Picking Small Cap Gems with Matt Griffin

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Maddie in this chat Spartan and
Middlesex gets mentioned and

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Ding Ding Ding for JDI.
Righto money miners.

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Another bloody great yarn
delivered by Axis Mine and

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Technology.
Have a look at that bloody hat

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trap.
How good's the hat?

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How good's the champ Orry behind
you, The champ Gyro?

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Jesus Christ, I wouldn't.
If anyone's thinking of any

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other bloody supplier, give
yourself an uppercut 'cause that

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Axis Mine and Technology is all
you need to think about forever.

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The the the Gyros and the the
Yaris are actually even better

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than the hat and the hat's.
Pretty good tribe bought one.

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Yeah, Yeah, just out in his
room.

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Right.
Let's rip in, mate.

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We have got a bloody brilliant
little fundy chat coming with

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Maddie Gryphon from Maple Brown
Abbott.

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Mate, I've been watching Suits.
Can we get your name on the

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company?
It's all about getting your name

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on the door.
Maple Brown Abbott Gryphon.

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It could be after this.
Yeah.

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The business was founded about
40 years ago and by Mr Mabel

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Brown and Mr Abbott.
So I think I've probably got

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very little to no chance of that
happening.

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So it's a.
It's a pretty good name in the.

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Industry and don't give up hope.
Don't give up hope.

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Oh mates were girl ripping you
in so you're buddy.

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Actually I won't read the boys
notes about what you do because

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that'll that's degrading to
them.

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Boys, lay the land about who
this Maddie Gryphon Fuller is.

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Oh, let's, let's root straight
in.

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So we've, we've tried to get
Maddie on the show for a little

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while.
Then we've finally managed to

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make it happen, which we're very
pumped about.

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So Maddie, I wouldn't speak too
much for him, but he runs the,

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the Aussie small caps fund.
So a generalist, but quite a,

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quite a bent at the moment,
about 1/4 of the portfolio in

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resources and a lot of the names
that we love to chat about.

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So in honour of you, Maddie,
Michael, I thought we'd start

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with uranium.
So Paladin and Boss Energy both

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in the portfolio and I heard you
do an interview maybe 8:00 or so

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months ago talking about the the
supply side narrative that sort

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of sits behind uranium.
We've sort of talked about it

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quite a bit on the potty.
But yeah, keen to keen to hear

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how you came across picking
these two names to start with in

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the the wider world of uranium.
Yeah, that's right.

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I mean, you know, uranium has
been talked about a lot in your

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show by a lot of smart people.
So I guess the the difference in

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where my view is versus what a
lot of the rest of the market

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is.
I'm probably less of a Super

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Bowl on the demand side.
I don't see sort of uranium

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reactors being rolled out like
they were in in the 70s or 80s.

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I just think it becomes very
hard politically in a lot of

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Western countries given these
very expensive builds over 10 to

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15 years sort of programmes and
you really need to have that

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industrial base in place.
So I think that becomes a bit

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difficult.
What we'll probably see in the

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Western world is extension of
lives continue and then you

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supplement that with Chinese,
Indian, Middle Eastern roll outs

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which come online.
So I think that leads to some

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slight growth in uranium demand
over the kind of the next 10 or

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15 years, noting that uranium
demand over the past 30 years

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has gone pretty much nowhere.
I think that probably steps up

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to maybe one or two percent a
year.

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The interesting thing we're
starting to hear a bit more of

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recently is in the US
particularly these capacity

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upgrades.
So the ability for existing

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reactors to add, say 5 to 10% on
top of existing capacity for

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pretty low CapEx, the likes of
Constellation, some of those US

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producers are starting to do
that.

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So that's probably some
incremental positive news for

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the space.
In terms of the stocks, Boston

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Paladin, it's quite simple
actually.

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Our process is pretty earnings
focused.

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We don't go too far down the
value chain in terms of

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exploration.
We want to see production and

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cash flow within two to three
years.

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So Boston Paladin were
effectively Aussie uranium

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stocks which fit the bill.
We did get quite a lot of

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comfort on the projects on the
restarts there, spent a lot of

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time with management and sort of
related companies around space

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to get comfort on that.
But essentially it's a pretty

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limited subset of stocks in
uranium.

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They will kind of have hairs on
them.

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So you've got to put up with the
a few issues and all of them,

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and I'm sure we'll talk about
some of those, but that that was

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a decision driving past the
Paladin into the fund over the

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past couple of years.
Well, we'll start, start on

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Paladin, start on Paladin then
as a as an equity holder, what

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was your, I guess initial
reaction to the Fission merger?

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Yeah, it's an interesting one.
I look, it's long dated, so that

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project's probably only going to
be in production post 2030.

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Taking a view on the project,
it's it's a difficult part of

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the world.
It's provided there's obviously

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a lot of permitting challenges
to get through and there's

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issues around kind of freezing,
you know, the ground there to

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get, get the production ramping
up.

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So it's not without challenges.
Having said that, it is a very

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high quality project, high
quality deposit should be very

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low cost, reasonable size
producer.

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I can see value in excess of
where Paladin's paid.

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So I think they've, they've
bought it quite well, added a

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pretty, you know, depressed time
in, in the short term cycle of

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your earning.
I just don't, I don't think

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taking pounds out of the market
or consolidating supply is a bad

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thing either.
I think that can only sort of

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lead to better things on, on a
pricing dynamic.

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So reasonably positive overall,
noting that it is quite long

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dated.
I think Paladin just becomes

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kind of the, the growth uranium
option for many investors.

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It's, it's big, it's got
hundreds of millions of pounds.

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There's plenty of optionality
there.

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So I think if and when we start
to see the spot price, spot

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price tick back up, Paladin
probably sort of attracts some

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of the global investors to that
growth pipeline.

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It was, it was looking at the
the fly over thing of the

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fission project.
It looked bloody easy.

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It was all green and everything.
They don't put all the snow on

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the, on the animation of what
the project project looks like

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there and, and, and it looks
like, oh, that's pretty easy to

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get to.
But from what I've heard that

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those projects are so remote and
the logistical challenge of

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developing them is, you know,
something not to be

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underestimated.
But then you look at the Fission

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project being right next door to
next Gen.

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So you got two projects very
close in a very remote area.

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It just makes obviously so much
logical sense that there'll be

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one stand alone operation there
instead of two.

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How do you see all that possibly
tying up crystal ball tying

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mate?
No, good point.

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And I mean, you know, the
remoteness and, and the

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challenges around location,
weather, all that sort of stuff.

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When you look at the project,
it's the 350,000 tonne per annum

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mil and it's going to cost over
a billion dollars at the moment

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to build.
So that just kind of goes to the

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challenges of how expensive and
how difficult it's going to be.

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Absolutely agree with your
point.

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Right next to next Gen
definitely makes sense.

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Should be a lot of synergies in
finding those operations.

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Having said that, you know, not
covering the mining space for a

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long time.
There's been a lot of sensible

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acquisitions over time, things
that make sense, but it depends

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on the people at the time,
depends on whether you guys get

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involved, you know, board type
sashes, that kind of thing.

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So on on paper makes sense, but
let's see how it plays out.

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There's still kind of a long
time to go on those projects.

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Matt the, the, the, the, what's
on boss is obviously what I want

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to talk about.
I actually, I, I listened to as

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a poddy you, you must have done
years ago.

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I think it was 2019 or
something, but you would you

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were talking about the
importance of of founder LED

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businesses.
You you spoke about at the time,

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you know, selling all of your PA
and, and putting it all in the

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fund.
And, and and that's like that's

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alignment to you is you're fully
aligned with yeah, and you know

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where I'm going with this line
of comment, you know, you're

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going yeah.
So how do you how do you like,

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you know, there's only I get
there's only a limited number of

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of places you can allocate your
capital given the given what you

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articulated with uranium.
But when you see the MD and two

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other directors selling, you
know, 70 plus percent of their,

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of their shareholding in, in, in
BOS, What's the read through on

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the on the alignment kind of
factor for you?

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Yeah, look, I, I, I completely
get the point of Boss management

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and boards selling big stakes.
Stakes and companies is always a

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red flag and it's never a good
thing.

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So would I prefer to see them
sell 20 or 30% of the holding

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and do that over stage period?
Absolutely.

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So I think that was, that's
definitely an issue and that's

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created some problems.
I think it's worth just

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remembering where BOSS has been
on the journey.

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Duncan joined that company in
early 2017.

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He put 100 grand in his own
money in at the start at four

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cents.
So that's a pretty good

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indication of just sort of the
value that's been created over

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the time that he's been there
over that several years.

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He took over a project which
obviously didn't work under your

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rating.
One had a lot of issues around

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the drilling side, the flows,
the plant.

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So all those problems have been
solved over time.

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I certainly don't begrudge him
taking money off the table,

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especially considering you did
put more in and during COVID and

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in a placement post that as you
say, the quantum's problematic,

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but it's, it's done now.
So we've kind of got to move on

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and assess where we're at.
I think the, the update they put

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out the other day, along with
the guidance for the next three

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years is kind of exactly in line
with the ramp up profile they

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previously communicated to the
market.

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There's obviously a month or two
delay at the start there, which

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is not unusual in a lot of these
Commission projects.

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But all the early signs seem
pretty positive.

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I was up on site probably six or
nine months ago.

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I got a pretty good read through
about what they're doing

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differently, how that ramp up
profile looks.

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So I'm I'm fairly comfortable
with that, noting that it is

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still quite early on in these
ISR mines do take 2-3 years to

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ramp up fully.
So there's it's not without

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risk, but I think a lot of those
boxes have been ticked.

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Now the the other thing I'd
probably say in defence and you

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know at the time that Duncan and
the board sold, the price is 550

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or 6 bucks.
So there was a lot priced at

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that point.
Were you assuming you're running

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price over $100 kind of forever
clear ramp up and commissioning?

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We had sell side numbers, which
still we're assuming some sales

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in, in Fr 24 and 25 looking a
bit too optimistic.

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So to be honest, we were
actually trimming our position

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at the same time.
So selling when when price is

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expensive is kind of kind of
what you do.

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And we're looking at the now
saying, well, the share price

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has retraced 35%.
There's been a pretty good start

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to commissioning.
Not even still the way to go

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there, but I actually think it's
something worth another look for

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people in Mississippi the first
time and something that we've

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added a little bit to the
position in recent weeks as

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well.
So if they're, if they're down

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35% now, like 'cause the, the,
the whole thing about these

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uranium equities was trying to
back solve, you know, the free

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cash flow they're gonna generate
to what they're being valued at

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the moment.
And it just didn't seem it was

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adding up.
And especially considering boss

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isn't like a multi decade
operation, it does have a no the

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it's yeah, it's it's not a 20
year life, but it's coming back

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down to where it is now sub sub
4 bucks.

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Is it starting to maybe make a
bit more sense about what

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they're going to make and what
it's being valued?

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Yeah, definitely.
Yeah.

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00:11:03,880 --> 00:11:05,640
I think the valuation is a lot
more reasonable now.

226
00:11:07,360 --> 00:11:10,240
Look, longer term, I do think
there's upside from Ghouls Dam

227
00:11:10,240 --> 00:11:12,600
and Janssen, some of the other
ground they've got around

228
00:11:12,600 --> 00:11:15,400
Honeymoon, which will either be
tied in or have a separate

229
00:11:15,400 --> 00:11:17,520
plant.
So I think that probably does

230
00:11:17,520 --> 00:11:20,160
provide you a 20 year view.
And I know there's a lot more

231
00:11:20,160 --> 00:11:22,680
work going on in terms of
drilling studies out there at

232
00:11:22,680 --> 00:11:25,400
the moment.
So that hopefully will eventuate

233
00:11:25,400 --> 00:11:27,680
over the next 6 to 12 months.
So you get a bit more visibility

234
00:11:27,680 --> 00:11:29,320
on that growing production
profile.

235
00:11:31,600 --> 00:11:33,480
But yeah, going back to the
point, I definitely think

236
00:11:33,480 --> 00:11:35,520
there's, there's more value now.
The cash flows over the next

237
00:11:35,520 --> 00:11:37,760
couple of years will take some
time to ramp up.

238
00:11:37,760 --> 00:11:39,960
But when you're looking at sort
of two to three years time when

239
00:11:39,960 --> 00:11:42,920
they're at full production,
you're probably getting to a

240
00:11:42,920 --> 00:11:45,960
kind of 10% free cash per yield,
which is not too bad.

241
00:11:46,760 --> 00:11:48,880
Uranium's interesting though.
I mean there is a very limited

242
00:11:48,880 --> 00:11:50,520
set of uranium companies to
invest in.

243
00:11:50,520 --> 00:11:52,840
So we're positive on the uranium
price.

244
00:11:52,840 --> 00:11:55,520
I do think we're kind of one or
two years into what will be a

245
00:11:55,800 --> 00:12:00,200
five to seven year cycle.
Where can you play that is

246
00:12:00,440 --> 00:12:02,640
essentially some of the majors
like Camico and Kazanoprom,

247
00:12:02,640 --> 00:12:04,000
which have got a lot of that
contracted.

248
00:12:04,080 --> 00:12:06,040
So there's not a huge amount of
spot price leverage.

249
00:12:06,600 --> 00:12:08,320
Boss has got a lot of spot price
leverage.

250
00:12:08,440 --> 00:12:09,760
Paladin's got a fair bit as
well.

251
00:12:10,360 --> 00:12:13,600
And I think just trying to in
certain valuations on these

252
00:12:13,600 --> 00:12:17,440
things can be a bit troublesome
given they will just trade the

253
00:12:17,440 --> 00:12:20,120
spot price sentiment.
We've had a fairly weak six

254
00:12:20,120 --> 00:12:24,120
months in uranium spot price
feedback I've got is that people

255
00:12:24,120 --> 00:12:28,320
have been more focused on
securing enrichment capacity and

256
00:12:28,320 --> 00:12:30,760
that and that's led to sort of
weakness in contracting over the

257
00:12:30,760 --> 00:12:32,840
first half of the year.
I think that'll flow through

258
00:12:32,840 --> 00:12:34,440
into better contracting in the
second half.

259
00:12:34,800 --> 00:12:38,080
I do think we'll see a step up
in spot price and it's probably

260
00:12:38,080 --> 00:12:40,760
important to note that the
actual term price has kept

261
00:12:40,760 --> 00:12:43,360
ticking up.
We're at about 80 bucks a pound

262
00:12:43,360 --> 00:12:47,760
now on the term price with
ceilings up, you know one 25130.

263
00:12:48,600 --> 00:12:50,800
So again that that just probably
goes to the underlying strength

264
00:12:50,800 --> 00:12:53,000
of that market and just the
dynamics we serve the next few

265
00:12:53,000 --> 00:12:56,400
years.
Hard to hard to put evaluation

266
00:12:56,400 --> 00:12:58,160
of these things.
I think once the spot price

267
00:12:58,160 --> 00:13:00,280
starts to recover if when that
happens, I think a lot of these

268
00:13:00,280 --> 00:13:02,520
things if you're given and the
equity starts to recover in mind

269
00:13:02,520 --> 00:13:05,400
with that.
The the obvious stock that's you

270
00:13:05,400 --> 00:13:08,800
know, not, not, not in your
portfolio there is next Gen.

271
00:13:08,800 --> 00:13:10,880
And is that just a function of
the fact that you you have to

272
00:13:10,880 --> 00:13:13,040
own something that you think
will have earnings 2 years from

273
00:13:13,040 --> 00:13:15,640
now?
Yeah, Yeah, pretty much.

274
00:13:15,640 --> 00:13:17,120
I mean Next Gen's interesting
look, it's 1:00.

275
00:13:17,120 --> 00:13:21,120
We we could own if we wanted to.
Generally on the on the earnings

276
00:13:21,120 --> 00:13:23,760
certainty side, we want stuff in
in production or profitability

277
00:13:23,760 --> 00:13:26,280
within two or three years.
I think when it's a project as

278
00:13:26,280 --> 00:13:29,040
high quality and as obvious as
Next Gen that it will be in

279
00:13:29,040 --> 00:13:31,480
production, I'm more happy to
take that risk on getting

280
00:13:31,480 --> 00:13:35,080
involved a bit earlier that
that's kind of an interesting

281
00:13:35,080 --> 00:13:37,440
one.
I mean, we're sort of at a, a

282
00:13:37,440 --> 00:13:38,960
bit of a stage now where they
need to progress some

283
00:13:38,960 --> 00:13:41,240
permitting.
What happens with CapEx

284
00:13:41,240 --> 00:13:43,000
estimates, how does the funding
come through?

285
00:13:43,400 --> 00:13:46,320
There's some milestones that can
take off over the next 6 or 12

286
00:13:46,320 --> 00:13:48,440
months, which could rewrite that
project.

287
00:13:49,520 --> 00:13:51,520
But I, I do think over the next
few years, that's just going to

288
00:13:51,520 --> 00:13:53,320
be more driven by the uranium
price than anything.

289
00:13:53,360 --> 00:13:54,920
The, the broad parameters are
kind of set.

290
00:13:55,480 --> 00:13:59,640
There's not too much they can do
in terms of construction issues

291
00:13:59,640 --> 00:14:03,080
or, or massive delays in terms
of project that could derail it

292
00:14:03,200 --> 00:14:05,560
over the short term.
So again, I I think that just

293
00:14:05,560 --> 00:14:07,520
comes back to being driven by
where the spot price heads in

294
00:14:07,520 --> 00:14:11,520
the next 12 months.
JD, out of respect, I'll stop

295
00:14:11,520 --> 00:14:14,360
talking about uranium.
I could keep going, but I'll let

296
00:14:14,360 --> 00:14:17,600
you keep things moving.
I, I was just came to hear your

297
00:14:17,600 --> 00:14:21,680
thoughts, Matt, obviously you're
an Aussie fun going at ASX

298
00:14:21,680 --> 00:14:24,240
stocks, but we've mentioned a
few names with Canadian

299
00:14:24,240 --> 00:14:25,840
relations.
I just wanted to hear if you had

300
00:14:25,840 --> 00:14:28,400
any thoughts on the news we've
heard about, you know, them

301
00:14:28,400 --> 00:14:33,240
clamping down on M&A and just
how you see Canada as a as a

302
00:14:33,240 --> 00:14:35,200
jurisdiction for mining
projects?

303
00:14:36,080 --> 00:14:37,360
Yeah, it's, it's an interesting
one.

304
00:14:37,360 --> 00:14:40,600
I haven't, I saw the headlines.
I haven't read in huge amount of

305
00:14:40,600 --> 00:14:42,480
detail what's what's happened
there.

306
00:14:42,480 --> 00:14:45,800
But look, I think basically
what'll happen is if, if Canada

307
00:14:46,280 --> 00:14:48,720
cracks down on M&A, you know the
capital for elsewhere, the

308
00:14:48,720 --> 00:14:50,200
companies are listed on other
exchanges.

309
00:14:50,840 --> 00:14:53,920
I know one of the things the ASX
has been doing to arrest the

310
00:14:53,920 --> 00:14:56,640
sort of decline in IP OS and the
amount of companies leaving the

311
00:14:56,640 --> 00:15:00,640
board through through M&A is
actually incentivizing some of

312
00:15:00,640 --> 00:15:03,720
these companies to dual list.
So we've seen the likes of

313
00:15:03,720 --> 00:15:08,040
metals acquisition, capstone, It
sounds like that process of dual

314
00:15:08,040 --> 00:15:10,200
listing is becoming a lot easier
on the ASX.

315
00:15:10,880 --> 00:15:13,840
So I do think we see probably
more companies gravitate

316
00:15:13,840 --> 00:15:16,960
towards, towards Australia's
investment destination.

317
00:15:17,560 --> 00:15:20,960
I, I think it probably just
hurts, hurts Canadian stock

318
00:15:20,960 --> 00:15:24,360
exchanges to be honest.
The money will flow somewhere

319
00:15:24,360 --> 00:15:28,080
and Canada is going to be too
restrictive in terms of who can,

320
00:15:28,160 --> 00:15:29,800
who can take over companies.
And that's sort of seeing the

321
00:15:29,800 --> 00:15:31,400
companies.
We'll, we'll just move to other

322
00:15:31,400 --> 00:15:33,640
exchanges is my view.
NextGen dual listed as well.

323
00:15:33,640 --> 00:15:36,160
It's amazing when you see these
these companies on other

324
00:15:36,160 --> 00:15:39,560
exchanges dual list on the ASX
they because the ASX is

325
00:15:39,560 --> 00:15:42,200
obviously like their their
incentivize to get more, more

326
00:15:42,200 --> 00:15:45,080
ASX listings.
That's how ASX reaches their KP

327
00:15:45,160 --> 00:15:48,440
is, but they will, they will
offer all of these like pretty

328
00:15:48,840 --> 00:15:52,120
insane waivers to these, you
know, Canadian listed companies,

329
00:15:52,120 --> 00:15:54,920
etcetera to dualist.
And that means that they don't

330
00:15:54,920 --> 00:15:57,800
have to comply with the same
like there are certain listing

331
00:15:57,800 --> 00:15:58,960
rules that they'll be exempt
from.

332
00:15:59,600 --> 00:16:01,680
It's kind of, it's interesting,
you know, they play, you get to

333
00:16:01,680 --> 00:16:03,800
play by a different set of rules
when you get the dual listing on

334
00:16:03,800 --> 00:16:06,080
the ASX because ASX just wants
you over here because you're a

335
00:16:06,080 --> 00:16:08,640
big company.
Pretty much, yeah.

336
00:16:08,640 --> 00:16:10,160
And that's the issue.
I mean, there's just been a

337
00:16:10,160 --> 00:16:13,560
complete lack of new companies
listing on the ASXA lot of

338
00:16:14,000 --> 00:16:15,240
especially in the industrial
space.

339
00:16:15,240 --> 00:16:17,480
We've seen the whole building
material space pretty much get

340
00:16:17,480 --> 00:16:19,440
hollowed out through through M
and A lately.

341
00:16:19,440 --> 00:16:21,920
So the ASX wants to get listing
numbers up.

342
00:16:21,920 --> 00:16:25,120
I think their approach has been,
look, if you've good enough to

343
00:16:25,200 --> 00:16:28,280
list in Canada or the US or or
New Zealand, then you should be

344
00:16:28,280 --> 00:16:31,280
good enough the ASX.
So it's always interesting

345
00:16:31,280 --> 00:16:33,160
though seeing just the the
differences of reporting

346
00:16:33,160 --> 00:16:35,240
requirements, the differences in
some of the waves you talk

347
00:16:35,240 --> 00:16:36,520
about.
So you've got to be comfortable

348
00:16:36,520 --> 00:16:38,360
with that sort of stuff before
you can actually invest in those

349
00:16:38,360 --> 00:16:41,040
companies.
One of those ones that is now

350
00:16:41,040 --> 00:16:43,880
listed here is Meadows
Acquisition Corp that you've,

351
00:16:44,000 --> 00:16:46,280
you've mentioned you're a holder
coming from the New York Stock

352
00:16:46,280 --> 00:16:48,840
Exchange where they've got
another listing and they were

353
00:16:48,840 --> 00:16:51,520
super, super well received when
they came on.

354
00:16:51,600 --> 00:16:55,240
I think they up the, the IPO
amount of money that they took

355
00:16:55,240 --> 00:16:59,200
in twice and then they had a bit
of a, a sort of bumpy start,

356
00:16:59,200 --> 00:17:01,760
obviously getting a lot of love
on the, the copper thematic side

357
00:17:01,760 --> 00:17:03,920
of things.
But the last quarter on a

358
00:17:03,920 --> 00:17:06,839
production side of things was
you know, a bit how you going.

359
00:17:06,839 --> 00:17:09,280
How do, how do you see the the
company going forward?

360
00:17:09,280 --> 00:17:13,119
Obviously a high pedigree sort
of management team with an asset

361
00:17:13,119 --> 00:17:15,680
that a lot of people have taken
a liking to.

362
00:17:15,680 --> 00:17:18,200
What's your sort of view of it?
Yeah, we're we're pretty

363
00:17:18,200 --> 00:17:20,920
positive on the name.
Look, I've got no great insights

364
00:17:20,920 --> 00:17:24,200
into where Copper's heading.
You know, we're, we're taking

365
00:17:24,200 --> 00:17:26,560
three sitting in Sydney.
So for us to have a a huge

366
00:17:26,880 --> 00:17:28,880
hugely differentiated view on
copper is pretty difficult.

367
00:17:28,880 --> 00:17:31,240
But we're pretty comfortable
with the commodity and and the

368
00:17:31,240 --> 00:17:34,120
drivers there.
So finding copper exposure has

369
00:17:34,120 --> 00:17:36,360
been quite difficult on the on
the ASX, especially ones of

370
00:17:36,360 --> 00:17:39,440
screen value, which I think
metals acquisition does.

371
00:17:40,320 --> 00:17:41,960
We've done a fair bit of work
there around kind of the

372
00:17:41,960 --> 00:17:45,120
structure, the the turn around.
There is complexity in that

373
00:17:45,120 --> 00:17:48,440
story and I think that's
probably led to the opportunity

374
00:17:48,440 --> 00:17:50,960
and where the valuation is for
some other copper peers.

375
00:17:51,720 --> 00:17:53,200
In terms of the quarterly
production numbers.

376
00:17:53,200 --> 00:17:56,480
Look it is going to be lumpy.
It is a pretty high grade, low

377
00:17:56,480 --> 00:17:58,160
volume mine going through a turn
around.

378
00:17:58,160 --> 00:18:00,640
So no surprise they're going to
have good quarters and bad

379
00:18:00,640 --> 00:18:03,560
quarters based on when high
grade Stokes come into the mine

380
00:18:03,560 --> 00:18:07,360
and different other things.
I think there's there's quite a

381
00:18:07,360 --> 00:18:09,520
lot of work that's gone into
that three year production ramp

382
00:18:09,560 --> 00:18:11,080
up.
They show on the plan.

383
00:18:11,640 --> 00:18:13,640
I would back Mick and the team
to turn around.

384
00:18:13,640 --> 00:18:17,160
I mean, you know, hearing about
how Blinkle operated that mine,

385
00:18:18,560 --> 00:18:20,720
some of the challenges there.
I think getting a good operator

386
00:18:20,720 --> 00:18:23,960
in really does provide a lot of
a lot of opportunity, although

387
00:18:23,960 --> 00:18:26,360
it's not a quick fix.
I mean clearly the constraint

388
00:18:26,360 --> 00:18:29,560
there is ventilation that's
going to take a couple of years

389
00:18:29,560 --> 00:18:32,400
to get rolled out fully through
the mine and that's really where

390
00:18:32,400 --> 00:18:34,560
you start to see those
productivity gains.

391
00:18:35,400 --> 00:18:37,600
There's some other interesting
upside angles there.

392
00:18:37,600 --> 00:18:40,000
I mean you've got you've got a
zinc resource, you've got a

393
00:18:40,000 --> 00:18:42,360
bunch of remnant areas which
kind of aren't in the reserve or

394
00:18:42,360 --> 00:18:45,040
the mine plan, You've got a very
underutilised mill which

395
00:18:45,200 --> 00:18:47,160
probably needs a little bit of
CapEx to get back to those

396
00:18:47,160 --> 00:18:50,160
levels.
But I think once once the team

397
00:18:50,160 --> 00:18:53,000
gets into good operating rhythm,
starts to deliver some pretty

398
00:18:53,000 --> 00:18:56,960
consistent quarters, that's when
we can start to think about kind

399
00:18:56,960 --> 00:18:59,600
of what's next.
I know the market's concerned as

400
00:18:59,600 --> 00:19:01,560
well about potential
acquisitions.

401
00:19:01,720 --> 00:19:03,480
It is called Mills Acquisition
Corp system.

402
00:19:05,080 --> 00:19:07,520
I I don't think they're going to
blow their brains out on doing

403
00:19:07,520 --> 00:19:09,720
anything too stupid.
I think it would have to be

404
00:19:10,280 --> 00:19:13,080
pretty value accretive.
You've got quite aligned and

405
00:19:13,080 --> 00:19:14,440
incentivised management team
there.

406
00:19:14,440 --> 00:19:18,200
So I think the quick wins for
them are really fixing up CSA.

407
00:19:18,760 --> 00:19:21,520
Maybe there's some some other
things they can do in the region

408
00:19:21,520 --> 00:19:23,600
which are kind of smaller deals
which add a bit of value.

409
00:19:24,640 --> 00:19:26,960
But I think to do something
bigger in a step out would have

410
00:19:26,960 --> 00:19:28,480
to be quite compelling for them
at this stage.

411
00:19:28,480 --> 00:19:30,720
It's.
Got to be it's hard to find the

412
00:19:30,720 --> 00:19:33,640
quality.
Like they are very deep, but

413
00:19:33,640 --> 00:19:38,200
the, it's the quality of that
ore body is just miles ahead of

414
00:19:38,720 --> 00:19:41,120
everything else.
Like finding quality copper.

415
00:19:41,440 --> 00:19:46,280
Unless someone finds a frigging
bloody VMS deposit at 5% in the

416
00:19:46,280 --> 00:19:48,720
next frigging month.
It's there's nothing just

417
00:19:48,720 --> 00:19:50,960
jumping out.
It's like, do you look at it and

418
00:19:50,960 --> 00:19:55,960
think, would you do M&A just for
the sake of it or is it going to

419
00:19:55,960 --> 00:20:00,080
be more detrimental?
Yeah, good point.

420
00:20:00,080 --> 00:20:03,240
And I guess that's the problem
with having a high quality asset

421
00:20:03,280 --> 00:20:04,720
that's kind of better than
anything else out there.

422
00:20:04,720 --> 00:20:05,840
You're always going to be
diluting.

423
00:20:05,920 --> 00:20:08,680
We've probably seen that with
Duterra lately.

424
00:20:08,680 --> 00:20:11,640
You know, Duterra is quite an
interesting one, the terrible,

425
00:20:11,640 --> 00:20:14,520
one of the best, probably the
best royalty stream in the

426
00:20:14,520 --> 00:20:15,880
world.
But anything you're going to buy

427
00:20:15,880 --> 00:20:18,520
is going to be dilated to that.
It was, it was similar to

428
00:20:18,520 --> 00:20:20,200
Sandfire years ago.
You know, Sandfire had one of

429
00:20:20,200 --> 00:20:23,560
the best copper assets.
In terms of grading costs and,

430
00:20:23,560 --> 00:20:25,320
and anything that we're going to
buy was going to be diluted.

431
00:20:25,320 --> 00:20:26,720
So that led to some indigestion
there.

432
00:20:26,720 --> 00:20:29,560
So yeah, it, it's going to have
to be something pretty good for,

433
00:20:29,720 --> 00:20:33,120
for Mac to to buy.
I think the quality angle is

434
00:20:33,120 --> 00:20:34,440
interesting.
I mean, definitely the quality

435
00:20:34,440 --> 00:20:37,680
of of these all bodies is
decreasing and you've got to

436
00:20:37,680 --> 00:20:40,200
make trade offs between how low
you're willing to go on the

437
00:20:40,200 --> 00:20:42,880
quality side compared to where
sort of valuation is.

438
00:20:43,320 --> 00:20:44,920
We love to spit ball.
You know what?

439
00:20:44,920 --> 00:20:46,240
What?
What's Mac going to buy?

440
00:20:46,920 --> 00:20:49,600
And there's so many like, you
know, players in that cobar

441
00:20:50,000 --> 00:20:51,320
region.
And when you look at the lay of

442
00:20:51,320 --> 00:20:54,520
the land of the, the, the, the
juniors out there, where can you

443
00:20:54,520 --> 00:20:57,680
sort of, you know, see the most
value of creative synergies at

444
00:20:57,680 --> 00:21:01,240
the moment?
Yeah, in the Cobar region, I

445
00:21:01,240 --> 00:21:05,320
mean the obvious one's really I
find it hard to see Mac

446
00:21:05,320 --> 00:21:08,680
Bollinger really I think there's
probably some asset type deals

447
00:21:08,680 --> 00:21:12,240
to do the the great cobar asset
that I really have would fit

448
00:21:12,280 --> 00:21:15,680
quite nicely with Mac.
I think potentially some of the

449
00:21:15,680 --> 00:21:19,160
zinc that that Mac has could go
through really is peak mill.

450
00:21:19,160 --> 00:21:22,880
So I think there's probably more
synergies in terms of how those

451
00:21:22,880 --> 00:21:24,920
assets come together and which
mills they go through rather

452
00:21:24,920 --> 00:21:26,960
than needing to do full kind of
M&A.

453
00:21:26,960 --> 00:21:31,120
Other than that, I mean there's
some interesting exploration

454
00:21:31,120 --> 00:21:33,000
ground.
I think having having a mill

455
00:21:33,000 --> 00:21:35,160
that operates well in that
region will provide power over

456
00:21:35,160 --> 00:21:37,040
time.
It's just going to be a matter

457
00:21:37,040 --> 00:21:40,640
of I think metals acquisition
needs to sort out how big CSA

458
00:21:40,640 --> 00:21:42,880
can get.
It's still quite early in the

459
00:21:42,880 --> 00:21:45,920
journey there of cutting
resources and reserves and just

460
00:21:45,920 --> 00:21:49,080
planning out probably five to
seven years because they may

461
00:21:49,080 --> 00:21:51,240
well have enough of the raw
material to fill the mill

462
00:21:51,240 --> 00:21:53,720
without needing to get anyone
else's product through there.

463
00:21:54,160 --> 00:21:58,600
And but it's just the it's the
life risk there in terms of how

464
00:21:58,600 --> 00:22:03,880
deep can you go and keep the
keep the ground from bloody

465
00:22:03,880 --> 00:22:07,040
squeezing in, like keep
extending the ventilation to

466
00:22:07,560 --> 00:22:10,520
that's it's, it's very similar
to Gualia.

467
00:22:10,520 --> 00:22:14,160
Like it just everything just
slows down so much at frigging

468
00:22:14,200 --> 00:22:17,560
1800 metres deep.
Well, the future of DSI is

469
00:22:17,560 --> 00:22:19,960
looking great with bloody
everything getting deeper in the

470
00:22:19,960 --> 00:22:23,120
cobar region.
Isn't there bloody any M And I

471
00:22:23,360 --> 00:22:29,640
more DSI bolts, the deepest CSI
guys, more DSI bolts, more DSI

472
00:22:29,640 --> 00:22:36,120
bolts per metre per depth.
So exponential bloody growth for

473
00:22:36,120 --> 00:22:38,760
DSI coming.
And when I was setting up the,

474
00:22:38,760 --> 00:22:41,480
when I was setting up the call
with Matt Gryphon, I was

475
00:22:41,480 --> 00:22:43,120
speaking with him and he said
he'd, you know, he's been on a

476
00:22:43,120 --> 00:22:47,160
site visit out out to the cobar
there and he just knew, sort of

477
00:22:47,160 --> 00:22:50,080
bakes it into his model.
Once they get the DSI orders in,

478
00:22:50,080 --> 00:22:53,720
they come and fill this place up
and they'll be gone 345

479
00:22:53,720 --> 00:22:55,240
kilometres deep there.
Not a problem.

480
00:22:56,080 --> 00:22:57,960
Rest.
Assured why don't they what JD

481
00:22:57,960 --> 00:23:01,560
but the the DSI bloody portal
sets will be just getting

482
00:23:01,960 --> 00:23:04,120
that'll that's how they'll be
holding up CSI.

483
00:23:04,120 --> 00:23:08,600
So look my queries about CS as
depth and the finite life.

484
00:23:08,600 --> 00:23:13,760
There not a problem because DSI
making it happen holds the mind.

485
00:23:13,760 --> 00:23:15,600
Together and it holds the model
together.

486
00:23:16,360 --> 00:23:19,240
Go Derek Head.
That's they've got.

487
00:23:19,280 --> 00:23:21,560
It's like but it's offset by the
grade.

488
00:23:22,200 --> 00:23:23,920
No, that it's a great point,
Yeah.

489
00:23:24,000 --> 00:23:26,480
And, and look, we are in Genesis
as well, which owns Gwalia.

490
00:23:27,320 --> 00:23:30,080
I went out to Gwalior last year,
went all the way down, 1800

491
00:23:30,080 --> 00:23:31,280
metres down decline to the
bottom.

492
00:23:31,880 --> 00:23:34,800
And you can see the challenges
that depth has.

493
00:23:34,840 --> 00:23:37,080
You know, we got stuck behind a
broken down truck coming up.

494
00:23:37,080 --> 00:23:40,240
So, but, but again, that's,
that's the opportunity for these

495
00:23:40,240 --> 00:23:44,400
guys to, you know, make it meals
acquisition, rally, Genesis, the

496
00:23:44,400 --> 00:23:48,120
guys who good operators get good
people and they're that's the

497
00:23:48,120 --> 00:23:50,800
opportunity to turn around some
of these deep minds, which have

498
00:23:50,800 --> 00:23:53,520
challenges.
I think with Gualia as well,

499
00:23:53,520 --> 00:23:55,800
just taking the pressure off
Gualia in terms of the tonnes

500
00:23:55,800 --> 00:23:58,120
bringing USC and I think that's
kind of a game changer there.

501
00:23:58,120 --> 00:24:00,920
So there's always risks with
Zeke minds.

502
00:24:02,040 --> 00:24:03,640
You know, you can have seismic
events, you can have other

503
00:24:03,640 --> 00:24:06,120
issues happen at any time.
But again, that's just part of

504
00:24:06,120 --> 00:24:09,120
the the risk involved in
investing in resources.

505
00:24:10,120 --> 00:24:12,560
And we we certainly take all
those risks into account upfront

506
00:24:12,560 --> 00:24:14,240
and that really drives position
sizing.

507
00:24:14,360 --> 00:24:17,280
So high risk companies get a
lower weight in the fund for

508
00:24:17,280 --> 00:24:19,400
that reason.
And it means that if something

509
00:24:19,400 --> 00:24:22,160
does go wrong or blow up,
hopefully it doesn't wipe out

510
00:24:22,160 --> 00:24:24,280
our returns.
I just came up with a deal idea,

511
00:24:25,040 --> 00:24:28,320
JD and Maddie, and it's I'd
love, I'd love to bounce it off

512
00:24:28,320 --> 00:24:31,800
you off your mat.
So obviously IGO where where

513
00:24:31,800 --> 00:24:34,200
the, where the well, they
weren't really under bidders on

514
00:24:34,200 --> 00:24:36,480
Mac, but the deal blew up
because it got late, but it was,

515
00:24:36,480 --> 00:24:38,880
you know, IGO where there and
thereabouts in the in the

516
00:24:38,880 --> 00:24:43,120
process when Glencore was
selling Mac and and now more

517
00:24:43,120 --> 00:24:45,400
than back then, IGO is desperate
for copper.

518
00:24:45,400 --> 00:24:48,200
They need, they need a bloody,
you know, they want copper.

519
00:24:48,200 --> 00:24:52,800
They've got an identity crisis.
What if IGO acquired Mac today

520
00:24:52,960 --> 00:24:54,480
and Mick McMullen runs the
vehicle?

521
00:24:54,480 --> 00:24:56,920
Would you, you guys that?
Well, that's not too bad, trap.

522
00:24:57,840 --> 00:25:01,280
I I put one reason why it
wouldn't happen because Ivan

523
00:25:01,640 --> 00:25:03,880
just got into the hot seat six
months ago.

524
00:25:04,720 --> 00:25:06,560
Yes, there's a, there's a couple
of soft issues there.

525
00:25:06,640 --> 00:25:08,560
A big payout would make a few
problems go away.

526
00:25:08,560 --> 00:25:10,280
That's all right.
Take the hard drive on the way.

527
00:25:10,280 --> 00:25:11,720
Home.
I was about to say that.

528
00:25:14,320 --> 00:25:15,400
Matt, what are your thoughts on
that one?

529
00:25:15,880 --> 00:25:20,520
Oh look, interesting one.
I'd probably say the where Igos

530
00:25:20,520 --> 00:25:23,600
at the moment Nova, Nova
obviously operates pretty well.

531
00:25:23,600 --> 00:25:25,680
I don't think there's too many
improvements to be made there

532
00:25:27,240 --> 00:25:29,960
with the Green Bush's JV that's
sort of non operators there.

533
00:25:29,960 --> 00:25:33,400
So it would be hard for someone
else to come in and make huge

534
00:25:33,400 --> 00:25:35,080
operational improvements to Igos
assets.

535
00:25:35,080 --> 00:25:40,160
I would have thought given Igos
in large cap index we it sort of

536
00:25:40,160 --> 00:25:41,600
fell out of a universe few years
ago.

537
00:25:41,640 --> 00:25:45,920
So not as close anymore, but
interesting, but unlikely I

538
00:25:45,960 --> 00:25:48,840
would say.
We can always dream Travers

539
00:25:48,840 --> 00:25:50,200
like, hey, Maddie, we've got a
thing.

540
00:25:50,440 --> 00:25:53,680
As long as it's recorded, we've
got it in case it happens.

541
00:25:53,960 --> 00:25:57,280
So like probably a good segue
into Genesis that you mentioned

542
00:25:57,280 --> 00:26:00,920
before, another one of your
holdings there.

543
00:26:02,320 --> 00:26:05,320
And, and probably in line with
the, you know, silver, like Red

544
00:26:05,320 --> 00:26:11,960
mergers gone through Genesis,
you know, big, big future growth

545
00:26:11,960 --> 00:26:14,040
coming from Tower Hill.
And it looks like, you know,

546
00:26:14,040 --> 00:26:17,600
they've got a plan to, you know,
change that location of that

547
00:26:17,600 --> 00:26:21,640
terminal for the, the, the
terminus for that railway

548
00:26:21,640 --> 00:26:26,280
instead of extent diverting it.
But the, the big question is for

549
00:26:26,280 --> 00:26:31,680
that growth of that company is
the consolidation with Red 5.

550
00:26:31,920 --> 00:26:34,680
Do you, what horizon are you
putting on that?

551
00:26:34,680 --> 00:26:37,120
Because that will be a game
changer for that region.

552
00:26:37,160 --> 00:26:38,920
And it's.
I'm sure it's going to happen

553
00:26:39,080 --> 00:26:41,600
eventually.
Yeah, it could.

554
00:26:41,600 --> 00:26:43,320
Do I look, I don't think it's
near term.

555
00:26:43,320 --> 00:26:46,640
I actually think Genesis has got
more than enough on their plate

556
00:26:46,680 --> 00:26:48,800
organically that they don't
really need to look at M&A.

557
00:26:48,840 --> 00:26:51,840
If you look at that five year
growth plan, there's a lot to

558
00:26:51,840 --> 00:26:55,360
exceed on Tower Hill approvals
is really the key one.

559
00:26:55,360 --> 00:26:57,480
And I think that's, to be
honest, that's probably where

560
00:26:57,480 --> 00:27:00,440
rally's spending like 70% of the
time just trying to get those

561
00:27:00,440 --> 00:27:03,200
approvals done because that is
such a big value driver.

562
00:27:04,000 --> 00:27:06,920
My, my sense is that it's
probably more likely you'll see

563
00:27:07,040 --> 00:27:11,280
bolt on M&A around the, the JC
mill of Mount Morgans around

564
00:27:11,280 --> 00:27:13,640
that area.
And then you can potentially

565
00:27:13,640 --> 00:27:17,040
look at maybe a new mill at, at
Gualia just to put the Tower

566
00:27:17,040 --> 00:27:18,720
Hill stuff through.
And that's right there.

567
00:27:18,720 --> 00:27:23,240
So longer term, I'd expect maybe
maybe a new bills at Gualia,

568
00:27:24,360 --> 00:27:27,360
potentially a Red 5 takeover if
there's still if there's a bit

569
00:27:27,360 --> 00:27:30,320
of value there and we can see
the synergies and then bolting

570
00:27:30,320 --> 00:27:33,400
on some of some of the other
deposits around Labour to

571
00:27:33,400 --> 00:27:36,200
interfere through that mill.
Look, there's a lot going on

572
00:27:36,200 --> 00:27:37,880
there.
I think the thesis really is

573
00:27:37,880 --> 00:27:40,080
that it's not cheap on this
year's earnings or next year's

574
00:27:40,080 --> 00:27:42,600
earnings, but it's one of the
few Aussie gold companies with a

575
00:27:42,600 --> 00:27:45,800
good growth profile, which is
severely lacking in space.

576
00:27:46,640 --> 00:27:49,360
Certainly back the team there,
you know, we were with them on

577
00:27:49,360 --> 00:27:50,840
the journey through the Saracen
days.

578
00:27:51,240 --> 00:27:53,480
I know how conservative they are
and setting numbers.

579
00:27:53,720 --> 00:27:56,320
There's just always some some
level of upside and some things

580
00:27:56,320 --> 00:27:59,240
they're not telling the market
there that always tend to just

581
00:27:59,240 --> 00:28:01,080
lead to small beats and small
upgrades.

582
00:28:02,000 --> 00:28:04,120
And the execution has been
second to none over the the

583
00:28:04,240 --> 00:28:07,240
period in the market.
So that makes Genesis a really

584
00:28:07,240 --> 00:28:09,720
attractive proposition for us
without needing to look at any

585
00:28:09,720 --> 00:28:13,520
sort of M and AI think they can
easily get to 400,000 oz, you

586
00:28:13,520 --> 00:28:15,160
know, potentially 500 on what
they've got.

587
00:28:15,840 --> 00:28:18,440
And you look at the resource
base there, there's 15,000,000

588
00:28:18,440 --> 00:28:22,560
ounces in resource across that
group with I think only three in

589
00:28:22,560 --> 00:28:26,200
reserves.
So a high gold price, a bit more

590
00:28:26,200 --> 00:28:27,640
work in some of these other
deposits.

591
00:28:27,640 --> 00:28:29,960
And you could see a lot of that
kind of shift from resource to

592
00:28:29,960 --> 00:28:32,080
reserve and really build up that
production profile.

593
00:28:32,480 --> 00:28:35,680
Sounds like they need bloody K
drill to convert that bloody 13

594
00:28:35,680 --> 00:28:38,120
million ounces of resource into
reserves.

595
00:28:38,120 --> 00:28:41,760
A bit more pepperon needed.
Get it up to indicated and

596
00:28:41,760 --> 00:28:43,600
measured.
Get it into reserves.

597
00:28:43,800 --> 00:28:49,520
The future of Genesis is hanging
by a thread for K Drill to take.

598
00:28:50,000 --> 00:28:52,920
I can feel it.
Mate, you know, get get some

599
00:28:52,920 --> 00:28:56,000
indicated answers, get some, get
some more than 30 answers while

600
00:28:56,000 --> 00:28:57,320
you're there, get some measured
answers.

601
00:28:57,400 --> 00:28:59,480
Mate, that might have 20 million
oz by the end of it.

602
00:28:59,680 --> 00:29:02,120
Get some uncategorized answers
in the mine plan.

603
00:29:02,120 --> 00:29:03,080
Actually, don't do that.
That's.

604
00:29:05,280 --> 00:29:08,200
Just Genesis either, fellas.
You you think about all those

605
00:29:08,200 --> 00:29:10,880
explorers and as soon as Matt
Gryphons, you know he's talking

606
00:29:10,880 --> 00:29:14,280
about them, All of them.
I can already feel the phone

607
00:29:14,280 --> 00:29:17,320
buzzing for Ryan O'Sullivan.
They all want to get taken out.

608
00:29:17,320 --> 00:29:18,800
They want Genesis to take them
out.

609
00:29:19,000 --> 00:29:21,240
All they need to do is pepper in
a few more holes.

610
00:29:21,240 --> 00:29:24,240
And who else would you rather
have do it than Buddy K Drew?

611
00:29:24,480 --> 00:29:27,480
Yeah, and look, Ryan's been
given a lot of love, but Drew

612
00:29:27,480 --> 00:29:29,680
Harvey's email is in the show
notes.

613
00:29:29,680 --> 00:29:33,680
Give Drew some love as well, and
he'll introduce you to the team

614
00:29:33,680 --> 00:29:36,880
and you will get answers.
That's all you need to know.

615
00:29:37,160 --> 00:29:40,200
And more answers, JD.
More of a takeover premium.

616
00:29:40,520 --> 00:29:42,400
You don't have to worry about
Drew not going hard at the footy

617
00:29:42,480 --> 00:29:45,960
mate.
He he goes real hard at the at

618
00:29:45,960 --> 00:29:50,280
the footy go Australia.
But how would that magic like

619
00:29:50,280 --> 00:29:53,480
that combination come together?
Because now to be, you know,

620
00:29:53,480 --> 00:29:57,560
red, red fives are bigger market
cap than than Genesis.

621
00:29:57,560 --> 00:30:01,720
So that obviously creates some
who's getting the premium.

622
00:30:03,240 --> 00:30:04,880
Yeah, no, exactly.
And there's obviously a lot of

623
00:30:04,880 --> 00:30:08,960
other stuff in in red now with
the Silver Lake assets and sugar

624
00:30:08,960 --> 00:30:11,520
zone in Canada.
So I, I think it's just too

625
00:30:11,560 --> 00:30:13,760
difficult in the near term.
I wouldn't probably expect that

626
00:30:13,760 --> 00:30:15,880
to to really happen.
I think Genesis has got more

627
00:30:15,880 --> 00:30:18,480
than enough to to execute on
over the next sort of three or

628
00:30:18,480 --> 00:30:21,680
four years in their own plate.
I would just think, you know if

629
00:30:21,680 --> 00:30:25,240
you look through the history of
Saracen and Northern Star, the

630
00:30:25,240 --> 00:30:30,640
Big M and A, there was kind of a
pretty very attractive prices,

631
00:30:30,640 --> 00:30:32,720
distressed assets coming out of
large companies.

632
00:30:33,160 --> 00:30:35,200
They were kind of no brainers
there rather than having to

633
00:30:35,200 --> 00:30:39,440
really pay up for assets.
So I probably wouldn't expect

634
00:30:39,440 --> 00:30:42,000
anything huge out of Genesis on
the M&A front in the new term.

635
00:30:42,160 --> 00:30:45,560
But do you think, do you think
they would do any mill upgrade

636
00:30:45,560 --> 00:30:49,800
or mill expansion at Gualia
knowing that the most optimum

637
00:30:49,800 --> 00:30:55,120
case is getting that king of the
hills massive new mill and

638
00:30:55,120 --> 00:30:57,800
possibly expanding that a bit?
Could do.

639
00:30:57,800 --> 00:30:59,600
I mean, it comes back to my
earlier comment that there's a

640
00:30:59,600 --> 00:31:01,040
lot of things that make sense in
resources.

641
00:31:01,040 --> 00:31:03,400
And a lot of the time these
obvious deals don't happen

642
00:31:03,400 --> 00:31:06,000
because of personalities that he
goes evaluations.

643
00:31:06,000 --> 00:31:09,360
So you get these situations
where 2 brand new mills are

644
00:31:09,360 --> 00:31:11,760
built right next to each other
when one could have done and

645
00:31:11,760 --> 00:31:15,280
that's just the way it is.
But yeah, it it's going to come

646
00:31:15,280 --> 00:31:18,600
down to I guess the the relative
share prices of people at a time

647
00:31:19,880 --> 00:31:21,000
whether any of that happens or
not.

648
00:31:21,920 --> 00:31:23,040
Yeah, right.
What are you and what do you

649
00:31:23,040 --> 00:31:25,400
think about the M&A?
So we're talking when you're

650
00:31:25,400 --> 00:31:28,800
talking about Hoover and UPS and
around the Laverton and that

651
00:31:28,800 --> 00:31:31,800
sort of things like just
literally pinching the few of

652
00:31:31,800 --> 00:31:36,280
the juniors to get a bit of
extra feed and is, yeah, they're

653
00:31:36,280 --> 00:31:39,120
not, they're going to just sort
of what would you say a bit more

654
00:31:39,120 --> 00:31:42,880
bit like Remelius historically
before the Spartan thing, like

655
00:31:42,880 --> 00:31:45,960
just taking little dribs and
drabs instead of big deals.

656
00:31:47,040 --> 00:31:48,000
I think, I think that's probably
it.

657
00:31:48,000 --> 00:31:50,440
I mean the one the one
reasonable sized one there is

658
00:31:50,440 --> 00:31:53,440
magnetic which looks like a a
very good deposit and and that

659
00:31:53,440 --> 00:31:58,600
could go through probably either
the Granny Smith mill or through

660
00:31:59,480 --> 00:32:01,800
through the Daisy mill unless
they go loans.

661
00:32:01,800 --> 00:32:05,360
So otherwise there are a number
of other small junior sort of

662
00:32:05,360 --> 00:32:08,680
operators around there.
The other, the other potential

663
00:32:08,680 --> 00:32:11,480
is that W Australia undergrounds
could be revisited and that

664
00:32:11,480 --> 00:32:14,960
could could be more economic now
given gold price and in a

665
00:32:14,960 --> 00:32:16,960
different operator.
So there's just lots of

666
00:32:16,960 --> 00:32:19,680
optionality in Genesis.
I just think the five year plan

667
00:32:19,680 --> 00:32:22,840
they've laid out is probably
unlikely to end up in that form

668
00:32:22,840 --> 00:32:24,600
in five years.
I think it's a good base case,

669
00:32:25,120 --> 00:32:27,200
but there's a lot of optionality
around other things, how they

670
00:32:27,200 --> 00:32:29,640
could, you know, reroute
different deposits through

671
00:32:29,640 --> 00:32:32,520
different mills.
And I think any of that's just

672
00:32:32,520 --> 00:32:34,440
pure upside to where the
company's trading today.

673
00:32:36,440 --> 00:32:40,080
Then if you, if you kind of
look, look elsewhere in the the

674
00:32:40,080 --> 00:32:43,280
ASX gold landscape, if if there
was ever, you know, producer

675
00:32:43,320 --> 00:32:46,600
that is just being easy for
investors to sit and forget over

676
00:32:46,600 --> 00:32:49,800
the last like I don't know,
eight years it's been Perseus,

677
00:32:49,800 --> 00:32:53,400
they've yeah, created tremendous
value there and it makes a lot

678
00:32:53,400 --> 00:32:56,000
more cash than than other other
golds when you look across the

679
00:32:56,000 --> 00:32:58,280
board.
What's, but what's the

680
00:32:58,280 --> 00:33:01,520
investment like case for, for
holding it now after a period of

681
00:33:01,520 --> 00:33:02,800
you know, great operational
delivery?

682
00:33:03,960 --> 00:33:05,640
Yeah.
I mean, you say first, this is

683
00:33:05,800 --> 00:33:08,840
certainly get, I mean it, it
does operate in interesting

684
00:33:08,840 --> 00:33:12,080
parts of Africa and there's
always things going on in in

685
00:33:12,080 --> 00:33:14,640
different parts of Africa.
There's lots of risk there is,

686
00:33:14,760 --> 00:33:16,560
that's true.
But the operational delivery has

687
00:33:16,560 --> 00:33:18,200
been great, yeah.
Yeah, no, well, that's the

688
00:33:18,200 --> 00:33:19,920
thing.
And actually, you know, to give

689
00:33:19,920 --> 00:33:22,360
credit to the whole African
sector, the, the operational

690
00:33:22,360 --> 00:33:25,160
delivery has been far better out
of African producers and has out

691
00:33:25,160 --> 00:33:26,960
of the Aussies over the last
5-10 years.

692
00:33:27,920 --> 00:33:30,240
You look at what Wax's been able
to do, what Resolute's been able

693
00:33:30,240 --> 00:33:34,160
to do recently in Perseus,
they've navigated very tough

694
00:33:34,400 --> 00:33:37,000
economic times, a very tough
country risk over there to

695
00:33:37,000 --> 00:33:39,760
deliver great results.
And I think that's, that's

696
00:33:39,760 --> 00:33:41,200
really shown through in the cash
that generated.

697
00:33:41,320 --> 00:33:44,840
Whereas you look at the Aussie
producers and Aussie gold prices

698
00:33:44,840 --> 00:33:46,280
have been going up.
The costs have been kind of

699
00:33:46,280 --> 00:33:48,640
going up in line with that.
So there hasn't been that

700
00:33:48,680 --> 00:33:51,400
operating leverage come through
Perseus today.

701
00:33:51,400 --> 00:33:55,440
I think the the Aucorp deal was
very smart, done a very good

702
00:33:55,440 --> 00:33:57,480
time without much of A premium
being paid.

703
00:33:58,400 --> 00:34:00,400
You know that that stock would
probably be a lot higher today

704
00:34:00,400 --> 00:34:03,160
if it had kept trading.
So I think they've done very

705
00:34:03,160 --> 00:34:06,440
well there.
That adds to the growth profile.

706
00:34:06,440 --> 00:34:09,639
I think you'll see some life
extensions out of Edican, out of

707
00:34:09,639 --> 00:34:13,400
EARE, even Sisigre maybe.
And then once you layer in nine

708
00:34:13,400 --> 00:34:17,199
Zaga on top, you're up to kind
of 700 and seven 50,000 oz for a

709
00:34:17,199 --> 00:34:22,120
few years and it can be funded
purely through through cash.

710
00:34:22,960 --> 00:34:26,600
The other benefit is that all
court being a kind of

711
00:34:26,600 --> 00:34:29,760
underfunded junior had to go
optimise around open pit

712
00:34:29,760 --> 00:34:33,199
underground, bit of a challenge
in terms of how they were going

713
00:34:33,199 --> 00:34:34,920
to mine that.
Whereas process can probably

714
00:34:34,920 --> 00:34:39,400
come in, spend a bit more CapEx,
take a big open pit, get more,

715
00:34:40,199 --> 00:34:42,520
get more answers through and
probably a low cost base.

716
00:34:42,520 --> 00:34:45,199
So I think economically it makes
a lot of sense to them as well.

717
00:34:45,199 --> 00:34:47,800
And the relationship with the
terms of your government seems

718
00:34:47,800 --> 00:34:50,960
to be pretty good too.
Trades at three 3.4 times next

719
00:34:50,960 --> 00:34:54,040
12 month EBITDA, which is yeah
like and has been a better

720
00:34:54,040 --> 00:34:57,520
margin preservation than the ASX
also then then the WA based

721
00:34:57,520 --> 00:35:00,720
Goldie's who yeah, Yep, command
command a high multiple.

722
00:35:00,720 --> 00:35:03,760
But that's just the the way that
the the market is willing to,

723
00:35:04,160 --> 00:35:08,920
yeah, I guess like reward the
the geopolitical, you know, risk

724
00:35:08,920 --> 00:35:11,760
aversion.
Matt, have you looked in in West

725
00:35:11,760 --> 00:35:13,560
Africa?
Obviously you've picked Perseus

726
00:35:13,560 --> 00:35:16,400
there, but Resolute's been a
really strong performer of late

727
00:35:16,400 --> 00:35:21,120
and West African also in
comparison with Perseus has a

728
00:35:21,120 --> 00:35:23,600
sort of great operational track
record since they brought

729
00:35:23,880 --> 00:35:27,360
Sambrado online a few years ago.
Have you looked into them and is

730
00:35:27,360 --> 00:35:31,160
like one of the reasons that
they have a bit of a spread

731
00:35:31,160 --> 00:35:33,240
across a couple W African
geographies the winner there?

732
00:35:33,240 --> 00:35:35,000
Are there other sort of reasons
why?

733
00:35:35,840 --> 00:35:41,320
Yeah, we have owned West three
to Zambrado construction and

734
00:35:41,320 --> 00:35:42,720
ramp up did very well out of
that stock.

735
00:35:43,160 --> 00:35:45,960
Resolute One is one that I've
been following for 15 years

736
00:35:45,960 --> 00:35:47,880
without owning and then
eventually pulled the trigger

737
00:35:48,040 --> 00:35:50,800
probably 18 months ago.
Didn't own it up until pretty

738
00:35:50,800 --> 00:35:52,040
recently.
So it was a pretty good

739
00:35:52,040 --> 00:35:54,840
contributor for us.
I, I definitely think Percy is

740
00:35:54,840 --> 00:35:56,640
having to spread across
different African countries does

741
00:35:56,640 --> 00:36:00,240
help, especially when you look
at the political landscape, the

742
00:36:00,280 --> 00:36:04,960
influence of Russia, some of the
other, you know, activities

743
00:36:04,960 --> 00:36:08,520
going on in Bikini Faso and
Mali, does see those countries a

744
00:36:08,600 --> 00:36:10,680
bit challenged.
I think people have the

745
00:36:10,680 --> 00:36:13,040
perception that the African risk
is probably greater than it

746
00:36:13,040 --> 00:36:15,560
actually is.
When you look through all the

747
00:36:15,560 --> 00:36:18,440
coups that happen, all the
terrorist events in, in these

748
00:36:18,440 --> 00:36:21,520
countries, gold is kind of the
one industry that just keeps

749
00:36:21,520 --> 00:36:24,200
going.
The government doesn't really

750
00:36:24,200 --> 00:36:27,000
nationalise assets unless
there's an ownership dispute.

751
00:36:27,000 --> 00:36:31,480
So if you've got clear ownership
over an operating asset, that

752
00:36:31,480 --> 00:36:34,360
stuff through and production's
been pretty consistent.

753
00:36:34,360 --> 00:36:37,200
So I'm probably less worried
about the political side, but it

754
00:36:37,200 --> 00:36:38,960
does.
It doesn't help when you've got,

755
00:36:40,280 --> 00:36:42,840
you know, Mali building their
own gold refineries and forcing

756
00:36:42,840 --> 00:36:45,640
everyone to sell to them.
And what does that mean in terms

757
00:36:45,640 --> 00:36:48,800
of price?
Mckenney's raised royalty rates

758
00:36:48,800 --> 00:36:50,920
harder to get money out of the
country there.

759
00:36:50,920 --> 00:36:56,320
So, so they post Resolute and
WAFF have done very well, still

760
00:36:56,320 --> 00:36:58,760
look fairly cheap, but processes
the peak just because they've

761
00:36:58,760 --> 00:37:00,800
got the spread.
I think they're in more stable

762
00:37:00,800 --> 00:37:03,440
environments over there and and
they've got the growth lever of

763
00:37:03,440 --> 00:37:05,680
Nine Zahu coming through, which
I think adds a lot of value.

764
00:37:06,960 --> 00:37:10,800
Then there's the two premier
undeveloped projects, Spartan

765
00:37:10,800 --> 00:37:13,800
and the Grey.
And you own, you own both of

766
00:37:13,800 --> 00:37:15,880
them.
And they're obviously like

767
00:37:15,880 --> 00:37:18,480
pretty, pretty different
projects in almost every single

768
00:37:18,480 --> 00:37:20,640
way.
Like what's, what's the kind of

769
00:37:20,760 --> 00:37:22,120
like the rationale for holding
both?

770
00:37:23,040 --> 00:37:25,200
Yeah.
Look, to be honest, it's, it's

771
00:37:25,200 --> 00:37:28,760
stock specific on both of them.
So again, with with gold, we're

772
00:37:28,760 --> 00:37:30,120
pretty positive on the gold
outlook.

773
00:37:30,120 --> 00:37:33,440
But the reason we own these 4
gold stocks is because we like

774
00:37:33,440 --> 00:37:34,840
the stocks, we like the
management teams.

775
00:37:35,280 --> 00:37:37,440
We think there's plenty of
upside as long as the gold price

776
00:37:37,440 --> 00:37:39,640
kind of holds in line with where
consensus is.

777
00:37:40,120 --> 00:37:43,880
So Spartan, we got involved in
the, in the raising $0.40 last

778
00:37:43,880 --> 00:37:46,480
year.
So we did miss, you know the 1st

779
00:37:46,520 --> 00:37:49,240
300% of the run up, but that's
typical for us.

780
00:37:49,240 --> 00:37:51,200
We want to see some runs on the
board.

781
00:37:51,200 --> 00:37:53,640
We want to see things get a bit
dearest before we get involved.

782
00:37:54,680 --> 00:37:57,960
I, I do see substantial upside
to where that is.

783
00:37:57,960 --> 00:37:59,960
I was up on site there a couple
of weeks ago.

784
00:38:00,600 --> 00:38:03,640
The what's been underappreciated
I think is just the value of the

785
00:38:03,800 --> 00:38:07,320
infrastructure in place there.
It's effectively a new mine that

786
00:38:07,320 --> 00:38:10,440
only operated for a few years,
ready to be restarted with

787
00:38:10,440 --> 00:38:12,880
permits, everything in place.
So just need to get some trucks

788
00:38:12,880 --> 00:38:16,760
and work out what they are going
to do with the mill in terms of

789
00:38:16,760 --> 00:38:18,600
the expiration side.
I think it's going to be

790
00:38:18,600 --> 00:38:22,200
important to see what the
indicated number is at never,

791
00:38:22,200 --> 00:38:24,360
never out of this upcoming
resource.

792
00:38:24,960 --> 00:38:28,480
That really then drives thinking
around how big production could

793
00:38:28,480 --> 00:38:31,640
be, how long the mine life is.
You layer in pepper on top of

794
00:38:31,640 --> 00:38:35,040
that and you know, you can start
to model up really attractive

795
00:38:35,040 --> 00:38:38,120
cash flows for at least a sort
of 6-7 year period.

796
00:38:39,840 --> 00:38:41,480
So I still, I still think
there's more to go there.

797
00:38:41,480 --> 00:38:44,240
And I the other thing with that
story is that exploration

798
00:38:44,240 --> 00:38:46,040
decline will be a game changer
for them.

799
00:38:47,560 --> 00:38:50,840
Once you're underground, they,
they can drill twice as fast,

800
00:38:50,840 --> 00:38:54,480
half the cost.
So delineating those ore bodies

801
00:38:54,480 --> 00:38:56,440
will be a lot quicker and a lot
easier.

802
00:38:57,280 --> 00:38:59,920
The exploration decline
effectively ends in or never,

803
00:38:59,920 --> 00:39:01,040
never.
So you've done your whole

804
00:39:01,040 --> 00:39:03,600
development.
You can just start mining and

805
00:39:03,600 --> 00:39:06,040
then allows a bit of focus on
some more regional targets as

806
00:39:06,040 --> 00:39:09,280
well.
And just given how that old gas

807
00:39:09,280 --> 00:39:13,480
coin, they just completely sort
of misread the geology on that

808
00:39:13,480 --> 00:39:16,600
site, you'd have to think
there's potentially more repeats

809
00:39:16,600 --> 00:39:20,240
of the structure and potentially
more expression can be done

810
00:39:20,240 --> 00:39:22,400
there.
So still very attractive to

811
00:39:22,400 --> 00:39:23,600
Spartan.
I think Simon's done an

812
00:39:23,600 --> 00:39:26,320
incredible job.
The mentality he's got running

813
00:39:26,320 --> 00:39:29,720
our company, the team he's built
underneath them, very part of

814
00:39:29,720 --> 00:39:32,760
that Northern Star school.
So he's certainly been been the

815
00:39:32,760 --> 00:39:35,560
right man there.
Degray is an interesting one.

816
00:39:36,600 --> 00:39:39,160
We took part pretty recently in
the last placement of the dollar

817
00:39:39,160 --> 00:39:41,840
ten.
The view there on Degray is

818
00:39:41,840 --> 00:39:44,120
that, look, that funding was
probably a bit of a shock to the

819
00:39:44,120 --> 00:39:45,480
market.
I think people probably expected

820
00:39:45,480 --> 00:39:47,280
the equity raise to be done
after the debt had been locked

821
00:39:47,280 --> 00:39:49,120
away.
That was maybe the opportunity

822
00:39:49,120 --> 00:39:52,800
for us coming in being new to
the register, just seeing that

823
00:39:53,360 --> 00:39:55,840
the funding now is effectively
in place, provided they can

824
00:39:55,880 --> 00:39:59,120
convert this debt, which sounds
quite likely, they'll have about

825
00:39:59,120 --> 00:40:01,200
a 2 to $300 million buffer on
top.

826
00:40:01,200 --> 00:40:04,080
So there's not.
Too many concerns about another

827
00:40:04,280 --> 00:40:06,960
raise or or anything for the
next couple of years until they

828
00:40:06,960 --> 00:40:08,520
start to really get towards
commissioning.

829
00:40:09,600 --> 00:40:11,680
But that stock really has just
been left behind in the gold

830
00:40:11,680 --> 00:40:13,920
rally.
You've got 10 million oz

831
00:40:13,920 --> 00:40:18,880
resource, 500 five, 50,000 oz a
year, production completely

832
00:40:18,880 --> 00:40:20,720
unhedged and the stock's gone
nowhere.

833
00:40:21,720 --> 00:40:24,640
So to us that is a tier one
asset.

834
00:40:25,440 --> 00:40:28,080
I think you you're obviously in
the wrong part of the lesan

835
00:40:28,080 --> 00:40:31,320
curve now where you're financing
and building to counter that.

836
00:40:31,320 --> 00:40:35,000
You still do have some news flow
to come out on studies around

837
00:40:35,120 --> 00:40:38,600
with Neil in terms of that maybe
adding another hundred 150,000

838
00:40:38,600 --> 00:40:41,120
oz.
So by the time you get that

839
00:40:41,120 --> 00:40:45,040
through, you're at call it
700,000 oz a year for at least

840
00:40:45,040 --> 00:40:46,680
six years.
That does become a very

841
00:40:46,680 --> 00:40:50,120
attractive asset, especially in
a goal space where the majors

842
00:40:50,120 --> 00:40:53,680
and mid tiers have, you know,
stable production assets,

843
00:40:54,720 --> 00:40:57,200
complete lack of growth,
complete lack of new projects

844
00:40:57,200 --> 00:40:59,720
that have been built and very
good cash flows coming through.

845
00:41:00,440 --> 00:41:03,320
So it just seems like quite an
obvious MMA target to me over

846
00:41:03,320 --> 00:41:06,720
the next couple of years.
Because it'd be it's bloody

847
00:41:06,720 --> 00:41:09,720
risky if they try to build a 10
million tonne operation with a

848
00:41:09,920 --> 00:41:11,760
brand new company, brand new
team.

849
00:41:12,160 --> 00:41:14,640
That's fucking recipe for
disaster I reckon.

850
00:41:15,640 --> 00:41:17,200
Absolutely, no, fully, fully
agree.

851
00:41:17,200 --> 00:41:19,480
I mean, I do think there's,
there's been a huge amount of

852
00:41:19,480 --> 00:41:21,400
detail and a lot of work that's
gone into those studies.

853
00:41:22,040 --> 00:41:24,880
There's good people they've
they've got on board who've

854
00:41:25,960 --> 00:41:28,000
who've built the projects in the
past.

855
00:41:28,000 --> 00:41:30,200
You can manage that well.
But look at great like the

856
00:41:30,200 --> 00:41:32,600
history of the, the gold space
over the last four or five years

857
00:41:32,600 --> 00:41:34,680
in terms of bringing on new
projects has been pretty tough.

858
00:41:36,320 --> 00:41:39,640
Building something that size
with the pox plant up in the

859
00:41:39,640 --> 00:41:44,120
Pilgrim is not going to be easy.
So I whether we own it into

860
00:41:44,120 --> 00:41:48,120
commissioning in 2-3 is time I'm
not so sure about, but I can see

861
00:41:48,120 --> 00:41:49,400
some catalysts in the short
term.

862
00:41:49,400 --> 00:41:52,440
I can see a share price that's
really like the gold price and I

863
00:41:52,440 --> 00:41:56,320
can see some potential MMA
appeal out there in a in in the

864
00:41:56,320 --> 00:41:58,440
gold market that I think we're
going to see a lot more in the

865
00:41:58,440 --> 00:42:00,720
next year or two.
Odie Reckon's going to have a

866
00:42:00,720 --> 00:42:03,560
look at it.
There's look, there's two that

867
00:42:03,560 --> 00:42:05,680
stand out for me.
The first one is ACNECO.

868
00:42:06,840 --> 00:42:09,600
They've been up at conferences
in the past saying there's kind

869
00:42:09,600 --> 00:42:12,120
of three premium mining
destinations in the world of

870
00:42:12,120 --> 00:42:14,880
which one is WA and they don't
have anything.

871
00:42:16,040 --> 00:42:19,480
Wai believe they operate epoxy
plan or two in their portfolio

872
00:42:19,480 --> 00:42:20,840
as well.
So they've got experience there.

873
00:42:22,560 --> 00:42:25,000
So I wouldn't be surprised if
they were if they were

874
00:42:25,000 --> 00:42:27,720
interested.
And the other one is Gold Fields

875
00:42:27,720 --> 00:42:33,360
through kind of Gold Rd, they
own half of Greer already.

876
00:42:33,360 --> 00:42:36,040
They own a stake in Gold Rd.
I understand there's been some

877
00:42:36,040 --> 00:42:39,520
management changes in in
Goldfields internationally and

878
00:42:39,520 --> 00:42:42,400
in Australia and they might have
more of a growth mindset.

879
00:42:42,400 --> 00:42:47,120
So rolling up gold road and
degrade would potentially make

880
00:42:47,120 --> 00:42:48,240
sense at some point as well
there.

881
00:42:48,520 --> 00:42:50,480
They probably, I don't think
they've got the POC's

882
00:42:50,480 --> 00:42:53,280
experience, but do they at?
Any of their operations?

883
00:42:53,280 --> 00:42:56,240
No, but I mean you can, you'd
hope you can bring in people to,

884
00:42:56,600 --> 00:43:00,560
to kind of take care of that.
I kind of look at SSR, the old

885
00:43:00,560 --> 00:43:03,720
Lassa when they started up
Sherpa, the sulphide plant

886
00:43:03,720 --> 00:43:05,360
there.
And I don't think they had any

887
00:43:05,360 --> 00:43:07,840
POC experience before, but that
kind of commissioned really well

888
00:43:07,840 --> 00:43:10,760
and and produced what it should.
So I think if you've got the

889
00:43:10,760 --> 00:43:12,760
right people there, it's it's
known technology.

890
00:43:13,720 --> 00:43:16,520
It's not as much of black boxes
as people may think.

891
00:43:16,880 --> 00:43:19,040
Nothing that Nathan Stewart has
can't fix.

892
00:43:19,320 --> 00:43:23,120
Bloody God, love me back back.
Just to finish off on Spartan

893
00:43:23,120 --> 00:43:26,080
when you talked about the value
of the infrastructure there and

894
00:43:26,080 --> 00:43:29,360
that and that probably bodes
well for the Spartan investment

895
00:43:29,720 --> 00:43:33,760
if they don't get taken over.
But it's looking like more than

896
00:43:33,760 --> 00:43:37,560
not that Remelius is going to
get them eventually.

897
00:43:37,560 --> 00:43:40,120
Well, they've got the foot on
them at the moment, but do you

898
00:43:40,120 --> 00:43:44,520
think that actual infrastructure
may not be used at all if

899
00:43:44,520 --> 00:43:47,120
Remelius takes them and they're
gonna just send it all to

900
00:43:47,120 --> 00:43:52,760
checkers and maybe expand
checkers to take everything

901
00:43:52,760 --> 00:43:54,920
instead of having Dalgaranga and
checkers?

902
00:43:55,760 --> 00:43:59,320
Yeah, it could, It could do I, I
kind of haven't worked through

903
00:43:59,320 --> 00:44:01,960
the full mass and where all that
that would go.

904
00:44:01,960 --> 00:44:06,480
I mean, having having the mill
right there at Delgaranga is

905
00:44:06,480 --> 00:44:08,640
quite useful and also having
just the flexibility around

906
00:44:08,640 --> 00:44:10,640
having multiple mills in the
region would help.

907
00:44:11,960 --> 00:44:14,520
Remilius, I think they're going
to build Rebecca as well.

908
00:44:14,520 --> 00:44:16,080
They might need to build there
so they could move some

909
00:44:16,080 --> 00:44:19,320
equipment down that way.
I do think for Emilius, it does

910
00:44:19,320 --> 00:44:22,600
make a lot of sense to to have
Spartan in their portfolio at

911
00:44:22,600 --> 00:44:25,880
some point.
They've got two years left at

912
00:44:26,000 --> 00:44:29,600
Penny, which is really the cash
cow in the next couple of years.

913
00:44:29,600 --> 00:44:32,520
And then that production profile
starts to drop off from the back

914
00:44:32,520 --> 00:44:35,520
end of FY20 6.
I don't know what the expiration

915
00:44:35,520 --> 00:44:37,880
upside is there where that can
be extended, but to have

916
00:44:37,880 --> 00:44:42,680
something like a a Spartan a
plug in from FI 27 on would to

917
00:44:42,680 --> 00:44:46,200
me it looks like it could make a
lot of sense to combine those

918
00:44:46,200 --> 00:44:50,160
two, obviously at the right
price and assuming assuming it

919
00:44:50,200 --> 00:44:53,040
can happen there.
Given you're a generalist, Matt,

920
00:44:53,080 --> 00:44:56,560
I'd, I'd be keen to just pick
your, your brain on, on the

921
00:44:56,560 --> 00:44:59,680
wider sort of things you're
seeing in regards to labour

922
00:44:59,680 --> 00:45:03,600
inflation, cost inflation across
the economy and how this sort of

923
00:45:03,600 --> 00:45:07,560
plugs into resource projects,
whether that be through mining

924
00:45:07,560 --> 00:45:10,920
services companies or just, you
know, construction bills.

925
00:45:10,920 --> 00:45:12,240
What are you sort of seeing on
that front?

926
00:45:12,800 --> 00:45:15,560
Yeah, sure.
So the labour pressure is really

927
00:45:15,560 --> 00:45:18,680
heavies quite a lot.
One of the things I do is

928
00:45:18,680 --> 00:45:22,200
actually track the mining
services job ads for all the

929
00:45:22,200 --> 00:45:24,320
listed mining services supplies.
I've been doing that for quite a

930
00:45:24,320 --> 00:45:27,920
few years now that the job
openings really did peak around

931
00:45:27,920 --> 00:45:30,880
early 2022 when the labour
shortages become the most acute

932
00:45:31,960 --> 00:45:33,160
as we're coming out of the COVID
period.

933
00:45:33,160 --> 00:45:36,840
There was a lot going on in
lithium, iron ore, nickel and

934
00:45:36,840 --> 00:45:39,880
that kind of thing.
And since that peak 2 1/2 years

935
00:45:39,880 --> 00:45:42,920
ago, we've actually seen the job
openings fall about 40%.

936
00:45:43,760 --> 00:45:45,840
So that heat really has
completely come out of the

937
00:45:45,840 --> 00:45:48,800
labour market.
If you talk to the gold players,

938
00:45:48,800 --> 00:45:52,160
who generally are the marginal
users of labour, like the gold

939
00:45:52,160 --> 00:45:55,840
companies get a bit squeezed in
tight markets because iron ore

940
00:45:55,840 --> 00:45:59,720
companies, lifting companies
offer much higher salaries,

941
00:45:59,720 --> 00:46:01,280
better working conditions, all
that sort of stuff.

942
00:46:02,760 --> 00:46:04,840
There's much less of an issue in
terms of staff turnover,

943
00:46:04,840 --> 00:46:06,120
absentees and that kind of
thing.

944
00:46:06,120 --> 00:46:09,080
So I think from an Aussie
perspective, we're starting to

945
00:46:09,080 --> 00:46:10,320
see some better results flow
through.

946
00:46:10,320 --> 00:46:13,280
I think there's much better
chance of going, it's now being

947
00:46:13,280 --> 00:46:16,440
hit costs coming in on budget,
just given that labour and that

948
00:46:16,440 --> 00:46:17,880
productivity side's getting a
lot better.

949
00:46:19,120 --> 00:46:21,560
And across the economy generally
we we're seeing that too.

950
00:46:21,560 --> 00:46:24,640
I mean, the building
construction side, you've had

951
00:46:24,640 --> 00:46:27,760
this huge pipeline of
residential homes, which is now

952
00:46:27,760 --> 00:46:30,360
coming to an end given home
building and things through

953
00:46:30,360 --> 00:46:32,160
COVID.
So you're starting to see

954
00:46:32,160 --> 00:46:33,680
tradies and like free up a
little bit.

955
00:46:34,920 --> 00:46:37,520
Some of the areas that are still
a bit tied around hospitals,

956
00:46:37,520 --> 00:46:41,240
aged care, childcare, it's
moving in the right direction.

957
00:46:42,160 --> 00:46:43,640
So that that sort of things has
eased.

958
00:46:43,640 --> 00:46:45,720
I think the labour pressures
aren't really there anymore.

959
00:46:46,240 --> 00:46:47,960
I don't think it's going to
necessarily translate into a

960
00:46:47,960 --> 00:46:49,720
lower costs.
You're still seeing wage

961
00:46:49,720 --> 00:46:53,120
pressure, wage rises going up
three, 4% a year.

962
00:46:53,640 --> 00:46:55,480
That will flow through.
I think where people will get

963
00:46:55,480 --> 00:46:59,400
the benefit is on productivity,
less in terms of recruitment,

964
00:47:00,400 --> 00:47:03,760
less staff absenteeism, less
turnover that that should really

965
00:47:03,760 --> 00:47:07,040
help across the mining sector
and just industrials more, more

966
00:47:07,120 --> 00:47:12,600
importantly.
Madam, I'm kind of keen to, to,

967
00:47:12,600 --> 00:47:16,080
to peel into some of your, your
energy stocks that you've got on

968
00:47:16,080 --> 00:47:19,600
the on the oil and gas side.
There's, there's our two year

969
00:47:19,600 --> 00:47:23,800
flag to us Cooper Energy and and
Karoon, yeah, Karoon, Karoon,

970
00:47:24,040 --> 00:47:28,520
you know, screen sort of pretty,
pretty absurdly, you know, load,

971
00:47:28,520 --> 00:47:30,680
load multiple at the moment.
There was a recent activist

972
00:47:30,680 --> 00:47:35,200
campaign to yeah, prevent like
for them to introduce this

973
00:47:35,200 --> 00:47:37,000
Capital Management framework and
pay dividends.

974
00:47:37,000 --> 00:47:39,280
Looks like their cash flow is
going to be, you know, quite,

975
00:47:39,280 --> 00:47:42,440
quite attractive.
But there's some, some doubt in

976
00:47:42,440 --> 00:47:45,440
the market that the, the, the
board of management team are,

977
00:47:45,520 --> 00:47:48,480
are actually going to allocate
that in a way that's best for

978
00:47:48,480 --> 00:47:50,960
shareholders.
Do you take a, a, a view on,

979
00:47:50,960 --> 00:47:53,120
there on, on the Capital
Management of Karuna?

980
00:47:53,120 --> 00:47:54,960
You just, you basically just
look at the the value

981
00:47:54,960 --> 00:47:57,200
proposition, the cash flow and
look at the multiple and just

982
00:47:57,200 --> 00:47:59,840
think this is as good a place as
any to allocate capital right

983
00:47:59,840 --> 00:48:01,600
now.
Yeah, that's that's the main

984
00:48:01,600 --> 00:48:04,960
thesis really is just the cash
flow that can be generated from

985
00:48:04,960 --> 00:48:07,920
these assets provided they are
producing it at the rates they

986
00:48:07,920 --> 00:48:09,360
should.
There's obviously been some

987
00:48:09,360 --> 00:48:10,920
challenges that both assets
lately.

988
00:48:11,440 --> 00:48:14,600
I think, you know, playing
devil's advocate, one of the

989
00:48:14,600 --> 00:48:16,920
reasons for the acquisition of
the US probably was to diversify

990
00:48:16,920 --> 00:48:20,040
way a bit from the Brazilian
asset, given some reliability

991
00:48:20,040 --> 00:48:22,280
issues there, which probably
weren't well known to the

992
00:48:22,280 --> 00:48:27,560
market, given it had a couple of
good years of operations. the US

993
00:48:27,560 --> 00:48:31,400
being, you know, relatively
small in terms of value

994
00:48:31,400 --> 00:48:34,160
accretion and and IRR probably
just goes to the fact that

995
00:48:34,160 --> 00:48:37,000
you're coming from Brazil buying
the Gulf of Mexico, you're gonna

996
00:48:37,000 --> 00:48:39,200
have to pay more and and those
assets trade on on high

997
00:48:39,200 --> 00:48:41,560
multiples.
So that that was always kind of

998
00:48:41,560 --> 00:48:44,640
the valuation differentially and
why they were never going to get

999
00:48:44,640 --> 00:48:46,120
much accretion on that, that
asset.

1000
00:48:47,280 --> 00:48:49,320
When I look at the activist
campaign, I kind of do agree

1001
00:48:49,320 --> 00:48:50,320
with it with quite a lot of
that.

1002
00:48:50,320 --> 00:48:53,560
I think as shareholders we do
want to see Capital Management

1003
00:48:54,080 --> 00:48:57,760
especially given where the
stocks trading now if cash flow

1004
00:48:58,640 --> 00:49:02,080
does what it should, it's on
like you say absurd multiples in

1005
00:49:02,080 --> 00:49:05,520
terms of free cash flow yields.
I think a lot of that can be

1006
00:49:05,520 --> 00:49:09,120
diverted to paying sustainable
dividends to shareholders and

1007
00:49:09,120 --> 00:49:12,640
potentially share buy back.
Certainly I'll be pushing the

1008
00:49:12,640 --> 00:49:15,520
company to to buy back shares
rather than do any more M&A at

1009
00:49:15,560 --> 00:49:19,000
least to the levels.
I do think though, if they can

1010
00:49:19,000 --> 00:49:20,760
again, it's it's just about
getting the operating rhythm,

1011
00:49:20,760 --> 00:49:22,760
getting some good quarters out,
showing the cash flow come

1012
00:49:22,800 --> 00:49:27,560
through. the US had a bit of a
false start, but the large part

1013
00:49:27,560 --> 00:49:29,800
of the production downgrade
there was actually on the gas

1014
00:49:29,800 --> 00:49:32,880
side, just given the Henry hub
gas price had fallen so low.

1015
00:49:33,480 --> 00:49:36,320
That's actually very low value
in terms of the the volume that

1016
00:49:36,320 --> 00:49:38,280
comes out of that.
So it wasn't actually a big, it

1017
00:49:38,280 --> 00:49:39,480
wasn't as bad as a headline
rate.

1018
00:49:40,680 --> 00:49:43,240
US gas prices have recovered a
fair bit since then.

1019
00:49:43,240 --> 00:49:46,200
So we may actually see, you
know, top end of guidance.

1020
00:49:46,200 --> 00:49:48,400
So even upgrade just with gas
coming back in, which could be

1021
00:49:48,400 --> 00:49:51,560
good for optics and there has
been a bit of exploration to

1022
00:49:51,560 --> 00:49:54,600
success and a couple more wells
that drilling now, which if

1023
00:49:54,600 --> 00:49:57,560
successful, just kind of adds
that, that great profile over

1024
00:49:57,560 --> 00:49:59,400
there and could turn sentiment a
little bit.

1025
00:50:00,200 --> 00:50:02,240
So it's, it's, it hasn't been an
easy one.

1026
00:50:02,480 --> 00:50:03,760
I, I do think they're good
operators.

1027
00:50:03,760 --> 00:50:08,040
I do think Julian's a very good
CEO knows the regions very well.

1028
00:50:08,120 --> 00:50:10,280
It's they've just had a few
issues in terms of reliability

1029
00:50:10,280 --> 00:50:11,640
and some other problems going
on.

1030
00:50:11,640 --> 00:50:13,800
But I don't think it's anything
that that can't be solved or

1031
00:50:13,800 --> 00:50:17,080
turned around and.
Then and then Cooper different,

1032
00:50:17,200 --> 00:50:20,160
different play.
Is this like basically just the

1033
00:50:20,480 --> 00:50:23,800
the East Coast gas crisis has a
has a the obvious beneficiary of

1034
00:50:24,160 --> 00:50:26,760
of that?
Pretty much, pretty much the,

1035
00:50:26,760 --> 00:50:29,760
the macro side in the East Coast
gas market is pretty well known

1036
00:50:29,760 --> 00:50:31,120
to people.
I don't think I'd be telling you

1037
00:50:31,120 --> 00:50:33,720
anything to you there to say
that, you know, there's a gas

1038
00:50:33,720 --> 00:50:36,040
shortage coming up and spot
prices are sparking in, you

1039
00:50:36,040 --> 00:50:38,520
know, in Victoria when the
weather's cold and the wind

1040
00:50:38,520 --> 00:50:41,000
doesn't blow.
So that's all very supportive of

1041
00:50:41,000 --> 00:50:42,800
the gas price over the medium
term.

1042
00:50:43,400 --> 00:50:45,600
I think what's happened on
Cooper, again, this is a company

1043
00:50:45,600 --> 00:50:48,280
I followed for a long time.
We've only got involved in

1044
00:50:48,280 --> 00:50:51,120
probably 6 or 12 months ago now
that we've seen a lot of the

1045
00:50:51,120 --> 00:50:52,640
negative catalysts come out of
the way.

1046
00:50:52,640 --> 00:50:58,040
The BMG decommissioning was a
massive overhang on them that's

1047
00:50:58,160 --> 00:51:03,200
done gone Orbost.
I think they've made some some

1048
00:51:03,200 --> 00:51:05,160
very good productivity
improvements there coming from

1049
00:51:05,160 --> 00:51:08,560
the the CRO they hired a year
ago that looks like it's

1050
00:51:08,560 --> 00:51:11,080
operating more consistently at
high rates.

1051
00:51:11,080 --> 00:51:13,160
There's more they can put in the
spot market that is actually

1052
00:51:13,160 --> 00:51:14,440
quite accretive to earnings
there.

1053
00:51:15,080 --> 00:51:18,040
So I think that all bust asset
as that just operates more

1054
00:51:18,040 --> 00:51:19,720
consistently over the next
couple of years.

1055
00:51:19,880 --> 00:51:22,440
You see the cash flow generation
profile of the group.

1056
00:51:23,080 --> 00:51:26,120
The way I view Cooper is you had
a, they've got a fair bit of

1057
00:51:26,120 --> 00:51:29,600
debt at the moment, but there's
very minimal CapEx to spend over

1058
00:51:29,600 --> 00:51:32,320
the next couple of years.
If they do what they should do

1059
00:51:32,320 --> 00:51:35,280
on cash flow, the debt gets
fully repaid over the next two

1060
00:51:35,280 --> 00:51:38,440
years and you're then the
situation where they can start

1061
00:51:38,440 --> 00:51:42,640
thinking about gross plants in
the Otway Basin where they've

1062
00:51:42,640 --> 00:51:44,680
got an extremely underutilised
plant.

1063
00:51:45,080 --> 00:51:48,800
They've got resources in the
basin there that are kind of

1064
00:51:48,800 --> 00:51:52,240
ready to develop and that could
come to the mix kind of towards

1065
00:51:52,240 --> 00:51:55,160
the back end of the decade.
And I don't think that's being

1066
00:51:55,160 --> 00:51:56,360
valued by the market at the
moment.

1067
00:51:56,360 --> 00:51:59,960
I think essentially what you're
getting at $0.20 is current cash

1068
00:51:59,960 --> 00:52:03,560
flows with a bit of a discount,
not assuming anything improves

1069
00:52:03,560 --> 00:52:06,000
at all, boss, not assuming any
of the growth projects work or

1070
00:52:06,000 --> 00:52:08,880
have any value.
And I think that'll probably be

1071
00:52:08,880 --> 00:52:10,320
realised over the next couple of
years.

1072
00:52:10,720 --> 00:52:13,840
The one thing I would say though
is oil and gas is becoming a big

1073
00:52:13,840 --> 00:52:17,680
boys game like it is the cost of
rigs, the cost of developments

1074
00:52:17,680 --> 00:52:21,720
is serious dollars.
Now we've seen with Cooper that

1075
00:52:21,880 --> 00:52:25,640
BMG abandonment programme blew
out to I think $380 million at

1076
00:52:25,640 --> 00:52:28,080
the end of it, and that's just
to abandon the field that's not

1077
00:52:28,080 --> 00:52:31,040
producing anymore.
So I think at some point we need

1078
00:52:31,040 --> 00:52:32,520
to see a bit of consolidation
there.

1079
00:52:33,840 --> 00:52:36,520
I wouldn't be surprised that
ends up as part of Beach or one

1080
00:52:36,520 --> 00:52:38,880
of those other players down
there, but just think Oil and

1081
00:52:38,880 --> 00:52:40,960
Gas is becoming a real scale
game.

1082
00:52:42,160 --> 00:52:45,240
Matt, given given you're a
generalist, how do you think

1083
00:52:45,240 --> 00:52:48,640
about sizing all of these
positions and and sizing the

1084
00:52:49,360 --> 00:52:52,400
energy component, the materials
component, the the mining

1085
00:52:52,400 --> 00:52:54,920
services component as a portion
of your portfolio?

1086
00:52:55,520 --> 00:52:58,040
Yeah, good question.
So we we generally earn around

1087
00:52:58,040 --> 00:53:01,800
40 stocks in the fund position
sizes.

1088
00:53:01,800 --> 00:53:04,640
We don't go below kind of one
one half percent positions.

1089
00:53:04,640 --> 00:53:06,240
We just want to have a bit of
conviction and things.

1090
00:53:06,240 --> 00:53:09,880
And then the top end, some of
the more stable industrial

1091
00:53:10,040 --> 00:53:13,240
compounding type businesses can
get up to five 6% positions.

1092
00:53:14,080 --> 00:53:17,600
What we do, our process comes
down to trade off between what

1093
00:53:17,600 --> 00:53:20,520
the upside is, what the quality
of the company and the assets

1094
00:53:20,520 --> 00:53:23,520
are and the corporate governance
and then overlying risk factors.

1095
00:53:24,120 --> 00:53:28,920
So when we think about resources
companies, the quality is

1096
00:53:28,920 --> 00:53:33,040
generally quite poor, the price
takers, there's a lot of

1097
00:53:33,080 --> 00:53:34,840
exogenous factors that can
affect results that are

1098
00:53:34,840 --> 00:53:37,600
completely out of control.
They've got limited lives.

1099
00:53:37,600 --> 00:53:40,640
So they generally score pretty
poorly on that, that quality

1100
00:53:40,640 --> 00:53:42,800
philtre.
And then overlying some of the

1101
00:53:42,800 --> 00:53:44,880
risks, again you've got
commodity price, currency,

1102
00:53:44,880 --> 00:53:50,040
whether political risks, you
know, high capital spend, so

1103
00:53:50,240 --> 00:53:53,040
score quite high on risk.
So that generally means for us

1104
00:53:53,040 --> 00:53:56,160
to resources companies are lower
on the on the weights.

1105
00:53:57,200 --> 00:54:00,920
We try to identify risks and and
quality upfront and position

1106
00:54:00,920 --> 00:54:03,320
size appropriately for that.
Some of the biggest stocks in

1107
00:54:03,320 --> 00:54:07,160
the fund are you know, an
example would be a defensive

1108
00:54:07,160 --> 00:54:10,160
tech company that grows earnings
15% a year and has a 10 year

1109
00:54:10,160 --> 00:54:14,200
growth runway structural growth
driver where we can we've got a

1110
00:54:14,200 --> 00:54:15,560
pretty narrow distribution of
earnings.

1111
00:54:15,560 --> 00:54:18,280
You can be pretty certain where
they can come in and you can see

1112
00:54:18,280 --> 00:54:19,960
them expanding into a bigger
market over time.

1113
00:54:20,520 --> 00:54:23,360
Whereas something like a gold
company, the gold price moving

1114
00:54:23,360 --> 00:54:26,040
up a couple of 100 bucks or down
a couple 100 bucks really can

1115
00:54:26,120 --> 00:54:27,320
blow out the earnings and the
cash flow.

1116
00:54:27,320 --> 00:54:30,880
And that that's a struggle for
us on earning certainty because

1117
00:54:30,880 --> 00:54:33,400
we really do value the earning
streams of these companies more

1118
00:54:33,400 --> 00:54:36,840
than anything.
Really interesting mate.

1119
00:54:36,920 --> 00:54:40,440
The the I'll let you go, JD,
because I was going to pivot to

1120
00:54:40,440 --> 00:54:44,480
an overrated, underrated.
Get mining services in there.

1121
00:54:44,600 --> 00:54:47,880
Yeah.
Yeah, I mean, go for one of the

1122
00:54:48,280 --> 00:54:51,720
two of the names that you sent
through SRG.

1123
00:54:52,280 --> 00:54:55,760
They do a lot of construction
and sort of services work.

1124
00:54:55,760 --> 00:54:59,480
And then PRN, you know, a more
kind of traditional mining

1125
00:54:59,480 --> 00:55:01,720
services name.
What's the what's the thesis

1126
00:55:01,720 --> 00:55:04,160
there?
Tell me how they fucking make

1127
00:55:04,160 --> 00:55:09,400
money, Parenti specifically and
how you analyse it because I do

1128
00:55:09,400 --> 00:55:11,680
not understand it.
Especially when you're talking

1129
00:55:11,680 --> 00:55:15,120
like the big quantums of debt
that they hold and bloody low

1130
00:55:15,120 --> 00:55:18,720
margins and how do you get a
bloody see the value in it?

1131
00:55:19,960 --> 00:55:21,960
Great point.
And look, I've been covering

1132
00:55:22,080 --> 00:55:25,200
mining services stocks for kind
of 16 years since I started the

1133
00:55:25,200 --> 00:55:27,560
industry.
And it's been a really tough

1134
00:55:27,560 --> 00:55:30,000
bunch of companies to cover.
Like every year something blows

1135
00:55:30,000 --> 00:55:32,960
up on a contract or there's too
much debt or there's the work

1136
00:55:32,960 --> 00:55:35,840
dries up.
So it's been this kind of death

1137
00:55:35,840 --> 00:55:37,600
spiral for a lot of these
companies over time.

1138
00:55:38,320 --> 00:55:40,560
What's been a big change over
the last few years, and I think

1139
00:55:40,560 --> 00:55:43,880
COVID and labour shortages
really drove this, was a lot of

1140
00:55:43,880 --> 00:55:46,640
these companies seeing the value
they actually provide to clients

1141
00:55:46,640 --> 00:55:49,800
and actually starting to charge
a bit more for that and, and get

1142
00:55:49,800 --> 00:55:52,880
more favourable terms.
So the pendulum's definitely

1143
00:55:52,880 --> 00:55:56,000
swung back towards contractors.
A lot of the contracts now are

1144
00:55:56,000 --> 00:55:58,440
alliance style, you know, cost
plus type things.

1145
00:55:58,440 --> 00:56:03,720
You're not taking big fixed cost
risk or risk on, on items that

1146
00:56:03,720 --> 00:56:05,880
are outside your control.
So that risk of blowing up on

1147
00:56:05,920 --> 00:56:07,760
projects kind of isn't there
anymore.

1148
00:56:07,840 --> 00:56:11,200
For the most part.
They they've also seen investors

1149
00:56:11,200 --> 00:56:13,080
want better returns.
I mean, these things have been

1150
00:56:13,080 --> 00:56:16,240
operating at 510% return on
capital, which just isn't good

1151
00:56:16,240 --> 00:56:18,080
enough for the amount of CapEx
and debt they spend.

1152
00:56:19,160 --> 00:56:22,080
You're seeing a lot of companies
now moving towards 15 to 20% on

1153
00:56:22,080 --> 00:56:24,880
the return side.
So I think overall for mining

1154
00:56:24,880 --> 00:56:28,120
services, that has been a big
tailwind over the last couple of

1155
00:56:28,120 --> 00:56:29,720
years.
I think there's probably more of

1156
00:56:29,720 --> 00:56:33,120
a a rewrite in the sector to
come as people just come back to

1157
00:56:33,120 --> 00:56:35,680
the sector and see the quality
of the earnings and the returns

1158
00:56:35,680 --> 00:56:38,040
have actually improved and
they're a lot more discipline on

1159
00:56:38,040 --> 00:56:41,600
the on the capital side.
The risk with that is there's

1160
00:56:41,600 --> 00:56:43,680
not a huge amount of work around
at the moment.

1161
00:56:43,680 --> 00:56:45,680
So the contract has dried up a
bit.

1162
00:56:46,840 --> 00:56:49,560
Does some of this pricing
discipline start to dissipate

1163
00:56:49,560 --> 00:56:51,760
and it gets more competitive?
You're the way it returns.

1164
00:56:52,400 --> 00:56:55,320
I think the other thing you've
got to be aware of is mining

1165
00:56:55,320 --> 00:56:57,360
services.
Just a cycle of the pendulum

1166
00:56:57,360 --> 00:56:59,200
swings between the miners and
contractors.

1167
00:56:59,200 --> 00:57:01,960
And at the moment we're heavily
in favour of the contractors.

1168
00:57:02,000 --> 00:57:05,960
But as soon as you start to have
rental companies making 20%

1169
00:57:05,960 --> 00:57:08,880
returns, contract miners making
20% returns, labour hire

1170
00:57:08,880 --> 00:57:11,720
companies making those returns,
by the time it gets to the miner

1171
00:57:11,720 --> 00:57:13,960
it's almost so expensive.
They just go, well, let's go

1172
00:57:13,960 --> 00:57:17,160
back to doing ourselves.
So we're at a good point in the

1173
00:57:17,160 --> 00:57:19,520
cycle now.
I think there's still a bit more

1174
00:57:19,520 --> 00:57:22,160
to go, but I'm getting a bit
more weary on the medium term.

1175
00:57:23,040 --> 00:57:26,280
Parenti is an interesting one.
I mean, Barminco is by far the

1176
00:57:26,280 --> 00:57:29,360
biggest driver in that business.
They've been on the same journey

1177
00:57:29,360 --> 00:57:32,720
as everyone else in terms of big
CapEx, a lot of debt, a lot of

1178
00:57:32,720 --> 00:57:35,520
new projects.
They've really pulled back now

1179
00:57:35,520 --> 00:57:39,440
to being more focused on
returns, driving free cash flow

1180
00:57:39,480 --> 00:57:42,000
through that business.
The guidance they've got, the

1181
00:57:42,960 --> 00:57:46,160
FY24, which you should see the
results in a month or two, are

1182
00:57:46,160 --> 00:57:48,000
for free cash flow to be 100
million bucks.

1183
00:57:48,720 --> 00:57:50,240
That's a 10% free cash flow
yield.

1184
00:57:50,240 --> 00:57:54,880
And then next year, you can
probably get 150 plus debts,

1185
00:57:54,880 --> 00:57:58,760
really been managed down to a
very appropriate gearing level.

1186
00:57:58,760 --> 00:58:01,520
And I think we're at the point
now where you actually need a

1187
00:58:01,520 --> 00:58:03,440
bit of debt in these businesses
to drive returns.

1188
00:58:03,800 --> 00:58:07,520
So extra cash that comes out of
these operations can be invested

1189
00:58:07,520 --> 00:58:11,040
into good growth projects where
they've got good tenure with

1190
00:58:11,120 --> 00:58:14,600
good clients or we'll start to
see capital returns.

1191
00:58:14,600 --> 00:58:16,880
I think Parenti will probably
reinstate a dividend they've got

1192
00:58:16,880 --> 00:58:19,680
to buy back ongoing, which
there's more to do there.

1193
00:58:19,680 --> 00:58:23,640
So that one kind of has flown
under the radar a bit.

1194
00:58:24,280 --> 00:58:26,160
You know, you look at some of
the other contract miners like

1195
00:58:26,160 --> 00:58:29,440
in RW demands that have had big
RE ratings, Parenti's kind of

1196
00:58:29,440 --> 00:58:32,000
got nowhere.
I think the proof will be in

1197
00:58:32,160 --> 00:58:34,800
free cash flow coming out, a
couple of contract renewals

1198
00:58:34,800 --> 00:58:36,400
which have been coming through
which are positive.

1199
00:58:37,560 --> 00:58:39,120
I think the market's kind of
missed that one and that's

1200
00:58:39,360 --> 00:58:41,440
that's probably a good pick for
the next six months for.

1201
00:58:41,800 --> 00:58:44,200
US, yeah, I think and like
bombing goes the interesting one

1202
00:58:44,200 --> 00:58:47,840
because you could see where they
were heading in terms of trying

1203
00:58:47,840 --> 00:58:50,760
to, as you said, part partner
with bigger companies probably

1204
00:58:50,760 --> 00:58:53,480
on more favourable terms like
they've just extended.

1205
00:58:53,480 --> 00:58:55,640
They've obviously got a good
partnership with Regis.

1206
00:58:56,480 --> 00:59:01,080
The IGI ones really fallen off a
Cliff with Cosmos getting

1207
00:59:01,080 --> 00:59:05,800
canned.
Nova's and Flying Fox and Nova

1208
00:59:05,800 --> 00:59:10,480
and Forestonia are finishing
soon so it's sort of opened them

1209
00:59:10,480 --> 00:59:12,120
up a bit.
You might get the double whammy

1210
00:59:12,120 --> 00:59:15,440
if they they're front runner for
Spartan so that'll bloody help

1211
00:59:15,440 --> 00:59:18,440
things along.
But have you got much insight

1212
00:59:18,440 --> 00:59:24,080
into how those contracts are
structured?

1213
00:59:24,080 --> 00:59:28,080
Like is there more less
scheduler rates because I know,

1214
00:59:28,080 --> 00:59:31,920
I know they wanted were at Agnew
with Goldfields.

1215
00:59:31,920 --> 00:59:33,840
I think that was full schedule
of rates.

1216
00:59:33,840 --> 00:59:36,360
I'm not sure about the other
ones if there's much cost plus

1217
00:59:36,680 --> 00:59:38,800
coming in yet or not.
You'd know more than me.

1218
00:59:40,280 --> 00:59:41,920
No, sorry.
Yeah, on the contract mining

1219
00:59:41,920 --> 00:59:43,440
side, it is more schedule of
rates.

1220
00:59:43,440 --> 00:59:46,840
The my comment around the fixed
price to cost plus is more in

1221
00:59:46,840 --> 00:59:49,440
the instant construction jobs,
which is the guarantee.

1222
00:59:49,440 --> 00:59:51,680
So, yeah, sorry, I should have
clarified that.

1223
00:59:51,680 --> 00:59:54,480
But I, I think in terms of their
contract book, they're they've

1224
00:59:54,480 --> 00:59:58,640
had some issues with nickel
mines and IGO coming off.

1225
00:59:58,640 --> 00:59:59,920
So that's been a bit of a
headwind.

1226
01:00:00,480 --> 01:00:02,560
There's been some renewals.
There's there's some opportunity

1227
01:00:02,560 --> 01:00:05,240
I think in Africa as well to
grow in, in places like

1228
01:00:05,240 --> 01:00:08,920
Botswana, even even Tanzania,
some of some of the East and

1229
01:00:08,920 --> 01:00:11,200
West African countries.
So there is a bit of growth

1230
01:00:11,200 --> 01:00:15,160
potentially there, but I would
view that as being a lower

1231
01:00:15,160 --> 01:00:17,440
growth proposition for the next
few years, but more of a capital

1232
01:00:17,440 --> 01:00:20,120
return story.
I think once you start, once the

1233
01:00:20,120 --> 01:00:22,240
market starts to see the cash
flow generated there that gets

1234
01:00:22,240 --> 01:00:24,320
returned to shareholders in
meaningful amounts.

1235
01:00:25,040 --> 01:00:27,280
That probably drives the rewrite
rather than.

1236
01:00:27,600 --> 01:00:30,000
I'm not really expecting big
earnings upgrades over the next

1237
01:00:30,000 --> 01:00:32,440
few years for that one.
They make more money in Africa,

1238
01:00:32,440 --> 01:00:34,160
a lot of those companies than
Australia.

1239
01:00:34,720 --> 01:00:38,000
The DDH 1 acquisition, that's
probably like, I know it's

1240
01:00:38,000 --> 01:00:40,840
probably not as big as Barminka,
but it's still a pretty big arm.

1241
01:00:40,840 --> 01:00:45,280
Now considering DDH one bought
Swift before Parenti bought DDH

1242
01:00:45,280 --> 01:00:49,160
one, how do you think that's
going to be sort of value or

1243
01:00:49,160 --> 01:00:52,080
creative eventually?
Like as I know there was some

1244
01:00:52,080 --> 01:00:55,160
knocks on that takeover by a lot
of.

1245
01:00:55,160 --> 01:00:57,720
Holders, yeah, it was an
interesting one.

1246
01:00:57,720 --> 01:01:00,880
I mean, the market probably
hasn't had a favourable view of

1247
01:01:00,880 --> 01:01:02,160
drilling companies quite a while
now.

1248
01:01:02,160 --> 01:01:04,400
A lot of them listing drilling,
listed drilling companies have

1249
01:01:04,400 --> 01:01:10,040
had issues over the years.
It's super cyclical and and

1250
01:01:10,400 --> 01:01:12,840
provided a lot of challenges.
So the market wasn't that

1251
01:01:12,840 --> 01:01:15,040
positive on that one.
I I do think it makes sense over

1252
01:01:15,040 --> 01:01:16,640
time.
I mean, they, they did have a

1253
01:01:16,640 --> 01:01:19,440
small OS drill kind of fleet
there, which there are some

1254
01:01:19,440 --> 01:01:22,080
synergies and some costs they
can take out.

1255
01:01:22,160 --> 01:01:26,160
It gives them a, you know,
operating base to utilise tax

1256
01:01:26,160 --> 01:01:29,160
losses in Australia as well.
So from a purely financial

1257
01:01:29,160 --> 01:01:31,880
sense, they've got a lot of tax
losses in the parenti group in

1258
01:01:31,880 --> 01:01:36,600
Australia bringing on a a big
Aussie earnings base and DDH can

1259
01:01:36,600 --> 01:01:39,960
utilise that and and get some
better cash flow in the timing

1260
01:01:40,240 --> 01:01:42,680
probably wasn't ideal.
We have seen expiration ticked

1261
01:01:42,680 --> 01:01:46,160
down.
So I think there's that

1262
01:01:46,160 --> 01:01:47,840
expiration side of it's probably
struggling a bit.

1263
01:01:47,880 --> 01:01:50,480
I'll probably say that, you
know, I wouldn't be surprised

1264
01:01:50,480 --> 01:01:52,080
that underperforms the
acquisition case.

1265
01:01:53,200 --> 01:01:56,000
But having Swift there, having
some of the, the iron ore

1266
01:01:56,120 --> 01:01:58,520
business I think is called
Ranger, which is a bit more

1267
01:01:58,520 --> 01:02:01,720
stable in terms of production
drilling that is that's a pretty

1268
01:02:01,720 --> 01:02:04,440
good base to that business.
And if and when the expiration

1269
01:02:04,440 --> 01:02:08,040
cycle resumes, there's quite a
lot of leverage there on the

1270
01:02:08,040 --> 01:02:11,080
upside.
And when that'll be, I don't

1271
01:02:11,080 --> 01:02:12,080
know.
I'd be kind of surprised how

1272
01:02:12,080 --> 01:02:14,480
weak exploration spending and
and junior capital raises have

1273
01:02:14,480 --> 01:02:17,280
been given the Aussie gold
prices at 3500 bucks.

1274
01:02:17,280 --> 01:02:20,480
But you have to think at some
point the the rig start turning

1275
01:02:20,480 --> 01:02:22,560
again and DH will be one of the
beneficiaries.

1276
01:02:23,320 --> 01:02:27,400
Can they definitely use the tax
losses of Barmingo with the

1277
01:02:27,600 --> 01:02:30,400
entity they bring in?
Yeah, my my understanding is I

1278
01:02:30,400 --> 01:02:31,360
can.
Yeah, OK.

1279
01:02:31,480 --> 01:02:33,200
Yeah, yeah.
Interesting.

1280
01:02:33,600 --> 01:02:35,040
Matt, you ready for overrated?
Underrated.

1281
01:02:35,120 --> 01:02:36,800
Well, here we go.
Let's do it.

1282
01:02:36,960 --> 01:02:40,480
All right, We'll, we've, we've
JD and I have beeped out a big

1283
01:02:40,480 --> 01:02:44,480
list here, So I reckon we'll
we'll go with the the succinct

1284
01:02:44,480 --> 01:02:46,920
version.
But if you you know, if, if any

1285
01:02:46,920 --> 01:02:49,680
of us are just want want you to
elaborate why, we'll ask why or

1286
01:02:49,680 --> 01:02:53,040
if you feel the need to, to give
A1 sentence of why, then then

1287
01:02:53,040 --> 01:02:54,440
please Chuck it in there as
well.

1288
01:02:54,920 --> 01:02:57,160
Sure.
All righty, overrated,

1289
01:02:57,240 --> 01:02:59,320
underrated Matt Gryphon, you
ready?

1290
01:02:59,560 --> 01:03:03,000
Owning physical uranium or gold
bars instead of the miners.

1291
01:03:05,640 --> 01:03:09,880
Look, given I run a equity fund,
I have to say that's overrated

1292
01:03:12,200 --> 01:03:13,440
to be honest.
It's been, it's been the best

1293
01:03:13,440 --> 01:03:15,920
strategy over the last probably
couple of decades.

1294
01:03:15,920 --> 01:03:18,480
But I do think we're at a point
now where you get more leverage

1295
01:03:18,480 --> 01:03:21,440
out of the equities and there's
big valuation disparities there.

1296
01:03:21,960 --> 01:03:25,400
Yeah.
Participating in IPOs for mining

1297
01:03:25,400 --> 01:03:28,920
companies.
Probably overrated.

1298
01:03:29,520 --> 01:03:31,400
We don't really do many IP OS in
general.

1299
01:03:32,320 --> 01:03:34,880
I haven't, yeah.
A lot of the mining companies

1300
01:03:34,880 --> 01:03:37,160
have listed kind of exploration
size if it's too small for us

1301
01:03:37,160 --> 01:03:38,560
anyway.
So it's not a huge pipeline

1302
01:03:38,560 --> 01:03:41,880
there for us.
Passive investing's distortion

1303
01:03:42,160 --> 01:03:46,280
on financial markets.
Look, I think that's probably,

1304
01:03:46,280 --> 01:03:49,680
that's probably fairly rated.
I think there is a fair bit of

1305
01:03:49,680 --> 01:03:51,520
distortion and I think it
probably does get overplayed a

1306
01:03:51,520 --> 01:03:53,760
little bit.
But in terms of active

1307
01:03:53,760 --> 01:03:56,320
management, you know, if there
is distortion from passive, it's

1308
01:03:56,360 --> 01:03:58,760
it should be great for us
because it just means there's

1309
01:03:58,760 --> 01:04:01,440
more opportunities that that
aren't being picked up.

1310
01:04:01,440 --> 01:04:03,000
So potentially a positive
tailwind.

1311
01:04:04,160 --> 01:04:06,800
African risk as a sort of
broader jurisdiction.

1312
01:04:07,880 --> 01:04:10,000
I think it's overrated.
As I said before, I I think a

1313
01:04:10,000 --> 01:04:14,240
lot of these African risks are
kind of overstated, especially

1314
01:04:14,240 --> 01:04:15,640
in the gold space.
I just don't see too many

1315
01:04:15,640 --> 01:04:21,680
impacts to gold mines over time.
Iron ore staying above 100 USA

1316
01:04:21,680 --> 01:04:25,360
tonne for the next 24 months.
Yeah, interesting one.

1317
01:04:25,360 --> 01:04:27,400
And I know, I know you guys did
the thing at the end of last

1318
01:04:27,400 --> 01:04:30,720
year where everyone's bearish
fit for the US iron ore and it's

1319
01:04:30,720 --> 01:04:33,160
still over 100 bucks.
Look, I don't know.

1320
01:04:33,200 --> 01:04:34,960
I know.
Yeah, we're not.

1321
01:04:34,960 --> 01:04:36,760
We're not macro guys.
It's hard to make a call.

1322
01:04:36,760 --> 01:04:39,080
I've been probably a bit
surprised it's held up so well.

1323
01:04:39,080 --> 01:04:42,920
But given how weak China's been,
if China does turn the corner

1324
01:04:42,920 --> 01:04:44,840
and start to get more positive,
you have to say probably, it

1325
01:04:45,200 --> 01:04:46,640
probably does hold up to these
levels.

1326
01:04:46,640 --> 01:04:49,520
So maybe that's underrated, I
guess.

1327
01:04:50,880 --> 01:04:55,200
The the influence of the recent
Aussie government funding on

1328
01:04:55,200 --> 01:04:57,520
critical minerals and and
downstream processing and

1329
01:04:57,520 --> 01:05:01,040
whatnot.
Yeah, I think that's overrated.

1330
01:05:02,280 --> 01:05:04,680
My quick view on that is I think
the government's probably going

1331
01:05:04,680 --> 01:05:05,920
to lose a lot of money on this
stuff.

1332
01:05:06,640 --> 01:05:10,000
You know, there's always money
around for good projects, and a

1333
01:05:10,240 --> 01:05:12,360
lot of these projects need
government funding, need it for

1334
01:05:12,360 --> 01:05:14,800
a reason, because equity markets
and debt markets aren't willing

1335
01:05:14,800 --> 01:05:16,880
to fund it.
I don't really get the whole

1336
01:05:16,880 --> 01:05:20,200
point of building out all this
critical infrastructure in

1337
01:05:20,200 --> 01:05:22,560
Australia or parts of the supply
chain and not the full thing

1338
01:05:22,560 --> 01:05:25,920
without the operating base here.
So overrated for me.

1339
01:05:27,720 --> 01:05:31,560
Short selling.
I think that's fairly right.

1340
01:05:31,560 --> 01:05:33,520
I think shorties have a place
we're we're long only.

1341
01:05:33,560 --> 01:05:36,000
I think shorting's very hard.
Probably not something I can do

1342
01:05:36,000 --> 01:05:38,880
successfully.
But I've got no issues with

1343
01:05:38,880 --> 01:05:40,280
short sellers.
I've got no issues with people

1344
01:05:40,280 --> 01:05:43,440
taking different views to me.
The debate's healthy, I think,

1345
01:05:43,440 --> 01:05:46,880
at least in good markets.
We've never met a short seller

1346
01:05:46,880 --> 01:05:48,280
in Australia.
No, they don't exist.

1347
01:05:48,280 --> 01:05:50,160
None.
Of them, they're all everyone's

1348
01:05:50,160 --> 01:05:53,040
long only apparently on the show
anyway.

1349
01:05:53,800 --> 01:05:55,040
We believe you.
But Maddie?

1350
01:05:56,760 --> 01:05:58,640
Yeah.
Similar to the the iron ore

1351
01:05:58,640 --> 01:06:04,800
question, what's your view on 6%
SPOD being under or over 1500

1352
01:06:04,800 --> 01:06:09,640
USA tonne in let's say in two
years time?

1353
01:06:10,280 --> 01:06:12,480
Yeah.
Look, I'm firmly convinced to

1354
01:06:12,480 --> 01:06:14,960
view that lithium's going to be
challenged for a while.

1355
01:06:14,960 --> 01:06:18,600
So I think it'll be under.
The views are based on a couple

1356
01:06:18,600 --> 01:06:22,360
of things.
I just think hybrids are taking

1357
01:06:22,360 --> 01:06:24,800
over from full electric vehicles
and there's much less lithium

1358
01:06:24,800 --> 01:06:27,520
needed.
I don't think some of those

1359
01:06:27,760 --> 01:06:30,880
Chinese supply sources like
Africa or the pedilites really

1360
01:06:31,160 --> 01:06:33,240
turn off necessarily where
people think they're doing this.

1361
01:06:33,240 --> 01:06:37,600
So I do think in two years we
probably have a pretty tough

1362
01:06:37,600 --> 01:06:43,440
market for lithium.
Buying instead of building.

1363
01:06:44,880 --> 01:06:49,360
Yeah, I think that's underrated
in terms of I think buying over

1364
01:06:49,360 --> 01:06:51,480
building is better strategy at
the moment.

1365
01:06:52,040 --> 01:06:54,720
If you look at building, it is
getting a lot harder.

1366
01:06:55,920 --> 01:06:59,560
Permitting, native title,
environmental, those timelines

1367
01:06:59,560 --> 01:07:03,160
are just massively blowing out.
So the value in having existing

1368
01:07:03,160 --> 01:07:05,720
infrastructure there is huge.
I think that goes to the

1369
01:07:05,720 --> 01:07:08,520
starting point as well.
And you look at some of these

1370
01:07:08,520 --> 01:07:11,720
projects like Mick Philomise
from Regis, which has just been

1371
01:07:11,720 --> 01:07:13,280
caught up in permitting for so
long.

1372
01:07:13,880 --> 01:07:15,680
It's kind of destroyed the
project.

1373
01:07:15,760 --> 01:07:18,600
Like they built it when they
thought they would be making

1374
01:07:18,600 --> 01:07:21,240
really good money now.
But we're now at a point where

1375
01:07:21,240 --> 01:07:23,600
the economics are challenged
just because it's taken so long,

1376
01:07:24,040 --> 01:07:26,680
the permitting and and the
construction side's really blown

1377
01:07:26,680 --> 01:07:30,480
out so a bit hard.
How about going on site visits?

1378
01:07:31,400 --> 01:07:35,200
Oh, underrated.
I try to go to as many sites as

1379
01:07:35,200 --> 01:07:36,440
I can.
I think there's a huge amount of

1380
01:07:36,440 --> 01:07:38,760
value in getting out there,
seeing things first hand,

1381
01:07:39,320 --> 01:07:42,680
getting a sense of the people on
site, you know, the next labour

1382
01:07:42,680 --> 01:07:45,520
management down, what sort of
people are, what their

1383
01:07:45,520 --> 01:07:48,560
incentives are.
And yeah, I think it's time very

1384
01:07:48,560 --> 01:07:52,000
well spent.
Is it sometimes detrimental but

1385
01:07:52,080 --> 01:07:54,760
and clouds your judgement when
you get the fluff fest up there?

1386
01:07:55,560 --> 01:07:57,960
Yeah, but you get that meeting
management in in an office

1387
01:07:57,960 --> 01:07:59,720
anyway.
You know, you've got to take

1388
01:07:59,720 --> 01:08:01,120
everything with a bit of a grain
of salt.

1389
01:08:01,120 --> 01:08:04,200
In this industry, one of the
things we do is just

1390
01:08:04,360 --> 01:08:06,440
consistently meet people over
time, go to sites.

1391
01:08:06,440 --> 01:08:09,600
Over time, you build up a track
record of knowing people,

1392
01:08:09,600 --> 01:08:12,600
knowing who you can trust, who's
conservative, who's aggressive.

1393
01:08:12,600 --> 01:08:15,640
And I don't think you get that
from one side visit to one

1394
01:08:15,640 --> 01:08:16,720
meeting.
I think that's really something

1395
01:08:16,720 --> 01:08:17,760
you've got to build up over
time.

1396
01:08:19,240 --> 01:08:24,319
Regis.
Oh, resources, I'd say probably

1397
01:08:24,319 --> 01:08:27,560
overrated.
I I just see a bit of a

1398
01:08:27,560 --> 01:08:29,120
challenge in terms of jigs and
ending.

1399
01:08:29,640 --> 01:08:31,920
I think they've probably got to
acquire something given

1400
01:08:32,000 --> 01:08:35,800
Philomise looks a bit tough.
So look, nothing against the

1401
01:08:35,800 --> 01:08:37,240
team or the company, I just
think there's better

1402
01:08:37,240 --> 01:08:38,359
opportunities than gold at the
moment.

1403
01:08:38,840 --> 01:08:42,319
And the and the royalty climb.
Yeah, yeah, that's hanging out

1404
01:08:42,319 --> 01:08:43,359
too.
Who knows where that goes.

1405
01:08:43,399 --> 01:08:45,680
That's that's really
interesting, the history on that

1406
01:08:45,680 --> 01:08:47,359
one.
How about sand fire?

1407
01:08:49,000 --> 01:08:51,319
San Fi's probably overrated just
on valuation.

1408
01:08:51,359 --> 01:08:54,160
I think I really like what
Brendan and the team have done

1409
01:08:54,160 --> 01:08:56,240
with that company.
I think they've got got the

1410
01:08:56,240 --> 01:09:00,240
operations humming build
bringing on that Mathura project

1411
01:09:00,240 --> 01:09:01,840
and ramping it up has gone
really well.

1412
01:09:02,319 --> 01:09:05,680
I struggle to see what the next
level of growth is post FY25.

1413
01:09:05,720 --> 01:09:08,920
So there's there's maybe some
more M&A that has to happen

1414
01:09:08,920 --> 01:09:11,680
there or or some other some
other projects that come in.

1415
01:09:11,680 --> 01:09:14,479
But I just think on a valuation
perspective, we prefer metals

1416
01:09:14,479 --> 01:09:19,439
acquisition vibe, investing
vibe.

1417
01:09:19,880 --> 01:09:22,240
Yeah.
Yeah, look, I mean, it probably

1418
01:09:22,240 --> 01:09:25,120
has a space of people for us.
We're we're very fundamental

1419
01:09:25,120 --> 01:09:27,560
bottom up.
We enjoy doing the models.

1420
01:09:27,560 --> 01:09:30,200
I enjoy talking to people,
getting as much information as I

1421
01:09:30,200 --> 01:09:32,760
can.
Sometimes you do have to get a

1422
01:09:32,760 --> 01:09:37,000
vibe on things positive and
negative, but 99% of what we do

1423
01:09:37,000 --> 01:09:39,399
is hopefully backed up by facts
and information.

1424
01:09:40,120 --> 01:09:43,000
Although it does reach a point
where, you know, the sort of

1425
01:09:43,000 --> 01:09:45,880
rule I think we operate on is if
you think you've got about 70 or

1426
01:09:45,880 --> 01:09:48,040
80% of what you need to know,
that's enough to invest.

1427
01:09:49,160 --> 01:09:52,080
Doing that extra 10 to 20% of
work does take a long time, is

1428
01:09:52,080 --> 01:09:53,760
pretty hard, and you do miss out
on opportunities.

1429
01:09:53,760 --> 01:09:57,360
So you can get a bit of a vibe
in there as well.

1430
01:09:57,880 --> 01:10:00,760
Matey Griffith, if you ever need
a vibe mate, I'll let you know

1431
01:10:00,760 --> 01:10:04,560
what the vibes are because I'm a
vibe. 100% vibe here.

1432
01:10:07,280 --> 01:10:11,040
That in a similar sort of vein
of thought, Fintwit, are you a

1433
01:10:11,040 --> 01:10:13,960
user?
I'm not, but one of the other

1434
01:10:13,960 --> 01:10:15,440
guys on the team is, I give it
all of him.

1435
01:10:16,120 --> 01:10:18,880
I'll try to steer clear, but I'd
rather read like quality reports

1436
01:10:18,880 --> 01:10:20,120
and annual reports and other
things.

1437
01:10:20,120 --> 01:10:22,840
But one of the guys on the team
loves it.

1438
01:10:22,840 --> 01:10:25,520
So he he's on top of that and he
takes care of that for us.

1439
01:10:26,200 --> 01:10:30,920
Capstone Copper.
Look, I think, yeah, probably

1440
01:10:30,920 --> 01:10:34,480
overrated again compared to Mac.
I haven't.

1441
01:10:35,000 --> 01:10:36,040
I've done a huge amount of work
on them.

1442
01:10:36,120 --> 01:10:39,360
From a cursory glance, it's big,
it's copper, it's got growth,

1443
01:10:39,360 --> 01:10:42,360
it's ticks all the boxes.
There have been a few guidance

1444
01:10:42,360 --> 01:10:45,280
misses over the last few years
and I'm just a bit worried about

1445
01:10:45,280 --> 01:10:48,400
the track record on a few of the
assets and especially given

1446
01:10:48,400 --> 01:10:50,360
there's a ramp up phase coming
on a couple layers.

1447
01:10:50,360 --> 01:10:52,280
So that could present a few
challenges.

1448
01:10:52,720 --> 01:10:55,600
And it does screen as as
recently expensive as well.

1449
01:10:55,600 --> 01:10:58,440
So not one for us at the moment,
but one that might look

1450
01:10:58,440 --> 01:11:01,360
interesting at some point.
How about Mada?

1451
01:11:02,640 --> 01:11:04,920
Yeah, maybe it's done an
incredible job.

1452
01:11:06,240 --> 01:11:08,160
It's hard to say at the moment.
I mean it's, it's been such a

1453
01:11:08,160 --> 01:11:10,360
good growth story.
There's such a strong pipeline

1454
01:11:10,360 --> 01:11:13,520
of geographies, different parts
of business they go can go into

1455
01:11:13,920 --> 01:11:16,400
my concern in the short term
there is just around this labour

1456
01:11:16,400 --> 01:11:18,480
shortage easing and what that
means.

1457
01:11:18,480 --> 01:11:20,400
I mean they've really been a bit
beneficiary of that.

1458
01:11:21,040 --> 01:11:24,080
I think if they can get through
the next 12 months and continue

1459
01:11:24,080 --> 01:11:28,240
this growth profile, then that's
kind of that set the business

1460
01:11:28,240 --> 01:11:30,280
works, you know, there's no
doubts in it.

1461
01:11:30,360 --> 01:11:32,240
So I think there's a pretty
critical period coming up.

1462
01:11:33,320 --> 01:11:35,800
There are a few competitors
trying to start up, you know,

1463
01:11:35,840 --> 01:11:38,920
small internal type major
divisions which might eat away

1464
01:11:38,920 --> 01:11:41,440
them a bit.
And then it's just a question of

1465
01:11:41,440 --> 01:11:44,360
do the miners start to see
labour more freely available so

1466
01:11:44,400 --> 01:11:47,800
use more of their own labour
compared to using major a bit

1467
01:11:47,800 --> 01:11:49,320
more.
So it's going to be a very

1468
01:11:49,320 --> 01:11:50,880
interesting 6 or 12 months ahead
for them.

1469
01:11:50,880 --> 01:11:53,360
I think that's really going to
make a break the model and and

1470
01:11:53,360 --> 01:11:54,800
whether it can keep trading on
the multiples.

1471
01:11:54,800 --> 01:11:58,880
It does ionic clay RAF deposits
out of Brazil.

1472
01:12:00,120 --> 01:12:03,600
Yeah, interesting.
Look, a lot of those are kind of

1473
01:12:03,600 --> 01:12:05,960
early stage for us.
So I've met with most of them.

1474
01:12:05,960 --> 01:12:07,240
I haven't done a huge amount of
work.

1475
01:12:07,640 --> 01:12:12,560
If they work, it's probably very
bearish for anyone that's not an

1476
01:12:12,560 --> 01:12:16,000
ionic clay president, rarest
producer, because there's so

1477
01:12:16,000 --> 01:12:19,520
much potential supply at such
low cost to come out of there

1478
01:12:19,520 --> 01:12:22,160
that it might just suppress the
price and destroy a lot of the

1479
01:12:22,160 --> 01:12:25,080
Hard Rock projects.
Obviously, they face challenges

1480
01:12:25,080 --> 01:12:28,520
in terms of permitting, ramping
up CapEx, Rarest, it's not easy

1481
01:12:28,520 --> 01:12:31,040
in terms of getting the
processing all the downstream

1482
01:12:31,040 --> 01:12:33,200
right.
So depending how far they want

1483
01:12:33,200 --> 01:12:35,040
to go on that track could be a
bit hard.

1484
01:12:35,960 --> 01:12:38,680
I'd probably say fairly rated
risks are probably evenly

1485
01:12:38,680 --> 01:12:40,680
balanced at the moment.
What about what about the

1486
01:12:40,680 --> 01:12:43,320
payability of those rare earths
by China?

1487
01:12:44,360 --> 01:12:47,800
Yeah, that's another question.
I mean, you know, recoveries,

1488
01:12:47,800 --> 01:12:53,240
payabilities it all, it's quite
no paid market rare earths, it's

1489
01:12:53,360 --> 01:12:55,360
been quite difficult from an
investment perspective.

1490
01:12:55,360 --> 01:12:58,000
We, we don't, we have not held
anything in space for quite a

1491
01:12:58,000 --> 01:13:00,560
while.
Yeah.

1492
01:13:00,560 --> 01:13:01,840
It's just just too many
questions, Sir.

1493
01:13:01,840 --> 01:13:03,080
OK.
For us, that whole space.

1494
01:13:04,520 --> 01:13:10,280
Nickel mines.
Interesting look.

1495
01:13:10,280 --> 01:13:11,840
I'm probably pretty bearish on
the nickel price.

1496
01:13:11,840 --> 01:13:16,600
I just think the whole trend
towards LFP batteries has taken

1497
01:13:16,600 --> 01:13:19,520
a bit away from the nickel
growth story, as well as

1498
01:13:19,520 --> 01:13:22,360
probably the the more bearish
view on battery sizes with plug

1499
01:13:22,360 --> 01:13:25,000
insurance.
Nickel mines is interesting

1500
01:13:25,000 --> 01:13:26,920
because I do own the resource
and I think that's becoming an

1501
01:13:26,920 --> 01:13:29,280
increasingly valuable asset
because a lot of the stuff we're

1502
01:13:29,280 --> 01:13:32,160
hearing out of Indonesia is that
they're going to be resource

1503
01:13:32,160 --> 01:13:35,880
constrained.
So that becomes probably more

1504
01:13:35,880 --> 01:13:37,680
valuable than what the market
gives in credit for.

1505
01:13:39,000 --> 01:13:42,240
There's a lot of risk there in
terms of Chinese ownership.

1506
01:13:42,480 --> 01:13:47,120
Being in Indonesia just becomes
a bit too hard for us at at the

1507
01:13:47,120 --> 01:13:50,000
moment.
AIC mines.

1508
01:13:51,120 --> 01:13:52,280
Yeah, I haven't looked in too
much details.

1509
01:13:52,280 --> 01:13:53,800
One I probably need a bit of
work on.

1510
01:13:54,560 --> 01:13:56,840
I've heard good things about
management and the operations,

1511
01:13:57,680 --> 01:13:59,960
potentially one of those next
year of juniors to come through

1512
01:13:59,960 --> 01:14:02,400
in the copper space.
The junior copper market has

1513
01:14:02,400 --> 01:14:07,320
been tough like those small
scale producers have tended not

1514
01:14:07,320 --> 01:14:09,600
to make any money even in good
copper prices.

1515
01:14:09,600 --> 01:14:12,560
So I'd have to check on their
plans.

1516
01:14:12,560 --> 01:14:14,680
But I think you need a bit of
scale in that space to make

1517
01:14:14,680 --> 01:14:18,160
money, but too early for me to
make a call and it needs a bit

1518
01:14:18,160 --> 01:14:21,240
of work on that one.
The last one for me BH.

1519
01:14:21,240 --> 01:14:24,320
PS Big bet on Podash.
Yeah.

1520
01:14:24,800 --> 01:14:28,200
Look, I don't know the first
thing about being Podash, to be

1521
01:14:28,200 --> 01:14:30,440
honest.
I follow Podash loosely when,

1522
01:14:30,640 --> 01:14:32,720
you know, a few junior companies
have Podash assets over the

1523
01:14:32,720 --> 01:14:35,200
years, again, that that's a big
boys game.

1524
01:14:35,200 --> 01:14:38,040
It's a it's, it's a tough market
to understand.

1525
01:14:38,040 --> 01:14:43,880
It's kind of up here, sorry.
Meadows X.

1526
01:14:45,160 --> 01:14:48,120
Yeah, we've got a good history
with Metals X actually, I've

1527
01:14:48,120 --> 01:14:50,120
been down to Renison in the
past.

1528
01:14:50,120 --> 01:14:52,200
It's a, it's a great mine if you
get a chance to go down there.

1529
01:14:53,360 --> 01:14:55,840
We did make a lot of money back
back on it probably five or six

1530
01:14:55,840 --> 01:14:59,360
years ago.
We've missed it this time just

1531
01:14:59,720 --> 01:15:03,080
given the the company's had
probably some operational

1532
01:15:03,120 --> 01:15:06,640
hiccups, which has meant we've
we've kind of steeped clear.

1533
01:15:07,040 --> 01:15:11,800
Haven't had a big view on tin
really, but could be

1534
01:15:11,800 --> 01:15:13,720
interesting.
Yeah, I think that's probably

1535
01:15:13,840 --> 01:15:16,480
underrating.
Bloody beautiful.

1536
01:15:17,080 --> 01:15:19,200
Awesome.
She's wicked mate.

1537
01:15:19,320 --> 01:15:21,960
Thanks for chatting with us.
That was right in our

1538
01:15:21,960 --> 01:15:23,800
wheelhouse.
Loved it.

1539
01:15:24,320 --> 01:15:29,080
I'm always so impressed by the
generalist investors that can

1540
01:15:29,560 --> 01:15:31,840
talk in great detail across so
many different sectors.

1541
01:15:31,840 --> 01:15:34,480
So thanks for making the time
and chatting with us, Matt.

1542
01:15:35,240 --> 01:15:36,360
No worries.
Thanks guys to be on the show.

1543
01:15:36,760 --> 01:15:38,400
Appreciate it.
You beauty.

1544
01:15:38,400 --> 01:15:40,480
That was a fucking brilliant
chat.

1545
01:15:40,480 --> 01:15:43,640
I love, I love talking.
I'll say it every time we talk

1546
01:15:43,640 --> 01:15:45,920
about this sort of stuff.
I love talking about shit I know

1547
01:15:45,920 --> 01:15:49,680
a bit about.
I'll repeat myself.

1548
01:15:50,160 --> 01:15:53,520
That was what a bloody JC.
Awesome.

1549
01:15:54,840 --> 01:15:57,160
It was great.
Cutler Cutler partners to thank

1550
01:15:57,160 --> 01:15:59,480
Hey.
Yeah mate at the bloody top of

1551
01:15:59,480 --> 01:16:03,360
the show we are great friends at
Axis porn and tech Look at the

1552
01:16:03,880 --> 01:16:07,520
look at the great hat the traps
got on and who who else we have

1553
01:16:07,520 --> 01:16:09,520
in the show.
A bit of K drill gonna go bloody

1554
01:16:09,520 --> 01:16:13,840
powder, Leonora and Laverton
region and DSI keeping Kobar

1555
01:16:13,840 --> 01:16:18,600
alive in the rest of the world.
Also got CRE insurance.

1556
01:16:18,600 --> 01:16:21,680
WA waterboards get wet
solutions.

1557
01:16:22,120 --> 01:16:23,840
Verify.
Verify.

1558
01:16:24,480 --> 01:16:29,400
Mineral mining services
Silverstone CRE insurance WA

1559
01:16:29,440 --> 01:16:32,240
water balls mate and use a spark
shark spark.

1560
01:16:32,240 --> 01:16:35,160
Just mention them all twice.
We'll say a few a few times.

1561
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How good Spark and how good is
JD and Trap?

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01:16:39,360 --> 01:16:44,400
Hoodoo Hoodoo Go Australia
Information contained in this

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01:16:44,400 --> 01:16:47,160
episode of Money of Mine is of
general nature only and does not

1564
01:16:47,160 --> 01:16:49,800
take into account the
objectives, financial situation

1565
01:16:49,840 --> 01:16:51,840
or needs of any particular
person.

1566
01:16:52,160 --> 01:16:55,200
Before making any investment
decision, you should consult

1567
01:16:55,200 --> 01:16:58,240
with your financial advisor and
consider how appropriate the

1568
01:16:58,240 --> 01:17:01,920
advice is to your objectives,
financial situation and needs.