The miners most exposed to a meltdown…

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It really stands out in the sort
of sea of red when you see BHB

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down 9%, Rio 6 plus percent, FM
GI mean the whole market was

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down over 6% to start the day.
Which miners are vulnerable?

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And I came up with a list of 14
ASX listed companies.

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Good day money miners.
We've got a ripping show today.

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We've got to talk about a whole
heap.

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Trev, you and me today, mate,
we're going to talk about the

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market turmoil to start, right?
Ripping show mate.

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I think a lot of people are are
crying today.

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There's unprecedented levels of
interest in the bloodbath that

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has absolutely swept its way
into all markets, including our

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beloved commodities, metals and
mining market.

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Yeah, mate, that's a, that's a
pretty succinct way to put it.

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The interest was so strong that
I saw COMSEC was down market

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index we're having a couple
issues as well.

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So there was definitely a few
people refreshing their their

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watch lists and their they're
holding screens throughout the

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day.
We're also actually going to

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chat about Rio, aren't we?
Super interesting news from the

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AGM.
Activist investor got a bit of a

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bit of a spiel at the thing and
and you've got some some uranium

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market coverage I'm I'm eager to
to hear about.

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But the elephant in the roommate
is, yeah, just the evolving on a

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macro landscape, which is, which
is just feels like it's.

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It's rapidly changing every
single day.

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Things are are heating up,
markets are.

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Just unraveling everywhere.
No one really knows what's going

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on.
Of course there's the whole

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Trump tariff angle and
everything like that, but but

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it's a sight to behold and we
don't kind of see violence sell

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offs like this like all that
frequently in our markets.

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Yeah, completely, completely
agree.

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Trying to tell Ruth just how how
sort of seismic the the events

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are and the movements are today.
I'm a partner here.

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It's it's pretty wild.
It's somewhat reminiscent of the

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the early days of of COVID and
stuff.

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And yeah, that, that kind of
level of interest and eagerness

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is like you said, quite
something to behold.

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Obviously we're, we're no macro
experts, mate, but there's,

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there's a lot of these sort of
factors that really impact the

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the companies and the, the
jurisdictions that we like to

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talk about.
So I think we can make some sort

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of observations without sort of
passing comment on the entire

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global trading system to to
start with.

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Commodity prices, mate, a lot of
interesting moves.

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Copper.
Firstly, if you're looking at

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the copper futures which
references US prices which have

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been noticeably different to
other parts of the world given

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the tariff implications, they've
fallen from over well over 5

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bucks to a bit over 4 bucks a
pound now, and spot is below

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$4.00 a pound.
So that's in a in a week.

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In a week, it's fallen a dollar.
A dollar a pound in a week.

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Yeah, yeah, pretty, pretty huge.
And yeah, a lot of that was kind

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of in people's thinking they
were trying to get copper in

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before for those 25% tariffs hit
and a few other related kind of

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movements.
But they are pretty, pretty big

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movements for just a week.
You've also got iron ore, which

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is actually held up pretty,
pretty strong.

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You wouldn't think that looking
at the movements in Rio Tinto,

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BHB and FMG.
But last trading at 102 bucks on

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the 62% benchmark.
Now, obviously trading between

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Australia and and China doesn't
have the implications of those

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UF tariffs, US tariffs just yet,
but one to watch.

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You can also sort of say the
same for for Newcastle coal that

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stayed a bit flat at a pretty
subdued level and METCO was

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actually bounced if you're
looking at the the HCC premium

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low Vol index here in Australia,
gold is obviously a super, super

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interesting one too that peeled
off 3% on the day.

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But the the differentials
between looking at this in an

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Aussie dollar and AUS dollar
basis was fascinating.

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So in Aussie dollar terms still
holding and through today was

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actually moving further and
further north of 5000 Aussie

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bucks an ounce.
So it's.

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Still still north of 5K Aussie
and still north of 3K like US.

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Yeah, still, still a very
healthy market for gold.

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Pretty remarkable price.
Silver, the sort of poorer

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cousin that was getting a lot of
attention, peeled off 7% in a

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day, which is a, I guess a on
brand kind of move.

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When you look at gold and you
think about the relationship,

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particularly how people have
been kind of trading it.

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And then to round off on a
couple other medals, there's,

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there's a whole bunch that were
kind of exempt.

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These were medals that the US
needed and they didn't want to

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tariff or go too hard on.
So I don't think we need to run

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through every single medal, but
there was some interesting

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movements out there to say the
least.

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Mate, super, super intriguing.
It's it's, yeah, it's, it's

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these like moments when you have
just violent, yeah, violent

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moves only one way you have
these kind of liquidity

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crunches.
Yeah.

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Is there any squeeze like, you
know, removing of excessive

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leverage that might be in
financial markets in some way,

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shape or form.
And those same violent moves can

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sometimes create opportunities
when when things that should be,

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you know, traditionally
negatively correlated, they'll

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kind of all correlate downwards
together because of the

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liquidity crunch that can
sometimes come in these these

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types of market movements, which
are opportunities as well.

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Yeah.
Absolutely.

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And it's, it's amplified in the
the equities as well, right.

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The movements are even more
violent, sometimes without the

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commodity even being hit so
hard.

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Maybe that's why yeah, market
index and COMSEC and everything

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was having such, such huge
volume today.

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Everyone was was clearly looking
for bargains.

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JD they were, they were, they
were not crying at their yeah,

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equities in their portfolio.
They were just looking for new

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opportunities.
Yeah, yeah.

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I mean the, yeah, there's,
there's so many other other ways

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to kind of look at it and the
implications of of sort of

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passive money and flows and
stuff.

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But we'll put a pin in that for
now.

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I want to talk about rare earths
mate, because what's happening

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with rare earths is particularly
interesting amongst the sort of

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subset of metals and super,
super relevant to us.

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So if you think through the
trade war from China's

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perspective, they might be
looking at and thinking, hey,

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where can we where do we have a
bit of leverage?

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And rare earths I don't think is
a too bad starting perspective

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if you're if you're Chinese.
So they have made a number of

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changes to how they put these
trade controls on rare earth

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elements.
And it's not just across the,

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the whole subset of rare earth
elements.

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It's very specific in these, the
elements that they've chosen.

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So the way they've gone and put
this into practice is through

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the dual use product control
measures.

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So what this essentially means
is there's products out there or

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metals that can be used both for
civilian and military purposes.

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You know, they can be tech
software, a, a niche metal

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itself.
And it's more or less just a

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pretty bureaucratic way of
putting controls on products or

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metals without actually putting
controls on them.

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If you're, if you're still kind
of following me, you just put

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another layer or another couple
layers of bureaucracy and slow

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down the whole process.
So you have the outcome of less

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exports taking place because the
US actually isn't a big importer

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of these rare earth metals.
Japan is.

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So it hits Japan much stronger
than it hits most other

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countries on the planet.
But that can indirectly cause a

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rift between the US and Japan.
So that that is kind of one way

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to look at it.
So you've got metals like NDPR,

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which we talk about quite often
on the show, mate.

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They're not actually a part of
the controls because China

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doesn't export large volumes of
them.

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Yeah.
Then you've got the They're the

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magnets.
They're the light rare earth,

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like, you know, dominant ones.
NDPREDM praised him.

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Yeah.
Exactly.

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And then you, you've got the
magnets themselves, right, which

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China exports a huge amount of
and the the biggest trade

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partners actually Europe for
these, these magnets and you've

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got kind of high performance
magnets as well as your more

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run-of-the-mill kind of magnets.
So those high performance

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magnets, they're not getting hit
directly, they're getting hit

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indirectly through these
controls because they use

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elements like TB and DY in them,
which you can't get anywhere

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else in the world.
So.

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Those are those are the the
heavy rare earth.

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Elements exactly yeah and
they're the and they're the high

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performance magnets that people
want in electric vehicles in in

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wind turbines and these sorts of
things which which China has a

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huge competitive or comparative
advantage in in sort of old

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school like economic thinking
but that's not really a world

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where we're living in at the
moment but.

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I think the big military uses of
those, those two magnets as

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well, which, yeah, absolutely
obvious reasons about us a lot.

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Yeah.
And if you run through the other

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elements that are impacted,
there will be very niche ones

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that people have never really
heard of, like SMGDLUSC and and

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Y.
So those ones, you know, a lot

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of them have those military
applications and they are

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strategically sort of important.
And hence you see companies like

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Linus today, even though they're
not, you know, necessarily

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producing those ones being
sheltered because people are

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thinking, hey, they've got some
some importance and they will be

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exempt and there will be
national champions that get

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favourable treatment in the in
the world we're heading towards.

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Linus, Linus would suggest that
they from 2025 at some stage

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will have the ability to to
separate TB and DY from their

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land facility in Malaysia.
And they've they've also got a

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heavy rare earths agreement of
some description that's pretty

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early stage in Texas.
So Texas midriff, Yeah, yeah,

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between.
They're moving in that

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direction.
They they would, they would

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argue they've got they've got
exposure to that and also the

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NDPRFX as well.
But it is interesting that that.

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Not just yet, but yeah, yeah,
for sure.

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Just seeing them defy the
gravity is fascinating,

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especially when it looks like a
$7 billion company that hasn't

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made free cash flow in, like, a
very long time now.

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And yeah, it's cash.
IS needs a capital raise.

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00:10:01,600 --> 00:10:03,400
Cash is running skinny.
If they don't want to add debt,

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00:10:03,400 --> 00:10:05,360
then yeah, you know, capital
rates could be on the cards too.

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00:10:05,360 --> 00:10:09,760
But but he's yeah, yeah, the the
share price is he's been really,

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00:10:09,760 --> 00:10:14,120
really resilient at all of that.
Yeah, and it really stands out

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00:10:14,120 --> 00:10:18,280
in the the sort of sea of red
when you see BHB down 9%, Rio 6

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00:10:18,280 --> 00:10:22,120
plus percent, FM, GI mean the
whole market was down over 6% to

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00:10:22,120 --> 00:10:24,800
start the day and actually
recovered through the day.

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00:10:24,800 --> 00:10:28,000
I think as people sort of calmed
down and and took stock of

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00:10:28,000 --> 00:10:29,080
everything that's kind of
happening.

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00:10:29,080 --> 00:10:33,600
When I last looked it was down 3
and a bit sort of percent close

202
00:10:33,600 --> 00:10:37,400
to 4%.
So it leaves it kind of 15 odd

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00:10:37,400 --> 00:10:41,640
percent off all time highs that
were hit in just February of

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00:10:41,640 --> 00:10:43,520
this year, so just a just a
couple months ago.

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00:10:44,080 --> 00:10:46,680
What about like, yeah, what are
your takeaways just looking at

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00:10:46,680 --> 00:10:49,800
the Aussie market broadly, mate?
Well, one, one of the other

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00:10:49,800 --> 00:10:52,720
things I wanted to to mention
mate, was exchange rates.

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00:10:52,720 --> 00:10:55,520
So again, thinking through what
the implications of all these

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00:10:55,560 --> 00:10:58,360
volatile movements are on the
companies that we follow.

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00:10:58,360 --> 00:11:01,480
So the Aussie dollar dropped
pretty dramatically against the

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00:11:01,480 --> 00:11:03,600
USDA.
It hit a five year low.

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00:11:03,600 --> 00:11:05,160
It's in the.
And it's not, it's not kind of

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00:11:05,160 --> 00:11:05,920
five.
Yeah, it's.

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00:11:06,760 --> 00:11:10,160
Crazy and it's not necessarily
speaking to U.S. dollar strength

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00:11:10,160 --> 00:11:14,120
and people that are in the the
kind of macro weeds will know or

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00:11:14,520 --> 00:11:17,920
if they're of the the view that
these Mar a Lago accords is the

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00:11:18,360 --> 00:11:20,880
economic strategy that the US
wants to pursue.

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00:11:21,760 --> 00:11:25,920
They will be thinking that a
weaker U.S. dollar is the

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00:11:25,920 --> 00:11:30,240
outcome that the states wants.
And that's not, you know, really

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00:11:30,240 --> 00:11:32,640
coming into play when you look
at the US dollar against the

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00:11:32,640 --> 00:11:35,400
Aussie dollar because we're just
lumped into that sort of

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00:11:35,400 --> 00:11:38,840
commodity currency basket and
sold off pretty harshly.

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00:11:38,840 --> 00:11:41,960
So anyone that wants to go for a
holiday to the States has got a

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00:11:42,120 --> 00:11:45,320
a fair bit pricier holiday to
look forward to.

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00:11:45,760 --> 00:11:48,880
Now, given we've hit those five
year lows, I'll I'll flash up a

226
00:11:49,680 --> 00:11:53,720
A1 year and a 10 year chart and
you can see where we kind of sit

227
00:11:53,720 --> 00:11:56,120
in historical context, which is
kind of interesting.

228
00:11:56,120 --> 00:12:02,040
But how this plays into the
Aussie miners is it's kind of

229
00:12:02,040 --> 00:12:04,440
interesting to to think about.
And it's not all bad.

230
00:12:04,440 --> 00:12:08,440
There's a bit of respite here.
So by and large revenues for

231
00:12:08,440 --> 00:12:12,040
Aussie miners, if you say assume
a flat commodity price, they'll

232
00:12:12,040 --> 00:12:14,760
go up, your costs will stay the
same and your margin will

233
00:12:15,360 --> 00:12:17,880
improve.
And there's a, you know, a

234
00:12:17,880 --> 00:12:21,840
caveat for those unfortunate
miners that have US denominated

235
00:12:21,880 --> 00:12:23,760
debt.
They're going to be suffering a

236
00:12:23,760 --> 00:12:27,120
little bit on the back of that.
But in reality, the the weaker

237
00:12:27,120 --> 00:12:29,080
Aussie dollar is just going to
provide a bit of a cushion to

238
00:12:29,080 --> 00:12:32,200
falling commodity prices.
That's what we're kind of seeing

239
00:12:32,200 --> 00:12:34,840
today with commodities that have
peeled off substantially in a

240
00:12:34,840 --> 00:12:37,600
weaker dollar.
If I remember my year 11

241
00:12:37,600 --> 00:12:41,360
economics mate, the automatic
stabilize, automatic stabilizer

242
00:12:41,560 --> 00:12:44,880
of the yeah, the Aussie dollar.
Beautiful, beautiful thing to

243
00:12:44,880 --> 00:12:46,480
develop.
Yeah.

244
00:12:46,760 --> 00:12:50,520
So to to think to it logically,
you know, increased fears of

245
00:12:50,680 --> 00:12:54,560
global recession move their way
through to expectations of like

246
00:12:54,560 --> 00:12:57,600
lower commodity demand around
the world and less people came

247
00:12:57,600 --> 00:13:01,840
to gobble up those Aussie
dollars and more expensive trips

248
00:13:01,840 --> 00:13:03,920
overseas for for Aussies,
unfortunately mate.

249
00:13:04,560 --> 00:13:09,160
The the yeah, the changing
landscape is not just limited to

250
00:13:09,160 --> 00:13:12,640
the financial markets, it's kind
of traversing into the political

251
00:13:12,880 --> 00:13:17,640
markets as well.
Mate it if, if what we hadn't

252
00:13:17,840 --> 00:13:20,480
spoken about there was if that
wasn't interesting enough for,

253
00:13:20,480 --> 00:13:23,080
for people tuning in.
This is huge.

254
00:13:23,080 --> 00:13:25,400
This is so so interesting and
just chatting with mates about

255
00:13:25,400 --> 00:13:28,640
this on the on the weekend, like
the the ramifications of

256
00:13:28,840 --> 00:13:31,880
politicians here in Australia
and I thought Canada would be a

257
00:13:31,880 --> 00:13:34,560
good one to speak about too,
because they too have an

258
00:13:34,560 --> 00:13:39,480
election in the next 4 weeks.
They're a a company that, sorry,

259
00:13:39,480 --> 00:13:42,320
a country that's historically
been very close with the States

260
00:13:42,320 --> 00:13:43,920
and they're a commodity
producer.

261
00:13:44,320 --> 00:13:48,480
And I'll show here on Polymarket
this the sort of odds of who the

262
00:13:48,480 --> 00:13:51,720
next Prime Minister will be.
And you can see the trajectory

263
00:13:51,720 --> 00:13:56,000
that we've seen in Canada and
Australia is very sort of

264
00:13:56,000 --> 00:13:59,880
similar.
So the incumbent in both cases

265
00:14:00,320 --> 00:14:03,400
was heavily out of favour just a
few months back and they've

266
00:14:03,400 --> 00:14:08,280
moved to heavily in favour in
the past couple weeks or so,

267
00:14:08,280 --> 00:14:09,720
which is super interesting to
see.

268
00:14:09,720 --> 00:14:13,160
And this, these sort of numbers
from Polymarket are matched by

269
00:14:13,160 --> 00:14:15,440
the bookies.
I think this way of showing it

270
00:14:15,440 --> 00:14:17,800
is kind of interesting because
you can see how it's changed

271
00:14:18,360 --> 00:14:21,560
over time.
But we're a month out from both

272
00:14:21,560 --> 00:14:23,960
these sorts of elections.
And it's just fascinating to me

273
00:14:23,960 --> 00:14:27,840
to see what kind of associations
with Trump and more conservative

274
00:14:27,840 --> 00:14:31,480
kind of politics has done to
those kind of more aligned, if

275
00:14:31,480 --> 00:14:33,480
you like, politicians in each of
those countries.

276
00:14:33,480 --> 00:14:36,000
It's it's truly something to
behold, I reckon.

277
00:14:36,640 --> 00:14:41,320
And while thinking through like,
yeah, how, how the macro is

278
00:14:41,320 --> 00:14:46,320
going to impact the the mining
companies, I had a couple

279
00:14:46,320 --> 00:14:51,120
reflections and one like 1 was
like, OK, if, if there is going

280
00:14:51,120 --> 00:14:53,880
to be any sustained period of
time where commodity prices

281
00:14:53,880 --> 00:14:56,400
might be in a downturn or
suppressed, or at least the, the

282
00:14:56,400 --> 00:15:00,800
ones that are tied to, to, to
GDGDP are are you know, are in

283
00:15:00,800 --> 00:15:02,120
the doldrums for a period of
time.

284
00:15:02,120 --> 00:15:04,600
So, you know, I think that think
the copper and all the, all

285
00:15:04,600 --> 00:15:08,280
those kinds of metals that are
used and tied to population

286
00:15:08,280 --> 00:15:11,640
growth and GDP growth.
Well, if, if you think they

287
00:15:11,640 --> 00:15:14,040
could be susceptible to a
downturn, which miners are

288
00:15:14,040 --> 00:15:17,640
vulnerable.
And I, I came up with a, a list

289
00:15:17,640 --> 00:15:22,440
of 14 ASX listed companies and
to select them, I've, I've just

290
00:15:22,600 --> 00:15:24,400
looked for a combination of
financial leverage.

291
00:15:24,400 --> 00:15:26,800
So they've got a bunch of debt
combined with operational

292
00:15:26,800 --> 00:15:28,400
leverage.
Are they high cost producer?

293
00:15:29,880 --> 00:15:33,720
And you know, it's that
combination that when you've

294
00:15:33,720 --> 00:15:35,320
combined the operational
leverage with financial

295
00:15:35,320 --> 00:15:37,920
leverage, it can be, can be
fatal for for some miners.

296
00:15:37,920 --> 00:15:40,840
Time and time again, I removed
gold miners from the equation

297
00:15:40,840 --> 00:15:42,960
because goldies are having
their, their time in the

298
00:15:42,960 --> 00:15:45,960
sunshine.
They're for the most part making

299
00:15:45,960 --> 00:15:48,280
plenty of cash.
So no need to no need to get

300
00:15:48,280 --> 00:15:49,360
concerned about them at this
stage.

301
00:15:50,120 --> 00:15:51,760
Yeah, I love it mate.
What are the what are the

302
00:15:51,760 --> 00:15:54,720
companies that come to mind?
So I think Erie like the likes

303
00:15:54,720 --> 00:15:56,360
of Erie's, they've got 40
million bucks of drawing debt,

304
00:15:56,360 --> 00:15:59,120
26,000,000 of unrestricted cash
only.

305
00:15:59,920 --> 00:16:02,440
Yeah, I mean that they are
selling the Mount Colin and

306
00:16:02,440 --> 00:16:04,400
Barbara assets in Queensland,
which should should ease some,

307
00:16:04,520 --> 00:16:08,400
some pressures, you know, when,
whenever that comes through.

308
00:16:08,400 --> 00:16:09,760
And hopefully they get some cash
in the door.

309
00:16:09,760 --> 00:16:12,760
And it is, you know that their,
their lender is, is sold Pat.

310
00:16:12,760 --> 00:16:15,800
So, you know, maybe they can
have some have some flexibility

311
00:16:15,800 --> 00:16:17,520
around around the repayments all
that sort of stuff.

312
00:16:17,520 --> 00:16:20,040
But yeah, it'll, it'll get
tricky for them if copper

313
00:16:20,560 --> 00:16:23,360
remains.
Yeah, in that that $4.00 range,

314
00:16:23,800 --> 00:16:27,480
29 medals, so $0.11 today.
Can you believe they got?

315
00:16:27,680 --> 00:16:32,360
USA 162 million in in drawn debt
cash and equivalents of Aussie

316
00:16:32,360 --> 00:16:36,160
268,000,000 after the raise
completed last year but.

317
00:16:36,920 --> 00:16:40,320
Like the the the next company in
the list, that debt there is

318
00:16:40,480 --> 00:16:42,320
U.S. dollar debt and that hurts
them.

319
00:16:42,840 --> 00:16:44,640
The next company on the list, of
course, min res.

320
00:16:45,320 --> 00:16:48,560
I don't think we need to lament
over their indebtedness.

321
00:16:48,760 --> 00:16:52,440
But you know, I know did did did
did below 100 bucks.

322
00:16:52,440 --> 00:16:55,440
It bounced back up.
But you know, if you if you just

323
00:16:55,440 --> 00:16:58,960
think of that and then the the
late maturity bonds are trading

324
00:16:58,960 --> 00:17:02,880
below par as of late last week.
Ding Ding Ding Valley GC, who

325
00:17:02,960 --> 00:17:05,359
owns min res.
Yeah, interesting to see those

326
00:17:05,359 --> 00:17:08,520
junk bonds around the world
getting getting sold off as

327
00:17:08,520 --> 00:17:10,800
people sort of flock to safe
havens.

328
00:17:12,200 --> 00:17:15,880
Line town, so $0.46 today.
You know, operationally they're

329
00:17:15,880 --> 00:17:18,520
fighting a, a, a good fight on,
on ramp up today.

330
00:17:18,880 --> 00:17:21,960
The Ford debt is, is is
obviously cheap debt, but it's,

331
00:17:21,960 --> 00:17:26,079
it's still debt and the, the LG
convertible is, is U.S. dollar

332
00:17:26,079 --> 00:17:28,840
denominated.
So, yeah, as they, as they

333
00:17:28,840 --> 00:17:30,720
transition to, to the
underground mining and

334
00:17:30,720 --> 00:17:34,560
underground costs, you know,
become part of your base case,

335
00:17:35,040 --> 00:17:37,000
Yeah, they're just one to watch
in that environment.

336
00:17:37,040 --> 00:17:39,560
Sheffield.
So their, their, their costs

337
00:17:39,560 --> 00:17:42,000
have been higher than expected
in the studies they're doing

338
00:17:42,000 --> 00:17:45,360
drilling blast now that their
share of, of, of Thunderbird

339
00:17:45,360 --> 00:17:48,320
mineral sands, yeah, could be,
could be at at at risk if they

340
00:17:48,320 --> 00:17:51,000
can't get the operations
profitable in a sustainable way.

341
00:17:51,000 --> 00:17:54,000
And yeah, the those like, you
know, mineral sands products are

342
00:17:54,040 --> 00:17:58,480
very tied to, to, to global
growth Metro mining.

343
00:17:59,520 --> 00:18:00,840
Little.
Little windows come out of their

344
00:18:00,840 --> 00:18:03,840
sales as the book site market
has has has moderated.

345
00:18:04,240 --> 00:18:08,520
They're still reducing their own
costs via adding scale and

346
00:18:08,520 --> 00:18:11,520
they're they're ramping that up.
But the cap structure still has

347
00:18:11,520 --> 00:18:14,000
like US 51 million in, in drawn
debt.

348
00:18:14,040 --> 00:18:15,880
At least they have a currency
hedge though.

349
00:18:15,880 --> 00:18:20,280
So the the effects of the, the,
the US dollar aren't, you know,

350
00:18:20,400 --> 00:18:21,520
aren't hurting them on that
front.

351
00:18:21,520 --> 00:18:25,480
It's a hedge at $0.68 Aussie
burgundy diamonds.

352
00:18:26,320 --> 00:18:29,200
Things have been tough for for
them of like like operational

353
00:18:29,200 --> 00:18:31,160
leverage, financial leverage and
the diamond market was in the

354
00:18:31,160 --> 00:18:33,520
dumps before the market wide
sell off.

355
00:18:34,040 --> 00:18:39,640
So, yeah, it's tricky if, if if,
you know, consumers feel their

356
00:18:39,640 --> 00:18:43,000
their spending pinched even
more, are they going to is that,

357
00:18:43,000 --> 00:18:44,880
you know, what does that do for
the, for the diamond market

358
00:18:44,880 --> 00:18:46,560
Further, is it an open-ended
question?

359
00:18:47,320 --> 00:18:50,520
Yeah, I agreed that that sort of
end of the market is going to be

360
00:18:50,520 --> 00:18:53,800
in a little bit of strife for at
least a little while longer.

361
00:18:53,800 --> 00:18:55,280
Hey, what's next under this
name?

362
00:18:55,280 --> 00:18:59,040
Bowen coking coal I recently
reaffirmed guidance despite, you

363
00:18:59,040 --> 00:19:02,480
know, some bad some bad weather,
but there's US 34 million in

364
00:19:02,480 --> 00:19:06,080
debt owing to to Taurus, another
Aussie 45 million to to New Hope

365
00:19:06,080 --> 00:19:08,720
and that's before the 40 million
in convertible notes in the cap

366
00:19:08,720 --> 00:19:11,520
structure too.
It's just a, you know, a fair

367
00:19:11,520 --> 00:19:13,080
bit to to overcome on the
leverage front.

368
00:19:13,520 --> 00:19:16,280
Phoenix, the balance sheet
actually isn't that bad, but

369
00:19:16,280 --> 00:19:19,120
they're they're just, you know,
in that bracket of of a high

370
00:19:19,120 --> 00:19:23,200
cost iron ore producers, unlike
min resto, the Aussie dollar

371
00:19:23,360 --> 00:19:26,720
does act as an auto stabilizer
on on any iron ore price decline

372
00:19:26,720 --> 00:19:28,160
here.
So just want, want to watch if

373
00:19:28,200 --> 00:19:31,920
if I know kind of feels any
pain, which it has been resumed

374
00:19:31,920 --> 00:19:37,440
on Mac copper.
So they're $12.76 today.

375
00:19:37,440 --> 00:19:40,680
And that's the the lowest
they've traded the the entire

376
00:19:40,680 --> 00:19:44,680
life they've been on the ASX.
They they IPO D or their CDISIP

377
00:19:44,680 --> 00:19:46,640
OED on the ASX at 17 Aussie
dollars.

378
00:19:47,200 --> 00:19:52,120
They have recently refinanced
the the high cost Sprite MEZ

379
00:19:52,120 --> 00:19:53,840
facility.
But there's still there's still

380
00:19:53,840 --> 00:19:55,640
a fair bit of debt in the cap
structure.

381
00:19:55,640 --> 00:20:00,840
And the, you know, last noted
kind of drawn debt was 225

382
00:20:00,840 --> 00:20:03,400
million U.S. dollars.
And again, U.S. dollar

383
00:20:03,520 --> 00:20:05,520
denominated debts that double
edged sword.

384
00:20:05,520 --> 00:20:08,680
Yeah, unfortunately kind of kind
of hurts with the with the

385
00:20:08,680 --> 00:20:11,920
Aussie dollar costs.
In in this evolving, yeah,

386
00:20:11,920 --> 00:20:16,320
commodity price dynamic.
We we've heard MA rumours, but

387
00:20:16,520 --> 00:20:19,040
about about Matt copper maybe
being a takeover target.

388
00:20:19,040 --> 00:20:21,560
But you know, those rumours are
a few weeks old now and the

389
00:20:21,960 --> 00:20:24,400
market volatility can can
sometimes and often kind of kill

390
00:20:24,400 --> 00:20:25,920
deals.
So, so who knows the status of

391
00:20:25,920 --> 00:20:29,920
that, but you know, TBA Saira.
Just.

392
00:20:30,440 --> 00:20:32,480
You know, pretty, pretty grim
cap structure.

393
00:20:33,120 --> 00:20:35,960
They only had US 30 million of
unrestricted cash at 31st of

394
00:20:35,960 --> 00:20:38,000
December.
Heavily indebted cap structure,

395
00:20:38,920 --> 00:20:41,480
albeit that we're friendly
government lenders, but yeah,

396
00:20:41,840 --> 00:20:45,200
tricky pathway to, to, to clean
out that cap structure, that's

397
00:20:45,200 --> 00:20:47,960
for sure, Adriatic.
Last couple of night.

398
00:20:48,000 --> 00:20:49,240
Yeah.
So Adriatic, I don't know if we

399
00:20:49,240 --> 00:20:52,640
can call them a high cost miner
necessarily, but hopefully not

400
00:20:52,640 --> 00:20:55,960
in the long run, but ramp up,
you know, that the high costs

401
00:20:55,960 --> 00:20:57,760
being well documented to to
date.

402
00:20:58,200 --> 00:21:01,800
And yeah, the cap structure
means it's still still

403
00:21:01,800 --> 00:21:04,960
vulnerable if if commodity
prices are are are hit.

404
00:21:05,520 --> 00:21:09,560
There's US $120 million.
I went to Ryan, another US 22

405
00:21:09,560 --> 00:21:13,720
million in a copper stream and
US $25 million prepaid to to

406
00:21:13,720 --> 00:21:16,080
traffic.
So, yeah, watching, watching

407
00:21:16,080 --> 00:21:17,480
Mike, what what happens on that
front?

408
00:21:17,480 --> 00:21:21,240
But hopefully they can not be a
high cost mine for too much

409
00:21:21,240 --> 00:21:24,800
longer.
Paladin can't I can't be

410
00:21:24,800 --> 00:21:27,560
convinced of the merit of why
they decided to put debt in

411
00:21:27,560 --> 00:21:30,120
their cap structure when I could
have taken that risk off the

412
00:21:30,120 --> 00:21:33,560
table with, you know, very
minimally dilutive equity 18

413
00:21:33,560 --> 00:21:35,720
months ago.
And yet right now they've got

414
00:21:35,720 --> 00:21:41,160
USA $100 million drawn and at
share price it's four year lows

415
00:21:41,280 --> 00:21:43,400
of 4 bucks.
So I figure.

416
00:21:43,400 --> 00:21:45,880
Yeah, bit of a spoiler, but
we're going to talk about

417
00:21:45,880 --> 00:21:49,560
Paladin in a moment.
And I think personally this is a

418
00:21:49,560 --> 00:21:56,160
a fascinating education in in
the the use of leverage and how

419
00:21:56,160 --> 00:21:59,520
quick markets can turn.
But As for the the whole list,

420
00:21:59,520 --> 00:22:03,480
super, super interesting like
you said at the top, operating

421
00:22:03,480 --> 00:22:07,360
leverage and financial leverage,
an awesome combination when

422
00:22:07,360 --> 00:22:09,920
things are going well and
they're a horrific combination

423
00:22:09,920 --> 00:22:14,120
when things aren't going well.
And yeah, companies in in

424
00:22:14,120 --> 00:22:18,120
varying levels of sort of
trouble in that sort of group of

425
00:22:18,360 --> 00:22:21,280
of 14 businesses there so.
Yeah, I mean, there's nothing

426
00:22:21,280 --> 00:22:23,600
fatal about any of those
situations right now or maybe

427
00:22:23,600 --> 00:22:26,800
one or two.
There could be, but, but they're

428
00:22:26,800 --> 00:22:30,080
just on the on the, you know,
the high risk watch, watch list.

429
00:22:30,080 --> 00:22:35,040
If if if commodities are are up
against a, you know, a a tricky

430
00:22:35,360 --> 00:22:37,320
short, medium term period of
time, I think.

431
00:22:38,200 --> 00:22:43,560
Yeah, Yeah, commodities and and
as goes with commodities, the,

432
00:22:43,560 --> 00:22:47,600
the, the desire of investors,
whether that be on the debt side

433
00:22:47,600 --> 00:22:53,160
or the equity side to refinance
you right or recapitalize you.

434
00:22:53,320 --> 00:22:56,920
They tend to move together those
two commodities and and the

435
00:22:56,920 --> 00:23:00,640
ability to refinance.
So it'd be an interesting future

436
00:23:00,640 --> 00:23:02,760
if things keep going on the way
they've been going the last the

437
00:23:02,760 --> 00:23:03,760
last couple weeks.
Hey.

438
00:23:04,400 --> 00:23:09,160
Now, JD, did you see the the
biggest news item from last week

439
00:23:09,160 --> 00:23:12,040
that we didn't talk about?
This is huge.

440
00:23:12,640 --> 00:23:15,320
It's it's about the most
interesting new cop of mine in

441
00:23:15,320 --> 00:23:16,880
the world, Kamala Kakula, of
course.

442
00:23:16,880 --> 00:23:20,160
Well, Kamala Copper has just
signed a massive agreement for

443
00:23:20,160 --> 00:23:23,040
base load energy with none other
than cross boundary energy.

444
00:23:24,680 --> 00:23:26,840
Mate, I must have missed that
one, but you've got me in free.

445
00:23:26,840 --> 00:23:29,240
Tell me more.
Pull your head in mate and keep

446
00:23:29,280 --> 00:23:33,400
up with the the mining news
because we're talking a 22 MW

447
00:23:33,400 --> 00:23:38,080
peak solar PV system and a 526
MW hour battery energy storage

448
00:23:38,080 --> 00:23:39,000
system.
Best.

449
00:23:39,720 --> 00:23:43,560
The plant will provide a 30 MW
dispatchable renewable base load

450
00:23:43,640 --> 00:23:46,440
energy supply to the mine,
offsetting fuel generators and

451
00:23:46,440 --> 00:23:49,400
shrinking carbon emissions by
79,000 tonnes every single.

452
00:23:49,520 --> 00:23:52,080
Year, right?
They are very, very, very big

453
00:23:52,080 --> 00:23:54,840
numbers.
It's huge and it gets better.

454
00:23:55,000 --> 00:23:57,640
So Cross Boundary energy will
own and operate the plant and

455
00:23:57,640 --> 00:23:59,520
Kamal copper will pay for the
energy it consumes.

456
00:23:59,520 --> 00:24:01,080
Now how is that for capital
efficiency?

457
00:24:01,080 --> 00:24:04,960
This plant is expected to
produce 300,000 MW hours of

458
00:24:04,960 --> 00:24:08,200
clean energy every single year.
I'm blown away mate.

459
00:24:08,280 --> 00:24:12,040
As you should.
Be mate and many, many mines

460
00:24:12,040 --> 00:24:14,680
they've incorporated like solar
PV and best systems into their

461
00:24:14,680 --> 00:24:17,080
into their operations.
But the supply of base load

462
00:24:17,080 --> 00:24:21,360
energy from that is so rare and
the sector I think is, is

463
00:24:21,360 --> 00:24:24,640
typically being cautious of
intermittency from from from

464
00:24:24,640 --> 00:24:27,120
doing so.
The big story here, in my

465
00:24:27,120 --> 00:24:30,400
opinion, is of the increasing
efficiency of solar PV and the

466
00:24:30,400 --> 00:24:33,960
declining cost of best
components, allowing a renewable

467
00:24:33,960 --> 00:24:36,800
base load system that is more
viable and cheaper than the

468
00:24:36,800 --> 00:24:40,440
diesel generators.
Completely agree with what

469
00:24:40,440 --> 00:24:42,080
you've said mate.
It's pretty straightforward.

470
00:24:42,080 --> 00:24:44,160
If you're a mining company out
there you know what to do.

471
00:24:44,280 --> 00:24:47,800
Give Tim Taylor a cross boundary
energy a cool and fix all your

472
00:24:47,880 --> 00:24:50,280
power problems right now.
Go, Tim, go cross boundary

473
00:24:50,280 --> 00:24:52,720
energy.
All right mate, let's talk about

474
00:24:52,720 --> 00:24:58,280
the Rio Tinto Jewel listed
structure debate.

475
00:24:58,280 --> 00:24:59,800
This is a a super interesting
one.

476
00:25:00,480 --> 00:25:03,760
So yeah, I, I was, I was on a.
Flight yesterday from.

477
00:25:04,280 --> 00:25:07,400
From Calgary to Perth.
And so I thought I better

478
00:25:07,400 --> 00:25:09,920
download something to, to listen
to on the flight.

479
00:25:09,960 --> 00:25:13,440
I, I chose the Rio Tinto AGM
because that's, that's gotta be

480
00:25:13,480 --> 00:25:17,600
interesting, right?
And to my surprise, Jada, it

481
00:25:17,600 --> 00:25:20,840
actually was the, the highlight
for me was when they gave the

482
00:25:20,840 --> 00:25:24,360
floor to the, the activist
shareholder Palliser Capital

483
00:25:24,600 --> 00:25:29,400
for, for a good 10 minutes to,
to share their logic behind the

484
00:25:29,400 --> 00:25:33,280
campaign that they have run
recently for Rio Tinto to unify

485
00:25:33,600 --> 00:25:36,640
it's dual listed structure.
And if that sounds a bit

486
00:25:36,640 --> 00:25:39,680
esoteric, it's, it's worth, you
know, me giving a bit of

487
00:25:39,680 --> 00:25:43,480
background, I think Rio Tinto,
they operate under this dual

488
00:25:43,480 --> 00:25:48,440
listed company structure or DLC,
maintaining their primary

489
00:25:48,440 --> 00:25:53,240
listings on both the London
Stock Exchange and the

490
00:25:53,240 --> 00:25:55,520
Australian Stock Exchange at the
same time.

491
00:25:55,520 --> 00:25:59,800
But this set up has been in
place since 1995, aiming to to,

492
00:26:00,200 --> 00:26:02,800
you know, unify the interests of
shareholders across both of

493
00:26:02,800 --> 00:26:04,480
those separate kind of
jurisdictions.

494
00:26:05,080 --> 00:26:08,320
In fact, 77% of Rio Tinto's
shares are traded on the London

495
00:26:08,320 --> 00:26:13,160
Stock Exchange through Rio Tinto
PLC, and the other 23% are

496
00:26:13,160 --> 00:26:16,640
traded on the Australian Stock
Exchange under Rio Rio Tinto

497
00:26:16,640 --> 00:26:18,840
Limited.
So they're actually 2 separate

498
00:26:18,840 --> 00:26:20,600
companies.
Dual listed company.

499
00:26:20,720 --> 00:26:24,720
Structure.
However, enter Palliser Capital

500
00:26:25,320 --> 00:26:29,720
hedge fund with a stake in Rio
Tinto, and Palliser contends

501
00:26:29,720 --> 00:26:33,560
that this dual structure has
been detrimental, allegedly

502
00:26:33,560 --> 00:26:38,040
eroding shareholder value.
By as much as $50 billion over,

503
00:26:38,120 --> 00:26:41,240
you know, the recent history
they they argue that unifying

504
00:26:41,320 --> 00:26:44,720
the the listings under a single
Australian entity would unlock

505
00:26:44,720 --> 00:26:47,720
significant value, enhance
strategic flexibility and

506
00:26:47,720 --> 00:26:49,600
simplify the corporate
governance.

507
00:26:50,080 --> 00:26:54,080
In December last year, Palasa
they were, you know, backed by

508
00:26:54,080 --> 00:26:57,240
over 100 shareholders.
They submitted a, a resolution

509
00:26:58,080 --> 00:27:02,040
to, to, you know, to be had at
Brio Tinto's PLCAGM calling for

510
00:27:02,040 --> 00:27:04,720
an independent review of the DLC
structure.

511
00:27:04,720 --> 00:27:07,360
So they're not, they're not
asking for resolution to, to

512
00:27:07,360 --> 00:27:09,880
unify the DLC structure.
They're just asking for an

513
00:27:09,880 --> 00:27:14,600
independent review to be, you
know, embarked on by, by Rio.

514
00:27:15,560 --> 00:27:18,200
They emphasized that such review
would allow shareholders to make

515
00:27:18,600 --> 00:27:20,960
informed decisions about the
company's future.

516
00:27:21,800 --> 00:27:24,520
And their campaign has been
sophisticated.

517
00:27:24,800 --> 00:27:28,400
Like, like Palliser, they are a
relatively new kid on the block

518
00:27:28,400 --> 00:27:32,560
as far as hedge funds go.
In fact, I think I think Rio was

519
00:27:32,560 --> 00:27:35,280
their first publicly named
target of of shareholder

520
00:27:35,280 --> 00:27:37,200
activism since launching the
fund.

521
00:27:37,840 --> 00:27:40,280
But people behind Palliser are
seasoned campaigners.

522
00:27:40,280 --> 00:27:43,560
Notably, the CIO is well, the
chief investment officer is

523
00:27:43,560 --> 00:27:46,560
James Smith, who who previously
worked for famous global

524
00:27:46,560 --> 00:27:49,280
activist fund Elliot.
You would have heard about

525
00:27:49,280 --> 00:27:53,720
Elliot before JD.
Once or twice made of note and

526
00:27:53,760 --> 00:27:56,440
relevant here was their famous
battle with BHP.

527
00:27:56,840 --> 00:28:00,320
Indeed, James Smith.
He was, yeah, pretty involved in

528
00:28:00,320 --> 00:28:02,880
Elliot.
Successful campaign against BHP

529
00:28:02,880 --> 00:28:06,120
which kicked off back in 27,
encouraging them to do the same

530
00:28:06,120 --> 00:28:08,560
thing and unify their DLC
structure.

531
00:28:09,000 --> 00:28:12,720
It took four years before BHP's
board themselves supported the

532
00:28:12,720 --> 00:28:15,920
unification.
And by the way, it didn't didn't

533
00:28:15,920 --> 00:28:18,640
go into effect until January
2022.

534
00:28:18,760 --> 00:28:22,200
So you know, it's a long time
for, for, for things to kind of

535
00:28:22,200 --> 00:28:25,280
turn around.
Similar to BHP's board back in

536
00:28:25,280 --> 00:28:30,200
2017, Rio Tinto's board has been
steadfast in opposing the

537
00:28:30,200 --> 00:28:32,440
unification of their DLC
structure.

538
00:28:32,480 --> 00:28:36,760
You know the the you know the
arguments put forward today they

539
00:28:36,760 --> 00:28:39,160
region his board argue that
unification would incur

540
00:28:39,160 --> 00:28:43,120
substantial tax costs somewhere
between 7 billion and 15 billion

541
00:28:43,880 --> 00:28:46,680
Palace that contend that but
that that Britain his board say

542
00:28:46,680 --> 00:28:49,840
that could lead to the loss of
valuable franking credits which

543
00:28:49,840 --> 00:28:52,480
benefit Australian shareholders
through tax sufficient

544
00:28:52,480 --> 00:28:55,040
dividends.
The board maintains that the the

545
00:28:55,040 --> 00:28:59,040
current structure offers
strategic flexibility and that

546
00:28:59,160 --> 00:29:03,600
you know an independent review
is unnecessary and a big part of

547
00:29:03,600 --> 00:29:06,160
all of this campaign hinges on
that interesting component of

548
00:29:06,160 --> 00:29:08,240
Australian tax system.
If you've, if you've ever looked

549
00:29:08,240 --> 00:29:11,960
at the price of, of Rio Tinto
PLC, like if you type in Rio

550
00:29:11,960 --> 00:29:15,360
Tinto share price on the London
Stock Exchange, then convert

551
00:29:15,360 --> 00:29:19,120
that share price in, in Great
Britain pounds to Aussie

552
00:29:19,120 --> 00:29:21,520
dollars.
And you, you might just trick

553
00:29:21,520 --> 00:29:24,120
yourself into thinking
incorrectly that there's a risk

554
00:29:24,120 --> 00:29:27,800
free arbitrage you can do here.
Because the, the PLC shares

555
00:29:28,440 --> 00:29:31,800
traded a, a structural, you
know, 15 to 20% discount to the

556
00:29:32,080 --> 00:29:35,320
real limited shares on the ASX.
And that's a, a pretty

557
00:29:35,320 --> 00:29:37,640
consistent discount.
That's largely because of

558
00:29:37,640 --> 00:29:41,160
Australia's franking credit
system, which allows Australian

559
00:29:41,200 --> 00:29:45,640
shareholders to receive tax
credits on dividends, making

560
00:29:45,920 --> 00:29:49,440
real limited shares more
attractive to the Australian

561
00:29:49,440 --> 00:29:52,080
resident investors.
Which, by the way, the Super

562
00:29:52,080 --> 00:29:55,080
funds love that.
Yeah, absolutely.

563
00:29:55,080 --> 00:29:57,480
And the the presentation they
put forward has a lot of

564
00:29:57,480 --> 00:30:00,960
similarities with the Elliott
presentation that they put

565
00:30:00,960 --> 00:30:03,800
forward to to shake up BHB.
So.

566
00:30:03,800 --> 00:30:06,960
So tell us a bit about what
James had to say at the AGM Mate

567
00:30:06,960 --> 00:30:09,440
came to hear.
Like in fairness, the the whole

568
00:30:09,440 --> 00:30:12,560
speech is worth listening to.
And yeah, if you're, if you're

569
00:30:12,560 --> 00:30:14,680
interested in, in, in hearing
the whole speech, I'll, I'll put

570
00:30:14,680 --> 00:30:16,760
a link in tomorrow's edition of
our daily newsletter, the

571
00:30:16,760 --> 00:30:19,440
Director Special, if you want to
hear the whole thing.

572
00:30:19,440 --> 00:30:24,240
But for now, here's just a a
taste of of James's speech.

573
00:30:24,840 --> 00:30:30,480
And stepping back again, we say
unification could release 20 to

574
00:30:30,480 --> 00:30:32,680
25 billion U.S. dollars of value
here.

575
00:30:33,680 --> 00:30:38,120
And I think a conservative
estimate of the cost of a public

576
00:30:38,120 --> 00:30:40,200
review that would be
disseminated in shareholders

577
00:30:40,720 --> 00:30:43,880
might be two, two and a half,
$1,000,000 from experience.

578
00:30:45,120 --> 00:30:47,320
And there will be people who
agree with us and people who

579
00:30:47,320 --> 00:30:50,280
disagree with us.
But if you think there's a more

580
00:30:50,280 --> 00:30:55,880
than .1% chance that we may be
right, the cost of the exercise

581
00:30:56,160 --> 00:30:58,960
is easily justified by the
potential value release.

582
00:30:59,240 --> 00:31:02,320
And to take a position that the
probability that we're right is

583
00:31:02,320 --> 00:31:06,800
less than .1%, we think is is is
not a reasonable position to

584
00:31:06,800 --> 00:31:11,040
take.
We think the board owes us a

585
00:31:11,040 --> 00:31:12,520
transparent and independent
review.

586
00:31:12,520 --> 00:31:15,640
We've done a lot of work, the
proxy specialists agree.

587
00:31:16,480 --> 00:31:20,280
The way Grass Lewis put it
again, if there is even a small

588
00:31:20,280 --> 00:31:24,120
chance that such a huge value
will be unlocked, an independent

589
00:31:24,280 --> 00:31:26,200
review is a worthwhile
endeavour.

590
00:31:27,080 --> 00:31:29,280
Bloomberg published earlier this
week their views on the

591
00:31:29,280 --> 00:31:31,240
situation.
Quote.

592
00:31:31,800 --> 00:31:35,920
There's truly little risk, other
than a few bruised egos and some

593
00:31:35,960 --> 00:31:39,200
trivial costs, to hire bankers
and lawyers to allow the

594
00:31:39,200 --> 00:31:42,840
independent review.
They end with a quote from

595
00:31:42,840 --> 00:31:46,880
Reagan Trust But Verify, which
we think is very apartment in

596
00:31:46,880 --> 00:31:51,040
this situation.
So let's think a bit about those

597
00:31:51,040 --> 00:31:55,440
breezed egos.
The board argues it's a waste of

598
00:31:55,440 --> 00:31:57,960
resource, time and money to
conduct an enhanced

599
00:31:57,960 --> 00:32:00,480
investigation.
They also don't wish to share

600
00:32:00,480 --> 00:32:02,760
publicly the work that they say
they have done.

601
00:32:02,920 --> 00:32:04,200
And I'm sure they have done
some.

602
00:32:05,640 --> 00:32:09,080
But when we look at the time and
effort that has gone in to the

603
00:32:09,080 --> 00:32:13,840
vigorous and robust defense of
the resolution that put forward

604
00:32:13,840 --> 00:32:17,040
and the vast internal team
that's been mobilized and the

605
00:32:17,040 --> 00:32:21,120
cost of advisors that apparently
are all unilaterally focused on

606
00:32:21,120 --> 00:32:24,600
squashing the views of a tiny
shareholder, we have to wonder

607
00:32:24,840 --> 00:32:27,520
how many multiples of the cost
of a review have actually gone

608
00:32:27,520 --> 00:32:30,120
into that process.
And does that really make sense

609
00:32:30,120 --> 00:32:30,920
for shareholders?
What?

610
00:32:32,040 --> 00:32:34,680
Do you make mate?
Yeah, he's got his, he's got his

611
00:32:34,680 --> 00:32:36,840
salesmanship on there.
Very, very compelling.

612
00:32:36,880 --> 00:32:38,200
The arguments he sort of put
forward.

613
00:32:38,200 --> 00:32:41,840
And yeah, having having listened
to that throughout and listened

614
00:32:41,840 --> 00:32:48,160
to the the rebuttals that Rio
put forward, I think he puts

615
00:32:48,160 --> 00:32:50,080
forward a pretty compelling
argument.

616
00:32:50,120 --> 00:32:52,320
What was your take mate?
Yeah, I mean like like I

617
00:32:52,320 --> 00:32:56,200
withhold if you want on whether
or not it's like a sensible

618
00:32:56,200 --> 00:32:59,520
thing to embark on the on the
deal like say unification.

619
00:32:59,520 --> 00:33:02,160
But it's it's tricky to.
Argue the investigation was

620
00:33:02,160 --> 00:33:03,480
compelling us.
Totally.

621
00:33:03,480 --> 00:33:05,840
It'd be clear.
It's tricky to argue that it's,

622
00:33:05,880 --> 00:33:09,480
it's, it's a, you know, it's a
wrong thing to to have an

623
00:33:09,480 --> 00:33:12,640
independent review conducted on
whether it would be a value or

624
00:33:12,640 --> 00:33:15,640
creative thing to embark on.
Like why would you, yeah, why

625
00:33:15,640 --> 00:33:17,400
would you spend, you know,
millions and millions and

626
00:33:17,400 --> 00:33:21,120
millions of dollars to, to to
fight just like your own launch

627
00:33:21,120 --> 00:33:24,080
of an, of an, of an independent
report into, into the potential

628
00:33:24,080 --> 00:33:27,000
benefit of it.
I do find, yeah, a bit a bit

629
00:33:27,000 --> 00:33:28,840
strange.
I, I, you know, like, kudos to

630
00:33:28,840 --> 00:33:31,120
Rio for giving James the stage
and I think like.

631
00:33:31,480 --> 00:33:33,880
Even though he's kind of accused
the board of having bruised

632
00:33:33,880 --> 00:33:37,320
egos, There was, yeah, it was a
very like civil way of like

633
00:33:37,320 --> 00:33:39,320
engaging with the activist at
that AGM.

634
00:33:40,280 --> 00:33:43,560
Very, yeah, very respectfully
handled.

635
00:33:43,560 --> 00:33:46,640
I thought it was well navigated
by by Rio.

636
00:33:46,640 --> 00:33:50,400
So came to see where that kind
of goes given given the the way

637
00:33:50,400 --> 00:33:52,080
they're voting kind of plays out
there.

638
00:33:52,080 --> 00:33:55,800
But there are a few other kind
of under the radar aspects of

639
00:33:55,800 --> 00:33:58,280
the campaign that I know you did
a bit of digging into.

640
00:33:58,280 --> 00:34:01,280
What were they?
When's when's the last time you

641
00:34:01,280 --> 00:34:04,080
looked at the the short interest
of of Rio Tinto?

642
00:34:04,640 --> 00:34:08,199
Have you noticed that it is
uncharacteristically high right

643
00:34:08,199 --> 00:34:10,159
now?
I have had a peak because we

644
00:34:10,159 --> 00:34:12,520
spoke about it not not too long
ago, mate.

645
00:34:12,520 --> 00:34:14,760
But yeah, I remember when we
first spoke about it.

646
00:34:14,760 --> 00:34:16,239
It.
Yeah.

647
00:34:16,360 --> 00:34:18,679
You take a bit of a step back
and you're like, whoa, what's

648
00:34:18,679 --> 00:34:22,600
going on there?
Hey. 7.7% short interest and

649
00:34:22,600 --> 00:34:26,000
it's you know it's going to be
marching N from sub 1% over the

650
00:34:26,000 --> 00:34:29,120
last 12 months in particular.
I'll pull up the chart from

651
00:34:29,120 --> 00:34:32,960
short man right now, but keep in
mind this, this short man short

652
00:34:32,960 --> 00:34:35,520
interest is just showing the
short interest of Rio Tinto

653
00:34:35,520 --> 00:34:38,960
Limited shares, the ones on the
ASX.

654
00:34:39,280 --> 00:34:41,760
What about PLC shares on the
LSE?

655
00:34:42,239 --> 00:34:45,840
Well, in London you can only
get, you only get a public

656
00:34:45,840 --> 00:34:49,719
notification if the short
interest is above 0.5% of the

657
00:34:49,719 --> 00:34:53,239
float.
And for Rio PLC it's it's not.

658
00:34:53,239 --> 00:34:56,040
So I don't know what the actual
short interest is for PLC

659
00:34:56,040 --> 00:34:58,200
shares, but it's certainly less
than half a percent.

660
00:34:58,880 --> 00:35:02,080
They do have.
An ADR for Rio PLC which is on

661
00:35:02,080 --> 00:35:06,120
the NYSE and that has 0.68%
short interest for the for the

662
00:35:06,120 --> 00:35:08,600
pretty low float that is is on
that exchange.

663
00:35:09,720 --> 00:35:13,800
How does BHP compare mate?
Well, look at look at the dismal

664
00:35:13,800 --> 00:35:18,800
short interest in BHP shares
only 0.44% short interest and

665
00:35:18,800 --> 00:35:22,320
it's it's been consistently sub
0.6% in the entire last three

666
00:35:22,320 --> 00:35:25,480
years.
I'm looking at these these data

667
00:35:25,480 --> 00:35:28,120
points and I'm going to make a
few deductions as it relates to

668
00:35:28,120 --> 00:35:30,960
the activist campaign.
If you if you think of a multi

669
00:35:30,960 --> 00:35:35,760
Strat hedge fund like Palliser,
they see unification of this DLC

670
00:35:35,760 --> 00:35:40,040
structure as a catalyst event.
And you know, the the the timing

671
00:35:40,040 --> 00:35:43,240
of the the catalyst is uncertain
and whether they actually

672
00:35:43,240 --> 00:35:45,120
succeed or not is also
uncertain.

673
00:35:45,120 --> 00:35:49,400
But if successful unification
occurring is the event to bet on

674
00:35:49,400 --> 00:35:54,560
for a hedge fund and how do you
make low risk or you know, kind

675
00:35:54,560 --> 00:36:00,080
of very, very low risk returns
trading an event you, you, you

676
00:36:00,080 --> 00:36:03,160
don't just buy Rio stock
indiscriminately and hope you

677
00:36:03,160 --> 00:36:06,320
lofty value creation just
manifests itself.

678
00:36:06,320 --> 00:36:08,360
I mean, there's a lot of other
factors that contribute to the

679
00:36:08,600 --> 00:36:11,480
the share price and value of of
every tin turn, at least of

680
00:36:11,480 --> 00:36:14,280
which is commodity prices.
And for multi Strat hedge fund,

681
00:36:14,640 --> 00:36:16,720
they want, they want alpha.
They don't want to take on it.

682
00:36:16,720 --> 00:36:20,960
You know a huge amount of of of
of you know of market related

683
00:36:20,960 --> 00:36:23,560
risk here.
I'd be, I'd be shocked if

684
00:36:23,560 --> 00:36:26,600
Palliser and the other activist
friends that are in this trade

685
00:36:26,600 --> 00:36:29,880
aren't, aren't doing what I'm
what I'm about to say because

686
00:36:29,880 --> 00:36:32,480
the way you make the, the, the
low risk money.

687
00:36:32,680 --> 00:36:36,080
Is you.
You, you buy Rio PLC shares and

688
00:36:36,080 --> 00:36:39,600
you short Rio limited shares and
it's a pairs trade, right?

689
00:36:40,520 --> 00:36:44,320
Because it's the PLC
shareholders who benefit the

690
00:36:44,320 --> 00:36:47,680
most from a unification event
on, on ASX.

691
00:36:47,680 --> 00:36:50,400
Those, those are the shares that
trade at a big discount.

692
00:36:50,840 --> 00:36:54,480
Remember to the limited shares
and and to show you evidence of

693
00:36:54,560 --> 00:36:58,280
of you know how this pair trade
plays out in reality.

694
00:36:58,640 --> 00:37:01,200
Look what happened when BHP
announced they were finally

695
00:37:01,200 --> 00:37:04,040
going to unify themselves back
in 2021.

696
00:37:04,360 --> 00:37:09,520
That day, the ASX listed shares
of BHP fell 7% and the PLC

697
00:37:09,520 --> 00:37:12,520
shares on the London Stock
Exchange rose 4%.

698
00:37:13,320 --> 00:37:16,040
Get that payers trade right and
that's amazing alpha if you're a

699
00:37:16,040 --> 00:37:19,080
multi Strat, you know, hedge
fund investor.

700
00:37:20,480 --> 00:37:23,600
So yeah, so tell us about the
the voting then mate as this,

701
00:37:23,640 --> 00:37:25,800
this one unfolds.
We.

702
00:37:27,040 --> 00:37:28,640
The.
Of course, like PLC,

703
00:37:28,640 --> 00:37:31,520
shareholders voted at the AGM,
but we don't actually.

704
00:37:31,520 --> 00:37:35,080
Know this was a resolution, but
we don't actually know like what

705
00:37:35,080 --> 00:37:38,880
the outcome of that vote was
yet, which it might seem pretty

706
00:37:38,880 --> 00:37:41,400
odd, but but Rio they wait for
yeah.

707
00:37:42,080 --> 00:37:45,400
For the AGM of Rio Tinto Limited
to occur in Australia first

708
00:37:45,400 --> 00:37:48,600
before revealing the outcome of,
of major decisions from the vote

709
00:37:48,600 --> 00:37:52,120
of the PLC shareholders.
And that AGM is scheduled for

710
00:37:52,120 --> 00:37:54,720
May 1st.
So, you know a subsequent to, to

711
00:37:54,720 --> 00:37:57,400
that May 1st AGM will, will
actually know how shareholders

712
00:37:57,400 --> 00:38:01,680
have have voted on, on this.
And yeah, that'll be a pretty, a

713
00:38:01,680 --> 00:38:04,680
pretty interesting thing to to
evaluate after the fact given

714
00:38:04,680 --> 00:38:08,640
there's some pretty major, you
know, proxy advisors advocating

715
00:38:08,640 --> 00:38:11,040
for it.
Yeah, I, I, I think it'll be,

716
00:38:11,120 --> 00:38:13,880
it'll be a pretty, a pretty, a
pretty interesting thing to

717
00:38:13,880 --> 00:38:17,200
watch.
So kind of ironic that because

718
00:38:17,200 --> 00:38:21,040
of the DLC structure, we're
waiting on the vote on the DLC

719
00:38:21,040 --> 00:38:23,080
structure.
Yeah, I mean yeah.

720
00:38:23,360 --> 00:38:27,240
And in in the meantime, JD James
Smith of Palisade, if you want

721
00:38:27,240 --> 00:38:29,720
to reach the Australian
investment community who are

722
00:38:29,960 --> 00:38:32,280
voting in that AGM, may I
suggest coming on the Money of

723
00:38:32,280 --> 00:38:34,440
Mine podcast would.
Love to talk to you about it.

724
00:38:35,760 --> 00:38:39,120
Absolutely mate.
OK so cool to to have a chat.

725
00:38:39,520 --> 00:38:43,800
So like I I said, JD, I was
listening to that AGM while on

726
00:38:43,800 --> 00:38:45,560
the plane back from Cal last
night.

727
00:38:45,560 --> 00:38:49,200
But yeah, you want to know what
I saw when I landed at the the

728
00:38:49,880 --> 00:38:52,200
Kalgoorlie airport when I, you
know, went to Cal just a few

729
00:38:52,200 --> 00:38:54,720
days before that?
Tell me mate, what did you say?

730
00:38:55,080 --> 00:38:58,280
MMS logos everywhere mate.
They they wear MMS shirts in

731
00:38:58,360 --> 00:39:00,520
every direction there.
Polo shirts, high V shirts, you

732
00:39:00,520 --> 00:39:03,200
name it.
I saw the MMS team out there.

733
00:39:03,200 --> 00:39:05,040
How many?
How many contract miners could

734
00:39:05,040 --> 00:39:08,200
mobilize an entire mining fleet
in the goldfields with less than

735
00:39:08,200 --> 00:39:09,080
a weekend's notice?
I don't.

736
00:39:09,080 --> 00:39:11,800
I don't think it's possible.
No way is that possible mate.

737
00:39:11,800 --> 00:39:13,800
It's.
It's not, unless you're MMS that

738
00:39:13,800 --> 00:39:15,160
is.
Because I saw it with my own

739
00:39:15,160 --> 00:39:16,240
eyes.
Jada, You know why?

740
00:39:16,480 --> 00:39:18,880
They have a fleet of over 200
owned assets.

741
00:39:19,200 --> 00:39:21,480
That that just.
Wrap it up with an integrated

742
00:39:21,480 --> 00:39:24,400
support team and get it done.
Tell me about the integrated

743
00:39:24,400 --> 00:39:26,800
support team mate.
Integrated support Jada, your

744
00:39:26,800 --> 00:39:28,720
deposit is not ready to be mined
yet.

745
00:39:28,720 --> 00:39:31,560
If that's an issue, well guess
what MMS They have an in house

746
00:39:31,560 --> 00:39:34,160
team of technical experts to do
all the things that convert your

747
00:39:34,160 --> 00:39:35,960
dirt into cash flow as soon as
possible.

748
00:39:36,160 --> 00:39:38,680
Be it mine planning,
engineering, geological

749
00:39:38,680 --> 00:39:41,600
modelling or resource
estimation, they just get it

750
00:39:41,600 --> 00:39:44,400
done.
That's the mentality you need to

751
00:39:44,400 --> 00:39:47,800
get mining fast and make money
while the gold price, it's 5000

752
00:39:47,800 --> 00:39:50,160
Aussie dollars an ounce.
Get in touch with Extractory Rob

753
00:39:50,160 --> 00:39:52,160
at MMS.
They get it done.

754
00:39:52,600 --> 00:39:53,920
Go MMS.
Go MMS.

755
00:39:53,920 --> 00:39:56,040
All right, JD, what are you
seeing in the uranium market

756
00:39:56,040 --> 00:39:59,080
that's catching your attention?
All right mate, let's let's chat

757
00:39:59,080 --> 00:40:01,560
about uranium a little bit.
There are a couple of bits of

758
00:40:01,600 --> 00:40:04,120
eye-catching news that I thought
we should have a little chin wag

759
00:40:04,120 --> 00:40:06,400
about.
So the first thing was that a

760
00:40:06,400 --> 00:40:10,400
clocked Kopernic Global
investors went substantial at

761
00:40:10,520 --> 00:40:15,200
Paladin, so they popped up with
a 5.2% shareholding now.

762
00:40:15,720 --> 00:40:19,680
These guys had previously been
shareholders at Fission Uranium.

763
00:40:19,680 --> 00:40:22,320
You can see that in a
presentation from a couple

764
00:40:22,320 --> 00:40:26,400
months back from them, as well
as in the significant notice.

765
00:40:26,400 --> 00:40:29,880
If you Scroll down, you can see
they can converted a bit of the,

766
00:40:30,600 --> 00:40:33,880
the shareholding there.
So there's a, there's a few

767
00:40:33,880 --> 00:40:37,000
funds out there that I love to
just sort of read the, the white

768
00:40:37,000 --> 00:40:40,040
papers they put out, the, the
presentations, investor letters,

769
00:40:40,040 --> 00:40:42,880
whatever they might be, if
they're, if they're on podcasts,

770
00:40:43,360 --> 00:40:45,920
love to hear their thoughts.
And Kaepernick is one of them,

771
00:40:45,920 --> 00:40:47,880
mate.
They're, they're a global

772
00:40:47,880 --> 00:40:50,920
investment group and they're
value investors.

773
00:40:50,920 --> 00:40:51,960
Why?
Because it's sort of.

774
00:40:52,080 --> 00:40:54,720
What do you, Yeah, like why?
Why do you rate the content they

775
00:40:54,720 --> 00:40:56,560
put out there?
Like what's the interaction?

776
00:40:57,320 --> 00:41:01,280
I think it's sort of super,
super thoughtful, deep value

777
00:41:01,480 --> 00:41:06,360
work kind of for for the money
miners to relate it to people

778
00:41:06,360 --> 00:41:08,480
that we've spoken with in the
past.

779
00:41:08,480 --> 00:41:11,920
I kind of relate their styles to
the way Rusty kind of thinks

780
00:41:11,920 --> 00:41:14,680
about things, the way Trader
Ferg thinks about things.

781
00:41:15,120 --> 00:41:18,560
The people, you know, the guys
at Collin Street value, the

782
00:41:18,560 --> 00:41:21,160
people who love to get into the
the cycle when it's totally

783
00:41:21,160 --> 00:41:23,680
beaten up and hated.
These guys play that.

784
00:41:24,080 --> 00:41:26,320
They're not resource
specialists.

785
00:41:26,320 --> 00:41:29,560
They look all around the world.
You'll hear them talking about

786
00:41:29,880 --> 00:41:35,160
Korean conglomerates 1 moment
about big trading houses in in

787
00:41:35,160 --> 00:41:38,640
Japan another.
And because of the cyclicality

788
00:41:38,640 --> 00:41:42,840
in commodities throughout
cycles, at sort of periodic

789
00:41:42,840 --> 00:41:47,120
times, they get attracted, mate.
So an example would be pay GMs.

790
00:41:47,120 --> 00:41:50,960
They hold Subarnier of all
companies now because they, you

791
00:41:50,960 --> 00:41:52,880
know, and they'll, they'll play
that sort of basket approach.

792
00:41:52,880 --> 00:41:56,680
To be clear, I'm not not
advertising Subarnier as a, as

793
00:41:56,680 --> 00:42:01,600
a, as a sort of holding, but
they love to target in on

794
00:42:01,720 --> 00:42:04,560
totally beaten up stuff.
And you know, there's ebbs and

795
00:42:04,560 --> 00:42:07,560
flows to it.
The, the performance won't be

796
00:42:07,560 --> 00:42:09,880
the same performance you'll have
seen from some growth investors

797
00:42:09,880 --> 00:42:13,000
out there over the last 10 sort
of years, because that's not

798
00:42:13,000 --> 00:42:16,080
been that kind of environment.
But I think they, they think

799
00:42:16,080 --> 00:42:19,160
through things really well.
And we've included papers of

800
00:42:19,160 --> 00:42:24,400
theirs as well on, on mining, on
optionality, optionality as it

801
00:42:24,400 --> 00:42:27,400
relates to to mining companies
as well as just optionality in

802
00:42:27,760 --> 00:42:29,600
inherent in certain business
models.

803
00:42:29,600 --> 00:42:33,160
And I, I just sort of like the
way they are, the way they think

804
00:42:33,160 --> 00:42:38,120
about things Now to pull it back
to Paladin mate, obviously no,

805
00:42:38,160 --> 00:42:40,520
no investor or no investment is
is foolproof.

806
00:42:40,520 --> 00:42:42,960
And had they had their time
again, I'm sure they would have

807
00:42:42,960 --> 00:42:46,040
started buying Paladin a fair
bit later than they did.

808
00:42:46,400 --> 00:42:48,840
Because you can see in the docs
they've started buying after

809
00:42:48,840 --> 00:42:52,120
they converted stocking in
January already of this year

810
00:42:52,360 --> 00:42:55,680
when the commodity when the
stock price rather was double

811
00:42:55,680 --> 00:42:59,800
where it is today.
So it's kind of interesting to

812
00:42:59,800 --> 00:43:02,720
look at the the uranium spot
price, which had done most of

813
00:43:02,720 --> 00:43:05,640
its falling already.
It's sort of January, it's below

814
00:43:05,640 --> 00:43:08,520
70 bucks already.
It's not that much lower from

815
00:43:08,520 --> 00:43:12,400
there to where it is today.
If you compare where it's sort

816
00:43:12,400 --> 00:43:15,080
of hit, I think one O 8 was the
the high on the spot price

817
00:43:15,080 --> 00:43:17,960
there.
But yeah, they've they've been

818
00:43:17,960 --> 00:43:21,560
hurt a little bit on this one.
But I thought because these guys

819
00:43:21,560 --> 00:43:25,200
first wrote about the uranium
trade in February of 2017, mate.

820
00:43:25,640 --> 00:43:30,040
And when I heard Dave Iben
speak, he pretty much sold out

821
00:43:30,920 --> 00:43:33,320
what I could sort of gather that
sold out pretty much all of

822
00:43:33,320 --> 00:43:36,760
their uranium positions over the
past sort of couple years, kind

823
00:43:36,760 --> 00:43:40,640
of 2223 time period as
valuations really got away from

824
00:43:40,640 --> 00:43:42,640
us.
We spoke about it at the time.

825
00:43:42,640 --> 00:43:46,360
You know, you're you're back
solving to find uranium prices

826
00:43:46,360 --> 00:43:48,960
of 150 of 200 bucks in some of
these stocks.

827
00:43:48,960 --> 00:43:52,360
So for AD value investor, I
think it's a pretty easy sell,

828
00:43:52,880 --> 00:43:58,160
but it just leaves it at A at an
interesting place.

829
00:43:58,160 --> 00:44:02,640
That's that's Paladin.
They have fallen 75% now like

830
00:44:02,640 --> 00:44:05,320
you mentioned in your segment
before from peak to through that

831
00:44:05,320 --> 00:44:09,320
was a May 2024 high that they
hit now kept at 1.6 billion

832
00:44:09,320 --> 00:44:15,720
bucks US 166 million in cash.
They yeah, I mean, I can almost

833
00:44:15,720 --> 00:44:18,920
sort of say idiotically took on
on that debt if we want to get a

834
00:44:18,920 --> 00:44:21,440
bit sort of liberal in in how we
think about it.

835
00:44:21,440 --> 00:44:26,800
I think we're pretty aligned on,
on how mining companies in sort

836
00:44:26,800 --> 00:44:30,560
of certain cycles should be
treating leverage, especially

837
00:44:30,560 --> 00:44:34,200
when they don't necessarily need
to, especially when their, their

838
00:44:34,200 --> 00:44:37,400
equity is so richly valued.
But they made that decision.

839
00:44:37,400 --> 00:44:39,040
They're going to kind of live
with it now.

840
00:44:39,480 --> 00:44:43,200
And it's interesting to look at
Copernic and, and they're buying

841
00:44:43,200 --> 00:44:45,560
because we've spoken about the
operational challenges that

842
00:44:45,560 --> 00:44:47,840
Paladin have had, right?
They've had too much water.

843
00:44:47,840 --> 00:44:49,920
They've had not enough water at
different points in time.

844
00:44:49,920 --> 00:44:53,600
They've had to push back their
their guidance.

845
00:44:53,600 --> 00:44:56,880
They've been whacked around on a
few different fronts.

846
00:44:57,120 --> 00:45:00,560
They've had problems with their
their stockpiles, actual mining

847
00:45:00,560 --> 00:45:03,640
has been pushed back.
So to see that Kaepernick, we're

848
00:45:03,640 --> 00:45:06,880
buying through these was also
sort of interesting to me, Matt.

849
00:45:07,640 --> 00:45:08,960
It is.
It is interesting, Yeah.

850
00:45:08,960 --> 00:45:12,160
When, when, when, yeah, value
investors kind of pick up the

851
00:45:12,160 --> 00:45:15,240
paper and say this, this is
maybe hated enough again for me

852
00:45:15,240 --> 00:45:17,760
to take a look.
Yeah, I do find that intriguing.

853
00:45:17,840 --> 00:45:21,160
And yeah, sentiments certainly
shifted on on uranium.

854
00:45:21,400 --> 00:45:25,560
I do find it like like you
rarely see in commodity markets

855
00:45:25,560 --> 00:45:28,880
when things go from like hype to
to height, you really see that

856
00:45:28,880 --> 00:45:30,600
be a very sharp cycle, you know
what I mean?

857
00:45:30,600 --> 00:45:35,040
Like it's I just, I just wonder
how like how long a yeah price

858
00:45:35,040 --> 00:45:39,560
could could be low for versus
versus, you know, Yeah, the

859
00:45:39,920 --> 00:45:44,320
yeah, I do question that, but
it's it's always a really

860
00:45:44,400 --> 00:45:48,600
interesting sign where where
value investors kind of get re

861
00:45:48,600 --> 00:45:52,760
engaged and pick up stock.
Yeah, totally agreed mate.

862
00:45:52,760 --> 00:45:56,880
And I'm sure all the the uranium
fans out there will be yelling

863
00:45:56,880 --> 00:45:59,240
at us to to kind of look at the
term market and everything.

864
00:45:59,240 --> 00:46:03,440
But like you said it, the
sentiment is, is so interesting.

865
00:46:03,440 --> 00:46:07,240
The sentiment in less than a
year has gone from the most

866
00:46:07,240 --> 00:46:11,320
exuberant kind of commodity
related sentiment in the market

867
00:46:11,680 --> 00:46:14,120
to arguably one of the most
bearish, right?

868
00:46:14,320 --> 00:46:16,400
And that is, that is quite
something to behold.

869
00:46:16,680 --> 00:46:19,000
Yeah, yeah.
And there's a lot of I think

870
00:46:19,000 --> 00:46:21,240
we've talked about it a little
bit, but yeah, a lot of a lot of

871
00:46:21,240 --> 00:46:25,480
interest in the spot pounds
which may or may not be sold

872
00:46:25,480 --> 00:46:29,760
for, for for Sprott to, you
know, run its costs and the the

873
00:46:29,760 --> 00:46:31,760
management fee associated with
that that product.

874
00:46:31,760 --> 00:46:34,120
And does that change sentiment,
Pete, Pete, that's kind of, I

875
00:46:34,120 --> 00:46:36,960
don't know if that's priced in
or if, or if sentiment can get

876
00:46:36,960 --> 00:46:40,880
worse if that manifest or if
Sprott can engineer, you know, a

877
00:46:40,880 --> 00:46:44,600
workaround to, to, to that,
which completely kind of

878
00:46:44,680 --> 00:46:46,920
nullifies the, the fear around
that.

879
00:46:46,920 --> 00:46:50,600
Like all of that's yet to play
out, but it makes this base very

880
00:46:50,600 --> 00:46:53,600
interesting because of because
of those dynamics.

881
00:46:54,520 --> 00:46:56,800
Yeah, totally agreed.
I think it's a big, big sort of

882
00:46:56,800 --> 00:46:59,840
question mark and it's certainly
not helping sentiment at the

883
00:46:59,840 --> 00:47:01,920
moment.
There was one other uranium

884
00:47:01,920 --> 00:47:04,280
company I wanted to chat about
as well mate, and that was

885
00:47:04,280 --> 00:47:07,720
Lotus.
So they added another off take

886
00:47:07,720 --> 00:47:10,080
agreement this morning.
They, they announced to the

887
00:47:10,080 --> 00:47:14,360
market and not too long ago we
we had a yarn about Lotus and we

888
00:47:14,360 --> 00:47:18,640
add some of our sort of caution,
I think is that the right way to

889
00:47:18,640 --> 00:47:22,040
kind of put it about the, the
nature of the restart at Keila

890
00:47:22,040 --> 00:47:27,720
Queda and the, the challenges
that that operation faced when

891
00:47:27,720 --> 00:47:31,520
it was a Paladin asset sort of a
decade ago were, were pretty

892
00:47:31,520 --> 00:47:34,360
notable.
Nevertheless, they want to

893
00:47:34,360 --> 00:47:36,800
produce first uranium this
calendar year by Q3.

894
00:47:36,800 --> 00:47:40,000
So you know, it's, it's next
quarter, it's, it's pretty soon.

895
00:47:40,480 --> 00:47:44,280
But we'll, we'll put aside all
the, the operational thoughts

896
00:47:44,280 --> 00:47:48,080
for a moment on the asset there
and and hone in on the off take

897
00:47:48,080 --> 00:47:51,320
strategy for Lotus and then
compare it with the the rest of

898
00:47:51,320 --> 00:47:53,120
the market.
What have what have they off

899
00:47:53,120 --> 00:47:58,240
take?
So they added another £600,000

900
00:47:58,240 --> 00:48:05,480
to be to be sold at a fixed
price through from 26 through to

901
00:48:05,480 --> 00:48:07,040
2029.
So is that is that?

902
00:48:07,120 --> 00:48:09,960
Every year or in in aggregate
over over those four years?

903
00:48:10,560 --> 00:48:15,200
So that's that's in aggregate
over that that period and it

904
00:48:15,200 --> 00:48:21,080
takes their total volumes up to
£3.8 million.

905
00:48:21,080 --> 00:48:24,000
One of them has a sort of
scaling feature to it.

906
00:48:24,440 --> 00:48:28,200
But yeah, that starts in 2026
and fixed price.

907
00:48:28,200 --> 00:48:33,880
So they've got escalations in in
line with the Reserve Bank of

908
00:48:33,880 --> 00:48:38,080
Australia's inflation rate, but
we're not talking about colors

909
00:48:38,080 --> 00:48:41,560
or or floors and ceilings here
that that is really interesting

910
00:48:41,560 --> 00:48:44,560
to me.
So if you look at their strategy

911
00:48:44,560 --> 00:48:47,960
and how they kind of word it,
it's focused on securing long

912
00:48:47,960 --> 00:48:51,600
term linked prices with sales to
be predominantly covered by

913
00:48:51,600 --> 00:48:55,640
contracts, thereby minimizing
uncontracted spot exposure.

914
00:48:55,720 --> 00:49:00,080
So that makes specific reference
to an $80 per pound long term

915
00:49:00,080 --> 00:49:03,160
price at the end of the the sort
of final month when the

916
00:49:03,160 --> 00:49:04,840
negotiations were were wrapping
up.

917
00:49:04,840 --> 00:49:09,280
But it really strikes me about
how different this approach is

918
00:49:09,280 --> 00:49:11,000
just to other companies out
there.

919
00:49:11,000 --> 00:49:13,840
So obviously everyone's sort of
slightly unique and there's a

920
00:49:13,840 --> 00:49:15,120
few different ways you can kind
of play it.

921
00:49:15,120 --> 00:49:18,520
But if you look at Boss, they
have only signed up as far as

922
00:49:18,520 --> 00:49:21,680
I'm aware, £1,000,000 to be
contracted over 7 years.

923
00:49:22,280 --> 00:49:24,480
And that's from an operation
that's going to do nearly £2.5

924
00:49:24,480 --> 00:49:28,800
million per annum at peak.
That's just honeymoon we're

925
00:49:28,800 --> 00:49:32,280
talking about there obviously.
And then you've got Paladin,

926
00:49:32,280 --> 00:49:35,800
they've got contracted 50% of
their life of mine production.

927
00:49:36,040 --> 00:49:39,400
Again, just talking about Langa
Heinrich here ignoring the the

928
00:49:39,400 --> 00:49:43,960
Canadian assets sort of way out
into the future, but they state

929
00:49:43,960 --> 00:49:49,320
that 88% of their product is
exposed to market related

930
00:49:49,320 --> 00:49:51,760
prices.
So we're not talking about fixed

931
00:49:51,760 --> 00:49:55,440
prices there.
And yeah, I think that just

932
00:49:55,440 --> 00:49:58,680
differs quite, quite a bit with
what we've seen from Lotus.

933
00:49:58,680 --> 00:50:01,800
And I find it really fascinating
that the read through both on

934
00:50:01,800 --> 00:50:04,520
each of these companies and the
confidence they have or the

935
00:50:04,680 --> 00:50:08,000
confidence that you can kind of
infer from the outside that they

936
00:50:08,000 --> 00:50:13,280
will meet the targets that
they've sort of set is 1 read

937
00:50:13,280 --> 00:50:17,080
that I find pretty fascinating.
The other is obviously where

938
00:50:17,080 --> 00:50:19,640
they think the commodity price
is headed.

939
00:50:19,920 --> 00:50:23,480
You can wrap a great narrative
around a spot price that you

940
00:50:23,480 --> 00:50:27,800
think is going to go flying and
you being uncontracted, which is

941
00:50:28,000 --> 00:50:29,920
one way to kind of look at it,
right.

942
00:50:30,400 --> 00:50:34,000
And then the approach to using
fixed price versus collars,

943
00:50:34,000 --> 00:50:36,920
whether they're sort of tight or
whether they're quite open is

944
00:50:36,920 --> 00:50:39,680
very interesting.
I find that the Lotus strategy

945
00:50:39,680 --> 00:50:42,480
pretty risk averse and I don't
mind that at all.

946
00:50:42,480 --> 00:50:44,920
To be to be clear, you've.
The timing still got a, the

947
00:50:45,360 --> 00:50:48,600
timing's interesting too, JD.
So like it's it's still 2029

948
00:50:48,640 --> 00:50:51,320
there and.
Yeah, what what like one line

949
00:50:51,320 --> 00:50:54,440
from the uranium kind of
moderates is that the real

950
00:50:54,440 --> 00:50:56,360
demand growth picks up in the 20
thirties.

951
00:50:56,360 --> 00:51:01,720
So you know, to the extent you
get the the price response from

952
00:51:01,720 --> 00:51:06,280
from the demand surge that comes
from twenty 30s, then yeah, they

953
00:51:06,480 --> 00:51:09,680
still kind of capture that.
For sure, for sure.

954
00:51:09,680 --> 00:51:12,680
And they're not, you know,
completely chopping off.

955
00:51:12,680 --> 00:51:15,200
They're still going to have
production, but the way they've

956
00:51:15,200 --> 00:51:18,880
kind of thought about it and the
way they've put it forward is

957
00:51:18,880 --> 00:51:23,600
that they want to just cover
their expected cash operating

958
00:51:23,600 --> 00:51:26,400
costs with these fixed price
contracts.

959
00:51:26,440 --> 00:51:30,320
And yeah, there's heaps of
problems with restart projects.

960
00:51:30,320 --> 00:51:33,160
We've spoken about that a bunch.
You still need to deliver the

961
00:51:33,160 --> 00:51:35,400
pounds and that can be a real
burden if you're having problems

962
00:51:35,760 --> 00:51:37,520
getting the pounds out the
ground.

963
00:51:37,520 --> 00:51:40,520
It becomes, you know, it becomes
like debt essentially if you

964
00:51:40,520 --> 00:51:43,720
need to, to go into the market
and and buy it and then sell it

965
00:51:43,720 --> 00:51:46,080
on.
But if there's a few that have

966
00:51:46,200 --> 00:51:48,240
had to do that too, like, you
know.

967
00:51:48,320 --> 00:51:51,520
Peninsula yeah, yeah, yeah, it
can be really gnarly when it

968
00:51:51,520 --> 00:51:53,760
sneaks up when you're like that
and you have the problems

969
00:51:54,080 --> 00:51:57,520
delivering into them.
But you know, by and large it's

970
00:51:57,520 --> 00:51:59,800
it's relatively risk averse and
it's not a bad.

971
00:51:59,960 --> 00:52:02,560
I mean this, these guys are also
debt free, which kind of works

972
00:52:02,920 --> 00:52:06,640
in their favor.
And you know, if we think about

973
00:52:07,360 --> 00:52:09,680
Halogen just before and how we
kind of spoke about some of the

974
00:52:09,680 --> 00:52:11,760
decisions they've kind of made,
it's a, it's a very different

975
00:52:12,360 --> 00:52:16,800
approach.
And yeah, I am, I'm, I'm pretty

976
00:52:16,800 --> 00:52:17,920
intrigued by it.
I can.

977
00:52:18,000 --> 00:52:22,480
I'm pretty receptive to the
their sort of view of the, the

978
00:52:22,480 --> 00:52:26,000
world and kind of hedging risk
if you like and covering,

979
00:52:26,000 --> 00:52:29,480
covering your bases to make sure
you handle that those operating

980
00:52:29,480 --> 00:52:33,080
costs and just to make sure that
you can still be here through

981
00:52:33,080 --> 00:52:38,320
all those swings and be here
for, for the long term. 1-2 keep

982
00:52:38,440 --> 00:52:40,640
watching JD.
Great episode mate.

983
00:52:41,440 --> 00:52:43,440
What's the partners think?
We do.

984
00:52:43,440 --> 00:52:46,160
We have some awesome, awesome
partners to thank mate.

985
00:52:46,280 --> 00:52:50,000
Firstly, GRX, the big mining
innovation conference that's

986
00:52:50,000 --> 00:52:52,640
taking place in Brisbane at the
end of May Get your tickets

987
00:52:52,760 --> 00:52:56,400
discounts in the show notes.
Also a massive thank you to

988
00:52:56,400 --> 00:52:59,320
Mineral mining services,
grounded Sandvik ground support,

989
00:52:59,320 --> 00:53:03,000
CRE insurance, K drill, WA water
boards, Quattro project

990
00:53:03,000 --> 00:53:06,360
engineering, KCA site services,
Black diamond drilling services

991
00:53:06,400 --> 00:53:08,320
and Cross Boundary energy.
Hoodoo mate.

992
00:53:08,680 --> 00:53:12,160
Hoodoo The information contained
in this episode of Money of Mine

993
00:53:12,160 --> 00:53:14,520
is of general nature only and
does not take into account the

994
00:53:14,520 --> 00:53:18,120
objectives, financial situation
or needs of any particular

995
00:53:18,120 --> 00:53:20,160
person.
Before making any investment

996
00:53:20,160 --> 00:53:23,240
decision, you should consult
with your financial advisor and

997
00:53:23,240 --> 00:53:26,400
consider how appropriate the
advice is to your objectives,

998
00:53:26,600 --> 00:53:28,560
financial situation and needs.