The Mining Giant That Has Outperformed Every Major

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I've even adjusted, you know,
for currency to be fair, this is

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like for like basis total
shareholder return.

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So it accounts for dividends,
those sorts of things.

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Over the last 10 years, Z gin
plus 679% like years away from

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the entire pack.
And in second place, this is how

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far away 2nd place is.
Farley lost 372.

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Percent rhino money waters we're
going to we're going to China,

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we're going to North America
today we're going to you boys

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are covering a couple of big
dogs that are big and warrant of

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discussion.
Behemoth.

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Behemoth in the mining world
that we just haven't haven't

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really unpacked until today.
But we're gonna be the wiser for

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it.
Thank God for you too, because

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I'd never look at those two in
detail.

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It's just I'll just assume
they're good, but we're not.

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Look forward.
To this we're not gonna neglect

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the WA mining community either.
Oh, mate, there's made a,

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there's made a share price
plummet and we're gonna go in to

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see what the Hell's going on.
Oh, let's do it.

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Of course I'll freaking own it
too.

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So tell you what mate, tell you
what's going to bloody lift me

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spirits from a share price
decline?

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The GRX Conference, the Global
Resources Innovation Expo, It is

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coming up 20th to 22nd of May in
Brisbane at the Convention

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Centre.
It's hosted by Osman in

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partnership with OSIM.
What is it?

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It is the absolute nucleus of
mining tech innovation.

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What the future of the mining
industry is going to look like.

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You're going to have 150
exhibitors showing you

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everything and it is going to
look cool.

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Have a look at this is this is
look at those photos, look at

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those tech discussions in
action.

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You are going to see shit loads
of these.

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Look at these two.
That is a highly engaged

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discussion about the future of
the mining industry.

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And mate, tell you what?
Conference is a portal to the

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future of mining.
Oh mate.

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Good pun there.
Good pun.

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It gets better though, Maddie.
Why does it get better?

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For money mind listeners.
Mate I love saying the word

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exclusive.
Exclusive discount via US 190

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bucks off.
The standard rate for members.

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160 bucks off if you're not a
member, which means look, it's

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worth the extra 30 bucks
discount to become a member.

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Follow the links in the show
notes.

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This conference is bloody going
to be unreal.

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You got to get there.
Go to Bruce Vegas, see what the

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future of mining is going to
look like and oh, just.

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I'm up.
What's it?

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Like Rusty and Bryce should go,
yeah.

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Yeah, yeah, I'm.
Sure they will.

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They will.
Probably keynotes.

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Bryce is probably gone.
Keynote speakers, yeah. 100%.

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I reckon if we could get the JRX
logo on Rusty's nails, that'd be

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the guy.
That'd be the perfect marketing

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material.
All right, let's get into it.

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What do we got?
Take it away, Trev.

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Which Chinese company are we
talking about today?

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The mighty Zigin.
Mighty not not BYD, not BYD, no.

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Yeah, I would call him a miner,
but we do talk about him a bit.

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But mate, Zigin is a massive
mining company and it and it you

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know, it, it takes a bit for us
to understand that, I think.

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And yeah, upfront I think I'm
admitting that that I'm probably

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going to be be be wrong or a
little bit, a little bit off on

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some of my takes about decision
because up until today, frankly,

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I haven't done the work to try
and understand this company, but

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it absolutely warrants that it's
massive.

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They have growing influence
literally fucking everywhere in

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all the commodities that that
matter.

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And it's a company that has
grown enormously over the last

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decade to kind of conceptualize
just how rapidly this mining

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company has grown.
In 2014, they produce 1.1

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million ounces of gold, 10 years
later, 20242.35 million ounces

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of gold, so more than double the
gold production.

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In 2014, they produced 138,000
tonnes of copper. 2024 they

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produced 1.08 million tonnes of
copper.

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Like that is just enormous
copper growth when yeah, when

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every, every, every, everyone's
been trying to grow copper.

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They've just excited that.
Far out.

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I think I'll I'll let you get to
it, but I'll assume where a lot

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of that's come from.
Kamala.

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Yeah, yeah.
Amongst others, yeah, No other

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major has, has, has come close
to generating the sort of

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shareholder returns along that
same growth journey at that XI

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Jin has over the last decade.
Keep in mind this is a Chinese

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company listed on the Hong Kong
Stock Exchange in a, in a, in a

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decade where capital markets
have been very punitive towards

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Chinese equities, they've been,
if you look at any performance

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of Chinese equities over the
last decade versus Western

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equities like atrocious returns.
So, you know, but what I've done

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here, I, I'm actually comparing
XI Jin, who, who is amid that

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kind of capital pool, compare
their 10 year total shareholder

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returns with the majors, BHP,
Rio Tinto, Glencore, Anglo

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American Valet.
I've even adjusted, you know,

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for currency to be fair, this is
like for like basis total

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shareholder return.
So it accounts for dividends,

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those sorts of things.
Over the last 10 years, Z gin

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plus 679% like he is away from
the entire pack and in second

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place.
This is how far away. 2nd place

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is Valet plus 372%.
It's not a time frame thing

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right?
I I haven't just cherry picked a

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time frame.
Here's the last five years.

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See Gin plus 592%.
Second place is Glencore Miles

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Away plus 192%.
Oh, and that's bloody

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considering Glencore in the last
month or two, it's like 280 last

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night.
Yeah.

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It's like they're just, yeah,
yeah.

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Here's the last three years,
right, a different time frame,

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CGN plus 51% in first place.
Second place, BHP miles away

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down 1% is that, you know,
coming off the back of elevated

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commodity prices back in 2022.
Here's the last one year, CGN

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plus 11%.
Second place is Anglo, who keep

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in mind in that last 12 months
received a buddy, a bid from BHP

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up 8%.
So on every single time frame,

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no matter which one you use, the
relative performance of the

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others, the pack always changes.
It's a different company in

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second place.
But the constant on every single

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one of those time frames, Z Gin
has outperformed the rest.

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And well, I just find that
utterly fascinating.

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So I, you know, I've tried to
spend some time today to to

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understand how Z Gin has such an
edge over the Western incumbents

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that has seen it compounding at
a vastly higher rate on every

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single time frame.
And that and that total return

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that takes it for BHP Raya, that
takes into account the dividends

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as well.
Exactly, exactly.

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Reinvest dividends.
Yeah, yeah.

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Yeah, let's let's crack into to
why.

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Mate, this is super, super
interesting.

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I think you framed it well and
there's some really, really

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important reasons why to
understand like and put it into

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context, I reckon.
I got secret sauce and I I think

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I can pin it down to, to to 55
areas that, you know, Z gin, but

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that gives it gives Z gin a like
a massive edge that like

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honestly, I don't think is it's
an egg, an edge that is not

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replicable by, by any western
mind.

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And those reasons are number
one.

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Zijin has a cost structure that
is vastly lower than its Western

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peers #2 Zijin's cost of capital
is so much lower than any of its

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peers thanks to its access to
China state owned bank debt at,

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you know, very low cost #3 Zijin
has an envious track record of

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aggressive, shrewd and bold
acquisitions while remaining

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tremendously disciplined on the
price that they pay #4 Zijin's

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geopolitical positioning has
enabled it to go where Western

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miners hesitate to conduct
business, and they do it in a

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way that Western miners probably
can't.

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And #5 capital allocation of
Zigene has really prioritized

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reinvesting for more production
growth as opposed to capital

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returns to shareholders that
we've seen other Western miners

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participate in.
Yeah, for sure.

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Let's unpack that cost structure
one, because that's maybe the

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most important.
I mean, they're all, they're all

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pretty important, but that one's
like kind of, you know, once you

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kind of see it, you can't Unsee
it in a way.

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There's so much to, to, to this.
And, and, but if you, if you

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think about a mining company,
just like conceptually think of

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a mining company, they can't
control the commodity price,

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right?
They're, they're, they're price

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takers.
They can't control commodity

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price.
They, they can to an extent

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control their production units.
And you know, it requires

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expectations and skill to do
that.

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And they absolutely can control
their costs.

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So I can't emphasize enough how
important it is for a for a

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major mining company to manage
their costs.

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In the case of Zijin, I think
their cost structure is a, is a

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true competitive advantage
enabled by the fact that A, they

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have their own in house
engineering team to design,

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build and expand projects.
They avoid, you know, third

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party ABC contractors and then
the margins that come with it

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clearly, you know, like like
disappear.

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So they, they can move much
faster as a result of that as

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well.
B, they have access to the

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entire Chinese supply chain.
They source most equipment,

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material services primarily from
domestic suppliers who are right

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on their doorstep, doorstep.
C, lean overhead, unlike Rio

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Tinto or BHP or Anglo, etcetera,
all the rest.

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But they all have enormous
corporate overheads, right?

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Teams on teams on teams that do
nothing productive.

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Z jeans lean right.
They run a flatter structure

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with centralized control and
lower corporate costs.

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In fact, it's it's it's got it's
major shareholder is the

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provincial government and they
really discourage corporate

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bloat.
D this is a big one project

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location arbitrage Sijin has
prioritised countries with low

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wage costs and permissive
regulatory regimes, think DRC,

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Serbia, Colombia.
Western peers have been, you

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know, constrained by the ESG
investors or, you know, or the

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permitting dynamics in Tier 1
jurisdictions and they face

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longer timelines with higher
community and environmental

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costs, both be it both value and
timing.

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And those locations have much
much higher wages like these

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FIFO workforces are not cheap.
JD we were in the the the DRC we

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visited at the Chinese on mine,
not as a gene one, but they they

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weren't there was no FIFO
rosters there.

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They were flying back to China
once every six months, like.

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Completely, completely
different, right?

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It's yeah, it's, it's mind
blowing.

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And like it can only kind of be
done some of these things from a

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kind of Chinese perspective or
other kind of similar countries.

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Like you say, you just can't
compete on a lot of those

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numbers.
And the cost discipline it, it

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runs through the company in a
way that I don't think others

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come close to.
Just when you hear the rhetoric

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out of out of management, I'll
just play an excerpt from the

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latest results call that shows
you how obsessed with cost

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discipline this company is.
This is this is English

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translation audio over the over
the top of the the call that

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I'll play.
So we have operations in five

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continents and what we do is
that we build a comprehensive

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logistic and procurement network
for our project across the world

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in order to reduce our costs.
And we have two concrete

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measures.
For example, we use open price

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negotiation to buy some
frequently used equipments,

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which also help us to reduce
procurement costs.

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And we also take measures to
control investment in

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construction.
We set up an overseas cost

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settlement centre.
It is responsible for managing

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our prices and expenses early in
the process overseas.

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And we through this settlement
center, we had put forward some

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feasible plans which is quite
helpful for us to improve our

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construction investment
management.

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So we are we have managed to
involve our management in

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overseas construction
investments early in the process

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and we also continue to optimize
our designs and engineering.

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So basically, we have formed a
very conducive cycle for cost

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00:11:27,320 --> 00:11:30,280
control.
And we also have this kind of

227
00:11:30,280 --> 00:11:32,520
full chain cost control
measures.

228
00:11:32,720 --> 00:11:37,160
We also look into some abnormal
prices in our contracts.

229
00:11:37,440 --> 00:11:39,760
Through this kind of management,
we identify problems and lower

230
00:11:39,760 --> 00:11:41,560
them.
And 4th, we step up our

231
00:11:42,480 --> 00:11:44,760
performance assessments
regarding cost control.

232
00:11:44,760 --> 00:11:48,600
We set clear targets and we also
break them down into specific

233
00:11:48,600 --> 00:11:50,960
tasks.
And for major operations, we

234
00:11:50,960 --> 00:11:53,800
also customize plans for their
cost control.

235
00:11:54,120 --> 00:11:59,880
And we also introduce a sharing
system to in order to share our

236
00:11:59,880 --> 00:12:02,160
best cost control prices among
our operations.

237
00:12:02,680 --> 00:12:05,840
And also we will be able to
improve our performance in all

238
00:12:06,040 --> 00:12:08,440
on all fronts.
And we also introduce a reward

239
00:12:08,440 --> 00:12:11,480
and panel gear system to ensure
accountability and improve our

240
00:12:11,480 --> 00:12:15,120
cost control results.
So basically these effective

241
00:12:15,120 --> 00:12:18,520
measures will be continued to
roll out across our entire group

242
00:12:18,760 --> 00:12:21,360
in order to further improve our
cost control performance.

243
00:12:21,520 --> 00:12:23,200
And also and also and also and
also.

244
00:12:23,200 --> 00:12:24,520
There were so many things there,
right?

245
00:12:24,520 --> 00:12:25,960
It sounds exciting.
Yeah.

246
00:12:26,120 --> 00:12:28,920
Yeah.
It was a female show I show you.

247
00:12:29,400 --> 00:12:31,800
Yeah, translator was pumped.
Yes, yeah, yeah.

248
00:12:32,440 --> 00:12:33,760
Yeah, that, that was
fascinating, mate.

249
00:12:33,760 --> 00:12:36,400
And that and that flies in the
face of the the other ones,

250
00:12:36,400 --> 00:12:37,720
right?
Because this is something

251
00:12:37,720 --> 00:12:39,480
Western companies can compete
on.

252
00:12:39,800 --> 00:12:43,320
And I just love that dedication
to cost competitiveness.

253
00:12:43,320 --> 00:12:47,240
That is, you know, that that's
what really stands out in in any

254
00:12:47,240 --> 00:12:49,120
sector, right?
And mining's obviously no

255
00:12:49,120 --> 00:12:51,000
different.
It's perhaps even more amplified

256
00:12:51,000 --> 00:12:52,800
because you're you're a price
taker.

257
00:12:53,440 --> 00:12:56,480
What A So what about their, I
guess their M and A track record

258
00:12:56,480 --> 00:12:59,520
and their, and you speak of
geopolitical appetite.

259
00:12:59,520 --> 00:13:02,520
We mentioned the Congo.
They were obviously very heavily

260
00:13:02,520 --> 00:13:06,480
involved in the AVZ saga, which
was fascinating.

261
00:13:06,480 --> 00:13:08,480
So yeah, yeah.
Give us a rundown of that.

262
00:13:08,480 --> 00:13:11,680
The two the 2GO hand in hand and
you know, M and a geopolitical

263
00:13:11,680 --> 00:13:16,360
appetite Zijin, they've
undoubtedly leveraged global

264
00:13:16,840 --> 00:13:20,960
diplomatic and financial reach
to facilitate their expansion,

265
00:13:20,960 --> 00:13:23,160
right.
Many, many of its projects

266
00:13:23,400 --> 00:13:26,600
aligned with China's belt and
Rd. initiative or or national

267
00:13:26,600 --> 00:13:29,120
resource security goals.
They're their largest

268
00:13:29,120 --> 00:13:32,480
shareholder is a provincial
government effectively, in my

269
00:13:32,480 --> 00:13:34,800
mind making Zeigen an extension
of state policy.

270
00:13:35,000 --> 00:13:38,240
This government alignment I
think has provided access to to

271
00:13:38,240 --> 00:13:42,680
State Bank funding support when
investing abroad think host

272
00:13:42,680 --> 00:13:46,160
countries often welcome Zijin's
investment due to China's ties

273
00:13:46,160 --> 00:13:50,160
or infrastructure deals in other
parts of the country and

274
00:13:50,160 --> 00:13:52,920
government backing.
It also helps Zijin weather

275
00:13:53,000 --> 00:13:57,080
risks in these jurisdictions in
in developing countries, it can

276
00:13:57,080 --> 00:14:00,480
negotiate like favourable tax or
partnership terms and it often

277
00:14:00,480 --> 00:14:03,840
partners, you know, with
government owned enterprises or

278
00:14:03,840 --> 00:14:07,160
or offers host government's
equity stakes to to align those

279
00:14:07,160 --> 00:14:09,560
interests.
Just think about the deal of the

280
00:14:09,560 --> 00:14:12,920
century.
Zejin paid US $412 million for

281
00:14:12,920 --> 00:14:16,280
half of Kamoa Kakula from
Ivanhoe in 2015.

282
00:14:16,280 --> 00:14:19,280
Friedland himself has literally
called this the best deal ever

283
00:14:19,280 --> 00:14:20,960
in mining.
And you know, he was on the

284
00:14:20,960 --> 00:14:22,400
selling side of that deal,
right?

285
00:14:22,680 --> 00:14:24,160
He's no mug in negotiations
either.

286
00:14:24,160 --> 00:14:26,160
So, you know, if it was more
value to be had, I'm sure he

287
00:14:26,160 --> 00:14:27,920
would have found a way to to get
it.

288
00:14:27,920 --> 00:14:31,720
But but Ivanhoe needed a gin and
they they brought not only the

289
00:14:31,720 --> 00:14:37,720
in house engineering capability,
but also a pathway to finance

290
00:14:37,720 --> 00:14:41,280
the mine too, but also a
counterparty that has hasn't

291
00:14:41,440 --> 00:14:44,320
managed to actually, you know,
deal and negotiate and get

292
00:14:44,320 --> 00:14:48,720
things moving in the DRC in a
period of time when no western

293
00:14:48,720 --> 00:14:51,160
miner was going anywhere near
the DRC.

294
00:14:51,760 --> 00:14:53,480
And that's probably the one of
the most things that's

295
00:14:53,480 --> 00:14:57,360
misunderstood about Z June and
I'll acknowledge my ignorance is

296
00:14:57,640 --> 00:15:01,000
that engineering capability that
they're a a project builder,

297
00:15:02,000 --> 00:15:04,360
which is and they don't think
would be as well known.

298
00:15:04,360 --> 00:15:07,280
And they can do it cheaper than
anyone like you know, yeah,

299
00:15:07,720 --> 00:15:11,120
they'll run their own numbers
over, over an undeveloped

300
00:15:11,120 --> 00:15:13,440
project and come up with their
own CapEx, which is way lower

301
00:15:13,440 --> 00:15:15,600
than the study of the the
Western mind and put out for the

302
00:15:15,600 --> 00:15:18,240
Western project.
And and that can you know, kind

303
00:15:18,240 --> 00:15:20,760
of support a case to pay, pay X
dollars or or whatnot.

304
00:15:21,080 --> 00:15:22,560
It's it's totally not
appreciated.

305
00:15:22,560 --> 00:15:27,320
Yeah, I, I think now a lot of
people would be quite critical

306
00:15:27,320 --> 00:15:31,040
of Zegin in the way their
geopolitical influence may have,

307
00:15:31,360 --> 00:15:33,720
you know, let them achieve
outcomes that are unobtainable

308
00:15:33,720 --> 00:15:36,960
to, to Western minors.
And those critics probably have

309
00:15:36,960 --> 00:15:39,160
a damn good reason for their
criticism, too.

310
00:15:39,480 --> 00:15:43,360
Just ask any AVZ shareholder
what they think of Zegin mining.

311
00:15:43,960 --> 00:15:46,320
You'll be, you'll be, you'll be
having that conversation for 15

312
00:15:46,320 --> 00:15:48,120
minutes and not one positive
word will be said.

313
00:15:48,440 --> 00:15:51,960
And I've no doubt that Zegins,
you know, achievements in some

314
00:15:51,960 --> 00:15:54,800
of the spicy jurisdictions have
been facilitated in part by are

315
00:15:54,800 --> 00:15:56,920
doing things that no Western
company can do.

316
00:15:57,360 --> 00:16:01,120
And yeah, also I wanted to
convey how Zegin is also

317
00:16:01,120 --> 00:16:03,880
tremendously disciplined though,
when it when it comes to deal

318
00:16:03,880 --> 00:16:05,040
making.
Can you can you guys think of a

319
00:16:05,040 --> 00:16:08,840
single deal where Zegin has been
known to have overpaid for an

320
00:16:08,840 --> 00:16:12,000
asset or a company?
Can't think of one, right?

321
00:16:12,000 --> 00:16:14,560
How many, how many, how many
major miners can you?

322
00:16:14,720 --> 00:16:17,760
Can you say that about like you
just can't every like at some

323
00:16:17,760 --> 00:16:20,640
point in time in some companies
history, some management team

324
00:16:20,640 --> 00:16:23,760
and it happens relatively often,
they get very excited or too

325
00:16:23,760 --> 00:16:25,160
excited about 1 certain
opportunity.

326
00:16:25,160 --> 00:16:26,520
They pay too much and it's a
disaster.

327
00:16:26,880 --> 00:16:30,120
But I can't, I can't say I can't
think of that as it relates to

328
00:16:30,120 --> 00:16:33,800
to Zijin and I just to capture,
you know, that part of the DNAI

329
00:16:33,800 --> 00:16:37,280
did just want to play a snippet
from Chairman Chen talking about

330
00:16:37,280 --> 00:16:41,120
MNA in the current environment.
This is a quote from less than

331
00:16:41,120 --> 00:16:44,520
two weeks ago.
Want to say is that even with

332
00:16:44,680 --> 00:16:48,360
such high prices, there are also
there are still some good offers

333
00:16:48,360 --> 00:16:51,680
available.
So for a company if it does not

334
00:16:51,680 --> 00:16:57,840
has any increase, then it won't
be able to for the company to

335
00:16:57,840 --> 00:17:02,440
achieve growth.
So we will definitely continue

336
00:17:02,440 --> 00:17:07,359
with our M and A strategy.
The Zune has this feature which

337
00:17:07,359 --> 00:17:11,560
is that we won't go for very
expensive project, we won't bet

338
00:17:11,560 --> 00:17:13,880
on just one projects at all
costs.

339
00:17:14,599 --> 00:17:19,800
For example, when we decided to
enter the lithium markets, that

340
00:17:19,800 --> 00:17:24,640
time lithium prices has been
quite high, but we still

341
00:17:25,440 --> 00:17:29,400
evaluate projects at the cost of
100,000 per tonne.

342
00:17:30,920 --> 00:17:33,560
So this is our benchmark price
internally.

343
00:17:34,200 --> 00:17:37,000
Basically, it means that we will
still remain prudent in our

344
00:17:37,000 --> 00:17:39,200
investment strategy.
So we have some considerations,

345
00:17:39,200 --> 00:17:42,040
for example, in terms of the
selection of minerals, we will

346
00:17:42,040 --> 00:17:46,200
go with go for minerals that is
optimistic in the future.

347
00:17:46,480 --> 00:17:49,760
In in recent years, we
prioritized copper because it's

348
00:17:49,760 --> 00:17:54,120
critical to renewable energy.
And also artificial

349
00:17:54,120 --> 00:17:56,680
intelligence, the application of
AI also consumes a lot of

350
00:17:56,680 --> 00:18:00,080
electricity and geopolitical
factors are having greater

351
00:18:00,080 --> 00:18:02,040
impacts.
Almost all central banks across

352
00:18:02,040 --> 00:18:08,480
the world are printing money.
So money is cheap and that is

353
00:18:08,480 --> 00:18:10,320
why we are seeing rising gold
prices.

354
00:18:10,880 --> 00:18:15,680
So GOAT is a very important
target for us in our future M&A

355
00:18:15,840 --> 00:18:18,360
activities.
Gotta get Jim and Shannon the

356
00:18:18,360 --> 00:18:20,280
translator on the show.
That'll be a bloody.

357
00:18:20,880 --> 00:18:23,760
Wouldn't it, wouldn't it, it
would be a very, very

358
00:18:23,760 --> 00:18:26,400
interesting, very interesting
conversation I reckon, Maddie

359
00:18:27,240 --> 00:18:29,400
Yeah, but like you can, you can
hear the discipline there,

360
00:18:29,400 --> 00:18:31,560
right?
Like how many how many companies

361
00:18:31,560 --> 00:18:36,080
were were running 100,000 CNY
per ton lithium carbonate in

362
00:18:36,080 --> 00:18:38,800
their long term price
assumptions when when it got to

363
00:18:38,840 --> 00:18:42,360
six times that, you know, Oh no,
I certainly didn't.

364
00:18:43,520 --> 00:18:45,560
What, what do you, what do you
think is going to be some of

365
00:18:45,560 --> 00:18:47,760
their next moves?
Like if you're going to throw

366
00:18:47,760 --> 00:18:49,600
some darts around, what are
they?

367
00:18:49,680 --> 00:18:51,840
Is it going to be heavily
focused around copper?

368
00:18:52,520 --> 00:18:56,000
They had a massive swing in, in
lithium, yeah, relatively

369
00:18:56,000 --> 00:18:58,440
massive, almost 2 billion U.S.
dollar deal.

370
00:18:58,600 --> 00:19:01,280
Yeah, Chinese lithium for for
zangay.

371
00:19:01,720 --> 00:19:05,240
Yeah, they've got that.
He, he spoke after that quote.

372
00:19:05,360 --> 00:19:07,520
You know how he's pretty happy
with the, the quantity of, of

373
00:19:07,520 --> 00:19:08,760
lithium resources that they
have.

374
00:19:08,760 --> 00:19:12,120
And I'm sure that, you know,
they're, yeah, you know, they've

375
00:19:12,120 --> 00:19:14,640
got a view on the, the extent of
the Monono deposit they'll be

376
00:19:14,640 --> 00:19:17,040
able to bring online.
They've also got Argentinian

377
00:19:17,320 --> 00:19:18,960
brine which they're bringing
online as well.

378
00:19:18,960 --> 00:19:20,680
So there's, you know, they're,
they're, they're quite

379
00:19:20,680 --> 00:19:22,840
comfortable with their lithium
deposits, but they're happy to

380
00:19:22,880 --> 00:19:25,960
look at more gold said was a big
priority.

381
00:19:25,960 --> 00:19:28,400
I think gold is actually like
high priority that copper based

382
00:19:28,400 --> 00:19:29,880
on my interpretation of the
translation.

383
00:19:30,960 --> 00:19:34,120
I also think where they are
going to like look for they

384
00:19:34,120 --> 00:19:37,600
just, they just bought
Newmontchem mining in, in Ghana,

385
00:19:37,600 --> 00:19:40,640
by the way, paying a billion
dollars for that.

386
00:19:41,120 --> 00:19:44,720
And but I think they'll they'll
find a lot of opportunities in,

387
00:19:44,720 --> 00:19:47,880
in South America, you know,
places like again, spicy

388
00:19:47,880 --> 00:19:50,480
jurisdiction of Colombia, those
those sorts of locations.

389
00:19:51,320 --> 00:19:53,120
You know, I wouldn't be
surprised to see, you know, a

390
00:19:53,120 --> 00:19:56,480
lot more activity from from the
likes of the gym in those parts

391
00:19:56,480 --> 00:19:57,880
of the world.
What about Ecuador?

392
00:19:57,880 --> 00:19:59,640
It's.
Entirely possible.

393
00:19:59,720 --> 00:20:02,160
Yeah, Yeah, yeah, yeah,
Absolutely.

394
00:20:02,600 --> 00:20:04,640
Yeah.
Mate, that's fascinating.

395
00:20:04,680 --> 00:20:06,160
That is super, super
interesting.

396
00:20:06,160 --> 00:20:08,800
Obviously that with the the MNA
aspect of it, they haven't been

397
00:20:09,080 --> 00:20:12,640
around as as long in, in such
scales, so very keen to see how

398
00:20:12,640 --> 00:20:16,280
they do through the next cycles
in in staying to that

399
00:20:16,280 --> 00:20:18,160
discipline.
But the track record is super

400
00:20:18,160 --> 00:20:20,160
impressive.
Yeah, it is.

401
00:20:20,160 --> 00:20:24,560
And I mean they're, they're even
in in Australia in like fire.

402
00:20:25,520 --> 00:20:30,000
It's mostly owned subsidiary
Norton Goldfields, which yeah

403
00:20:30,000 --> 00:20:32,120
is, is a is a funny one, a bit
of a head scratcher.

404
00:20:32,120 --> 00:20:34,120
I think they've got a pretty
high kind of cost, cost basis

405
00:20:34,120 --> 00:20:35,520
that they, they run things out
there.

406
00:20:35,520 --> 00:20:39,400
But you know, have also shown a
willingness to, to divest for

407
00:20:39,400 --> 00:20:42,720
the first time in a, in a long
time by way of selling bullet

408
00:20:42,720 --> 00:20:45,680
bullying recently to to MI 6.
So just, I'm paying more

409
00:20:45,680 --> 00:20:48,480
attention to the gin.
Yeah, paying a lot more

410
00:20:48,480 --> 00:20:50,400
attention.
And I I'm kind of convinced that

411
00:20:50,400 --> 00:20:53,000
they do have a competitive
advantage that Western miners

412
00:20:53,000 --> 00:20:56,400
can't imitate based on, based on
all the factors that I talked

413
00:20:56,400 --> 00:21:02,040
about, for better or for worse.
Very bloody good, very good, JD,

414
00:21:02,040 --> 00:21:04,680
we're going.
We're going international again.

415
00:21:04,680 --> 00:21:06,800
We're heading to North America
for you.

416
00:21:06,800 --> 00:21:10,840
But before we do this, I have a
bit of an itch to scratch that I

417
00:21:10,840 --> 00:21:11,920
have not done.
Please.

418
00:21:12,040 --> 00:21:19,280
Done for a while check this out.
ITSITSITS more ITS flying out

419
00:21:19,280 --> 00:21:22,160
the door for KCI.
It's bloody good to have them

420
00:21:22,160 --> 00:21:23,880
back.
And tell you what these IT

421
00:21:23,880 --> 00:21:25,720
numbers have just grown since
we've had them.

422
00:21:25,960 --> 00:21:31,560
Where are they going to 38?
IT 3-8 more coming in six months

423
00:21:31,760 --> 00:21:34,800
and that is going to compliment
the fricking underground AG

424
00:21:34,880 --> 00:21:38,560
coming in the next month and the
bloody underground charge wagon

425
00:21:38,560 --> 00:21:41,360
coming in the next month mate.
All available for hire.

426
00:21:41,600 --> 00:21:44,200
A new grader on the way, mate,
they're going to be an

427
00:21:44,200 --> 00:21:46,440
underground operators.
I cannot wait to see him.

428
00:21:46,440 --> 00:21:50,440
It's great to have him back and
they've even just amplified the

429
00:21:50,440 --> 00:21:53,320
recruitment team.
All your blue collar workers for

430
00:21:53,920 --> 00:21:59,000
underground open pit civil
construction, they're just mate.

431
00:21:59,280 --> 00:22:01,880
Whenever in doubt in your life,
what do you do?

432
00:22:04,440 --> 00:22:06,720
Just call KCA.
Yeah, call KCA.

433
00:22:07,000 --> 00:22:09,200
Very simple.
Great to have the team back.

434
00:22:09,960 --> 00:22:14,200
How good is that?
He's flying out the door, right,

435
00:22:14,200 --> 00:22:16,000
JD?
Where we go, North America.

436
00:22:16,000 --> 00:22:18,320
This is a big humdinger of A
use.

437
00:22:18,320 --> 00:22:20,120
Love this company.
Use love it.

438
00:22:20,280 --> 00:22:21,040
Oh no use.
Love it.

439
00:22:21,200 --> 00:22:23,440
I do I've got I've got to sort
of turn the volume up after

440
00:22:23,440 --> 00:22:27,960
you've just done the ad again.
So normal very good.

441
00:22:27,960 --> 00:22:30,280
We're we're talking about Franco
Nevada.

442
00:22:30,280 --> 00:22:32,840
So they just had an investor
day.

443
00:22:32,840 --> 00:22:34,920
I'm not sure if you guys saw
this one, but I thought it'd be

444
00:22:34,920 --> 00:22:39,560
worthwhile just tuning in and
trying to learn a bit from the,

445
00:22:39,680 --> 00:22:41,480
the royalty behemoth that they
are.

446
00:22:41,480 --> 00:22:45,400
So I think everyone kind of
knows their returns a first

447
00:22:45,400 --> 00:22:48,120
rate, they're pretty stellar.
Their share price performance

448
00:22:48,120 --> 00:22:51,320
since since the IPO kind of
knocks it out the park.

449
00:22:52,040 --> 00:22:54,200
And I was, I was kind of curious
to hear how they're thinking in

450
00:22:54,200 --> 00:22:58,000
like a, a frothy precious metals
market and some of the other

451
00:22:58,000 --> 00:23:01,720
perspectives on, on debt on the
market and sort of funding

452
00:23:01,720 --> 00:23:05,240
structure more broadly from from
juniors to to developers.

453
00:23:05,720 --> 00:23:08,480
And yeah, I thought it'd be good
just to chat with you lads about

454
00:23:08,520 --> 00:23:11,040
about the big takeaways.
I'm very curious mate, where

455
00:23:11,040 --> 00:23:14,920
should we start?
I've, I've sort of jotted down a

456
00:23:14,920 --> 00:23:16,880
few points and it's actually
interesting to, to look

457
00:23:16,880 --> 00:23:20,200
afterwards.
There's, there's a, a sort of

458
00:23:20,200 --> 00:23:22,480
relation between all these
points, which I think the money

459
00:23:22,480 --> 00:23:24,160
miners will kind of notice as we
go through.

460
00:23:24,160 --> 00:23:29,680
But I'll start with how royalty
funding has its sort of place

461
00:23:29,680 --> 00:23:33,760
versus your, your traditional
debt and equity sources.

462
00:23:33,760 --> 00:23:37,040
And what you kind of take away
from this is the, the time

463
00:23:37,040 --> 00:23:40,640
frames when Franco in certain
commodities will get really

464
00:23:40,640 --> 00:23:43,200
active.
So I'll play a snippet from the

465
00:23:43,200 --> 00:23:47,360
CEO to to start us off.
That we can provide capital to

466
00:23:47,360 --> 00:23:49,560
the industry at a consistent
cost.

467
00:23:50,040 --> 00:23:53,080
There'll be times when debt is
very cheap and then we can't

468
00:23:53,080 --> 00:23:55,720
compete and, and, and we're
happy not to compete on that

469
00:23:55,720 --> 00:23:57,360
level.
There are other times when when

470
00:23:57,360 --> 00:24:00,840
debt is far more expensive and
then we can compete.

471
00:24:01,640 --> 00:24:04,840
So we prefer to think, you know,
both when we're competing with

472
00:24:04,840 --> 00:24:07,440
debt and and also with the
equity markets that we're a

473
00:24:07,440 --> 00:24:10,520
consistent cost of capital.
The equity markets probably even

474
00:24:10,520 --> 00:24:12,920
more open and shut than than the
debt markets.

475
00:24:12,920 --> 00:24:14,400
There.
There there's some periods where

476
00:24:14,400 --> 00:24:17,920
they they're wildly undervaluing
assets and the other periods

477
00:24:17,920 --> 00:24:22,320
where they're overvaluing it.
So my, my interpretation came to

478
00:24:22,320 --> 00:24:25,120
hear what you guys think, but
that was just speaking to

479
00:24:25,120 --> 00:24:28,520
discipline, like discipline,
discipline, discipline through

480
00:24:28,520 --> 00:24:30,560
the cycle.
You've got to, you've got to

481
00:24:30,560 --> 00:24:32,320
stick to it.
You can't change your strategy

482
00:24:32,320 --> 00:24:34,800
kind of halfway through.
And he, he ended up following up

483
00:24:35,160 --> 00:24:38,080
that bit there by sort of saying
when people really need our

484
00:24:38,080 --> 00:24:39,840
capital is when we get deals
done.

485
00:24:40,280 --> 00:24:42,000
And I just, I found that
fascinating.

486
00:24:42,000 --> 00:24:44,840
You guys can kind of chime in if
you've got thoughts or we can

487
00:24:44,840 --> 00:24:47,360
jump to the next one.
I totally like that, that you

488
00:24:47,360 --> 00:24:49,880
know what comes to mind when he
said when people really need us?

489
00:24:49,880 --> 00:24:54,320
I think I think of Sabanya late
last year when they they did the

490
00:24:54,640 --> 00:24:58,920
the stream, which was like,
yeah, pretty, pretty onerous.

491
00:24:58,920 --> 00:25:02,040
But it just kind of speaks to
the value of a royalty company.

492
00:25:03,120 --> 00:25:06,640
AB AB absolutely.
And it's, it's, it's going to

493
00:25:06,640 --> 00:25:08,720
tie and I've got, I've got more
thoughts that I'll I'll sort of

494
00:25:08,720 --> 00:25:12,480
piece into what you said as as
we go, but I'll I'll speak to

495
00:25:12,480 --> 00:25:16,720
their view on debt.
And in simple terms, they avoid

496
00:25:16,720 --> 00:25:18,400
it.
It's, it's as simple as that.

497
00:25:18,400 --> 00:25:21,720
The, the goal is to be the one
with capital when you're in

498
00:25:21,720 --> 00:25:24,320
those cycle troughs and some of
the best deals that these guys

499
00:25:24,320 --> 00:25:28,080
have done when other companies
are distressed.

500
00:25:28,080 --> 00:25:32,120
So thinking like Glencore 2015
sixteen, those sorts of deals

501
00:25:32,360 --> 00:25:36,680
that they do stand out and they
make your money for years and

502
00:25:36,680 --> 00:25:39,280
years and years afterwards.
So they view not holding debt as

503
00:25:39,280 --> 00:25:41,920
a competitive advantage in the
business.

504
00:25:41,920 --> 00:25:45,760
And it's, it's Berkshire esque
and that is a, you know, kind of

505
00:25:45,760 --> 00:25:49,040
the, the utmost compliment in my
mind, but it's really how they

506
00:25:49,520 --> 00:25:51,600
view the world.
And they got asked this question

507
00:25:51,600 --> 00:25:54,280
pretty early on or they actually
spoke to it actually without

508
00:25:54,280 --> 00:25:58,200
being asked because debt must be
such a such a tantalizing

509
00:25:58,200 --> 00:25:59,920
prospect for a business like
them, right?

510
00:25:59,920 --> 00:26:03,160
And the idea that you could just
spruce up your returns ever so

511
00:26:03,160 --> 00:26:09,000
slightly year in, year out is,
you know, super, super appealing

512
00:26:09,000 --> 00:26:10,760
given that the profile of this
business.

513
00:26:11,120 --> 00:26:14,480
But they clearly acknowledge we
are in one of the most cyclical

514
00:26:14,720 --> 00:26:18,440
industries that exist.
And they view that financial

515
00:26:18,440 --> 00:26:20,960
flexibility and the ability to
move quickly when it really,

516
00:26:20,960 --> 00:26:25,840
really counts far exceeds the
the ability or the the earnings

517
00:26:25,840 --> 00:26:27,680
in the long term that you're
going to get from a few extra

518
00:26:27,680 --> 00:26:29,520
percentage points here and
there.

519
00:26:29,520 --> 00:26:30,800
So I'll play another snippet
now.

520
00:26:32,040 --> 00:26:35,520
The second is financial
flexibility and it's how we

521
00:26:35,520 --> 00:26:39,240
think about our balance sheet.
A lot of folks say to us when

522
00:26:39,240 --> 00:26:43,400
you lever up the company debt is
a lower cost of capital, you can

523
00:26:43,400 --> 00:26:46,960
get better returns that way.
That's not our approach.

524
00:26:47,560 --> 00:26:51,760
We put more importance on
financial flexibility than we do

525
00:26:51,760 --> 00:26:54,880
on cost of capital.
What we found over time, the

526
00:26:54,880 --> 00:26:57,800
industry is highly cyclical.
That points in the cycle where

527
00:26:57,800 --> 00:26:59,440
the industry really needs
capital.

528
00:26:59,960 --> 00:27:01,640
That's where you get your best
deals done.

529
00:27:02,320 --> 00:27:05,320
For us, that's happened twice.
The first was 2008 financial

530
00:27:05,320 --> 00:27:08,040
crisis.
We had the capital available.

531
00:27:08,560 --> 00:27:11,800
We made some super investments.
Palmeria Guadalupe was one of

532
00:27:11,800 --> 00:27:13,920
those.
The second time it happened was

533
00:27:13,920 --> 00:27:17,440
20/15/2016.
Trying to slow down.

534
00:27:17,760 --> 00:27:20,040
Many of the diversifieds were
caught off side with their

535
00:27:20,040 --> 00:27:23,120
balance sheets.
We were able to get stakes in in

536
00:27:23,120 --> 00:27:27,240
terrific assets, Candelaria and
Tamina and to Pakai.

537
00:27:27,920 --> 00:27:29,240
Right.
That's, that's really

538
00:27:29,240 --> 00:27:31,360
interesting.
I think it kind of it speaks to

539
00:27:31,360 --> 00:27:36,080
the, the optionality that that
that cash has, but also, I mean,

540
00:27:36,080 --> 00:27:40,240
they're in a competitive
industry where the ability to

541
00:27:40,240 --> 00:27:44,400
act fast in those moments of, of
distressed opportunities matter

542
00:27:44,400 --> 00:27:46,760
so much, right?
You've got A and, and imagine if

543
00:27:46,760 --> 00:27:50,040
you've got a peer royalty
company who doesn't have a debt

544
00:27:50,040 --> 00:27:53,760
covenant in place and they've
got just, you know, like, you

545
00:27:53,760 --> 00:27:55,680
know, cash that could be
deployed, but you've got a debt

546
00:27:55,680 --> 00:27:57,080
covenant.
You've got to, you've got to get

547
00:27:57,080 --> 00:27:59,800
your lender to look over because
you want to kind of, you know,

548
00:27:59,800 --> 00:28:02,520
maybe maybe allocate more than
you, you thought you could for

549
00:28:02,520 --> 00:28:05,320
all of those sorts of reasons.
So yeah, it's, I think it's a

550
00:28:05,320 --> 00:28:08,680
function of, of their, their
outlook and also the competitive

551
00:28:08,680 --> 00:28:12,240
nature of what they're doing.
So that that flows on, you know,

552
00:28:12,240 --> 00:28:15,040
flowing on from that, you've got
investment cycles.

553
00:28:15,040 --> 00:28:16,960
And I just underline what, what
Paul said.

554
00:28:16,960 --> 00:28:20,160
They're investing
opportunistically in the weaker

555
00:28:20,160 --> 00:28:22,280
parts of the cycles, in
particular for non precious

556
00:28:22,280 --> 00:28:24,480
metals.
They've got a slightly different

557
00:28:24,480 --> 00:28:28,360
outlook for gold.
But the, the Detour Lake deal, I

558
00:28:28,360 --> 00:28:30,960
just want to under score to put
it in numbers for people to

559
00:28:30,960 --> 00:28:32,680
understand how good a deal this
kind of was.

560
00:28:32,680 --> 00:28:36,920
They got a 2% NSR on it for US,
$35 million.

561
00:28:37,360 --> 00:28:41,520
This mine did 670,000 oz last
year.

562
00:28:41,960 --> 00:28:45,320
They they call that a 250X.
It's, it's just kind of

563
00:28:45,320 --> 00:28:47,040
phenomenal.
And then there's, you know, the,

564
00:28:47,040 --> 00:28:50,240
the Big South American copper
assets that they, they spoke to

565
00:28:50,960 --> 00:28:53,040
goes well, which are kind of
stellar.

566
00:28:53,040 --> 00:28:56,320
And gold, like I said, is, is
viewed a bit differently, which

567
00:28:56,320 --> 00:28:59,760
I'll get into in a moment.
But the way they sort of talk

568
00:28:59,760 --> 00:29:02,240
about this is investing through
the cycle and they always

569
00:29:02,240 --> 00:29:05,440
present their board 2 price
decks, 1 is more or less the

570
00:29:05,440 --> 00:29:08,240
spot price and the other is
consensus.

571
00:29:08,240 --> 00:29:11,360
So it's, it's a bit of a
different take to the other

572
00:29:11,360 --> 00:29:14,520
commodities and to piece it
together for people, they kind

573
00:29:14,520 --> 00:29:19,680
of want to maintain gold and
precious as 70% of their

574
00:29:19,680 --> 00:29:23,680
portfolio and 30 as other
commodities.

575
00:29:23,680 --> 00:29:26,840
That's predominantly energy as
well as as well as copper.

576
00:29:28,080 --> 00:29:32,000
So the 4th point is ignoring the
rate of return and this one is

577
00:29:32,000 --> 00:29:35,520
super, super interesting.
So the upfront investment will

578
00:29:35,520 --> 00:29:38,880
always seem to have a low rate
of return is how they frame it.

579
00:29:39,440 --> 00:29:42,280
And adding to that, they say
whatever you put in the

580
00:29:42,280 --> 00:29:43,640
spreadsheet is going to be
wrong.

581
00:29:43,640 --> 00:29:45,480
So their process is kind of two
step.

582
00:29:45,480 --> 00:29:48,280
Firstly, are you highly
confident that you get your

583
00:29:48,280 --> 00:29:51,280
money back?
And secondly, have you picked a

584
00:29:51,280 --> 00:29:56,240
property that can be multiples
of its current size in future?

585
00:29:56,360 --> 00:29:59,480
And they sort of say that in
this business that's where you

586
00:29:59,480 --> 00:30:02,760
make all the returns.
So I'll play it from from then.

587
00:30:03,000 --> 00:30:05,880
Key thing when we're looking at
projects are we highly confident

588
00:30:05,880 --> 00:30:09,280
that the project is economic,
that we will get our money back.

589
00:30:09,280 --> 00:30:11,640
The number one thing that we
think about as a business as I

590
00:30:11,640 --> 00:30:14,840
said up front is it's not the
rate of return that you see on

591
00:30:14,840 --> 00:30:16,920
what's there today.
It's investing in the right

592
00:30:16,920 --> 00:30:19,560
properties that can be a
multiple of their size over time

593
00:30:19,920 --> 00:30:23,280
because if there are multiple of
the size that ultimately is, is

594
00:30:23,280 --> 00:30:25,120
where you make your returns in
this business there.

595
00:30:25,720 --> 00:30:28,640
You go don't fluff up your study
too much if you want Franco to

596
00:30:28,640 --> 00:30:33,080
come in.
If there's like one kind of word

597
00:30:33,080 --> 00:30:36,200
that describes how this company
thinks best, I think it's

598
00:30:36,200 --> 00:30:38,720
optionality.
That's what they that's what

599
00:30:38,720 --> 00:30:41,240
they prize over almost
everything else.

600
00:30:41,240 --> 00:30:47,160
And you know, you're, you're
targeting projects, assets that

601
00:30:47,160 --> 00:30:49,080
will last multiple, multiple
cycles.

602
00:30:49,080 --> 00:30:51,640
And it, it actually reminds me
of this paper that I think we

603
00:30:51,640 --> 00:30:55,520
shared a little while ago from
Kaepernick, this, this US fund

604
00:30:56,000 --> 00:31:00,960
on how many, many people out
there have flawed valuation

605
00:31:00,960 --> 00:31:02,520
methods for, for mining
companies.

606
00:31:02,520 --> 00:31:07,840
And they don't appropriately
value the longevity and the

607
00:31:07,840 --> 00:31:11,160
optionality that you get in
these top quality projects.

608
00:31:11,160 --> 00:31:13,800
And I think it's just, it's
something super interesting to,

609
00:31:13,920 --> 00:31:15,160
to hear and acknowledge from
them.

610
00:31:15,160 --> 00:31:18,840
They've always sort of spoken
about it, but to hear it is just

611
00:31:18,840 --> 00:31:21,760
reinforces it in my mind.
I think if who who benefits from

612
00:31:21,760 --> 00:31:25,160
that optionality the most that
come like it's, it's actually

613
00:31:25,160 --> 00:31:27,920
not the miner because their
costs creep up as time goes on.

614
00:31:28,160 --> 00:31:31,120
The royalty company captures so
much of that in a in a non

615
00:31:31,120 --> 00:31:33,440
linear fashion of that
optionality because as a matter

616
00:31:33,680 --> 00:31:34,960
it doesn't matter if mining
costs go up.

617
00:31:34,960 --> 00:31:37,640
It doesn't matter if inflation,
you know, happens on costs

618
00:31:37,720 --> 00:31:41,600
because royalty is percentage of
top line. 100% mate.

619
00:31:42,160 --> 00:31:44,640
Is there?
So if this is such a good

620
00:31:44,640 --> 00:31:49,840
business, how is it perceived?
If a mining developer or company

621
00:31:49,840 --> 00:31:55,840
has financing from Franco and a
royalty for them forever, is it?

622
00:31:56,600 --> 00:31:58,680
Or if it's so good for Franco,
is it?

623
00:31:59,440 --> 00:32:00,560
So this.
Is bad for them.

624
00:32:00,880 --> 00:32:03,320
What's the?
That's a really interesting

625
00:32:03,320 --> 00:32:06,320
question, Maddie, and it ties
into my final point on, on gold

626
00:32:06,320 --> 00:32:08,760
versus other commodities.
But to answer your question

627
00:32:08,760 --> 00:32:12,080
directly that they are trying to
stamp projects these days and

628
00:32:12,080 --> 00:32:14,680
kind of have a bit of brand
power, which I never thought

629
00:32:14,680 --> 00:32:18,120
we'd kind of speak about on a on
a mining podcast.

630
00:32:18,440 --> 00:32:21,280
But they want to like give
projects that the Franco stamp

631
00:32:21,280 --> 00:32:24,960
of approval and they try and
frame it as that having positive

632
00:32:25,240 --> 00:32:29,600
flow on effects for a company's
cost of capital because Franco's

633
00:32:29,600 --> 00:32:32,840
done the work now, you know,
take it with a bit of a pinch of

634
00:32:32,840 --> 00:32:34,040
salt.
They're getting the better deals

635
00:32:34,040 --> 00:32:36,040
there.
And the miner is going to pay in

636
00:32:36,040 --> 00:32:39,880
any case to get that stamp of
approval, right.

637
00:32:40,120 --> 00:32:42,600
But yeah, it's, it's a double
edged sword, right?

638
00:32:42,600 --> 00:32:44,640
It means that Franco's done the
work.

639
00:32:44,640 --> 00:32:46,880
And I think this project is
going to be around for a long

640
00:32:46,880 --> 00:32:49,000
time.
If they're, if they're buying a,

641
00:32:49,000 --> 00:32:52,240
a royalty directly, you know, if
they're tearing one up with with

642
00:32:52,240 --> 00:32:56,200
the company, it goes both ways.
So we go back kind of 20 years

643
00:32:56,200 --> 00:32:59,480
ago and they're one of very few
royalty companies around.

644
00:32:59,680 --> 00:33:03,480
It's a less competitive space
that is that has changed quite a

645
00:33:03,480 --> 00:33:05,600
bit.
There's more royalty companies

646
00:33:05,600 --> 00:33:08,480
around today and the little
royalty companies that are

647
00:33:08,480 --> 00:33:10,840
around are even bigger.
And then you've got also got

648
00:33:10,840 --> 00:33:14,640
more competition from the likes
of sovereign wealth funds and

649
00:33:14,920 --> 00:33:19,240
like these alternate sorts of
capital, your, your Orions of

650
00:33:19,240 --> 00:33:21,440
the world, your Appians of the
world, those sorts of guys that

651
00:33:21,440 --> 00:33:23,200
are coming in to try and
compete.

652
00:33:23,200 --> 00:33:26,600
But at the same time, you've got
a dearth of gold funds.

653
00:33:26,600 --> 00:33:30,560
So the number of pureplay gold
funds or mining funds that are

654
00:33:30,560 --> 00:33:33,720
around now is a much smaller
number than it was 20, even 10

655
00:33:33,720 --> 00:33:35,920
years ago.
And the capital that they're

656
00:33:35,920 --> 00:33:39,000
managing is substantially
smaller than it was.

657
00:33:39,000 --> 00:33:42,640
So the landscape has has changed
quite a bit.

658
00:33:43,000 --> 00:33:47,080
But as these guys, Franco's
position has grown, as they've

659
00:33:47,080 --> 00:33:50,320
become a bigger company, their
cost of capital has sort of gone

660
00:33:50,320 --> 00:33:51,760
down, they've become even more
competitive.

661
00:33:51,760 --> 00:33:54,120
So they can kind of do deals a
little different.

662
00:33:54,120 --> 00:33:57,400
But yeah, it's a it's a
fascinating kind of landscape

663
00:33:57,440 --> 00:33:59,880
and you can just sort of view
how how mining finance has

664
00:33:59,880 --> 00:34:01,560
changed as these guys have
grown.

665
00:34:02,680 --> 00:34:05,160
Yeah, right.
It's a It sounds that.

666
00:34:05,160 --> 00:34:06,680
Was that was a long answer to
your question.

667
00:34:06,680 --> 00:34:11,120
But it sounds like a good
marketing strategy to say, look,

668
00:34:11,120 --> 00:34:14,800
just attach us to it.
It just looks better because we

669
00:34:14,800 --> 00:34:17,960
sound like we've done the DD on
it, but we're going to make shit

670
00:34:17,960 --> 00:34:20,440
loads over the long term.
Yeah, it's, it's fascinating,

671
00:34:20,520 --> 00:34:22,600
isn't?
It I don't think we'll ever look

672
00:34:22,600 --> 00:34:25,920
at a, you know, a royalty on a
single asset developer royalty

673
00:34:25,920 --> 00:34:28,320
finance and be like, yeah, this
was a great finance.

674
00:34:28,400 --> 00:34:30,840
You know, we're just like
because of the way that it

675
00:34:31,280 --> 00:34:32,920
inhibits a project into
perpetuity.

676
00:34:32,920 --> 00:34:36,080
But sometimes a single asset
developer or even multi asset

677
00:34:36,080 --> 00:34:38,880
development.
You think in the case of First

678
00:34:38,880 --> 00:34:41,199
Quantum bringing on copper
Panama, like they had to put it

679
00:34:41,199 --> 00:34:43,840
be, you know, royalty stream,
yada yada on that.

680
00:34:44,120 --> 00:34:47,040
Thanks to Franco too.
Sometimes you have to do it to

681
00:34:47,040 --> 00:34:48,320
get the deal done.
Yeah, is it?

682
00:34:48,320 --> 00:34:50,600
Is it perceived Goes.
To the first point, this goes to

683
00:34:50,600 --> 00:34:53,400
the first point.
You know they do the deals when

684
00:34:54,000 --> 00:34:56,560
you know you need the capital,
you being the minor.

685
00:34:56,719 --> 00:34:58,440
Yeah.
Is it and is it possibly

686
00:34:58,440 --> 00:35:03,200
perceived a less risky option
than conventional debt or

687
00:35:03,480 --> 00:35:07,480
dilutive?
And that's so it's a short term

688
00:35:07,480 --> 00:35:11,160
benefit, but Franco gets the
huge, huge long term benefit of

689
00:35:11,160 --> 00:35:12,520
it.
How's it perceived from a

690
00:35:12,520 --> 00:35:15,240
funding dynamic?
There's a, it does have elements

691
00:35:15,240 --> 00:35:17,960
of that for sure like you don't
have to to pay it back, right.

692
00:35:17,960 --> 00:35:21,120
So that's not going to come and
sting you at the bottom of the

693
00:35:21,120 --> 00:35:24,920
cycle the same way high cost
debt will, no doubt about that.

694
00:35:24,920 --> 00:35:28,200
Yeah, it's a fair comment.
Yeah, in, in and in another

695
00:35:28,200 --> 00:35:32,560
perspective it it makes your
corporate appeal a lot lower

696
00:35:32,560 --> 00:35:35,840
too, because it it might just
going to be less less hungry to

697
00:35:35,840 --> 00:35:37,520
buy something because the world
here out lives.

698
00:35:38,080 --> 00:35:40,880
Yeah, the corporate outcome.
You can always, you can always

699
00:35:40,880 --> 00:35:43,360
spin a narrative as well, mate.
You can sort of say, oh, we're

700
00:35:43,360 --> 00:35:45,880
a, we're a copper miner.
We weren't getting credit for

701
00:35:45,880 --> 00:35:48,400
our gold anyway, so we just
streamed off the gold.

702
00:35:48,400 --> 00:35:51,200
That's, that's exactly how
Savannah framed it.

703
00:35:51,200 --> 00:35:53,160
You know, they're saying nobody
cares about the gold that we

704
00:35:53,160 --> 00:35:57,480
produce in, in the Bushveld.
We're a, we're a PGM minor.

705
00:35:57,480 --> 00:36:00,040
That's how people think of us.
So we'll stream off the, the

706
00:36:00,040 --> 00:36:02,040
gold.
So you can you can spin it a few

707
00:36:02,040 --> 00:36:04,720
ways.
Yeah, yeah, that's bloody

708
00:36:04,720 --> 00:36:07,000
interesting.
Very, very interesting.

709
00:36:07,000 --> 00:36:08,680
Good digging, Good digging as
always.

710
00:36:08,680 --> 00:36:11,520
You want to know another bloody
stamp of approval that's

711
00:36:11,520 --> 00:36:14,720
probably worth its weight in
gold up at Franco levels.

712
00:36:15,040 --> 00:36:18,560
MMS stamp of approval.
Tell me Maddie, but if haven't

713
00:36:18,560 --> 00:36:20,520
them associated with your
project.

714
00:36:21,200 --> 00:36:25,360
Look, Black Cat has cracked a
dollar and that is either to do

715
00:36:25,360 --> 00:36:30,680
with one or both of MMS open pit
mining expertise at Myri or the

716
00:36:30,680 --> 00:36:33,400
tech services arm that
complements it, which is

717
00:36:33,400 --> 00:36:36,520
probably been a significant
driver to why they've got to the

718
00:36:36,520 --> 00:36:38,720
ORSO early and they're just
going to finish it that far

719
00:36:38,720 --> 00:36:41,800
ahead of schedule.
So you're talking about stamp of

720
00:36:41,800 --> 00:36:45,400
approvals that are actually hold
some merit in Australia.

721
00:36:45,560 --> 00:36:48,320
It's Bloody mineral Mining
services doing your open pit

722
00:36:48,320 --> 00:36:50,280
mining.
It's amazing when you think

723
00:36:50,280 --> 00:36:53,800
about it because, yeah, like, I
don't know, maybe even just only

724
00:36:53,800 --> 00:36:57,240
be focusing on Polsons.
If it weren't for the innovation

725
00:36:57,240 --> 00:36:59,960
that came from MMS, help them
kind of get that going.

726
00:36:59,960 --> 00:37:02,320
And then all of a sudden, like
it's like, heck, we might

727
00:37:02,320 --> 00:37:04,520
actually buy a meal here because
there's a, there's a fair bit of

728
00:37:04,520 --> 00:37:07,040
upside going on.
The flow on effects like mate,

729
00:37:07,040 --> 00:37:09,320
that's like great decisions for
perpetuity.

730
00:37:09,320 --> 00:37:11,040
It's like open pit mining
royalty.

731
00:37:11,400 --> 00:37:14,600
And look, they will acknowledge
that MMS were instrumental in

732
00:37:14,600 --> 00:37:18,160
that process.
So mate, just do if you want to

733
00:37:18,160 --> 00:37:21,360
follow a similar trajectory, get
MMS doing your bloody open pit

734
00:37:21,360 --> 00:37:23,240
mining, mate.
There's going to be, I don't

735
00:37:23,280 --> 00:37:25,960
know if they're going to be
doing mining here or not.

736
00:37:26,000 --> 00:37:29,080
Oh, no, you got, Oh, you got a
bit more final thoughts, JD or

737
00:37:29,080 --> 00:37:31,360
do you?
Yeah, I I had a couple just to

738
00:37:31,360 --> 00:37:33,120
to wrap up on.
Ripping me up mate.

739
00:37:33,640 --> 00:37:37,440
On Franco, so real quick, I
didn't speak about Cobra Panama

740
00:37:37,440 --> 00:37:40,120
because we touched on it, but
that was 15% of the company's

741
00:37:40,120 --> 00:37:42,920
NAV not too long ago.
You just go back a couple years

742
00:37:42,920 --> 00:37:45,440
and things are heading in the
right direction there.

743
00:37:45,440 --> 00:37:49,840
So watch that space.
And finally on on Franco, you

744
00:37:49,840 --> 00:37:55,320
know, their strategy has been
superbly executed to date and

745
00:37:55,320 --> 00:37:58,440
they've outperformed almost
every Goldie as well as the the

746
00:37:58,440 --> 00:38:01,400
metal price since they listed.
So came to see if they can

747
00:38:01,400 --> 00:38:03,920
maintain that discipline going
forward.

748
00:38:03,920 --> 00:38:07,520
You know, you'll constantly have
to kind of do do new deals here

749
00:38:07,520 --> 00:38:08,800
and there that knock it out the
park.

750
00:38:09,000 --> 00:38:10,400
So we'll we'll see on that
front.

751
00:38:10,400 --> 00:38:13,720
But the stock itself can be
super, super pricey.

752
00:38:13,720 --> 00:38:16,200
Hence they pay dividends.
They don't buy back their stock.

753
00:38:16,200 --> 00:38:20,400
I think that's a bit of an
acknowledgement in that there

754
00:38:20,400 --> 00:38:23,440
there are opportunities though
in times where these guys have

755
00:38:23,440 --> 00:38:28,040
done deals like they said 2008
and 2015 sixteen, their share

756
00:38:28,040 --> 00:38:30,080
price has been pretty depressed
as well.

757
00:38:30,080 --> 00:38:33,520
So you can here and there, you
know, it's kind of once a decade

758
00:38:33,520 --> 00:38:38,840
type thing get an opportunity.
But in normal times, I think as

759
00:38:38,840 --> 00:38:42,480
an investor, if you are looking
at kind of investing in Franco

760
00:38:42,480 --> 00:38:46,160
Nevada's stock, you are paying
up quite handsomely for the

761
00:38:46,640 --> 00:38:50,120
optionality in their portfolio,
which ironically I think it's

762
00:38:50,120 --> 00:38:53,600
something that Franco's
management team themselves would

763
00:38:53,600 --> 00:38:56,320
would never do.
So it's a kind of interesting

764
00:38:56,320 --> 00:38:57,840
paradox to to leave it on, I
think.

765
00:38:58,440 --> 00:39:01,040
Very good God got us all
thinking, JD.

766
00:39:01,080 --> 00:39:04,360
Nice work, right everyone's?
Thinking let's talk exploration,

767
00:39:04,360 --> 00:39:05,440
mate.
Exploration.

768
00:39:05,440 --> 00:39:07,640
Jeez, everyone's thinking why
the Hell's this going down

769
00:39:07,640 --> 00:39:10,320
bloody 30%?
Oh, Caprice, one of the early

770
00:39:10,520 --> 00:39:15,520
gold exploration bolters as UN
bolted a bit or sort of back to

771
00:39:15,520 --> 00:39:20,960
where it was before the assays.
These assays come, let's go.

772
00:39:21,000 --> 00:39:24,840
There's a pretty interesting
sequence of events here.

773
00:39:24,840 --> 00:39:28,880
So they've got the ground up
near Remelius's break a day up

774
00:39:28,880 --> 00:39:32,640
in the Murchison.
So one now that gold gold's 5000

775
00:39:32,640 --> 00:39:36,040
bucks an ounce today Aussie,
which is fascinating that the

776
00:39:36,240 --> 00:39:38,360
gold prices, gold stocks haven't
moved that much.

777
00:39:38,360 --> 00:39:43,520
So whether old Trumpies are the
the fear of tariffs on the whole

778
00:39:43,520 --> 00:39:46,400
world is offsetting the
increased gold price could be a

779
00:39:46,400 --> 00:39:49,080
reason.
But it was yeah, it was

780
00:39:49,120 --> 00:39:51,520
fascinating.
Not so the the equities move as

781
00:39:51,520 --> 00:39:56,600
much so Caprice in the leader
that a busiest a busy 28th of

782
00:39:56,600 --> 00:39:59,280
March.
This was which was last week.

783
00:39:59,520 --> 00:40:01,840
They they put out a because I
was sort of running.

784
00:40:02,960 --> 00:40:06,360
On no news pending assays, they
got up to like 8 and a bit since

785
00:40:06,680 --> 00:40:09,760
and they they released this
these incentive securities for

786
00:40:09,760 --> 00:40:13,280
the directors 2 and a half
million performance rights each

787
00:40:13,280 --> 00:40:16,360
and half a mil to the cosec as
well, I think.

788
00:40:16,800 --> 00:40:20,960
And but on the same day the
price was running, they went

789
00:40:20,960 --> 00:40:26,160
into trading halt pending price
query and assay announcements.

790
00:40:26,160 --> 00:40:28,920
Everyone's thinking Jesus
Christ, there are bloody issue

791
00:40:28,960 --> 00:40:31,960
on performance rights just
before assays.

792
00:40:31,960 --> 00:40:35,000
Looks a bit airy gown.
But then on the same day, the

793
00:40:35,040 --> 00:40:39,400
28th of March, buddy.
They then withdrew the proposed

794
00:40:39,400 --> 00:40:41,400
incentives.
So they and those those

795
00:40:41,400 --> 00:40:44,800
incentives were based on the
company shares trading above

796
00:40:45,160 --> 00:40:50,120
$0.10 for 15 days and at least
one year's service.

797
00:40:50,120 --> 00:40:57,320
So it was nearly approaching
$0.10 so but but it has retraced

798
00:40:57,320 --> 00:41:00,880
today it's back down 30 odd
percent on the release and when

799
00:41:00,880 --> 00:41:03,480
it come out of trading hole in
the release of the assays.

800
00:41:04,280 --> 00:41:07,840
So you look at look at the first
page and you think it oh, 11

801
00:41:07,840 --> 00:41:11,920
metres at 6.7, that doesn't look
too bad. 20 at 1 1/2, not as

802
00:41:11,920 --> 00:41:14,680
good 28 at 6.4.
But that was the previously

803
00:41:14,680 --> 00:41:19,680
reported result.
And then then they had a few

804
00:41:19,680 --> 00:41:22,720
other results at Baxter and
everything 10 meters at 3G.

805
00:41:22,720 --> 00:41:26,000
But if you look at I guess you
bring up the cross sections and

806
00:41:26,000 --> 00:41:29,200
say, right, what's what's new,
what's old and how's it all

807
00:41:29,200 --> 00:41:32,520
looking?
So the, I guess the main one

808
00:41:32,520 --> 00:41:35,840
they were going off was this
Vadrians Hill that that was

809
00:41:35,840 --> 00:41:39,320
where the 28th at 6.4 is.
And you see the new results are

810
00:41:39,320 --> 00:41:42,680
coming out in the yellow.
So you head north of there, it

811
00:41:42,680 --> 00:41:47,080
goes to well, I guess the the
follow up hole of come back at

812
00:41:47,080 --> 00:41:49,120
20 at 1 1/2.
So looks a lot right.

813
00:41:49,120 --> 00:41:52,640
The grades dropped off there.
They did a bit of drilling on

814
00:41:52,640 --> 00:41:55,960
the surface in another spot.
They all come back as Dusters 5

815
00:41:55,960 --> 00:42:00,160
at .38 at .2.
So and then that Baxter

816
00:42:00,760 --> 00:42:08,520
prospect, they again going
deeper results of 7.46 and 3

817
00:42:08,520 --> 00:42:11,840
meters at .4.
So it's sort of just the results

818
00:42:11,840 --> 00:42:16,760
today didn't really match the I
guess standard of the initial

819
00:42:16,760 --> 00:42:19,960
results that came out that sort
of saw the share price triple.

820
00:42:19,960 --> 00:42:23,480
So it's just looking like
that's, that's their phase one,

821
00:42:23,480 --> 00:42:27,240
phase two program complete of
5000 metres.

822
00:42:27,240 --> 00:42:30,600
They've got a phase three follow
up of 5000 metres scheduled to

823
00:42:30,600 --> 00:42:34,080
start next month.
So there's obviously this is

824
00:42:34,160 --> 00:42:36,760
early stage the volatility of
expiration.

825
00:42:36,760 --> 00:42:39,200
So there's plenty of ground
there they're going to pepper

826
00:42:39,200 --> 00:42:45,040
holes into, but it just shows
hype can quickly, very quickly

827
00:42:45,040 --> 00:42:50,160
turn into unhop when this gold
exploration mania market.

828
00:42:50,440 --> 00:42:54,120
So I'll be interested to see if
these performance rights, if

829
00:42:54,120 --> 00:42:58,400
they when they do get granted,
if they're still on the exact

830
00:42:58,440 --> 00:43:01,720
same conditions.
Yeah, because the share price is

831
00:43:01,760 --> 00:43:04,080
a fairway way now.
Yeah, it's down 30%.

832
00:43:04,080 --> 00:43:07,960
So you would hope they come back
out at $0.10 as well.

833
00:43:08,560 --> 00:43:10,160
So very interesting.
We will wait and see.

834
00:43:10,280 --> 00:43:12,200
So that's you.
Saw the series of events and you

835
00:43:12,200 --> 00:43:14,120
thought oh there must be
something good to come here but.

836
00:43:14,760 --> 00:43:19,360
Yeah, yeah, it's it was funny.
Yeah, very interesting.

837
00:43:19,360 --> 00:43:21,680
So Nah.
Anyway, see what they do in

838
00:43:21,680 --> 00:43:25,240
another 5000 meters on site.
There we go.

839
00:43:25,880 --> 00:43:28,680
Go gold, go expiration. 5000
bucks an ounce.

840
00:43:28,840 --> 00:43:32,400
LGC is freaking off her head.
She just can't sit still today.

841
00:43:32,400 --> 00:43:34,800
She's flying.
It's gold coming out of her

842
00:43:34,800 --> 00:43:39,600
ears.
That's what the alley G is going

843
00:43:39,600 --> 00:43:41,160
to be.
The G stands for gold.

844
00:43:41,160 --> 00:43:48,480
Now alley gold of Edis.
Oh, right, that's where we'll.

845
00:43:48,480 --> 00:43:51,600
See where We'll see where Gold
finishes the week on this insane

846
00:43:51,600 --> 00:43:53,840
run.
You can tell I just whipped that

847
00:43:53,960 --> 00:43:56,840
up right at the end just to put
something in the complimentary

848
00:43:56,840 --> 00:44:01,120
or extensive segments.
Anyway, I got to give a bit of

849
00:44:01,120 --> 00:44:03,480
love to everyone, right?
Hey, let's go through the

850
00:44:03,480 --> 00:44:05,840
bloody.
The friggin Speaking of, it's

851
00:44:05,840 --> 00:44:08,000
flying out the door.
We've got ticket discounts

852
00:44:08,000 --> 00:44:11,400
flying out the door.
We've got the JRX conference,

853
00:44:11,400 --> 00:44:15,440
which we mentioned at the show.
160 or 190 bucks off the future

854
00:44:15,440 --> 00:44:18,840
of mining innovation at Brisbane
in May.

855
00:44:18,840 --> 00:44:21,800
Get your tickets to that, Oz.
I'm in underground operators

856
00:44:21,800 --> 00:44:24,080
conference next week.
I've got the bloody and the

857
00:44:24,080 --> 00:44:27,400
gather round heading to that.
The resource rise and sail one

858
00:44:27,400 --> 00:44:30,640
after that will be a bit hoarse
apparently on bloody paddling A

859
00:44:32,480 --> 00:44:36,280
hosting a panel with Koshi.
Well, me and it I'll be like,

860
00:44:36,480 --> 00:44:38,680
hey, but young corner of the
days of sunrise.

861
00:44:38,680 --> 00:44:42,000
For a conference.
Mate, you're in my world now,

862
00:44:42,000 --> 00:44:45,600
Koshi.
I'll be doing the I'll be doing

863
00:44:45,600 --> 00:44:49,720
the Carl Koshy roll on that one.
Touch him a thing or two.

864
00:44:49,760 --> 00:44:51,320
Yeah, right.
I'll show him those boss in the

865
00:44:51,320 --> 00:44:53,280
mining industry.
Right.

866
00:44:53,280 --> 00:44:56,560
Who are those all these bloody
bosses of the mining industry?

867
00:44:56,560 --> 00:44:59,680
Mineral Mining services,
Grounded Samba, Groundsports, AR

868
00:44:59,680 --> 00:45:03,480
Insurance, WA Waterboards,
Quattro, Project Engineering,

869
00:45:03,600 --> 00:45:07,520
KCI Site services, Black Diamond
Drilling Services.

870
00:45:07,520 --> 00:45:10,680
Love that.
That sounds Black Diamond and

871
00:45:10,680 --> 00:45:12,520
Cross Boundary Energy Rd.
Rd.

872
00:45:12,840 --> 00:45:13,960
Rd.
Road Rd. guys.

873
00:45:14,760 --> 00:45:17,320
Information contained in this
episode of Money of Mine is of

874
00:45:17,320 --> 00:45:19,400
general nature only and does not
take into account the

875
00:45:19,400 --> 00:45:23,000
objectives, financial situation
or needs of any particular

876
00:45:23,000 --> 00:45:25,040
person.
Before making any investment

877
00:45:25,040 --> 00:45:28,080
decision, you should consult
with your financial advisor and

878
00:45:28,080 --> 00:45:31,240
consider how appropriate the
advice is to your objectives,

879
00:45:31,440 --> 00:45:33,440
financial situation and needs.