The Great MinRes Debate: Bull vs Bear

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Operations at Onslow basically
stopped.

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It looked to me like haulage
wasn't going to work and as a

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consequence, there would be no
trans shipping.

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As a consequence, there'd be no
money and as a consequence that

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bondholders were going to end up
owning the company.

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Trav Trav kicked off my Twitter
career.

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I got like, I got like.
And and gave you the most.

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Name I got yeah, yeah, yeah,
yeah, yeah, yeah.

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I got 300 followers overnight
and then it was off to the

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horses.
You've made it.

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Trev's made it.
Trev's now Forget it.

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That's now properly recorded.
Oh.

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Mate, how funny is that clip so.
You know, no matter who shares

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that video, no matter where they
are, no matter where there's

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Elon Musk, there's a great big
Trevor Ricardo bubble that links

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to your profile.
Yeah.

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So Elon Musk is sending a tweet
that has Travis Ricardo and I

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haven't linked your profile on
it.

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That's pretty funny.
It's incredible.

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It's kind of crazy.
Yeah.

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I'm.
I'm.

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Daily Mail writing in for a
comment.

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Yeah, that's pretty funny.
Pretty funny mate, I'm just.

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Happy that's just the that's the
lowest form of journalism.

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Just like a Twitter events
unfolding quick, stick it on the

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front back.
So, so you know what's kind of

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funny?
Both both Daily Mail and

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news.com, though you picked it
up.

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Daily Mail actually asked to
which I said thenews.com dot AU

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article was pretty good.
Just use that.

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You don't know that guy though.
You just haven't.

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Someone just sent you this or
yes?

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Yeah, I like mate, Jerry is
clearly like that.

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That snippet was was a was it
worthy of being a viral clip?

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Yeah, I'm happy to just milk it
for the virality that it is, but

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I am.
I can take no credit for that at

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all other than just yeah,
repost.

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It but did you post it intending
it to go viral?

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I I had no.
Idea.

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Well, you're just like, this is
gold.

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I just thought it was.
It was sent to me on WhatsApp

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and I looked at it and I showed
it to JD and you both.

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He's all needed to see this.
He started when he started just

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cracking up in the.
So you're like, it's just

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cracking up.
I was like, is this on Twitter

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yet?
I checked Twitter, wasn't there.

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I'm like, I'm putting this up
like.

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And and 24 hours later, you've
doubled your follower count.

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You've got a million views or a
billion views, or some insane

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number of views.
My my new followers are going to

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be very disappointed.
When it's when it's hyper

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technical.
Half, yeah, my new followers

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that they've all got like
Australian flags.

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I noticed, I noticed very
patriarchal Put it this way, if

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I interviewed Pete Buttigieg,
they are not the intended

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listeners for that conversation.
You just let me know if you want

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to reach them.
I'll put out some tweets for

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you.
Yeah, Moz, thank you for for

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coming in.
Thanks for having me.

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Who are you?
Who am I?

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I am a A a an erstwhile lawyer
turned Twitter commentator.

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And the reason that we're we're
bringing you in for studio mate

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is yeah, it's kind of an
interesting, a different kind of

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chat we're going to have JD, but
Moz has become obsessed with a

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single stock.
That single stock just happens

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to be my my favorite stock.
Mineral resources and your

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obsession I find interesting.
I find interesting when anyone

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gets like solely obsessed
people.

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If you get so obsessed with like
a single stock, I don't see the

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only stock in your portfolio.
So it's like you're solely

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obsessed with this one stock.
Then I think you have a tendency

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to do do hardcore analysis.
You try and check all of your

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assumptions.
You see where you're right or

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where you're wrong.
Doesn't mean you won't have

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like, you know, biases along
along the way, but but you've

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been putting your analysis out
there into the abyss.

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It's it's gathered some
attention.

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You know, I've, I've, I've found
it useful and checking my own

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prize.
And I just think it's it's an

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interesting point in time for us
to really peel apart where

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Minrez is at right now, like
bullish thesis, bearish thesis

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and the whole swarm of of other
affairs going on.

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We're recording this Monday
afternoon, 28th of July.

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They're reporting this coming
Wednesday for, for the, for the,

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for the June quarter.
Stock is run from 1440 up to

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what went up to like 34 and now
it's back down to 30 bucks

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today.
I know your average entry was in

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the 20s Twenty 2:00-ish.
How did how the hell did you get

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obsessed with Minarez?
Well, it's an interesting story

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because this conversation could
be unfolding in a very different

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manner.
When I first started following

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the company carefully, it was
because I thought it was going

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to 0 and I thought that this was
a dead to rights story of

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corporate failure.
This was in April this year.

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I followed the company for quite
a while.

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I've always been interested in
its CEO and his business.

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It's hard not to be interested
in someone like Chris Ellison, I

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think, especially when you're
when you live in WA and grow up

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in a mining or mining adjacent
sort of world.

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But in April, I thought, as I
say, this company was going to

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0.
So I started doing my work and

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it coincided.
That period of time coincided

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with Trump's doomsday tariffs
and whilst all of that was going

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on in the background, the Onzo
iron Ore project for Minrez

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wasn't having a great time.
Perhaps it's useful actually for

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your audience.
If we go back in time a little

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bit and just set up what's
happened with Minrez over the

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last 18 months, you've covered
it pretty well.

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But 18 months ago, this company
was moving from strength to

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strength.
It had a supportive lithium

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price.
Maybe 20-4 months ago, it had a

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supportive lithium price.
It had an iron ore price that

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was that was maybe not
irrationally high, but strong.

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And then over the next six
months, just about everything

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went wrong in fairly
catastrophic fashion.

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The lithium price collapsed,
SPOD fell down to at one point

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500 on a 500US on an SC6 basis.
That was a month or two ago and

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that alone I think would have
been enough to to cause some

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panic amongst the market for
Minarez or in respect of Minarez

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particularly given it's highly
indebted balance sheet.

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Then things that are going wrong
on the iron ore side of the

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business and the iron ore price
weakened a little bit.

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The trucks started rolling over
and earlier this year the whole

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Rd. started to fall apart as a
consequence of some wild weather

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up north.
I think these three factors each

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individually would have caused
jitters in the market.

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Together they conspired to bring
the company to its knees.

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And at the same time there was a
high speed collision between

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Chris Ellison's personal life
and the affairs of the company.

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And that that I think was the
straw that broke the camel's

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back in respect of the market's
view as to the value of the

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company.
Now, none of that phased me a

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great deal.
But then in April, operations at

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Onslow basically stopped.
So I was interested in following

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what was happening on the
shipping side of things and I

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noticed that there was no
shipping for the first half of

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April this year.
It looked to me like this

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company was was going down and
looked to me like haulage wasn't

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going to work and as a
consequence there would be no

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trans shipping.
As a consequence, there'd be no

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money and as a consequence, the
bondholders were going to end up

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owning the company.
And that's where I fired up the,

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the account maybe a little bit
after that and started giving my

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thoughts.
Now this long monologue has

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meant that I somewhat lost your
question, but you asked me what

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my interest in the company is.
And and my interest now is in

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looking at the fairly
spectacular comeback that that I

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think the Onzo Iron ore project
has made over the last six

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months and particularly the last
three months following a period

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in April where as I say, almost
nothing was happening.

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You, you were, you were looking
to see if you should put on a

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short, Yeah.
And in your DD, you went to the,

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you went to the transshipping
volumes effectively.

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At what point were you tracking
the volumes?

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And you thought, hang on, maybe,
maybe consensus doesn't quite

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match my my view.
The first three weeks of April,

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they shipped almost no iron ore
and they didn't say anything.

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They didn't update the market as
it was occurring, but it looked

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to me like they were on a
pathway to be delivering 5

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million, maybe 10 million tons
on a per annum basis unless

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things dramatically changed.
So at that point I thought, I

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mean, at that point it's a
matter of simple maths.

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There's there's no universe in
which this company comes out of

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this without a massive cap raise
or some sort of other fairly

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drastic liquidity change, change
in the, in the company's

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liquidity.
And that's where that's where a

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decision had to be made.
And that that, that was where I

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think the, the short, the, the
people who are short this

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company seemed like they've been
vindicated.

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That that roughly corresponded
with some of your work.

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Trevin, you were quite bearish
on the company and I think

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perhaps that bearishness stem
from your view about the

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feasibility and the the success
of Onslow.

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Is that a?
Is that a fair comment?

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I don't think I'll reveal if
I've ever been bullish or

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bearish.
I feel like my sentiment, yeah,

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might, might come out.
I feel like I'll be scathing of,

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of capital allocation decisions.
I'll be scathing of, of the

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level of reporting to the market
under certain circumstances.

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That's that that actually has
improved by the way.

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But and yeah, obviously scathing
of like corporate, corporate

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covenants issues as they've
transpired and evolved.

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I think there's like a lot that
I have been, you know, have been

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and willing to be complimentary
to the business for as well.

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Like the, you know, the, the
degree to which been raised has

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a culture of like making things
happen in a, in a very, very

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short time frame.
Is, is, is generally

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unparalleled, you know, amongst
amongst the sector.

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And I'm, I'm happy to say that
the balance sheet is, is

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everything and then the cash
flow from Onslow is everything

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to address that balance sheet.
So I think you have to, the

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eyeballs have to be on the
delivery of Onslow because that,

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that's the only solution for the
balance sheet.

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And in April, you're 100% right.
Like there was no indication

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that this project was going to
be what had been put out there.

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Roof's still going to be in the
pudding.

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But but the volumes coming out
of Onslow you've been tracking

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the last couple months are
certainly stronger than I was

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expecting.
Yeah, they have.

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They've been they've been a lot
stronger than I was expecting.

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On that point.
I should probably just clarify

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before we get into some more of
the detail, what the purpose of

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the shipment tracking Twitter
County is that I'm running and

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and also more importantly, where
my data is coming from based

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upon the number of journalists
in my DMSI think there's a

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suspicion amongst some members
of the market that I'm providing

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non public information or
information that the average

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person doesn't have access to.
That's not, that's not right.

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Generally speaking, there's
three sort of buckets of

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information that I that I draw
from in respect of that account.

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And the first bucket is the
majority of it.

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And that's information that is
publicly available.

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So shipping information is
publicly available.

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There's AIS tracking that you
can that anyone could, could get

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access to tomorrow.
I also share information that

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comes from a more, I suppose
terrestrial source, but also but

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remains public information.
So if somebody observes a

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particular event that's
happening up north, that's not

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insider information, that's not
non public information.

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It's maybe a little bit harder
to to find.

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But I just want to make it very
clear that I don't have any

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special access to any company
information.

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I'm not an insider.
I've never worked with Minrez in

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any capacity.
I don't know anybody who works

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at Minrez and none of my
information is is information

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that the average intelligent and
well meaning individual would

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00:13:12,640 --> 00:13:16,000
struggle to find.
That said, there are two other

228
00:13:16,000 --> 00:13:19,240
buckets which I think is is
useful to be able to draw from.

229
00:13:19,240 --> 00:13:20,720
The second one is just
speculation.

230
00:13:20,720 --> 00:13:24,280
So I try to make this clear when
I do this on the Twitter

231
00:13:24,280 --> 00:13:26,360
account.
But some of what I say is

232
00:13:26,360 --> 00:13:29,400
speculation is just a guess
based upon the information that

233
00:13:29,400 --> 00:13:32,160
we have.
And the third bucket of

234
00:13:32,160 --> 00:13:35,640
information is, is hearsay.
So much the same way that you

235
00:13:35,640 --> 00:13:38,920
guys every now and then will
report on something you've heard

236
00:13:38,920 --> 00:13:40,760
about.
I do that occasionally on the

237
00:13:40,760 --> 00:13:47,440
Twitter account.
It's, it's not, it's not

238
00:13:47,480 --> 00:13:50,680
reliable in the sense that I
have no way to know whether or

239
00:13:50,680 --> 00:13:53,000
not something I say is
necessarily accurate.

240
00:13:53,000 --> 00:13:56,040
But I try to, I try to take
whatever steps necessary to

241
00:13:56,040 --> 00:13:58,800
ensure that I'm not spreading
nonsense.

242
00:14:01,040 --> 00:14:02,760
As I say, I think it's important
to get that out there.

243
00:14:02,760 --> 00:14:05,000
I wouldn't want anybody making
investment decisions based upon

244
00:14:05,000 --> 00:14:09,360
something I've said, assuming
that I, I'm more informed than I

245
00:14:09,360 --> 00:14:13,600
actually AM.
The point of the account that

246
00:14:13,600 --> 00:14:18,520
I'm that I'm running is just to
give your average investor more,

247
00:14:19,320 --> 00:14:21,760
I suppose, finely grained
information about what's going

248
00:14:21,760 --> 00:14:25,360
on at the port.
Because I think at the end of

249
00:14:25,360 --> 00:14:28,120
the day, despite the fact that
this company trades like a

250
00:14:28,680 --> 00:14:34,480
lithium miner today, down 7% or
whatever, it closed out along

251
00:14:34,480 --> 00:14:38,280
with PLS and IGO and the rest of
the lithium miners.

252
00:14:39,120 --> 00:14:42,520
I think Onslow is really the key
to this company's success.

253
00:14:42,520 --> 00:14:46,520
And I think that if Onzo were to
go wrong, nothing else matters.

254
00:14:46,960 --> 00:14:50,920
I don't think the balance sheet
can support, can support.

255
00:14:51,360 --> 00:14:53,480
I don't think the balance sheet
can be supported by its mining

256
00:14:53,480 --> 00:14:57,240
services business, no matter how
outstanding that business may

257
00:14:57,240 --> 00:14:58,800
be.
And it certainly can't be

258
00:14:58,800 --> 00:15:02,240
supported by the lithium
business, not in, not at

259
00:15:02,240 --> 00:15:04,840
prevailing prices for lithium in
any event.

260
00:15:06,440 --> 00:15:10,360
So I think our best guess as to
where this company's going is

261
00:15:10,360 --> 00:15:14,680
what's happening at Onslow.
Do you agree with that?

262
00:15:15,000 --> 00:15:16,360
Yeah.
And that well, that balance

263
00:15:16,360 --> 00:15:21,400
sheet at last quarter, this $5.4
billion net debt, if you had,

264
00:15:22,040 --> 00:15:26,040
you know, you kind of trying to
you've got $500 million of of

265
00:15:26,040 --> 00:15:29,080
interest payments that, that
need to be serviced on the, you

266
00:15:29,080 --> 00:15:30,120
know, on, on the debt.
Yeah.

267
00:15:30,120 --> 00:15:33,360
And to you effectively need
operations that, that can

268
00:15:33,360 --> 00:15:36,840
produce enough free cash flow to
a minimum service the the

269
00:15:36,840 --> 00:15:39,920
interest payments on that debt.
And the only way you can get

270
00:15:39,920 --> 00:15:44,000
there in my view is through the
delivery of Onslatt with margin.

271
00:15:44,400 --> 00:15:45,800
Yeah, yeah.
I agree.

272
00:15:48,320 --> 00:15:52,160
Before we before we get into
what I think is happening with

273
00:15:52,160 --> 00:15:57,120
Onso itself, perhaps we could
just talk about a few themes

274
00:15:57,680 --> 00:16:02,560
that that I've observed in
respect of this company because

275
00:16:02,760 --> 00:16:08,400
they make for fairly, fairly
torturous.

276
00:16:09,120 --> 00:16:11,160
They make the lives of anybody
interested in following this

277
00:16:11,160 --> 00:16:13,600
company as a hobby fairly
torturous, to say nothing of

278
00:16:13,600 --> 00:16:16,720
those who have invested their
own money in the company.

279
00:16:17,400 --> 00:16:20,360
As you mentioned, a category
into which I've recently fallen

280
00:16:21,880 --> 00:16:24,160
and something I thought we
should spend some time talking

281
00:16:24,160 --> 00:16:28,520
about is the way this company
talks to the market.

282
00:16:29,440 --> 00:16:36,680
Because it has been a, in my
view, a consistent failing of

283
00:16:36,680 --> 00:16:39,640
this company.
And I should say that any

284
00:16:39,640 --> 00:16:42,560
criticism I have of the company
is not criticism of individuals

285
00:16:42,560 --> 00:16:45,960
at the company, it's criticism
of the company itself.

286
00:16:46,360 --> 00:16:49,680
I say that because it's true,
and also because I know enough

287
00:16:49,680 --> 00:16:53,360
about Australian defamation laws
to know that you can't defame a

288
00:16:53,360 --> 00:16:55,000
company.
So you as.

289
00:16:55,120 --> 00:16:56,880
Long as there's more than 1010
employees.

290
00:16:57,040 --> 00:16:59,880
Yeah, yeah.
They haven't laid off enough to

291
00:16:59,920 --> 00:17:02,160
to bring them under that number.
What was?

292
00:17:02,240 --> 00:17:06,240
That so you, you start following
the company in April and then

293
00:17:06,240 --> 00:17:10,480
obviously your, your work kind
of goes back and you start to

294
00:17:10,480 --> 00:17:12,480
get a flavour of how they they
report.

295
00:17:12,480 --> 00:17:16,800
And yeah, well, actually April's
a great starting in April

296
00:17:16,800 --> 00:17:19,920
provides a perfect example of
the the phenomenon that I'm

297
00:17:20,160 --> 00:17:24,280
about to describe.
In April, as I say, not much was

298
00:17:24,280 --> 00:17:25,920
going on in terms of Onslow
shipping.

299
00:17:27,240 --> 00:17:31,560
There was silence from the
company at the end of April

300
00:17:31,560 --> 00:17:35,120
right before I was thinking, all
right, time to time to go short.

301
00:17:35,720 --> 00:17:39,160
The company publishes its
quarterly and they have an

302
00:17:39,160 --> 00:17:42,240
interesting part in it where
they talk about what's happening

303
00:17:42,240 --> 00:17:46,640
at Onslow in terms of haulage
and therefore shipping, and they

304
00:17:46,640 --> 00:17:51,120
basically say, yeah, April was a
terrible month, but don't worry,

305
00:17:51,120 --> 00:17:54,400
May and June are going to be
much better.

306
00:17:54,520 --> 00:17:56,400
We're going to double.
Yeah, we're going to double.

307
00:17:56,440 --> 00:18:01,680
In fact, they, they imply that
in May, which was three days

308
00:18:01,680 --> 00:18:04,680
after this this quarterly report
came out, they were going to be

309
00:18:04,680 --> 00:18:08,440
hauling and shipping at a rate
pretty much on nameplate

310
00:18:08,440 --> 00:18:10,240
capacity at 35,000,000 tons per
annum.

311
00:18:12,000 --> 00:18:15,880
And there's an interesting part
of that quarterly report where

312
00:18:15,880 --> 00:18:20,400
they say that the reason April
was so poor is because our

313
00:18:20,400 --> 00:18:23,280
contractor trucks that we're
running while the whole Rd. has

314
00:18:23,280 --> 00:18:26,640
been repaired are operating at a
reduced cycle time.

315
00:18:27,400 --> 00:18:29,880
And the cycle time is about 2.9,
they said.

316
00:18:30,000 --> 00:18:34,520
And we think it can be 4.
We can, we think we can get it

317
00:18:34,520 --> 00:18:38,000
up to four.
And they say in May, in May and

318
00:18:38,000 --> 00:18:40,040
in June, it'll be back up.
It'll be up at 4:00.

319
00:18:40,120 --> 00:18:42,560
And that'll give us the haulage
we need to operate at 35,000,000

320
00:18:42,560 --> 00:18:46,880
tons per annum.
And they say in that quarterly,

321
00:18:47,280 --> 00:18:50,280
these projected cycle times are
now being achieved.

322
00:18:50,560 --> 00:18:55,720
So we are presently at the end
of April achieving a cycle time

323
00:18:55,720 --> 00:18:57,720
of four for these contractor
trucks.

324
00:18:59,080 --> 00:19:02,840
Now we get into May and for the
first half of May, they're not

325
00:19:03,080 --> 00:19:05,120
shipping in anything like
35,000,000 tons per annum.

326
00:19:05,120 --> 00:19:08,480
And I'm, I'm sounding the alarm
on Twitter saying this is not,

327
00:19:08,600 --> 00:19:10,120
they are not going to make this
guidance.

328
00:19:10,760 --> 00:19:13,280
They're clearly down.
They're not down by 5% or 10%,

329
00:19:13,280 --> 00:19:20,000
they're down by 50%.
And then on the last day of May

330
00:19:20,000 --> 00:19:23,720
or one of the last days of May,
the company jumps in with A1

331
00:19:23,720 --> 00:19:26,800
line announcement, price
sensitive announcement titled

332
00:19:26,800 --> 00:19:29,680
Onslow Iron Update.
The day before the site visit.

333
00:19:29,680 --> 00:19:32,320
The day before the site visit,
Yep, it's accompanied by the

334
00:19:32,320 --> 00:19:34,920
site visit presentation, which
is a long, long document, not

335
00:19:34,920 --> 00:19:36,640
marked, not marked, price
sensitive.

336
00:19:37,160 --> 00:19:39,160
But in addition, they jump in
with a single page document in

337
00:19:39,160 --> 00:19:43,880
which they say, yeah, yeah,
yeah, we're way down on exports

338
00:19:43,880 --> 00:19:45,080
for May.
We're not going to meet our

339
00:19:45,080 --> 00:19:48,960
guidance.
This is because our cycle times

340
00:19:49,440 --> 00:19:53,320
are at 2.7 or 2.9 or some number
in the in the twos.

341
00:19:55,040 --> 00:19:58,280
So just just stop and observe
what's just occurred.

342
00:19:58,600 --> 00:20:01,760
They've said in April we're
operating, we have our

343
00:20:01,760 --> 00:20:08,120
contractor trucks operating at a
cycle time of 2.9, but they're

344
00:20:08,120 --> 00:20:10,680
now at the end of April
operating at a cycle time of

345
00:20:10,680 --> 00:20:13,400
four.
Which means in May, we're going

346
00:20:13,400 --> 00:20:15,640
to be operating, we're going to
be exporting at 35,000,000 tons

347
00:20:15,640 --> 00:20:17,600
per annum.
Then at the end of May, they

348
00:20:17,600 --> 00:20:20,160
jump in and they say no, no, no,
we're way down on guidance.

349
00:20:20,600 --> 00:20:24,160
Our trucks are operating at a
cycle time of 2.7.

350
00:20:24,160 --> 00:20:25,440
Cool.
I think it was 2.7.

351
00:20:28,080 --> 00:20:33,600
That sort of carelessness in the
way you report to the market is,

352
00:20:34,480 --> 00:20:39,920
is destructive of the ability of
your investors and your

353
00:20:39,920 --> 00:20:42,440
prospective investors to take
you seriously.

354
00:20:43,360 --> 00:20:50,400
And it makes trying to build out
a, an accurate valuation model

355
00:20:50,400 --> 00:20:52,360
for this company very, very
difficult.

356
00:20:53,240 --> 00:20:58,920
I, I continue to be concerned
that it's not possible to put

357
00:20:58,920 --> 00:21:02,080
faith in some of the things that
this company says, be it through

358
00:21:02,080 --> 00:21:10,600
carelessness or be it through
sheer happenstance.

359
00:21:14,160 --> 00:21:17,680
And, and this is a problem that
I think has plagued min res for

360
00:21:17,680 --> 00:21:20,560
quite a while.
I think this company suffers

361
00:21:20,560 --> 00:21:22,720
from a discounted valuation in
the market.

362
00:21:22,720 --> 00:21:26,240
I think, I think the market
builds in a discount as a result

363
00:21:26,240 --> 00:21:31,720
of the complex vertically
integrated structure with a fair

364
00:21:31,720 --> 00:21:37,680
bit of, if not obfuscation, at
least a lack of clarity

365
00:21:37,720 --> 00:21:39,880
surrounding the company's
operations.

366
00:21:41,520 --> 00:21:45,800
And it's frustrating because
this can be fixed very, very

367
00:21:45,800 --> 00:21:47,920
easily.
What do you think about that,

368
00:21:47,920 --> 00:21:49,320
Trev?
Are we on the same?

369
00:21:49,320 --> 00:21:53,680
Page yeah, the company's got a
history of minimal disclosure, I

370
00:21:53,680 --> 00:21:54,960
think.
Like it'd be the only company

371
00:21:54,960 --> 00:21:59,040
where I still to this day don't
quite know what material, like

372
00:21:59,400 --> 00:22:02,160
any materiality threshold is.
Like that just seems like a

373
00:22:02,160 --> 00:22:05,320
subjective kind of term that
could, could, could change.

374
00:22:05,320 --> 00:22:08,760
But, you know, there's a very, a
very kind of confidential

375
00:22:08,760 --> 00:22:10,480
materiality threshold for a lot
of disclosure.

376
00:22:11,600 --> 00:22:13,280
I think there's been signs of
improvement.

377
00:22:13,280 --> 00:22:16,600
Like for example, the yeah, the
latest quarterly did have

378
00:22:16,720 --> 00:22:20,120
information relating to Onslow
that was like more like

379
00:22:20,120 --> 00:22:21,840
thoroughly than they had ever
been in the past.

380
00:22:21,880 --> 00:22:25,120
The Onslow site visit
presentation included a level of

381
00:22:25,120 --> 00:22:27,800
disclosure that had previously
not been revealed on a lot of

382
00:22:27,800 --> 00:22:30,600
different parts of the road.
It also included a, a, you know,

383
00:22:30,800 --> 00:22:33,400
a minimum guarantee in relation
to the whole Rd. which was a

384
00:22:33,400 --> 00:22:37,120
specific, you know, a
specifically asked question in

385
00:22:37,120 --> 00:22:39,800
the past, which was kind of
sidestepped and had now been

386
00:22:39,800 --> 00:22:42,160
revealed.
Those were positive steps in

387
00:22:42,160 --> 00:22:45,720
regards to the level of
disclosure the market expects.

388
00:22:45,720 --> 00:22:48,400
And I think why why is it
important?

389
00:22:48,400 --> 00:22:52,600
Because if, if, if management at
Minarez has actually has a

390
00:22:52,600 --> 00:22:55,040
positive differentiated view on
the stock versus what the market

391
00:22:55,040 --> 00:22:58,040
was pricing in, then then why
not give the market information

392
00:22:58,080 --> 00:23:00,200
exactly?
I'd, I'd push back on the, the

393
00:23:00,200 --> 00:23:01,920
notion that this is unique
though.

394
00:23:02,120 --> 00:23:05,720
I think this is super, super
commonplace across the, the

395
00:23:05,720 --> 00:23:09,400
resource landscape.
And you're, yeah, there's plenty

396
00:23:09,400 --> 00:23:11,080
of companies.
Fortescue is one that comes to

397
00:23:11,080 --> 00:23:13,760
mind and they're always
stretched targets that they're

398
00:23:13,760 --> 00:23:16,360
putting out there and they're,
you know, look at like Iron

399
00:23:16,360 --> 00:23:18,400
Bridge, for example, where you
could go back 20 years and say

400
00:23:18,400 --> 00:23:21,080
the same thing about Fortescue.
But that's part of the the

401
00:23:21,080 --> 00:23:22,560
culture of the business.
Sure.

402
00:23:22,600 --> 00:23:26,240
I there's documents that are
said to be binding agreements

403
00:23:26,240 --> 00:23:29,560
and they're just not at all the
the the degree of materiality

404
00:23:29,560 --> 00:23:32,400
that Onslow in particular has to
this company.

405
00:23:32,400 --> 00:23:35,040
And the market's never seen a
feasibility study from Minarez.

406
00:23:35,040 --> 00:23:38,480
It's never yeah, like those
those examples would be

407
00:23:38,480 --> 00:23:40,080
Fortescue 20 years ago.
Yeah.

408
00:23:40,160 --> 00:23:43,320
And if you if you also just
think like.

409
00:23:43,840 --> 00:23:51,240
One of many kind of reporting
gripes that I have, one of them

410
00:23:51,240 --> 00:23:53,680
largely relates to, I don't
think there's a single analyst

411
00:23:53,680 --> 00:23:57,520
in Australia that can really
tell you the value of CSI and

412
00:23:57,600 --> 00:24:00,960
undoubtedly CSIS.
The mining services businesses,

413
00:24:00,960 --> 00:24:03,240
contracts that they have with
the majors are incredibly

414
00:24:03,240 --> 00:24:06,400
valuable and they have
tremendous like earnings

415
00:24:06,480 --> 00:24:08,640
resilience.
They have tremendous ability to

416
00:24:08,640 --> 00:24:11,640
roll over contracts repeatedly.
There really isn't any other

417
00:24:11,920 --> 00:24:14,040
competition in that space the
contracts they have with the

418
00:24:14,040 --> 00:24:16,520
majors.
However, my gripe is that the

419
00:24:16,520 --> 00:24:19,560
volumes attributed to those
contracts with the majors are

420
00:24:19,560 --> 00:24:22,480
grouped in with volumes.
Servicing their own mines, the.

421
00:24:22,480 --> 00:24:27,000
Servicing miners, you know, own
JV mines and which, which are in

422
00:24:27,000 --> 00:24:30,880
my view like they're cyclical
operations that that that are

423
00:24:30,880 --> 00:24:34,200
vulnerable to, to being turned
off in a, in a, in a, in a down

424
00:24:34,200 --> 00:24:36,560
market.
Whereas the way that the mining

425
00:24:36,560 --> 00:24:39,120
services contracts are portrayed
to the market in general are

426
00:24:39,120 --> 00:24:42,200
like these infrastructure assets
that, you know, the cash flows

427
00:24:42,200 --> 00:24:46,280
go on forever and ever.
And to, to, to kind of hone in

428
00:24:46,280 --> 00:24:49,320
on why I underlined that.
It's like the last quarterly you

429
00:24:49,320 --> 00:24:53,760
actually, you actually saw the,
the way that earnings to the CSI

430
00:24:53,760 --> 00:24:57,520
business can be hit when you
know, when, when there's this

431
00:24:57,560 --> 00:25:02,520
over reliance on 3rd party
trucking and haulage at at

432
00:25:02,520 --> 00:25:05,400
Onslow, like that's, that's at
the detriment to the to the

433
00:25:05,440 --> 00:25:09,960
earnings of CSI business.
So all of that to say, no one

434
00:25:09,960 --> 00:25:12,480
can tell can actually
disaggregate the value of CSI

435
00:25:12,480 --> 00:25:17,360
business if they don't know the
disaggregation of of contracts

436
00:25:17,360 --> 00:25:21,120
to min res's own minds and what
they look like versus versus

437
00:25:21,120 --> 00:25:22,280
third parties.
Yeah.

438
00:25:22,280 --> 00:25:25,000
And this ties back to my comment
about the discount the market

439
00:25:25,000 --> 00:25:28,560
applies as a consequence of the
complex and vertically

440
00:25:28,560 --> 00:25:31,360
integrated structure that that
min Res operates under.

441
00:25:32,520 --> 00:25:36,840
Another point, a similar point
is it's $2.00 a tonne margin

442
00:25:37,400 --> 00:25:40,760
claim that seems to come up in
respect of every single service

443
00:25:40,760 --> 00:25:44,160
provided by CSI to every aspect
of every business that IT

444
00:25:44,160 --> 00:25:45,920
services.
I mean that that doesn't make

445
00:25:45,920 --> 00:25:46,880
any sense.
No.

446
00:25:46,920 --> 00:25:51,040
And and to the fact that you can
simplify CSI, what are they like

447
00:25:51,040 --> 00:25:53,840
to everything simplifies to
these units of these volumes,

448
00:25:53,840 --> 00:25:56,600
these tonnage volumes.
And so we just apply a dollar

449
00:25:56,600 --> 00:26:00,080
per tonne to a volume of like to
your point, there's no way that,

450
00:26:00,360 --> 00:26:03,160
you know, crushing volume is the
same as a haulage volume, like

451
00:26:03,160 --> 00:26:06,200
the fundamentally very, very
different margin types of

452
00:26:06,200 --> 00:26:08,280
businesses.
They get asked this question

453
00:26:08,880 --> 00:26:12,040
every quarterly just about and
they they always dodge it.

454
00:26:12,440 --> 00:26:15,000
Yeah, well, that's what I'm here
for, to to push for more

455
00:26:15,000 --> 00:26:18,800
transparency and respective min
res disclosures.

456
00:26:18,920 --> 00:26:20,120
Yeah.
And there there have been like

457
00:26:20,200 --> 00:26:23,160
for example, the latest reserves
update on Onslow as well.

458
00:26:23,160 --> 00:26:26,040
That was a big improvement.
There was, you know, disclosure

459
00:26:26,040 --> 00:26:28,880
about what future CapEx looks
like, wash plans can be

460
00:26:28,880 --> 00:26:30,600
required.
Things like that, which which

461
00:26:30,600 --> 00:26:33,120
you know, probably been part of
the thinking for a long time

462
00:26:33,120 --> 00:26:36,280
have have have finally started
to come to the market in a more

463
00:26:36,280 --> 00:26:38,720
more forthcoming Nana.
I'd welcome, I welcome more of

464
00:26:38,960 --> 00:26:42,440
more of that, like more, yeah,
more of that transparency.

465
00:26:42,440 --> 00:26:45,160
I think he's a positive.
You know what mate, Minres have

466
00:26:45,160 --> 00:26:48,680
pretty swish digs up at Onslow.
I know you've seen the pictures,

467
00:26:48,680 --> 00:26:50,360
right?
I've seen them, mate, yes, they,

468
00:26:50,400 --> 00:26:53,080
they talk about the great Kens
board retreat, but they're not

469
00:26:53,080 --> 00:26:55,800
the only ones building these
flashy like, like, you know,

470
00:26:55,800 --> 00:26:59,720
very, very accommodative camps
for FIFO workers, mate, Grounded

471
00:26:59,720 --> 00:27:01,520
construction group.
They've been doing this for

472
00:27:01,520 --> 00:27:03,360
years.
They've, they've really brought

473
00:27:03,360 --> 00:27:06,120
out some, some absolutely
stunning camps for, for, for

474
00:27:06,240 --> 00:27:09,000
FIFO workers across the state.
You're on the money mate, and

475
00:27:09,080 --> 00:27:11,280
there was a big announcement
earlier this week or maybe late

476
00:27:11,280 --> 00:27:14,240
last week, they're building a
new accommodation set up in the

477
00:27:14,240 --> 00:27:16,720
mighty S headland the.
South Headland premium

478
00:27:16,720 --> 00:27:18,960
accommodation is is coming,
mate.

479
00:27:19,200 --> 00:27:21,920
It's a $60 million camp, 297
rooms.

480
00:27:21,920 --> 00:27:23,920
We're talking rec room, all of
the perks.

481
00:27:24,080 --> 00:27:26,480
This thing's going to be swish
and special, and it's being

482
00:27:26,480 --> 00:27:28,880
delivered, brought to everyone
by Grounded.

483
00:27:29,160 --> 00:27:32,080
It's true mate, and I think we
need, really need to hammer this

484
00:27:32,080 --> 00:27:32,760
point home.
Why?

485
00:27:32,760 --> 00:27:35,200
Why it's so important?
Because you need to keep the

486
00:27:35,200 --> 00:27:38,520
workers happy, right?
High turnover, high costs and

487
00:27:38,520 --> 00:27:41,120
that hits your productivity and
that goes on and hits your

488
00:27:41,120 --> 00:27:42,800
profitability.
So if you wanna have.

489
00:27:42,800 --> 00:27:44,600
This sounds like what Jack
Tooley wrote in the AFI.

490
00:27:44,600 --> 00:27:46,320
Just the.
Other way tooley and it gets

491
00:27:46,600 --> 00:27:48,600
research right?
What do the workers want mate?

492
00:27:49,080 --> 00:27:52,520
Comfortable rooms, good and
quiet rooms, sounds spacious,

493
00:27:52,520 --> 00:27:55,800
acoustics not asking for a lot.
No, it's it's simple.

494
00:27:55,920 --> 00:27:58,880
And you know what mate?
Grounded gets workers and if

495
00:27:58,880 --> 00:28:00,920
workers are happy, that helps
the bottom line.

496
00:28:00,960 --> 00:28:03,160
That's the message.
Get in touch with Paul Natoli

497
00:28:03,160 --> 00:28:05,880
and the team at Grounded.
Get yourself a new accommodation

498
00:28:05,880 --> 00:28:08,520
set up wherever you are in WA.
Go grounded construction.

499
00:28:08,520 --> 00:28:10,320
Go grounded.
Yeah.

500
00:28:10,600 --> 00:28:14,320
Well, actually on the theme of
transparency, I don't think we

501
00:28:14,320 --> 00:28:16,240
should move on to the actual
operations until we spend a

502
00:28:16,240 --> 00:28:20,800
little bit of time discussing
our beloved CEO.

503
00:28:24,360 --> 00:28:27,880
It might be easier if you give
me your view on, on Chris

504
00:28:27,880 --> 00:28:32,240
Ellison first, if you're willing
to, and then perhaps I can, I

505
00:28:32,240 --> 00:28:36,320
can comment on a phenomenon that
that I'm wrestling with at the

506
00:28:36,320 --> 00:28:40,360
moment in respect of, in respect
of his effect upon this company.

507
00:28:40,800 --> 00:28:41,520
Nah, you first.
Well.

508
00:28:42,800 --> 00:28:49,040
I, I have, I have nothing but
positive words in respect of

509
00:28:49,440 --> 00:28:52,560
Chris Ellison's talent as a
mining executive.

510
00:28:52,880 --> 00:28:54,760
And, and perhaps you and I
disagree a little bit on this,

511
00:28:54,760 --> 00:28:59,120
but I think he's a, he's a
genuinely skilled operator.

512
00:28:59,400 --> 00:29:05,520
And I think that he, he does get
projects done that wouldn't

513
00:29:05,520 --> 00:29:08,640
otherwise get done and he gets
projects done faster than other

514
00:29:08,640 --> 00:29:14,440
people would be able to do them.
He, he, he, he hustles harder

515
00:29:14,440 --> 00:29:16,840
than any other mining executive
I'm familiar with.

516
00:29:16,840 --> 00:29:20,440
And I think for me, a lot of
people like to spend a lot of

517
00:29:20,440 --> 00:29:24,680
time trying to find the best
asset on a piece of paper they

518
00:29:24,680 --> 00:29:28,840
want the, the, the Holy Grail of
mining investing is, is, you

519
00:29:28,880 --> 00:29:32,360
know, the highest grade or the
largest ore body.

520
00:29:32,840 --> 00:29:36,360
You've got institutional support
from the from JP Morgan.

521
00:29:37,000 --> 00:29:41,200
You've got, you know, you've got
the, you're going to end up

522
00:29:41,200 --> 00:29:45,480
with, you've got the projected
lowest costs on a unit basis and

523
00:29:45,480 --> 00:29:50,880
then the project sits there for
five years and four cap raisers

524
00:29:50,880 --> 00:29:52,480
go through.
And at the end of the day that

525
00:29:52,480 --> 00:29:55,360
the prospect of outside
shareholder returns despite the

526
00:29:55,840 --> 00:29:58,720
strength of the asset minimum.
On the other hand, you have a

527
00:29:58,720 --> 00:30:02,480
company like or a person like
Chris Ellison who he'll take A

528
00:30:02,480 --> 00:30:07,160
and he'll take an asset that
perhaps isn't on paper at the

529
00:30:07,160 --> 00:30:09,320
highest quality quality asset in
the world.

530
00:30:10,320 --> 00:30:12,920
And I'm thinking of something
like in the lithium space,

531
00:30:12,920 --> 00:30:15,160
something like Mount Marion or
even Wodgina.

532
00:30:15,800 --> 00:30:20,320
But he'll, he'll just start
mining the bloody stuff and

533
00:30:20,480 --> 00:30:23,400
he'll do it quickly and he'll
cut costs where he can.

534
00:30:23,560 --> 00:30:29,960
And for me, it is very easy to
prioritize asset quality to the

535
00:30:29,960 --> 00:30:33,520
detriment of to the detriment of
returns investing in this space.

536
00:30:33,840 --> 00:30:40,080
I will take a a second class
asset with a first class

537
00:30:40,080 --> 00:30:44,040
operator any day of the week
over a first class asset with a

538
00:30:44,040 --> 00:30:49,560
second class operator.
That that's, that's the

539
00:30:49,560 --> 00:30:53,960
foundation of my views about
Chris Ellison's role as a

540
00:30:53,960 --> 00:30:58,080
talented mining executive.
But what I what I will say is

541
00:30:58,080 --> 00:31:06,080
that he's put us all and by us
all, I mean people who invest

542
00:31:06,080 --> 00:31:09,240
their money in this company in
a, in a fairly unfortunate

543
00:31:09,240 --> 00:31:11,080
position.
Because I mean, I've asked you

544
00:31:11,080 --> 00:31:13,080
this Trev before, but I'll ask
you again for the sake of your

545
00:31:13,080 --> 00:31:16,000
listeners.
If you were plopped into the CEO

546
00:31:16,000 --> 00:31:18,440
seat tomorrow of Minres, what
will be the first thing you do?

547
00:31:20,240 --> 00:31:22,400
Well, first thing I'd do would
be get the real numbers, yeah.

548
00:31:23,120 --> 00:31:24,440
And then what were the second
thing you do?

549
00:31:25,040 --> 00:31:26,880
Second thing I do depends on
what the real numbers are.

550
00:31:28,400 --> 00:31:31,320
And if you had to have a guess
of what you think the second

551
00:31:31,320 --> 00:31:33,440
thing you do would be.
Even what we know, well, it

552
00:31:33,440 --> 00:31:34,920
depends.
It totally depends like.

553
00:31:34,920 --> 00:31:36,080
The answer I'm fishing for is a
cap.

554
00:31:36,080 --> 00:31:38,160
Raise.
It would be a cap raise if if

555
00:31:38,160 --> 00:31:43,040
you, if peak net debt on your
numbers still has a like isn't

556
00:31:43,040 --> 00:31:47,080
actually coming to call it, you
know, the end of the end of this

557
00:31:47,240 --> 00:31:50,400
calendar year or, or a bit
later, yeah, then it would be a

558
00:31:50,400 --> 00:31:51,040
cap raise.
Yeah.

559
00:31:51,240 --> 00:31:53,160
And that's what I think.
That's what I think is happening

560
00:31:53,160 --> 00:31:56,240
with peak net debt, although we
can come back to that later.

561
00:31:57,120 --> 00:32:00,480
I think any, any professional
CEO in this company would do a

562
00:32:00,480 --> 00:32:02,320
cap raise before the seat was
worn.

563
00:32:03,440 --> 00:32:08,120
And yet Chris has resisted
pressure to do that for the last

564
00:32:08,120 --> 00:32:14,760
18 months.
His, his interests are aligned

565
00:32:14,760 --> 00:32:18,720
with shareholders in a way that
I think is unusual in this

566
00:32:18,720 --> 00:32:23,880
space.
But as a consequence of that, I

567
00:32:23,880 --> 00:32:27,160
feel like I, and I've observed
this phenomenon in my own mind.

568
00:32:27,160 --> 00:32:31,400
I feel like we're all subject to
a form of Stockholm syndrome.

569
00:32:31,960 --> 00:32:37,760
It's, it's not normal that when
I'm reading the AFR 7th

570
00:32:38,440 --> 00:32:41,560
disclosure or seventh piece
about some misconduct that

571
00:32:41,560 --> 00:32:44,240
they're alleging Chris Ellison
to have committed, it's not

572
00:32:44,240 --> 00:32:47,880
normal that I'm, I'm reading
that with one eye closed and,

573
00:32:47,880 --> 00:32:51,120
and, and fighting the, the
dissonance in my mind with every

574
00:32:51,120 --> 00:32:53,720
second sentence trying to
justify why, oh, this actually

575
00:32:53,720 --> 00:32:56,240
isn't that big a deal.
And come on, you know, this was

576
00:32:56,240 --> 00:32:58,920
15 years ago.
That's that's not a normal

577
00:32:58,920 --> 00:33:02,960
pattern of thinking, and yet
it's one that so many of us have

578
00:33:02,960 --> 00:33:07,400
been forced into as a
consequence of our desire to

579
00:33:07,400 --> 00:33:11,600
avoid plainly destructive
actions that would be taken by

580
00:33:11,600 --> 00:33:14,120
anybody other than Chris.
And this is the phenomenon that

581
00:33:14,120 --> 00:33:19,240
gave us gave us the the truly
paranormal, which was a standing

582
00:33:19,240 --> 00:33:26,040
ovation at the AGM at which he
was apologizing for historical

583
00:33:26,040 --> 00:33:31,040
misconduct for what was played
in the media as a tax evasion

584
00:33:31,040 --> 00:33:32,640
scandal.
But if you if you take the

585
00:33:32,640 --> 00:33:35,400
allegations made in the AFR at
face value and you assume they

586
00:33:35,440 --> 00:33:37,680
are true and I have no other
information, I have no

587
00:33:37,680 --> 00:33:39,280
independent reason to think they
are true.

588
00:33:39,280 --> 00:33:42,200
But assuming they are true, this
was not just a tax evasion

589
00:33:42,200 --> 00:33:45,160
scandal.
This was the knowing misuse of

590
00:33:45,160 --> 00:33:47,160
corporate funds for personal
enrichment.

591
00:33:49,200 --> 00:33:57,720
And so I, I think that I think
that genuinely talented

592
00:33:59,160 --> 00:34:04,200
individuals are often flawed.
I think Chris Ellison is

593
00:34:04,240 --> 00:34:07,680
evidence enough of that fact.
But I do think something needs

594
00:34:07,680 --> 00:34:14,400
to be done to, to try bring
shareholders around to a more

595
00:34:14,400 --> 00:34:16,639
comfortable position.
I don't think it's sustainable

596
00:34:16,639 --> 00:34:21,400
that big super funds view this
company as uninvestable.

597
00:34:22,480 --> 00:34:26,679
I don't think it's sustainable
that there's lurking in the

598
00:34:26,679 --> 00:34:32,719
background the constant danger
of some new article in the AFR

599
00:34:33,440 --> 00:34:38,280
alleging some manner of
historical misconduct or some

600
00:34:38,280 --> 00:34:46,480
manner of failure of disclosure.
What I'm saying is if there's a

601
00:34:46,480 --> 00:34:50,400
way to have the good without the
bad, I think I think all of us

602
00:34:50,400 --> 00:34:52,719
would be would be grateful for
that opportunity.

603
00:34:55,320 --> 00:34:57,280
I I've realized I'm I'm sort of
monologuing now.

604
00:34:57,280 --> 00:34:59,880
This is a no, no, no.
It's a bugbear of mine, but.

605
00:34:59,920 --> 00:35:01,400
It's a really interesting train
of thought.

606
00:35:01,400 --> 00:35:04,200
What, what, what is the, the
sort of solution there or what,

607
00:35:04,200 --> 00:35:07,480
what is the, the, the idea?
Is it sustainable with Allison?

608
00:35:07,600 --> 00:35:10,960
Well, I, I think what they
should do is be is show that

609
00:35:10,960 --> 00:35:14,320
they are committed to
transparency by being far more

610
00:35:14,320 --> 00:35:16,320
open about the operations of the
company.

611
00:35:16,360 --> 00:35:17,520
And you think they've had the
first steps?

612
00:35:17,520 --> 00:35:19,200
There, Yeah, I do.
Yeah, I do.

613
00:35:19,720 --> 00:35:21,120
I do.
And I think the company should

614
00:35:21,120 --> 00:35:25,880
be applauded for that.
And and I don't, I don't think I

615
00:35:25,880 --> 00:35:34,320
have as negative a view about
the the intentionality of some

616
00:35:34,320 --> 00:35:36,840
of this past conduct that that
maybe you do, Trev.

617
00:35:37,200 --> 00:35:40,800
I think that there's a decent
chance a lot of this got caught

618
00:35:40,800 --> 00:35:44,880
up.
A lot of these disclosure or

619
00:35:44,880 --> 00:35:48,520
mistakes of disclosure or
absences of transparency in

620
00:35:48,520 --> 00:35:50,960
their disclosures have been the
consequence of past decisions,

621
00:35:50,960 --> 00:35:54,160
not not recent deliberate
decisions to mislead the market.

622
00:35:54,160 --> 00:35:56,480
I don't think they've set out to
mislead the market in any way,

623
00:35:56,920 --> 00:36:01,520
but I do think that has been the
effect, if not the intention.

624
00:36:02,680 --> 00:36:06,360
I I often think back like, you
know, talking about Alison and

625
00:36:06,360 --> 00:36:10,400
his role sort of running this
company, you know, stewarding it

626
00:36:10,440 --> 00:36:13,880
to the tremendous shareholder
returns that we had from IPO to,

627
00:36:14,480 --> 00:36:19,400
to recently and and subsequently
the the erosion of shareholder

628
00:36:19,400 --> 00:36:21,080
return in, in, in the recent
years.

629
00:36:21,840 --> 00:36:25,640
The I often think back to the
question that was asked, not at

630
00:36:26,280 --> 00:36:28,400
the last AGM, but the AGM before
that.

631
00:36:29,600 --> 00:36:31,640
A shareholder gets up and.
I think I know where you're.

632
00:36:31,640 --> 00:36:34,520
Going yeah, and and and asks,
you know, how do you think about

633
00:36:35,120 --> 00:36:37,520
hubris?
It strikes me that a weakness of

634
00:36:37,520 --> 00:36:39,280
yours or the companies might be.
Do you remember his?

635
00:36:39,280 --> 00:36:40,960
Response to that question
because I remember the question

636
00:36:40,960 --> 00:36:42,640
but I don't.
Remember his yeah, he he hit

637
00:36:42,640 --> 00:36:44,640
Chris handballed it to James
requirements.

638
00:36:44,760 --> 00:36:47,800
But I it was it was a funny kind
of way.

639
00:36:47,800 --> 00:36:49,560
It all evolved.
I'm not entirely sure that Chris

640
00:36:49,560 --> 00:36:51,880
knew what the definition of
hubris was and that's why he

641
00:36:51,880 --> 00:36:54,160
handballed it.
But it was like regardless, it

642
00:36:54,160 --> 00:36:57,040
seemed a a funny a funny
interaction.

643
00:36:57,040 --> 00:37:01,640
Like the body language was
really intriguing and why, why I

644
00:37:01,640 --> 00:37:05,200
still think about that is like
IA 100% think hubris is, is the

645
00:37:05,200 --> 00:37:07,160
biggest weakness of Chris is a
capital allocator.

646
00:37:07,200 --> 00:37:10,000
I think like that, that level
of, of hubris.

647
00:37:10,200 --> 00:37:12,000
It's like you, you roll in the
dice, you roll in the dice, you

648
00:37:12,000 --> 00:37:14,400
roll in the dice and there's a
probability you'll be right.

649
00:37:15,120 --> 00:37:17,920
And he's and he's, he's had a
he's had a freaking hot streak.

650
00:37:17,920 --> 00:37:21,000
He had a really hot streak.
But if you keep kind of, you

651
00:37:21,000 --> 00:37:24,160
know, rolling the lot on the
next roll and at some point,

652
00:37:24,560 --> 00:37:27,720
like, you know, you're not in
charge of the macro, you can

653
00:37:27,720 --> 00:37:29,600
look pretty silly on the capital
allocation front.

654
00:37:29,760 --> 00:37:34,120
I do think a lot of the, the
lithium investment like, yeah,

655
00:37:34,360 --> 00:37:36,920
the, you know, the billion odd
dollars that that went into

656
00:37:37,320 --> 00:37:40,680
copper, lithium stocks and, and
the like, I don't know how you

657
00:37:40,680 --> 00:37:43,000
justify that from a capital
allocation perspective.

658
00:37:43,120 --> 00:37:47,920
And and yeah, how you kind of
back solve the, the, the lithium

659
00:37:47,920 --> 00:37:52,040
price assumptions that were so,
so distinctly different from,

660
00:37:52,040 --> 00:37:55,920
from the market.
Like why, why did you deter from

661
00:37:56,120 --> 00:37:59,680
consensus by, by such a, you
know, like 2 standard deviations

662
00:37:59,680 --> 00:38:01,560
in your, in your assumptions,
when you're, when you're, when

663
00:38:01,560 --> 00:38:04,880
you're bidding on these things,
is is still a big question mark

664
00:38:04,880 --> 00:38:08,440
to be had.
Yeah, I, I, I tend to agree.

665
00:38:08,600 --> 00:38:15,240
I think that I think that that
success and this is not not the

666
00:38:15,240 --> 00:38:20,720
sort of comment that I would
usually think goes that is that

667
00:38:20,720 --> 00:38:23,120
is apartment in respect of a
company like Min Res.

668
00:38:23,120 --> 00:38:25,760
But I do think that success can
breed complacency.

669
00:38:26,240 --> 00:38:28,480
And although Chris Ellison
doesn't strike me as somebody

670
00:38:28,480 --> 00:38:34,880
who's complacent, he does strike
me as somebody who who trusts

671
00:38:34,880 --> 00:38:40,920
his gut more than perhaps it is
prudent to do.

672
00:38:42,040 --> 00:38:44,400
And I think he's been right in a
number of respects.

673
00:38:44,400 --> 00:38:49,720
And and as I'm sure we'll get
to, I think Onslow may well

674
00:38:50,200 --> 00:38:56,760
prove him right on an enduring,
on an enduring basis, but

675
00:38:59,160 --> 00:39:05,000
there's too many unforced errors
that are that I think by their

676
00:39:05,000 --> 00:39:08,720
nature can be, can be solved.
And I think it would, it would

677
00:39:08,720 --> 00:39:10,520
redound to the company's benefit
to do so.

678
00:39:11,080 --> 00:39:13,200
And and I don't see any
downside.

679
00:39:13,320 --> 00:39:16,760
I don't believe that this
company is hiding, hiding

680
00:39:16,760 --> 00:39:20,040
information that would make the
company re evaluate the entire

681
00:39:20,040 --> 00:39:22,880
mining services business and
come to the conclusion that this

682
00:39:22,880 --> 00:39:28,040
is actually AC grade services
business rather than the A+

683
00:39:28,280 --> 00:39:30,600
grade that everybody has given
it in the past.

684
00:39:30,600 --> 00:39:33,240
I I don't think that's likely
and and I don't agree with you,

685
00:39:33,240 --> 00:39:38,520
Trev that their operations that
they are servicing are marginal.

686
00:39:38,520 --> 00:39:40,800
At least I don't agree that
Onslow is a marginal operation.

687
00:39:41,160 --> 00:39:46,200
So I think that the mining
services business will go from

688
00:39:46,200 --> 00:39:48,520
strength to strength over the
next five years.

689
00:39:48,880 --> 00:39:52,160
Let's take Marion and Wajna.
Do you think that either of

690
00:39:52,160 --> 00:39:55,480
those joint venture partners
other than Minrez would like to

691
00:39:55,480 --> 00:40:00,440
close those operations down?
Well, I think you've reported

692
00:40:00,440 --> 00:40:04,440
that they that Albemarle is
desperate to to close down

693
00:40:05,120 --> 00:40:08,800
Wajna.
So I'll I'll take that at face

694
00:40:08,800 --> 00:40:12,320
value.
I don't think and Feng is is

695
00:40:12,320 --> 00:40:15,880
keen to close down Marion.
No, I think they're happy for

696
00:40:15,880 --> 00:40:21,120
that to stay.
Open, yeah, but I mean Minres

697
00:40:21,120 --> 00:40:25,200
Minres would would keep Mount
Marion running even with the

698
00:40:25,200 --> 00:40:31,360
even with spot spot at at you
know the US price for SE-6 of

699
00:40:31,360 --> 00:40:33,880
women at 300 I would have
thought I think that they're

700
00:40:33,880 --> 00:40:37,560
banking on those mining services
that mining services revenue

701
00:40:37,560 --> 00:40:40,560
stream.
I do think they're, they're

702
00:40:40,560 --> 00:40:43,480
probably telling the truth when
they say that those operations

703
00:40:43,480 --> 00:40:45,880
are cash flow positive from a
min res point of view.

704
00:40:47,320 --> 00:40:50,400
It's obviously not the JV is
obviously not cash flow positive

705
00:40:50,400 --> 00:40:52,680
at either of those lithium
mines.

706
00:40:53,160 --> 00:40:57,760
But I think, I think it's likely
that min res is happy to leave

707
00:40:57,760 --> 00:41:02,640
them running at the at the
current spot price because I

708
00:41:02,640 --> 00:41:06,280
think they're either generating
cash or sort of break even.

709
00:41:08,280 --> 00:41:11,120
You, you're a bit more bearish
on that side of things than I

710
00:41:11,120 --> 00:41:13,680
am, I think or bearish is maybe
not the right word.

711
00:41:13,680 --> 00:41:15,800
You're a bit more negative on
the the viability of those

712
00:41:15,800 --> 00:41:19,440
operations at this price.
Viability is an interesting one.

713
00:41:19,480 --> 00:41:27,280
I, I think, I think I don't,
yeah, I, I, I think like, OK, if

714
00:41:27,280 --> 00:41:29,720
you look at the, the JVS, to the
best of my knowledge, both of

715
00:41:29,720 --> 00:41:33,200
those JVS actually require, you
know, mutual agreement or mutual

716
00:41:33,200 --> 00:41:37,080
consent to actually like sees
sees mining or sees operations.

717
00:41:37,160 --> 00:41:42,080
I think, I think Min Res might
be able to, to shut them down of

718
00:41:42,080 --> 00:41:45,960
their own accord as the
operators, as the operator of

719
00:41:45,960 --> 00:41:48,160
each.
I'm not sure about that, but I,

720
00:41:48,160 --> 00:41:52,160
I certainly suspect, well, I
think it's clear that the other

721
00:41:52,160 --> 00:41:56,000
JV partner cannot unilaterally
insist on care and maintenance.

722
00:41:56,040 --> 00:41:59,440
Get ugly, you know, if, if, if
it was like a more public kind

723
00:41:59,440 --> 00:42:04,040
of display of wanting that
operation to be shot, things get

724
00:42:04,040 --> 00:42:06,560
ugly that could kind of like,
you know, force that to happen.

725
00:42:06,600 --> 00:42:09,840
I do think I don't, I like, you
know, I see your analysis and

726
00:42:09,920 --> 00:42:12,680
it's not like you're actually
forecasting a positive free cash

727
00:42:12,680 --> 00:42:16,320
flow from the lithium business.
So I think when you when you

728
00:42:16,320 --> 00:42:17,520
say, we probably set this up for
the views.

729
00:42:17,520 --> 00:42:20,440
When you say you see my
analysis, you're talking about

730
00:42:21,000 --> 00:42:23,160
the financials that I've shared
with you privately.

731
00:42:23,400 --> 00:42:25,440
That's not not the financials.
That's that's gonna give the

732
00:42:25,440 --> 00:42:26,840
wrong impression to in cash flow
forecast.

733
00:42:26,960 --> 00:42:27,440
Yeah.
Yeah, yeah.

734
00:42:27,440 --> 00:42:29,760
My cash flow forecast I I.
Think that's a fair?

735
00:42:30,200 --> 00:42:33,320
Base case assumption like I
don't I do think like those the

736
00:42:33,320 --> 00:42:37,200
business current prices like all
in mining services, everything.

737
00:42:37,800 --> 00:42:40,240
I wouldn't be surprised if there
were you know operations from

738
00:42:40,240 --> 00:42:42,960
time to time that actually like
like bleeding cash.

739
00:42:43,360 --> 00:42:48,520
But yeah, like TVA, there's
also, you know what a well

740
00:42:48,520 --> 00:42:53,200
reported agreement that Minres
is looking to sell up to 49% of,

741
00:42:53,520 --> 00:42:57,040
you know, Marion and, and and
watching on whilst effectively

742
00:42:57,040 --> 00:43:00,320
retaining kind of control via
whatever that JV is in, in the

743
00:43:00,360 --> 00:43:03,400
decision, decisions to be made
in the respective minds.

744
00:43:03,400 --> 00:43:07,600
But yeah, I think that would be
a, a, a.

745
00:43:08,640 --> 00:43:11,560
Tragic mistake.
Everything's got a price.

746
00:43:12,520 --> 00:43:15,200
Wow.
I I think assuming.

747
00:43:15,200 --> 00:43:17,320
Any realistic price, I think
that would be a tragic mistake.

748
00:43:18,600 --> 00:43:21,960
I I think what you've said is.
Is is sort of bang on for for

749
00:43:21,960 --> 00:43:27,480
the lithium business as we stand
and for the say one to two year

750
00:43:27,480 --> 00:43:31,680
period, but like they're clearly
not running gangbusters.

751
00:43:32,000 --> 00:43:34,120
What you know, we'll get to a
point where more CapEx needs to

752
00:43:34,120 --> 00:43:36,320
be kind of spent.
So Marion too, like, you know,

753
00:43:36,320 --> 00:43:38,400
like the.
Float plant is a priority.

754
00:43:38,400 --> 00:43:41,560
You've gone gone from like that,
so that's an acceptable.

755
00:43:41,560 --> 00:43:45,720
Sort of situation for the short
to medium term, I think before a

756
00:43:45,720 --> 00:43:47,760
real decision has to be made.
Yeah, yeah.

757
00:43:47,760 --> 00:43:51,440
I mean and again.
This is a product of or.

758
00:43:51,800 --> 00:43:54,360
This is somewhat a product of
our uncertainty surrounding.

759
00:43:54,360 --> 00:43:57,080
This is somewhat a product of
the.

760
00:43:57,400 --> 00:43:59,880
Absence of detail in.
Some of the disclosures around

761
00:43:59,880 --> 00:44:04,640
these operations, who knows what
CapEx has been deferred at what

762
00:44:04,640 --> 00:44:08,080
you know, who knows whether
they're high?

763
00:44:08,080 --> 00:44:17,480
Grading it or not?
Well, we can guess, but you

764
00:44:17,480 --> 00:44:19,240
would think in in the current
price environment they would

765
00:44:19,240 --> 00:44:22,200
have to be, they would have to
be high grading migrating it.

766
00:44:23,240 --> 00:44:24,920
In fact, I think that that would
be almost prudent.

767
00:44:28,160 --> 00:44:30,880
But the good news is.
None of this matters.

768
00:44:31,160 --> 00:44:37,600
If Onslow performs, then the
lithium revenue is merely a drop

769
00:44:37,600 --> 00:44:40,840
in the ocean compared to how
much money they'll.

770
00:44:40,840 --> 00:44:42,360
Make up.
North.

771
00:44:42,680 --> 00:44:46,120
So this is this is the point.
I think of of contention and

772
00:44:46,120 --> 00:44:51,560
importance to to peel out is how
suppose a, how you've come to

773
00:44:51,560 --> 00:44:56,520
have a a very positive view and
even medium term outlook on

774
00:44:56,520 --> 00:45:02,360
Onslow's ability to generate
real free cash flow and and B

775
00:45:02,360 --> 00:45:06,480
how you consider like the the
risks to that that view.

776
00:45:06,720 --> 00:45:08,120
Yeah.
And then we might differ yeah.

777
00:45:08,440 --> 00:45:11,680
So I.
Think, I'm not sure how well

778
00:45:11,680 --> 00:45:14,200
your audience is likely to
understand this operation, but

779
00:45:15,560 --> 00:45:18,920
this project has been quite a
long time in the making and I

780
00:45:18,920 --> 00:45:21,280
think it's been a something of a
passion project for Chris

781
00:45:21,280 --> 00:45:23,000
Ellison.
I think he a long time ago

782
00:45:23,000 --> 00:45:28,920
identified these identified bid
for Aquila back in 20.

783
00:45:30,640 --> 00:45:34,520
I would say 1414 I think.
So he identified these tenements

784
00:45:34,520 --> 00:45:42,080
as capable of producing iron ore
at A at a competitive price that

785
00:45:42,080 --> 00:45:43,240
was.
A view contrary.

786
00:45:43,240 --> 00:45:47,720
To the views of most other
market participants and I think

787
00:45:47,720 --> 00:45:51,520
that was because of the distance
the tenements are from the

788
00:45:51,520 --> 00:45:55,480
nearest deepwater port and the
associated costs of running rail

789
00:45:55,480 --> 00:46:00,280
from where these where these
mines are, they're about 150

790
00:46:00,280 --> 00:46:05,920
kilometers southeast of the port
of Ashburton keep in.

791
00:46:05,920 --> 00:46:07,320
Mind when?
When Aquila.

792
00:46:07,320 --> 00:46:11,120
Was ultimately taken over the
successful bidders where you

793
00:46:11,360 --> 00:46:14,880
know it was Bastille in
consortium with Horizon rail

794
00:46:15,120 --> 00:46:20,040
provider Horizon ultimately, you
know did after numerous studies

795
00:46:20,280 --> 00:46:24,080
thought there was no potential
for rail at this operation hence

796
00:46:24,080 --> 00:46:26,560
why they were willing to kind of
float their their stake in

797
00:46:26,560 --> 00:46:31,600
Aquila to Minrez for I think it
was like $10 million wasn't very

798
00:46:31,600 --> 00:46:35,400
much their stake in a color.
Yeah, yeah, and and and Minrez.

799
00:46:35,400 --> 00:46:39,200
Agreed in respect of the the
feasibility of rail and so

800
00:46:39,200 --> 00:46:44,080
instead the project is the the
tenements are connected to the

801
00:46:44,160 --> 00:46:47,200
port of Ashburton which is a
which is not a a proper deep

802
00:46:47,200 --> 00:46:52,760
water port via a Hall Rd. the
highway.

803
00:46:52,760 --> 00:46:56,520
To Hell has.
Been the cause of so much of the

804
00:46:57,400 --> 00:47:01,640
dramas running this company over
the last 12 months but then of

805
00:47:01,640 --> 00:47:05,720
course even once you get there
or to the port, it's.

806
00:47:05,720 --> 00:47:08,360
It's it's.
Loaded in an unconventional

807
00:47:08,360 --> 00:47:10,560
manner because the port is not a
deep water port, meaning that

808
00:47:10,920 --> 00:47:13,920
proper Cape sized bolt carriers
can't get all the way in.

809
00:47:14,600 --> 00:47:18,840
Meaning that Minarez is instead
loading shallow draft

810
00:47:18,840 --> 00:47:24,560
transshippers, which are, in my
view, a a, an incredible piece

811
00:47:24,560 --> 00:47:28,040
of technology that I mean,
transshippers are not new, but

812
00:47:28,200 --> 00:47:30,520
Mina is.
These transshippers are, from

813
00:47:30,520 --> 00:47:37,760
everything I've heard and can
see, remarkably, remarkably

814
00:47:39,080 --> 00:47:43,760
efficient isn't the right word.
Remarkably entrepreneurial, I

815
00:47:43,760 --> 00:47:47,080
suppose.
And then and then these

816
00:47:47,080 --> 00:47:49,640
transshippers.
Take the ore out to the waiting

817
00:47:50,120 --> 00:47:58,000
bulk carriers offshore.
Where are we going with this

818
00:47:58,000 --> 00:48:01,160
discussion about Onslow?
Sort of the background history.

819
00:48:01,160 --> 00:48:03,520
Right from 10 years ago.
Yeah, yeah, yeah, yeah, yeah.

820
00:48:03,520 --> 00:48:05,480
So.
And so the reason all of this is

821
00:48:05,480 --> 00:48:09,480
interesting is, is interesting
is because these these these

822
00:48:09,880 --> 00:48:12,760
tenements were considered to
contain stranded or in the sense

823
00:48:12,760 --> 00:48:15,120
that it wouldn't have been
economical to to transport them

824
00:48:15,520 --> 00:48:19,600
by rail to a deep water port.
Minres.

825
00:48:20,080 --> 00:48:25,280
Has developed this project on
the basis the most the most

826
00:48:25,280 --> 00:48:30,160
recent updated disclosure
assumes that.

827
00:48:30,240 --> 00:48:32,880
They'll be.
Mining and shipping the ore on a

828
00:48:33,520 --> 00:48:37,720
free on board basis at 49 Aussie
per ton.

829
00:48:38,400 --> 00:48:42,120
So that number itself is lower
than than you might have thought

830
00:48:42,120 --> 00:48:45,240
it would be.
Given given the situation that

831
00:48:45,280 --> 00:48:48,200
this is, this is a fully.
Ramped 35,000,000 ton per yeah,

832
00:48:48,200 --> 00:48:51,240
yeah, yeah.
Not including third party like

833
00:48:51,240 --> 00:48:53,520
college, which they're heavily
utilizing right now.

834
00:48:53,520 --> 00:48:54,960
Yeah.
And and the cost that they've

835
00:48:54,960 --> 00:48:57,880
reported.
So far they're not including

836
00:48:57,920 --> 00:48:59,480
capitalized development costs,
obviously.

837
00:48:59,480 --> 00:49:03,320
So, so you know, you know, query
where exactly this is going to

838
00:49:03,320 --> 00:49:05,880
end up.
But but that number's a little

839
00:49:05,880 --> 00:49:09,840
bit deceptive, I think because
that $4949 a tonne number is a

840
00:49:09,840 --> 00:49:12,720
little bit deceptive because
built into that is all of Min

841
00:49:12,720 --> 00:49:15,640
Rez's margins on the mining
services side of things.

842
00:49:16,160 --> 00:49:23,280
And so that's $8 a tonne in
margin for min res mining

843
00:49:23,280 --> 00:49:27,840
services, but then there's also
an $8 toll fee that's being paid

844
00:49:27,840 --> 00:49:31,200
for every ton and half of that
comes back to min res.

845
00:49:31,560 --> 00:49:37,280
So there's $12.00 of margin in
that $49.00 number for min res,

846
00:49:38,320 --> 00:49:39,320
which means?
If you.

847
00:49:39,400 --> 00:49:40,840
If you.
Strip that out and and.

848
00:49:40,840 --> 00:49:44,400
This is, I suppose, a fairly
crude way to look at it, But if

849
00:49:44,400 --> 00:49:49,000
you strip 12 out of 49 and you
end at a $37 a ton basis and you

850
00:49:49,000 --> 00:49:51,760
can sort of you can imagine from
Minrez's point of view that

851
00:49:51,760 --> 00:49:53,360
that's one way they see this
project.

852
00:49:53,800 --> 00:50:00,160
Suddenly this is a highly
competitive bottom. 25%.

853
00:50:01,280 --> 00:50:04,880
Quartile, you know, lower
quartile iron ore project.

854
00:50:07,040 --> 00:50:11,760
When have you ever seen?
Companies like projected costs

855
00:50:11,920 --> 00:50:16,440
from a feasibility stage or pre
pre pre development stage match

856
00:50:16,440 --> 00:50:21,960
your actuals in Australia mining
history the last five years yeah

857
00:50:23,040 --> 00:50:24,680
and they've been.
Revised, these costs have been

858
00:50:24,680 --> 00:50:29,640
revised upwards twice now, but I
do think that we'll we will have

859
00:50:30,760 --> 00:50:33,680
a better understanding of what's
happening in terms of the cost

860
00:50:33,720 --> 00:50:37,600
per tonne not in this coming
quarterly, but probably in in

861
00:50:37,880 --> 00:50:41,560
the next quarterly.
I still don't think anyone.

862
00:50:42,560 --> 00:50:44,040
Properly Understands.
The cost?

863
00:50:44,040 --> 00:50:47,440
Base at Onslow like there's not
a good appreciation of what you

864
00:50:47,560 --> 00:50:51,400
you know, costs are at Onslow
and realistically what they

865
00:50:51,400 --> 00:50:53,880
could get to well in terms of
the.

866
00:50:53,880 --> 00:50:57,840
Haulage so so this discussion
generally relates to the haulage

867
00:50:57,840 --> 00:51:00,720
the the discussion of relating
to.

868
00:51:00,720 --> 00:51:03,520
Cost at Onslow.
Relates to the cost getting the

869
00:51:03,520 --> 00:51:05,680
iron ore from the mine to the
port.

870
00:51:06,000 --> 00:51:10,520
I think I I don't think there's
a whole lot of consternation

871
00:51:10,520 --> 00:51:12,760
surrounding the actual mine
operations themselves.

872
00:51:12,760 --> 00:51:15,560
It seems pretty, pretty basic.
It's low strip.

873
00:51:17,000 --> 00:51:19,480
Do you have any views about the
actual costs on the mining site?

874
00:51:19,560 --> 00:51:21,320
I think naturally your your
strip changes.

875
00:51:21,320 --> 00:51:26,440
Over time, but yeah.
And I, I, I obviously think that

876
00:51:28,240 --> 00:51:30,400
yeah, your, your, your costs are
also going to change the

877
00:51:30,400 --> 00:51:32,840
function of like where you've
been like you mined the highest

878
00:51:32,840 --> 00:51:35,240
grade of a deposit earlier.
And, and by all accounts, you

879
00:51:35,240 --> 00:51:37,920
can kind of see the deposits
they bring into the mix are,

880
00:51:38,520 --> 00:51:41,960
are, are kind of optimizing for
high grade, low impurities, but

881
00:51:41,960 --> 00:51:43,920
that does deplete relatively
kind of quickly.

882
00:51:43,920 --> 00:51:46,280
And then you then sure, but but
the other side of.

883
00:51:46,280 --> 00:51:52,360
Things scale allows you to to
shrink your overall cost basis

884
00:51:52,360 --> 00:51:58,080
because because of the nature of
scale, you have fixed costs in.

885
00:51:58,280 --> 00:52:00,280
In some respects, but.
You also have costs and not

886
00:52:00,280 --> 00:52:04,880
fixed, so if they ramp this
beyond 35,000,000 tons per

887
00:52:04,880 --> 00:52:07,800
annum.
I think it's, I think it's, I

888
00:52:07,800 --> 00:52:09,640
don't think it's.
Unreasonable to assume that that

889
00:52:09,800 --> 00:52:14,840
cost basis will come down you.
You you think the cost basis?

890
00:52:14,840 --> 00:52:17,520
Long term will actually be below
49.

891
00:52:17,520 --> 00:52:19,560
Aussie.
I'm not sure but.

892
00:52:20,040 --> 00:52:22,960
There's a big question mark
surrounding the haulage side of

893
00:52:22,960 --> 00:52:26,360
things for me.
But I, I don't think it's fair

894
00:52:26,360 --> 00:52:29,960
to to describe this as a
marginal operation.

895
00:52:29,960 --> 00:52:33,240
I think that this is, I think
this is competitively

896
00:52:33,280 --> 00:52:37,680
positioned, yeah.
I think that it's competitively

897
00:52:37,680 --> 00:52:39,560
positioned.
Subject to what happens with

898
00:52:39,560 --> 00:52:44,720
haulage.
And that's a big question mark

899
00:52:44,720 --> 00:52:46,440
for me.
Yeah.

900
00:52:47,120 --> 00:52:49,520
Yeah.
And the way to think about, so

901
00:52:49,520 --> 00:52:53,240
you look at $49.00 a tonne, the
the, the Onslow site visit

902
00:52:53,240 --> 00:52:57,040
presentation, they broke it up
into like 3 components, $14.00

903
00:52:57,040 --> 00:53:00,400
per tonne for what they call
other mining costs.

904
00:53:00,400 --> 00:53:03,240
Then there's the $27.00 per
tonne, which is the services

905
00:53:03,240 --> 00:53:07,680
you're talking about that's
crushing haulage, port handling

906
00:53:07,680 --> 00:53:10,240
and trans and trans shipping.
So there's four things people

907
00:53:10,240 --> 00:53:12,680
are assuming there's $2.00 to
each of those category per

908
00:53:12,680 --> 00:53:13,560
tonne.
Well, the company has said

909
00:53:13,560 --> 00:53:15,600
there's $2.00 to.
Each of those categories per

910
00:53:15,600 --> 00:53:17,880
tonne and then and then there's
the $8.

911
00:53:19,160 --> 00:53:23,640
Our Rd. trust, yeah, the the
whole Rd. like fee so, but look

912
00:53:23,640 --> 00:53:27,400
at the the $27.00 per ton bit on
the services front.

913
00:53:27,480 --> 00:53:31,400
Now that's kind of like a, a
contractual price to deliver to

914
00:53:31,400 --> 00:53:35,960
the to Mineco at in Rez's
services effectively.

915
00:53:35,960 --> 00:53:39,160
So people think that there's $8
a ton of margin there.

916
00:53:39,400 --> 00:53:42,760
But what, what came out of the
last quarterly was, was a, a,

917
00:53:43,720 --> 00:53:47,400
there's a clear example of,
well, this mining CSI has to

918
00:53:47,400 --> 00:53:50,480
wear margin erosion because,
because they've, they've

919
00:53:50,480 --> 00:53:53,360
guaranteed the price of these
services to Mineco.

920
00:53:53,440 --> 00:53:56,320
And at the moment they're
relying on 3rd party contractors

921
00:53:56,320 --> 00:54:01,080
for haulage, which is basically,
you know, clearly, clearly

922
00:54:01,080 --> 00:54:03,560
meaning there's not $8 a tonne
of, of margin there.

923
00:54:03,560 --> 00:54:05,400
Yeah, I I tried to do some
digging.

924
00:54:05,400 --> 00:54:07,560
On on this side of things in
particular, because I was

925
00:54:07,560 --> 00:54:12,160
concerned that the whole the
situation might make this

926
00:54:12,520 --> 00:54:15,520
uneconomical or significantly
reduce the economics of it on an

927
00:54:15,520 --> 00:54:21,200
on an ongoing basis.
If the the road was to to not be

928
00:54:21,200 --> 00:54:23,040
up, not to be built to spec
basically.

929
00:54:23,760 --> 00:54:27,560
And I think that to the best of
so far as I could see.

930
00:54:30,240 --> 00:54:35,240
If the, if the.
Min Res triples are not

931
00:54:35,240 --> 00:54:38,440
autonomous.
They, the Min Res thinks that

932
00:54:38,440 --> 00:54:41,400
they will cost them about $0.06
per tonne per kilometer.

933
00:54:42,760 --> 00:54:45,920
I I assumed 7 cents.
I had previously assumed $0.07

934
00:54:45,920 --> 00:54:50,320
per ton per ton per kilometer.
The contractor trucks are double

935
00:54:50,320 --> 00:54:53,960
that, so double that.
That's $0.06 per ton per

936
00:54:53,960 --> 00:54:55,760
kilometer.
They, they cost them about $0.12

937
00:54:55,760 --> 00:54:59,840
per ton per kilometer.
But the company thinks that if

938
00:54:59,840 --> 00:55:04,120
they go autonomous, that $0.06
per ton per kilometer can be

939
00:55:04,120 --> 00:55:07,920
brought down to three to around
$0.03 per ton per kilometer.

940
00:55:08,400 --> 00:55:10,720
And that's competitive with with
rail.

941
00:55:14,560 --> 00:55:19,360
I think that may.
Be a little bit ambitious, but

942
00:55:19,360 --> 00:55:20,440
even if.
Even if it's in the.

943
00:55:20,440 --> 00:55:25,200
Ballpark, then, then that.
Do you think that's 6?

944
00:55:25,200 --> 00:55:29,640
Cents per.
TKM is is assuming like the full

945
00:55:29,640 --> 00:55:34,040
330 payload and cycle times that
are, you know, average cycles

946
00:55:34,040 --> 00:55:36,920
per day, which are still kind of
in the ambitious range of

947
00:55:36,920 --> 00:55:38,400
things.
I'm not sure whether the.

948
00:55:38,840 --> 00:55:42,560
The average cycles per day are
in the ambitious range of things

949
00:55:42,840 --> 00:55:45,160
to that's something else I've
been trying to look into.

950
00:55:45,160 --> 00:55:49,040
And I think that they're they're
probably more likely to achieve

951
00:55:49,040 --> 00:55:53,000
their cycle times than they are
to achieve their full full load

952
00:55:54,800 --> 00:55:57,040
projections.
I think that what's likely to

953
00:55:57,040 --> 00:56:00,960
occur is that they're going to
run their triples at reduced

954
00:56:00,960 --> 00:56:02,680
capacity.
I think that's, I think that's

955
00:56:02,680 --> 00:56:06,120
basically inevitable actually at
least for the foresee or not

956
00:56:06,120 --> 00:56:08,120
foreseeable future, at least for
the medium term.

957
00:56:10,560 --> 00:56:16,080
Now that may flow through and
push that that cost up a little

958
00:56:16,080 --> 00:56:21,760
bit.
But I mean, again, part of this

959
00:56:21,760 --> 00:56:26,800
is a function of, of a lack of
disclosure around exactly how

960
00:56:26,800 --> 00:56:28,480
they're what, what they're going
to do with these trucks going

961
00:56:28,480 --> 00:56:30,440
forward.
But if we assume that they're

962
00:56:30,440 --> 00:56:36,080
loaded to 300 tons, which is
down from 330, then I think that

963
00:56:36,080 --> 00:56:39,840
that's that $0.06 per ton per
kilometer is probably not

964
00:56:39,840 --> 00:56:43,640
unrealistic from everything I'll
be able to find online.

965
00:56:46,200 --> 00:56:49,400
Right here's.
Yeah.

966
00:56:49,600 --> 00:56:54,600
Here's probably where I have a a
different risk outlook on on the

967
00:56:54,600 --> 00:56:59,040
project's kind of capability to
sustainably deliver, kind of

968
00:56:59,480 --> 00:57:03,400
name plate and sustainably
deliver is the the the keyword

969
00:57:03,400 --> 00:57:08,080
there?
The the moment you.

970
00:57:08,800 --> 00:57:13,120
The moment you you get rid of
your your contractor road

971
00:57:13,120 --> 00:57:16,240
trains, well, the contractor Rd.
trains are actually not

972
00:57:16,320 --> 00:57:18,520
operating on the whole Rd.
They're taking a different path.

973
00:57:18,520 --> 00:57:20,840
They're using for for some of
it, at least the access.

974
00:57:20,840 --> 00:57:23,680
Road for a bit and then they're.
And then they're using public,

975
00:57:23,760 --> 00:57:26,120
the public highway.
So it's a longer route, it's a

976
00:57:26,120 --> 00:57:29,200
smaller, smaller train.
So if you remove the contractor

977
00:57:29,200 --> 00:57:34,880
trucks and you suddenly have a
an enhanced reliance on the a

978
00:57:34,880 --> 00:57:38,160
combination of min raises,
jumbos, plus there might be

979
00:57:38,160 --> 00:57:40,000
other size trucks that are also
operating on the whole Rd.

980
00:57:42,240 --> 00:57:44,720
I I think you're, you know,
depending on what you're

981
00:57:44,720 --> 00:57:48,200
actually loading these trucks at
you're you're you're coming

982
00:57:48,680 --> 00:57:52,960
probably coming into a, a, a
pretty dicey position in with

983
00:57:52,960 --> 00:57:56,360
the extent to which your whole
Rd. is kind of capable of of

984
00:57:56,360 --> 00:58:01,840
that load in an unproven way.
Yeah, you're talking about the

985
00:58:01,840 --> 00:58:04,120
actual.
Underlying structure of the

986
00:58:04,120 --> 00:58:06,680
whole Rd.
I, I I am.

987
00:58:07,400 --> 00:58:09,320
Yeah, yeah.
But this is an unknown.

988
00:58:09,360 --> 00:58:15,840
This is there is.
I have found absolutely.

989
00:58:15,840 --> 00:58:21,120
No, no reliable way to work out
what's going to happen with this

990
00:58:21,120 --> 00:58:23,640
road.
There are people who say that

991
00:58:24,440 --> 00:58:28,360
the the the actual composition
of the base course is is

992
00:58:28,360 --> 00:58:32,360
necessarily stuffed as a
consequence of a lack of

993
00:58:32,360 --> 00:58:36,440
available material when the road
was built.

994
00:58:37,480 --> 00:58:41,120
On the other hand, the company
seems to be the view that the

995
00:58:41,120 --> 00:58:44,920
main problem was.
Was water ingress.

996
00:58:44,920 --> 00:58:48,520
It wasn't the actual underlying
composition of the road and

997
00:58:48,520 --> 00:58:52,360
therefore as folding it and
playing with the with the

998
00:58:52,360 --> 00:58:55,120
shoulders a little bit,
extending it, being more careful

999
00:58:55,120 --> 00:58:59,920
around water will deal with all
these problems, both of those

1000
00:58:59,960 --> 00:59:03,560
things that can be related.
Because yeah, of course water is

1001
00:59:03,560 --> 00:59:05,800
the enemy of roads.
Like when it gets into the like

1002
00:59:05,800 --> 00:59:08,360
the sub base, then yeah, your
chemical bonding and everything

1003
00:59:08,360 --> 00:59:12,440
can be pretty compromised.
And yeah, when you buy.

1004
00:59:12,440 --> 00:59:15,200
The stock, how do you get
comfortable with that then?

1005
00:59:15,400 --> 00:59:17,760
Or do you think that's something
that might play out in 18 plus

1006
00:59:17,760 --> 00:59:19,520
months and that's not in my time
horizon or what?

1007
00:59:19,520 --> 00:59:21,760
Well, yeah, it's very difficult
to know.

1008
00:59:23,560 --> 00:59:27,440
I think that over the next six
months, the company.

1009
00:59:27,440 --> 00:59:29,120
Will get a better idea.
Of what's going to happen with

1010
00:59:29,120 --> 00:59:33,760
the road it's been it's been
reported that they're they're

1011
00:59:34,040 --> 00:59:38,160
monitoring it quite carefully
they're using GPR ground

1012
00:59:38,160 --> 00:59:42,040
penetrating radar to try and to
try and keep an eye on any

1013
00:59:42,040 --> 00:59:48,360
movement subsurface but.
It's.

1014
00:59:49,840 --> 00:59:53,560
What they're doing now shows
that the road can take.

1015
00:59:55,240 --> 01:00:00,640
Say 260 tons.
In on these trailers, yes, which

1016
01:00:00,640 --> 01:00:03,240
is a prudent.
Thing and just because it can

1017
01:00:03,240 --> 01:00:07,480
take that much right now it
doesn't mean that come January,

1018
01:00:07,480 --> 01:00:09,840
January, February, it'll it'll
still be rosy.

1019
01:00:10,000 --> 01:00:14,280
Yeah, yeah, yeah, and and and.
The unsatisfactory answer to all

1020
01:00:14,280 --> 01:00:18,920
of this may be that we just need
to wait and see, but I think

1021
01:00:18,920 --> 01:00:23,160
that the the risks are weighted
to the upside in respect of the

1022
01:00:23,160 --> 01:00:28,920
company's operations at Onslow.
Generally, I think that I don't,

1023
01:00:28,920 --> 01:00:33,160
I think that the the dispute
between the initial Rd.

1024
01:00:33,160 --> 01:00:36,240
contractor and minerals has
been, has been overplayed a

1025
01:00:36,240 --> 01:00:38,800
little bit in the media.
I think that there were some

1026
01:00:39,560 --> 01:00:41,760
sort of that I think, I'm not
sure if it was the fin review of

1027
01:00:41,760 --> 01:00:43,480
the Australian who reported on
this, but there was some

1028
01:00:43,480 --> 01:00:49,320
innuendo around the quality of
the actual Rd. composition.

1029
01:00:49,720 --> 01:00:52,160
But I think where you to ask the
people who built the road, I

1030
01:00:52,160 --> 01:00:57,880
think they would say, actually
we built a, we built a road, we

1031
01:00:57,880 --> 01:01:02,200
built a really good Rd.
The this this thing.

1032
01:01:02,640 --> 01:01:04,240
I don't think we've ever
probably hashed out on the

1033
01:01:04,240 --> 01:01:07,000
podcast.
Yeah.

1034
01:01:07,200 --> 01:01:10,800
Why the maybe?
Some of the intuitive science.

1035
01:01:10,800 --> 01:01:13,760
Behind why the road is such an
important kind of piece of

1036
01:01:13,760 --> 01:01:18,200
things.
And in in civil construction, in

1037
01:01:18,200 --> 01:01:21,960
Rd. design, there's this thing
called the 4th power law, 4th

1038
01:01:21,960 --> 01:01:23,960
power law of Rd. design.
What is the 4th power law?

1039
01:01:23,960 --> 01:01:25,920
Well, the 4th power law.
I know what it looks like.

1040
01:01:26,040 --> 01:01:26,800
Yeah.
Yeah.

1041
01:01:27,080 --> 01:01:29,640
It looks like.
This you can picture an

1042
01:01:29,640 --> 01:01:31,360
exponential curve to the power
of four.

1043
01:01:31,360 --> 01:01:34,640
Well, that's that's the
relationship between the maximum

1044
01:01:34,880 --> 01:01:38,640
axle weight of vehicles on a on
a road.

1045
01:01:39,640 --> 01:01:43,240
Well, the the change in that is,
is directly proportional to the

1046
01:01:43,440 --> 01:01:44,840
well.
The road damage is directly

1047
01:01:44,840 --> 01:01:47,760
proportional to the 4th power of
the maximum maximum load.

1048
01:01:47,880 --> 01:01:49,120
And So what what you're saying
is?

1049
01:01:49,240 --> 01:01:52,640
Small changes in load can have
outsized effects.

1050
01:01:52,640 --> 01:01:56,400
Tremendously outsized if.
You just take a look at a

1051
01:01:56,400 --> 01:02:02,680
typical standard Rd. train
maximum Max load is is is is 8.

1052
01:02:03,360 --> 01:02:07,000
Now min res ones are 20.
These are public public numbers.

1053
01:02:07,000 --> 01:02:10,320
That's that's 2 1/2 times the
Max the the axle load.

1054
01:02:10,520 --> 01:02:15,880
But your your your effect on on
road damage is proportional to

1055
01:02:15,880 --> 01:02:20,320
the to the 4th power of of 2.5.
So it suddenly doesn't look

1056
01:02:20,320 --> 01:02:22,440
like.
A difference between 8 and 20?

1057
01:02:22,800 --> 01:02:25,800
It looks like a difference
between like 40 ish.

1058
01:02:26,080 --> 01:02:29,600
Times the the road damage you'd
expect of a of a, of a road that

1059
01:02:29,600 --> 01:02:35,040
is, is yeah, that's, that's the
intuition behind like why this

1060
01:02:35,040 --> 01:02:37,960
road is matters a lot.
And this the people that built

1061
01:02:37,960 --> 01:02:39,960
the road, I'm sure like they,
they did the numbers.

1062
01:02:39,960 --> 01:02:42,120
They they know this stuff.
They built they built roads

1063
01:02:42,120 --> 01:02:45,960
before and they would have built
it to the to spec, but the to to

1064
01:02:46,040 --> 01:02:48,400
to hope be able to manage this
in the way they could.

1065
01:02:49,160 --> 01:02:53,320
Now it doesn't.
What what I do mean though, is

1066
01:02:53,320 --> 01:02:56,360
like if, if the road would were
designed to handle a maximum

1067
01:02:56,360 --> 01:03:00,680
load of of of 20, of 20, maximum
maximum load of 20, but they

1068
01:03:00,680 --> 01:03:04,240
were overloading in the early
days, for example, to 24 or 25.

1069
01:03:04,240 --> 01:03:07,200
Or maybe maybe the distribution
of the actuals across the

1070
01:03:07,200 --> 01:03:10,240
vehicles wasn't probably like
understood.

1071
01:03:11,520 --> 01:03:14,480
There was some variability that
has a massive impact on kind of

1072
01:03:14,680 --> 01:03:16,080
what you can expect to happen on
the road.

1073
01:03:16,400 --> 01:03:19,600
And the other, the other working
assumption I have when thinking

1074
01:03:19,600 --> 01:03:24,040
about the risks of the road is
the way I think about a road is

1075
01:03:25,520 --> 01:03:27,080
you.
Will you will see Rd.

1076
01:03:27,080 --> 01:03:31,520
Failure in the first, you know,
couple of months, if it, if, if

1077
01:03:31,520 --> 01:03:35,160
there were, you know, things
that were where, if there were

1078
01:03:35,160 --> 01:03:36,720
design components were not up to
scratch.

1079
01:03:36,800 --> 01:03:39,080
And you will know in the first
couple of months, a properly

1080
01:03:39,080 --> 01:03:43,000
built Rd. will be durable for 50
years and you'll never have to

1081
01:03:43,000 --> 01:03:46,720
do any maintenance on that.
So my, my working assumption it

1082
01:03:46,760 --> 01:03:50,320
like you think, you think of a,
like freeways in, in the United

1083
01:03:50,320 --> 01:03:51,880
States, they're loud as all hell
or whatever.

1084
01:03:51,880 --> 01:03:54,640
But those things they're,
they're basically like built

1085
01:03:54,640 --> 01:03:56,760
with sufficient characteristics
to, to have, you know, your

1086
01:03:56,760 --> 01:03:58,640
certain thickness of Rd. base
and all that kind of stuff, all

1087
01:03:58,640 --> 01:04:02,880
those materials, yada, yada, so
that they can endure without

1088
01:04:03,240 --> 01:04:05,920
maintenance for, for the longest
period of time to think of, you

1089
01:04:05,920 --> 01:04:07,800
know, your airport tarmacs,
those sorts of things are the

1090
01:04:07,800 --> 01:04:12,920
same.
But if it's not built to the

1091
01:04:12,920 --> 01:04:16,520
right kind of specs for what the
low ultimate load's going to be,

1092
01:04:16,520 --> 01:04:18,640
you'll see that very quickly.
And I think we did see that very

1093
01:04:18,640 --> 01:04:20,560
quickly with minres.
And my working assumption is

1094
01:04:20,560 --> 01:04:23,360
that it's not a, it's not
necessarily going to be a case

1095
01:04:23,360 --> 01:04:27,360
that you can remediate it with
some cement filling asphalt and

1096
01:04:27,480 --> 01:04:30,200
it's going to be durable again
for, for 10 years.

1097
01:04:30,200 --> 01:04:36,280
In fact, like I'm, I'm very
concerned about when you have

1098
01:04:36,320 --> 01:04:40,080
your summer months, January,
February, it's going to be very

1099
01:04:40,080 --> 01:04:41,760
hot.
That's when the road's going to

1100
01:04:41,760 --> 01:04:44,000
be under a lot of stress.
It's also going to be very wet.

1101
01:04:45,440 --> 01:04:48,800
And you know, depending how much
cement has kind of been put in

1102
01:04:48,800 --> 01:04:52,880
to stabilize the road, your risk
of different types of risks like

1103
01:04:52,880 --> 01:04:57,480
block failure.
Now all of that to say, like.

1104
01:04:57,840 --> 01:05:00,560
The road remains a key risk.
What it can really credibly do

1105
01:05:00,560 --> 01:05:02,560
remains a key risk.
All that to say, but I'm I'm

1106
01:05:02,560 --> 01:05:06,240
amazed that they're achieving an
annualized rate of 35,000,000

1107
01:05:06,240 --> 01:05:08,560
tons per annum right now with
the reliance on contractor

1108
01:05:08,560 --> 01:05:12,000
tracks and using kind of 1/2
effectively half a whole Rd.

1109
01:05:12,000 --> 01:05:14,680
because they're they're doing
repairs along it at the moment.

1110
01:05:14,680 --> 01:05:17,240
It's it's incredible.
It's it's.

1111
01:05:17,720 --> 01:05:19,080
It's part of the Chris Ellison
magic.

1112
01:05:19,400 --> 01:05:23,600
Well, the question to figure.
Out is like and we know that the

1113
01:05:23,600 --> 01:05:26,800
repairs of the whole Rd. all of
that costs is going to be worn

1114
01:05:26,800 --> 01:05:31,480
by Minrez.
So that's 100% Minrez's, you

1115
01:05:31,480 --> 01:05:33,920
know, what is a realistic number
for the annualized?

1116
01:05:34,120 --> 01:05:36,840
Like if you look at if you look
at what they're getting for

1117
01:05:36,840 --> 01:05:39,760
their share of the, the whole
Rd., the 50%, it's like 150

1118
01:05:39,760 --> 01:05:41,600
million bucks a year, right?
They're spending twice that

1119
01:05:41,600 --> 01:05:44,640
right now just in, in repair of
the whole Rd. this year.

1120
01:05:45,040 --> 01:05:48,360
So what's your, what's your,
what should be your annualized

1121
01:05:48,720 --> 01:05:52,240
number of like your annualized
cap expectation for Rd.

1122
01:05:52,240 --> 01:05:53,960
maintenance?
I'm sure it's not $300 million.

1123
01:05:53,960 --> 01:05:55,680
I'm sure it's less than that
because they're, they're doing

1124
01:05:56,360 --> 01:05:59,360
yeah, faulty and everything.
But but that's a that that kind

1125
01:05:59,360 --> 01:06:01,680
of cuts into your margins
pretty, pretty clearly in my

1126
01:06:01,680 --> 01:06:04,880
opinion.
And if it also inhibits your

1127
01:06:04,880 --> 01:06:07,760
maximum allowable volumes, which
it obviously, you know,

1128
01:06:08,360 --> 01:06:11,240
obviously, what if you're having
more, more trucks, you can't

1129
01:06:11,240 --> 01:06:13,240
just keep adding trucks and
trucks to expand.

1130
01:06:13,560 --> 01:06:16,280
There's some maximum trucks and
some maximum loading that this

1131
01:06:16,280 --> 01:06:19,000
road is going to be able to
handle on a durable basis.

1132
01:06:19,000 --> 01:06:21,560
And that was clearly exceeded
beforehand.

1133
01:06:21,560 --> 01:06:23,280
Yeah, it's interesting that
there's been no.

1134
01:06:23,280 --> 01:06:27,920
Talk of long term reliance upon
contractor trucks, yeah,

1135
01:06:28,400 --> 01:06:31,520
because.
You know will.

1136
01:06:31,520 --> 01:06:34,520
We will.
We see a point where they say

1137
01:06:34,520 --> 01:06:38,680
for the next 6 months we're only
willing to run X amount of tons

1138
01:06:38,760 --> 01:06:41,360
along the whole Rd.
We need it, we need it, we need

1139
01:06:41,360 --> 01:06:45,440
a year observation.
So we will make up the shortfall

1140
01:06:45,800 --> 01:06:47,760
using the contractor accident
and they've shown that they can

1141
01:06:47,760 --> 01:06:50,640
do that.
I think that that would place

1142
01:06:51,120 --> 01:06:56,000
upwards pressure on, on well
downwards pressure on min res's

1143
01:06:56,280 --> 01:06:58,640
revenue, upwards pressure on the
costs involved in getting this

1144
01:06:58,640 --> 01:07:04,200
stuff to port, getting this
order port in the in the

1145
01:07:04,200 --> 01:07:07,640
presentation that accompanied
the mine visit.

1146
01:07:08,280 --> 01:07:10,480
I think there's a line in there
where they say that once the

1147
01:07:10,480 --> 01:07:14,680
road is repaired, there'll be
essentially 0 sustaining CapEx.

1148
01:07:15,080 --> 01:07:16,640
That's a that's a phenomenal
line.

1149
01:07:17,080 --> 01:07:23,680
Yeah.
Yeah, that it's not.

1150
01:07:23,680 --> 01:07:24,840
So much that that I mean that
strikes.

1151
01:07:24,840 --> 01:07:29,320
Me as perfectly realistic if
everything goes to plan that

1152
01:07:29,320 --> 01:07:30,880
strikes me as.
Incredibly unrealistic.

1153
01:07:30,880 --> 01:07:33,240
Given the the the road needed
repairs.

1154
01:07:33,240 --> 01:07:34,600
Yeah, well, that's what I mean.
That's what I mean.

1155
01:07:34,600 --> 01:07:36,760
So.
So what what I'm saying is

1156
01:07:37,760 --> 01:07:40,480
what's the basis for staying for
saying there will be 0

1157
01:07:40,480 --> 01:07:44,560
sustaining CapEx in respect to
the road unless they are very

1158
01:07:44,560 --> 01:07:46,960
confident that these Rd. repairs
have solved this problem.

1159
01:07:47,200 --> 01:07:50,400
I I think like.
The company does have a, a

1160
01:07:50,680 --> 01:07:53,400
history of disappointing on
CapEx expectations from a

1161
01:07:53,400 --> 01:07:56,560
sustaining perspective.
Like I don't, you know, and

1162
01:07:56,760 --> 01:07:59,760
you've spoken about, about that
too, like I don't, I don't look

1163
01:07:59,760 --> 01:08:01,800
at that number.
I think that number, the

1164
01:08:01,800 --> 01:08:04,840
expectation maybe is guidance to
hopefully alleviate, you know,

1165
01:08:04,880 --> 01:08:07,760
the market that, you know,
things are going to be OK for a

1166
01:08:07,760 --> 01:08:10,600
balance sheet perspective.
But like, my thinking is that

1167
01:08:10,600 --> 01:08:13,480
the, the whole, the whole Rd.
assuming there's going to be 0

1168
01:08:13,480 --> 01:08:15,520
maintenance CapEx on that whole
Rd. after these repairs.

1169
01:08:15,520 --> 01:08:18,600
Like I think it's kind of a
wacky assumption to to

1170
01:08:18,600 --> 01:08:22,600
realistically have given, you
know, the, the, the reality of

1171
01:08:22,600 --> 01:08:24,960
how a bit of rain transpired.
Yeah.

1172
01:08:25,120 --> 01:08:28,600
And if the sub base is
compromised or all of that kind

1173
01:08:28,600 --> 01:08:29,880
of stuff, throw it out and start
again.

1174
01:08:31,960 --> 01:08:34,439
I'm not a civil engineer, I'm
not an expert on this stuff.

1175
01:08:34,439 --> 01:08:37,800
But the, you know, like you, I
don't think you have to be too

1176
01:08:37,800 --> 01:08:41,680
intuitively kind of recognize
the risks with assuming A0

1177
01:08:41,800 --> 01:08:44,840
maintenance CapEx.
We should probably.

1178
01:08:44,840 --> 01:08:49,520
Then mention the.
The upside risks which is that

1179
01:08:50,439 --> 01:08:54,000
some of these problems can be
alleviated or at least fudged if

1180
01:08:54,000 --> 01:08:56,640
you if you push the project
beyond 35,000,000 tons per

1181
01:08:56,640 --> 01:09:00,120
annum.
If you're able to suppose that

1182
01:09:00,720 --> 01:09:06,399
they they covered the increased
cost associated with the road

1183
01:09:06,720 --> 01:09:12,080
with increased shipments of I
know I'm I'm pretty bullish on

1184
01:09:12,080 --> 01:09:15,600
the capacity of this project
going forward.

1185
01:09:17,000 --> 01:09:23,640
I think that putting the road to
one side, they've demonstrated

1186
01:09:24,040 --> 01:09:26,760
or they are in the process of
demonstrating that they can push

1187
01:09:26,800 --> 01:09:28,960
everything else beyond
35,000,000 tons per annum.

1188
01:09:29,800 --> 01:09:32,760
And my read on what's happening
on the port side of things is

1189
01:09:32,760 --> 01:09:40,520
that the project is performing
phenomenally in.

1190
01:09:40,520 --> 01:09:43,040
Terms of what CapEx would be?
Required to push the project

1191
01:09:43,040 --> 01:09:44,600
beyond 35,000,000 tons per
annum.

1192
01:09:45,120 --> 01:09:48,880
We know that they've already
ordered two more transshippers

1193
01:09:48,880 --> 01:09:51,840
and they're arriving next year
taking it up to seven.

1194
01:09:52,279 --> 01:09:56,960
There, there.
Everything I have seen and have

1195
01:09:56,960 --> 01:10:01,080
heard suggests that five
transshippers operating at

1196
01:10:01,080 --> 01:10:05,840
capacity is alone enough to get
this project to name play it or

1197
01:10:05,840 --> 01:10:08,520
beyond.
The question then comes, can

1198
01:10:08,520 --> 01:10:10,880
they?
Can they build?

1199
01:10:10,880 --> 01:10:13,360
Out to 4040. 550,000,000 tons
per annum.

1200
01:10:15,360 --> 01:10:19,840
And go from there.
My view is that the.

1201
01:10:19,840 --> 01:10:25,000
Market is is is overestimating
how much it.

1202
01:10:25,000 --> 01:10:27,560
Will cost to push.
Beyond 35,000,000 tons per annum

1203
01:10:28,200 --> 01:10:31,240
or is perhaps underestimating
the likelihood of that occurring

1204
01:10:31,240 --> 01:10:36,760
at all.
And I think that I think that

1205
01:10:36,760 --> 01:10:40,280
they've shown were it not.
For problems with the.

1206
01:10:40,280 --> 01:10:43,040
Road, you know, assume the road
works perfectly.

1207
01:10:43,760 --> 01:10:49,680
I think they've shown that with
7 transshippers in operation and

1208
01:10:49,720 --> 01:10:55,320
some work actually at the port
concerning the, the, the channel

1209
01:10:55,320 --> 01:10:58,960
that the transshippers used to
come in to shore to be loaded.

1210
01:10:59,920 --> 01:11:02,960
I think they'll be able to push
this well beyond 35,000,000 tons

1211
01:11:02,960 --> 01:11:08,320
per just on that, on that
Channel point.

1212
01:11:09,440 --> 01:11:14,080
I think that what's, what's the
only real bottleneck at the port

1213
01:11:14,120 --> 01:11:19,360
at the moment is that they're
sharing one single quite narrow

1214
01:11:19,360 --> 01:11:23,440
channel with, with Shep.
So Shep, Chevron has the

1215
01:11:23,840 --> 01:11:28,200
Wheatstone LNG project basically
on top of where minerals is

1216
01:11:28,200 --> 01:11:29,240
operating at the port of
Ashburn.

1217
01:11:29,240 --> 01:11:30,400
And they're right next to each
other.

1218
01:11:30,920 --> 01:11:35,880
And that means that almost once
a day Chevron brings in an LNG

1219
01:11:35,880 --> 01:11:40,240
tanker or takes an LNG taker out
and, and Chevron has priority

1220
01:11:40,240 --> 01:11:43,560
over the shipping of the
maritime operations when that's

1221
01:11:43,560 --> 01:11:47,040
occurring.
And so it seems that miners

1222
01:11:47,040 --> 01:11:51,360
can't actually use can't, can't
use their transshippers while

1223
01:11:51,360 --> 01:11:52,640
that's occurring.
They can't, they can't bring

1224
01:11:52,640 --> 01:11:56,680
them into load or take them out
from shore to the carriers.

1225
01:11:57,280 --> 01:12:01,120
So my understanding is it may be
possible to come up with a

1226
01:12:01,120 --> 01:12:03,800
workaround for this problem with
a bit of bit of dredging.

1227
01:12:06,040 --> 01:12:10,320
I was, I was actually told that
this this was not from somebody

1228
01:12:10,320 --> 01:12:13,280
who works at miners, but from
somebody who's to understand

1229
01:12:13,280 --> 01:12:15,760
what's going on there.
I was told that it may not be

1230
01:12:15,760 --> 01:12:20,120
expensive at all to dredge or to
widen that Channel such that

1231
01:12:20,120 --> 01:12:24,000
this is no longer an issue.
If that's the case, then I think

1232
01:12:24,000 --> 01:12:28,440
that the one impediment to
shipping occurring beyond

1233
01:12:28,440 --> 01:12:31,320
35,000,000 tons per annum could
be removed.

1234
01:12:35,240 --> 01:12:37,960
Does transpire then?
Then we're back at the road.

1235
01:12:38,040 --> 01:12:40,680
We're back at the road being the
the bottleneck.

1236
01:12:41,080 --> 01:12:44,160
Do you have a view as to to
where this project can go beyond

1237
01:12:44,160 --> 01:12:50,080
35,000,000 tons per minute?
Let's get to let's get to 35 for

1238
01:12:50,080 --> 01:12:56,360
a year first.
Yeah, I like, I, I, I'm

1239
01:12:56,400 --> 01:12:58,480
intrigued by the opportunity for
expansion.

1240
01:12:58,480 --> 01:13:00,840
I think like the upside's an
interesting case to explore.

1241
01:13:01,240 --> 01:13:04,360
I think there was actually a
brief window, I want to say it

1242
01:13:04,360 --> 01:13:07,840
was in 2024 where Chris was
telling the market this is going

1243
01:13:07,840 --> 01:13:11,200
to be 50 million tons per annum.
And then he also guided CapEx

1244
01:13:11,200 --> 01:13:13,360
that was kind of sharply higher
than expectations and there was

1245
01:13:13,360 --> 01:13:17,840
a port kind of allowance that
that was the the main factor for

1246
01:13:17,840 --> 01:13:20,320
the huge increase in expected
kind of CapEx.

1247
01:13:20,320 --> 01:13:23,960
So I challenge the proposition
that the dredging is a cheap

1248
01:13:23,960 --> 01:13:26,040
thing to do.
I think it's quite an expensive

1249
01:13:26,040 --> 01:13:28,800
endeavour.
I think like the discussion of

1250
01:13:29,040 --> 01:13:36,600
the expansion comes with it like
a very uncertain like like how

1251
01:13:36,600 --> 01:13:37,760
they're going to fund this,
right?

1252
01:13:37,920 --> 01:13:40,040
Like you know so well, I'm going
to talk about expansion, but the

1253
01:13:40,040 --> 01:13:42,600
first thing you think of is,
well, that's a lot of CapEx and

1254
01:13:42,720 --> 01:13:44,720
like the, the balance sheet's
already stressed.

1255
01:13:44,720 --> 01:13:48,680
So where's the free cash flow
to, to, to fund this expansion?

1256
01:13:48,680 --> 01:13:51,600
That's got to it's got to be
proven to be free cash

1257
01:13:51,600 --> 01:13:54,760
generative substantially before
you before the market is even

1258
01:13:54,760 --> 01:13:58,440
told about expansion in my
opinion, like because.

1259
01:13:58,480 --> 01:14:00,800
Expansion comes with.
CapEx, well, Speaking of,

1260
01:14:01,280 --> 01:14:03,840
Speaking of.
The need for money to fund CapEx

1261
01:14:03,840 --> 01:14:07,400
and the balance sheet, yeah.
Do you think they should do

1262
01:14:07,400 --> 01:14:11,320
nothing right now, focus on
operations and then earn their

1263
01:14:11,320 --> 01:14:16,040
way out?
I don't like I, I.

1264
01:14:16,600 --> 01:14:20,280
If you looked at the last
quarter, the that, that you

1265
01:14:20,280 --> 01:14:22,320
know, cash at bank was like 4400
million bucks.

1266
01:14:22,320 --> 01:14:25,880
They had had an $800 million
revolver which was undrawn,

1267
01:14:25,880 --> 01:14:27,280
which they, they, they could
draw.

1268
01:14:29,520 --> 01:14:31,400
I don't have any reason to
believe that they can't draw the

1269
01:14:31,400 --> 01:14:33,560
revolver, although I do think
there's some uncertainty in the

1270
01:14:33,560 --> 01:14:36,080
market about that.
Like I I'll believe them at face

1271
01:14:36,080 --> 01:14:39,160
value that they can't draw the
revolver for like the purpose of

1272
01:14:39,360 --> 01:14:41,240
a hypothetical.
Let's assume that they can't

1273
01:14:41,240 --> 01:14:43,880
draw the revolver.
If $400 million is a completely

1274
01:14:43,880 --> 01:14:46,200
insufficient like level of
liquidity for the nature of this

1275
01:14:46,200 --> 01:14:48,040
business, I think they would
have, they would have had to.

1276
01:14:48,080 --> 01:14:51,400
Act before now if they weren't
able to draw on the well, they.

1277
01:14:52,160 --> 01:14:54,680
They're they're absolutely
running a sale process for up to

1278
01:14:54,680 --> 01:14:59,040
49% of the lithium business.
So they are acting like and I

1279
01:14:59,040 --> 01:15:01,880
think like they're whether they
pull the trigger on that or not

1280
01:15:01,960 --> 01:15:05,520
is TBA, but they are doing all
things to act on adding more

1281
01:15:05,520 --> 01:15:07,960
liquidity to the business.
I find that to be a very

1282
01:15:07,960 --> 01:15:11,320
curious.
Very curious decision if that's

1283
01:15:11,320 --> 01:15:16,480
what they think is their most
favoured response, their most

1284
01:15:16,480 --> 01:15:20,240
favoured method of of raising
money.

1285
01:15:20,880 --> 01:15:22,720
It doesn't make sense to me.
Actually, it doesn't make any

1286
01:15:22,720 --> 01:15:25,400
sense at all.
I think that first thing first,

1287
01:15:25,800 --> 01:15:30,240
are they surrendering the mining
services contracts over these

1288
01:15:30,360 --> 01:15:33,040
49% would mean that they.
Still control the JV?

1289
01:15:33,160 --> 01:15:34,520
Well then, who's going to pay
them?

1290
01:15:35,200 --> 01:15:40,240
The money that these assets are
worth, you run a process to find

1291
01:15:40,240 --> 01:15:41,600
out.
I don't know.

1292
01:15:41,600 --> 01:15:42,720
It's insanity.
I don't know.

1293
01:15:42,840 --> 01:15:44,640
You would have to think.
They would sound.

1294
01:15:44,640 --> 01:15:50,160
Out the bondholders and see what
needs to be done to you know.

1295
01:15:50,680 --> 01:15:53,200
Reissue.
Bonds and and roll the roll the

1296
01:15:53,200 --> 01:15:56,480
debt right and that would
dictate how a lot of cut

1297
01:15:57,040 --> 01:16:02,040
conversations and levers which
levers are pulled yeah, it

1298
01:16:02,040 --> 01:16:03,000
depends in some.
Respect.

1299
01:16:03,280 --> 01:16:05,800
What what happens with interest
rates in the United States will

1300
01:16:05,800 --> 01:16:14,240
be important, but but why why
turn to your lithium assets that

1301
01:16:14,240 --> 01:16:18,400
are currently being valued in a.
Market or on?

1302
01:16:18,400 --> 01:16:20,000
On.
A basis, you know, if you value

1303
01:16:20,000 --> 01:16:22,840
them on a on a NPV basis,
they're worth nothing.

1304
01:16:26,040 --> 01:16:27,040
But I think quite clearly
they're not.

1305
01:16:27,080 --> 01:16:28,040
They're not going.
To sell them?

1306
01:16:28,040 --> 01:16:29,480
No, if they're not, it's only
if.

1307
01:16:29,480 --> 01:16:32,000
They get a a price.
Commensurate they're they're an

1308
01:16:32,000 --> 01:16:34,320
expensive.
Option like I feel like it's my

1309
01:16:34,320 --> 01:16:36,640
expensive, I mean, it's like
it's a valuable option on on

1310
01:16:36,640 --> 01:16:38,640
lithium prices.
How I view their like their

1311
01:16:38,640 --> 01:16:40,160
their lithium business.
I think they could, I think they

1312
01:16:40,160 --> 01:16:42,600
could get, you know, a
reasonable amount of upfront

1313
01:16:42,720 --> 01:16:45,360
kind of cash depending like
curious you see how they might

1314
01:16:45,360 --> 01:16:47,440
structure something curious you
see what type of buyers there

1315
01:16:47,440 --> 01:16:49,880
could be.
You know, I'd also be surprised

1316
01:16:49,880 --> 01:16:53,840
if the buyers didn't leaders
didn't have a view on like

1317
01:16:53,880 --> 01:16:56,400
they'd absolutely want the
marketing rights with volumes.

1318
01:16:56,440 --> 01:16:59,160
I'm sure the mining services
contracts is a pretty

1319
01:16:59,160 --> 01:17:01,680
interesting part of the puzzle
because I'm, I'm, I'm sure

1320
01:17:01,680 --> 01:17:05,720
Monrez would be unwilling to to
compromise on them, but that

1321
01:17:05,840 --> 01:17:08,120
that that could be a pretty
sticky point of contention.

1322
01:17:08,200 --> 01:17:09,960
But that's what I mean.
And suddenly this looks.

1323
01:17:09,960 --> 01:17:12,200
Like a for sale, if they're
compromising, of course it's a

1324
01:17:12,240 --> 01:17:13,480
force.
Like of course.

1325
01:17:13,480 --> 01:17:15,960
It's why start with the lithium.
What?

1326
01:17:15,960 --> 01:17:17,600
What else is what?
Else, I mean you've got 3

1327
01:17:17,600 --> 01:17:21,000
interesting levers.
As well in an ideal world, they

1328
01:17:21,000 --> 01:17:23,680
get half a billion dollars from
hitting the target on the road,

1329
01:17:23,680 --> 01:17:27,680
200 million and another 300 from
the energy assets over the next

1330
01:17:27,680 --> 01:17:33,760
year and then monetizing the the
loan yeah, would be the carry

1331
01:17:33,760 --> 01:17:35,920
loan, yeah.
The carry loan which is sort of.

1332
01:17:36,080 --> 01:17:41,240
790 As of last reporting, the.
The carry loan's an interesting

1333
01:17:41,240 --> 01:17:46,480
one and the carry loan's not
going to lie about the the cash

1334
01:17:46,480 --> 01:17:50,320
dynamics at at at Onslow, but
but.

1335
01:17:51,560 --> 01:17:52,160
Yeah.
So that's a.

1336
01:17:52,160 --> 01:17:56,840
Separate point.
But the the antecedent point is

1337
01:17:57,040 --> 01:17:58,320
why don't they just sell the
carry line?

1338
01:17:58,920 --> 01:18:02,040
They can, I think that.
They've sounded that option out

1339
01:18:02,120 --> 01:18:05,720
historically like, and it's an
expensive endeavour like, you

1340
01:18:05,720 --> 01:18:10,000
know you're you're forgoing a
pretty substantial, you know,

1341
01:18:10,240 --> 01:18:13,600
risk free rate for for for
enacting on that transaction.

1342
01:18:14,080 --> 01:18:15,360
Well, but is it a risk free
right?

1343
01:18:18,480 --> 01:18:22,440
Well, yeah, precisely in there
min res's view it is right.

1344
01:18:22,640 --> 01:18:27,600
So if if you had to transact on
that and so yeah, bewilders mean

1345
01:18:27,600 --> 01:18:28,640
that they.
Haven't already done this.

1346
01:18:28,920 --> 01:18:31,960
I would have thought that would
be that would be the the obvious

1347
01:18:31,960 --> 01:18:36,240
option and I can't imagine that
I mean and this is here.

1348
01:18:36,240 --> 01:18:38,200
This is where I'm I'm
desperately struggling to avoid

1349
01:18:38,200 --> 01:18:42,200
falsifying my thesis as to the
viability of oh as to the not

1350
01:18:42,200 --> 01:18:45,800
viability as to the as to the
nature of the ONS operations.

1351
01:18:45,800 --> 01:18:48,920
Because the fact that they
haven't sold this already is

1352
01:18:48,920 --> 01:18:53,040
perhaps a hint that that Onzo
may not be viewed as favourably

1353
01:18:53,040 --> 01:18:57,320
by.
Other market participants as.

1354
01:18:57,880 --> 01:19:01,240
As the company user and I'd flip
it I'd flip it I'd.

1355
01:19:01,240 --> 01:19:04,680
Say, I'd try and argue that
maybe the market has a more

1356
01:19:04,720 --> 01:19:07,720
maybe min res now has a more
somber view on lithium outlook

1357
01:19:07,720 --> 01:19:09,960
than they historically did right
now.

1358
01:19:10,000 --> 01:19:15,080
If, if, if minres has internally
come to the view that look, we

1359
01:19:15,080 --> 01:19:19,160
don't actually see it like too
much upside on the lithium price

1360
01:19:19,160 --> 01:19:22,520
for a long period of Fair number
of years ahead here.

1361
01:19:22,520 --> 01:19:24,400
And that's kind of consensus
outlook.

1362
01:19:24,880 --> 01:19:29,680
Well, if you can like you say if
the MPV is 0, maybe you can

1363
01:19:29,680 --> 01:19:33,600
actually sell it for 49% for you
know up to a billion dollars.

1364
01:19:33,600 --> 01:19:36,000
And that's, that's a lot of
money for something with MPV is

1365
01:19:36,000 --> 01:19:37,000
0.
But you've kept the mining

1366
01:19:37,000 --> 01:19:39,080
services contract and maybe
you've even kept some some

1367
01:19:39,080 --> 01:19:41,320
marketing volumes like and
you've kept some equity upside

1368
01:19:41,320 --> 01:19:44,400
because you still earn a fair
bit like I think I think that's

1369
01:19:44,400 --> 01:19:46,640
a pretty prudent like
transaction to have.

1370
01:19:46,640 --> 01:19:48,880
I think the stock would RIP if
they did it because they

1371
01:19:48,880 --> 01:19:52,720
alleviate a lot of liquidity
concerns in the process you are

1372
01:19:53,400 --> 01:19:56,400
building.
Into that a very bearish outlook

1373
01:19:56,400 --> 01:19:58,560
on lithium over the next five
years.

1374
01:19:59,720 --> 01:20:00,800
Not even.
Like not even.

1375
01:20:00,800 --> 01:20:03,240
Bearish.
I think it's just I got it.

1376
01:20:03,960 --> 01:20:05,360
Who knows?
Like I'm not kind of in the

1377
01:20:05,360 --> 01:20:09,760
business of predicting commodity
prices and I'm certainly always

1378
01:20:09,760 --> 01:20:12,400
cautious of when a mining
company predicts commodity

1379
01:20:12,400 --> 01:20:17,920
prices.
I I yeah, I think, I think.

1380
01:20:17,920 --> 01:20:21,280
The value that min red.
Sees in those assets is is

1381
01:20:21,280 --> 01:20:24,200
increasingly more towards the
mining services contracts

1382
01:20:24,200 --> 01:20:28,720
attached to those assets rather
than the equity and in the in in

1383
01:20:28,720 --> 01:20:32,160
the actual, you know line.
The other option is to.

1384
01:20:32,720 --> 01:20:36,600
Sell the other half of the road.
That that bit doesn't.

1385
01:20:37,800 --> 01:20:40,480
Makes sense to me.
I certainly don't think you'd

1386
01:20:40,480 --> 01:20:41,600
get.
Anything more than what you got

1387
01:20:41,600 --> 01:20:44,160
for the first half?
I saw that there was some

1388
01:20:44,240 --> 01:20:46,480
amusing speculation in The
Australian that they would get a

1389
01:20:46,520 --> 01:20:50,040
hefty control, that the that if
they sold the other half to for

1390
01:20:50,040 --> 01:20:52,120
Morgan Stanley, Morgan Stanley
would pay a hefty control

1391
01:20:52,120 --> 01:20:54,240
premium.
Yeah, which makes absolutely no

1392
01:20:54,240 --> 01:20:55,560
sense.
To me wonder where the.

1393
01:20:55,560 --> 01:21:01,080
Leak came from that is.
Just.

1394
01:21:01,440 --> 01:21:03,880
A puzzling thought after what
has happened since Morgan

1395
01:21:03,880 --> 01:21:06,200
Stanley bought the 49%.
Yeah, yeah.

1396
01:21:06,640 --> 01:21:09,040
But.
You have to remember that, that

1397
01:21:09,040 --> 01:21:11,520
that what they've sold is not,
you know, Morgan Stanley isn't

1398
01:21:11,520 --> 01:21:15,680
on the hook for half of the
repairs to the road, correct,

1399
01:21:15,680 --> 01:21:18,200
But Morgan.
Stanley don't get paid if Minrez

1400
01:21:18,200 --> 01:21:20,240
fails.
The mind doesn't work.

1401
01:21:20,240 --> 01:21:23,880
I mean if the entire company.
Fails if if if.

1402
01:21:23,880 --> 01:21:26,320
Onslow doesn't work right.
I mean, it still gets but

1403
01:21:26,520 --> 01:21:27,600
Morgan.
Stanley still gets but from

1404
01:21:27,600 --> 01:21:29,560
what?
Well, yeah, So you're saying so.

1405
01:21:29,760 --> 01:21:31,200
Yeah, sure.
So you're saying the downside

1406
01:21:31,200 --> 01:21:33,120
case is not like an?
Infrastructure asset, right,

1407
01:21:33,120 --> 01:21:37,720
like that thing's yeah, I, I, I
just think that flexing the

1408
01:21:37,720 --> 01:21:40,520
downside case from an
infrastructure perspective has

1409
01:21:40,520 --> 01:21:43,720
become increasingly a known
thing in the market.

1410
01:21:43,720 --> 01:21:47,320
Yeah, I'd be amazed if it, you
know, if investment committee

1411
01:21:47,400 --> 01:21:53,440
kind of approved a sale there at
a price comparable to what it

1412
01:21:53,440 --> 01:21:55,560
was in the past.
Yeah, I tend to agree, but.

1413
01:21:55,560 --> 01:21:57,520
I still would have thought that
it would be possible to just

1414
01:21:58,080 --> 01:22:00,440
sell.
I still would have preferred if

1415
01:22:00,440 --> 01:22:02,520
I if I'm in the position of
minerals, I still would prefer

1416
01:22:02,520 --> 01:22:07,400
to sell the other half of that
future revenue stream for the

1417
01:22:07,400 --> 01:22:10,080
same reason that I prefer to
sell the carry loan.

1418
01:22:10,960 --> 01:22:14,120
However, the.
The.

1419
01:22:16,800 --> 01:22:18,560
The.
Negative view about.

1420
01:22:18,560 --> 01:22:21,040
Either of those two assets, if
we call them assets may be the

1421
01:22:21,040 --> 01:22:24,360
same thing is what I'm saying,
which may be why they're turning

1422
01:22:24,360 --> 01:22:29,920
to lithium, but.
What I suspect the company would

1423
01:22:29,920 --> 01:22:31,920
prefer to do.
Is sell nothing.

1424
01:22:34,760 --> 01:22:36,120
I think.
I think.

1425
01:22:36,240 --> 01:22:39,200
The company's strong preference
is to sell nothing.

1426
01:22:41,840 --> 01:22:44,960
Do you think that they're.
You know, the businesses

1427
01:22:45,280 --> 01:22:49,880
liquidity needs are sufficient
to warrant selling nothing like

1428
01:22:49,880 --> 01:22:52,360
you alluded to the fact that you
think Max net debt actually

1429
01:22:52,360 --> 01:22:55,040
doesn't come until yeah, end of
this calendar year.

1430
01:22:55,040 --> 01:22:57,160
Yeah, Yeah.
So it's actually.

1431
01:22:57,160 --> 01:22:58,640
Justified just.
On that point, I think that.

1432
01:22:59,280 --> 01:23:04,920
Net debt when it's just got,
when it's revealed Wednesday in

1433
01:23:04,920 --> 01:23:08,440
the quarterly, I think that
there's a very real chance it

1434
01:23:08,440 --> 01:23:10,120
stays about where it was last
quarterly.

1435
01:23:10,120 --> 01:23:13,160
I think there are some the
dissidents in the market who

1436
01:23:13,160 --> 01:23:14,680
think that it's going to start
coming down.

1437
01:23:14,680 --> 01:23:17,080
I think that there's a very real
chance that stays about the

1438
01:23:17,080 --> 01:23:20,120
same.
Although what happens with the

1439
01:23:20,120 --> 01:23:24,000
currency may may mean that there
is a revision downward sort of

1440
01:23:24,000 --> 01:23:26,120
on paper.
That's not, it's not.

1441
01:23:26,200 --> 01:23:28,160
That doesn't tell you anything
about what's happening in terms

1442
01:23:28,160 --> 01:23:31,600
of the cash coming in and out of
the business, but.

1443
01:23:33,440 --> 01:23:36,320
Basically the reason I think.
That it's unlikely to have

1444
01:23:36,320 --> 01:23:40,920
changed is because I think that
we've had an extra 3 months of

1445
01:23:41,000 --> 01:23:43,640
of spending, of elevated
spending required at Onslow.

1446
01:23:44,600 --> 01:23:47,560
I think that three months from
now that number, that number

1447
01:23:47,560 --> 01:23:50,720
will start coming down 3 months
from from Wednesday.

1448
01:23:51,160 --> 01:23:54,120
I think we'll be, I think it
will be revealed to the market

1449
01:23:54,120 --> 01:23:56,480
that that number has started to
come down and the.

1450
01:23:57,680 --> 01:24:02,080
The road is supposedly like
supposed to be repaired by end

1451
01:24:02,080 --> 01:24:04,640
of September.
I I think it the roads.

1452
01:24:04,640 --> 01:24:08,800
Likely to be repaired by by
earlier than that, yeah, and.

1453
01:24:10,680 --> 01:24:17,240
Yeah, you.
Think that the Max debt

1454
01:24:17,240 --> 01:24:23,000
therefore will coincide with the
the the CapEx kind of you know

1455
01:24:23,200 --> 01:24:27,000
seizing well reparation CapEx
seizing well, yes, but more.

1456
01:24:27,000 --> 01:24:31,760
Importantly, proper earnings
from Onslow, repayment of the

1457
01:24:31,760 --> 01:24:37,440
carry loan and and and proper
free cash flow the the carry

1458
01:24:37,440 --> 01:24:39,760
loan makes a difference.
The $200 million contingent

1459
01:24:39,760 --> 01:24:42,360
contingent payment is expected,
of course, of course, but you

1460
01:24:42,360 --> 01:24:44,800
have to remember, and this is a.
Mistake that a lot of people

1461
01:24:44,800 --> 01:24:46,560
have made with this company over
the last six months.

1462
01:24:47,080 --> 01:24:49,560
Despite the failures of
disclosure and despite all the

1463
01:24:49,560 --> 01:24:53,640
drama that's been going on, we
can actually get our hands

1464
01:24:53,640 --> 01:24:59,880
around basic.
What's the word?

1465
01:24:59,880 --> 01:25:04,240
I'm searching for critical
claims about the nature of these

1466
01:25:04,240 --> 01:25:07,800
operations.
We can see how much iron ore is

1467
01:25:07,800 --> 01:25:11,560
being exported by this company.
The numbers don't lie in that

1468
01:25:11,560 --> 01:25:14,440
respect.
And there's been a dramatic step

1469
01:25:14,440 --> 01:25:20,240
up in exports over the last 12
weeks so that you know that that

1470
01:25:20,360 --> 01:25:25,640
ore has been paid for some of it
in advance, but but some of it's

1471
01:25:25,640 --> 01:25:30,320
been paid for now, I think.
I do think the market is

1472
01:25:30,320 --> 01:25:34,360
overlooking how much cash Onzo
will be generating for this

1473
01:25:34,360 --> 01:25:39,320
business over the next 12 months
What's the assuming that the

1474
01:25:39,320 --> 01:25:43,760
road holds up you know what's
the what's the hole in that

1475
01:25:43,760 --> 01:25:45,800
thesis key risk is iron or
practice yeah of.

1476
01:25:45,800 --> 01:25:46,960
Course, of course.
But yeah, I.

1477
01:25:47,320 --> 01:25:50,680
I don't like.
I I'd be willing to wager the

1478
01:25:50,680 --> 01:25:54,160
costs are substantially higher
than 49 bucks when everything's

1479
01:25:54,160 --> 01:25:57,200
said and done.
I just, yeah, like, like, kudos

1480
01:25:57,200 --> 01:25:58,400
to them if they can execute
that.

1481
01:25:58,400 --> 01:26:03,720
But I just think the reality of
delivering any project is is one

1482
01:26:03,720 --> 01:26:07,760
of us.
Surprised the upside in.

1483
01:26:08,000 --> 01:26:10,840
A very inordinate number of ways
that are originally maybe not

1484
01:26:11,640 --> 01:26:15,200
expected and kind of been.
Raised they have the track.

1485
01:26:15,200 --> 01:26:18,560
Record of delivering projects.
This is completely different to

1486
01:26:18,560 --> 01:26:20,120
any project they've ever
delivered before.

1487
01:26:20,440 --> 01:26:21,920
Like this is enormous.
This is not.

1488
01:26:22,280 --> 01:26:26,640
This is not, you know.
Cool, you know where they had.

1489
01:26:26,640 --> 01:26:29,800
To build the Carina Rd.
This is a, a transformative

1490
01:26:29,800 --> 01:26:31,760
project.
It's, it's, it's, it's, it's,

1491
01:26:31,840 --> 01:26:34,320
it's crazy that they built what
they did in the time frame that

1492
01:26:34,320 --> 01:26:35,760
they did.
It's incredible.

1493
01:26:35,760 --> 01:26:37,400
It is like, you know.
Like I'm not sure.

1494
01:26:37,400 --> 01:26:39,400
Another team could have done
that, but I think that that

1495
01:26:39,400 --> 01:26:44,440
comes with a lot of risks on on
on costs, a lot of pressure to

1496
01:26:44,440 --> 01:26:47,920
meet certain cost targets and
and that can come out in a

1497
01:26:47,920 --> 01:26:50,520
variety of ways.
All of that to say, I don't

1498
01:26:50,520 --> 01:26:52,040
think the costs are properly
understood.

1499
01:26:52,280 --> 01:26:54,360
I certainly don't have a firm
grip of what the unit costs are

1500
01:26:54,360 --> 01:26:56,920
going to be.
You think that 49's reasonable?

1501
01:26:56,920 --> 01:27:02,240
I think 49's unreasonable.
Now, all I have to say is, do I

1502
01:27:02,240 --> 01:27:04,720
think it's an asset that is
vulnerable to a downturn in the

1503
01:27:04,720 --> 01:27:06,960
iron ore market?
I do like, is iron ore being

1504
01:27:06,960 --> 01:27:08,200
very resilient right now?
Absolutely.

1505
01:27:08,200 --> 01:27:10,360
Could they absolutely just milk
the cow for a year?

1506
01:27:10,360 --> 01:27:12,520
And this, like, the debt's not a
concern at all because iron ore

1507
01:27:12,520 --> 01:27:15,600
prices are elevated 100 percent,
100%.

1508
01:27:16,440 --> 01:27:20,200
Yeah, I'll make a number of.
Comments about that, I think

1509
01:27:20,200 --> 01:27:24,760
that mean that the indebted
position of Min Res is is

1510
01:27:25,080 --> 01:27:28,480
confusing our understanding of
the cost profile of this

1511
01:27:28,480 --> 01:27:32,720
project.
A if.

1512
01:27:32,720 --> 01:27:36,880
Those costs are roughly right.
Then it's a, this is a, this is

1513
01:27:36,880 --> 01:27:41,680
a low cost iron ore project
that's you know, strip out some

1514
01:27:41,680 --> 01:27:45,280
of the min res margin and
convert it to US on AUS dollar

1515
01:27:45,280 --> 01:27:47,560
cost basis and compare that to
FMGS costs.

1516
01:27:47,560 --> 01:27:50,640
I disagree.
Yeah, I mean, like for one, they

1517
01:27:50,640 --> 01:27:54,320
don't actually convert the
carnage reduced when they show

1518
01:27:54,320 --> 01:27:56,880
the cost curve.
It's like presented on A on a D.

1519
01:27:59,200 --> 01:28:01,640
Mt basis instead of a WM.
T basis, it's like, you know,

1520
01:28:01,640 --> 01:28:04,880
there's a there's a number of
you know, every cost curves

1521
01:28:04,880 --> 01:28:09,000
forward for a variety of
reasons, but this is this is but

1522
01:28:09,080 --> 01:28:10,840
it's it's not a marginal.
Operation.

1523
01:28:11,680 --> 01:28:13,760
How do you know that?
Like the carry loan's still

1524
01:28:13,760 --> 01:28:15,360
going up.
It's certainly been marginal

1525
01:28:15,360 --> 01:28:19,920
today.
On a fully red basis like I.

1526
01:28:20,080 --> 01:28:22,960
Like your points received, there
should be a line of sight to

1527
01:28:23,280 --> 01:28:25,040
especially like on on on prices
today.

1528
01:28:25,040 --> 01:28:27,560
Like, you know, it'd be, I'd be
amazed if they didn't didn't

1529
01:28:27,680 --> 01:28:30,880
make free cash, you know, but
but I don't think the market

1530
01:28:30,880 --> 01:28:32,560
really knows what unit costs are
going to be.

1531
01:28:32,760 --> 01:28:36,280
I think the impact of third
party like trucks is is poorly

1532
01:28:36,280 --> 01:28:38,120
understood.
I disagree with your numbers on

1533
01:28:38,520 --> 01:28:41,720
TKMS, both six cents and 12
cents for, for both cases.

1534
01:28:42,760 --> 01:28:47,440
And I, I, I think they have to,
I think This is why the stock is

1535
01:28:47,440 --> 01:28:49,880
priced where it is, where you
think there's an opportunity

1536
01:28:50,200 --> 01:28:52,920
because, you know, like people
like me are skeptical and I

1537
01:28:52,920 --> 01:28:55,160
think they have to prove the
market wrong, right?

1538
01:28:55,160 --> 01:28:58,200
They have to prove not just for
next three months or next six

1539
01:28:58,200 --> 01:28:59,560
months.
I think they have to, they have

1540
01:28:59,560 --> 01:29:01,360
to prove themselves at this time
next year.

1541
01:29:01,360 --> 01:29:05,560
There's been a continuity of, of
delivery and an absence of, of,

1542
01:29:05,760 --> 01:29:09,880
of, of anomalies before like
it's, you know, that the market

1543
01:29:09,880 --> 01:29:11,840
can believe this, this project
in its entirety.

1544
01:29:11,840 --> 01:29:13,640
Yeah, I do think that there's a
risk.

1545
01:29:13,640 --> 01:29:19,800
That the reported costs in each
quarterly over the last, well,

1546
01:29:19,800 --> 01:29:21,440
let's just say the last
quarterly, this quarterly and

1547
01:29:21,440 --> 01:29:29,160
the coming quarterly
misunderstood due to the the the

1548
01:29:29,680 --> 01:29:32,120
loss of margin for the the
mining services business.

1549
01:29:32,120 --> 01:29:37,160
I think that Minres is wearing
costs that would otherwise make

1550
01:29:37,160 --> 01:29:41,480
that number that was last
reported at, say, 58, higher.

1551
01:29:41,480 --> 01:29:45,960
Than higher than 50.
Eight, yeah, and and in your.

1552
01:29:46,160 --> 01:29:49,120
Like in your experience,
following the company when they

1553
01:29:49,120 --> 01:29:51,920
have typically suggested capital
costs, for example, might be a

1554
01:29:51,960 --> 01:29:55,120
certain amount, have they had a
tendency to be larger or smaller

1555
01:29:55,120 --> 01:29:58,680
or on, on, you know, on par with
your expectations?

1556
01:29:58,720 --> 01:30:04,520
It's it's it's obvious that the
I just I would struggle to to

1557
01:30:04,520 --> 01:30:06,320
believe the 49.
I also struggle to believe

1558
01:30:06,320 --> 01:30:07,680
there's very maintenance
cutbacks on the road.

1559
01:30:07,680 --> 01:30:10,760
And it doesn't mean that the
cost can't go up, but it's still

1560
01:30:10,840 --> 01:30:13,520
have a project with sufficient
margin to repack their debt,

1561
01:30:13,520 --> 01:30:17,120
especially when I was 105 US
right now, like that's a, it's a

1562
01:30:17,120 --> 01:30:18,840
very healthy iron ore
environment for them to be

1563
01:30:18,840 --> 01:30:21,880
delivering this project in.
But but I don't think it's a

1564
01:30:21,880 --> 01:30:25,720
project that is, is is
definitionally resilient to your

1565
01:30:26,000 --> 01:30:28,920
worst case iron ore market.
No, perhaps not your worst case.

1566
01:30:28,920 --> 01:30:33,400
Iron ore market.
But it's easy to lose sight of

1567
01:30:33,400 --> 01:30:39,320
just what has been accomplished
here, given the the this the few

1568
01:30:39,320 --> 01:30:44,160
but fairly calamitous problems
that that have been run into.

1569
01:30:44,280 --> 01:30:45,880
You'd lose trust as an investor.
Yeah, yeah.

1570
01:30:45,880 --> 01:30:49,040
Of course, of course, but but.
I mean, and this is what is

1571
01:30:49,040 --> 01:30:52,040
truly crazy making about all
this, because if they had just

1572
01:30:52,040 --> 01:30:56,600
been completely honest upfront
about everything that was that

1573
01:30:56,720 --> 01:30:57,960
that had worked and hadn't
worked.

1574
01:30:58,160 --> 01:31:00,880
If they had said in January when
this weather happened, look, we

1575
01:31:00,880 --> 01:31:03,920
think we're going to have to
redo the entire Rd. from from

1576
01:31:03,920 --> 01:31:07,240
start to finish and it's going
to cost an extra 250 mil, 300

1577
01:31:07,240 --> 01:31:11,120
mil.
If that hadn't happened and

1578
01:31:11,120 --> 01:31:13,200
instead.
What had happened was initially

1579
01:31:13,320 --> 01:31:15,920
they had just said the road is
going to cost 300 million more

1580
01:31:15,920 --> 01:31:17,920
than they did say it was going
to cost.

1581
01:31:18,240 --> 01:31:20,640
Everyone would say, well,
whatever, this is still an

1582
01:31:20,640 --> 01:31:25,120
incredible project of incredible
scale coming in at at remarkable

1583
01:31:25,120 --> 01:31:30,280
on a remarkable cost level.
So it's very easy to get caught

1584
01:31:30,280 --> 01:31:35,560
up in the, in the, in the
day-to-day errors of disclosures

1585
01:31:35,560 --> 01:31:38,760
and the day-to-day operational
mishaps.

1586
01:31:38,760 --> 01:31:41,440
But, but just take a step back
and look at what, what this

1587
01:31:41,440 --> 01:31:44,120
project looks like.
That point matters.

1588
01:31:44,120 --> 01:31:48,640
A.
Lot I've got no doubt that like

1589
01:31:48,880 --> 01:31:51,800
part of the culture of minres
that has created the, you know,

1590
01:31:51,800 --> 01:31:54,840
the very value generative
business that it has been for a

1591
01:31:54,840 --> 01:31:56,720
long period of time comes from
this.

1592
01:31:56,720 --> 01:32:01,840
This kind of just like attitude
of making shit happen on a low

1593
01:32:01,840 --> 01:32:04,960
budget, you know, in a in a
crazy period of time with

1594
01:32:04,960 --> 01:32:07,720
people, you know, breaking all
sorts of records, doing things.

1595
01:32:07,720 --> 01:32:09,840
But I thought you were going to
say breaking all sorts of rules.

1596
01:32:09,840 --> 01:32:15,000
For it, but it's that mentality.
That like may also compromise

1597
01:32:15,000 --> 01:32:17,920
something that is a key critical
piece of infrastructure

1598
01:32:17,920 --> 01:32:21,680
underpinning it like they did
they deliver the, the the road

1599
01:32:21,680 --> 01:32:25,440
with the same appreciation for,
you know, critical delivery that

1600
01:32:25,440 --> 01:32:28,320
this is or, or was that same
mentality of kind of, you know,

1601
01:32:28,880 --> 01:32:31,480
build it on a much tighter
budget than maybe was was

1602
01:32:31,600 --> 01:32:34,600
desired by some, some people.
Maybe, you know, with, with

1603
01:32:35,000 --> 01:32:37,880
certain parameters or standards
kind of tightened here and there

1604
01:32:38,360 --> 01:32:40,680
with with assumptions that may
may be optimistic.

1605
01:32:40,680 --> 01:32:43,160
If you do that, if that's the
mentality and it's the the

1606
01:32:43,160 --> 01:32:47,000
typical mentality that also
creates value, well, then maybe

1607
01:32:47,000 --> 01:32:48,480
you've also made yourself
vulnerable.

1608
01:32:49,480 --> 01:32:52,680
That's the that's that's how I
see the risks associated

1609
01:32:52,760 --> 01:32:54,000
associated with this
infrastructure.

1610
01:32:54,160 --> 01:32:58,200
There's no doubt that there.
That the the tsunami gathering,

1611
01:32:58,880 --> 01:33:00,440
gathering force in the
background is the debt.

1612
01:33:01,040 --> 01:33:04,960
And that were you to take away
this debt, there would be, there

1613
01:33:04,960 --> 01:33:11,120
would be no doubt that that this
company had had a lot going for

1614
01:33:11,120 --> 01:33:15,680
it.
Has the timing being.

1615
01:33:15,680 --> 01:33:21,160
Unfortunate in terms of what's
happened with the debt, the.

1616
01:33:21,160 --> 01:33:23,960
Lithium Market.
The iron ore market to some

1617
01:33:23,960 --> 01:33:31,240
extent, yes, but but I don't
think that this project has been

1618
01:33:31,240 --> 01:33:35,000
appreciated for what it is.
And the meme, the meme out there

1619
01:33:35,000 --> 01:33:38,280
that Onslow is a company maker,
it's going to transform this

1620
01:33:38,280 --> 01:33:39,520
company.
Well, so far as I can tell,

1621
01:33:39,520 --> 01:33:43,360
that's not just a meme.
It is a genuine.

1622
01:33:43,840 --> 01:33:48,520
A genuinely transformational
project and I don't think we

1623
01:33:48,520 --> 01:33:54,400
should look through that on the
basis that on the basis that it

1624
01:33:54,400 --> 01:33:56,920
has some problems, it's
unconventional and involves told

1625
01:33:57,040 --> 01:34:01,480
iron ore tons, which, you know,
hardly, hardly screams low cost

1626
01:34:02,520 --> 01:34:04,400
and things have gone wrong with
the whole Rd.

1627
01:34:04,600 --> 01:34:09,840
I think that I think that the
problems are not insurmountable.

1628
01:34:09,840 --> 01:34:12,360
There's there's no evidence that
the problems with the road at

1629
01:34:12,360 --> 01:34:15,720
this stage are insurmountable.
And if they're not, I think that

1630
01:34:16,200 --> 01:34:18,920
the the valuation that has been
given to this company by the

1631
01:34:18,920 --> 01:34:21,560
market at the moment makes makes
very little sense.

1632
01:34:23,280 --> 01:34:26,120
At the end of the day, that's.
That's the investment thesis for

1633
01:34:26,120 --> 01:34:27,760
me.
It's not, it's not this is the

1634
01:34:27,760 --> 01:34:30,280
greatest company in the world.
It's going to be the next, next

1635
01:34:30,640 --> 01:34:37,520
BHP or, or or Rio Tinto.
It's that the risks against the

1636
01:34:37,520 --> 01:34:44,120
reward is not being not being
calculated in a, in a reasonable

1637
01:34:44,120 --> 01:34:47,800
manner at the moment.
I mean, go back a week before

1638
01:34:47,800 --> 01:34:51,600
the, the share price went from
from 24 to 32 or whatever

1639
01:34:51,600 --> 01:34:55,120
happened back.
But go back a week and, and the,

1640
01:34:55,440 --> 01:34:59,400
the valuation of this company is
getting pretty close to full

1641
01:34:59,400 --> 01:35:02,280
blown distress.
And I don't, I don't think the

1642
01:35:02,280 --> 01:35:08,040
company's in distress.
What was the either?

1643
01:35:08,040 --> 01:35:11,320
Time horizon or target price
when you bought in that you had

1644
01:35:11,320 --> 01:35:13,160
in March?
I'm pretty reluctant to give a.

1645
01:35:13,160 --> 01:35:14,600
Target price because that's
going to.

1646
01:35:15,600 --> 01:35:16,840
Is that how you thought about
going to imbue?

1647
01:35:16,840 --> 01:35:19,000
My words with.
More with more expertise and

1648
01:35:19,000 --> 01:35:24,560
confidence than they're worth.
But yeah, I mean, look, my basic

1649
01:35:24,760 --> 01:35:27,280
and this is going to really
trigger Trev, my basic, some of

1650
01:35:27,280 --> 01:35:30,880
the parts valuation basically
basically involved just looking

1651
01:35:30,880 --> 01:35:33,720
at the the revenue profile that
the company's likely to earn on

1652
01:35:33,720 --> 01:35:39,080
a on a EBITDA basis and checking
a multiple of 5 or 6 on that.

1653
01:35:41,040 --> 01:35:42,640
You know a multiple of 5 to
account for the fact.

1654
01:35:42,640 --> 01:35:46,240
That they got a lot of debt and
you know, you look at Onslow,

1655
01:35:46,880 --> 01:35:51,200
the mining services outside of
Onslow and then let's just say

1656
01:35:51,200 --> 01:35:56,040
A0 and lithium for now.
Take that, that revenue, sum it

1657
01:35:56,040 --> 01:36:00,000
up 2 billion.
Stick A5 or A6 on it, call it

1658
01:36:00,000 --> 01:36:01,280
A5.
Given they've got a lot of debt.

1659
01:36:01,920 --> 01:36:04,960
That's ten billion.
What's the company trading at

1660
01:36:04,960 --> 01:36:07,480
today?
5 billion equity, six.

1661
01:36:08,200 --> 01:36:11,920
Yeah, yeah, equity, but but I'm
using a multiple that's that's

1662
01:36:11,920 --> 01:36:13,880
compressed having regard to the
amount of debt they've got.

1663
01:36:14,600 --> 01:36:18,760
FMG doesn't trade on a multiple
of five, I think.

1664
01:36:19,120 --> 01:36:21,240
I don't think.
Yeah, yeah, there's definitely

1665
01:36:21,240 --> 01:36:22,840
different risk characteristics
for sure.

1666
01:36:23,320 --> 01:36:33,160
The yeah, the the EBITDA, like
the bullshit earnings.

1667
01:36:33,240 --> 01:36:36,360
It's it's.
This Am I allowed to swear on

1668
01:36:36,360 --> 01:36:37,680
this?
This is, yeah, this is another

1669
01:36:37,680 --> 01:36:40,880
gripe.
With the business as well, there

1670
01:36:40,880 --> 01:36:44,880
is a huge focus on EBITDA.
This can't be a mini specific,

1671
01:36:44,880 --> 01:36:47,080
right?
This is mini specific this.

1672
01:36:47,080 --> 01:36:54,000
Is not a widely adopted
financial metric of any other

1673
01:36:54,000 --> 01:36:55,760
mining company.
I granted there's a services

1674
01:36:56,320 --> 01:37:01,000
company here, which of course,
but but why, why use EBITDA,

1675
01:37:01,000 --> 01:37:02,880
right?
And well, I think the answer is

1676
01:37:02,880 --> 01:37:03,840
they can't.
They can't.

1677
01:37:03,840 --> 01:37:04,920
They don't know what to do with
the debt.

1678
01:37:05,120 --> 01:37:06,800
It's very difficult to give free
cash flow.

1679
01:37:06,800 --> 01:37:09,680
It's it's it's not just.
That I think it's like.

1680
01:37:11,960 --> 01:37:14,600
Also like depreciation.
Matters a lot to this business.

1681
01:37:14,600 --> 01:37:15,880
This is a capital intensive
business.

1682
01:37:15,880 --> 01:37:18,240
So what you know, why, why are
we giving, why are we talking

1683
01:37:18,240 --> 01:37:22,640
about EBITDA numbers and the
interchange ability of EBITDA

1684
01:37:22,640 --> 01:37:26,200
with profitable when you know,
when management talks is a is a

1685
01:37:26,200 --> 01:37:29,240
very like, you know, confusing
component of the company.

1686
01:37:29,240 --> 01:37:36,080
But I do think, I do think like
there's a have.

1687
01:37:36,080 --> 01:37:37,280
Have you?
Maybe bankers have.

1688
01:37:37,280 --> 01:37:39,360
Convinced the company of that
like, you know, if you point to

1689
01:37:39,520 --> 01:37:43,400
EBITDA growth, you point to
strong EBITDA growth, albeit I

1690
01:37:43,400 --> 01:37:46,480
can't remember the last quarter
that they had cash like like

1691
01:37:46,560 --> 01:37:49,160
honestly, I genuinely can't
remember the last quarter that

1692
01:37:49,160 --> 01:37:51,480
in the cash.
So but but EBITDA has continued

1693
01:37:51,480 --> 01:37:54,280
to grow in a variety of
different parts of the business

1694
01:37:54,360 --> 01:37:56,320
or at least quarter and quarter
from time to time.

1695
01:37:56,320 --> 01:38:00,520
Now why has that been a a, a
focal point?

1696
01:38:00,520 --> 01:38:03,440
Well, it's obviously like debt
covenants are tied to this there

1697
01:38:03,560 --> 01:38:06,600
like it matters to debt markets
and and the, you know, the

1698
01:38:06,720 --> 01:38:10,240
utilization of debt markets in
recent history, US bond market,

1699
01:38:11,000 --> 01:38:13,240
etcetera.
Like that's a way their bonds

1700
01:38:13,240 --> 01:38:15,680
aren't tied to it.
And the government, the

1701
01:38:15,680 --> 01:38:20,480
revolver, I believe it is, but,
but I just think you have to

1702
01:38:20,480 --> 01:38:23,280
look at my cash flow, you have
to look at free cash in this

1703
01:38:23,280 --> 01:38:26,280
business.
And yeah, the recent history

1704
01:38:26,280 --> 01:38:30,800
trend has been selling assets
to, to mitigate what's actually

1705
01:38:30,800 --> 01:38:34,760
happening to, you know, their,
the, the, the ultimate liquidity

1706
01:38:34,760 --> 01:38:37,160
and cash balance available.
I hope that trend turns now that

1707
01:38:37,160 --> 01:38:38,560
Onslow is kind of finding his
feet.

1708
01:38:38,800 --> 01:38:41,160
I've been surprised at the
volumes that they're doing.

1709
01:38:41,520 --> 01:38:44,520
I'm impressed at what they're
capable and able to do with the

1710
01:38:44,520 --> 01:38:45,880
Reliance and 3rd party
contractors.

1711
01:38:45,880 --> 01:38:49,040
I don't properly understand the
cost basis, especially given

1712
01:38:49,040 --> 01:38:50,600
the, the Reliance and 3rd party
contractors.

1713
01:38:50,600 --> 01:38:54,000
I'm nervous about, you know,
the, their ability to preserve

1714
01:38:54,400 --> 01:38:58,080
margin in delivering the cost
that the market expects there.

1715
01:38:58,080 --> 01:39:02,080
And I hope they can, they can
alleviate my, my nerves to that

1716
01:39:02,080 --> 01:39:04,120
respect in in the future
reporting periods.

1717
01:39:04,200 --> 01:39:07,800
I've despite whatever sentiment
that I've had from time to time,

1718
01:39:07,800 --> 01:39:11,240
like I've, I've never had a
position in stock like the, you

1719
01:39:11,240 --> 01:39:14,280
know, the entire duration we've
been doing the podcast and I'll

1720
01:39:14,440 --> 01:39:16,520
continue not until it's too
spicy for me, right.

1721
01:39:16,520 --> 01:39:18,840
But that doesn't match my risk.
It's a matter of principle more

1722
01:39:18,840 --> 01:39:20,360
than it is a.
Matter of the risk reward,

1723
01:39:20,360 --> 01:39:22,720
certainly both, yeah.
The risk reward, I think it is

1724
01:39:22,720 --> 01:39:28,160
still too spicy for me to like I
think you can have a a non

1725
01:39:28,160 --> 01:39:31,680
consensus view of operational
deliverability and still get

1726
01:39:31,760 --> 01:39:35,040
pants by commodity price on the
stock yeah, there's no.

1727
01:39:35,040 --> 01:39:37,600
Doubt that the price of iron
ore, not the price of lithium,

1728
01:39:37,600 --> 01:39:42,240
but the price of iron ore
matters a great deal.

1729
01:39:43,160 --> 01:39:44,840
Things over the next year and a
half.

1730
01:39:45,720 --> 01:39:49,440
But the the sentiment around
iron ore has been doom and gloom

1731
01:39:49,440 --> 01:39:51,840
for 20 years.
For the last 20 years, yeah,

1732
01:39:52,520 --> 01:39:54,280
it's been a long time.
Yeah, yeah.

1733
01:39:54,520 --> 01:39:57,440
What do you think end game looks
like end game?

1734
01:39:57,440 --> 01:40:02,840
For in. 12 months from now.
I'm hoping what?

1735
01:40:02,840 --> 01:40:08,000
This, what this experience has
convinced the management of this

1736
01:40:08,000 --> 01:40:12,360
company is that they need to
just have a core focus and they

1737
01:40:12,360 --> 01:40:16,560
need to do it well.
I don't think that I certainly

1738
01:40:16,560 --> 01:40:20,040
hope we're not going to have
another crenzy, frenzied,

1739
01:40:20,680 --> 01:40:27,720
frenzied spree of, of genius
capital allegation into

1740
01:40:27,920 --> 01:40:31,040
whatever's sexy three months
from now.

1741
01:40:31,760 --> 01:40:33,840
I think I mean, in that way, the
debt may be a good thing.

1742
01:40:33,840 --> 01:40:38,320
It may, it may constrain the the
worst impulses of of the company

1743
01:40:38,320 --> 01:40:42,560
and, and force them to to focus
only on what matters.

1744
01:40:43,080 --> 01:40:47,640
But, but I think my, we're right
to guess what this company looks

1745
01:40:47,640 --> 01:40:49,600
like in 12 months from now.
Not the share price.

1746
01:40:49,600 --> 01:40:51,800
I have no idea what the share
price look like, but we're right

1747
01:40:51,800 --> 01:40:53,600
to guess what Onza looks like in
12 months from now.

1748
01:40:53,960 --> 01:40:59,440
I would guess that it's
operating at or above 35,000,000

1749
01:40:59,440 --> 01:41:04,680
tons per annum in terms of
exports, in terms of cost, I

1750
01:41:04,680 --> 01:41:09,840
don't know.
But I, I think there's a,

1751
01:41:09,840 --> 01:41:15,040
there's a more than 50% chance
that certainly more than 50%

1752
01:41:15,040 --> 01:41:22,400
chance that haulage goes to plan
the road holds up and and this

1753
01:41:22,400 --> 01:41:26,760
project begins to be appreciated
for its, for its scale.

1754
01:41:28,760 --> 01:41:31,760
More than it is.
Being appreciated by the market

1755
01:41:31,760 --> 01:41:38,440
at the moment.
What do you think, God?

1756
01:41:39,520 --> 01:41:42,520
Yeah, there's like a a variety
of different outcomes things can

1757
01:41:42,520 --> 01:41:45,000
take on the balance of
probabilities.

1758
01:41:45,600 --> 01:41:47,280
Can I share?
Can I share with your audience?

1759
01:41:47,720 --> 01:41:49,880
What what you said to me when I
said to you, do you think the

1760
01:41:49,880 --> 01:41:54,160
share price of this company is
more likely to be 55 or 0 within

1761
01:41:54,160 --> 01:41:57,280
the next 12 months?
You asked 12 months is.

1762
01:41:57,280 --> 01:41:58,960
That what I might not have said
12 months I.

1763
01:41:59,440 --> 01:42:01,080
Think yeah, because if I recall.
Quickly.

1764
01:42:01,080 --> 01:42:03,000
Your answer was I think it could
be going to both.

1765
01:42:03,960 --> 01:42:06,400
Yep.
But.

1766
01:42:06,400 --> 01:42:09,080
I do struggle to see like.
Negative catalysts over the

1767
01:42:09,080 --> 01:42:12,920
next, I call it, call it five
months like I like I don't till

1768
01:42:12,920 --> 01:42:14,560
summer.
Yeah, yeah, I think.

1769
01:42:14,560 --> 01:42:16,480
I think I.
Think, I think there's a lot

1770
01:42:16,560 --> 01:42:18,680
weighing on, on summer and
there's a lot weighing on iron

1771
01:42:18,680 --> 01:42:24,680
oil price and you know like like
there's yeah, iron market

1772
01:42:24,680 --> 01:42:28,480
suddenly looks healthy again
after yeah and the lithium.

1773
01:42:28,480 --> 01:42:31,840
Market as well, perhaps, yeah.
Yeah.

1774
01:42:31,920 --> 01:42:33,600
I actually, I actually will
struggle to give you a

1775
01:42:33,600 --> 01:42:35,560
prediction because I think it's
so commodity focused when you've

1776
01:42:35,560 --> 01:42:38,840
got so much like debt in the
equity so levered to commodity

1777
01:42:38,840 --> 01:42:40,000
prices.
Yeah, yeah, yeah.

1778
01:42:40,120 --> 01:42:42,000
But but that's a very.
Different proposition.

1779
01:42:42,000 --> 01:42:43,760
And that's sort of, I'm fine
with that.

1780
01:42:43,880 --> 01:42:46,840
I'm fine with this being a play
on the iron ore price because

1781
01:42:47,080 --> 01:42:49,600
the iron ore price is not, it's
not high at the moment.

1782
01:42:49,840 --> 01:42:52,800
It's not, it's not, it's not
really low.

1783
01:42:52,800 --> 01:42:54,280
I don't know how you describe
the iron ore price at the

1784
01:42:54,360 --> 01:42:55,320
moment.
You can describe it.

1785
01:42:57,760 --> 01:43:01,200
As sort of floundering.
At a sort of at a price that

1786
01:43:01,200 --> 01:43:05,080
incentivizes production, but but
cuts out some of the very

1787
01:43:05,080 --> 01:43:08,000
marginal producers.
But yeah, if if this is just a

1788
01:43:08,000 --> 01:43:11,200
plan, the iron ore price, then
then the risk reward is is

1789
01:43:11,200 --> 01:43:14,120
fantastic.
What?

1790
01:43:14,120 --> 01:43:18,160
What key risks?
Have you identified and like you

1791
01:43:18,160 --> 01:43:20,600
know you kind of watching out
for other than commodity price?

1792
01:43:20,600 --> 01:43:22,640
Yeah, yeah.
So the quantity price is the.

1793
01:43:22,640 --> 01:43:26,840
Is the the price of iron ore?
I think is more important and

1794
01:43:26,960 --> 01:43:34,520
represents a A more.
A more.

1795
01:43:34,800 --> 01:43:38,080
Influential factor in respect of
the success of this company than

1796
01:43:38,080 --> 01:43:42,800
than the other than the other
factors combined, but I will be.

1797
01:43:42,800 --> 01:43:45,600
Disappointed if.
If they sell the lithium

1798
01:43:45,840 --> 01:43:48,320
business, if they sell half of
their of the lithium business

1799
01:43:49,160 --> 01:43:53,000
for for anything.
For any amount that they're

1800
01:43:53,000 --> 01:43:54,800
going to get offered.
I would be disappointed if they

1801
01:43:54,880 --> 01:43:57,480
if they sold it for so any
amount ever.

1802
01:43:57,800 --> 01:43:58,880
Well.
They're going to be offered

1803
01:43:58,880 --> 01:43:59,800
realistically.
Yeah, Yeah.

1804
01:43:59,800 --> 01:44:00,800
I mean, they're not going to be
offered.

1805
01:44:00,840 --> 01:44:02,360
They're not going to be offered.
If they were offered three

1806
01:44:02,360 --> 01:44:04,880
billion tomorrow for half a
living business, sign me up.

1807
01:44:05,400 --> 01:44:07,840
But I, I think that's struggled
to even get a billion in the

1808
01:44:07,840 --> 01:44:11,360
current market, particularly
given the the mining services

1809
01:44:12,040 --> 01:44:16,560
situation.
I think that if Chris Ellison

1810
01:44:16,560 --> 01:44:21,520
were to to to be fired or to
leave the company, that would be

1811
01:44:21,520 --> 01:44:23,840
a major downside risk from my
perspective.

1812
01:44:25,360 --> 01:44:28,960
I think that people who think he
is going to voluntarily retire

1813
01:44:28,960 --> 01:44:33,000
at the end of this transition
period are very confused indeed.

1814
01:44:35,000 --> 01:44:36,760
If there was any doubt that
that's not happening.

1815
01:44:36,760 --> 01:44:41,080
I think that was put to bed when
the chairman posted his when the

1816
01:44:41,080 --> 01:44:43,800
company posted the chairman's
governance slideshow the other

1817
01:44:43,800 --> 01:44:47,120
day that that basically said
Chris Ellis was not going

1818
01:44:47,120 --> 01:44:49,600
anywhere.
And that to me is a very

1819
01:44:49,600 --> 01:44:56,920
positive sign, not because I
think he's the the not because

1820
01:44:56,920 --> 01:44:59,360
he's my idol, but because I
think he's the the only thing

1821
01:44:59,360 --> 01:45:02,800
standing in the way of this,
between standing in the way of a

1822
01:45:02,840 --> 01:45:08,040
massive cat raise.
Other than those, I think the

1823
01:45:08,040 --> 01:45:14,560
only real risk that that.
Is worth worrying about is.

1824
01:45:14,560 --> 01:45:21,440
Is the road.
This this uncertainty.

1825
01:45:22,080 --> 01:45:24,440
Place havoc with with valuations
because how do you how do you

1826
01:45:24,440 --> 01:45:28,080
build in you know, what
percentage are you assigning to

1827
01:45:28,440 --> 01:45:30,560
the chance of the operation
falling over because the road

1828
01:45:30,560 --> 01:45:34,320
doesn't work.
I've had to assign in my sort of

1829
01:45:34,320 --> 01:45:38,400
model A0 percent chance of that
but but query whether that's

1830
01:45:38,400 --> 01:45:41,800
realistic but.
Otherwise, I think all the

1831
01:45:41,800 --> 01:45:44,400
other.
Components of the Onslow export

1832
01:45:44,400 --> 01:45:46,480
chain are working really well.
And I don't think there's any

1833
01:45:46,480 --> 01:45:50,440
risk associated with anything
from port to carriers.

1834
01:45:50,440 --> 01:45:53,160
And I don't think there's any
risk associated with or any real

1835
01:45:53,160 --> 01:45:57,800
risk associated with anything
from with anything from the ore

1836
01:45:57,920 --> 01:46:00,840
to the road.
What do you think?

1837
01:46:02,400 --> 01:46:03,680
I think.
It's a yeah.

1838
01:46:03,800 --> 01:46:06,320
Like, I don't disagree.
Like your point on Chris

1839
01:46:06,320 --> 01:46:10,680
Allison, Like, yeah.
That's that's.

1840
01:46:10,840 --> 01:46:14,160
I agree with like, you know, the
market's not pricing in or that

1841
01:46:14,360 --> 01:46:15,960
the market doesn't think that
he's going to be leaving.

1842
01:46:15,960 --> 01:46:18,440
I don't think there's any kind
of query about that.

1843
01:46:21,000 --> 01:46:24,680
To your point on.
If he were to if the board.

1844
01:46:24,680 --> 01:46:26,320
Were to announce tomorrow that
he'd been fired.

1845
01:46:26,840 --> 01:46:27,880
So you think the share price
would go?

1846
01:46:27,960 --> 01:46:29,520
I do think there's a chance of
that.

1847
01:46:29,520 --> 01:46:33,920
Like like, and I don't think
it's a zero chance only because

1848
01:46:33,920 --> 01:46:37,960
if there's like heightened ASIC
enforcement kind of warranting

1849
01:46:37,960 --> 01:46:41,080
it, which like who freaking
knows like where, where that's

1850
01:46:41,080 --> 01:46:43,920
at or anything.
But I'm just kind of like, yeah,

1851
01:46:43,920 --> 01:46:46,080
I don't think you can assign a
0% probability to that.

1852
01:46:46,080 --> 01:46:47,400
I think there's there is a
chance.

1853
01:46:47,600 --> 01:46:49,120
And do you think what, what do
you think would happen?

1854
01:46:49,200 --> 01:46:51,480
If that would happen it it, it
wouldn't be good like.

1855
01:46:51,560 --> 01:46:56,200
I do think like that, you know,
shareholders think that A, he is

1856
01:46:56,280 --> 01:46:59,320
like you say, most aligned to
get the company to a better

1857
01:46:59,320 --> 01:47:03,040
financial and operating position
and, and and B, can probably run

1858
01:47:03,040 --> 01:47:06,480
the company in a way that no
other yeah, management person

1859
01:47:06,480 --> 01:47:09,440
could from getting stuff done
perspective.

1860
01:47:10,680 --> 01:47:13,320
So yeah, I do think that's a,
that'd be a pretty significant

1861
01:47:13,320 --> 01:47:19,440
negative catalyst for the stock.
I I, I, I on my like my

1862
01:47:19,440 --> 01:47:21,800
intuition is that cost is
substantially higher than what

1863
01:47:21,800 --> 01:47:23,240
you think they are.
And what does that actually

1864
01:47:23,240 --> 01:47:25,200
mean?
It means that that, you know,

1865
01:47:25,200 --> 01:47:28,160
depending where iron ore prices
are, you're it's going to take a

1866
01:47:28,200 --> 01:47:33,120
fair bit longer to pay down the
debt than than maybe you might

1867
01:47:33,120 --> 01:47:34,840
think it to take down.
And what does that actually

1868
01:47:34,840 --> 01:47:36,520
mean?
It means that you're vulnerable

1869
01:47:36,520 --> 01:47:39,600
to a commodity down cycle for
for a longer period of time.

1870
01:47:39,600 --> 01:47:42,240
So that that if you're just
prolonging the period, you're

1871
01:47:42,240 --> 01:47:45,480
kind of flirting with, with a
high debt balance, you're kind

1872
01:47:45,480 --> 01:47:48,440
of at any point in time one
negative economic shock away

1873
01:47:48,440 --> 01:47:51,840
from being in a a very ugly
position, which would justify

1874
01:47:51,840 --> 01:47:54,240
doing something like selling.
Half of the within business per

1875
01:47:54,560 --> 01:47:56,160
per a billion, yeah.
Yeah.

1876
01:47:58,000 --> 01:48:01,480
But, yeah, it's been a pleasure
to, to, to talk through the

1877
01:48:01,480 --> 01:48:03,560
stock.
I'm, I'm glad you became

1878
01:48:03,560 --> 01:48:05,160
obsessed with it.
I'm glad you've, you know,

1879
01:48:05,280 --> 01:48:10,280
you've been willing to figure
out your thoughts, like, you

1880
01:48:10,280 --> 01:48:12,840
know, bet on them, articulate
them and share them with the,

1881
01:48:12,920 --> 01:48:16,120
the world.
You know, it's a it's a yeah,

1882
01:48:16,320 --> 01:48:18,560
it's an admirable thing to do.
There's plenty of minarest bulls

1883
01:48:18,560 --> 01:48:20,160
out there, but not many of them
are willing to put their face to

1884
01:48:20,160 --> 01:48:21,840
it.
So like I do, I do commend you,

1885
01:48:21,840 --> 01:48:23,560
for they're not, they're not
that foolish.

1886
01:48:26,960 --> 01:48:28,440
Yeah, well.
One stock portfolio.

1887
01:48:28,440 --> 01:48:30,680
I don't know if I can endorse
the merit of that though.

1888
01:48:32,640 --> 01:48:34,440
That's that's big, big kahunas,
mate.

1889
01:48:35,400 --> 01:48:39,880
And yeah, I'd like I thank you a
lot for even if to bring me

1890
01:48:39,880 --> 01:48:41,720
back.
On if it all goes to hell and

1891
01:48:42,680 --> 01:48:44,200
come back in one year, yeah.
There we go.

1892
01:48:44,480 --> 01:48:46,760
Yeah, Thanks Moz.
It's been a pleasure.

1893
01:48:47,120 --> 01:48:49,560
There we go, money minus.
Let us know.

1894
01:48:49,560 --> 01:48:52,880
Where you sit on the line, are
you long or are you short?

1895
01:48:52,960 --> 01:48:56,320
And a massive thank you to our
fantastic partners Grounded

1896
01:48:56,320 --> 01:48:59,080
Sanded Ground Support and Cross
Boundary.

1897
01:48:59,080 --> 01:49:04,440
Energy.
Now remember, I'm an idiot.

1898
01:49:04,720 --> 01:49:07,160
JD is an idiot.
If you thought any of this was

1899
01:49:07,160 --> 01:49:09,680
anything other than
entertainment, you're an idiot

1900
01:49:10,040 --> 01:49:11,200
and you need to read out a
disclaimer.