:24:49,400
ability to rectify water issue
in a timely enough manner,

459
00:24:49,640 --> 00:24:54,160
underwhelming free cash flow
without even mining costs yet

460
00:24:54,640 --> 00:24:58,400
contracted supply challenging to
meet if water issues persist,

461
00:24:58,640 --> 00:25:01,160
which they hinted at potential
guidance change at the next

462
00:25:01,160 --> 00:25:03,760
quarterly.
So then are they going to make

463
00:25:03,760 --> 00:25:06,200
contracts if guidance is
downgraded again or are they

464
00:25:06,200 --> 00:25:07,840
going to have to go to the spot
market and buy?

465
00:25:07,840 --> 00:25:10,040
Well, if they've already
executed their flex.

466
00:25:10,320 --> 00:25:11,680
Yeah, and they've got.
Make the three.

467
00:25:11,680 --> 00:25:14,040
Million and they've got
inventory like an inventory line

468
00:25:14,040 --> 00:25:18,840
at the moment for 200,000 and
yeah, so then you know there's a

469
00:25:18,840 --> 00:25:22,760
new development project which if
if the FCU deal closes that's

470
00:25:22,760 --> 00:25:24,000
going to need a development
budget.

471
00:25:24,000 --> 00:25:27,360
So I think the short is our
pricing in a future race.

472
00:25:27,360 --> 00:25:30,560
That's what they're doing, this
sort of other all day sort.

473
00:25:30,880 --> 00:25:32,000
Of dealings with it, they got it
today.

474
00:25:32,400 --> 00:25:37,240
Yeah, exactly.
And yeah, So you know, and, and

475
00:25:37,240 --> 00:25:41,080
I'm you know, if you're if
you're one of those, yeah, like

476
00:25:41,280 --> 00:25:43,560
like the the shorter, they'll
probably Pierce trade it with a

477
00:25:43,560 --> 00:25:46,520
different name to kind of avoid
kind of view market sort of risk

478
00:25:46,520 --> 00:25:48,360
and they'll take that sort of
stock specific outlook.

479
00:25:49,080 --> 00:25:51,800
And I'm not saying that's how
things are going to play out.

480
00:25:51,800 --> 00:25:53,960
I'm just sort of articulating
what the short thesis, you know,

481
00:25:53,960 --> 00:25:55,640
would have been on that, on that
stock.

482
00:25:55,760 --> 00:25:58,280
Well, I think I, I think what
you're saying is like you like

483
00:25:58,280 --> 00:26:02,840
the these are the risks, but
debt is one risk you could that

484
00:26:02,840 --> 00:26:05,160
could have been removed like a.
100%, yeah.

485
00:26:05,320 --> 00:26:06,640
You didn't.
You didn't need that.

486
00:26:06,640 --> 00:26:09,040
That's just like, yeah, that
would.

487
00:26:09,040 --> 00:26:11,200
That was completely unnecessary
in my opinion.

488
00:26:11,360 --> 00:26:14,040
Yeah, yeah.
Yeah, and I think it was at the

489
00:26:14,040 --> 00:26:17,560
same time it might have been the
same discussion we had at the

490
00:26:17,560 --> 00:26:19,920
time, just how richly they were
valued.

491
00:26:19,920 --> 00:26:22,120
I know you said 1.3 times have
their.

492
00:26:22,480 --> 00:26:26,840
Well, they're one of not many
producing uranium companies in

493
00:26:26,840 --> 00:26:29,360
the world that the ATS were
fading into.

494
00:26:29,960 --> 00:26:32,520
And that's like that's remember
Paladin and Boss were just.

495
00:26:32,920 --> 00:26:34,280
Fucking flying.
Yeah.

496
00:26:34,280 --> 00:26:38,720
And I mean spot and term were
somewhere around 80 ish, you

497
00:26:38,720 --> 00:26:41,480
know, plus or minus a little bit
and you had to back out

498
00:26:41,840 --> 00:26:46,440
something well over 130 odd
bucks to try and, you know, make

499
00:26:46,440 --> 00:26:49,080
make it balance.
You had brokers flashing through

500
00:26:49,080 --> 00:26:52,600
multiples and then upgrading and
using a higher multiple instead

501
00:26:52,600 --> 00:26:56,120
of just a basic NAV calc try and
make it all stack up.

502
00:26:57,280 --> 00:27:00,120
Yeah, so those sort of little
flags stand out, don't they?

503
00:27:00,200 --> 00:27:03,320
I'm seeing, like, there's, like,
tweets on Twitter people saying,

504
00:27:03,320 --> 00:27:05,920
like, your vision should be
arguing for a material adverse

505
00:27:05,920 --> 00:27:08,920
event here and bloody get it,
you know, get shareholders out

506
00:27:08,920 --> 00:27:10,320
of this deal.
And like, that's the sort of

507
00:27:10,320 --> 00:27:12,480
rhetoric that's going around in
the context of, you know,

508
00:27:12,480 --> 00:27:14,600
today's announcement.
Yeah.

509
00:27:14,600 --> 00:27:17,360
So what?
Is the has the merger ratio

510
00:27:17,360 --> 00:27:18,960
changed at all because they've
both gone?

511
00:27:18,960 --> 00:27:20,760
Down merger ratio doesn't change
at all.

512
00:27:21,120 --> 00:27:22,640
Yeah, yeah.
But so it's like they've tracked

513
00:27:22,720 --> 00:27:24,800
each other so but.
But Fusion shareholders?

514
00:27:24,800 --> 00:27:27,720
No, but they'll be getting for a
bigger portion of the of the

515
00:27:27,720 --> 00:27:31,680
ratio or just a break in it.
But is it but isn't.

516
00:27:31,680 --> 00:27:34,160
You can't.
Fission, I suppose as a result

517
00:27:34,160 --> 00:27:36,560
of this, yes.
But I think in terms of the

518
00:27:36,560 --> 00:27:39,480
market performance, fission,
Fission share price would have

519
00:27:39,520 --> 00:27:41,520
gone down technically the same
as Paladin.

520
00:27:41,760 --> 00:27:45,920
Well, it's more specific, Yeah.
What what you're saying is sort

521
00:27:45,920 --> 00:27:48,280
of broadly true.
They'll kind of track with that

522
00:27:48,280 --> 00:27:51,560
error for the the doubt that
people have in the the deal kind

523
00:27:51,560 --> 00:27:54,480
of getting through.
If you're a Fission shareholder,

524
00:27:54,480 --> 00:27:57,840
you're a bit grumpier because
you're pro forma is now looking.

525
00:27:58,560 --> 00:28:00,480
It's got issues, yeah.
Yeah, yeah.

526
00:28:00,640 --> 00:28:03,640
Which, as we said, ramp up.
Morning's fucking hard.

527
00:28:04,240 --> 00:28:07,400
But yeah, we'll see if they can
get it back on track.

528
00:28:07,400 --> 00:28:11,520
I'll just want to, I'd love to
actually go over.

529
00:28:11,520 --> 00:28:14,600
I just want to go from the air
and see what's going on.

530
00:28:14,600 --> 00:28:17,600
Maybe like Nathan Daish, if
you're listening, I want to hop

531
00:28:17,600 --> 00:28:20,320
on a bloody Daish Sat helicopter
and head over and then maybe or

532
00:28:20,520 --> 00:28:22,240
get some odds on this bloody
thing.

533
00:28:23,360 --> 00:28:24,720
Is it coming?
How many can you fit in a

534
00:28:24,720 --> 00:28:26,160
helicopter?
I reckon.

535
00:28:26,680 --> 00:28:31,520
Yeah, yeah. 35 GC and Daishi
buddy mate.

536
00:28:31,520 --> 00:28:34,960
I could run a geophysical survey
over there, maybe find some

537
00:28:34,960 --> 00:28:40,240
uranium from stock code.
MUN, Maddie Uranium Mining.

538
00:28:41,960 --> 00:28:44,120
That's the ticker.
A lot you could do it right on

539
00:28:44,120 --> 00:28:45,280
money miners with the you know
the.

540
00:28:45,320 --> 00:28:46,080
Helicopter.
Yeah, yeah.

541
00:28:46,080 --> 00:28:49,160
With the YEAH directed I could
detect water from a Daisat

542
00:28:49,480 --> 00:28:51,600
survey.
Paladin would be hoping so with

543
00:28:51,600 --> 00:28:53,440
that.
I reckon they probably do.

544
00:28:53,720 --> 00:28:58,880
So if you want bloody Geofiz
done, magnetics, bloody gravity,

545
00:28:59,160 --> 00:29:01,800
seismic surveys.
Before I take Daisy over to

546
00:29:01,800 --> 00:29:04,840
Namibia to find some uranium,
give him a buzz.

547
00:29:05,040 --> 00:29:07,320
My numbers in the show notes.
Daisat.

548
00:29:07,640 --> 00:29:13,200
Go, Daisat, go.
To Kings gate JCJDJCJD you're

549
00:29:13,200 --> 00:29:15,200
AJC.
We are going to a different part

550
00:29:15,200 --> 00:29:17,320
of the world now back over to
Thailand.

551
00:29:17,320 --> 00:29:20,280
So we spoke about these guys a
couple months ago and I thought

552
00:29:20,280 --> 00:29:22,320
it was worth going a bit deeper
on them.

553
00:29:22,320 --> 00:29:25,640
So they came out with A2 page
update today fellas.

554
00:29:25,640 --> 00:29:29,120
And you know, it was, it was
broadly sort of simple stuff,

555
00:29:29,120 --> 00:29:34,360
operations improving October a
record quarter on the Oz front,

556
00:29:34,920 --> 00:29:38,120
availability, utilisation
looking a bit better, relying

557
00:29:38,120 --> 00:29:41,200
less on the the stockpiles.
So good, good stuff.

558
00:29:41,200 --> 00:29:44,240
Things you want to kind of see.
They had been doing a couple of

559
00:29:44,240 --> 00:29:46,920
studies which sort of yielded
some positive results, which

560
00:29:46,920 --> 00:29:49,800
could reflect in better
operating costs in time.

561
00:29:49,800 --> 00:29:54,280
So they had tested processing
the carbonaceous ore and that

562
00:29:54,480 --> 00:29:59,160
meant that led to recoveries not
being, you know, detrimentally

563
00:29:59,640 --> 00:30:01,320
affected.
So they can flash that all

564
00:30:01,360 --> 00:30:04,040
through helps to the mind
planning and sequencing those

565
00:30:04,040 --> 00:30:07,160
sorts of things as well as
testing the essentially the

566
00:30:07,160 --> 00:30:09,120
amount of cyanide they need to
use.

567
00:30:09,120 --> 00:30:11,600
And the outcome is that they
think they can use a little bit

568
00:30:11,600 --> 00:30:14,680
less per tonne of all processed.
So all kind of good things.

569
00:30:14,680 --> 00:30:16,880
But there was a super, super
interesting detail that they

570
00:30:16,880 --> 00:30:20,000
chucked in in the last paragraph
of this one.

571
00:30:20,280 --> 00:30:22,800
And hence I thought it was worth
having a bit of a chat about it.

572
00:30:22,800 --> 00:30:26,400
So the I'll Chuck it up now for
those watching on on YouTube,

573
00:30:26,400 --> 00:30:29,880
but what it essentially says to
the listeners is that the, the

574
00:30:29,880 --> 00:30:32,640
company has noted the recent
volatility in the stock price.

575
00:30:33,160 --> 00:30:35,720
They think the stock doesn't
reflect the true value of the

576
00:30:35,720 --> 00:30:37,360
company.
Little sort of surprise on that

577
00:30:37,360 --> 00:30:39,480
one.
The management and board will

578
00:30:39,480 --> 00:30:42,760
review and consider Capital
Management options.

579
00:30:42,880 --> 00:30:45,960
So that is that is pretty juicy
and I thought it was worth going

580
00:30:45,960 --> 00:30:48,720
through the the sort of cap
structure of the business and

581
00:30:48,720 --> 00:30:51,120
saying what sort of options they
could actually, you know,

582
00:30:51,480 --> 00:30:55,280
undertake to make the stock
price more accurately reflect

583
00:30:55,280 --> 00:30:56,480
the value that I think the
company has.

584
00:30:56,480 --> 00:30:58,000
It's.
It's an interesting company and

585
00:30:58,000 --> 00:31:01,440
it was like, you know, all the
Goldies are just like bleeding

586
00:31:01,440 --> 00:31:04,160
today, but that one was like
kind of up a percent or

587
00:31:04,160 --> 00:31:06,320
something like that, so clearly.
Yeah, bit of relative

588
00:31:06,440 --> 00:31:10,760
outperformance on that front.
If you look back, you know, a

589
00:31:10,760 --> 00:31:13,960
few months though on on the
chart hasn't performed quite as

590
00:31:14,160 --> 00:31:15,520
strongly as some of the other
names.

591
00:31:15,520 --> 00:31:18,240
So another reason why I thought
it was kind of worth looking

592
00:31:18,240 --> 00:31:21,000
into.
So that kept at about 330

593
00:31:21,000 --> 00:31:27,760
million at a $1.28 share price,
EV of about $360 million.

594
00:31:27,760 --> 00:31:31,720
So looking at where a kicker
could come for from, for

595
00:31:31,720 --> 00:31:34,440
shareholders, one thing that
stands out is they've got a

596
00:31:34,440 --> 00:31:37,760
silver, gold project in Chile,
Nueva Esperanza.

597
00:31:38,120 --> 00:31:40,760
So half a million ounces in
gold, 83,000,000 ounces in

598
00:31:40,760 --> 00:31:42,880
silver.
Silver's been on a hell of a run

599
00:31:43,440 --> 00:31:45,680
of this year.
Now there's been a a long

600
00:31:45,680 --> 00:31:48,280
standing resource and reserve
statement here.

601
00:31:48,720 --> 00:31:51,840
APFS came out in 2016.
That's a bit of a sort of red

602
00:31:51,840 --> 00:31:55,360
flag, like why isn't it gone
anywhere in that kind of amount

603
00:31:55,360 --> 00:31:56,560
of time?
But they did say they're going

604
00:31:56,560 --> 00:32:00,000
to come out and provide a new
resource and reserve statement

605
00:32:00,320 --> 00:32:02,880
this quarter.
So spinning that one off could

606
00:32:02,880 --> 00:32:05,760
unlock a bit of value.
They can market it as they call

607
00:32:05,760 --> 00:32:08,800
it, the seventh biggest silver
resource going.

608
00:32:09,240 --> 00:32:12,720
And yeah, I mean, maybe that's a
maybe that's a sale process.

609
00:32:12,720 --> 00:32:15,720
There's actually been a couple
other sale processes for silver

610
00:32:15,720 --> 00:32:19,640
projects in the Americas lately.
So that's one to keep an eye on.

611
00:32:19,640 --> 00:32:22,240
Maybe they've spin it off and
kind of listed or do something

612
00:32:22,240 --> 00:32:25,320
else.
One to keep an eye on in terms

613
00:32:25,320 --> 00:32:27,800
of cash that they don't have an
awful lot.

614
00:32:27,800 --> 00:32:30,320
They're in a net debt position
at the moment.

615
00:32:30,960 --> 00:32:34,040
So, you know, there's not an
awful lot of opportunity just

616
00:32:34,040 --> 00:32:36,960
yet for a, for a buyback
programme or a special divvy.

617
00:32:36,960 --> 00:32:39,720
But looking through the
resolutions they put forward for

618
00:32:39,720 --> 00:32:43,760
the upcoming AGM, they did ask
for approval to buy back up to

619
00:32:43,760 --> 00:32:47,080
50% of their shares on issue,
which is kind of interesting.

620
00:32:47,440 --> 00:32:49,480
And they said regardless of
that, they're going to study

621
00:32:49,480 --> 00:32:51,840
buying back 10% of their their
stock.

622
00:32:52,120 --> 00:32:54,440
You don't need shareholder
approval for that.

623
00:32:54,440 --> 00:32:58,600
And if you, if you dig into the
reasons here, any cash proceeds

624
00:32:58,640 --> 00:33:01,520
from it's TAFTA claim, TAFTA is
the Thailand Australia free

625
00:33:01,520 --> 00:33:05,080
trade agreement.
What this essentially ties to is

626
00:33:05,240 --> 00:33:09,720
the expropriation that the the
Thai government more or less did

627
00:33:09,720 --> 00:33:12,680
in 2016 of the asset of the Chat
Tree goldmine, which meant they

628
00:33:12,680 --> 00:33:15,280
couldn't mine for seven odd
years.

629
00:33:16,000 --> 00:33:18,160
Then you've got, you know, more
obviously ones like cash flow

630
00:33:18,160 --> 00:33:21,600
from operations from Chat Tree
over the next sort of year or so

631
00:33:21,600 --> 00:33:24,600
when it sort of starts a bit to
bear a bit more fruit.

632
00:33:25,080 --> 00:33:28,600
And then again the, the sale or
other liquidity event for the

633
00:33:29,040 --> 00:33:32,520
project they have in Chile.
So I thought it'd be worth just

634
00:33:32,520 --> 00:33:35,320
digging in pros and cons.
Is there a bit of value here?

635
00:33:35,320 --> 00:33:38,040
That's the kind of direction I
went about this one to see what

636
00:33:38,040 --> 00:33:39,160
was kind of interesting about
it.

637
00:33:39,160 --> 00:33:43,760
And to, to start on the kind of
positives in the context of the

638
00:33:43,880 --> 00:33:45,400
midcap goldies that have run
quite well.

639
00:33:45,400 --> 00:33:49,080
These guys are going to produce
about 100 to 130,000 ounces of

640
00:33:49,080 --> 00:33:54,040
gold equivalent through to FY20
8 at about AUS $1500 all in

641
00:33:54,040 --> 00:33:56,760
sustaining cost.
So it's not too hard to to paint

642
00:33:56,760 --> 00:34:00,320
a pretty bright future of that
just in terms of cash flow they

643
00:34:00,320 --> 00:34:03,160
can generate.
They're an unhedged producer.

644
00:34:03,280 --> 00:34:06,080
Is that is that attributable JD?
Yep, all.

645
00:34:06,080 --> 00:34:08,560
All theirs, yeah. 1500, that's
US.

646
00:34:08,560 --> 00:34:11,639
That's a bit odd than what we
say with WAF and that isn't it?

647
00:34:12,800 --> 00:34:15,840
Yeah, WAFF comes in below, below
1500.

648
00:34:15,840 --> 00:34:18,840
They've of course got another
another operation coming online

649
00:34:18,840 --> 00:34:21,000
as well.
Open bid I open pit.

650
00:34:21,000 --> 00:34:24,280
Different grade buck an MMS to
get that down to 1400 I reckon.

651
00:34:24,320 --> 00:34:30,199
They'd have a field day at 13
grade. 12112 twelve 1200 I think

652
00:34:30,199 --> 00:34:33,280
if you know, if MMS are digging
in Holland, you know open pits,

653
00:34:33,280 --> 00:34:36,840
I think you can at least drop
200 US off your all in

654
00:34:36,840 --> 00:34:38,120
sustaining cost.
I think you're right.

655
00:34:38,120 --> 00:34:39,560
I think that's a good rule of
thumb.

656
00:34:39,560 --> 00:34:41,560
Yeah, they wouldn't be the first
ones to take him up on that

657
00:34:41,639 --> 00:34:42,760
either.
They don't just hit the all in

658
00:34:42,760 --> 00:34:44,960
sustaining cost.
They hit the upfront CapEx as

659
00:34:44,960 --> 00:34:46,440
well because yeah, that can be
0.

660
00:34:46,920 --> 00:34:49,520
And they and they hit the stock
graph as well.

661
00:34:49,520 --> 00:34:52,320
They hit it up.
Look at that like I've actually

662
00:34:52,320 --> 00:34:55,840
that is an accurate display of
when MMS got the contract for

663
00:34:55,840 --> 00:34:58,640
black cap.
Amazing that that could be your

664
00:34:58,640 --> 00:35:00,560
company.
Look at that.

665
00:35:01,000 --> 00:35:04,800
The I, I don't, I don't need to
say anything more than you

666
00:35:04,800 --> 00:35:08,320
inject MMS in your company and
everything just gets better.

667
00:35:08,440 --> 00:35:09,960
Just have a look at that stock
graph.

668
00:35:09,960 --> 00:35:13,040
Just give them a call.
Not even gold price related.

669
00:35:13,040 --> 00:35:17,800
No, no at all.
So anyway, sorry JD, no continue

670
00:35:17,840 --> 00:35:21,480
on with they just in MMS just
interrupt all the time.

671
00:35:23,600 --> 00:35:26,680
On on the tax front, it's kind
of interesting about 25% of that

672
00:35:26,680 --> 00:35:29,640
all in sustaining cost is
royalties going to the

673
00:35:29,640 --> 00:35:33,360
government, but they do have an
8 year tax holiday.

674
00:35:33,720 --> 00:35:36,600
So you kind of see the, you
know, the government payments

675
00:35:36,600 --> 00:35:39,280
more or less are wrapped up in
the all in sustaining cost, but

676
00:35:39,280 --> 00:35:42,040
the, the tax component after
this sort of EBITDA isn't quite

677
00:35:42,040 --> 00:35:44,080
as severe as it might otherwise
be.

678
00:35:44,080 --> 00:35:46,520
And you know, a lot of the
catalogue capital items have

679
00:35:46,520 --> 00:35:50,240
been spent already.
There's those other liquidity

680
00:35:50,240 --> 00:35:54,480
potential events that they could
have decent reserve life net

681
00:35:54,480 --> 00:35:57,200
debt.
So they they have a cash balance

682
00:35:57,200 --> 00:35:59,440
which should see them through by
any hiccups.

683
00:35:59,440 --> 00:36:02,760
But you know, knock on wood,
given everything we talk about,

684
00:36:02,840 --> 00:36:06,160
you know, all the time with ramp
up and how it can be risky.

685
00:36:06,960 --> 00:36:09,680
And, and just to circle back
once more on the, the

686
00:36:09,680 --> 00:36:15,880
expropriation of the mine back
in, in 2016, they did get a, a

687
00:36:15,880 --> 00:36:18,680
decent payout in 2019.
So there's a bit of history

688
00:36:18,680 --> 00:36:21,160
here.
That was from the political risk

689
00:36:21,400 --> 00:36:23,840
insurers.
So clearly didn't use CRE.

690
00:36:23,840 --> 00:36:28,040
These guys sued Zurich and a
group.

691
00:36:28,480 --> 00:36:31,240
God, I'll pick that up a bit
late so that.

692
00:36:31,360 --> 00:36:33,360
Work.
They sued Zurich and a sort of

693
00:36:33,360 --> 00:36:35,680
other consortium of insurers on
this one.

694
00:36:35,680 --> 00:36:40,240
They got about $80 million.
But the other claim is with the

695
00:36:40,240 --> 00:36:44,000
Thai government essentially.
And I read a bunch of articles

696
00:36:44,000 --> 00:36:47,320
by various Thai newspapers, they
were sort of quoting figures

697
00:36:47,320 --> 00:36:52,120
between 25 and 39 billion baht,
which translates to 1.1 to 1.7

698
00:36:52,120 --> 00:36:56,720
billion Aussie dollars.
But that was prior to Thailand

699
00:36:56,720 --> 00:36:58,440
allowing them to restart the
mine.

700
00:36:58,440 --> 00:37:01,600
So I wouldn't be banking on
anything near that sort of

701
00:37:01,960 --> 00:37:04,520
amount.
Kingsgate also haven't revealed

702
00:37:04,520 --> 00:37:06,600
what they're actually seeking in
damages there.

703
00:37:06,600 --> 00:37:09,320
And it's a process that has been
going on years and years and

704
00:37:09,320 --> 00:37:10,320
years.
So who knows when it'll

705
00:37:10,320 --> 00:37:12,760
actually, you know, lead to
anything.

706
00:37:13,000 --> 00:37:16,240
So there's some of the positives
that stand out there for the

707
00:37:16,240 --> 00:37:17,520
company.
But then you've got a fair few

708
00:37:17,520 --> 00:37:20,360
challenges as well, which we've
got a sort of highlight.

709
00:37:20,360 --> 00:37:23,720
So firstly, this is Thailand,
you know, you're not operating

710
00:37:23,720 --> 00:37:27,320
in WA.
Ramp up risks prevalent, We see

711
00:37:27,320 --> 00:37:30,280
it all the time.
The open pit reserve runs at

712
00:37:30,280 --> 00:37:35,240
0.82 grammes per tonne.
So you know, pros and cons.

713
00:37:35,240 --> 00:37:39,600
There's a lot of sensitivity if
they have exploration success to

714
00:37:39,600 --> 00:37:43,800
improved cash flows, but it's
not a huge, you know, margin of

715
00:37:43,800 --> 00:37:46,160
safety there when you're
operating at that sort of grade

716
00:37:46,600 --> 00:37:49,240
high cost debt.
So Nabari provided debt a few

717
00:37:49,240 --> 00:37:50,720
months ago.
They need to sort of clear

718
00:37:50,720 --> 00:37:52,480
through that.
Hopefully within a year or so

719
00:37:52,480 --> 00:37:54,480
they can be in a net cash
position.

720
00:37:54,480 --> 00:37:57,760
But you know, they've got to get
there 1st and any sort of slips

721
00:37:58,040 --> 00:38:02,240
likely mean a capital raise.
And the history, the history is

722
00:38:02,240 --> 00:38:03,960
super important.
So the mine was shut down in

723
00:38:03,960 --> 00:38:07,520
2016, like I sort of said, over
environmental concerns.

724
00:38:07,520 --> 00:38:09,880
So essentially all the people
living in communities around the

725
00:38:09,880 --> 00:38:11,880
mine were concerned.
They'd complained to the

726
00:38:11,880 --> 00:38:14,080
government.
There's a long, long history

727
00:38:14,080 --> 00:38:16,960
here with lots of ink spilled
over it.

728
00:38:17,520 --> 00:38:22,200
But a lot of the locals, they
tested their bloods in numerous

729
00:38:22,200 --> 00:38:24,840
rounds of testing.
They complained that they had

730
00:38:24,840 --> 00:38:28,120
elevated levels of heavy metals
in their blood.

731
00:38:28,120 --> 00:38:31,720
The company denied this all the
way through.

732
00:38:31,720 --> 00:38:33,920
They said they did their own
testing and proved it wasn't

733
00:38:34,360 --> 00:38:38,640
them, but that's not something a
lot of investors will be want to

734
00:38:38,880 --> 00:38:41,360
want to associate with
whatsoever.

735
00:38:41,720 --> 00:38:44,400
And it's, you know, it's a risk
that's just got to be front and

736
00:38:44,400 --> 00:38:46,600
centre for people looking at
this company.

737
00:38:47,160 --> 00:38:49,360
And then you've got an
interesting one just to to

738
00:38:49,360 --> 00:38:54,600
finalise on the, the challenges,
the exec directors, the MD and

739
00:38:54,600 --> 00:38:56,480
the chair.
So there's a four person board

740
00:38:56,480 --> 00:39:00,640
here, took next to no stock in
either short term or long term

741
00:39:00,640 --> 00:39:03,760
compensation in each of the last
two financial years.

742
00:39:03,760 --> 00:39:06,840
That took big salaries, big cash
bonuses.

743
00:39:06,840 --> 00:39:09,880
So I think to start with
alignment could have been a bit

744
00:39:09,880 --> 00:39:13,600
better that the managing
director holds almost no stock

745
00:39:13,840 --> 00:39:16,520
in the company.
The chairman does hold a decent

746
00:39:16,520 --> 00:39:19,920
amount of over over $5,000,000
worth of stocks.

747
00:39:19,920 --> 00:39:23,960
So that's a decent amount.
But management is a detail I'd

748
00:39:23,960 --> 00:39:25,520
want to get a much better read
on.

749
00:39:25,520 --> 00:39:28,600
I've just, I've spent three
hours reading about the company.

750
00:39:28,920 --> 00:39:31,760
It's one I'd want to go quite a
bit deeper on to, to get a feel

751
00:39:31,760 --> 00:39:33,800
given all the other risks kind
of at play.

752
00:39:34,120 --> 00:39:36,080
You'd want to make sure they're
they're really on your side,

753
00:39:36,080 --> 00:39:39,960
especially if you know they do
come into a bit of cash in one

754
00:39:39,960 --> 00:39:42,040
way or another.
You want clarity on how that's

755
00:39:42,040 --> 00:39:43,560
going to get distributed.
I know they've put up the

756
00:39:43,560 --> 00:39:47,840
resolution for the buyback, but
going down this rabbit hole just

757
00:39:47,840 --> 00:39:51,600
to just to finalise, there was a
249-D in 2018 and it was pretty

758
00:39:51,600 --> 00:39:53,960
funny.
This company, Metal Tiger, they

759
00:39:53,960 --> 00:39:57,160
had 8.5% of the company at the
time they had.

760
00:39:57,160 --> 00:39:59,200
Listed as well Metal Tiger.
Yes, yeah, yeah.

761
00:39:59,200 --> 00:40:01,840
Real Thailand field of that
metal tiger.

762
00:40:02,080 --> 00:40:07,400
So there was an AGM in early
2018, you know, held face to

763
00:40:07,400 --> 00:40:11,280
face and there was some stern
words traded between some

764
00:40:11,280 --> 00:40:15,280
shareholders and management.
Bit of yelling going back and

765
00:40:15,280 --> 00:40:17,360
forth.
Was a good AFR article on this

766
00:40:17,360 --> 00:40:19,680
one with one of the shareholders
yelling at the chairman.

767
00:40:20,080 --> 00:40:22,480
You're an arrogant, over
educated idiot so.

768
00:40:23,880 --> 00:40:26,760
Sounded like a Trump quote.
Yeah, it's a pretty funny.

769
00:40:26,760 --> 00:40:31,560
So there was some, yeah, some
educational reading on this

770
00:40:31,560 --> 00:40:34,200
company and the events that have
sort of came out of the back of.

771
00:40:34,200 --> 00:40:36,360
That over educated reading JD,
you'd say?

772
00:40:36,360 --> 00:40:39,920
I'd say so myself, yeah.
So yeah, if anything, it was

773
00:40:40,200 --> 00:40:43,320
entertaining.
And yeah, this this trades

774
00:40:43,480 --> 00:40:46,800
relatively a lot cheaper to a
lot of the names we talk about.

775
00:40:47,000 --> 00:40:49,560
And as always, there's a good
reason why it trades a bit

776
00:40:49,560 --> 00:40:51,320
cheaper.
But who knows?

777
00:40:51,320 --> 00:40:54,160
I mean, from all the all the
stuff I've blabbed on about, do

778
00:40:54,160 --> 00:40:56,880
you guys have a different sort
of feeling or any sort of

779
00:40:56,880 --> 00:41:00,840
history with this one at all?
So as I feel like I'd be, I

780
00:41:00,840 --> 00:41:03,720
don't hold the right to comment
after you spent so long on a

781
00:41:03,720 --> 00:41:05,600
jade.
I'm just agreeing with you.

782
00:41:05,920 --> 00:41:08,040
What do you sort of think?
I think the management one's a

783
00:41:08,040 --> 00:41:12,120
really interesting one, like A,
an MD who by all accounts has,

784
00:41:12,320 --> 00:41:14,760
has done a great job.
They've met everything to date

785
00:41:14,760 --> 00:41:16,320
on, on ramp up.
They're doing a good job.

786
00:41:16,720 --> 00:41:18,040
Let's hope that sort of
continues.

787
00:41:18,040 --> 00:41:21,160
But holding no stock in the
company while while talking

788
00:41:21,160 --> 00:41:23,280
about these sort of capital
returns.

789
00:41:23,320 --> 00:41:26,360
I, I just that that sets off
alarm bells because like, how's

790
00:41:26,360 --> 00:41:28,920
he going to get compensated if
he's not a shareholder?

791
00:41:28,920 --> 00:41:30,960
Why?
Why would he go and launch a big

792
00:41:30,960 --> 00:41:33,560
buyback programme like?
Yeah.

793
00:41:33,560 --> 00:41:34,800
Is he?
Has he got any performance

794
00:41:34,800 --> 00:41:39,080
rights attached to TSR?
I'd have to dig into it.

795
00:41:39,280 --> 00:41:42,800
Not that I sort of stood out to
me straight away, but it was

796
00:41:42,800 --> 00:41:45,520
just a big Cash, Cash bonus last
year as well.

797
00:41:45,640 --> 00:41:47,280
Yeah.
But yeah, I think alignment

798
00:41:47,280 --> 00:41:53,240
matters heaps the like you can
see value sometimes the single

799
00:41:53,240 --> 00:41:57,920
asset kind of producers in funky
jurisdictions and you just have

800
00:41:57,920 --> 00:42:01,040
to, you have to stomach the
tremendous amount of risk that

801
00:42:01,040 --> 00:42:05,000
comes with that.
Like I just look, look at what

802
00:42:05,000 --> 00:42:09,640
happened to 1064 just last year.
I mean, yeah, there's, there's a

803
00:42:09,640 --> 00:42:12,800
quote someone told me when we
last time, last time we talked

804
00:42:12,800 --> 00:42:17,680
about these gold producers or
whatnot in in Southeast Asia.

805
00:42:17,680 --> 00:42:22,640
And that's Southeast Asia is
where rich Australian men's

806
00:42:22,640 --> 00:42:26,240
money goes to die in, you know,
in this case, there's face and

807
00:42:26,240 --> 00:42:27,480
value creation in recent
history.

808
00:42:27,480 --> 00:42:30,440
But yeah, you guys get nervous
projecting that into the Into

809
00:42:30,440 --> 00:42:31,720
the Future 100.
Percent.

810
00:42:31,720 --> 00:42:33,760
One of the other one, Medusa,
that was a bit of.

811
00:42:33,880 --> 00:42:37,720
A yeah, yeah.
That's what what 1064 was was

812
00:42:37,720 --> 00:42:39,720
called before it was 1064.
Yeah, yeah.

813
00:42:40,360 --> 00:42:43,200
And there's been some, you know,
success examples.

814
00:42:43,200 --> 00:42:45,600
It's a sort of a matter of
balancing the risk and and

815
00:42:45,600 --> 00:42:47,960
taking the money when you get, I
think, resolute different part

816
00:42:47,960 --> 00:42:50,080
of the world, but was a very
interesting case in point.

817
00:42:50,520 --> 00:42:53,240
Emerald great returns.
And then, you know, bang, sort

818
00:42:53,280 --> 00:42:56,320
of, yeah, it hits you.
If they, if they, you know, if

819
00:42:56,320 --> 00:42:58,600
they go for the shareholder
returns buybacks like, you know,

820
00:42:58,800 --> 00:43:01,160
shareholders won't be
complaining if if they if they

821
00:43:01,160 --> 00:43:04,040
want to, yeah, to diversify
their single asset exposure.

822
00:43:04,040 --> 00:43:06,400
I think they'd they'd have some
supporters in that camp too.

823
00:43:06,640 --> 00:43:08,920
Yeah, yeah, last sort of
comment.

824
00:43:08,920 --> 00:43:11,800
I reckon a few brokers might
pick up coverage given the sort

825
00:43:11,800 --> 00:43:15,000
of risk profile of where the
company's at, heightened risk of

826
00:43:15,000 --> 00:43:19,320
a a capital raise, only two
names covering it at the moment.

827
00:43:19,840 --> 00:43:23,560
A few equity research teams
might might do well to through

828
00:43:23,560 --> 00:43:25,280
that for their banks.
I wouldn't be surprised at all

829
00:43:25,280 --> 00:43:27,040
if we see something like that.
What do you think they'd brace

830
00:43:27,040 --> 00:43:29,280
for?
Well, if there is a ramp up slip

831
00:43:29,280 --> 00:43:31,560
up given the risks base in the
company.

832
00:43:31,800 --> 00:43:33,320
Oh.
So you probably said it.

833
00:43:33,320 --> 00:43:37,320
What was the EV360 mil?
Gotcha.

834
00:43:38,400 --> 00:43:40,560
Imagine that cap race to buy
back our stock.

835
00:43:44,200 --> 00:43:48,600
Funky world, yeah.
Just like just looking at the

836
00:43:48,600 --> 00:43:51,840
numbers now, 300 odd mil,
100,000 oz equivalent.

837
00:43:52,320 --> 00:43:54,280
Yeah, yeah.
And you can, you can pretty

838
00:43:54,280 --> 00:43:58,040
easily back out over $100
million EBITDA and like this

839
00:43:58,040 --> 00:44:02,920
year even more next year just on
a pretty, you know, very back of

840
00:44:02,920 --> 00:44:05,080
the envelope type of math on
that.

841
00:44:05,080 --> 00:44:07,360
Just how we like it, JD.
Keep it simple, eh?

842
00:44:07,600 --> 00:44:12,240
Oh mate, no back of the envelope
bloody contracts with MMS highly

843
00:44:12,240 --> 00:44:14,840
detailed.
The most detailed contracts,

844
00:44:15,240 --> 00:44:18,320
geological and support you'll
ever find to move to.

845
00:44:18,320 --> 00:44:22,600
Unbelievable.
Bloody a grounded camp are out,

846
00:44:22,600 --> 00:44:26,000
how good are they?
Detailed detailed cross boundary

847
00:44:26,000 --> 00:44:28,200
energy.
A detailed A lot of detail goes

848
00:44:28,200 --> 00:44:31,800
into a hybrid power station.
Look the detail that goes into

849
00:44:31,800 --> 00:44:34,520
creating the steel for a Sandvik
split set.

850
00:44:35,120 --> 00:44:38,200
Unbelievable.
To talk about detail CRE

851
00:44:38,200 --> 00:44:40,680
insurance.
Detail for free to get a free

852
00:44:40,680 --> 00:44:43,040
appraisal of your current
insurance policies.

853
00:44:43,520 --> 00:44:47,400
OK drill, just detailing the
bloody the ground beneath you

854
00:44:47,400 --> 00:44:49,960
with shit loads of RC and
diamond.

855
00:44:50,480 --> 00:44:52,800
Dasat.
There is no more detail than you

856
00:44:52,800 --> 00:44:55,800
will find in the Geophys survey
provided by DASAT.

857
00:44:56,040 --> 00:44:58,520
Legends thank you to all the
partners and the money miners

858
00:44:58,520 --> 00:45:02,800
heard.
Information contained in this

859
00:45:02,800 --> 00:45:05,560
episode of Money of Mine is of
general nature only and does not

860
00:45:05,560 --> 00:45:08,200
take into account the
objectives, financial situation

861
00:45:08,240 --> 00:45:10,240
or needs of any particular
person.

862
00:45:10,560 --> 00:45:13,600
Before making any investment
decision, you should consult

863
00:45:13,600 --> 00:45:16,640
with your financial advisor and
consider how appropriate the

864
00:45:16,640 --> 00:45:20,320
advice is to your objectives,
financial situation and needs.