Sandfire’s Brendan Harris: Risk Less, Win Bigger

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You know the traditional adage
that adding debt was a lower

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cost of capital reduces.
Therefore you know your overall

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cost of capital and and provides
a benefit.

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From a net present value
perspective, I think is flawed

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because it arguably all it does
is increase beta for what is

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already a high beta sector.
This is an interview that we've

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been trying to have for a very
long time.

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Brendan Harris, MDCEO of
Sapphire Resources, thank you

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very much for joining us on
Money of Mine.

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Oh, absolute pleasure.
Really good to be here having

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had the chance to meet with you,
you know, on a few occasions and

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and being an avid watcher, so
it's nice to be in the room.

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Brendan, we, we often tune into
your quarters, always tune into

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your quarterlies.
And from when we very first

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started money of mine, your,
your commentary really stuck out

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to us as people trying to
understand the, the, the mining

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space, the commodity space to
understand what are the

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differences between an enduring
business and not.

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And you had perspectives
particularly on, on debt and how

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a commodity business should run
their, their balance sheet.

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And I know it's a bit financial,
it's right in the way it's

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straight away, but it's what
stuck and it's what I've been

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like itching to ask you about
for so long.

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So I want to start the
conversation there and start to

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paint the picture of your
philosophy on what a mining

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business should look like.
So let's start with debt, net

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debt and and that evolution that
Samphire has been on as well.

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It looked great, great place to
start.

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It is in the weeds and, and I
think it, it probably reflects,

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you know, part of my own
journey.

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You know, I'm a geologist,
geophysicist.

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But I think I said to you both,
I haven't hit a rock with a

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hammer and anger in a long, long
time.

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I found my, my geopic the other
day when I was cleaning a few

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things out and I had to
reacquaint myself with it.

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Obviously I spent a lot of time
at Macquarie, you know, close to

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10 years predominantly in Sydney
and, and that shaped a number of

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my views.
It was a really interesting

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time.
Obviously the early 2000s, you

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know, through to around early
2010, I think it was, you think

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about that period, the
urbanization, rapid change in

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the, the global economy, the
emergence of China and obviously

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what it meant for commodity
markets.

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But in the midst of that, of
course we saw, you know, what

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was a, a generational event in
financial markets.

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Debt levels became too high.
Debt was arguably ascribe with

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ratings that possibly in
hindsight when appropriate,

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particularly in the US and and
caught a lot of investors out.

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But it it it clearly had a big
impact on commodity markets.

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And and there are a number of
companies at that point that as

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a result of that found
themselves, you know, with

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balance sheets that were were
challenged operating assets in a

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lower price environment that
were obviously under pressure

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from a cash flow perspective.
And when you put those two

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things together, it creates a,
a, a lot of problems.

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And, and I think that was
something that was, you know,

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sort of imprinted on my mind is
it's not only important to be

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very clear about the industry
you operated in, you know, what

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its strengths and weaknesses
are, what the perhaps asymmetry

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of price formation may or may
not look like.

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And then how you match that up
with a balance sheet and that

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you've got to have a balance
sheet that's fit for purpose.

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In other words, if you've got a
a multi decade on all mine

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operating 60% EBITDA margins,
it's probably fair to say that

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as you, you know, embark on
other growth pursuits or what

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have you in the industry, you
can carry a bit more debt, you

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can carry a bit more debt with
more confidence because you've

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got less potential for cash flow
compression.

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And so that's something that
that really shaped my thinking.

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And, and obviously you know, on
those quarterly conference calls

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that you're referring to gets
back to that, that core belief

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that, that, that many companies
now industry Sam fire,

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particularly from our point of
view, what I'm obviously most

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concerned about is a company
that is best served if we run,

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you know, plus or minus a net
cash balance sheet.

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You know, the traditional adage
that adding debt you know is a

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lower cost of capital reduces
obviously.

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Therefore obviously you know
your overall cost of capital and

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and provides a benefit from a
net present value perspective, I

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think is flawed because it
arguably all it does is increase

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beta for what is already a high,
high beta sector.

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I know you mentioned to us
yesterday you've been described

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as conservative or having a
conservative philosophy, but now

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how do you think about taking on
individual risk in the role of

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running Sandfire and also in the
role of Sandfire as a risk

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taking organization too?
Yeah.

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Look, thanks Trevor.
I guess look from my side, maybe

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that means I've been
directionless.

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I don't know.
You know, I've not been one

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person to to feel you should
narrow yourself in into one

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specific, you know, area within
any business.

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I started as I said, in the
field, loved my time sitting

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around drill rigs, you know, not
every day, but incredible

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experience I look back on
incredibly fondly.

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But it led me to really
question, you know, what is it

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that makes the market tick and
what is it that makes the market

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tick for our industry?
And I felt there was no better

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place to do that than to go to
Sydney.

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And I remember the first time I
drove into Sydney, you probably

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had similar experiences.
I was in a taxi.

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Macquarie had been kind enough
to give me an opportunity.

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And I've been blessed throughout
my career with people taking a

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risk on me.
But I remember thinking, what is

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an Adelaide boy doing coming
into this city and how does he

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think he's going to compete?
And so from my perspective, and

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I wish I could give people a
different answer, I'm often, you

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know, pose that question.
What advice would you give

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someone who's who's setting out,
you know, wants to obviously

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achieve big things or what have
you?

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I have no, no, I guess if you
like at magic wand, it's back

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yourself and work hard back
yourself and work hard and do

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the best that you can in the
role you're in at the time.

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Don't think too much ahead.
Do the best you can in the role

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you're in.
And, and I think if that

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happens, you'll be presented
opportunity.

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And then, you know, as you've
mentioned many of those very

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diverse things, it's at times
willing to, you know, zig or zag

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and do something different as
long as you think you're going

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to develop and, and, and become
a, you know, more rounded and

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perhaps a better person and more
capable.

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So that's sort of been my
philosophy.

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And you know, like you said,
it's often a question that that

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that is brought to bear is
having been an equity analyst,

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being so focused on balance
sheet, so focused on making sure

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that we're trying to be safe,
predictable and consistent and

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therefore, in a way reducing
overall beta in a high beta

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sector.
Does that mean you're just

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conservative?
You know, I would argue that

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someone who's conservative
doesn't change paths as many as

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I, I have hasn't moved in and
out of the industry or, or

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looked at it from both sides.
So I've been willing to take

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those risks individually.
And I think it's just about

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making, you know, I guess
educated decisions at the time

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to the best of your ability.
You know, the Calcare

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transaction we've done recently
I think is a great example of

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that where, you know, to me, and
I go back to my equities

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experience, one of the things I
probably found hard towards the

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end of that time was the way the
markets were changing.

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And almost I felt the
expectation for equity analysts

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to have a new idea every day.
And, and I think that's really

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hard to believe that you can do
that with any, you know,

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visibility and, and with any
real confidence or with

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conviction.
And I like to be someone when

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you make a decision, you have
conviction.

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And I sort of felt that in the
equities market, if you had a

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really, really good idea once
every three years, you were

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doing really well.
Now, what I mean is you might

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have a lot of ideas that
incrementally those ones that

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make a big difference, which,
you know, give potential who

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put, you know, for people who
put money to work to get a real

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return, that they're few and far
between.

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If you're doing deep bottom up
research, they're not that

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common.
And that's sort of, you know, I

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guess plays into how I think
about, you know, running a

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company with a great team and
with a very, you know,

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supportive board is that, you
know, we, we aim to work

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together.
We want to make Sam fire as

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strong as it can be and be
positioned in a way that with

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patients, we can assess
opportunities.

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And when we see the right
opportunity, we move with

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conviction.
And and we do it in a way we're

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also not scared to give a little
away if it means we think our

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shareholders are better placed.
And that gets back to this

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holistic way of thinking about
risk.

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It's if we're winning, it's OK
if someone else is too.

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And so I think with the Calgary
transaction, there's some real

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almost harmony with that that,
you know, as a company with

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real.
Capability with a balance sheet

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that's strong with two really
good assets operating under a

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dollar a pound, you know, in in
the copper industry today, we've

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found a way.
To use all of those elements and

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of course with Mateo being one
of the the rare projects that's

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being built on time, on budget,
ramped up to plan and then

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expanded, you know, again to
plan.

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That track record enabled us to
go in and talk to the Havelar

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team, who we have a lot of
respect for, who have been

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exploring around that region
for.

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For decades, 30 odd years, you
know, Kalkuru is akin to their

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baby is how I think about it.
And so, you know, they don't

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want to give that away lightly
and they don't want to give it

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away to someone they don't
trust.

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And so pulling all of that
together.

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But once we saw the opportunity,
moving with intent but creating

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a structure of a transaction
where if we're as successful as.

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As we want to be.
Have a lot of shareholders are

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going to do very well and the
reason for that is they've got a

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20% retained stake.
From our perspective, it's doing

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something in that way that you
know I talked about asymmetry

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gives us the real potential to
get asymmetric return for our

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shareholders because our win
cost is relatively light.

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From a cash perspective, it
doesn't put that that strong

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balance sheet to risk.
We've given Havilah some paper

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to also reflect the value of
what they've created and then

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through a fairly short and rapid
and intense pre visibility study

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process, hopefully shed light on
the potential of that ore body

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and then all of the upside that
can accrue to both companies.

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We think that's quite a unique
transaction in recent times.

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And obviously we've got a lot of
hard work ahead of us now to

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prove that your, your comment on
one perhaps good decision every

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three years is really kind of
reminiscent of listening to

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Buffett speak kind of recently
and says, I made 12 good

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decisions in my whole career.
And the day-to-day process of

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continuing to put yourself in,
in the right place is, is

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fascinating.
And you're, you're learning

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along the way.
And that equity research

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component of your, of your life,
that kind of 10:00-ish year

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chapter would have seen you
cover and have access to some of

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the the smartest people in the
industry at such a fascinating

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time as you mentioned there.
So I'd love to hear just that,

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that curiosity that I have for
the history, the people, you

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know, Marius Klopp is running
the running BHB Chip Goodyear

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before him.
Who are the people that you you

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learned and kind of modeled
yourself off as much?

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I think I said to the other day,
you know, everyone you meet, you

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can learn something from.
I think if if you look at

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Macquarie, there's many people.
And so I'm sure I'll miss some.

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But in the equities research
team, there were people like Ian

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Miles, Greg during Alex Pollack,
Tony Jackson, who funny enough,

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I ran into in the Moen airport
in Botswana, the last place you

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expect to.
But, you know, these were people

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who, you know, were leaders at
their time in their industries,

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in equities research, always
willing to share ideas.

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As someone who came from a, you
know, an earth sciences

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00:11:22,120 --> 00:11:26,520
background, being able to test
my ideas, but also seek their

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advice and counsel on some of
these things was was pivotal.

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And then, you know, as you said,
I think and I'm sure any of the

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sell side analysts who listen to
your podcast will relate to this

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that you know as as you know.
A relatively young and

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00:11:40,520 --> 00:11:43,280
inexperienced person in the
scheme of the industry, being

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able to sit in rooms and listen
but also ask questions of some

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of the leaders of industry as a
unique opportunity.

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I'm sure you can relate to this,
you know, the likes of Lee

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00:11:53,000 --> 00:11:57,640
Clifford, Chip Goodyear.
I, I remember when Chip Goodyear

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00:11:57,640 --> 00:12:00,680
walked into Merrill Lynch, they
used to hold the, the annual

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results briefing.
Vicky Bins, a good friend of

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00:12:03,000 --> 00:12:06,200
mine was a, you know, a stand
out analysts in the sector had a

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very high profile and, and BHP
would hold their, their analysts

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00:12:10,760 --> 00:12:13,160
results calls and, and
conference calls there.

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And I remember, you know, the
press and, and the record

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00:12:17,560 --> 00:12:19,920
profits that were being
generated in the early 2000s.

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I hope he doesn't mind me saying
this.

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It was like he was a rock star.
It's, you know, but listening to

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00:12:26,200 --> 00:12:30,920
him and, and, and obviously the
way that he had repositioned the

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company and then Marius coming
in behind him and, you know,

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00:12:33,880 --> 00:12:35,760
just listening to Marius
cloppers about commodity

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00:12:35,760 --> 00:12:39,880
markets, just incredible.
I mean, he's an individual when

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I think about it, who
individually changed how

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00:12:42,240 --> 00:12:45,520
commodity markets operated.
You know, it's his tenacity and

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00:12:45,520 --> 00:12:51,400
his, his intensity, his vision.
But level of commitment to a

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00:12:51,400 --> 00:12:54,600
belief that that meant that it
happened.

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00:12:54,600 --> 00:12:57,280
Tell us this, this, this story
is probably not well known, not

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00:12:58,000 --> 00:12:59,760
not amongst everyone.
It would be to you.

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00:13:00,320 --> 00:13:04,120
Well, he, he and I saw it from
the outside and then obviously

254
00:13:04,120 --> 00:13:07,800
later on through the lens of of
being inside BHP.

255
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But I think in many respects
it's underappreciated the value

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00:13:12,000 --> 00:13:16,400
that that created for the
Australian economy, he

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00:13:16,400 --> 00:13:20,440
obviously.
Was able to with great tenacity.

258
00:13:21,360 --> 00:13:25,280
Push bulk commodity markets,
particularly initially towards

259
00:13:25,360 --> 00:13:28,680
index or spot pricing.
So markets that reflected the,

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00:13:29,040 --> 00:13:32,600
the fundamentals of the day
rather than long term annually

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00:13:32,600 --> 00:13:34,720
negotiated prices where there
was always a lag.

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00:13:34,720 --> 00:13:37,960
And when you're in this
generational phase of growth

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00:13:38,120 --> 00:13:41,480
with the urbanization of China,
prices were always lagging, you

264
00:13:41,480 --> 00:13:43,240
know, the, the, the true
fundamentals.

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00:13:43,240 --> 00:13:46,560
And so with that change, there
was an immediate shift in the

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00:13:46,560 --> 00:13:51,280
rent that was generated.
And I think individually, I

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00:13:51,280 --> 00:13:54,280
haven't done the numbers, but my
suspicion is you can put all the

268
00:13:54,280 --> 00:13:57,320
acquisitions and line them up,
but I doubt that anyone's

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00:13:57,320 --> 00:14:01,480
created more value through that
single, I guess pursuit.

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00:14:02,720 --> 00:14:05,200
Now, of course, that benefited a
number of companies and it

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00:14:05,200 --> 00:14:08,160
wasn't just.
BHP so he he just listening to

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00:14:08,160 --> 00:14:12,120
him talk about commodity
markets, you know, was, was

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00:14:12,120 --> 00:14:14,520
obviously something I learned a
great deal about and.

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00:14:14,920 --> 00:14:18,640
And then also his tenacity, I
think his background.

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00:14:18,640 --> 00:14:22,240
When I got into BHP, they were
very much into the process that

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00:14:22,240 --> 00:14:25,400
Mike Henry, you know.
Since I obviously left, seems to

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00:14:25,400 --> 00:14:27,760
have taken to another level in
terms of the.

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00:14:27,760 --> 00:14:34,480
BHP operating model and you know
someone out of Macquarie

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00:14:35,360 --> 00:14:39,720
policies standards.
Procedures probably didn't

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00:14:39,720 --> 00:14:42,800
really resonate with me because,
you know, I was in equities

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00:14:42,800 --> 00:14:46,360
research and it's very
different, as you would know,

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00:14:47,600 --> 00:14:50,920
that really had a huge impact on
me.

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00:14:50,920 --> 00:14:52,880
And then with Graham Kerr, with
the demerger.

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Of South of detail and what we
did there was the importance of

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00:14:55,960 --> 00:14:59,880
having fit for purpose ways of
working to find for people so

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00:14:59,880 --> 00:15:02,560
you can have.
Clarity of accountability, but

287
00:15:02,560 --> 00:15:05,680
also you actually, I think, give
people a level of psychological

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00:15:05,680 --> 00:15:07,640
safety.
We all know what it's like when

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00:15:07,640 --> 00:15:09,760
you go to work and you're not
quite sure what someone wants of

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00:15:09,760 --> 00:15:11,240
you.
You do your best, but you leave

291
00:15:11,360 --> 00:15:13,640
somewhat unnerved or or a little
anxious.

292
00:15:13,640 --> 00:15:17,920
If you've got real clarity of of
purpose, clarity of task, I

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00:15:17,920 --> 00:15:19,920
think you've got a better chance
of being successful.

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00:15:19,920 --> 00:15:22,640
So if it wasn't.
For having the access to those

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00:15:22,640 --> 00:15:25,720
times, those people, I wouldn't
have, I wouldn't have, if you

296
00:15:25,720 --> 00:15:27,960
like have probably developed a
lot of the views I have which

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00:15:28,360 --> 00:15:31,000
which you know, together with
all of the insights of the

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00:15:31,000 --> 00:15:32,560
people.
Around me at Sam Far and the

299
00:15:32,560 --> 00:15:35,840
board are really shaping how
we've we've tried to establish

300
00:15:36,160 --> 00:15:37,840
the company for its next phase
of growth.

301
00:15:37,920 --> 00:15:40,560
Just to jump in here, money
miners, I couldn't help but

302
00:15:40,560 --> 00:15:43,840
think in real time as Brendan
was talking about the influence

303
00:15:43,840 --> 00:15:48,240
of various cloppers on the iron
ore industry and how just moving

304
00:15:48,240 --> 00:15:52,120
towards a more transparent based
pricing mechanism, index based

305
00:15:52,120 --> 00:15:55,680
pricing create so much more
value for the mining companies

306
00:15:55,680 --> 00:15:58,000
themselves.
And you know what JD?

307
00:15:58,200 --> 00:16:01,240
You know why I thought of it?
Because of Metals Hub doing the

308
00:16:01,240 --> 00:16:03,840
exact same phenomenon in the
industry today.

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00:16:03,920 --> 00:16:05,160
They're doing it in a digital
way.

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00:16:05,160 --> 00:16:08,680
They're bringing it in to the
21st century properly.

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00:16:08,680 --> 00:16:11,840
Truly, Marius made the start.
Metals Hub are taking it to the

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00:16:11,840 --> 00:16:14,240
next level aren't they?
Online transparent competitive

313
00:16:14,240 --> 00:16:18,520
auctions with real volume, real
adoption by a lot of specialty

314
00:16:18,520 --> 00:16:22,240
medals and more than. 3000
Companies, thousands and

315
00:16:22,240 --> 00:16:24,280
thousands of tracks,
transactions happening on the

316
00:16:24,280 --> 00:16:27,240
platform already.
You got companies from Anglo all

317
00:16:27,240 --> 00:16:29,800
the way down on the selling
side, as well as some of the

318
00:16:29,800 --> 00:16:32,240
biggest metals buyers in the
world on the other side of those

319
00:16:32,240 --> 00:16:34,680
transactions.
I think if metals hub was around

320
00:16:34,960 --> 00:16:38,560
back in the day that iron ore
was was going through its

321
00:16:38,600 --> 00:16:41,440
period, Myers cloppers would
have just made iron ore trade on

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00:16:41,480 --> 00:16:43,320
metals hub.
Undoubtedly metals hub.

323
00:16:43,600 --> 00:16:46,600
Check it out.
Go to metalshub.com/money of

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00:16:46,600 --> 00:16:47,600
mine.
Go Metals Hub.

325
00:16:48,040 --> 00:16:53,720
I want to, I want to understand
this philosophy because a mining

326
00:16:53,720 --> 00:16:56,120
company operates within the
framework of a commodity market.

327
00:16:56,400 --> 00:17:00,080
So to to have a view of what a
miner's role is or even anyone

328
00:17:00,080 --> 00:17:03,320
stewarding capital in a mining
business, you have to first and

329
00:17:03,320 --> 00:17:05,800
foremost understand commodity
markets.

330
00:17:06,119 --> 00:17:09,839
And sounds like some of those
views were, were were really

331
00:17:09,839 --> 00:17:12,520
enhanced throughout your your
time in Macquarie.

332
00:17:12,520 --> 00:17:15,960
But what are you like?
How do you actually think about

333
00:17:15,960 --> 00:17:18,440
commodity markets in a way that
you think maybe, maybe not

334
00:17:18,440 --> 00:17:20,920
everyone does or would be useful
heuristics for people to think

335
00:17:20,920 --> 00:17:23,359
of?
Well, and one person I haven't

336
00:17:23,359 --> 00:17:26,200
mentioned which which I really
do want to is Jim Lennon.

337
00:17:26,880 --> 00:17:29,800
You know, Jim Lennon, you know,
I remember going into a meeting

338
00:17:29,840 --> 00:17:34,760
at Fidelity in in Boston and it
was their large meeting room,

339
00:17:34,880 --> 00:17:37,120
you know, one of the world's
largest asset managers, and the

340
00:17:37,120 --> 00:17:38,840
room was full.
And when I say full, it wasn't

341
00:17:38,840 --> 00:17:40,920
just a big table.
They had like a grandstand round

342
00:17:40,920 --> 00:17:43,280
the edge and it was full.
And let me tell you, they

343
00:17:43,280 --> 00:17:46,640
weren't there to listen to me.
You know, Jim was at that point

344
00:17:46,640 --> 00:17:50,960
known as Mr. China.
You know, he is a man who's got

345
00:17:50,960 --> 00:17:54,680
just immense knowledge.
He can draw statistics from, you

346
00:17:54,680 --> 00:17:57,160
know, from memory, like no one
I've seen.

347
00:17:57,160 --> 00:18:03,320
And so just having a colleague
like that through that phase was

348
00:18:04,040 --> 00:18:08,240
was all I was blessed really to
to to be able to learn from him,

349
00:18:08,840 --> 00:18:11,480
probably like few other people
through a pivotal point in the

350
00:18:11,480 --> 00:18:16,240
industries.
History how do I think about

351
00:18:16,360 --> 00:18:19,800
commodities I mean, I guess over
time Jim and I also had some

352
00:18:19,800 --> 00:18:22,440
really good debates and that
that was the thing I enjoyed the

353
00:18:22,440 --> 00:18:25,360
most so I'm I'm.
AI guess a purist.

354
00:18:25,360 --> 00:18:27,800
I love the industry.
One of the things I love about

355
00:18:27,800 --> 00:18:30,760
it is commodity economics. 101
just works, you know.

356
00:18:30,760 --> 00:18:32,320
It doesn't mean there aren't
leads and lags.

357
00:18:32,320 --> 00:18:34,280
But but if you're willing to do
the work and understand the

358
00:18:34,280 --> 00:18:38,640
fundamentals of the industry,
you know from demand

359
00:18:39,120 --> 00:18:41,560
characteristics and particularly
where you see structural demand

360
00:18:41,560 --> 00:18:45,120
drivers to supply and the
challenges facing supply and

361
00:18:45,120 --> 00:18:46,800
then underlying costs, you can
actually form a view.

362
00:18:46,800 --> 00:18:49,840
You can build fairly good cost
curves and start to form a view

363
00:18:49,840 --> 00:18:52,520
as to how.
Price formation may evolve over

364
00:18:52,520 --> 00:18:53,840
time.
I think I said to you

365
00:18:54,720 --> 00:18:57,840
previously, you know, I, I used
to like to.

366
00:18:57,840 --> 00:19:01,360
Think I had a functioning
crystal ball, You know, I now

367
00:19:01,360 --> 00:19:03,200
have two.
I've got a short term crystal

368
00:19:03,200 --> 00:19:05,800
ball trying to predict short
term prices that lives in the

369
00:19:05,800 --> 00:19:07,160
cupboard.
It never comes out because it

370
00:19:07,160 --> 00:19:09,920
doesn't work.
But I do think if you try and

371
00:19:09,920 --> 00:19:12,800
assess the long term
fundamentals, you can generally

372
00:19:12,920 --> 00:19:15,920
form a fairly good view that
that I think more often than not

373
00:19:17,240 --> 00:19:19,280
proves to be, you know, fairly
accurate.

374
00:19:19,640 --> 00:19:25,160
But but the critical thing
that's probably changed in my

375
00:19:25,160 --> 00:19:29,840
thinking over recent years is I
don't spend too much time trying

376
00:19:29,840 --> 00:19:33,040
to work out what the price
should be and particularly in

377
00:19:33,040 --> 00:19:35,640
the short term.
And part of that's because you

378
00:19:35,640 --> 00:19:38,680
know, I'm not trying to pick
whether a company's share price

379
00:19:38,680 --> 00:19:40,440
will go up or down from
day-to-day.

380
00:19:41,080 --> 00:19:43,520
I'm actually thinking about
those longer term structural

381
00:19:43,520 --> 00:19:45,520
drivers.
We're thinking about those as an

382
00:19:45,520 --> 00:19:49,600
organization and that's what
really matters to us.

383
00:19:50,280 --> 00:19:53,680
And so rather than trying to
pick with, you know, precision

384
00:19:53,680 --> 00:19:58,520
what we think the copper price
might be in 2035, which I can

385
00:19:58,520 --> 00:20:01,960
tell you we've got a very low
likelihood of of being right

386
00:20:01,960 --> 00:20:04,160
about.
We're trying to work out

387
00:20:04,360 --> 00:20:08,280
asymmetry as in do we think
there's more upside risk or

388
00:20:08,280 --> 00:20:10,440
downside risk and what are the
drivers and what are the

389
00:20:10,440 --> 00:20:12,800
signposts for that?
And I think, and then if you

390
00:20:12,800 --> 00:20:15,560
look at a lot across commodity
markets, you can do that.

391
00:20:16,720 --> 00:20:19,640
And so that's probably, if, you
know, heaven forbid, if I was to

392
00:20:19,640 --> 00:20:24,360
go back in time and think about,
you know, research and, and

393
00:20:24,360 --> 00:20:28,080
companies and value across
industries, I would probably

394
00:20:28,080 --> 00:20:31,560
spend more time trying to
understand asymmetry of, of

395
00:20:31,560 --> 00:20:35,480
price formation and also
asymmetry of the potential

396
00:20:35,880 --> 00:20:38,480
returns formation of a company
and therefore its share price,

397
00:20:38,480 --> 00:20:41,280
rather than trying to be precise
and then look at that

398
00:20:41,280 --> 00:20:43,280
relativity.
And I think that would put me in

399
00:20:43,280 --> 00:20:46,000
a better place to be right more
often than maybe I was.

400
00:20:46,720 --> 00:20:49,240
You've got particular thoughts
on, on the duration of these

401
00:20:49,240 --> 00:20:52,080
cycles too.
And I'd love to hear you kind of

402
00:20:52,080 --> 00:20:54,640
expand on them and just throw in
the word super cycle and what

403
00:20:54,640 --> 00:20:56,400
that means, because you kind of
lived through that and it's been

404
00:20:56,400 --> 00:20:58,760
thrown around again lately.
So I'm keen to hear your

405
00:20:58,760 --> 00:21:00,400
thoughts on all of that
together.

406
00:21:02,920 --> 00:21:06,760
I, I'm probably someone who's
quite hesitant to coin, you

407
00:21:06,760 --> 00:21:11,120
know, a super cycle or not
because I think even when you

408
00:21:11,120 --> 00:21:14,840
look at some of the great
cycles, so industrialization of

409
00:21:14,840 --> 00:21:19,280
Japan, urbanization of China, so
70s, you know, 2000s, etcetera.

410
00:21:20,080 --> 00:21:22,280
There are still cycles within
those cycles.

411
00:21:23,440 --> 00:21:26,880
So there are structural trends,
but you can have some deep

412
00:21:26,920 --> 00:21:30,040
phases of correction.
I mean, we, we talked about one,

413
00:21:30,040 --> 00:21:34,280
if you look at the 2 thousand
2015 period where you had on

414
00:21:34,280 --> 00:21:37,600
average very high returns across
many of the commodities, there

415
00:21:37,600 --> 00:21:41,320
were still periods through that
where you actually, you know,

416
00:21:41,320 --> 00:21:44,400
thought the end was not.
And again, if you didn't have

417
00:21:44,400 --> 00:21:46,600
the right balance sheet at that
time, it didn't matter that,

418
00:21:46,600 --> 00:21:50,080
that the three years beyond that
point in time, things were going

419
00:21:50,080 --> 00:21:52,440
to be good again, you, you
mightn't get from A to B.

420
00:21:53,120 --> 00:21:57,960
And so, you know, I, I, you
know, for my sins back in the

421
00:21:57,960 --> 00:22:01,720
day, looked at the base metals
index, you know, over 100 years.

422
00:22:01,720 --> 00:22:04,080
And, and if you go back and you
know, the, it's a very simple

423
00:22:04,080 --> 00:22:08,240
analysis, you just do the old
through to peek and you can see

424
00:22:08,240 --> 00:22:11,160
amplitude of a cycle and you can
see duration and you just look,

425
00:22:11,240 --> 00:22:13,760
you know, index them to 100 and
lay them over each other.

426
00:22:14,280 --> 00:22:17,120
And what you find is the cycles
actually aren't that long.

427
00:22:17,120 --> 00:22:22,160
You know, 18 to 36 months is
pretty typical, some extent of

428
00:22:22,160 --> 00:22:25,280
it beyond that, but not many.
In other words, you know, the

429
00:22:25,280 --> 00:22:28,880
way I think about it is and the
way we do is therefore if you're

430
00:22:28,880 --> 00:22:32,280
in a cycle and you believe
you're starting to be in a, you

431
00:22:32,280 --> 00:22:35,760
know, in a, call it a, a bullish
market, there is a somewhat of

432
00:22:35,760 --> 00:22:38,000
reality that you're probably
closer to the top than you are

433
00:22:38,120 --> 00:22:41,280
the bottom.
And so again, that that all

434
00:22:41,280 --> 00:22:44,760
feeds into therefore how we
think about our balance sheet.

435
00:22:45,360 --> 00:22:48,440
And it's not about conservatism.
It's making sure that our

436
00:22:48,440 --> 00:22:51,960
shareholders can have confidence
that if we keep doing the basics

437
00:22:51,960 --> 00:22:55,560
well, we're patient, we put.
You know that discretionary

438
00:22:55,560 --> 00:22:57,800
capital to work in a way where
we think there's a symmetry of

439
00:22:57,800 --> 00:22:59,880
returns.
That we're actually well

440
00:22:59,880 --> 00:23:02,640
positioned irrespective of what
happens in that cycle.

441
00:23:02,640 --> 00:23:07,280
I think, you know, I was with
our team in Miami recently for

442
00:23:07,280 --> 00:23:09,480
the for one of the major
conferences, one of the major

443
00:23:09,480 --> 00:23:13,360
industry conferences and it was
incredibly, you know, a positive

444
00:23:14,440 --> 00:23:17,760
thematic vibe if you like at the
conference.

445
00:23:17,760 --> 00:23:22,480
I think it was record attendance
and lo and behold, weeks after

446
00:23:22,480 --> 00:23:24,680
that we've obviously had the
emergence of the conflict in the

447
00:23:24,680 --> 00:23:26,760
Middle East and everyone's
wondering what happens next.

448
00:23:27,080 --> 00:23:29,600
And I think it just sort of goes
to the heart of this issue that

449
00:23:29,600 --> 00:23:31,560
be be very careful what you
assume.

450
00:23:32,840 --> 00:23:35,880
You know, I think optimism is a
good thing in our sector.

451
00:23:37,000 --> 00:23:42,000
I think it's always an
appropriate strategy to believe

452
00:23:42,000 --> 00:23:44,520
over time you want to improve
the quality of your portfolio,

453
00:23:45,400 --> 00:23:47,000
and I think that's a good
aspiration to have.

454
00:23:47,000 --> 00:23:49,440
You should only ever do it when
you can create value or you see

455
00:23:49,440 --> 00:23:51,480
the potential for those
asymmetric returns.

456
00:23:52,040 --> 00:23:55,400
But always do it with the mind
of making sure you keep a strong

457
00:23:55,400 --> 00:23:58,280
balance sheet because you don't
want to get caught at the wrong

458
00:23:58,280 --> 00:23:59,560
time with the wrong balance
sheet.

459
00:24:00,800 --> 00:24:02,760
Who did you, who did you watch
get caught at the wrong time

460
00:24:02,760 --> 00:24:04,520
with the wrong with the wrong
balance sheet?

461
00:24:05,320 --> 00:24:07,200
Who scarred?
Who scarred your like memory of

462
00:24:07,200 --> 00:24:08,800
this?
Oh, just go back and look at

463
00:24:08,800 --> 00:24:11,160
2007 eight.
Yeah, there were a few.

464
00:24:11,280 --> 00:24:14,120
Have a look at the list.
It's long.

465
00:24:15,360 --> 00:24:22,040
Well, and so it's long and it's,
it's the leaders of our industry

466
00:24:22,320 --> 00:24:26,480
right down through to the, the,
the, the micro space, right?

467
00:24:26,480 --> 00:24:27,880
And and it's understandable,
right.

468
00:24:27,880 --> 00:24:30,840
So again, I'm not sitting here
in judgement.

469
00:24:31,560 --> 00:24:34,360
I'm not sitting here saying, you
know, as I think I've said, I, I

470
00:24:34,360 --> 00:24:36,040
don't profess to have the right
answers.

471
00:24:36,040 --> 00:24:39,760
I've got some beliefs and and we
as a company prosecute those and

472
00:24:39,760 --> 00:24:43,640
we think about those and and and
and and obviously working with

473
00:24:43,640 --> 00:24:46,440
the team and the board, it
further shapes the decisions we

474
00:24:46,440 --> 00:24:49,520
make.
But after a period of the early

475
00:24:49,520 --> 00:24:52,280
2000s through to 2000 thousand
and seven where you just had

476
00:24:52,280 --> 00:24:56,320
this incredible demand equation
with limited investment that

477
00:24:56,320 --> 00:24:59,520
gone into the sector in the
decades prior, you know, you

478
00:24:59,520 --> 00:25:04,680
literally had the fundamentals
for a period of sustained above

479
00:25:04,680 --> 00:25:06,960
average returns.
It's understandable that

480
00:25:06,960 --> 00:25:10,360
everyone wanted to put capital
to work, but we know in this

481
00:25:10,360 --> 00:25:12,560
industry what is true.
If you look back at, you know,

482
00:25:12,560 --> 00:25:16,200
50 plus years of M&A in this
sector, aside from some very

483
00:25:16,200 --> 00:25:20,360
unique synergistic transactions,
the most cases, the only

484
00:25:20,360 --> 00:25:22,640
transactions that have really
worked for shareholders are the

485
00:25:22,640 --> 00:25:24,280
ones that have been done at the
bottom of the cycle.

486
00:25:25,240 --> 00:25:28,400
That is a that is a core trait.
So again, timing is everything.

487
00:25:29,000 --> 00:25:31,560
We, we were speaking with a fund
manager recently and they gave

488
00:25:31,560 --> 00:25:35,720
us a bit of an anecdote that
the, the, the most, the, the

489
00:25:35,720 --> 00:25:39,200
highest outflow day that they
have had was the day after

490
00:25:39,200 --> 00:25:42,000
liberation day.
And the most inflows they've had

491
00:25:42,200 --> 00:25:45,120
was the eve of the Iran crisis
just just by recently.

492
00:25:45,120 --> 00:25:50,120
So these, these intangible type
things are fascinating.

493
00:25:50,120 --> 00:25:52,560
So I want to go back to your
commentary on, on beta.

494
00:25:52,560 --> 00:25:54,880
We've touched on it, you speak
about it often.

495
00:25:55,240 --> 00:25:57,920
And I want you to kind of build
up how you think about this

496
00:25:57,920 --> 00:26:00,320
from, from a kind of grassroots
level, because I know there will

497
00:26:00,320 --> 00:26:02,840
be people listening that might
come from the, the tools, the

498
00:26:02,840 --> 00:26:04,240
actual mining engineering side
of things.

499
00:26:04,600 --> 00:26:06,880
And I'm sure they would love to
hear how you think about

500
00:26:07,320 --> 00:26:10,200
suppressing beta volatility risk
within the business.

501
00:26:10,520 --> 00:26:12,440
Yeah.
And look, before I do that,

502
00:26:12,440 --> 00:26:15,360
going back to that concept of
being scarred by it, I, I think

503
00:26:15,360 --> 00:26:17,200
quite, quite the opposite is
true.

504
00:26:17,720 --> 00:26:19,480
I think it's a, it's a great
question.

505
00:26:20,120 --> 00:26:23,720
To me, it's rather the opposite.
It's like we do in our business

506
00:26:23,720 --> 00:26:25,760
every day.
We're trying to learn and I

507
00:26:25,760 --> 00:26:29,720
think learning from those things
is what actually potentially

508
00:26:29,720 --> 00:26:32,360
sets you up to capture
opportunity into the future,

509
00:26:33,200 --> 00:26:35,080
right.
So it, it's all of these things

510
00:26:35,080 --> 00:26:38,880
that shape how do you want to be
set up the next time those

511
00:26:38,880 --> 00:26:41,920
pressures come to bear?
How do you want to be set up as

512
00:26:41,920 --> 00:26:44,920
a business as you take
opportunity to make sure that

513
00:26:44,920 --> 00:26:47,080
you're well positioned, as I've
said, to get your shareholders?

514
00:26:47,080 --> 00:26:49,640
From A to B, you know, if you've
got a compelling investment

515
00:26:49,640 --> 00:26:51,840
proposition and they're backing
you and you're telling them what

516
00:26:51,840 --> 00:26:54,960
you're going to do.
And, and they can see the future

517
00:26:55,440 --> 00:26:58,040
and they are aligned with you.
How do you make sure that the

518
00:26:58,040 --> 00:27:01,360
balance sheet combined with the
top of assets you run the

519
00:27:01,360 --> 00:27:03,880
margins that you generate the
way you protect all of those

520
00:27:03,880 --> 00:27:06,320
things so they can be confident
that you can get from A to B?

521
00:27:06,840 --> 00:27:09,240
Because again, if you go back to
some of that history, that's

522
00:27:09,240 --> 00:27:12,880
really where in a highly
volatile sector, we've, we've

523
00:27:12,880 --> 00:27:16,480
often come unstuck.
So you know, that is a is a sort

524
00:27:16,480 --> 00:27:20,120
of a nice segue to to the
question that that you pose.

525
00:27:22,240 --> 00:27:28,400
The thing that that that we
reflect on is that our sector is

526
00:27:28,400 --> 00:27:31,200
incredibly unique.
And I think sometimes we don't

527
00:27:31,800 --> 00:27:35,040
step back enough and and
actually really contemplate what

528
00:27:35,040 --> 00:27:38,000
that means.
You know, our products price in

529
00:27:38,000 --> 00:27:44,640
many cases every day, across
every hour, across every minute

530
00:27:44,840 --> 00:27:47,880
and in some cases every second,
right.

531
00:27:47,880 --> 00:27:52,520
So it's not like you wait for a
quarterly update to understand

532
00:27:52,520 --> 00:27:56,000
how that retail good is going
and what demand you know is like

533
00:27:56,000 --> 00:27:59,680
and what same store sales growth
is like or what have you.

534
00:28:00,400 --> 00:28:04,000
We get immediate visibility.
All of our shareholders get

535
00:28:04,000 --> 00:28:07,200
immediate visibility.
The people who may want to short

536
00:28:07,320 --> 00:28:10,360
the sector or or or our company
have immediate visibility.

537
00:28:10,760 --> 00:28:12,800
These things are trading
constantly.

538
00:28:13,600 --> 00:28:16,680
But then think about the fact in
many, many cases our input costs

539
00:28:16,680 --> 00:28:19,600
are also trading constantly.
Freight rates are trading

540
00:28:19,640 --> 00:28:22,000
constantly.
The foreign exchange rate

541
00:28:22,000 --> 00:28:24,960
markets that we're exposed to if
we've got costs that are non-us

542
00:28:24,960 --> 00:28:29,640
dollar are trading constantly.
So we have this by definition

543
00:28:29,960 --> 00:28:34,600
incredible volatility of which
much of it is out of our

544
00:28:34,640 --> 00:28:38,800
control.
So then when you contemplate

545
00:28:38,800 --> 00:28:43,160
that, then think about the fact
that particularly as you move

546
00:28:43,160 --> 00:28:45,960
into the base metals landscape,
unless you're in a really large

547
00:28:45,960 --> 00:28:50,800
homogeneous porphyry, you're
often mining or bodies that are

548
00:28:50,800 --> 00:28:54,600
highly variable.
So whether you're at a, a MATSA

549
00:28:54,920 --> 00:28:59,880
or, you know, in, in Cannington
with S 32, depending on which

550
00:28:59,880 --> 00:29:02,280
stope you're in at a point in
time, you can have a completely

551
00:29:02,280 --> 00:29:04,520
different grade profile and
therefore economics of that

552
00:29:04,520 --> 00:29:07,480
single parcel of, of dirt, so to
speak.

553
00:29:08,240 --> 00:29:11,200
So you've got this non linear
relationship of what you're

554
00:29:11,200 --> 00:29:13,800
trying to mine.
You've got this incredible

555
00:29:13,800 --> 00:29:17,720
volatility of of all a number of
the input costs and then your

556
00:29:17,720 --> 00:29:22,240
revenue lines moving around.
The way I coin that when I talk

557
00:29:22,280 --> 00:29:26,840
to investors, it's we're sort of
exciting enough, right.

558
00:29:26,840 --> 00:29:31,000
So as a as a sector and as a
metals play in the sector, we

559
00:29:31,000 --> 00:29:34,160
offer our investors an
incredible amount of excitement

560
00:29:34,240 --> 00:29:40,840
just dealing with that.
And so my strong argument and

561
00:29:40,840 --> 00:29:46,280
the way that we think about
Sapphire is if we can suppress

562
00:29:46,280 --> 00:29:51,760
some of that through the way we
run our business and the

563
00:29:51,760 --> 00:29:54,400
combination of the type of
assets that we have, which you

564
00:29:54,400 --> 00:29:57,560
know, full credit to the team
that came before me and, and the

565
00:29:57,560 --> 00:30:01,160
board and how they pulled this
together means that we should

566
00:30:01,160 --> 00:30:04,040
overall reduce the beta of our
company relative to some others.

567
00:30:04,760 --> 00:30:07,040
And my view is if you reduce the
beta, you're obviously going to

568
00:30:07,040 --> 00:30:09,160
reduce your cost of capital,
which should translate to a

569
00:30:09,160 --> 00:30:11,760
higher rating.
And if you have a higher rating,

570
00:30:11,760 --> 00:30:15,320
your license to operate goes up
and your license to play goes

571
00:30:15,320 --> 00:30:17,520
up, your ability to grow
improves.

572
00:30:18,640 --> 00:30:21,840
That's sort of holistically how
we think about it.

573
00:30:22,600 --> 00:30:24,520
Again, I'm not suggesting we're
right.

574
00:30:24,600 --> 00:30:28,680
That's that's our philosophy.
But it goes back to this point

575
00:30:28,680 --> 00:30:32,560
that I think sometimes we've
been at risk of, of always

576
00:30:32,560 --> 00:30:34,000
thinking we need a shiny new
toy.

577
00:30:34,000 --> 00:30:36,720
All right?
My experience would tell me the

578
00:30:36,720 --> 00:30:40,560
last thing investors are looking
for is a team that's always

579
00:30:40,560 --> 00:30:42,880
looking for a shiny new toy for
the sake of having it.

580
00:30:43,600 --> 00:30:46,400
As I said, we offer them a hell
of a lot of excitement everyday

581
00:30:46,680 --> 00:30:48,680
just dealing with all of that
volatility.

582
00:30:49,120 --> 00:30:52,800
So again, being aiming to be
safe and we're not where we need

583
00:30:52,800 --> 00:30:55,440
to be yet.
First to say that being safe,

584
00:30:56,040 --> 00:30:59,240
consistent and predictable,
that's that's where it starts

585
00:30:59,240 --> 00:31:00,760
for us.
Then if we can increase our

586
00:31:00,760 --> 00:31:03,160
reserves, so I'm talking about
pillars of our strategy.

587
00:31:03,560 --> 00:31:06,960
If we can increase the the
reserves in our business, that

588
00:31:06,960 --> 00:31:10,160
also increases duration.
So it reduces valuation

589
00:31:10,160 --> 00:31:12,360
volatility to anything that
happens in the short term.

590
00:31:12,960 --> 00:31:15,360
And then of course, if we do
that with capital discipline,

591
00:31:15,360 --> 00:31:17,680
with a strong balance sheet,
that also reduces beta.

592
00:31:18,360 --> 00:31:21,400
So our view is if we do those
things, not only does it set us

593
00:31:21,400 --> 00:31:25,400
up arguably well to contemplate
not only growing the business,

594
00:31:25,400 --> 00:31:28,440
but returning capital to
shareholders, It sets us up to

595
00:31:28,440 --> 00:31:31,400
manage through cycles and
hopefully come out the other end

596
00:31:31,400 --> 00:31:33,760
relatively well off and
ultimately the end of the game.

597
00:31:34,280 --> 00:31:38,040
It's about doing better on a
relative basis than others.

598
00:31:39,080 --> 00:31:43,520
As a yeah, in the pursuit of a
shiny new toy, often times mine

599
00:31:43,520 --> 00:31:47,960
is they have an enormous amount
of cash and looking for ideas to

600
00:31:47,960 --> 00:31:50,320
deploy, but they're trying to do
that all at the exact same time

601
00:31:50,320 --> 00:31:52,640
because the times are good.
That's why they've got the cash

602
00:31:52,840 --> 00:31:57,240
and it's a competitive time and
prices are incredibly elevated

603
00:31:57,240 --> 00:31:59,360
for the things that you would
want to buy.

604
00:32:00,440 --> 00:32:03,160
So how do you how do you
actually go about seeking

605
00:32:03,800 --> 00:32:08,960
asymmetry given the relationship
between the times when you have

606
00:32:08,960 --> 00:32:12,840
capability and asymmetry being
available in the first place?

607
00:32:13,760 --> 00:32:17,080
Well, these things are always to
be tested.

608
00:32:18,280 --> 00:32:19,720
You know, that's the beauty of
markets.

609
00:32:19,720 --> 00:32:22,720
But I'm a big believer if you've
got good projects or you've got

610
00:32:22,720 --> 00:32:28,040
a good idea, if you can't put a
good idea on one PowerPoint

611
00:32:28,040 --> 00:32:30,800
slide and convince others, it's
probably not a good idea.

612
00:32:32,000 --> 00:32:35,720
So, so if you've got a really
good idea and you need funding,

613
00:32:35,720 --> 00:32:38,120
you'll get it.
That's my base premise.

614
00:32:38,720 --> 00:32:40,960
I've never seen a good project
not funded by the market.

615
00:32:42,160 --> 00:32:45,280
And So what goes hand in hand
with that is a premise that you

616
00:32:45,280 --> 00:32:47,400
shouldn't hesitate to give
excess capital back to

617
00:32:47,400 --> 00:32:50,920
shareholders when you've got it.
Because what I think's often

618
00:32:50,920 --> 00:32:56,280
missed is not only the the ever
present challenge that money can

619
00:32:56,280 --> 00:33:00,600
burn a hole in your pocket, but
also that if you sit on

620
00:33:01,160 --> 00:33:05,120
significant sums of cash on your
balance sheet, it's reducing in

621
00:33:05,120 --> 00:33:06,760
value every year to your
shareholder.

622
00:33:07,600 --> 00:33:09,080
And I would argue the cost of
equity.

623
00:33:09,080 --> 00:33:11,760
And the reason for that is a
shareholder can take that and

624
00:33:11,760 --> 00:33:13,280
reinvest it elsewhere in the
market.

625
00:33:14,080 --> 00:33:17,360
So I think when you put those
two things together, it's sort

626
00:33:17,360 --> 00:33:20,240
of it reinforces how we think
about Capital Management.

627
00:33:20,400 --> 00:33:23,360
I've got a buddy in again here,
JD, You know why?

628
00:33:23,600 --> 00:33:26,560
Not just because sand fire.
They obviously mine underground

629
00:33:26,560 --> 00:33:28,000
and matter and underground
mining.

630
00:33:28,080 --> 00:33:30,400
You need ground support.
Not just because of that, but

631
00:33:30,400 --> 00:33:33,680
because Brendan's philosophy of
suppressing beta, reducing

632
00:33:33,840 --> 00:33:37,200
volatility, minimizing, Yeah,
the effective, the risk.

633
00:33:37,200 --> 00:33:38,760
Some people think of it as
conservatism.

634
00:33:39,000 --> 00:33:40,840
No.
You want more predictable

635
00:33:40,840 --> 00:33:43,560
operations?
You want suppliers you can rely

636
00:33:43,560 --> 00:33:45,680
on.
Checking all these boxes is

637
00:33:45,680 --> 00:33:49,080
Sandvik ground support.
Sandvik Ground Support JD The

638
00:33:49,440 --> 00:33:52,200
best and only name you need to
think of when you think of Who

639
00:33:52,200 --> 00:33:54,040
am I going to order all of my
ground support needs from?

640
00:33:54,040 --> 00:33:57,880
Because you need reliability.
You need safety like absolutely

641
00:33:57,880 --> 00:34:00,240
paramount.
You need you need it to arrive

642
00:34:00,480 --> 00:34:03,280
in a relatively short window
when things change, which they

643
00:34:03,360 --> 00:34:05,160
always do in mining.
You need supply chains that are

644
00:34:05,160 --> 00:34:08,320
responsive distribution centres
in Europe or in Australia that

645
00:34:08,320 --> 00:34:10,199
can meet your ground support
needs on demand.

646
00:34:10,280 --> 00:34:12,080
If you're running a mining
business, you want to suppress

647
00:34:12,080 --> 00:34:14,440
the volatility.
You want a safer and more

648
00:34:14,440 --> 00:34:17,000
effective operation.
You should use Sandvik Ground

649
00:34:17,000 --> 00:34:18,920
support and get your order in
today.

650
00:34:19,360 --> 00:34:21,760
Back to Brandon.
I, I think a lot about Jake

651
00:34:21,760 --> 00:34:23,880
Klein and his approach to
building evolution.

652
00:34:23,880 --> 00:34:26,040
And I think there's just
parallels with with how you guys

653
00:34:26,040 --> 00:34:28,760
kind of both think about, about
markets, about putting a mining

654
00:34:28,760 --> 00:34:30,440
company.
And he always had this

655
00:34:30,440 --> 00:34:33,199
philosophy of 6 to 8 assets.
Is, is the right.

656
00:34:33,199 --> 00:34:36,639
Do you, do you have a view on
the number of assets that is, is

657
00:34:36,679 --> 00:34:38,840
rounded?
It gives the management team

658
00:34:38,840 --> 00:34:40,440
enough time to, to cover all the
bases.

659
00:34:41,199 --> 00:34:43,080
Yeah.
Look, I think the the first

660
00:34:43,080 --> 00:34:50,040
thing I'd say is whether it's 5
or 6 assets, you shouldn't aim

661
00:34:50,040 --> 00:34:52,639
to have a specific number unless
you're doing it through the lens

662
00:34:52,639 --> 00:34:55,920
of creating value.
So I've never believed in growth

663
00:34:55,920 --> 00:35:01,360
for growth sake.
I say somewhat flippantly, but

664
00:35:01,360 --> 00:35:04,360
it is a deep seated belief
because if you play around in

665
00:35:04,360 --> 00:35:08,440
spreadsheets enough, I think it
is the only answer that that a

666
00:35:08,440 --> 00:35:12,280
mining company should be willing
to run its asset to closure,

667
00:35:13,320 --> 00:35:15,480
liberate all the cash, give it
back to its shareholders,

668
00:35:15,480 --> 00:35:20,360
realize the value proposition,
and then, you know, go and look

669
00:35:20,360 --> 00:35:23,000
about what else there is to do.
I think that should be the

670
00:35:23,000 --> 00:35:25,080
underpinning philosophy.
In other words, unless you can

671
00:35:25,080 --> 00:35:28,000
do something that exceeds that
return equation, you should do

672
00:35:28,000 --> 00:35:30,960
nothing.
Now in saying that, I think if

673
00:35:30,960 --> 00:35:35,960
you're patient, if you're
prudent, again, if you aim to

674
00:35:35,960 --> 00:35:38,040
have the right balance sheet
through the cycle, so you can

675
00:35:38,040 --> 00:35:42,200
take advantage of, of situations
as they arise or you can find

676
00:35:42,200 --> 00:35:45,440
unique opportunities that suit
you and may not suit others.

677
00:35:46,280 --> 00:35:51,200
Then there is going to always be
over time the potential to, to

678
00:35:51,280 --> 00:35:53,680
add to your portfolio, but in a
very rational way.

679
00:35:54,560 --> 00:35:56,840
And, and I think you're right, I
think evolution is a great

680
00:35:56,840 --> 00:35:59,760
example of that is my take on
it, that they've done that very

681
00:35:59,760 --> 00:36:02,200
well.
They've not only added assets,

682
00:36:02,200 --> 00:36:04,440
they've recycled, they've been
willing to let things go.

683
00:36:04,440 --> 00:36:06,800
So they've upgraded the quality
of their portfolio over time.

684
00:36:06,800 --> 00:36:08,400
That's what it looks like from
afar.

685
00:36:10,440 --> 00:36:13,240
When I think about Cal Crew,
that's exactly what Cal Crew

686
00:36:13,240 --> 00:36:18,440
offers to us is, you know, we
have a clear state of the intent

687
00:36:18,440 --> 00:36:21,760
that we want to grow the
resources and reserves that sit

688
00:36:21,760 --> 00:36:24,800
around our modern processing
facilities in the Iberian Pirate

689
00:36:24,800 --> 00:36:26,600
Belt and the Kalahari Copper
Belt.

690
00:36:26,600 --> 00:36:29,440
We think that those two belts
are highly prospective and those

691
00:36:29,440 --> 00:36:31,280
facilities themselves are
strategic.

692
00:36:32,200 --> 00:36:38,160
In other words, any discovery
will be incredibly commercially

693
00:36:38,160 --> 00:36:40,720
economic for us because of the
capital that's being deployed.

694
00:36:41,120 --> 00:36:43,240
But ironically, if someone else
makes a discovery there, it's

695
00:36:43,240 --> 00:36:45,040
highly likely to go through our
plant as well.

696
00:36:45,080 --> 00:36:46,480
Now, we'd like it to be
ourselves.

697
00:36:46,880 --> 00:36:49,600
So, you know, we're very excited
about that prospectivity.

698
00:36:49,600 --> 00:36:53,600
But then on the back of that as
well with Cal Kuru having, we

699
00:36:53,600 --> 00:36:56,120
would say transformed the
company in the last three to

700
00:36:56,120 --> 00:37:00,680
four years to be that truly
international, you know,

701
00:37:00,680 --> 00:37:05,040
significant Australian listed
largely copper play with

702
00:37:05,040 --> 00:37:08,320
important byproducts.
Kalkuru is is similarly that

703
00:37:08,320 --> 00:37:10,400
next major transformational
opportunity.

704
00:37:10,800 --> 00:37:13,360
And we should always be looking
out for those types of options.

705
00:37:13,360 --> 00:37:16,800
Because I think you're right if
if you if you take that, that

706
00:37:16,800 --> 00:37:22,320
philosophy of reducing beta is a
strength in a sector that's

707
00:37:22,320 --> 00:37:25,400
highly volatile.
By adding assets that are

708
00:37:25,400 --> 00:37:29,400
complementary, you also reduce
beta, not so much necessarily

709
00:37:29,400 --> 00:37:32,840
price beta, but operating
leverage because you've got this

710
00:37:32,840 --> 00:37:37,040
the risk profile that we carry
every day in our sector diluted

711
00:37:37,040 --> 00:37:39,640
across more assets.
So if you have an issue in one

712
00:37:39,640 --> 00:37:43,760
asset specifically, it might be
1/7 or 110th of the importance

713
00:37:43,760 --> 00:37:45,880
that it that it would be
otherwise if you're only a

714
00:37:45,880 --> 00:37:48,320
single asset company.
But again, I think you've got to

715
00:37:48,320 --> 00:37:51,960
be very measured in how you go
about that and be very patient

716
00:37:52,640 --> 00:37:55,920
and and never feel compelled to
do it for the sake of some

717
00:37:55,920 --> 00:37:58,320
philosophy or belief.
You've got to do it only when it

718
00:37:58,320 --> 00:38:01,720
makes sense, when you see the
potential for asymmetric returns

719
00:38:01,880 --> 00:38:05,960
that five year shareholders.
What comes with acquiring more,

720
00:38:05,960 --> 00:38:09,760
more and more assets over time
is a a tendency to increase

721
00:38:10,000 --> 00:38:14,040
corporate bloat, which which
which I think you might have

722
00:38:14,040 --> 00:38:17,040
some some views on yourself.
Do you think, do you where do

723
00:38:17,040 --> 00:38:19,720
you think accountability should
be in running assets?

724
00:38:19,920 --> 00:38:23,200
Look, it's not so much, you
know, experience, it was a bloat

725
00:38:23,200 --> 00:38:25,520
or otherwise.
I think, you know, I'm often

726
00:38:25,520 --> 00:38:27,640
asked about companies that I
admire and, you know, I

727
00:38:27,640 --> 00:38:30,120
mentioned some of the analysts
that I used to listen to sitting

728
00:38:30,120 --> 00:38:33,840
in the auditorium at Macquarie,
A chap called Greg Dring was,

729
00:38:33,840 --> 00:38:37,640
was a, you know, and he still is
a, you know, a very well known

730
00:38:37,640 --> 00:38:41,200
and revered person in the
financial markets.

731
00:38:42,240 --> 00:38:45,560
And he covered Wes farmers And I
used to love listening to him

732
00:38:45,560 --> 00:38:47,800
talk about Wes farmers.
And I've always had admiration

733
00:38:47,800 --> 00:38:51,360
for for how they run, not just
because our company secretary,

734
00:38:51,360 --> 00:38:54,440
its brother is senior and Wes
Farmers, I might add, but but I

735
00:38:54,440 --> 00:38:59,280
think the way they run their
company and the results they

736
00:38:59,280 --> 00:39:01,560
deliver is there's something in
that for me.

737
00:39:02,800 --> 00:39:06,680
And so when I, when I think
about an organization and, and,

738
00:39:06,680 --> 00:39:10,200
and truthfully, this is
something that that that came to

739
00:39:10,200 --> 00:39:13,120
the fore in the first discussion
I had with, with two of the

740
00:39:13,120 --> 00:39:17,880
directors before joining Samfire
is we talked a lot about

741
00:39:17,880 --> 00:39:21,680
organizational design as much as
we did anything else.

742
00:39:22,680 --> 00:39:27,520
And there was, there was a real,
if you like what felt to me

743
00:39:27,720 --> 00:39:32,400
level of alignment, a belief
that as a, as a mining company,

744
00:39:32,400 --> 00:39:35,920
particularly in our size, that
we would be best placed if we

745
00:39:35,920 --> 00:39:40,520
ran a relatively lean corporate
center and actually made

746
00:39:40,520 --> 00:39:44,400
individual assets accountable
for their performance.

747
00:39:44,920 --> 00:39:46,880
So they run as individual
businesses.

748
00:39:47,320 --> 00:39:50,040
They will ultimately look and
feel if you go there, we would

749
00:39:50,040 --> 00:39:53,680
hope you would sense that it's a
San fire operation in Spain and

750
00:39:53,680 --> 00:39:58,400
in Botswana and have a San fire
culture but with a strongly

751
00:39:58,400 --> 00:40:02,640
Spanish bent or a strongly
Batswana bent.

752
00:40:03,800 --> 00:40:06,800
But primarily they run as
individual businesses as one of

753
00:40:06,800 --> 00:40:09,040
the reasons for that is I think
it's a simpler model.

754
00:40:09,840 --> 00:40:12,320
And I'm a big believer that, you
know, sounds obvious, simplicity

755
00:40:12,320 --> 00:40:16,280
will always be complexity, but I
do believe that accountability

756
00:40:16,280 --> 00:40:18,120
Trump's everything.
And, and that's probably one

757
00:40:18,120 --> 00:40:21,720
thing from Macquarie that that
really came through as I felt my

758
00:40:21,720 --> 00:40:23,360
time there.
It was an incredibly accountable

759
00:40:23,360 --> 00:40:26,760
organization.
You know, performance was, was

760
00:40:26,760 --> 00:40:29,480
transparent.
Everyone knew how everyone was

761
00:40:29,480 --> 00:40:32,080
going.
Everyone knew how everyone was

762
00:40:32,080 --> 00:40:33,880
placed with every one of the
major clients.

763
00:40:34,760 --> 00:40:39,600
And so it, it led to a high
performance culture, not for

764
00:40:39,600 --> 00:40:42,400
everyone, but but you know, I
really enjoyed it.

765
00:40:43,480 --> 00:40:47,800
In the same way, I think we want
to make sure that we can

766
00:40:47,800 --> 00:40:51,320
celebrate the success of one
business because they're

767
00:40:51,320 --> 00:40:55,080
accountable.
We can also be very clear on our

768
00:40:55,160 --> 00:40:57,720
expectations for that business
and then support them.

769
00:40:58,680 --> 00:41:02,040
But primarily they are running
their individual business on

770
00:41:02,040 --> 00:41:05,280
their own now on a spreadsheet
that would probably look like

771
00:41:05,280 --> 00:41:07,640
it's got inefficiency because it
will have duplication, You'll

772
00:41:07,640 --> 00:41:10,280
have duplication of specific
functional capacity like

773
00:41:10,280 --> 00:41:13,000
finance, legal, HR and other
areas.

774
00:41:14,240 --> 00:41:17,640
My personal view and, and I
think as I said, there was this

775
00:41:17,640 --> 00:41:21,360
very strong level of alignment
and, and, and as a collective

776
00:41:21,360 --> 00:41:26,040
team, it's what we have rallied
around is a belief that that

777
00:41:26,040 --> 00:41:29,360
spreadsheet, this synergy will
actually be trumped by the fact

778
00:41:29,360 --> 00:41:31,400
that our businesses are very,
very much accountable.

779
00:41:35,360 --> 00:41:40,520
If I, if I try and bring the
conversation now to some of

780
00:41:40,520 --> 00:41:43,840
these assets you mentioned
Botswana where you've got Mateo,

781
00:41:43,840 --> 00:41:46,440
you've got Matsa.
When you came into the business,

782
00:41:47,880 --> 00:41:51,200
there was, there was some, some
balance sheet that needed

783
00:41:51,240 --> 00:41:56,600
cleaning up and it was, I mean
Sam fight today looks a lot

784
00:41:56,600 --> 00:41:58,560
different.
Part of that was the, the

785
00:41:58,560 --> 00:42:01,920
recapitalisation that had to be
embarked on to, to reduce those

786
00:42:01,920 --> 00:42:05,440
debt levels and, and now, now
commodity prices have, have,

787
00:42:05,440 --> 00:42:07,800
have certainly, certainly aided
the cash generation of the

788
00:42:07,800 --> 00:42:11,480
business as well.
But how do you reflect on the

789
00:42:11,480 --> 00:42:13,760
acquisition of MATSA?
You know, granted, it wasn't, it

790
00:42:13,760 --> 00:42:16,840
wasn't a, a decision that you
made, you came into the business

791
00:42:16,880 --> 00:42:19,960
after that, but how do you like,
how do you, how do you come into

792
00:42:20,200 --> 00:42:22,760
sand fire today?
This is the the latest

793
00:42:22,800 --> 00:42:26,040
acquisition that we did at the
time you joined and evaluate,

794
00:42:26,040 --> 00:42:31,360
integrate and also you know
accept the the the leverage that

795
00:42:31,360 --> 00:42:32,960
was taken on to acquire it as
well.

796
00:42:34,040 --> 00:42:37,280
Yeah, I guess one of the things
that comes to mind is you've got

797
00:42:37,280 --> 00:42:42,840
to build confidence and she'll
hate me for this, but I know

798
00:42:42,840 --> 00:42:46,480
Megan Jansen our our CFO, she
takes great pride that she ranks

799
00:42:46,480 --> 00:42:50,400
very highly in your cash flow
waterfall award of the of the

800
00:42:50,400 --> 00:42:52,600
results season.
That means a lot to her SO.

801
00:42:52,680 --> 00:42:54,160
Fire reports The cleanest?
Yeah.

802
00:42:54,160 --> 00:42:56,000
It's our it's our
recommendations to people that

803
00:42:56,120 --> 00:42:57,360
ask.
Someone asked us the other day,

804
00:42:57,400 --> 00:42:59,200
like who, who has the who's the
best reporting?

805
00:42:59,240 --> 00:43:00,920
Like they wanted to mimic it.
And I was like sand, fire.

806
00:43:01,240 --> 00:43:03,640
Well, we we do like our cash
flow waterfall and our earnings

807
00:43:03,640 --> 00:43:05,400
waterfalls and I think it does
help people.

808
00:43:06,240 --> 00:43:09,720
But in all truth, I think it's
starts with when you've got

809
00:43:09,720 --> 00:43:14,000
those sorts of levels of
financial leverage, particularly

810
00:43:14,000 --> 00:43:17,400
we're still in the middle of a
growth profile, you know, a

811
00:43:17,400 --> 00:43:21,480
capital investment cycle with
Matteo people uncertain.

812
00:43:21,480 --> 00:43:23,920
I think at that stage a lot of
questions around the Kalahari

813
00:43:23,920 --> 00:43:28,160
copper belt and given some of
the chequered history, you've

814
00:43:28,160 --> 00:43:30,200
got to build confidence.
And I think the best way you do

815
00:43:30,200 --> 00:43:32,360
that is it goes back to
accountability.

816
00:43:32,360 --> 00:43:35,400
First and foremost, you make
commitments and then, you know,

817
00:43:35,600 --> 00:43:38,120
heaven forbid you've got to
deliver on those commitments.

818
00:43:38,160 --> 00:43:40,320
And so that to me is a core
element of obviously

819
00:43:40,320 --> 00:43:43,000
accountability, but then
transparency.

820
00:43:43,520 --> 00:43:47,720
So, you know, we as a company,
again, we're not perfect, but we

821
00:43:47,720 --> 00:43:50,120
aim to be incredibly
transparent.

822
00:43:50,280 --> 00:43:53,240
We work very hard to provide
good guidance.

823
00:43:53,240 --> 00:43:55,120
As you saw recently, it's not
perfect.

824
00:43:55,800 --> 00:43:57,720
We, we had to adjust our
guidance lower.

825
00:43:57,720 --> 00:44:00,320
We're still within a range of
our guidance range, but we've

826
00:44:00,320 --> 00:44:02,840
said we're expecting to be
towards the bottom end of the

827
00:44:02,840 --> 00:44:04,040
range.
But as soon as we know, we'll

828
00:44:04,040 --> 00:44:06,880
tell people.
So I think, you know, that's

829
00:44:06,880 --> 00:44:08,240
important because you build
trust.

830
00:44:09,400 --> 00:44:14,280
But the reality is so, you know,
it was an interesting time, Iris

831
00:44:14,280 --> 00:44:17,560
Copper said to me once you know,
there's this philosophy that you

832
00:44:17,560 --> 00:44:19,200
know, at times you release the
full upside.

833
00:44:20,680 --> 00:44:28,840
And I think the team that that
that came before me, De Grasse

834
00:44:28,880 --> 00:44:32,040
was incredible success story and
a number of the incredibly

835
00:44:32,040 --> 00:44:35,160
talented people who played a key
role Degrassa are still within

836
00:44:35,160 --> 00:44:39,880
Sandfire.
And the platform that created,

837
00:44:41,200 --> 00:44:44,400
you know, for, for Sandfire as a
company to expand globally to

838
00:44:44,400 --> 00:44:47,240
have the courage to, to move
into Spain.

839
00:44:47,400 --> 00:44:50,400
And not many companies in
Australia and you can go outside

840
00:44:50,400 --> 00:44:52,960
of the mining industry have
actually been successful as

841
00:44:52,960 --> 00:44:55,920
they've embarked on, on, you
know, if you like offshore

842
00:44:56,560 --> 00:44:59,360
acquisitions and, and, and
moving into global, you know,

843
00:44:59,360 --> 00:45:05,000
global markets in that way.
But SANFA has, and I think at

844
00:45:05,000 --> 00:45:07,920
the core, it gets back to this
principle the way, you know, we

845
00:45:07,960 --> 00:45:11,280
established the company, we, we
give accountability, we empower

846
00:45:11,280 --> 00:45:13,680
the assets.
We're very clear on, on and, and

847
00:45:13,680 --> 00:45:15,920
this has evolved over time, the
minimum standards that we

848
00:45:15,920 --> 00:45:17,880
expect.
And that's really important in

849
00:45:17,880 --> 00:45:19,800
an industry where you can hurt
people, of course.

850
00:45:21,280 --> 00:45:24,200
But we empower them and and we
empower them to be Spanish.

851
00:45:24,240 --> 00:45:26,520
You know, we recognize, I mean,
we've got a Roman smelter

852
00:45:26,520 --> 00:45:30,080
literally within, I think it's
100 or 200 meters of the

853
00:45:30,080 --> 00:45:34,960
processing facility at Matsa.
Yeah.

854
00:45:35,080 --> 00:45:39,000
And so they have been, you know,
the the Spanish in that area of

855
00:45:39,000 --> 00:45:40,640
Andalusia.
It's a beautiful part of the

856
00:45:40,640 --> 00:45:42,280
world.
By the way, Matsa is surrounded

857
00:45:42,280 --> 00:45:44,600
by gum trees.
It's fascinating.

858
00:45:44,600 --> 00:45:47,160
They imported gum trees for
various reasons back in the day.

859
00:45:47,160 --> 00:45:50,120
Is that old mining museum nearby
as well at Rio Tinto?

860
00:45:50,360 --> 00:45:50,760
Yeah.
Yeah.

861
00:45:50,760 --> 00:45:53,880
So the Rio Tinto mine is
literally, you know, it's a bit

862
00:45:53,880 --> 00:45:56,520
more, but a stone's throw away.
So there's enormous history.

863
00:45:58,320 --> 00:46:00,840
And so I think one of the
elements that's that we hope is

864
00:46:00,840 --> 00:46:02,800
making us successful.
And I think there's still more,

865
00:46:02,800 --> 00:46:05,400
much more for us to do is we
embrace that.

866
00:46:05,680 --> 00:46:09,120
You know, we we haven't tried to
go over there and turn it into

867
00:46:09,120 --> 00:46:12,080
an Australian mine.
Don't get me wrong, we've taken

868
00:46:12,080 --> 00:46:15,360
some of the best and brightest
people that we've had, you know,

869
00:46:15,440 --> 00:46:17,720
particularly with deep
experience in a place like De

870
00:46:17,720 --> 00:46:21,680
Grissa and we've put them into
key roles to help coach and

871
00:46:21,680 --> 00:46:24,080
develop and at times Dr.
outcomes.

872
00:46:24,480 --> 00:46:26,880
But that's been at the margin.
We've really embraced that

873
00:46:26,880 --> 00:46:28,000
workforce.
And then if you look at

874
00:46:28,000 --> 00:46:34,000
Botswana, you know, Matteo is 95
plus percent Botswana in terms

875
00:46:34,000 --> 00:46:37,080
of, you know, the, the, the, the
business reflecting the

876
00:46:37,080 --> 00:46:39,600
community in which we operate.
And I think that's a really,

877
00:46:39,600 --> 00:46:43,480
really important thing.
But you know, again, it was an

878
00:46:43,480 --> 00:46:46,680
interesting time.
And, and I think again, talking

879
00:46:46,720 --> 00:46:52,200
for Megan, the day she arrived,
I said, look, take your time,

880
00:46:52,200 --> 00:46:58,000
you know, get to know your team,
get to know the company, try and

881
00:46:58,000 --> 00:47:01,000
get out to the assets.
But I need you to fix the

882
00:47:01,000 --> 00:47:03,680
balance sheet by Christmas,
right?

883
00:47:03,680 --> 00:47:07,560
And it, you know, and it, and
it, it needed that next phase

884
00:47:07,560 --> 00:47:10,760
of, of maturity.
It's again not a criticism.

885
00:47:10,760 --> 00:47:14,880
In the past, the big defining
feature for us was the success

886
00:47:14,880 --> 00:47:18,360
of Jason Grace, Ian Kerr and the
team at Mateo.

887
00:47:19,120 --> 00:47:23,040
Proving that that asset was as
good as we thought it could be.

888
00:47:23,040 --> 00:47:26,440
And let's be honest, better
meant that we could then talk to

889
00:47:26,440 --> 00:47:30,680
the financiers of MATSA and say
to them, well, if we change the

890
00:47:30,680 --> 00:47:34,280
structure in a way that would
help us in, in how we could

891
00:47:34,280 --> 00:47:36,680
cycle capital through the
business, which was going to be

892
00:47:36,680 --> 00:47:39,880
critical truthfully for the the
corporate entity itself to be a

893
00:47:39,880 --> 00:47:44,160
going concern in time that they
could gain access to Matteo cash

894
00:47:44,160 --> 00:47:48,520
flows.
And So what we argued and there

895
00:47:48,520 --> 00:47:51,720
were people questioning whether
we'd be successful is that not

896
00:47:51,720 --> 00:47:55,520
only could we restructure,
change the fabric, if you like,

897
00:47:55,520 --> 00:47:58,960
of the balance sheet, but we
could do it at a lower cost

898
00:47:59,160 --> 00:48:01,760
because it would be a de risking
event for the finances because

899
00:48:01,760 --> 00:48:04,520
they'd be better off having
access to both pools of capital.

900
00:48:05,320 --> 00:48:08,800
And ultimately it won out.
And again, it just goes to, you

901
00:48:08,800 --> 00:48:11,080
know, you can have a good
finance team in isolation, you

902
00:48:11,080 --> 00:48:13,080
can have a good projects team,
you can have a good operating

903
00:48:13,080 --> 00:48:15,480
team.
It's actually all of that coming

904
00:48:15,480 --> 00:48:17,200
together.
That was a great example of the

905
00:48:17,200 --> 00:48:20,760
success of the development of
Matteo transitioning across to

906
00:48:20,760 --> 00:48:22,840
the team under Dale Burgess,
who's now running Mat.

907
00:48:22,840 --> 00:48:25,600
So who took it through
commissioning and then ramp up

908
00:48:25,600 --> 00:48:29,080
and commercial production all
coming together with Megan and

909
00:48:29,080 --> 00:48:31,880
her team to enable us to
restructure the balance sheet.

910
00:48:32,040 --> 00:48:34,480
You couldn't have done any of
that unless all of those

911
00:48:34,480 --> 00:48:37,200
elements work together.
You've now made an active

912
00:48:37,200 --> 00:48:39,800
decision to to come back to
Australia.

913
00:48:40,760 --> 00:48:45,440
How does Australia fare in in
the world right now as a mining

914
00:48:45,440 --> 00:48:50,320
jurisdiction?
Well, I think by definition,

915
00:48:50,320 --> 00:48:52,720
obviously we're putting capital
to work here.

916
00:48:53,720 --> 00:48:56,680
And so, you know, we think there
are still the right ingredients

917
00:48:56,680 --> 00:48:59,760
that can be successful for sand
foreign.

918
00:48:59,760 --> 00:49:02,400
And I think if you look at the
industry, it speaks for itself.

919
00:49:03,680 --> 00:49:06,600
One thing we would, we would
argue very strongly has never

920
00:49:06,600 --> 00:49:09,360
changed is that, you know,
Australia is a powerhouse in

921
00:49:09,360 --> 00:49:11,920
mining.
I think it's probably not

922
00:49:11,920 --> 00:49:16,560
appreciated enough in terms of
the, the literal capacity that

923
00:49:16,560 --> 00:49:19,320
Australia has in, in what is a
foundational industry for the

924
00:49:19,320 --> 00:49:23,600
global economy.
I, I heard the Prime Minister

925
00:49:23,600 --> 00:49:27,400
speak yesterday, I think he was
here and, you know, he was

926
00:49:27,400 --> 00:49:31,680
talking about that the, the
trust that offshore trading

927
00:49:31,680 --> 00:49:35,560
partners have in our mining and
energy industries is even

928
00:49:35,560 --> 00:49:38,000
proving critical in terms of
shoring up the country's fuel

929
00:49:38,000 --> 00:49:40,240
supplies.
You know, and, and there's,

930
00:49:40,280 --> 00:49:43,360
there's just so much to that.
So I think first and foremost,

931
00:49:43,360 --> 00:49:47,280
when you think about a
jurisdiction, the talent that

932
00:49:47,280 --> 00:49:49,600
you have access to is right at
the top of the list.

933
00:49:50,120 --> 00:49:52,760
So there's no doubt that
Australia is tier one in terms

934
00:49:52,760 --> 00:49:54,360
of the capacity to access
talent.

935
00:49:54,680 --> 00:49:57,880
And we benefit from that at Sam
Fire immeasurably for our size.

936
00:49:58,080 --> 00:49:59,600
I think we're back well above
our weight.

937
00:49:59,960 --> 00:50:02,200
And if you look at the people in
our business, most of them have

938
00:50:02,200 --> 00:50:04,240
worked through the large
companies come out the other

939
00:50:04,240 --> 00:50:07,080
side and they they choose to
work for a company like Sam Fire

940
00:50:07,400 --> 00:50:08,920
because of the type of place it
is.

941
00:50:10,320 --> 00:50:13,320
If you go beyond that, we know
the rocks, the rocks here are

942
00:50:13,320 --> 00:50:15,520
pretty good.
I mean, you know, again, as an

943
00:50:15,520 --> 00:50:18,880
old geologist, someone once said
to me, at the end of the day,

944
00:50:18,880 --> 00:50:20,000
you've got to go where the rocks
are.

945
00:50:20,840 --> 00:50:23,360
So you can have all these views
about geographies and so on, but

946
00:50:23,360 --> 00:50:24,880
you've got to go where the
opportunity is.

947
00:50:24,880 --> 00:50:27,880
And I think Australia still has,
you know, an enormous amount of

948
00:50:27,880 --> 00:50:28,880
potential.
You know, there's still

949
00:50:28,880 --> 00:50:32,440
discoveries being made, as you
know, regularly in this

950
00:50:32,440 --> 00:50:36,720
industry.
I think what was discussed

951
00:50:36,720 --> 00:50:39,520
yesterday again by the Prime
Minister around streamlining

952
00:50:39,520 --> 00:50:43,760
approvals processes, getting to
a process whereby to remove the

953
00:50:43,760 --> 00:50:46,040
duplication.
So if you can meet the

954
00:50:46,040 --> 00:50:51,280
requirements, as we understand
it, of a state process, then

955
00:50:51,360 --> 00:50:55,280
you've effectively met the
overall objectives of whether it

956
00:50:55,280 --> 00:50:58,880
be environment, heritage or
others, as I understand it.

957
00:50:58,880 --> 00:51:02,440
And I think that's going to be a
really, really important

958
00:51:02,440 --> 00:51:07,400
positive in terms of the ability
of this industry to continue to

959
00:51:07,640 --> 00:51:12,480
invest capital and bring
capacity on time on in an in a

960
00:51:12,480 --> 00:51:16,480
timely manner, which ultimately
is going to be absolutely needed

961
00:51:17,720 --> 00:51:20,560
if you look forward by the
Australian economy and and I

962
00:51:20,560 --> 00:51:22,040
think some of the challenges it
faces.

963
00:51:23,880 --> 00:51:27,920
The one thing I would say
though, is that if I go back to

964
00:51:27,920 --> 00:51:30,880
that time in the early 2000s,
and I know we we discussed this

965
00:51:30,880 --> 00:51:35,040
in a previous meeting, is we
always had this adage of a Tier

966
00:51:35,040 --> 00:51:38,240
1 geography.
You know, this industry loves

967
00:51:38,240 --> 00:51:41,760
throwing world class tier one
these sorts of, you know, brands

968
00:51:41,760 --> 00:51:46,760
out there.
And I would argue that I think

969
00:51:46,760 --> 00:51:50,480
that's that that's a bit of a
misnomer today in terms of this

970
00:51:50,480 --> 00:51:52,080
question.
Is there really any Tier 1

971
00:51:52,080 --> 00:51:54,680
geography?
And the reason I say that is

972
00:51:56,120 --> 00:51:59,320
until we get those processes
streamed line, until we get to a

973
00:51:59,320 --> 00:52:01,800
point where you can move through
an approvals process quickly

974
00:52:01,800 --> 00:52:05,480
such that it's not 10 to 15 to
20 years to go from discovery to

975
00:52:05,480 --> 00:52:08,760
production, You know,
Australia's is going to

976
00:52:08,760 --> 00:52:10,240
struggle.
If you look at some of the

977
00:52:10,240 --> 00:52:13,280
industrial relations laws and
the challenges they pose, that's

978
00:52:13,280 --> 00:52:14,960
a real risk.
I mean, we know there's been

979
00:52:14,960 --> 00:52:17,840
harmony in the Pilbara for for,
for for decades.

980
00:52:17,840 --> 00:52:19,920
And, you know, I was up there in
the early 2000s.

981
00:52:20,200 --> 00:52:22,960
It's been one of the strengths.
If you go back in time, it

982
00:52:22,960 --> 00:52:25,640
wasn't the case.
And so I think, you know, we've

983
00:52:25,640 --> 00:52:28,240
got to be very careful here in
Australia as an example.

984
00:52:28,240 --> 00:52:32,280
But the one thing I would draw
out for you which which you

985
00:52:32,280 --> 00:52:35,440
know, I'm sure you know your
listeners will be interested in

986
00:52:35,440 --> 00:52:38,120
is, is this issue of labour
productivity and cost.

987
00:52:39,400 --> 00:52:41,640
Australia has, as I said, some
of the best miners, some of the

988
00:52:41,640 --> 00:52:45,480
most productive miners, but
they're expensive, right?

989
00:52:45,480 --> 00:52:47,800
So if you look at the cost
structure of the industry here,

990
00:52:47,800 --> 00:52:51,080
you've seen very strong rates of
inflation, particularly in those

991
00:52:51,080 --> 00:52:54,080
FIFO workforces where you've had
very high turnover.

992
00:52:54,600 --> 00:52:58,120
In Spain our our turnover went
up 50% last year.

993
00:52:58,760 --> 00:53:01,240
It went from around 2 to percent
to 3%.

994
00:53:01,880 --> 00:53:03,840
These are drive in, drive out
workforces.

995
00:53:04,440 --> 00:53:06,120
They cherish the role they have
at MATS.

996
00:53:06,120 --> 00:53:08,000
As I said, they've been
operating in and around here,

997
00:53:08,120 --> 00:53:11,440
you know, for generations.
We haven't seen anything like

998
00:53:11,440 --> 00:53:13,400
that level of inflation in those
areas.

999
00:53:14,120 --> 00:53:17,840
Mateo is very similar, you know,
in southern Spain, I haven't

1000
00:53:17,840 --> 00:53:20,240
seen the latest statistics, but
you had upwards of 20%

1001
00:53:20,240 --> 00:53:23,160
unemployment.
Botswana was similar.

1002
00:53:23,560 --> 00:53:25,480
So again, it's a very different
dynamic.

1003
00:53:25,760 --> 00:53:28,280
And, and if you think about the
importance of labour and labour

1004
00:53:28,280 --> 00:53:31,360
costs and labour productivity,
again, I'm never going to argue

1005
00:53:31,360 --> 00:53:34,680
that that that we achieve the
same levels of overall

1006
00:53:34,680 --> 00:53:37,800
productivity holistically in
Spain as we do in Australia.

1007
00:53:37,800 --> 00:53:39,480
For instance, we run 8 hour
shifts.

1008
00:53:39,960 --> 00:53:43,120
If you think about the community
there, it, it, it's what works

1009
00:53:43,160 --> 00:53:45,600
in that location.
But when you think about the

1010
00:53:45,600 --> 00:53:49,840
cost of a worker in Spain being
a fraction of a like worker here

1011
00:53:49,840 --> 00:53:55,320
in WA, I think that in of its
own is a challenge with, you

1012
00:53:55,320 --> 00:53:58,600
know, this reference as being
able to call parts of Australia

1013
00:53:58,600 --> 00:54:00,600
now a Tier 1 mining
jurisdiction.

1014
00:54:02,120 --> 00:54:07,320
It's amazing what FIFO did to to
to labour costs it because

1015
00:54:07,320 --> 00:54:10,520
labour's mobile, all miners can
compete for the same labour and

1016
00:54:10,840 --> 00:54:13,600
and people will just migrate
towards where they get paid the

1017
00:54:13,600 --> 00:54:16,040
most.
And when you've got super

1018
00:54:16,040 --> 00:54:19,240
profits in the state, you can
always bid, bid higher for the,

1019
00:54:19,440 --> 00:54:21,800
for the, for the best talent.
And it just pushes everything

1020
00:54:21,880 --> 00:54:26,960
higher to the detriment of, of
of of of, you know, essentially

1021
00:54:27,360 --> 00:54:29,600
GDP.
Well, I guess, you know, it's

1022
00:54:29,640 --> 00:54:32,040
pretty hard for a commodity
producer who loves to live on

1023
00:54:32,040 --> 00:54:35,480
some line demand, market pricing
to then say that a, a person

1024
00:54:35,480 --> 00:54:38,000
working in the industry doesn't
have that same mobility.

1025
00:54:38,000 --> 00:54:40,120
And right, I think, you know,
and, and I know companies work

1026
00:54:40,120 --> 00:54:42,680
really hard to try and make sure
their offering is unique.

1027
00:54:43,080 --> 00:54:45,520
You know, you think about the
camp facilities that exist in

1028
00:54:45,520 --> 00:54:48,560
some of these locations compared
to what they were, you know,

1029
00:54:48,560 --> 00:54:51,680
when, when I was bouncing around
up there in the early 2000s, you

1030
00:54:51,680 --> 00:54:53,440
know, there's been enormous
amounts of investment.

1031
00:54:54,480 --> 00:54:57,000
It's in that area, but, but it's
still, it's still mobile.

1032
00:54:57,000 --> 00:54:59,680
I I absolutely understand and
and don't disagree.

1033
00:55:00,240 --> 00:55:02,800
Botswana, I'm sure, I'm sure
it's the case.

1034
00:55:02,800 --> 00:55:05,800
There's there's community,
there's a a, a whole, a whole

1035
00:55:05,800 --> 00:55:10,240
town that where you know, the,
the, the mine is without a

1036
00:55:10,240 --> 00:55:13,800
doubt, you know, the, the huge
source of the economic driver of

1037
00:55:13,800 --> 00:55:16,720
that town and there's robustness
to, you know, the old school

1038
00:55:16,720 --> 00:55:18,840
mining community.
But unfortunately if it.

1039
00:55:19,240 --> 00:55:23,720
Well, put another way, put
another way, you know, Matteo

1040
00:55:23,720 --> 00:55:29,000
has we think been as much of A
success story for Botswana has

1041
00:55:29,040 --> 00:55:31,680
been for Sam, for I often say, I
think I'm, I'm see I've got

1042
00:55:31,680 --> 00:55:36,200
their little, little Australia
Botswana flag here because we,

1043
00:55:36,200 --> 00:55:38,440
we're advocates for the country.
We think it's a wonderful place

1044
00:55:38,440 --> 00:55:40,520
to do business.
It has been up until this point,

1045
00:55:41,520 --> 00:55:43,760
you know, we, we aim to do
everything to the same level of

1046
00:55:43,760 --> 00:55:46,280
standards as we would anywhere
else in the world with a

1047
00:55:46,280 --> 00:55:49,400
government that's been to this
point, very, very supportive.

1048
00:55:49,720 --> 00:55:52,720
But absolutely, you know, we, we
invested something like $100

1049
00:55:52,720 --> 00:55:57,640
million, a bit more to get in
400 million to build Mateo, you

1050
00:55:57,640 --> 00:55:59,600
know, and it's had a very, very
rapid payback.

1051
00:55:59,600 --> 00:56:02,520
And it's now starting to
contribute significant amounts

1052
00:56:02,520 --> 00:56:05,400
of tax back into the community,
looking at community programs.

1053
00:56:05,400 --> 00:56:08,880
These are all very, very good
things, but equally, you know,

1054
00:56:08,880 --> 00:56:11,640
as I said, over 95% of the
workforce is Batswana.

1055
00:56:11,800 --> 00:56:15,320
We recently appointed our first
GM of mining who's a local

1056
00:56:15,320 --> 00:56:18,680
Batswana and, and most of what
it just so happens that she's

1057
00:56:18,680 --> 00:56:23,040
female, you know, the GM is
female and she is outstanding.

1058
00:56:23,040 --> 00:56:25,640
And so these are all really
important symbols for our

1059
00:56:25,640 --> 00:56:27,080
business.
They're really important symbols

1060
00:56:27,080 --> 00:56:32,120
in the location, but but in of
itself, you know, Mateo, you

1061
00:56:32,120 --> 00:56:34,400
know is a beacon of opportunity
in that area.

1062
00:56:35,280 --> 00:56:38,640
It creates enormous opportunity
not only for the people who work

1063
00:56:38,640 --> 00:56:41,040
directly for us, but all of the
indirect activity.

1064
00:56:41,320 --> 00:56:44,120
You know, the haulage contracts
where we've got the trucks

1065
00:56:44,120 --> 00:56:47,800
driving in the order of 1000
kilometers to get to Wolvis Bay

1066
00:56:47,800 --> 00:56:50,440
and Namibia.
You know, the the ancillary

1067
00:56:50,440 --> 00:56:52,960
business that comes from that.
And and we need to do more and

1068
00:56:52,960 --> 00:56:54,480
we're looking to do more than we
are today.

1069
00:56:55,800 --> 00:56:59,640
Botswana is a really interesting
country at the moment.

1070
00:56:59,640 --> 00:57:04,160
There's incredibly disruptive
dynamics that continue to evolve

1071
00:57:04,160 --> 00:57:08,600
in the diamond market and an
industry that I've read reports

1072
00:57:08,600 --> 00:57:10,880
that it constitute it
constituted as much as 50% of

1073
00:57:10,880 --> 00:57:15,040
GDP at some points in time.
I I'd hope it's, it's a lot less

1074
00:57:15,040 --> 00:57:17,800
these days, but it's.
A small population, right?

1075
00:57:18,600 --> 00:57:20,240
Yeah, it's.
It is, yeah.

1076
00:57:20,480 --> 00:57:23,200
We're we're talking about an an
industry that kind of gets

1077
00:57:23,200 --> 00:57:25,960
gutted overnight by by the
emergence of, of low cost

1078
00:57:25,960 --> 00:57:29,240
diamonds and a government that
that is, you know, exploring

1079
00:57:29,240 --> 00:57:32,680
that future in the wake of of
Anglo's decision to to divest to

1080
00:57:32,680 --> 00:57:35,920
beers as well.
What implication does that have

1081
00:57:35,920 --> 00:57:40,760
on a a huge economic and and a
huge taxpayer and economic

1082
00:57:40,800 --> 00:57:43,000
contributor?
That is a, you know, a mining

1083
00:57:43,000 --> 00:57:46,360
company in in Santa Fire that
that that mines in country.

1084
00:57:47,080 --> 00:57:49,920
Yeah, look, I, I start by the
premise and it's, it's something

1085
00:57:49,920 --> 00:57:53,120
in, in, you know, my last
employer we talked a lot about

1086
00:57:53,560 --> 00:57:56,160
is this belief that that we
don't own the resources.

1087
00:57:56,760 --> 00:58:00,680
You know, ultimately we are
guests in a country, you know,

1088
00:58:00,680 --> 00:58:04,440
our social license to mine their
resources is only as good as the

1089
00:58:04,440 --> 00:58:07,680
job that we do and the benefit
and contribution that we make.

1090
00:58:08,480 --> 00:58:11,840
And as I mentioned, there's,
there's, there's so many

1091
00:58:11,840 --> 00:58:15,360
examples of, of, I think the,
the potential and opportunity

1092
00:58:15,360 --> 00:58:19,080
that that Mateo has provided,
But, but the expectation of

1093
00:58:19,080 --> 00:58:20,920
miners around the world has has
risen.

1094
00:58:20,920 --> 00:58:26,880
It's, it's no longer good enough
to identify a resource, inject

1095
00:58:26,880 --> 00:58:30,320
foreign capital, build that
resource, create jobs, pay

1096
00:58:30,320 --> 00:58:33,520
royalties and taxes.
You need to do more, you know,

1097
00:58:33,520 --> 00:58:35,920
you need to be a good corporate
citizen, you need to make sure

1098
00:58:35,920 --> 00:58:39,720
that you're thinking about the
legacy that you create after

1099
00:58:39,720 --> 00:58:43,800
you've left because we manage
and mine finite resources again

1100
00:58:43,800 --> 00:58:47,440
that are that are their position
of the people at their behest.

1101
00:58:48,040 --> 00:58:51,840
And so again, we look across
that whole spectrum.

1102
00:58:52,160 --> 00:58:53,760
We're looking at a project at
the moment.

1103
00:58:54,160 --> 00:58:57,000
So we recently made a commitment
that, that half a percent of

1104
00:58:57,000 --> 00:59:00,040
EBITDA, which is, which stacks
up very well to, to other

1105
00:59:00,040 --> 00:59:03,280
companies will actually go
towards, you know, legacy

1106
00:59:03,280 --> 00:59:05,440
community programs.
And we're looking at a project

1107
00:59:05,440 --> 00:59:08,800
which will help electrify one of
the local communities and

1108
00:59:08,800 --> 00:59:13,120
potentially others in CUCA.
And it, it, it might sound right

1109
00:59:13,120 --> 00:59:16,360
here in Australia, but you know,
you can imagine without energy,

1110
00:59:16,360 --> 00:59:18,720
it's pretty hard to do anything.
It's certainly hard to reach

1111
00:59:18,720 --> 00:59:21,640
your full potential.
So the, the, the ability for

1112
00:59:21,640 --> 00:59:25,400
Mateo to bring benefit beyond
what it's doing today through

1113
00:59:25,400 --> 00:59:29,280
projects, legacy type projects
such as that, you know, really,

1114
00:59:29,280 --> 00:59:32,880
really can, can leave a, you
know, that lasting benefit in

1115
00:59:32,880 --> 00:59:36,800
terms of the economy.
I haven't gone back far enough.

1116
00:59:36,800 --> 00:59:39,200
I haven't done the 100 year test
as I might have been some other

1117
00:59:39,200 --> 00:59:42,520
things.
What I would say is, you know, 1

1118
00:59:42,520 --> 00:59:45,160
of Botswana's great strength is
it's a thriving democracy.

1119
00:59:45,640 --> 00:59:48,400
You know, in recent times,
obviously tested, you know, in

1120
00:59:48,400 --> 00:59:51,080
some ways for the first time,
it's, it's always had, you know,

1121
00:59:51,080 --> 00:59:53,200
functioning democratic
elections.

1122
00:59:53,200 --> 00:59:56,760
In the recent election,
obviously there was a change of

1123
00:59:56,760 --> 01:00:00,960
government and the passage of
government occurred within 24

1124
01:00:00,960 --> 01:00:03,320
hours.
You know, again, a real success

1125
01:00:03,320 --> 01:00:06,320
story.
We've found government to be

1126
01:00:06,320 --> 01:00:09,560
appropriately challenging, but
fair.

1127
01:00:10,560 --> 01:00:13,600
And, and I think that's all you
can ask for as a as a

1128
01:00:13,680 --> 01:00:16,080
international guest in their
country.

1129
01:00:17,160 --> 01:00:20,440
And then beyond that, the last
stats I saw were in the order of

1130
01:00:20,440 --> 01:00:23,320
20 to 25% of GDP is where
diamonds had been sitting.

1131
01:00:23,320 --> 01:00:25,000
And you're right, that's come
under a lot of pressure.

1132
01:00:25,720 --> 01:00:28,360
I think that clearly we have
great hope and I think the

1133
01:00:28,360 --> 01:00:31,120
government has great hope that
their broader mineral wealth and

1134
01:00:31,120 --> 01:00:34,280
endowment is really only
starting to come to light and

1135
01:00:34,280 --> 01:00:35,680
that is the Kalahari copper
belt.

1136
01:00:35,680 --> 01:00:39,240
You'll see Quamacal and MMG and
what they're doing to the north.

1137
01:00:39,960 --> 01:00:42,960
There's obviously exploration,
not just ourselves but others.

1138
01:00:43,640 --> 01:00:46,880
You've got joint ventures as
well with companies as large as

1139
01:00:46,880 --> 01:00:50,600
BHP out on the the western edge
in the deeper part looking for

1140
01:00:50,600 --> 01:00:53,640
those potentially very large
opportunities.

1141
01:00:54,480 --> 01:00:57,080
And, and we still of the view
there's, there's a lot to be

1142
01:00:57,080 --> 01:00:58,680
discovered in the Kalahari
copper belt.

1143
01:00:59,640 --> 01:01:02,560
Of course, you know, again, it's
a bit of that A to B.

1144
01:01:02,560 --> 01:01:05,720
They are under quite a lot of
quite a lot of stress.

1145
01:01:05,720 --> 01:01:10,760
And so we have seen obviously
things such as electricity

1146
01:01:10,760 --> 01:01:13,360
prices rise as they have been in
other parts of the world, not

1147
01:01:13,400 --> 01:01:16,240
unlike here.
And you're seeing obviously

1148
01:01:16,240 --> 01:01:18,160
taxes at the margin.
And that's what I would say at

1149
01:01:18,160 --> 01:01:21,760
the moment at the margin where
the minimum tax rates risen,

1150
01:01:22,480 --> 01:01:24,840
they're looking at the
deductibility of, of capital as,

1151
01:01:24,880 --> 01:01:27,040
as losses for accounting or tax
purposes.

1152
01:01:27,680 --> 01:01:29,680
And these things are all really
important.

1153
01:01:30,480 --> 01:01:32,760
And we're very focused on that.
I'm in Botswana next week.

1154
01:01:32,800 --> 01:01:35,600
Obviously, you know, I'm aiming
to, to meet with government what

1155
01:01:35,600 --> 01:01:38,120
as I do when I'm there.
And they're always very, you

1156
01:01:38,120 --> 01:01:41,560
know, accommodating and, and,
and we have very good dialogue

1157
01:01:41,960 --> 01:01:44,160
and discussion.
Of course, there's always a

1158
01:01:44,160 --> 01:01:48,800
point where at the moment we've
seen those, you know, chipping

1159
01:01:48,800 --> 01:01:51,960
away at the edges.
We haven't seen fundamental

1160
01:01:51,960 --> 01:01:54,880
change that that we think
impacts the attractiveness as

1161
01:01:54,880 --> 01:01:57,040
Botswana.
Again, we've been one of its

1162
01:01:57,040 --> 01:01:59,360
strongest advocates.
You know, we watch that very

1163
01:01:59,360 --> 01:02:02,440
closely.
What I would say, though, is, is

1164
01:02:02,760 --> 01:02:06,360
pervasively across Botswana is
its people are incredibly well

1165
01:02:06,360 --> 01:02:09,840
educated, part of the wealth of
the diamonds industry.

1166
01:02:10,720 --> 01:02:13,240
You know, they have two dual
first languages.

1167
01:02:13,480 --> 01:02:15,760
Their English is, you know,
better than ours.

1168
01:02:15,760 --> 01:02:19,240
It's it is a remarkable country.
It's also incredibly beautiful

1169
01:02:20,920 --> 01:02:24,400
and, and when I meet with
government, obviously our own

1170
01:02:24,400 --> 01:02:27,680
people, whilst there are
challenges, they're very

1171
01:02:27,680 --> 01:02:29,680
sophisticated in how they think
about it.

1172
01:02:30,280 --> 01:02:32,960
And it leaves you with
confidence that they're very

1173
01:02:32,960 --> 01:02:35,160
much aware that, you know, they
were the recent Fraser

1174
01:02:35,160 --> 01:02:38,480
Institute, you know, the index
of investment attractiveness for

1175
01:02:38,480 --> 01:02:40,640
the mining industry.
It's been laughable these days,

1176
01:02:40,640 --> 01:02:42,400
though.
Well, but they're #7 yeah.

1177
01:02:42,560 --> 01:02:43,720
Yeah.
And I believe that they are a

1178
01:02:43,760 --> 01:02:46,080
good jurisdiction.
Yeah, so, so, so they're number

1179
01:02:46,080 --> 01:02:50,440
7 and whether whether everyone
believes in every element of it

1180
01:02:50,440 --> 01:02:53,720
or not, it's really important if
you want to be a destination

1181
01:02:53,720 --> 01:02:57,440
that tracks foreign capital.
And I do believe that deeply

1182
01:02:57,440 --> 01:03:00,160
within government, they
understand the importance of

1183
01:03:00,320 --> 01:03:02,960
being a thriving democracy and
fiscal stability.

1184
01:03:03,440 --> 01:03:08,120
Capital is mobile you.
It is you joined Sandfire when I

1185
01:03:08,120 --> 01:03:11,680
think the copper price was close
to 3 bucks 50.

1186
01:03:11,680 --> 01:03:16,600
It's now much closer to $6.
And, you know, implicit in this

1187
01:03:16,600 --> 01:03:19,080
conversation is the idea of of
asymmetry.

1188
01:03:19,080 --> 01:03:22,840
Where are we at on coppers,
evolution and that big picture

1189
01:03:22,840 --> 01:03:24,760
that everyone likes to talk
about?

1190
01:03:25,280 --> 01:03:28,720
It's a really good question.
I'll go.

1191
01:03:29,960 --> 01:03:32,760
Go back to the point I made
earlier, trying to make short

1192
01:03:32,760 --> 01:03:37,760
term predictions I think is very
difficult because there are all

1193
01:03:37,760 --> 01:03:42,400
sorts of factors that can play
into short term price formation.

1194
01:03:43,320 --> 01:03:45,720
And I guarantee you there'll be
a number that will actually

1195
01:03:45,720 --> 01:03:47,080
impact that we don't even know
about yet.

1196
01:03:47,840 --> 01:03:50,360
So that's if you look back in
time, that's the reality.

1197
01:03:50,720 --> 01:03:53,200
Everything plays around the
edges and then something happens

1198
01:03:53,280 --> 01:03:57,040
that you may foresee or may not
that leads to a very sharp

1199
01:03:57,360 --> 01:04:02,120
rewriting one way or the other
derating less, less preferable

1200
01:04:02,120 --> 01:04:05,240
from our side.
Look, I think it's fair to say

1201
01:04:05,240 --> 01:04:09,520
that at $3.50, our view and a
personal view, I mean I joined a

1202
01:04:09,920 --> 01:04:13,280
sure play smaller copper company
partly for, you know, obviously

1203
01:04:13,280 --> 01:04:15,960
the opportunity that I saw
within the market, we saw real

1204
01:04:15,960 --> 01:04:18,760
asymmetry, you know, strong
structural demand drivers

1205
01:04:19,040 --> 01:04:20,880
literally around the
electrification of the global

1206
01:04:20,880 --> 01:04:23,960
economy, a view that the
industry was going to be finding

1207
01:04:23,960 --> 01:04:25,840
increasingly difficult to bring
on supply.

1208
01:04:27,080 --> 01:04:31,200
You know, the Andean porphyries,
as I like to think of them, they

1209
01:04:31,200 --> 01:04:33,920
typically have few byproducts on
average.

1210
01:04:34,480 --> 01:04:38,080
They're getting deeper.
Strip ratios are rising, grades

1211
01:04:38,080 --> 01:04:40,320
are declining.
In many cases, they no longer

1212
01:04:40,320 --> 01:04:42,680
have access to the local
aquifers or the salars.

1213
01:04:43,000 --> 01:04:44,360
So they're pumping water up the
hill.

1214
01:04:44,600 --> 01:04:47,560
Their costs continue to rise.
And there are a point where in

1215
01:04:47,560 --> 01:04:50,800
many cases, they need to be
recapitalized just to stand

1216
01:04:50,800 --> 01:04:52,400
still or even still go
backwards.

1217
01:04:53,160 --> 01:04:56,600
All of that, you know, fed into
a belief that, you know, an

1218
01:04:56,600 --> 01:05:01,280
incentive price would need to be
much higher than the market was

1219
01:05:01,280 --> 01:05:05,600
at that point suggesting was
necessary to stimulate the next

1220
01:05:05,600 --> 01:05:11,160
phase of capacity.
I still think that we're at an

1221
01:05:11,160 --> 01:05:14,960
interesting juncture where where
if, if certain things play

1222
01:05:14,960 --> 01:05:17,200
through, you could still see the
copper price much higher than it

1223
01:05:17,200 --> 01:05:20,240
is today.
But it's fair to say that that

1224
01:05:20,240 --> 01:05:23,080
you're probably more so moving
within the band of equilibrium

1225
01:05:23,080 --> 01:05:25,520
at the moment.
You know, I don't know if it's 5

1226
01:05:25,520 --> 01:05:29,640
or 6 or $4.50 to be truthful,
but it's somewhere in that

1227
01:05:29,640 --> 01:05:31,440
range.
And, and a lot of factors will

1228
01:05:31,440 --> 01:05:33,640
depend on how the cost curve
plays out and things that feed

1229
01:05:33,640 --> 01:05:36,280
into those cost curves.
What's the US dollar going to

1230
01:05:36,280 --> 01:05:37,720
do?
What are other local currencies

1231
01:05:37,720 --> 01:05:40,160
going to do?
What's the price of sulfur going

1232
01:05:40,160 --> 01:05:43,280
to be, you know, a range of
those factors all play into it.

1233
01:05:43,280 --> 01:05:46,920
But you know, so I think we're
closer to what I would call, you

1234
01:05:46,920 --> 01:05:49,200
know, a reasonable long term
price assumption.

1235
01:05:49,200 --> 01:05:52,560
I think if you go back to, you
know, some of my old colleagues

1236
01:05:52,560 --> 01:05:56,200
and and knew that that put out,
you know that BHP presentation,

1237
01:05:56,200 --> 01:05:59,000
I think was it November 2024
the.

1238
01:05:59,080 --> 01:06:01,440
Escondida.
Site so I was waiting for that

1239
01:06:01,440 --> 01:06:04,360
for years, right having, you
know, spent a lot of time

1240
01:06:04,800 --> 01:06:08,520
understanding the asset having
been out there that that there's

1241
01:06:08,520 --> 01:06:11,040
an inevitability that it's
incredible asset.

1242
01:06:12,080 --> 01:06:14,320
It's it, it's a privilege to
have been there a number of

1243
01:06:14,320 --> 01:06:17,640
times, but it was going to need
to be recapitalized and it was,

1244
01:06:17,720 --> 01:06:19,720
it was in mind.
And that's, that's they're not

1245
01:06:19,720 --> 01:06:22,840
lone soldiers.
And to me, that was going to

1246
01:06:22,840 --> 01:06:26,960
really like a laser focus
people's attention on these

1247
01:06:26,960 --> 01:06:29,440
challenges in the industry just
at a time when the world needs

1248
01:06:29,440 --> 01:06:32,000
more copper.
So if you think about the, the

1249
01:06:32,000 --> 01:06:35,040
urbanization phase in China and
iron ore, right?

1250
01:06:35,040 --> 01:06:36,120
So what's the primary
difference?

1251
01:06:36,120 --> 01:06:39,800
You had a structural demand
driver for steel, but you had

1252
01:06:39,800 --> 01:06:42,280
hundred, you know, 100 plus
years of resource sitting there

1253
01:06:42,280 --> 01:06:44,640
ready to go at the, the known
production rate at the time.

1254
01:06:45,280 --> 01:06:47,480
So all you had to do was put
capital to work and grow that

1255
01:06:47,480 --> 01:06:50,680
capacity and you still had
infinite, you know, almost

1256
01:06:50,680 --> 01:06:52,880
infinite resources.
The different is you're now

1257
01:06:52,880 --> 01:06:57,120
moving into a structural phase
of of and, and we're willing it

1258
01:06:57,120 --> 01:07:00,960
for demand, I think for for
copper, as you know, arguably,

1259
01:07:01,040 --> 01:07:05,840
you know, the best transmitter
or conductor of electrons, you

1260
01:07:05,840 --> 01:07:08,160
know, in a world, as we said,
that needs to electrify for a

1261
01:07:08,160 --> 01:07:12,000
range of reasons.
And yet the world hasn't

1262
01:07:12,000 --> 01:07:15,440
invested in that next generation
of all bodies, unlike the

1263
01:07:15,440 --> 01:07:18,440
Pilbara that could grow.
And if it did nothing stand

1264
01:07:18,440 --> 01:07:20,520
still.
If you don't do anything in the

1265
01:07:20,520 --> 01:07:24,600
copper industry, it declines.
And you're at that juncture, you

1266
01:07:24,600 --> 01:07:26,840
just happen to be right at that
juncture where all those

1267
01:07:26,840 --> 01:07:29,880
pressures are combining to
create quite a unique

1268
01:07:29,880 --> 01:07:32,520
circumstance.
And I think for that reason, you

1269
01:07:32,520 --> 01:07:36,480
know, I've said, you know, over
three years that if you look at

1270
01:07:36,480 --> 01:07:39,080
other commodities, look at
lithium, when the world decided

1271
01:07:39,080 --> 01:07:42,320
it needed more lithium and it
yes, it's a nascent industry,

1272
01:07:42,800 --> 01:07:45,440
but you can get scared.
True scarcity pricing and

1273
01:07:45,440 --> 01:07:47,240
markets move a lot further than
people think.

1274
01:07:47,240 --> 01:07:50,120
And if you go and look across a
lot of commodities across the

1275
01:07:50,120 --> 01:07:52,880
last 20 years, many of them have
seen true scarcity pricing.

1276
01:07:53,640 --> 01:07:56,720
I'd, I'd said for, you know,
more than a year now that, that

1277
01:07:56,720 --> 01:07:59,040
I don't think you'd seen true
scarcity pricing in the copper

1278
01:07:59,040 --> 01:08:00,720
market.
And I think that's what we're

1279
01:08:00,720 --> 01:08:03,840
starting to feel now.
It doesn't mean, like I said

1280
01:08:03,840 --> 01:08:06,680
earlier that you can't have a
period where you go through a

1281
01:08:06,680 --> 01:08:10,240
wobble right at the moment with
what's going on in the Middle

1282
01:08:10,240 --> 01:08:13,320
East and obviously what that
could do to to compress short

1283
01:08:13,320 --> 01:08:15,960
term demand.
You could easily have a period

1284
01:08:15,960 --> 01:08:18,680
where where the market
recalibrates.

1285
01:08:19,040 --> 01:08:20,920
But I think the fundamentals are
still there.

1286
01:08:20,920 --> 01:08:24,240
You've got all of these forces
combining at once that are quite

1287
01:08:24,240 --> 01:08:28,680
unique and very different to
what we saw in the China cycle,

1288
01:08:28,680 --> 01:08:30,920
as I said with with something
like iron ore, metallurgical

1289
01:08:30,920 --> 01:08:34,439
coal and that's what potentially
could be quite explosive for

1290
01:08:34,439 --> 01:08:36,640
price.
And so we're pretty happy to be

1291
01:08:36,640 --> 01:08:42,520
exposed to that thematic.
If I if I look at the

1292
01:08:42,520 --> 01:08:46,359
opportunities that would have
been in front of you in the in

1293
01:08:46,359 --> 01:08:51,000
the years today that this
business, Brendan, I can think

1294
01:08:51,000 --> 01:08:54,680
of assets or opportunities that
would have been synergistic on

1295
01:08:54,680 --> 01:08:56,040
paper.
Whether that's synergistic in

1296
01:08:56,040 --> 01:08:58,479
reality, I'm not sure.
Comic cow was that there was a

1297
01:08:58,479 --> 01:09:00,760
sale process.
Add a layer is next door a

1298
01:09:00,760 --> 01:09:04,319
stone's throw away, in your own
words to Brio Tinto mine the

1299
01:09:04,319 --> 01:09:08,840
Iberia Empire right belt.
Why not pull the trigger on

1300
01:09:08,880 --> 01:09:14,600
either of those opportunities?
So you might recall we had a bit

1301
01:09:14,600 --> 01:09:18,960
of a laugh where I said, again
flippantly, that.

1302
01:09:19,920 --> 01:09:21,760
You know, two of the most
dangerous tools that ever

1303
01:09:21,760 --> 01:09:24,319
emerged in the mining industry.
One was was Excel.

1304
01:09:26,120 --> 01:09:28,279
You know, I remember again when
I first started at Macquarie,

1305
01:09:28,279 --> 01:09:31,479
the guys who'd been there a lot
longer than I, they, they had,

1306
01:09:31,560 --> 01:09:34,880
you know, memories of their
graph paper where they used to

1307
01:09:35,120 --> 01:09:38,080
build their financial models for
companies even like BHP with,

1308
01:09:38,479 --> 01:09:41,439
with a pencil and a razor and a
graph paper.

1309
01:09:41,439 --> 01:09:45,120
And they'd update it maybe once
1/4 and perhaps once a year.

1310
01:09:45,120 --> 01:09:49,359
All right, different world
spreadsheets, you can make them

1311
01:09:49,359 --> 01:09:54,800
do anything.
Similarly, PowerPoint, you know,

1312
01:09:54,800 --> 01:09:58,480
I see a lot of slides that come
across my desk, as I'm sure

1313
01:09:58,480 --> 01:10:04,160
others do, that show assets that
apparently near each other that

1314
01:10:04,160 --> 01:10:06,600
apparently therefore must be,
you know, combined because of

1315
01:10:06,600 --> 01:10:10,760
the synergies or the potential.
Sometimes they're 200 kilometers

1316
01:10:10,760 --> 01:10:13,120
apart.
It's like in a context of

1317
01:10:13,120 --> 01:10:15,800
Australia saying Boddington and
the Super Pit are synergistic,

1318
01:10:16,920 --> 01:10:19,080
but because you know, if you're
sitting here and you see

1319
01:10:19,080 --> 01:10:22,920
Botswana and you look at Kwame
Kow and and Mateo and you don't

1320
01:10:22,920 --> 01:10:25,240
know Botswana, you go, well,
that makes sense, but you

1321
01:10:25,240 --> 01:10:28,920
wouldn't think that here.
So, so I think that's the first

1322
01:10:28,920 --> 01:10:34,280
thing is, is I would argue that
that that there are very few

1323
01:10:34,280 --> 01:10:36,160
transactions.
I think gold's a bit different.

1324
01:10:36,280 --> 01:10:38,120
You know, it's a bit different
there.

1325
01:10:38,120 --> 01:10:39,400
There's a it's a different
landscape.

1326
01:10:39,400 --> 01:10:42,960
There's more opportunities and I
think we've seen that play out.

1327
01:10:42,960 --> 01:10:48,360
But but I think if you look more
broadly, there are few

1328
01:10:48,360 --> 01:10:50,840
opportunities that are truly
synergistic.

1329
01:10:50,840 --> 01:10:54,480
You know, obviously tech and
Anglo have have obviously

1330
01:10:54,640 --> 01:11:00,720
described one recently.
You know, if you know an example

1331
01:11:00,720 --> 01:11:04,840
in gold, the Super pit, you
know, I won't mention others

1332
01:11:04,840 --> 01:11:07,080
that I could see that makes
sense because that will just

1333
01:11:07,080 --> 01:11:10,960
lead to a different discussion.
But so they do exist.

1334
01:11:11,960 --> 01:11:15,600
But you know, North Limited and
Rio Tinto, when the sleepers

1335
01:11:15,760 --> 01:11:19,600
were being laid, the strategic
value of doing that deal for

1336
01:11:19,600 --> 01:11:22,440
different reasons, not so much
about the emergence of China

1337
01:11:22,440 --> 01:11:26,160
that just turbocharged it.
But there's a truly synergistic

1338
01:11:26,160 --> 01:11:28,840
trend that's few and far between
in our industry.

1339
01:11:29,720 --> 01:11:33,440
And so when we sat back and
looked at that, those assets,

1340
01:11:33,440 --> 01:11:36,360
we, there were a range of
reasons, but we felt that we

1341
01:11:36,360 --> 01:11:41,280
weren't the natural owner.
Now we, we do like to think that

1342
01:11:42,480 --> 01:11:45,160
and, and to test it every day
and everyone's looking.

1343
01:11:45,160 --> 01:11:47,720
We do believe that for who we
are in our size, the sort of

1344
01:11:47,720 --> 01:11:51,000
post code that we operate within
that we're blessed to have two

1345
01:11:51,000 --> 01:11:53,640
very, very good assets.
Now our job, as I said is to

1346
01:11:53,640 --> 01:11:56,080
extend their life.
We know that, but they're very,

1347
01:11:56,080 --> 01:11:59,120
very good assets said with the
current dynamic and what's going

1348
01:11:59,120 --> 01:12:01,960
on in byproducts, they're
operating, you know, very, very

1349
01:12:01,960 --> 01:12:08,200
competitively on the cost curve.
It's, it's, you know, one of our

1350
01:12:08,880 --> 01:12:14,240
best beliefs that success is
unlikely, greater success is

1351
01:12:14,240 --> 01:12:18,440
unlikely to be driven by a
portfolio quality overall that

1352
01:12:18,440 --> 01:12:22,520
diminishes over time.
So as we look to grow and we

1353
01:12:22,520 --> 01:12:25,760
look to build upon what we have,
but only where it makes sense

1354
01:12:26,920 --> 01:12:31,160
that underpinning that a belief
that we should also aim to

1355
01:12:31,160 --> 01:12:33,120
improve the overall quality of
the portfolio.

1356
01:12:33,480 --> 01:12:35,240
And I think, you know, you, you
mentioned evolution.

1357
01:12:35,240 --> 01:12:38,480
My sense is that's that's an
example there where they managed

1358
01:12:38,480 --> 01:12:41,320
to achieve that.
I think if you there's a number

1359
01:12:41,320 --> 01:12:44,120
of companies that that the
successful ones first quantum

1360
01:12:44,120 --> 01:12:46,920
was a pretty good example of
that over time.

1361
01:12:46,920 --> 01:12:50,800
So you know, they're out there.
But I again, those assets we

1362
01:12:50,800 --> 01:12:52,880
just didn't think fit that whole
bill.

1363
01:12:53,160 --> 01:12:57,080
We also think the people running
them again, better at natural

1364
01:12:57,080 --> 01:12:59,040
owners than us are doing
incredibly good job.

1365
01:12:59,040 --> 01:13:01,960
I look at at a liar and Alberto
on the team, I think do an

1366
01:13:02,000 --> 01:13:07,000
incredibly good job, you know,
and but but I'm just not sure

1367
01:13:07,000 --> 01:13:13,200
that we do a better one.
You mentioned BHP, you've you've

1368
01:13:13,360 --> 01:13:16,560
worked at BHP in the past.
BHP is back in Botswana and

1369
01:13:16,560 --> 01:13:20,880
you've just you've just bought
an undeveloped copper project in

1370
01:13:20,880 --> 01:13:24,840
BHP's Australian Copper Backyard
SA and if I look.

1371
01:13:24,880 --> 01:13:28,360
At my backyard first.
This is a real question.

1372
01:13:28,360 --> 01:13:30,680
You're going to, you're going to
start a corporate off a sand

1373
01:13:30,680 --> 01:13:32,640
fire office in Adelaide and
that's is that why I bought car

1374
01:13:32,640 --> 01:13:33,720
group?
But no, that's not the question

1375
01:13:33,720 --> 01:13:35,000
I'm going to ask.
The question I'm going to ask.

1376
01:13:35,000 --> 01:13:36,600
Is Yeah, you did.
I know you had my old friend

1377
01:13:36,600 --> 01:13:39,040
Michael Willoughby here recently
as well, who was also an

1378
01:13:39,040 --> 01:13:39,920
Adelaide boy.
Yeah.

1379
01:13:40,240 --> 01:13:42,320
Yeah, everyone we have from
Adelaide is good.

1380
01:13:42,480 --> 01:13:49,520
It's underrated state.
The question I have is, is sand

1381
01:13:49,520 --> 01:13:53,080
fire trades with a major
multiple and maybe this is part

1382
01:13:53,080 --> 01:13:57,000
of your philosophy actually
translating into a a high, you

1383
01:13:57,000 --> 01:13:59,480
know, a higher multiple, lower
cost of capital, you know, the

1384
01:13:59,520 --> 01:14:02,040
the strategy's working.
But undoubtedly you you look at

1385
01:14:02,040 --> 01:14:05,600
the valuation of sapphire and
and on a relative basis compared

1386
01:14:05,600 --> 01:14:08,800
to the quality or life of its
existing assets and it does

1387
01:14:08,920 --> 01:14:12,160
screen expensive I thought.
You were going to say it's

1388
01:14:12,160 --> 01:14:16,520
undervalued, but.
That could be a function of many

1389
01:14:16,520 --> 01:14:20,120
things, you know, backable back
of all strategy, back of all

1390
01:14:20,120 --> 01:14:23,280
management, consistent delivery
over time, a whole host of

1391
01:14:23,280 --> 01:14:27,080
things.
But you can't help but wonder,

1392
01:14:27,640 --> 01:14:29,680
BHP, well, they bought us
minerals.

1393
01:14:29,680 --> 01:14:33,520
It was in his backyard and it
was the the biggest copper miner

1394
01:14:33,520 --> 01:14:34,640
on the ASX at that point in
time.

1395
01:14:35,000 --> 01:14:37,680
Do you ever like, you know, look
behind your back and think one

1396
01:14:37,680 --> 01:14:41,840
day, one day we'll be relevant
enough or BHP will just have to

1397
01:14:41,840 --> 01:14:45,040
own us as well and we'll do
entertainment?

1398
01:14:48,560 --> 01:14:51,040
Look, it's a.
It's an interesting proposition.

1399
01:14:51,080 --> 01:14:55,720
I, I think if you look at Oz
minerals, Andrew Cole and, and,

1400
01:14:55,720 --> 01:15:00,840
and the team and what they did
there and, and you know, you

1401
01:15:00,840 --> 01:15:03,600
can't see on camera, but our
head of IRS here and, and Dave

1402
01:15:03,600 --> 01:15:07,040
Wilson and he, he actually ran
the processing facility, I think

1403
01:15:07,040 --> 01:15:10,400
part of it at least Olympic Dam.
I grew up in South Australia,

1404
01:15:10,400 --> 01:15:14,800
studied geology, geophysics
there early days running around

1405
01:15:15,200 --> 01:15:18,080
drilling a few holes and what
have you up in the, up in the

1406
01:15:18,080 --> 01:15:22,720
craton.
And you know, I'm a big believer

1407
01:15:22,720 --> 01:15:24,880
in what the healed for granites
and, and the potential that they

1408
01:15:24,880 --> 01:15:28,360
can bring in the forms of time
and the role they can play in

1409
01:15:28,360 --> 01:15:29,800
the, in the world copper
industry.

1410
01:15:29,800 --> 01:15:32,520
I, I, I think we're still yet to
really fully understand its

1411
01:15:32,520 --> 01:15:34,720
potential.
That's my, my sneaking

1412
01:15:34,720 --> 01:15:38,160
suspicion.
I, I think when you look at that

1413
01:15:38,160 --> 01:15:40,480
transaction, you know, we, we
talked about synergies.

1414
01:15:40,480 --> 01:15:44,000
I think there are some quite
unique synergies in that deal.

1415
01:15:45,000 --> 01:15:48,160
I'm not here to to scrutinize
the merits of the value or

1416
01:15:48,160 --> 01:15:53,320
otherwise, but you can see the
natural synergies when it comes

1417
01:15:53,320 --> 01:15:58,440
to Kalkaroo.
I think the reality is in a case

1418
01:15:58,440 --> 01:16:01,400
of acquisition, the focus on
making sure that they capture

1419
01:16:01,400 --> 01:16:05,880
the value of bringing Carabati
in a prominent hill Olympic dam.

1420
01:16:07,880 --> 01:16:10,280
And what I think of the old
word, well, all of those things

1421
01:16:10,280 --> 01:16:14,000
together and making sure they
realize the potential ahead of

1422
01:16:14,080 --> 01:16:17,160
move to two stage smelting and,
and, and potentially further

1423
01:16:17,160 --> 01:16:19,000
investment in the underground
Olympic dam.

1424
01:16:19,600 --> 01:16:20,880
That's where you've got to
focus.

1425
01:16:20,880 --> 01:16:23,720
And, and, and if you think about
our approach, it's to be simple

1426
01:16:24,440 --> 01:16:27,280
over complexity.
It's to try and be what we call

1427
01:16:27,280 --> 01:16:29,680
just better at the basics every
day, which is trying to be

1428
01:16:29,680 --> 01:16:31,680
better at the basics.
We're not, we're not trying to

1429
01:16:31,680 --> 01:16:33,600
be rocket scientists.
We're just trying to be better

1430
01:16:33,600 --> 01:16:36,120
at the basics.
I think if you think of that in

1431
01:16:36,120 --> 01:16:39,720
a BHP context, that's where you
would focus.

1432
01:16:39,720 --> 01:16:41,600
That's my suspicion.
That's what I'd be doing.

1433
01:16:42,480 --> 01:16:45,480
So that created an opportunity
for us at Kalkuru.

1434
01:16:45,760 --> 01:16:48,760
And, and it's not unlike Mod in,
in Botswana.

1435
01:16:48,760 --> 01:16:50,840
I don't think people understood
the Kalahari.

1436
01:16:51,400 --> 01:16:54,920
There'd been some attempts to
succeed in the at Kalahari that

1437
01:16:54,920 --> 01:16:57,920
hadn't probably gone to plan.
And so there was a level of

1438
01:16:57,920 --> 01:17:01,360
skepticism and there was a
period where, you know, I think

1439
01:17:01,800 --> 01:17:05,080
Africa, it was difficult to
invest capital and get the

1440
01:17:05,080 --> 01:17:08,600
Australian market to realize it.
And I having said another

1441
01:17:08,600 --> 01:17:11,360
company with a lot of South
African exposure, you know,

1442
01:17:12,400 --> 01:17:15,240
direct experience with how some
Australian investors would look

1443
01:17:15,240 --> 01:17:18,560
at that, that those investments
and, and the discounts that they

1444
01:17:18,560 --> 01:17:21,880
may ascribe.
So that was a unique opportunity

1445
01:17:21,960 --> 01:17:24,520
for various reasons.
And I think Kalakuru quite

1446
01:17:24,520 --> 01:17:27,040
similarly.
And because of the way that that

1447
01:17:27,040 --> 01:17:30,200
company structured the
shareholding, it was ripe, I

1448
01:17:30,200 --> 01:17:33,320
think for a team with
capability, the wherewithal to

1449
01:17:33,320 --> 01:17:37,120
do something to come in with a
different mentality of working

1450
01:17:37,120 --> 01:17:41,320
with them to realize the
potential of, of the asset.

1451
01:17:42,600 --> 01:17:44,520
So, so I think it is quite
unique.

1452
01:17:46,240 --> 01:17:49,600
I think BHP and I don't want to
speak for them and but, but as

1453
01:17:49,600 --> 01:17:52,920
someone watching now from the
outside, I'm guessing between

1454
01:17:52,920 --> 01:17:56,560
how they unlock Olympic Dam and
its real potential and then what

1455
01:17:56,560 --> 01:18:01,400
they do in Argentina and then
recapitalizing Escondida.

1456
01:18:02,040 --> 01:18:05,520
I'm guessing that's going to be,
you know, a lot of work that's

1457
01:18:05,520 --> 01:18:08,400
going to keep them pretty busy.
So I'm not sitting there looking

1458
01:18:08,400 --> 01:18:11,560
over my shoulder with regards to
Cal Guru as to whether that then

1459
01:18:11,560 --> 01:18:14,320
becomes something that that we
should worry about.

1460
01:18:14,760 --> 01:18:20,120
It's an opportunity because for
the exact reason you described,

1461
01:18:20,160 --> 01:18:23,080
it's lower on the pecking order
of return on capital.

1462
01:18:23,800 --> 01:18:27,720
And in fact it's if you can buy
it from them one day, I'm sure

1463
01:18:27,760 --> 01:18:31,040
that becomes a a really defining
opportunity for sand fire.

1464
01:18:31,680 --> 01:18:33,400
I hope that happens one day back
then.

1465
01:18:33,960 --> 01:18:36,160
Well, I said I, I, you know,
we're, we're very happy here.

1466
01:18:36,880 --> 01:18:40,640
Perth is is is the home of Sand
Fire, You know we.

1467
01:18:40,640 --> 01:18:44,160
We are very blessed to be here.
It gives.

1468
01:18:44,160 --> 01:18:46,880
Us incredible access to talent,
talented engineers,

1469
01:18:46,880 --> 01:18:51,640
geoscientists, sustainability
experts, people who spent their

1470
01:18:51,640 --> 01:18:55,240
whole career in finance,
accounting and other skills.

1471
01:18:55,320 --> 01:18:58,080
That is all mining and they are
miners and we talk a lot about

1472
01:18:58,080 --> 01:19:00,680
that.
They're proud to be miners,

1473
01:19:01,040 --> 01:19:04,320
people who are playing a key
role in the mining industry, you

1474
01:19:04,320 --> 01:19:08,720
know, but we will establish a,
a, a clear footprint in South

1475
01:19:08,720 --> 01:19:12,520
Australia, you know, on the
basis that things go well over

1476
01:19:12,520 --> 01:19:14,560
the next 12 months, we'll be
drilling, you know, we aim to

1477
01:19:14,560 --> 01:19:17,560
drill around 130,000 meters in
��12 months.

1478
01:19:17,560 --> 01:19:19,160
So we're going to go pretty
hard.

1479
01:19:19,720 --> 01:19:21,080
You know, we've got real intent
there.

1480
01:19:21,480 --> 01:19:23,680
But if you go back to that
organizational model that we

1481
01:19:23,680 --> 01:19:26,560
talked about, we will, we will
look to establish that in as a

1482
01:19:26,560 --> 01:19:31,200
joint venture, as the the deal
demands, as a business stand

1483
01:19:31,200 --> 01:19:33,480
alone with its capacity fully
accountable.

1484
01:19:34,160 --> 01:19:37,040
But you know, somewhere closer
to the Wesfarmers model with

1485
01:19:37,040 --> 01:19:40,040
this little corporate here
running around, you know, doing

1486
01:19:40,040 --> 01:19:41,760
its best to find the next
opportunity.

1487
01:19:41,760 --> 01:19:44,240
But also in short, we're
supporting those assets so they

1488
01:19:44,240 --> 01:19:48,000
can be successful over time.
We are very excited to to see

1489
01:19:48,000 --> 01:19:50,080
how that one plays out.
Really appreciate your time,

1490
01:19:50,080 --> 01:19:51,800
Brendan.
We could chat for for hours

1491
01:19:51,800 --> 01:19:53,840
about your your experiences,
what you've learnt along the

1492
01:19:53,840 --> 01:19:55,520
way.
But just want to say thank you

1493
01:19:55,520 --> 01:19:57,720
for for your generosity and
sharing it with us and our

1494
01:19:57,760 --> 01:20:00,000
audience.
Look, pleasure to be here.

1495
01:20:00,640 --> 01:20:05,560
You know, as I said, I do watch
with with a lot of interest and

1496
01:20:06,000 --> 01:20:08,440
you know, it's it's been a long
time in the making, but but good

1497
01:20:08,440 --> 01:20:12,400
to finally to sit in the room
and as I said to you, it it

1498
01:20:12,400 --> 01:20:15,080
feels a little bit like the
front bar on on fox footy you.

1499
01:20:15,120 --> 01:20:17,080
See if I got a sponsor.
Port Adelaide, yeah.

1500
01:20:17,200 --> 01:20:19,400
Or.
Look, I think that's on the risk

1501
01:20:19,400 --> 01:20:20,960
register from the board's
perspective.

1502
01:20:21,840 --> 01:20:24,000
There's probably not a high
return in that, but not but I,

1503
01:20:24,000 --> 01:20:26,280
you know, will obviously admit
that I'm a pretty avid Port

1504
01:20:26,280 --> 01:20:28,200
Adelaide supporter.
Fantastic.

1505
01:20:28,280 --> 01:20:29,480
Thank you, guys.
Thank you.

1506
01:20:29,880 --> 01:20:32,280
Thank you to Sandvik Ground
Support, Focus, The Platform by

1507
01:20:32,280 --> 01:20:35,960
Market Tech, Intralinks, XE
Capital and last but not least

1508
01:20:35,960 --> 01:20:37,480
Metals Hub for making it all
possible.

1509
01:20:38,080 --> 01:20:42,440
Hudaru money minus Hudaru.
Now remember, I'm an idiot.

1510
01:20:42,680 --> 01:20:45,160
JD is an idiot.
If you thought any of this was

1511
01:20:45,160 --> 01:20:47,680
anything other than
entertainment, you're an idiot

1512
01:20:48,040 --> 01:20:49,200
and you need to read out
disclaimer.