The Playbook Behind Evolution’s $20B Gold Success

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Jonas Sterling gave us an
appetizer, which was Northern

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Star.
You've followed it up with a

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wonderful main meal that was
Fortescue.

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And now you've come out with
dessert Evolution Mining.

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You've done the history on the
mining companies that have

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defined their last decade or two
decades, and what have they

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done?
They've gone from nothing to

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something incredibly
substantial.

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Evolution is your focus today
like.

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A $22 billion business, Can you
can you just wrap your head

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around that number for a moment?
And the last sort of 6 to 12

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months make that number look
pretty astounding.

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But this is a 15 year story, bit
by bit, trading their way out,

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stepping stones, as they, they
like to call it, going from

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asset to asset from frankly, not
the best assets in the world,

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just some pretty stunning
assets.

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And even more remarkable, it has
been a journey led by a guy

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called an accidental miner by
himself, Jake Klein, and a very

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entrepreneurial team.
So I've been itching to do this

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episode for a long time.
We've sort of heard along the

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way about deals like the Ernest
Henry deal that they did, which

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was just remarkable, like
awesome, awesome stuff.

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And we, we analyze a lot of
deals here.

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We, we talk a lot about deal
making in the mining space.

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So why not learn?
Learn from some of the best in

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the business.
I, I can't wait, mate.

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I mean, the, the feedback that
that we've had from the amount

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of work and research that you've
put into studying both Northern

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Star and, and Fortescue has been
extraordinary.

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And I know that that today is no
exception.

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In fact, I actually think you've
probably done more research into

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evolution than any of the two,
but.

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I'm keen to get it done.
You're building, you're

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building.
And again, the characters are

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important.
Again, the the the company's

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strategy is important.
Fortescue a story that execution

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Northern Star a story of of, of
of deals and and and execution.

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But this one, a story of deals,
right?

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Totally, this is this is all
about the the deals and to put

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it in the context as well,
right, because there are cycles,

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we're in a very cyclical
business and there are multiple

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cycles in the company we're
going to analyse today.

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We're clearly at one of the the
higher ebbs of the gold cycle

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today.
And evolution is a company

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that's had a draw down over 80%
in its time.

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So I think it's really important
as commodity investors as well

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to to try and take this on board
and understand what can what can

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happen when, when the cycle kind
of turns.

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And I think Jake Klein would be
the first person to to say

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something like that.
There's a couple other reasons

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to do an episode like this as
well.

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Speaking of Jake, he has just
moved to non exec chair.

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So it feels like a bit of a
passing of the the the guard

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there.
And you remember in the Northern

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Star episode, we kind of brought
that one to a close kind of when

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when Bill moved on.
So I think that changing in the

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nature of the business makes
sense.

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And just to to touch on that
point once more that that you

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made, it's all about the deals
here.

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This is the ultimate investor
slash capital allocator mining

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company.
And I think it's so fascinating.

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It's not just the deals that
they did, it's the assets that

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they sold along the way, not
just the buyers as well as the

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assets they, you know, passed on
and perhaps most important, the

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timing of those deals.
And you know, you can, you can

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only kind of think back about it
years afterwards.

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But when you, when you do look
back on evolution, the timing's

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been pretty good, hasn't it?
It's been been been great to

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have commodity tailwinds.
It makes or breaks a mining

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company, there's no doubt.
I'm extremely excited for your

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story on the evolution of
evolution.

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JD Where does the evolution of
evolution begin?

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That we're going to kick this
one off in the 90s.

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So I want to give you a brief
bit of background on the on 2

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individuals, firstly Jake Klein
and then Nick Curtis.

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So Jake Klein, South African
born, joined Macquarie in late

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1991.
He was in his late 20s at that

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point in time.
Joins the internal audit

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division and he moves through
the bank gets a flavor for all

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the all the divisions that a a
much younger and smaller

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Macquarie has at that point in
time.

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But he gets a bit of a flavour
for gold working in the bullion

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division.
And they were, they were doing a

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whole bunch of fascinating
things, which I'll, I'll sort of

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try not to digress into, but he
meets Nick Curtis there.

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Nick had first tried his hand as
an art dealer of of all things.

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And he is running the most
profitable division of the bank,

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the bullion division.
And to flash forward a bit for

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people that don't know, Nick
would found Linus later on in

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the, in the early to mid 2000s.
And he would, he would lead that

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company as well as serving on
the board with Evolution and

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playing a big role in Sino gold,
which we're going to get into.

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But they get their first taste
for China pretty early on.

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It's, it's the mid kind of 1990s
here.

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And they are actually approached
by a Chinese SOA.

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And Jake is tasked with showing
this guy Zhu Hengjing around the

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bank for a couple weeks in
Macquarie's office in, in

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Sydney.
Nick had already met this guy

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and he, he spoke super, super
highly of him.

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He, he said he was one of the
most interesting men he'd come

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across in a long, long time.
And Zhu becomes very influential

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in the Sino gold stories.
We'll we'll touch on later on.

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But he he helps open doors and
give local insight to the

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company and and helps them on
their kind of way.

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This is the mid 90s like, like
what is the political yeah

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atmosphere of China at the time?
Were they trying to incentivize

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foreign investment into China?
That they were in small parts.

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I mean, the, the opening up had
really started in the in the

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late 70s with Deng Xiaoping and
that had taken a long time

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because China was extremely poor
and it's still very poor at this

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point in time in the 90s.
But as these guys kind of show,

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they are pretty adept at, at
reading the tailies and they're

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going to China 10 years before
others are kind of doing that.

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But more importantly, from
China's perspective, they want

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to learn.
And that is why they sought out

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Macquarie because they wanted to
learn about, about deal making

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and, and all sorts of kind of
things.

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Hence sending Zhu over over to
China and then inviting the

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Aussie team back to China.
And they get an experience going

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to a whole bunch of different
mines in kind of in the

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northwest of China and some
provinces that back in in those

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days took a long, long time to
to get to and over the Sino

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Gold.
And firstly, the Macquarie

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journey, they were seeing first
hand how things were changing on

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the ground in China.
Jake gave some some awesome sort

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of anecdotes about how long it
would take to get to places and

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roll forward a few years that
the trip is, you know, dropped

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2030 forty 50% in time because
highways are being built across

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valleys and all these sorts of
things to just remarkable to

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kind of think about.
So Nick and Jake are invited to

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to China.
And what does that?

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What does that experience evolve
into?

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So eventually Macquarie learns
that they're not going to get

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the fees that they want to get
from the Chinese.

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I'm laughing.
Anyone that's working in

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investment banking will have a
good laugh at that.

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No surprises there.
So in that sort of second part

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of the 90s they they leave
Macquarie, a SOA essentially

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puts money into an offshore
vehicle, a came in vehicle

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called Sino Mining International
and this is run from Sydney.

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It starts with 30 million U.S.
dollars and they look for a

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whole bunch of different things.
They pick up Illumina assets,

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they pick up undeveloped gold
projects, they pick up developed

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gold projects.
So they pick up a whole

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collection of assets.
And then around the year 2000,

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the Chinese premier puts the
foot down and says we are

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reforming all the SOAS.
A lot of these assets get pushed

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back out to the provinces, but
it leaves Sino Mining

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International in a bit of limbo.
Sino gets swooped up by a

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company called Min Metals.
Might be familiar to a lot of

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people because they're the
parent company of MMG today, one

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of the biggest businesses in in
in China, mining businesses.

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And Min Metals is an enormous
commodity trader.

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Right, yes, they're, they're a
behemoth in in China still to

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this day.
But Long story short, for 18

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months, they don't have a a
shareholder, so they get swooped

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up and they end up negotiating
to take on this unprofitable

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gold mine that's called Zhang
Chaling, plus a few undeveloped

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projects.
Jin Feng was one of them, which

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would go on to become a mine and
the second biggest gold mine in

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in China.
The Chinese state still owns a

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stake in that entity, Sino.
And sooner or later, come 2002,

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we get a public listing.
So the company Sino Mining lists

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on the ASX, the Chinese interest
in that is, is way, way down.

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They raise $100 million.
This is sort of corner stoned by

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4 investors taking $10 million
stakes.

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And you got Jake, a CEO, Nick
Curtis chair later on.

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Jim Askew becomes chair in 2005.
And if we Fast forward all the

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way to 2009, they're a company
with two mines.

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A third one is on the way.
One of them is, like I said, the

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second biggest gold mine in in
China.

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These guys are the largest
foreign gold miner in China.

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Jewel listed Hong Kong and on
the ASX and that is getting to

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the end of their 15 odd year
journey in China.

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You fast forwarded 7 years of of
Sino Gold's life there mate.

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But but those those seven years
would have been filled with some

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pretty important lessons.
There, there would have been a

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bunch of important lessons, but
the the one that sticks out to

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me that they take forward and
this is a lesson actually I

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think they learned at Macquarie,
this was hammered into the guys

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at Macquarie is that you need to
understand what your competitive

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advantage is.
You need to know what your edge

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is.
And in China that was abundantly

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clear for these guys, at least
early on, costs were a fraction

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of what they were in Australia.
These guys brought in the

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expertise of the Australian
mining industry and they brought

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that to an underexplored area
like the the average gold mine

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in China at the time was doing
less than 20,000 oz.

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And Despite that it was the
biggest gold producer in the

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world.
It, it, it, there was so much

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for the Chinese to learn and the
Chinese did a great job learning

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that.
Everything is done in a joint

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venture.
The Chinese, they would never

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give Sino or any other foreigner
access to their tier one mines

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that they're working with the
the lower kind of quality mines.

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And a lot of what these guys
brought to China is still

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embedded, as I've sort of read
it to this day, in the Chinese

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mining culture, if you like.
I remember Jake sharing an

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anecdote, I think it was when we
had him on the podcast about

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like, you know, one of the
operations.

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It wasn't ingrained into the the
operators to to effectively like

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just do your development level
by by level.

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That would do all of the
development and then start

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stopping.
And they're like, we're we're 12

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years ahead or something.
Like that.

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Yeah.
Which which it's kind of, you

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know, we, we chuckle about it
now because your, your latter

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point is so important.
The Chinese did a phenomenal job

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at learning.
In fact, like the innovations,

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the technology advancements and
everything in the mining

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industry today, we're, we're,
we're learning from China now.

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Yeah, it, it, it's remarkable.
I mean, what what you first say

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there that's, that's straight
out of the the USSR, like it's

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a, a complete shift in, in how
they think about these things.

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And yeah, where we are today is,
is worlds away from that.

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But 2009, these guys knew the
opportunity wouldn't remain

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forever.
And, and the writing was kind of

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on the wall.
Specifically, I'm talking about

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how the Chinese viewed foreign
ownership of mines and there was

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a few kind of hair raising
incidents that that start to

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happen.
And they they make a call.

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And this is where Zhu Hongjing,
who'd who'd been, you know,

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running BD and done a bunch of
things for the company.

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He really gave the advice to to
Jake who, who did well in in

225
00:12:00,800 --> 00:12:03,200
heating it, saying things are
changing here on the ground in,

226
00:12:03,200 --> 00:12:06,800
in China and it's time to go.
And for that you need to find

227
00:12:06,800 --> 00:12:10,120
someone to buy you.
And for that they found

228
00:12:10,240 --> 00:12:13,640
Eldorado.
So Goldfields had been a big

229
00:12:13,640 --> 00:12:18,640
shareholder in Sino Gold, but
for a bunch of kind of reasons,

230
00:12:18,840 --> 00:12:21,400
South African companies weren't
trading at rich multiples.

231
00:12:22,080 --> 00:12:24,360
Aussies were kind of middle of
the pack and at that time the

232
00:12:24,360 --> 00:12:26,800
North Americans were trading at
much richer valuations.

233
00:12:27,040 --> 00:12:31,320
So Eldorado buys that 20% stake
in the company from gold fields

234
00:12:31,720 --> 00:12:36,360
and a month after we have a deal
Aussie $2.2 billion to buy out

235
00:12:36,360 --> 00:12:38,160
Sino Gold at.
This point Sino Gold.

236
00:12:38,160 --> 00:12:41,440
They were an ASX 100 company, or
201 hundred.

237
00:12:41,960 --> 00:12:43,640
They were an ASX 100 company.
It's.

238
00:12:43,640 --> 00:12:46,640
Kind of remarkable that yeah,
Sonic Gold had grown from,

239
00:12:46,880 --> 00:12:50,560
again, very, very humble
beginnings into an ASX 100

240
00:12:50,560 --> 00:12:53,480
company at the time was taken
out by Eldorado.

241
00:12:53,840 --> 00:12:57,080
From what from what like I'd
heard about that deal around the

242
00:12:57,080 --> 00:13:00,640
fringes was Eldorado with a type
of company that thought that

243
00:13:00,640 --> 00:13:04,880
they had specializations working
in, you know, exotic locations

244
00:13:04,960 --> 00:13:08,960
and and as as evolution.
Read the writing on the wall to

245
00:13:08,960 --> 00:13:12,200
get out of China.
Eldorado foolishly went in.

246
00:13:13,400 --> 00:13:15,880
Maybe maybe a bit too exotic.
Yeah, you're dead right.

247
00:13:15,880 --> 00:13:18,760
That operated in in Turkey and,
you know, a bunch of countries

248
00:13:19,320 --> 00:13:24,160
of of that sort of similar ilk.
But yeah, by 2018, they don't

249
00:13:24,160 --> 00:13:26,200
own any of the assets anymore.
I mean, they've got a bit of

250
00:13:26,200 --> 00:13:28,520
money for it, but not what they
paid for.

251
00:13:28,520 --> 00:13:30,800
To think about it all.
Like there's not too many

252
00:13:30,800 --> 00:13:35,400
foreigners that go to China and
make a bunch of money and sort

253
00:13:35,400 --> 00:13:37,760
of just walk away kind of like
that there.

254
00:13:38,240 --> 00:13:39,880
You know, it's, it's fascinating
to think about.

255
00:13:39,880 --> 00:13:45,480
And more broadly, the 1995
period to the 2010 period, I

256
00:13:45,480 --> 00:13:47,000
mean, that captures the whole
Fortescue story.

257
00:13:47,400 --> 00:13:51,120
That would have been like
outstanding to just witness what

258
00:13:51,120 --> 00:13:52,960
was happening in in China.
That would have been one of the

259
00:13:52,960 --> 00:13:55,640
most fascinating times in modern
history that I can kind of think

260
00:13:55,640 --> 00:13:59,320
of to see the development of a
country and see the hundreds of

261
00:13:59,320 --> 00:14:01,160
millions of people that have
come out of poverty.

262
00:14:01,160 --> 00:14:04,000
But that's a bit of a digression
from the the evolution story

263
00:14:04,000 --> 00:14:07,520
we're going to get into.
Which brings us to the evolution

264
00:14:08,400 --> 00:14:10,120
chapter, the beginning of
evolution.

265
00:14:10,120 --> 00:14:12,080
I mean, you wrap up the sinus
story.

266
00:14:12,760 --> 00:14:14,160
Jake's looking for a new job.
He is.

267
00:14:14,160 --> 00:14:15,480
They've sold themselves out of a
job now.

268
00:14:15,480 --> 00:14:17,240
This is 2010.
We're in.

269
00:14:17,240 --> 00:14:19,680
Jake is 45 years old and
hunting.

270
00:14:19,680 --> 00:14:22,240
Look, it does he?
Good.

271
00:14:22,680 --> 00:14:24,920
He is hunting for the next, next
challenge.

272
00:14:24,960 --> 00:14:27,200
And as the story kind of goes, I
think this one's pretty well

273
00:14:27,200 --> 00:14:29,760
told.
There's a Sydney broker, Richard

274
00:14:29,760 --> 00:14:31,760
Granger.
He's sort of yells at Jake from

275
00:14:31,760 --> 00:14:33,920
over the street and tells him
he's got this, this great

276
00:14:33,920 --> 00:14:36,160
opportunity to show him.
That opportunity is called

277
00:14:36,160 --> 00:14:38,320
Conquest.
Project wise, they've got the

278
00:14:38,320 --> 00:14:42,520
Mount Carlton project up in
North Queensland and that had

279
00:14:42,560 --> 00:14:46,240
ADFS on the way or arguably
already kind of done.

280
00:14:46,240 --> 00:14:50,800
So Jake took it on to to review
the project with with his sort

281
00:14:50,800 --> 00:14:54,920
of connections, Aaron Culler and
Tommy Mckeith, Ross Jenkins, a

282
00:14:55,080 --> 00:14:58,040
few other individuals that sort
of pop up consistently

283
00:14:58,040 --> 00:15:00,360
throughout the story and and a
kind of pivotal in it.

284
00:15:00,560 --> 00:15:03,720
Some of those characters had
been involved with Jake and the

285
00:15:03,720 --> 00:15:04,880
sign.
I got story as well, right?

286
00:15:04,880 --> 00:15:07,440
Yeah, exactly.
And after this period of

287
00:15:07,800 --> 00:15:12,120
diligence, Aaron gives the
advice that, you know, he, he

288
00:15:12,120 --> 00:15:14,800
wasn't totally convinced by the
project, but they sort of

289
00:15:15,160 --> 00:15:18,840
differed sort of slightly on the
opportunity that was at hand

290
00:15:18,840 --> 00:15:22,560
because Jake saw the cashbox
that the company was 58,000,000

291
00:15:22,560 --> 00:15:26,080
bucks in cash is a key asset
that the company did have.

292
00:15:26,440 --> 00:15:29,080
Regardless of what you thought
of Mount Carlton at the time.

293
00:15:29,080 --> 00:15:32,480
And at its sort of lower ebb,
that was an enterprise value of

294
00:15:32,680 --> 00:15:36,120
25 ish $1,000,000.
So the company's cashed up, but

295
00:15:36,120 --> 00:15:37,760
it's got non economic study on
it.

296
00:15:37,760 --> 00:15:42,680
Why was it uneconomic?
So the project is a refractory

297
00:15:42,680 --> 00:15:46,920
gold, silver, copper project.
It's a a high sulfidation

298
00:15:46,920 --> 00:15:50,280
epithermal deposit as a lot of
those ones tend tend to be in in

299
00:15:50,280 --> 00:15:52,960
that neck of the woods a bit
different to the the gold mines

300
00:15:52,960 --> 00:15:58,240
that we have out here in, in WA.
But what appealed to them if

301
00:15:58,240 --> 00:16:01,440
anything was that the the
similarities they saw with this

302
00:16:01,440 --> 00:16:07,240
asset and that first mine that I
mentioned in in China and as

303
00:16:07,240 --> 00:16:10,160
that sort of relates to why the
the feasibility could be

304
00:16:10,160 --> 00:16:12,720
improved upon.
They thought they could cut a

305
00:16:12,720 --> 00:16:14,720
portion of the CapEx and sell a
concentrate.

306
00:16:16,240 --> 00:16:18,120
So if you simple it down that
that is what they were looking

307
00:16:18,120 --> 00:16:20,560
to do and they thought they
could sell that concentrate to

308
00:16:20,560 --> 00:16:24,240
the context that they built in
their in their time in China.

309
00:16:24,480 --> 00:16:27,200
So the study says that
concentrate's not saleable.

310
00:16:27,320 --> 00:16:32,160
You need to build extra CapEx to
actually refine this con.

311
00:16:32,160 --> 00:16:34,760
Yeah, I mean that, that is what
the the the study had just

312
00:16:35,400 --> 00:16:38,000
assume they were going to go all
the way down and then later they

313
00:16:38,000 --> 00:16:40,400
backtracking that they start
looking at that but.

314
00:16:40,400 --> 00:16:42,960
These guys know that the con is
saleable because of their

315
00:16:42,960 --> 00:16:46,000
experience in China dealing with
these smelters.

316
00:16:46,240 --> 00:16:51,200
Exactly selling sort of 2%
arsenic concentrates in in parts

317
00:16:51,200 --> 00:16:54,680
of China there.
So Jake is actually mentioned

318
00:16:54,680 --> 00:16:57,720
before he comes into the company
in one of the releases and the

319
00:16:57,720 --> 00:17:00,320
board commissions him to to run
this review.

320
00:17:01,040 --> 00:17:03,280
And hang on.
So the company puts out a

321
00:17:03,280 --> 00:17:05,440
release saying Jake Klein is
running a review.

322
00:17:05,480 --> 00:17:10,359
Yes, So we're in Feb 2010, Jake
has come in to to do this

323
00:17:10,359 --> 00:17:13,480
review.
The stock has halved on the back

324
00:17:13,480 --> 00:17:18,079
of this and Jake is using the
expertise of him and his team to

325
00:17:18,160 --> 00:17:20,000
to look at what they can do with
this.

326
00:17:20,000 --> 00:17:22,839
And in March, another
announcement comes out also

327
00:17:23,079 --> 00:17:26,560
worth noting as well that
Goldfields was on the Register

328
00:17:26,599 --> 00:17:31,880
here to through a kind of weird
confluence of events, they were

329
00:17:31,880 --> 00:17:36,200
the major shareholder and AJV
partner in the land surrounding

330
00:17:36,440 --> 00:17:39,440
Mount Carlton.
The CEO of Conquest had

331
00:17:39,440 --> 00:17:42,560
reportedly held sort of stock
through Opus Prime, which was a

332
00:17:42,840 --> 00:17:46,320
kind of awful bankruptcy that
happened here in Australia in

333
00:17:46,440 --> 00:17:49,960
2008.
One way or another, the the

334
00:17:49,960 --> 00:17:54,640
stock gets put up for for tender
and Goldfields get their hands

335
00:17:54,640 --> 00:17:56,920
on roughly 20% of the company.
By the time Jake's there, it's

336
00:17:56,920 --> 00:18:01,560
15% of the company and the
Conquest Goldfields relationship

337
00:18:01,560 --> 00:18:04,400
had soured quite a bit as well.
Isn't that interesting?

338
00:18:04,400 --> 00:18:08,400
But Tommy Mckeith is a common
link there as well, because he'd

339
00:18:08,400 --> 00:18:13,640
worked at Goldfields and he
would be a yeah, Jake had got to

340
00:18:13,640 --> 00:18:15,480
know him from that time, Sino
Goldfields.

341
00:18:15,480 --> 00:18:18,720
And he joins the board and has a
long relationship with with

342
00:18:18,720 --> 00:18:21,280
evolution, so.
So.

343
00:18:21,600 --> 00:18:25,600
So at this point, Jake, looking
into the economics, but the

344
00:18:25,600 --> 00:18:27,720
market thinks this is a Dodd
because they've told the market

345
00:18:27,760 --> 00:18:31,560
it's a Dodd.
Meanwhile, the stocks now

346
00:18:31,560 --> 00:18:33,440
trading What is it about about
cash backing?

347
00:18:34,200 --> 00:18:35,760
It's, it's a bit over cash
backing, right?

348
00:18:35,800 --> 00:18:37,800
But it's, it's a long way down
from what it was.

349
00:18:37,800 --> 00:18:40,760
And essentially the team from
Sydney flies over to Perth to,

350
00:18:40,760 --> 00:18:42,480
to tell them the facts, what
they think.

351
00:18:42,480 --> 00:18:46,040
And when I say the team, I'm
talking about Jake as well as

352
00:18:46,240 --> 00:18:49,240
Nick Curtis and, and and Jim
Askew, who were brought onto the

353
00:18:49,240 --> 00:18:53,280
board in March of 2010.
And shortly after that as well.

354
00:18:53,280 --> 00:18:56,520
You've got Aaron Coleraine, Ross
Jenkins, Dave Hewitt and Charles

355
00:18:56,520 --> 00:19:01,240
Wang, three of whom had worked
at Sino, joining the the team in

356
00:19:01,240 --> 00:19:03,840
in quick succession.
And to the board's credit, they

357
00:19:03,840 --> 00:19:07,520
didn't fight it massively.
They knew it was flawed in in

358
00:19:07,520 --> 00:19:10,760
it's current sort of shape and
form and the company was going

359
00:19:10,760 --> 00:19:12,720
nowhere.
And this was ultimately better

360
00:19:12,720 --> 00:19:14,400
for shareholders.
So what did they what did they

361
00:19:14,480 --> 00:19:18,040
they convince the board to just
effectively change management.

362
00:19:18,280 --> 00:19:20,920
Let let Jake and the crew run
this company.

363
00:19:21,280 --> 00:19:23,560
Honestly, I know it's like West
Perth, I just scratched my head

364
00:19:23,640 --> 00:19:26,200
a bunch of times to to wrap my
head around the fact they would

365
00:19:26,200 --> 00:19:29,120
just walk away, but having
spoken with a number of people

366
00:19:29,280 --> 00:19:31,680
that that is more or less how
things played out.

367
00:19:31,840 --> 00:19:33,080
Isn't that, isn't that
fascinating?

368
00:19:33,200 --> 00:19:35,960
You just, Yeah.
A win for shareholders.

369
00:19:36,240 --> 00:19:39,600
You don't, you don't you don't
get such a polite a polite yeah,

370
00:19:39,600 --> 00:19:41,080
I'd be happy to hand over the
keys.

371
00:19:41,400 --> 00:19:44,600
Yeah, these days, but it's there
was also an opportunity in doing

372
00:19:44,600 --> 00:19:45,920
that, I mean.
Totally.

373
00:19:45,920 --> 00:19:48,520
And the, the stock rebounds a
little bit.

374
00:19:48,520 --> 00:19:51,680
It sort of trades in that $0.30
kind of range for a while.

375
00:19:52,080 --> 00:19:55,520
It's a, it's a bit of a far cry
from 10 years later where you'd

376
00:19:55,560 --> 00:19:58,880
see the likes of Bill and Rao
jump into a company and the

377
00:19:58,880 --> 00:20:00,960
stock price would more than
double the next day.

378
00:20:00,960 --> 00:20:05,360
But the company had a lot to
kind of work through here.

379
00:20:05,400 --> 00:20:09,200
But they they get get, they get
to it pretty quickly and we

380
00:20:09,200 --> 00:20:13,280
start to see the strategy.
Which becomes the the evolution

381
00:20:13,280 --> 00:20:16,480
strategy in time, which never
really wavers from its sort of

382
00:20:16,480 --> 00:20:20,400
core roots before that.
Interesting you mentioned team

383
00:20:20,400 --> 00:20:24,280
from Sino coming with Jake like
that's a that's a a difference

384
00:20:24,280 --> 00:20:27,680
to the story of of Twiggy
Anaconda.

385
00:20:27,720 --> 00:20:29,680
I mean, it's kind of gold to
gold.

386
00:20:29,680 --> 00:20:31,720
So I can't understand the
parallels.

387
00:20:31,800 --> 00:20:34,680
Whereas before you go on from
complex met, which was Anaconda

388
00:20:34,680 --> 00:20:37,240
to to simple logistics for
excuse and maybe there's those

389
00:20:37,240 --> 00:20:40,760
parallels, but I do think it
speaks volumes to type of

390
00:20:40,760 --> 00:20:43,920
individual when people that
they'd worked with previously

391
00:20:43,920 --> 00:20:46,760
will, will will go along for the
for the next ride.

392
00:20:47,280 --> 00:20:49,080
Couldn't agree more.
And it's something we're seeing

393
00:20:49,080 --> 00:20:51,800
again with federation slash
endura.

394
00:20:52,120 --> 00:20:53,800
It's a trend that just
continues.

395
00:20:53,960 --> 00:20:56,280
Are there, are they carry over
people at at federation?

396
00:20:56,760 --> 00:20:58,320
At least five that I can count
already.

397
00:20:58,560 --> 00:21:02,320
Wow, yeah.
No, it's a, it's a, it's a

398
00:21:02,320 --> 00:21:05,520
pretty glowing kind of
statement.

399
00:21:05,600 --> 00:21:09,120
You know, if you like that, you
would do it not once, not twice,

400
00:21:09,120 --> 00:21:12,000
but maybe in three times in some
cases with with someone.

401
00:21:12,000 --> 00:21:15,360
So, yeah, but that that rings
loud and clear in this story.

402
00:21:15,760 --> 00:21:20,400
And the strategy is something
else that is super important

403
00:21:20,400 --> 00:21:24,280
and, and crystal clear from from
pretty early on, they outline

404
00:21:24,400 --> 00:21:27,840
that there is a dearth of Aussie
midcap companies with 75% of

405
00:21:27,840 --> 00:21:30,640
Australian gold production being
owned by foreign companies and

406
00:21:30,640 --> 00:21:35,080
that they want to build a midcap
with a portfolio of Australian

407
00:21:35,080 --> 00:21:38,960
assets at this point in time.
And the reason they say like

408
00:21:38,960 --> 00:21:42,240
midcap or mid tier quite
specifically is that the mid

409
00:21:42,240 --> 00:21:44,360
tiers are the ones that
outperform, they outperform

410
00:21:44,360 --> 00:21:46,800
juniors and they outperform the
major mining companies.

411
00:21:46,800 --> 00:21:50,000
And we're going to continue to
speak through this this strategy

412
00:21:50,400 --> 00:21:55,640
during the story.
The strategy is this is again,

413
00:21:55,640 --> 00:21:57,400
another reflection I feel like
we'll get to at the end.

414
00:21:57,400 --> 00:22:00,280
But evolution, just one of those
companies, they said what they

415
00:22:00,280 --> 00:22:01,360
were going to do from the
beginning.

416
00:22:01,360 --> 00:22:04,440
They articulated it and the
strategy was consistent.

417
00:22:04,440 --> 00:22:06,360
They achieved it right.
Totally, totally.

418
00:22:06,760 --> 00:22:08,960
Before we get there, mate, we've
got a, we've got a deal to talk

419
00:22:08,960 --> 00:22:13,520
about in less than 8 weeks from
that takeover of of the company.

420
00:22:14,480 --> 00:22:18,120
You've got a very, very juicy
deal, a $58 million deal to buy

421
00:22:18,120 --> 00:22:20,960
North QLD Metals.
So 20 million in cash, the rest

422
00:22:20,960 --> 00:22:24,400
in paper.
Now NQM, they were the 60%

423
00:22:24,440 --> 00:22:27,720
owners and the operators of the
Pigingo Gold mine, a pretty old

424
00:22:28,080 --> 00:22:31,920
mine up near Charters Towers.
It was doing about 50,000 ounces

425
00:22:32,280 --> 00:22:35,160
at the time.
And for context, the gold price

426
00:22:35,160 --> 00:22:40,240
is 1400.
So they have one over the major

427
00:22:40,240 --> 00:22:43,040
shareholder, a guy called Don
Walker here who's also a

428
00:22:43,040 --> 00:22:44,680
director.
So it's a three person board.

429
00:22:44,680 --> 00:22:48,080
They've won over one director
and a 20% shareholder of the

430
00:22:48,080 --> 00:22:51,760
company.
Now North QLD Metals has also

431
00:22:51,920 --> 00:22:54,280
purchased the old Twin Hills
mine in the area.

432
00:22:54,280 --> 00:22:56,800
So they're talking up this being
a satellite operation, but

433
00:22:56,800 --> 00:22:59,320
really that they're running this
as a, as a bit of a cash cow.

434
00:23:00,120 --> 00:23:03,960
And Despite that, despite
having, you know, a third of the

435
00:23:03,960 --> 00:23:08,760
board on side the, the North
Queensland board say no thank

436
00:23:08,760 --> 00:23:10,320
you, your, your offers
inadequate.

437
00:23:10,720 --> 00:23:14,680
And by July, so a month after
these guys have a fight in their

438
00:23:14,680 --> 00:23:16,960
hands because this other little
company called Hemskirk, who

439
00:23:16,960 --> 00:23:20,720
owns the other 40% of the mine,
have come in with a competing

440
00:23:20,720 --> 00:23:24,160
offer, which was colorfully
described as a toilet paper bid

441
00:23:24,600 --> 00:23:27,640
to us.
So conquest come out and say,

442
00:23:28,000 --> 00:23:29,240
you know, that's clearly
inferior.

443
00:23:29,240 --> 00:23:32,040
It's got no cash.
The the buyer has con notes in

444
00:23:32,040 --> 00:23:34,320
its structure.
The premium is not really what

445
00:23:34,320 --> 00:23:37,000
it seems if you if you back out
the actual numbers and you don't

446
00:23:37,000 --> 00:23:38,720
even have major shareholder
support.

447
00:23:39,240 --> 00:23:41,720
But in any case, they upped
their offer and they sort of

448
00:23:41,800 --> 00:23:44,080
amend the the conditionality of
their offer.

449
00:23:44,320 --> 00:23:47,240
Pesky Interlopus getting pesky,
getting in the way.

450
00:23:47,240 --> 00:23:51,240
But you know, I think it's it
shows the the, the difference

451
00:23:51,240 --> 00:23:53,560
when you do a friendly deal
versus a hostile one, your

452
00:23:53,560 --> 00:23:56,920
probability of success is so
much more enhanced.

453
00:23:56,920 --> 00:24:00,560
These guys had the major
shareholder on side and and then

454
00:24:00,560 --> 00:24:02,760
you get the pesky into low bar
getting in the mix.

455
00:24:02,760 --> 00:24:04,640
Well, you don't really want to
do a deal with the pesky person,

456
00:24:04,640 --> 00:24:07,160
do you?
Well, it it takes a while, so

457
00:24:07,600 --> 00:24:10,440
Hemsgot, you know, as they would
continue to maintain that their

458
00:24:10,440 --> 00:24:14,560
offer is superior and North
Queensland agree they encourage

459
00:24:14,560 --> 00:24:16,280
shareholders to reject the
Conquest offer.

460
00:24:16,480 --> 00:24:20,200
So lo and behold, the takeovers
panel gets involved.

461
00:24:20,520 --> 00:24:23,600
Conquest just sort of calling
out a bunch of the the

462
00:24:23,600 --> 00:24:27,200
strategies that Hemskirk were
using.

463
00:24:28,040 --> 00:24:30,280
But by September Conquest have
solved it.

464
00:24:30,760 --> 00:24:35,080
They go on by Hemskirk and then
shortly after that they gobble

465
00:24:35,080 --> 00:24:39,040
up North Queensland with the
major shareholders caving kind

466
00:24:39,040 --> 00:24:41,960
of in quick succession there.
People like Acorn and Line

467
00:24:41,960 --> 00:24:43,280
Selection were involved in this
one.

468
00:24:43,280 --> 00:24:47,320
They had to buy Hemskirk in
order to. $37,000,000 to buy

469
00:24:47,320 --> 00:24:50,360
Hemsgirt 27 in cash.
That's juicy.

470
00:24:50,680 --> 00:24:54,720
Yeah, so hard fought M and a
battle that took a good few

471
00:24:54,720 --> 00:24:57,120
months to to chew through is
done and dusted.

472
00:24:57,760 --> 00:25:01,960
And they're a mining company now
like they they have a producing

473
00:25:01,960 --> 00:25:04,960
asset.
The I think internally the the

474
00:25:04,960 --> 00:25:07,160
team would debate whether it was
all worth it for for Pagingo.

475
00:25:07,160 --> 00:25:10,120
Not the greatest mine in the
world, but they're well on their

476
00:25:10,120 --> 00:25:11,800
way.
You know, they've got Mount

477
00:25:11,800 --> 00:25:13,600
Carlton that they're, they're
working through doing the

478
00:25:13,600 --> 00:25:18,480
optimizations and whatnot and
this 50,000 oz producing asset

479
00:25:18,480 --> 00:25:20,840
is on its way to do 70,000 oz
next year.

480
00:25:21,800 --> 00:25:25,120
Jingo while it might not have
been the world's best asset, it

481
00:25:25,120 --> 00:25:30,480
maybe gave them sufficient scale
to do subsequent deals right.

482
00:25:30,560 --> 00:25:35,600
Yeah, yeah, totally.
And this is a, a kind of frothy

483
00:25:35,880 --> 00:25:39,680
environment in the gold in the
gold space 20, you know, back

484
00:25:39,680 --> 00:25:42,200
end of 2010 into 2011 that we're
talking about now.

485
00:25:42,720 --> 00:25:45,600
So deals, you know, cheap
dealers aren't throwing

486
00:25:45,600 --> 00:25:47,400
themselves at you.
You have to kind of get creative

487
00:25:47,400 --> 00:25:50,600
and you have to keep developing
the, the development project you

488
00:25:50,600 --> 00:25:53,840
have Mount Carlton.
So whilst this deal is going on,

489
00:25:53,840 --> 00:25:57,080
they secure this concentrate off
cake and I, I love this.

490
00:25:57,080 --> 00:26:00,320
So they get this, they get
interest from a bunch of Chinese

491
00:26:00,320 --> 00:26:03,480
smelters, as we sort of hinted
at before, given the team's

492
00:26:03,480 --> 00:26:07,520
previous experience.
And Ross Jenkins, who's that?

493
00:26:07,520 --> 00:26:09,440
The met and Charles Wang, I
think are the people that

494
00:26:09,440 --> 00:26:11,600
deserve a bunch of credit for
their their expertise and the

495
00:26:11,600 --> 00:26:14,400
can do attitude here.
So the story is that Charles

496
00:26:14,400 --> 00:26:18,400
just flew with a bunch of
buckets with him on the airline

497
00:26:18,520 --> 00:26:20,680
full of concentrate to try and
sell.

498
00:26:20,680 --> 00:26:24,560
It just goes to a bunch of of
the smelters in in the area in

499
00:26:24,560 --> 00:26:28,320
China and one way or another
comes back with a deal

500
00:26:28,440 --> 00:26:31,040
phenomenally.
And this is firmed up in time to

501
00:26:31,040 --> 00:26:34,120
A1, you know, quote UN quote $1
billion off take agreement with

502
00:26:34,480 --> 00:26:38,120
Shandong Guoda.
They are a large smelter, gold

503
00:26:38,120 --> 00:26:42,600
smelter in in China and it's for
the life of mine offtake for the

504
00:26:42,600 --> 00:26:46,320
V2 deposit, one of the two key
deposits at at Mount Carlton.

505
00:26:46,320 --> 00:26:50,280
And yeah, decent payment terms
kind of you know, yet 90% of the

506
00:26:50,280 --> 00:26:54,200
payments being made prior to the
shipment going over which is,

507
00:26:54,680 --> 00:26:57,400
you know in terms of working
capital where a decent thing the

508
00:26:57,400 --> 00:27:01,360
alternative can be can be pretty
gnarly and.

509
00:27:02,000 --> 00:27:05,520
Can't understand just how wild
this is, by the way, like, like

510
00:27:05,800 --> 00:27:11,240
the this was in a in a period of
time when all you could really

511
00:27:11,240 --> 00:27:14,920
get out of China was a, a non
binding Mou of some description.

512
00:27:14,920 --> 00:27:17,680
And you know, that's intertwined
in the Fortescue story that you

513
00:27:17,840 --> 00:27:20,280
told.
But Charles goes over there

514
00:27:20,760 --> 00:27:25,920
armed with a an an effective.
It was a it was, it was a, it

515
00:27:25,920 --> 00:27:28,320
was the type of off take
agreement that I think Rio Tinto

516
00:27:28,320 --> 00:27:29,920
used.
They had like some lawyer who it

517
00:27:29,920 --> 00:27:32,880
was, you know, the same kind of
same template thing and managed

518
00:27:32,880 --> 00:27:36,440
to get signatures on it from
from Chinese smelter like yeah,

519
00:27:36,480 --> 00:27:39,480
just phenomenal, remarkable a
binding off take comes back with

520
00:27:39,480 --> 00:27:41,640
company.
Yeah, after taking on the plane,

521
00:27:42,360 --> 00:27:45,360
some, some concentrated, you
know, I don't know about the the

522
00:27:45,360 --> 00:27:47,520
disclosure of the of the
material.

523
00:27:47,560 --> 00:27:48,840
Don't worry about it, Don't
worry about it.

524
00:27:49,040 --> 00:27:50,640
It's it's truly, yeah, it's
wicked.

525
00:27:50,880 --> 00:27:53,360
Yeah, that that's sort of
entrepreneurialism I just love

526
00:27:53,400 --> 00:27:56,600
and you know, simultaneous to
that, they keep working on the

527
00:27:56,800 --> 00:27:59,120
the optimization studies.
They're sort of focusing on the,

528
00:27:59,160 --> 00:28:02,040
the recovery, the grind size,
trying to assess whether they

529
00:28:02,040 --> 00:28:05,080
can use a, a course, a grind,
the sort of thinking maybe not

530
00:28:05,160 --> 00:28:08,400
75 microns, maybe 106 microns
will still do the job.

531
00:28:08,400 --> 00:28:12,200
So reducing OpEx and CapEx at
the same time.

532
00:28:12,200 --> 00:28:15,360
They also buy a, a meal second
hand from Hill Grove Canmantu

533
00:28:15,360 --> 00:28:20,840
in, in SA about 7:00-ish million
dollars for, for that one.

534
00:28:20,840 --> 00:28:23,560
So things are things are
happening for the company and

535
00:28:23,560 --> 00:28:27,320
it's it's late 2010 and I'll
just give a bit of a recap to,

536
00:28:27,840 --> 00:28:29,640
to make sure we're all on the
same page about what this kind

537
00:28:29,640 --> 00:28:31,400
of company looks like.
So they have a run up in the

538
00:28:31,400 --> 00:28:33,400
share price near the back end of
that year.

539
00:28:33,560 --> 00:28:34,680
Still called conquest, by the
way.

540
00:28:34,720 --> 00:28:35,680
Not even evolution.
Yep.

541
00:28:35,720 --> 00:28:38,400
Still called Conquest, they do a
$45 million placement.

542
00:28:38,840 --> 00:28:43,640
So after that the market cap is
about 270,000,230 AV.

543
00:28:44,520 --> 00:28:46,840
They've all but confirmed
ownership of Pojingo, the sort

544
00:28:46,840 --> 00:28:49,640
of mining these very, very
narrow veins down there.

545
00:28:50,080 --> 00:28:53,880
And the stock is trading in the
mid kind of $0.30 range.

546
00:28:55,000 --> 00:28:58,040
A year ago, all this team had
still been in China.

547
00:28:58,120 --> 00:29:01,160
It's all still been well, not
all, but the majority of them

548
00:29:01,160 --> 00:29:05,360
had still been running a
predominantly Chinese mining

549
00:29:05,360 --> 00:29:07,600
company.
So they've now done this tough

550
00:29:07,600 --> 00:29:09,840
takeover battle.
They got their work cut out for

551
00:29:09,840 --> 00:29:13,720
them in an asset in in Mount
Carlton and they're they're

552
00:29:13,720 --> 00:29:17,200
running this junior in a kind of
frothy Aussie gold environment.

553
00:29:17,320 --> 00:29:20,440
So a big change in a year.
Huge, huge change that that

554
00:29:20,440 --> 00:29:21,920
placement, that 45,000,000
bucks.

555
00:29:22,800 --> 00:29:26,000
Was that to fund the development
of Mount Carlton?

556
00:29:26,000 --> 00:29:28,840
When did that come later?
It was just a staged, staged

557
00:29:28,840 --> 00:29:31,040
race.
So not too far down the road

558
00:29:31,040 --> 00:29:33,720
that would raise another bunch
of money in the next deal that

559
00:29:33,720 --> 00:29:36,080
we're going to talk about.
And that deal would be

560
00:29:36,080 --> 00:29:39,520
ultimately 18 odd months, a bit
more than 18 months before Mount

561
00:29:39,520 --> 00:29:42,200
Carton starts producing.
At that time the debt financing

562
00:29:42,200 --> 00:29:45,720
is coming together as well.
So it's it's not quite fully

563
00:29:45,720 --> 00:29:47,720
funded to to do Mount Carlton
just yet.

564
00:29:48,360 --> 00:29:50,880
I follow.
I follow what are the what?

565
00:29:50,960 --> 00:29:54,600
What is the actual like
landscape of of gold producers

566
00:29:54,600 --> 00:29:56,680
like on the ASX at this point in
time?

567
00:29:57,040 --> 00:29:59,000
It's a good question actually,
because that that plays into the

568
00:29:59,000 --> 00:30:01,360
strategy.
The the strategy that they spoke

569
00:30:01,360 --> 00:30:04,320
to so often is that like you've
got new Crest on the one hand, a

570
00:30:04,320 --> 00:30:07,520
big, big, big company and then
you've kind of got this, this

571
00:30:07,520 --> 00:30:11,040
dearth.
So they, they circle out the 750

572
00:30:11,040 --> 00:30:14,240
million to a bit over a billion
dollar range.

573
00:30:14,240 --> 00:30:17,080
And I mean, it's fascinating to
read about the companies at this

574
00:30:17,080 --> 00:30:19,480
point in time.
You've got Perseus, Medusa,

575
00:30:19,480 --> 00:30:24,640
Kingsgate, CGA, Avoca, St.
Barbara, Oceana, so some kind of

576
00:30:24,640 --> 00:30:26,600
familiar names there.
But a lot has changed kind of

577
00:30:26,640 --> 00:30:29,440
since that point in time.
But there is a bit of a, a

578
00:30:29,440 --> 00:30:31,880
dearth in that midcap space.
Now, granted, some of these

579
00:30:31,880 --> 00:30:33,880
companies are still big.
What we're coming to the tail

580
00:30:33,880 --> 00:30:38,000
end of a 10 year bull market in
the gold price and things are

581
00:30:38,000 --> 00:30:40,040
going to change quite, quite
soon here.

582
00:30:41,560 --> 00:30:44,360
I am intrigued looking at that
list of peers.

583
00:30:44,360 --> 00:30:47,320
Hey, it's it's fascinating.
I mean, some of them disappear

584
00:30:47,320 --> 00:30:51,920
from deals, some of them merge,
some of them implode from poor

585
00:30:51,920 --> 00:30:54,200
operations.
Some implode and come back.

586
00:30:54,200 --> 00:30:56,240
That's.
That's that's a staggering,

587
00:30:56,320 --> 00:30:57,800
staggering slide.
It is.

588
00:30:57,800 --> 00:30:59,320
It is what?
Happens to me at Carlton.

589
00:30:59,640 --> 00:31:02,880
So the, the refined numbers that
they come up with when they

590
00:31:03,040 --> 00:31:06,320
rework the, the CapEx and all
these sorts of things is about

591
00:31:06,320 --> 00:31:10,640
1:30 CapEx and the MPV is only a
bit higher than that for 12 year

592
00:31:11,080 --> 00:31:14,520
mine life.
The the cash flows if you sort

593
00:31:14,520 --> 00:31:17,360
of flush through the, the spot
price are, you know, they give

594
00:31:17,360 --> 00:31:19,000
you a bit more room for, for
encouragement.

595
00:31:19,000 --> 00:31:22,520
But the company's got $40
million and like I sort of said,

596
00:31:22,800 --> 00:31:25,840
it's sorting out the debt,
finding funding at this point in

597
00:31:25,840 --> 00:31:30,880
time, we're talking April, May
into June of, of 2011.

598
00:31:30,880 --> 00:31:33,440
But then we've got a big, big
deal that preoccupies the

599
00:31:33,440 --> 00:31:38,520
company for a little while.
This this deal needs context,

600
00:31:38,880 --> 00:31:40,480
right?
Because when I think of like,

601
00:31:41,200 --> 00:31:44,320
yeah, a deal that epitomizes the
formation of evolution, I don't

602
00:31:44,320 --> 00:31:45,880
even think of the back story
you've told today.

603
00:31:45,880 --> 00:31:49,720
I think of this deal, just the
the absurdity of this coming

604
00:31:49,720 --> 00:31:51,800
together.
Yeah, you've taken a a good

605
00:31:51,800 --> 00:31:53,720
while to actually get to
evolution, but this is the

606
00:31:53,800 --> 00:31:58,400
creation of evolution itself and
it is a fascinating deal, right?

607
00:31:58,400 --> 00:32:03,000
So June 2011, Conquest agreed
this all script deal with

608
00:32:03,200 --> 00:32:08,160
Katawpa whilst concurrently
buying Krakow and Mount Rorden

609
00:32:08,200 --> 00:32:12,040
from New Crest.
So if you can wrap your head all

610
00:32:12,040 --> 00:32:16,080
around that, they're also going
to do a capital raising, a $150

611
00:32:16,080 --> 00:32:19,800
million capital raising at the
same point in time, so 2.

612
00:32:19,800 --> 00:32:25,320
Companies merging with each
other to acquire these non core

613
00:32:25,320 --> 00:32:27,840
assets from new Crest.
Everything pay for.

614
00:32:27,920 --> 00:32:31,040
In with a with a.
Yeah, and and a placement.

615
00:32:31,240 --> 00:32:34,160
Yeah, Snarly.
So New Crest is going to become

616
00:32:34,160 --> 00:32:38,200
the roughly 1/3 owner of this
joint company, which they dub

617
00:32:38,560 --> 00:32:40,560
Evolution.
Now the pro forma market cap

618
00:32:40,560 --> 00:32:45,080
$1.2 billion EV is about about a
billion dollars.

619
00:32:45,640 --> 00:32:48,480
And you know, like you've kind
of said that these guys pride

620
00:32:48,480 --> 00:32:51,560
themselves on, on handling deal
complexity, but it almost feels

621
00:32:51,560 --> 00:32:54,240
as if you've gone out of your
way to to make this one more

622
00:32:54,240 --> 00:32:57,280
complicated than it needs to be.
But as we get into this pretty

623
00:32:57,280 --> 00:33:01,120
good reason for for this, if we
look at the assets very quickly,

624
00:33:01,880 --> 00:33:06,680
Kataupa are bringing in Edna
May, so nine year mine life,

625
00:33:06,680 --> 00:33:11,440
100,000 oz per annum roughly.
They're also bringing in a 30%

626
00:33:11,440 --> 00:33:15,280
interest in Krakow.
I know I said Krakow before

627
00:33:15,280 --> 00:33:18,560
coming in from Eucharist.
They are the other 70% owners of

628
00:33:18,560 --> 00:33:21,600
this one that's doing about
100,000 oz as well.

629
00:33:21,800 --> 00:33:23,560
But it's only got five years
proven out.

630
00:33:23,920 --> 00:33:26,640
Then you've got Mount Rorden, as
I mentioned, that's going to do

631
00:33:26,640 --> 00:33:31,120
90,000 ounces in, in due course,
single kind of open pit mine,

632
00:33:31,520 --> 00:33:33,880
eight years left there.
And then rounding out the

633
00:33:33,880 --> 00:33:36,200
assets, you've got Bajingo and
Mount Carlton.

634
00:33:36,520 --> 00:33:39,920
Now Mount Carton is due to come
online in about 18 months at

635
00:33:39,920 --> 00:33:43,040
this point in time.
So for producing assets and a

636
00:33:43,040 --> 00:33:46,560
development project, if you look
back a year, what the Proform

637
00:33:46,560 --> 00:33:49,520
entity would have done, it would
have been a bit under 300,000

638
00:33:49,520 --> 00:33:54,600
oz, but on the way up.
I feel like the I've heard Jake

639
00:33:54,720 --> 00:33:59,680
tell the story of this deal and
it doesn't kind of come together

640
00:33:59,680 --> 00:34:02,360
necessarily just by pure desire
to put the two companies

641
00:34:02,360 --> 00:34:05,760
together.
It it comes from the pre emptive

642
00:34:05,760 --> 00:34:10,880
right that could help had over
the other 70% of Krakow.

643
00:34:11,280 --> 00:34:12,639
Yeah.
You, you got to make this deal

644
00:34:12,639 --> 00:34:13,760
happen.
It's not going to fall on your

645
00:34:13,760 --> 00:34:17,000
lap.
So Catalpa, were they, they

646
00:34:17,040 --> 00:34:19,679
weren't even single, you know,
at the time they had to break

647
00:34:19,679 --> 00:34:22,040
off talks with St.
Barbara, who they were

648
00:34:22,040 --> 00:34:25,440
reluctantly in in talks with who
just, you know, in the month

649
00:34:25,440 --> 00:34:29,360
prior proposed A merger with
Catalpa that wasn't really

650
00:34:29,360 --> 00:34:33,360
friendly at all.
But that pre emptive right is,

651
00:34:33,400 --> 00:34:35,639
is super, super important that
you you talk about.

652
00:34:35,639 --> 00:34:40,320
So the Conquest team had seen
that new Crest led by Greg

653
00:34:40,440 --> 00:34:43,080
Robinson had just acquired
Lahir, which we've spoken about

654
00:34:43,080 --> 00:34:46,280
in in a previous podcast.
And they concluded that Krakow

655
00:34:46,280 --> 00:34:48,280
and Mount Rawdon couldn't be
central to the plans of new

656
00:34:48,280 --> 00:34:51,600
Crest going forward.
So they make an approach new

657
00:34:51,600 --> 00:34:53,080
Crest actually quite receptive
to this.

658
00:34:53,080 --> 00:34:55,320
Now you have that pre emptive
right.

659
00:34:55,440 --> 00:34:58,360
New Crest had actually
previously tried to sell Krakow.

660
00:34:58,480 --> 00:35:00,280
So Evo's approach new Crest
directly.

661
00:35:00,600 --> 00:35:03,160
That's right, right.
Yeah, Conquest.

662
00:35:03,480 --> 00:35:09,000
So to the CEO Greg's
frustration, CEO of new Crest,

663
00:35:09,520 --> 00:35:13,000
this group called KET Helper had
a, a pre emptive right?

664
00:35:13,000 --> 00:35:14,200
And they wouldn't let this one
go.

665
00:35:14,200 --> 00:35:18,480
So he just pretty much said that
you go create some sort of

666
00:35:18,480 --> 00:35:22,520
arrangement with them and we'll
be happy to kind of do a deal.

667
00:35:22,520 --> 00:35:27,520
And as was relayed in other
channels to us, the Evolution BD

668
00:35:27,520 --> 00:35:31,400
team gets in touch with the New
Crest team got this great idea.

669
00:35:32,160 --> 00:35:34,280
New Crest is sort of nodding,
nodding along.

670
00:35:34,280 --> 00:35:36,120
They're, you know, receptive.
They're thinking, yeah, yeah,

671
00:35:36,120 --> 00:35:38,200
yeah, this is great.
This, you know, we've already

672
00:35:38,200 --> 00:35:40,120
thought of this.
You know, they're given the

673
00:35:40,120 --> 00:35:43,120
whole pitch evolution on why it
makes sense for you to offload

674
00:35:43,120 --> 00:35:46,080
these assets to us.
And then they kind of get to the

675
00:35:46,080 --> 00:35:49,560
point we've got a problem
though, you know, you've got

676
00:35:49,560 --> 00:35:53,160
this, this pre emptive, right?
And and new crests say, hang on,

677
00:35:53,840 --> 00:35:56,200
you've got a problem, you need
to sort this out.

678
00:35:57,200 --> 00:35:59,600
And then it dawns on them, ah,
we do have a problem.

679
00:35:59,640 --> 00:36:02,440
So hence the complex deal they
need to.

680
00:36:02,440 --> 00:36:06,440
Spell that out right.
So so why, why, why?

681
00:36:06,440 --> 00:36:09,320
If I say you, you've got a
problem that's pre emptive,

682
00:36:09,320 --> 00:36:11,240
right?
Because they they're actually

683
00:36:11,240 --> 00:36:14,840
pitching to buy new Crest steak
in Krakow 1st and then EUCRIS

684
00:36:14,840 --> 00:36:18,320
flips it on them and says sort
out, sort out the other side of

685
00:36:18,320 --> 00:36:19,600
the equation.
Exactly.

686
00:36:19,600 --> 00:36:21,400
And then it all solves itself.
Yeah, pre emptive.

687
00:36:21,400 --> 00:36:23,800
Right.
So Conquest get in touch with

688
00:36:23,800 --> 00:36:27,600
Kitapa and lo and behold, we
have the the deal that we have.

689
00:36:27,600 --> 00:36:30,800
So yeah, it, yeah, it, it took a
while to get there.

690
00:36:31,080 --> 00:36:35,080
As for the merger itself, that's
a 5050 merger that the two

691
00:36:35,080 --> 00:36:37,760
companies are doing.
Conquest get a, a bit of a bump

692
00:36:37,760 --> 00:36:41,720
on on their last clothes and you
have this eight person board as

693
00:36:41,720 --> 00:36:43,800
you tend to when these sort of
companies come together.

694
00:36:44,640 --> 00:36:48,000
Lori Conway joins the board
because he's one of two new

695
00:36:48,000 --> 00:36:51,120
Crest nominees.
So, you know, it'd be still a

696
00:36:51,120 --> 00:36:54,400
few years before Laurie becomes
a full time employee at

697
00:36:54,680 --> 00:36:57,760
Evolution.
And that raising that I

698
00:36:57,760 --> 00:37:00,560
mentioned $150 million, that was
a bit of a spanner in the works

699
00:37:00,560 --> 00:37:03,800
and they needed a commitment
from from BlackRock and Baker

700
00:37:03,800 --> 00:37:06,640
Steel to get that one over the
line.

701
00:37:06,880 --> 00:37:11,000
This, this comes from the fact
that, yeah, it's a new Crest is

702
00:37:11,000 --> 00:37:15,080
feeling, feeling a bit of a
squeeze after fumbling the footy

703
00:37:15,080 --> 00:37:17,320
with Lahia.
So they're, they're needing to

704
00:37:17,320 --> 00:37:19,720
shore up their own balance sheet
and they didn't want to become a

705
00:37:19,720 --> 00:37:24,360
big shareholder in a pro forma
evolution that was underfunded.

706
00:37:24,360 --> 00:37:27,800
So they like they as I
understand it was pressure from

707
00:37:27,960 --> 00:37:32,800
from new Crest in in the midst
of this deal to actually ensure

708
00:37:32,800 --> 00:37:35,360
a a placement happen
concurrently with it all.

709
00:37:35,960 --> 00:37:38,160
Yeah.
They wanted confidence because

710
00:37:38,160 --> 00:37:41,440
financing had been one of the
problems to a deal getting done

711
00:37:41,680 --> 00:37:44,280
previously to to a sale of of an
asset.

712
00:37:44,280 --> 00:37:46,640
So they wanted confidence that
there wasn't going to be any

713
00:37:46,640 --> 00:37:48,640
problems on that front and that
they weren't.

714
00:37:48,640 --> 00:37:51,720
Funded so they didn't get a a
call up for for a pro rata share

715
00:37:51,720 --> 00:37:53,400
of of capital down the track as
well.

716
00:37:53,400 --> 00:37:56,000
Yeah, they weren't having
problems with Lahir just yet.

717
00:37:56,000 --> 00:37:59,680
This is the, the gold price is
still very strong in 2011,

718
00:37:59,720 --> 00:38:01,360
right?
So it's yet to sort of fall

719
00:38:01,360 --> 00:38:05,320
through, right.
But they have, you know,

720
00:38:05,320 --> 00:38:10,640
refocused on, on Africa and,
and, you know, PNG and and the

721
00:38:10,640 --> 00:38:12,240
like.
So they, they don't need these

722
00:38:12,640 --> 00:38:17,160
assets that made-up 4% of of
their kind of value.

723
00:38:17,520 --> 00:38:20,520
So got you.
Hence they came to get that one

724
00:38:20,520 --> 00:38:23,200
done.
But yeah, it it left a deal, you

725
00:38:23,200 --> 00:38:24,800
know, that was already
complicated being even more

726
00:38:24,800 --> 00:38:27,920
complicated for the evolution
team to do.

727
00:38:28,160 --> 00:38:31,920
This is this is this is a gnarly
deal still like you just don't

728
00:38:31,920 --> 00:38:38,440
see deals like this today.
It's the coordination like

729
00:38:38,440 --> 00:38:41,400
required to bring all of these
disparate parties together

730
00:38:41,480 --> 00:38:46,480
aligned on on value and seeing
the upside of what could be

731
00:38:46,480 --> 00:38:49,600
created as opposed to getting
kind of caught up in the in the

732
00:38:49,600 --> 00:38:54,600
waves of of a bit ask spread in
the moment, backing a, you know,

733
00:38:54,800 --> 00:38:57,280
a management team in to to to
lead things forward from there.

734
00:38:58,000 --> 00:39:00,800
It's it's pretty cool.
It's a very cool deal like this.

735
00:39:00,800 --> 00:39:03,240
Just this is one of those deals
that stands out when you study

736
00:39:03,360 --> 00:39:08,840
mining deals that that a because
of what created more evolution,

737
00:39:08,840 --> 00:39:13,320
and B it's just gnarly like.
No better way to put it.

738
00:39:13,320 --> 00:39:17,520
It's super, super gnarly.
And yeah, I mean, they do a few

739
00:39:17,520 --> 00:39:21,480
more creative deals, but nothing
is is kind of mind bending as as

740
00:39:21,480 --> 00:39:25,520
this one.
But they are now a, you know,

741
00:39:25,520 --> 00:39:29,120
once this deal is bedded down, a
multi asset mining company with

742
00:39:29,120 --> 00:39:31,360
a pretty decent sized market
cap.

743
00:39:31,360 --> 00:39:34,200
They're a decent sized business
coming out of this one in, in

744
00:39:34,200 --> 00:39:37,680
2011, they sought out the
financing for, for Mount

745
00:39:37,680 --> 00:39:40,360
Carlton.
They can in pretty short order

746
00:39:40,360 --> 00:39:45,200
turn that one into more, you
know, commercial type funding

747
00:39:45,200 --> 00:39:48,520
rather than it being a project
financing because they have the,

748
00:39:49,240 --> 00:39:51,160
the spread of assets to, to get
that one done.

749
00:39:51,160 --> 00:39:52,560
And the, the terms sort of come
in.

750
00:39:53,680 --> 00:39:58,200
They're guiding to 350,000 oz at
this point in time.

751
00:39:58,240 --> 00:40:01,200
It's not long after the deal
that the, the MD and exec share

752
00:40:01,200 --> 00:40:05,800
role gets combined under Jake.
They they March on into the ISEX

753
00:40:05,800 --> 00:40:11,480
200 and whilst everything sort
of is seemingly going great the

754
00:40:11,720 --> 00:40:13,160
the floor falls out of the gold
price.

755
00:40:13,200 --> 00:40:17,720
From mid 2012 it would be 4
years until the share price

756
00:40:17,720 --> 00:40:21,160
breaks even again.
All years is a long time when

757
00:40:21,160 --> 00:40:22,920
you're running a company.
It's a long time when you've

758
00:40:22,920 --> 00:40:27,920
just financed a new mine, you
know we've got a AA10 year gold

759
00:40:27,920 --> 00:40:30,560
bull market that has just fallen
through and you've just put

760
00:40:30,560 --> 00:40:32,920
together this fantastic big kind
of deal.

761
00:40:33,400 --> 00:40:35,760
But also on the positive side,
it would create the

762
00:40:35,760 --> 00:40:38,200
opportunities that built the
company we know today.

763
00:40:38,720 --> 00:40:40,960
Was there was there debt
involved in their cap structure

764
00:40:40,960 --> 00:40:42,920
at this point in time?
There, there sure was.

765
00:40:42,920 --> 00:40:46,160
Yeah.
So for for a number of years

766
00:40:46,200 --> 00:40:52,200
from this call at 2012 to 2015,
early 2015, they're in a net

767
00:40:52,200 --> 00:40:55,160
debt position of 100 to $150
million.

768
00:40:55,240 --> 00:40:57,400
And that was to fund Mount
Carlton, yeah.

769
00:40:57,640 --> 00:40:59,400
That was that was funding Mount
Carlton.

770
00:40:59,400 --> 00:41:02,960
Yeah.
So like I said, the gold price

771
00:41:02,960 --> 00:41:07,240
fell away, but you don't get
these 4 sellers straight away.

772
00:41:07,360 --> 00:41:10,840
It it takes time and a lot of
patience is kind of required.

773
00:41:11,080 --> 00:41:15,040
Evolutions have to do a $385
million write down in 2013

774
00:41:15,040 --> 00:41:19,240
first, which is never a a good
thing for shareholders to to

775
00:41:19,240 --> 00:41:20,560
swallow.
They're never too eager to see

776
00:41:20,560 --> 00:41:23,120
that.
And they start stripping costs

777
00:41:23,120 --> 00:41:25,440
out of the business at the
corporate office, numerous

778
00:41:25,440 --> 00:41:27,760
contracts close, they go owner
operator at Krakow.

779
00:41:28,000 --> 00:41:33,120
They flatten the org structure.
The, you know, by 2013, by 2013,

780
00:41:33,120 --> 00:41:35,400
the merger's almost two years in
the rearview mirror.

781
00:41:35,960 --> 00:41:39,120
And like you comment on the
balance sheet just there, it's

782
00:41:39,120 --> 00:41:41,360
not as healthy as it kind of
could be.

783
00:41:41,560 --> 00:41:44,400
A bit over $100 million in in,
in net debt.

784
00:41:44,920 --> 00:41:50,600
The share price looking back
just 12 months is -57% and that

785
00:41:50,600 --> 00:41:53,120
only puts the middle of the pack
when you look around the field

786
00:41:53,120 --> 00:41:54,600
of what the other Goldies have
done.

787
00:41:55,400 --> 00:41:58,360
But they still actually pay a
dividend at this point in time,

788
00:41:58,720 --> 00:42:01,280
believe it or not, they pay a 1
cent dividend, which, you know,

789
00:42:01,280 --> 00:42:03,880
might not sound like the biggest
thing in the world, but they

790
00:42:03,880 --> 00:42:06,880
have remained super dedicated
and that, you know, instills

791
00:42:06,880 --> 00:42:10,080
capital discipline, paying a
dividend every half year.

792
00:42:10,760 --> 00:42:14,200
I think they're going on 25 or
26 dividends now paid that that

793
00:42:14,200 --> 00:42:17,360
is kind of remarkable to do it
at this point in time.

794
00:42:17,360 --> 00:42:20,600
Yeah, production is.
Is confronting when you just

795
00:42:20,600 --> 00:42:25,640
look at it like 427,000 ounces
in in FY14 like that is that is

796
00:42:25,920 --> 00:42:28,040
that is a formidable production
profile but they're.

797
00:42:28,040 --> 00:42:31,200
And they don't make money.
They're not washing their face.

798
00:42:31,200 --> 00:42:33,920
They're no, I mean no one, no
one's doing, no one's doing

799
00:42:33,920 --> 00:42:36,440
well, but they've got the
production and they just need

800
00:42:36,440 --> 00:42:40,280
the commodity tailwinds.
They do they, they're a leverage

801
00:42:40,280 --> 00:42:42,240
play without doubt at this point
in time.

802
00:42:42,360 --> 00:42:46,400
The yeah, that's a big, big
number for a company not to make

803
00:42:46,400 --> 00:42:48,400
money.
And they, they know more than

804
00:42:48,400 --> 00:42:51,200
most that the, the assets aren't
the best in the world that they

805
00:42:51,200 --> 00:42:53,560
have.
But it is been a very tough year

806
00:42:53,800 --> 00:42:56,040
going around.
And I say not making money from

807
00:42:56,040 --> 00:42:58,720
a kind of cash flow perspective.
They had been bringing on Mount

808
00:42:58,720 --> 00:43:02,000
Carlton, you know, online
through this period as well.

809
00:43:02,360 --> 00:43:05,400
But the real concern is that
reserves are depleting.

810
00:43:05,920 --> 00:43:09,120
These assets don't have massive
mine lives like Jake would later

811
00:43:09,120 --> 00:43:12,360
always talk about having an 8
year plus mine life on on your

812
00:43:12,360 --> 00:43:16,280
projects across the portfolio,
Pagingo, you know, these sorts

813
00:43:16,280 --> 00:43:19,480
of assets, they don't have that
and they need to get on the

814
00:43:19,480 --> 00:43:22,040
stepping stones to to get to the
better assets at this point in

815
00:43:22,040 --> 00:43:24,400
time.
On the positive side, again, the

816
00:43:24,440 --> 00:43:27,120
the four Stellars at this point
in time are starting to emerge.

817
00:43:27,520 --> 00:43:29,960
We're now mid 2014.
You know, looking around the

818
00:43:29,960 --> 00:43:33,480
field, Northern Stars done some
of their deals, they've done 3

819
00:43:33,520 --> 00:43:37,720
sort of around the, the new year
period coming into 2014.

820
00:43:37,720 --> 00:43:40,600
So you're starting to see
transactions that reshape the

821
00:43:40,880 --> 00:43:44,120
Australian gold landscape for a
for a long time to come.

822
00:43:44,280 --> 00:43:49,640
One of those forced sellers
becomes a new Crest of their

823
00:43:49,840 --> 00:43:52,560
evolution stock over time.
Or does that happen later?

824
00:43:52,880 --> 00:43:57,640
That happens in 2015.
So before we get there, you

825
00:43:57,640 --> 00:44:00,320
know, as these things tend to be
the, the stock price continues

826
00:44:00,320 --> 00:44:05,280
to to bomb out late 2014 shares
trade below $0.50.

827
00:44:05,320 --> 00:44:09,040
So the market cap is South of
400 million and that merger was

828
00:44:09,040 --> 00:44:13,080
down and said $1.2 billion.
So the the company's fallen a

829
00:44:13,080 --> 00:44:16,640
long way from that, and so was
everyone else in in the arena

830
00:44:16,640 --> 00:44:18,480
they.
Probably raised more like nearly

831
00:44:18,480 --> 00:44:20,200
more capital than that at that
point in time.

832
00:44:20,200 --> 00:44:23,080
I know, right?
So, you know, these things sort

833
00:44:23,080 --> 00:44:25,320
of grip the markets and these
these kind of trends and the

834
00:44:25,320 --> 00:44:27,640
trend here is profitability and
they don't have too much

835
00:44:27,640 --> 00:44:31,360
profitability to show.
So they're talking about reusing

836
00:44:31,600 --> 00:44:34,320
mill mill balls.
They're talking about smarter

837
00:44:34,320 --> 00:44:35,920
drilling blasting.
They're talking about going

838
00:44:35,920 --> 00:44:38,040
owner operator at every site
they can.

839
00:44:38,040 --> 00:44:40,400
They're talking about pulling in
employee turnover.

840
00:44:41,160 --> 00:44:43,920
You go through the slide decks
of companies at the time and

841
00:44:44,320 --> 00:44:46,880
more than half is just cost
saving initiatives like you're

842
00:44:46,880 --> 00:44:50,280
really tightening the belt here
and it starts to work in bits

843
00:44:50,280 --> 00:44:52,040
and pieces at Evolution.
They start to make a bit of

844
00:44:52,040 --> 00:44:55,560
money quarter after quarter and
then they get hit with, you

845
00:44:55,560 --> 00:44:58,120
know, the QLD floods a lot of
their assets up in Queensland.

846
00:44:58,120 --> 00:45:00,520
So they're copying it from all
sides.

847
00:45:00,520 --> 00:45:04,080
And it's very, you know, quick
and easy to say in retrospect.

848
00:45:04,080 --> 00:45:06,480
But when you're living through
it, I can only sort of imagine

849
00:45:06,480 --> 00:45:09,280
when it's kind of year after
year and you're copying it and

850
00:45:09,280 --> 00:45:11,720
you're just waiting for the the
times to turn.

851
00:45:13,560 --> 00:45:17,040
But like you say, we have the
the new Crest sell down.

852
00:45:17,040 --> 00:45:19,960
They're 32% stake.
They sell in two parts.

853
00:45:20,400 --> 00:45:23,000
So they sell at the beginning of
2015 and then at the end of the

854
00:45:23,440 --> 00:45:27,520
kind of at the end of ish of
2015, in the second-half, they

855
00:45:27,520 --> 00:45:30,520
take a big haircut on on that
compared to what the value was

856
00:45:30,680 --> 00:45:33,760
when the deal was done.
And it's a very unhelpful time

857
00:45:34,240 --> 00:45:35,760
for the company for this to
happen.

858
00:45:35,760 --> 00:45:39,680
And, you know, when something
like that happens at the point

859
00:45:39,680 --> 00:45:42,520
in time, you kind of might
question evolution.

860
00:45:42,600 --> 00:45:44,480
History shows that they were
just trying to look after

861
00:45:44,480 --> 00:45:46,520
themselves.
And, you know, I don't think it

862
00:45:46,520 --> 00:45:49,040
would have taken a genius at the
time to realize New Crest

863
00:45:49,040 --> 00:45:52,640
themselves needed the cash.
It wasn't a fundamental flaw in

864
00:45:52,640 --> 00:45:55,720
evolution.
Isn't it, isn't it a staggering

865
00:45:55,720 --> 00:46:01,160
kind of reflection that a 32%
shareholder at the formation of

866
00:46:01,160 --> 00:46:06,440
what we know today to be
evolution lost money like.

867
00:46:07,760 --> 00:46:10,000
That's crazy.
It really is crazy.

868
00:46:10,000 --> 00:46:14,440
And like all, all the same, it's
a trend you see with some of

869
00:46:14,440 --> 00:46:18,680
these phenomenal success stories
in any industry, there are multi

870
00:46:18,680 --> 00:46:20,920
year periods where the company
doesn't go up.

871
00:46:20,920 --> 00:46:22,560
The stock doesn't just go up
linearly.

872
00:46:22,920 --> 00:46:26,640
Like you need to bear through
the bad times to enjoy the good

873
00:46:26,640 --> 00:46:29,240
times.
So, yeah, it, it is kind of

874
00:46:29,240 --> 00:46:34,120
funny to, to take out a, you
know, a four year piece in time

875
00:46:34,400 --> 00:46:38,160
and they took a, a big haircut
that it's kind of remarkable to,

876
00:46:38,160 --> 00:46:40,720
to round out on the personnel
side of things.

877
00:46:41,400 --> 00:46:43,360
You've got more familiar names.
I know we spoke about this

878
00:46:43,360 --> 00:46:46,680
before, but Cobb Johnson and
Tommy Mckeith, they joined

879
00:46:46,680 --> 00:46:50,320
through that 2014 period.
And Jake has finally worn down.

880
00:46:50,400 --> 00:46:55,160
Laurie, who joins the company
full time, becomes the CFO in

881
00:46:55,160 --> 00:46:58,320
2014.
So again, familiar faces showing

882
00:46:58,320 --> 00:47:01,320
up throughout this story.
This entire time Jake is exec

883
00:47:01,320 --> 00:47:02,960
chair as well right?
Like.

884
00:47:03,200 --> 00:47:05,760
MD and exec.
Chair MD and Exec Chair, Yeah,

885
00:47:06,000 --> 00:47:06,840
yeah.
Interesting.

886
00:47:07,560 --> 00:47:08,920
Controls the company and the
board.

887
00:47:09,120 --> 00:47:10,800
Yeah, yeah.
Interesting.

888
00:47:10,800 --> 00:47:13,240
And no accident as well.
Yeah.

889
00:47:13,240 --> 00:47:17,480
So coming into 2015 there's a
bit of health in the Aussie gold

890
00:47:17,640 --> 00:47:20,680
price, which is, which is good
for evolution obviously.

891
00:47:20,680 --> 00:47:23,600
And they they make a bit of a
voluntary play, pay down of

892
00:47:23,600 --> 00:47:27,720
debt.
And then come April 2015, we

893
00:47:27,720 --> 00:47:32,880
have the the first real kind of
bear market deal, which is a a

894
00:47:32,880 --> 00:47:35,720
cracker.
This is this is the period where

895
00:47:36,040 --> 00:47:39,000
like Evo's assets actually start
making good money, right?

896
00:47:39,000 --> 00:47:42,600
They've got like 3 core minds
that all make about 100 million

897
00:47:42,600 --> 00:47:47,320
bucks in that one year each.
Yeah, that would be the next

898
00:47:47,320 --> 00:47:51,840
year, more so like going from
2015 to 16.

899
00:47:52,160 --> 00:47:54,800
You think, hey, these projects
can actually make a bit of money

900
00:47:54,800 --> 00:47:58,680
when the gold price ticks up a
good few 100 bucks and sentiment

901
00:47:58,680 --> 00:48:03,120
changes like it always does, but
they they need to get through a

902
00:48:03,120 --> 00:48:05,520
couple deals actually, but
before they get there.

903
00:48:05,600 --> 00:48:08,240
Gotcha.
So the La Mancha deal juicy,

904
00:48:09,800 --> 00:48:11,680
super juicy.
I know you've, you've actually

905
00:48:11,680 --> 00:48:15,720
studied this one a little bit.
And we've spoken with La Mancha

906
00:48:15,720 --> 00:48:19,440
in in the past a couple years
ago now, but La Mancha is a

907
00:48:19,440 --> 00:48:22,960
private mining investment
vehicle for the the Super

908
00:48:22,960 --> 00:48:26,360
wealthy Egyptian Sawari's
family.

909
00:48:26,360 --> 00:48:30,440
So Nagib predominantly and they
owned frogs legs.

910
00:48:30,440 --> 00:48:33,960
It's an underground mine, white
foil open pit mine and the brand

911
00:48:33,960 --> 00:48:36,880
new Mangari mill. 1.5 million
tonne per annum milk which had

912
00:48:36,880 --> 00:48:41,360
just been built one year prior.
Najib was a yeah, an Egyptian

913
00:48:42,120 --> 00:48:45,480
billionaire who made his his
fortune in the

914
00:48:45,480 --> 00:48:48,560
telecommunications industry and.
Yeah, from a very wealthy

915
00:48:48,560 --> 00:48:51,200
family.
Somehow got the the gold bug and

916
00:48:51,200 --> 00:48:55,320
found himself yeah, like owning,
owning these these, yeah, these

917
00:48:55,320 --> 00:48:58,760
mines in, in Kalrauli.
Yeah, and and all through Africa

918
00:48:59,320 --> 00:49:02,520
as well, which would become a
focus later on for him.

919
00:49:02,520 --> 00:49:06,800
But he's got these assets in the
East Kalgoorlie region and they

920
00:49:06,800 --> 00:49:09,840
want to find someone to really
help them grow.

921
00:49:10,000 --> 00:49:12,040
They want a vehicle to kind of
put this in so that somebody can

922
00:49:12,040 --> 00:49:14,280
kind of do the growing for them
in a way.

923
00:49:14,280 --> 00:49:16,520
And that ends up being
evolution.

924
00:49:16,520 --> 00:49:19,440
So Evos pay for this deal in
script.

925
00:49:20,320 --> 00:49:25,120
La Mancha ends up being a 31%
shareholder and at this point in

926
00:49:25,120 --> 00:49:28,480
time Mucrest has sold their
first half of first half of

927
00:49:28,480 --> 00:49:31,280
their their block doing the
other half later.

928
00:49:32,080 --> 00:49:35,640
Evos actually have to take on
$115 million in in net debt at

929
00:49:35,640 --> 00:49:38,160
this point in time.
But we're back to a billion

930
00:49:38,160 --> 00:49:41,440
dollar market camp market cap
with this share issue.

931
00:49:41,720 --> 00:49:47,320
And super importantly, La Mancha
Nagib commits $100 million to

932
00:49:47,320 --> 00:49:50,080
future growth.
The assets themselves had done

933
00:49:50,080 --> 00:49:55,520
150,000 oz at a bit under $1000
all in sustaining costs.

934
00:49:55,520 --> 00:49:59,200
So that's, you know that's a
more than 10% improvement on the

935
00:49:59,240 --> 00:50:02,640
all in sustaining cost of the
asset portfolio that the company

936
00:50:02,640 --> 00:50:05,840
had at that point in time.
Evolutions just had the overhang

937
00:50:05,840 --> 00:50:10,440
of a of a 30 ish percent
shareholder who's reducing their

938
00:50:10,440 --> 00:50:12,040
stake and a bit of an overhang
on the share price.

939
00:50:12,680 --> 00:50:15,160
They finally, they finally see
our new Crest and now they

940
00:50:15,160 --> 00:50:19,600
welcome another 31% shareholder.
There's a bit of a bit of an

941
00:50:19,600 --> 00:50:25,560
anecdote on how they agreed that
31% I because you're trying to,

942
00:50:25,560 --> 00:50:28,400
you're trying to figure out like
how, what, what pro forma, like

943
00:50:28,400 --> 00:50:30,440
what are they bringing to the
table versus yours?

944
00:50:30,520 --> 00:50:33,560
And isn't there an article in
the AFR about how they exactly

945
00:50:33,560 --> 00:50:35,920
landed on 31?
There, there is.

946
00:50:35,920 --> 00:50:42,080
So I mean, some of the stories
are, are very funny, but one of

947
00:50:42,080 --> 00:50:46,280
the details we heard is that a
half a percentage point

948
00:50:46,280 --> 00:50:50,760
difference is negotiated via
sort of screaming matches in the

949
00:50:51,240 --> 00:50:54,680
in the office.
And it's a kind of arbitrary

950
00:50:54,680 --> 00:50:56,880
number.
They, they, they're negotiating

951
00:50:56,880 --> 00:51:00,120
it head to head on a kind of
like for like basis where they

952
00:51:00,120 --> 00:51:03,520
say, you know, you use reserves
or this much, you know,

953
00:51:03,520 --> 00:51:05,800
reserves, we'll use this much
percentage of reserves.

954
00:51:05,800 --> 00:51:08,200
You use a bit of resources,
yada, yada, yada.

955
00:51:08,680 --> 00:51:13,080
And at the end of the day, they,
they, they knuckle down and

956
00:51:13,080 --> 00:51:16,440
they, they come to an agreement.
And like you do in Sydney, you

957
00:51:16,440 --> 00:51:19,920
go to rock pool to, to celebrate
that one and, and drink it all

958
00:51:19,920 --> 00:51:23,440
the way in inexpensive champagne
with the, the Frenchman from La

959
00:51:23,440 --> 00:51:25,960
Mancha.
But yeah, it was a, it was an

960
00:51:25,960 --> 00:51:30,240
expensive kind of deal to get
done, but a super important deal

961
00:51:30,240 --> 00:51:34,320
in, in the, the stepping stones
of evolution and their kind of

962
00:51:34,320 --> 00:51:36,480
journey.
There's another detail actually,

963
00:51:36,480 --> 00:51:38,800
which I, I want to mention
because I find so fascinating.

964
00:51:38,800 --> 00:51:42,400
They didn't even evolution
didn't even use investment

965
00:51:42,400 --> 00:51:45,240
bankers for this deal at all LED
through, you know, Aaron

966
00:51:45,240 --> 00:51:48,480
Colleron and and Kieran Schmidt
there as well with the the BD

967
00:51:48,480 --> 00:51:51,440
team that they had internally
just sort of powered through

968
00:51:51,440 --> 00:51:54,520
this one, which is a pretty cool
little, little detail.

969
00:51:54,880 --> 00:51:58,800
Is that's a common theme and
especially I think this year is,

970
00:51:59,280 --> 00:52:04,280
is chock a block with deals you
don't like, You can't actually

971
00:52:05,240 --> 00:52:08,080
get that many deals done if you
have like teams and teams of

972
00:52:08,080 --> 00:52:10,640
advisors because they slow you
down, You're not nimble enough.

973
00:52:10,640 --> 00:52:13,360
You, you add complexity, there's
more meetings in the calendar.

974
00:52:13,800 --> 00:52:16,160
You're, you're talking about
things that don't actually

975
00:52:16,160 --> 00:52:17,800
matter.
But if you back yourself your

976
00:52:17,800 --> 00:52:21,480
own capability to to do what's
required, like yeah it is

977
00:52:21,480 --> 00:52:24,080
possible to do 3 deals in a
month, which they did.

978
00:52:24,320 --> 00:52:26,520
Totally, and that that comes
down to the MO of the company,

979
00:52:26,520 --> 00:52:28,360
you know, deal making.
If that's your expertise, you

980
00:52:28,480 --> 00:52:29,840
you got to be able to do it in
house, don't you?

981
00:52:30,520 --> 00:52:33,760
I say it's possible, but it's
still like genuinely, truly

982
00:52:34,000 --> 00:52:36,640
impressive.
Like, yeah, like having, having

983
00:52:36,640 --> 00:52:39,080
having worked in banking, mate,
like I've been crushed from just

984
00:52:39,080 --> 00:52:41,600
one, like just, you know, one on
the plate, like absolutely

985
00:52:41,600 --> 00:52:43,840
crushed.
And the fact there were three

986
00:52:43,840 --> 00:52:48,280
enormous ones simultaneously is
is stupidly impressive.

987
00:52:48,280 --> 00:52:51,200
Yeah, totally, totally.
So if we, if we analyze this

988
00:52:51,200 --> 00:52:55,000
deal for a moment before we jump
on to, to the next one, the

989
00:52:55,000 --> 00:52:56,960
assets are better.
You you're paying a big price

990
00:52:56,960 --> 00:52:59,480
for it, but you're pulling down
your, your all in sustaining

991
00:52:59,480 --> 00:53:01,240
cost.
You're providing more cash

992
00:53:01,240 --> 00:53:04,840
generation, you're pushing out
the average my life of your,

993
00:53:04,960 --> 00:53:08,800
your portfolio doing it with
cash that, that wasn't an option

994
00:53:08,800 --> 00:53:13,760
here given the, the strategy
that NGIB and Lamancha had.

995
00:53:15,440 --> 00:53:17,560
The gold price, like we've
always sort of said rises

996
00:53:17,560 --> 00:53:19,520
throughout.
So you get kind of nitpicky

997
00:53:19,880 --> 00:53:23,160
deciding who's a winner, but at
the end of the day, both the

998
00:53:23,160 --> 00:53:26,600
sides here are winners.
They had equity upside in this

999
00:53:26,600 --> 00:53:30,680
and both would do do very well
in, in due course.

1000
00:53:31,480 --> 00:53:36,480
I think the, the Evolution team
at at the time and perhaps some

1001
00:53:36,480 --> 00:53:39,760
of the the shareholders out
there didn't wait how important

1002
00:53:39,800 --> 00:53:42,880
that La Mancha alliance would be
that $100 million, which we're

1003
00:53:42,880 --> 00:53:46,880
going to talk about.
Because having that support you

1004
00:53:46,880 --> 00:53:49,480
through the next deal kind of
means you need to take both

1005
00:53:49,480 --> 00:53:53,600
deals into account at the same
time because you can't do like

1006
00:53:53,600 --> 00:53:54,720
the other one wouldn't have got
done.

1007
00:53:54,720 --> 00:53:58,000
And the other deal we're talking
about is, is cow huge.

1008
00:53:58,000 --> 00:54:03,160
And that is a phenomenal deal, a
a remarkable asset to to scoop

1009
00:54:03,160 --> 00:54:08,120
up from from a major and yeah,
in an environment where gold

1010
00:54:08,120 --> 00:54:13,120
prices are down a long way from
what they would have been many

1011
00:54:13,120 --> 00:54:16,160
years ago.
So let's talk about that deal,

1012
00:54:16,160 --> 00:54:19,160
mate.
Cal is Cal is the cash cow.

1013
00:54:19,880 --> 00:54:22,480
It is.
It is and it wasn't.

1014
00:54:22,480 --> 00:54:25,400
It wasn't so apparently clear at
the time.

1015
00:54:25,400 --> 00:54:28,080
Even shortly after the deal
there was criticism about this

1016
00:54:28,080 --> 00:54:31,840
deal, a lot of people saying oh,
you've overpaid for this one and

1017
00:54:31,840 --> 00:54:33,560
that is clearly not been the
case.

1018
00:54:34,000 --> 00:54:35,840
This was a this was a sale
process, right?

1019
00:54:36,160 --> 00:54:38,960
And only the actual like
announcement of the deal only

1020
00:54:39,320 --> 00:54:42,280
comes a month after La Muncha
deals announced.

1021
00:54:42,280 --> 00:54:44,320
But these things are kind of in
the works.

1022
00:54:44,320 --> 00:54:47,360
Like, yeah.
Yeah, absolutely.

1023
00:54:47,360 --> 00:54:51,960
And the same day that IGO bought
serious and wow the.

1024
00:54:52,440 --> 00:54:54,880
Two big deals on the same day.
Two big deals on the same day

1025
00:54:54,880 --> 00:54:57,560
and IGO Independence Group, as
they were called at the time,

1026
00:54:57,880 --> 00:55:02,320
were rumoured to be hunting
around looking at at cow as

1027
00:55:02,320 --> 00:55:04,960
well.
And they're a gold miner before

1028
00:55:05,120 --> 00:55:08,240
before serious, so it totally
makes sense that they were in

1029
00:55:08,240 --> 00:55:11,800
and about that sale process.
So they're buying COW for US,

1030
00:55:12,240 --> 00:55:16,880
550 million from Barrick,
undoubtedly better asset and

1031
00:55:17,080 --> 00:55:19,360
bigger price tag.
With stamp duty, we're talking

1032
00:55:19,360 --> 00:55:23,560
about 750 million Aussie dollars
that is bigger than their market

1033
00:55:23,560 --> 00:55:25,480
cap.
This is a big deal for the

1034
00:55:25,480 --> 00:55:27,040
company.
At the time Cow's doing about

1035
00:55:27,040 --> 00:55:33,200
250,000 oz and all in sustaining
cost over 15% lower than the,

1036
00:55:34,000 --> 00:55:37,040
the portfolio for those that
aren't familiar with the assets

1037
00:55:37,040 --> 00:55:40,320
sort of big at the time sort of
open cut project in kind of

1038
00:55:40,320 --> 00:55:44,800
central NSW, 7 and a half
million tonne per annum meal.

1039
00:55:45,400 --> 00:55:50,320
So it's a, it's a large scale
lower grade goldmine.

1040
00:55:50,320 --> 00:55:54,160
And the mine life of the project
at the time was only out till

1041
00:55:54,160 --> 00:55:56,360
2024.
We're in 2015.

1042
00:55:56,600 --> 00:55:59,480
So it's, it's not a long mine
life and there's I think about

1043
00:55:59,480 --> 00:56:02,200
800,000 ounces sitting on the
stockpiles.

1044
00:56:02,200 --> 00:56:04,720
So mining was only actually
going to stop in like 2020

1045
00:56:04,720 --> 00:56:06,520
roughly.
And they were just going to

1046
00:56:06,840 --> 00:56:11,200
process the stockpiles for the
few years after that, which is

1047
00:56:11,200 --> 00:56:14,800
the downside of the massive
upside if you can prove it out

1048
00:56:14,800 --> 00:56:16,440
and prove that there is a longer
life here.

1049
00:56:16,800 --> 00:56:18,720
Well, that's there's a
difference between like limited

1050
00:56:18,720 --> 00:56:22,040
mine life because yeah,
mineralization actually ends.

1051
00:56:22,080 --> 00:56:26,840
And then there's these type of
assets which have much, much,

1052
00:56:26,840 --> 00:56:30,680
much longer mine lives than then
you're paying for in reserves at

1053
00:56:30,680 --> 00:56:32,800
any point in time.
Because yeah, you do another

1054
00:56:32,800 --> 00:56:36,200
cutback or, or, or or the likes
and you've got, you've got

1055
00:56:36,320 --> 00:56:38,000
mineralisation extending a
depth.

1056
00:56:39,000 --> 00:56:41,400
Like let's, let's underline
that, let's pull that forward

1057
00:56:41,400 --> 00:56:43,640
right now from like one of the
talking points later on.

1058
00:56:44,440 --> 00:56:48,760
Optionality and mine life are
underrated in in MPV studies.

1059
00:56:49,600 --> 00:56:53,160
This asset is now going to live
on to 2042.

1060
00:56:53,160 --> 00:56:57,480
It is doing over 300,000 oz per
annum and it's doing it at an

1061
00:56:57,480 --> 00:57:00,760
all in sustaining cost of I
think about 1400 Aussie.

1062
00:57:01,600 --> 00:57:06,520
The optionality really rings
true when commodity prices shoot

1063
00:57:06,520 --> 00:57:09,120
through the roof like they do
every so often.

1064
00:57:09,120 --> 00:57:11,240
It's not a common thing, but
that is a point in time we're

1065
00:57:11,240 --> 00:57:15,320
living at right now.
And had you sort of modelled at

1066
00:57:15,320 --> 00:57:19,080
the time 2024 you're not getting
that 2025 fantastic gold price.

1067
00:57:19,560 --> 00:57:22,760
But now the the amount of money
it's going to make this year is

1068
00:57:22,760 --> 00:57:26,840
going to outdo many of many of
those years put together, right.

1069
00:57:27,200 --> 00:57:29,480
And that is something that Jake
would say, that is something

1070
00:57:29,480 --> 00:57:31,600
that a lot of the smart
investors in in our arena have

1071
00:57:31,600 --> 00:57:35,520
sort of said for a while that
optionality is underrated.

1072
00:57:35,520 --> 00:57:38,800
And we see it more and more with
the people that think super long

1073
00:57:38,800 --> 00:57:40,720
term about deal making in the
resource space.

1074
00:57:41,280 --> 00:57:45,640
It's, it's a, it's a true like
this is this is a, an asset that

1075
00:57:45,640 --> 00:57:47,720
really just transforms the
company.

1076
00:57:47,720 --> 00:57:50,640
This is like a corner.
This is a, this is a tier, tier

1077
00:57:50,640 --> 00:57:53,040
one asset.
I know it's not 500,000 oz but

1078
00:57:53,360 --> 00:57:56,680
you know, big reliable
production profile, long life,

1079
00:57:56,920 --> 00:57:59,440
low cost.
Tier 1 jurisdiction.

1080
00:57:59,480 --> 00:58:02,120
Far better than everything else
in their portfolio up until this

1081
00:58:02,120 --> 00:58:05,640
point in time.
And it moves evolution to be on

1082
00:58:05,640 --> 00:58:07,880
Oz, which is not how they'd look
at it.

1083
00:58:07,880 --> 00:58:11,000
But the second largest producer
in Australia.

1084
00:58:11,440 --> 00:58:14,320
Decent bit of debt they've
brought on board to to get this

1085
00:58:14,320 --> 00:58:16,560
deal done.
How did this deal get done?

1086
00:58:17,280 --> 00:58:20,320
Matt, this is a great story.
So like you mentioned,

1087
00:58:20,320 --> 00:58:23,400
competitive process, gold
fields, Z gin, they were

1088
00:58:23,400 --> 00:58:26,880
rumoured to be in and around it.
The Finn wrote after the deal

1089
00:58:26,880 --> 00:58:30,800
that an insider told Jake it'd
be a Bradbury if they won.

1090
00:58:30,800 --> 00:58:33,040
So for for non Aussies, you have
to search that one up on on

1091
00:58:33,040 --> 00:58:35,920
YouTube.
But when straight talk came out

1092
00:58:36,080 --> 00:58:39,120
and wrote about the deal in the
months prior, you've also got

1093
00:58:39,120 --> 00:58:42,760
Northern star independence, like
I mentioned, Regis Oz minerals

1094
00:58:43,080 --> 00:58:45,600
in and around the hoop there,
but the pieces fell into place

1095
00:58:45,600 --> 00:58:49,080
very late here.
So essentially before the Friday

1096
00:58:49,080 --> 00:58:52,080
when the bids are due, there is
a board meeting and there's a

1097
00:58:52,080 --> 00:58:56,640
lot of written about the price.
Is it, you know, 485?

1098
00:58:56,640 --> 00:58:58,880
Is it 500?
Is it 525 that we're going to

1099
00:58:58,880 --> 00:59:02,240
have to pay?
And they're wanting a bit of

1100
00:59:02,240 --> 00:59:05,960
guidance from, you know, perhaps
the senior people in the within

1101
00:59:05,960 --> 00:59:08,400
the board.
And as we kind of heard it was

1102
00:59:08,400 --> 00:59:13,000
Jim Askew who inverted the
question and a great, great

1103
00:59:13,000 --> 00:59:17,160
insight here is how do you feel
or what would be the outcome if

1104
00:59:17,160 --> 00:59:20,680
we didn't win this?
And that kind of sick feeling in

1105
00:59:20,680 --> 00:59:24,720
their in their stomach at the
thought of losing out by fifteen

1106
00:59:24,720 --> 00:59:27,320
$20 million is what spurred them
on.

1107
00:59:27,400 --> 00:59:30,920
And they actually bid an extra
50 million U.S. dollars on what

1108
00:59:30,920 --> 00:59:36,160
they'd previously planned.
So they go from 500 to 550

1109
00:59:36,160 --> 00:59:37,800
million.
These numbers are 10 years old,

1110
00:59:37,800 --> 00:59:39,560
but that's that's how it's sort
of remembered.

1111
00:59:40,040 --> 00:59:43,120
When, when you're confronted
with what does My Portfolio look

1112
00:59:43,120 --> 00:59:46,480
like if I don't have this and
there's some, there's some harsh

1113
00:59:46,480 --> 00:59:50,960
realities about that, then it
actually encouraged them to to

1114
00:59:50,960 --> 00:59:54,160
pay what was considered overs.
Right.

1115
00:59:54,160 --> 00:59:56,800
And what's what's 50 million
bucks if it goes right?

1116
00:59:57,040 --> 01:00:00,960
Hey, so on the Saturday, Barrett
give Evos the call, say let's

1117
01:00:00,960 --> 01:00:03,720
catch up Sunday.
And they're worried, Jake's

1118
01:00:03,720 --> 01:00:06,120
worried, they're thinking they
might get the treatment.

1119
01:00:06,480 --> 01:00:09,080
The other guys are in the the
room over there, the other ones

1120
01:00:09,080 --> 01:00:12,120
are just over there.
And this is an open auction.

1121
01:00:12,120 --> 01:00:14,040
Now, what's your best, you know,
you're close, but what's your

1122
01:00:14,040 --> 01:00:16,920
best offer?
But lo and behold, the asset was

1123
01:00:16,920 --> 01:00:19,120
theirs, 550 million U.S.
dollars.

1124
01:00:19,520 --> 01:00:22,480
Got it done.
And you know, we've, we've said

1125
01:00:22,480 --> 01:00:26,280
it a bunch of times, but this is
a undoubted portfolio improver.

1126
01:00:26,560 --> 01:00:30,680
The they would always sort of
show this this great chart,

1127
01:00:31,000 --> 01:00:34,320
simple but great that
effectively shows the the margin

1128
01:00:34,320 --> 01:00:38,960
on your Y axis, the the mine
life on your axis and you know

1129
01:00:38,960 --> 01:00:41,560
things are going up and to the
right, which is always a kind of

1130
01:00:41,560 --> 01:00:44,080
good sign.
But in the months afterwards,

1131
01:00:44,080 --> 01:00:48,120
Jake is seriously concerned that
he materially overpaid people

1132
01:00:48,240 --> 01:00:50,000
are.
There's criticism, There's Yep,

1133
01:00:50,000 --> 01:00:52,880
the.
Yeah, the analysts are, are, are

1134
01:00:52,880 --> 01:00:55,880
saying that they've overpaid.
I mean you you run an NPV at

1135
01:00:55,880 --> 01:00:58,200
consensus gold price.
They overpaid.

1136
01:00:58,280 --> 01:01:00,960
And to your point on the the
analysts, we had a great quip

1137
01:01:01,080 --> 01:01:03,600
the the analysts don't know what
to value the thing at you just

1138
01:01:03,600 --> 01:01:06,120
tell them what the what the
asset is worth it's.

1139
01:01:06,680 --> 01:01:09,360
Worth what you paid?
Made made me chuckle.

1140
01:01:10,520 --> 01:01:12,840
You, you mentioned something
earlier as well, Trev, which I

1141
01:01:12,840 --> 01:01:17,520
think is super important with
the, the context of the asset

1142
01:01:17,520 --> 01:01:21,160
and how it kind of been treated.
There were quality ideas within

1143
01:01:21,160 --> 01:01:25,000
the people on site, but Barrick
hadn't been investing for 3/3

1144
01:01:25,000 --> 01:01:26,480
long years.
They hadn't really been

1145
01:01:26,480 --> 01:01:31,880
investing in the asset.
So the, the, the group that ran

1146
01:01:31,880 --> 01:01:34,920
the asset there, which would be
coming on to, to Evolution, they

1147
01:01:34,920 --> 01:01:37,520
had ideas, they, they had stuff
they wanted to do, they had

1148
01:01:37,520 --> 01:01:40,680
leads they wanted to chase up,
you know, and on the back of

1149
01:01:40,680 --> 01:01:44,280
that, the asset goes from having
1.6 million ounces to nearly

1150
01:01:44,280 --> 01:01:46,240
doubling in, in less than a
year.

1151
01:01:46,280 --> 01:01:49,080
Like they're just given the
capital to chase up these things

1152
01:01:49,440 --> 01:01:52,040
more recently, like I said, out
to 2042.

1153
01:01:52,040 --> 01:01:55,160
So they've been sort of kicking
goal after goal there.

1154
01:01:55,160 --> 01:01:57,080
And it's, it's kind of
remarkable.

1155
01:01:57,080 --> 01:02:01,840
If you'd gone into the $250
million raise that they did to

1156
01:02:01,840 --> 01:02:06,840
get this deal done, which the La
Mancha group took half of, you

1157
01:02:06,840 --> 01:02:09,120
would have compounded your money
at 30% per annum.

1158
01:02:09,120 --> 01:02:11,800
And I know that's, that's a bit
skewed by the last 6 or so

1159
01:02:11,800 --> 01:02:15,880
months, but that is a a great,
great return on a long time

1160
01:02:15,880 --> 01:02:18,760
period, 10 years since that deal
was done, more than 10 years

1161
01:02:18,760 --> 01:02:23,560
since that deal was done.
And this is also looking at all

1162
01:02:23,560 --> 01:02:27,240
the deals that have done.
This is the one that management

1163
01:02:27,240 --> 01:02:30,840
most commonly sites, you know,
this is the, the go to deal, the

1164
01:02:30,840 --> 01:02:34,120
asset that stood head and
shoulders above the other ones.

1165
01:02:34,120 --> 01:02:38,600
And yeah, I mean, we're, we're
looking at a a mine that

1166
01:02:38,600 --> 01:02:42,880
analysts call roughly $6 billion
of net asset value within the

1167
01:02:42,880 --> 01:02:46,240
portfolio today.
That's that's pretty remarkable.

1168
01:02:46,600 --> 01:02:50,440
But it yeah, it goes to net
asset value of of 6 billion

1169
01:02:50,440 --> 01:02:54,000
today versus what would have
been would have been US 500 back

1170
01:02:54,000 --> 01:02:58,160
then thanks to my life
extensions, but but also thanks

1171
01:02:58,160 --> 01:03:03,480
to thanks to gold price bull
market that that makes that

1172
01:03:03,480 --> 01:03:05,760
makes these deals look look
phenomenal.

1173
01:03:05,960 --> 01:03:08,440
You know, you can't understand
the fact that the the gold price

1174
01:03:08,440 --> 01:03:12,320
has has been a huge tailwind for
for evolutions growth. 100% it's

1175
01:03:12,320 --> 01:03:16,120
been a phenomenal tailwind and I
want to talk a little bit about

1176
01:03:16,120 --> 01:03:18,400
this talk that that Jake gave.
He gave it a a bit after the

1177
01:03:18,400 --> 01:03:20,720
time period he gave it in 2016
at the Melbourne Mining Club.

1178
01:03:21,800 --> 01:03:24,800
A phenomenal talk to to listen
to on the gold price.

1179
01:03:24,800 --> 01:03:28,920
It's really interesting because
that speech when he, you know,

1180
01:03:28,920 --> 01:03:30,880
the snippets he talks about the
gold price could have been given

1181
01:03:30,880 --> 01:03:33,360
today, talking about government
debts around the world and all

1182
01:03:33,360 --> 01:03:35,160
these sorts of things.
It's very interesting.

1183
01:03:35,160 --> 01:03:37,720
So it's not as if they didn't,
you know, I don't think they

1184
01:03:37,720 --> 01:03:39,760
would have forecast the gold
price being where it is today,

1185
01:03:40,160 --> 01:03:42,680
but they knew they the, the game
they were playing.

1186
01:03:43,840 --> 01:03:48,480
Beyond that, he spoke about the
five attributes that make a top

1187
01:03:48,480 --> 01:03:50,160
gold miner.
And I want to highlight these

1188
01:03:50,160 --> 01:03:54,160
because I thought it was such a,
such a, a stellar talk and

1189
01:03:54,680 --> 01:03:56,800
understanding of what makes a
good gold miner.

1190
01:03:56,800 --> 01:04:01,160
So point #1 efficient, high
quality assets that operate at a

1191
01:04:01,160 --> 01:04:03,880
low cost with at least one
cornerstone asset.

1192
01:04:04,760 --> 01:04:07,520
That cornerstone asset has the
lowest quartile costs in a long

1193
01:04:07,520 --> 01:04:11,840
mine life. 2, Consistently
discovering more answers at your

1194
01:04:11,840 --> 01:04:16,080
operations. 3, financially
disciplined with strong,

1195
01:04:16,120 --> 01:04:20,640
uncomplicated balance sheets. 4,
having resilience based upon a

1196
01:04:20,640 --> 01:04:23,880
strong people culture.
And five, investing smartly.

1197
01:04:24,440 --> 01:04:26,520
And I like this for a bunch of
reasons.

1198
01:04:27,160 --> 01:04:30,600
Firstly, you know, he's, he's
clearly studied the, the great

1199
01:04:30,600 --> 01:04:34,720
gold mining companies that came
before them like he would, he

1200
01:04:34,720 --> 01:04:36,680
would reference Randgold in the
talk.

1201
01:04:37,200 --> 01:04:39,320
He's previously mentioned
Normandy and others.

1202
01:04:39,320 --> 01:04:42,040
But he he understands that the,
the history, the cyclicality of

1203
01:04:42,040 --> 01:04:44,920
the business and, and what makes
a company which I which I really

1204
01:04:44,920 --> 01:04:46,920
kind of like.
Would have banked plenty of them

1205
01:04:46,920 --> 01:04:49,880
at at Macquarie in, in the
bullion days.

1206
01:04:49,880 --> 01:04:53,120
And yeah, I do think, I don't
think that's a reflection of

1207
01:04:53,120 --> 01:04:54,520
Jake.
He's like he's, he's often been

1208
01:04:54,520 --> 01:04:58,120
a big thinker about the yeah,
what, what creates great gold

1209
01:04:58,120 --> 01:05:01,440
miners.
I've, I've, I've seen that in

1210
01:05:01,440 --> 01:05:04,520
more recent times when he would,
when he would talk about, you

1211
01:05:04,520 --> 01:05:06,000
know, again, tying it back to
China.

1212
01:05:06,000 --> 01:05:08,920
And he talks about he's, he's
talked, he's talked thoroughly

1213
01:05:08,920 --> 01:05:11,840
about it by that Nico.
He's talked about Sejin many

1214
01:05:11,840 --> 01:05:14,400
times in in the modern era.
Absolutely.

1215
01:05:15,320 --> 01:05:19,640
So Next up to round out 2015,
we've got a bidding war with of

1216
01:05:19,640 --> 01:05:22,600
all companies, Zizhen over
Phoenix Gold.

1217
01:05:22,760 --> 01:05:25,160
They end up paying 50 million
bucks for the land around

1218
01:05:25,160 --> 01:05:28,080
Mangari.
And here's where the cash flow

1219
01:05:28,080 --> 01:05:30,600
that you mentioned before kicks
in, $400 million in net mine

1220
01:05:30,600 --> 01:05:34,720
cash flow in FY16.
They rapidly start paying down

1221
01:05:35,000 --> 01:05:38,120
the debt.
They had roughly $600 million

1222
01:05:38,120 --> 01:05:40,800
and pay more than half down in
one year.

1223
01:05:41,400 --> 01:05:46,040
And if you look at the answers,
they're doing that rate that

1224
01:05:46,040 --> 01:05:48,120
they're going out there, they
produce less oz today.

1225
01:05:48,240 --> 01:05:52,000
So goes to show that they've
actually lived up to the, the

1226
01:05:52,000 --> 01:05:56,080
ounces of the margin kind of
mantra and continue to to tweak

1227
01:05:56,080 --> 01:05:58,280
the portfolio on the way
through.

1228
01:05:58,280 --> 01:06:02,280
And coming into 2016, sentiment
really shifts all of a sudden

1229
01:06:02,280 --> 01:06:04,120
very quickly.
Goldie's are out of the Symbian

1230
01:06:04,120 --> 01:06:06,080
and they're, they're in Fuego
again.

1231
01:06:06,160 --> 01:06:09,720
People are loving them the the
stock prices jumping up

1232
01:06:10,240 --> 01:06:14,200
Evolution stock price more than
double s in in a year and

1233
01:06:14,640 --> 01:06:15,880
they're they're well on their
way.

1234
01:06:15,880 --> 01:06:20,160
And that brings us to August of
2016 where they divest their

1235
01:06:20,160 --> 01:06:22,880
first asset for jingo that had
it in the portfolio.

1236
01:06:22,880 --> 01:06:27,920
We started the the story just
about there for 5 odd years and

1237
01:06:27,920 --> 01:06:31,320
it's time to offload the asset.
They get 42,000,000 bucks for

1238
01:06:31,320 --> 01:06:34,080
this one but it's.
They sell it to Ninja.

1239
01:06:34,320 --> 01:06:36,480
They sell it to Ninja.
Yeah, I think it's really

1240
01:06:36,480 --> 01:06:38,920
important to show because
they've spoken about it for this

1241
01:06:39,840 --> 01:06:42,880
at this point in time for, for
over 5 years, you improve the

1242
01:06:42,880 --> 01:06:46,520
portfolio quality by both
divesting as well as investing.

1243
01:06:46,680 --> 01:06:49,320
And now they're finally walking
the walk on that one.

1244
01:06:49,320 --> 01:06:51,560
And they've divested their,
their first asset.

1245
01:06:53,360 --> 01:06:58,520
And then the Ernest Henry deal.
This is the deal that made me

1246
01:06:58,520 --> 01:07:01,000
want to do this episode.
This is an unbelievable deal.

1247
01:07:01,000 --> 01:07:03,280
It's interesting for so many
reasons.

1248
01:07:03,280 --> 01:07:06,160
And I'm I'm excited to to RIP
into it just one week after the

1249
01:07:06,160 --> 01:07:11,600
sale of Pijingo in between which
the full year results came out

1250
01:07:11,600 --> 01:07:12,760
and there was an interesting
sort of.

1251
01:07:14,240 --> 01:07:16,520
Who's full year results,
evolutions, evolutions, OK.

1252
01:07:16,920 --> 01:07:20,520
There was an interesting
interaction played through the

1253
01:07:20,520 --> 01:07:25,240
media here where Jake said we
are continuing to look at deals,

1254
01:07:25,240 --> 01:07:29,080
We are continually looking at
deals and one of the big

1255
01:07:29,080 --> 01:07:32,080
shareholders, Ellen Gray just
said calm down, focus on your

1256
01:07:32,080 --> 01:07:35,720
portfolio, you know, but they
didn't listen to that.

1257
01:07:36,200 --> 01:07:38,400
They were.
They were, yeah, they were

1258
01:07:38,400 --> 01:07:43,040
aggressive at the right times.
$880 million purchase of an

1259
01:07:43,040 --> 01:07:44,720
economic interest in Ernest
Henry.

1260
01:07:45,920 --> 01:07:49,440
This is economic interest.
Economic interest.

1261
01:07:49,440 --> 01:07:52,640
This is a fast.
This is just like anyone that's

1262
01:07:52,640 --> 01:07:56,800
ever looked at A at a an all in
sustaining cost or cost curve

1263
01:07:56,800 --> 01:07:59,760
chart for Australian gold
producers would just be

1264
01:07:59,760 --> 01:08:02,560
scratching their head.
Why is there this big block at

1265
01:08:02,560 --> 01:08:05,160
the beginning that goes steeply
negative?

1266
01:08:05,520 --> 01:08:07,520
And it's always earnest Henry
and you're like, what the like

1267
01:08:07,520 --> 01:08:09,840
something doesn't produce at a
negative all in sustaining cost

1268
01:08:09,840 --> 01:08:11,880
doesn't make any sense.
Yeah, maybe we'll clear that one

1269
01:08:11,880 --> 01:08:15,760
up right now for for anyone
that's gone this far that

1270
01:08:15,760 --> 01:08:17,479
doesn't look at mining companies
like we do.

1271
01:08:18,359 --> 01:08:23,319
When when you look at the the
revenues of a mine that produces

1272
01:08:23,319 --> 01:08:26,720
multiple commodities, you take
the the byproducts, the the

1273
01:08:26,720 --> 01:08:31,080
lesser commodity if you like and
you subtract it from the costs.

1274
01:08:31,319 --> 01:08:35,479
So the all in sustaining costs
can look remarkable.

1275
01:08:35,800 --> 01:08:39,960
And evolution understood this,
no accident here.

1276
01:08:40,560 --> 01:08:44,160
They understood what the
marketing of gold miner looks

1277
01:08:44,160 --> 01:08:47,520
like.
They understood what generalist

1278
01:08:47,520 --> 01:08:50,080
investors will look at when they
come into the space, you know,

1279
01:08:51,040 --> 01:08:54,520
tier one assets, you know, in
Australia, very low cost, all

1280
01:08:54,520 --> 01:08:56,040
these things.
They got it.

1281
01:08:56,040 --> 01:08:59,720
And Ernest Henry just checked a
lot of those boxes.

1282
01:08:59,720 --> 01:09:02,960
But I had to pay $900 million if
you take into account the

1283
01:09:02,960 --> 01:09:05,000
transaction costs.
And obviously they're going to

1284
01:09:05,000 --> 01:09:08,120
pay 30% of the future costs for
this economic interest.

1285
01:09:08,120 --> 01:09:12,439
They would be getting all of the
gold produced here and 30% of

1286
01:09:12,800 --> 01:09:16,720
the copper and silver within
that life of mine area, which

1287
01:09:16,720 --> 01:09:21,080
was to a sort of certain RL.
They would do a roughly $400

1288
01:09:21,080 --> 01:09:24,560
million entitlement offer at
over 2 bucks.

1289
01:09:24,560 --> 01:09:28,479
So like I said, more than a
doubling of the share price from

1290
01:09:28,479 --> 01:09:31,840
when they did the cow raise.
Partially debt funding and

1291
01:09:31,960 --> 01:09:34,920
equity then.
Half a billion dollar term loan

1292
01:09:35,080 --> 01:09:39,000
to get this one done as well and
a pre emptive right, Another pre

1293
01:09:39,000 --> 01:09:40,720
emptive right.
They get the pre emptive right

1294
01:09:40,920 --> 01:09:42,920
in this case.
Nice, nice.

1295
01:09:43,000 --> 01:09:46,880
The, The vendor made Glencore.
Now, why is this?

1296
01:09:47,000 --> 01:09:49,080
Why is this like an important
and interesting point?

1297
01:09:49,080 --> 01:09:52,520
Because Glencore's got a
reputation for always having the

1298
01:09:52,520 --> 01:09:55,760
hooks in deals that they do.
They kind of, you always have

1299
01:09:55,920 --> 01:09:58,760
have one over or they, they,
they sneak something in there.

1300
01:09:58,760 --> 01:10:02,120
But you know, this is this is a
tremendous deal because

1301
01:10:02,960 --> 01:10:06,240
Evolution got the last laugh and
they've they've done, they've

1302
01:10:06,240 --> 01:10:09,480
done a great deal and they did
that deal with Glencore.

1303
01:10:10,200 --> 01:10:14,360
Totally.
So I mean, why, why do Evolution

1304
01:10:14,560 --> 01:10:16,360
want this?
Obviously there's the marketing

1305
01:10:16,680 --> 01:10:21,200
that we've we've spoken about,
but Ernest Henry is also a

1306
01:10:21,200 --> 01:10:25,880
decent scale long life copper
gold project with plenty of

1307
01:10:25,880 --> 01:10:28,640
growth potential.
It's had plenty of capital

1308
01:10:28,640 --> 01:10:30,240
invested in it.
So it's not going to be super

1309
01:10:30,240 --> 01:10:34,280
capital hungry.
They also had Mark Lemegia, the,

1310
01:10:34,280 --> 01:10:37,720
the CEO at Evolution who knew
the asset inside out.

1311
01:10:37,720 --> 01:10:42,200
He'd he'd worked there and they
knew with that pre emptive right

1312
01:10:42,200 --> 01:10:44,960
they'd be in the box seat to to
collect it down the track.

1313
01:10:45,800 --> 01:10:51,240
And they had a, a forced seller.
They knew, I mean Glencore had

1314
01:10:51,240 --> 01:10:55,320
gone and said we are
deleveraging, we are in a lot of

1315
01:10:55,320 --> 01:10:56,480
strife.
Everyone knew it.

1316
01:10:56,920 --> 01:11:01,960
And we are not wanting to sell
copper units of production, but

1317
01:11:02,280 --> 01:11:05,000
we want cash in the door.
Hence, if you could come to them

1318
01:11:05,000 --> 01:11:08,800
with a a creative solution,
they'd be willing to listen.

1319
01:11:08,880 --> 01:11:11,520
They were, they were actively
running sale processes in

1320
01:11:11,520 --> 01:11:12,840
various parts of their
portfolio.

1321
01:11:12,920 --> 01:11:14,640
I mean, they're, they weren't a
real pickle.

1322
01:11:14,640 --> 01:11:16,840
People were writing articles
about the demise of Clancor and

1323
01:11:16,840 --> 01:11:18,560
the likes.
There was a lot of debt there

1324
01:11:18,560 --> 01:11:22,520
and they had to they had to
deliver imminently ahead of

1325
01:11:22,560 --> 01:11:24,920
their own reporting period
dates.

1326
01:11:25,160 --> 01:11:27,640
Yeah.
So, so a quick sort of synopsis

1327
01:11:27,640 --> 01:11:32,240
of the the sales process is that
in late 2015, they kick off a

1328
01:11:32,240 --> 01:11:39,080
sales process for CSA in Cobar.
They also start having a bit of

1329
01:11:39,080 --> 01:11:43,080
interactions with evolution on,
on Ernest Henry and they toy

1330
01:11:43,080 --> 01:11:46,560
with the idea.
But then it takes until about

1331
01:11:46,560 --> 01:11:50,200
April until things start to look
a bit more serious because

1332
01:11:50,200 --> 01:11:52,840
evolution is still chewing down
cow at that point in time.

1333
01:11:53,560 --> 01:11:56,720
They are still chewing down the,
the Mangari, you know, assets

1334
01:11:56,760 --> 01:11:59,440
there and they've done that
Phoenix takeover.

1335
01:11:59,520 --> 01:12:04,000
But the bankers at RBC, they
pitch this deal again in March,

1336
01:12:04,000 --> 01:12:06,520
April 2016, this time as a joint
venture.

1337
01:12:07,240 --> 01:12:10,000
And come April, they sort of
formulate a plan.

1338
01:12:10,720 --> 01:12:13,440
End of that month, they present
this plan to to Glencore.

1339
01:12:13,440 --> 01:12:15,680
And there's a bit of back and
forth for some time, but it

1340
01:12:15,680 --> 01:12:19,880
takes until July and August for
things to really start to heat

1341
01:12:19,920 --> 01:12:23,400
up because that CSA sales
process has crashed out.

1342
01:12:24,400 --> 01:12:28,600
Glencore needs the cash.
And by this point, you know,

1343
01:12:28,600 --> 01:12:34,440
late July Evo's table a take it
or leave it type of offer.

1344
01:12:34,640 --> 01:12:37,800
And they have met, they've met
with the copper king Telus, Mr.

1345
01:12:37,800 --> 01:12:41,160
Kiddies, the, you know, one of
the, the billionaires that came

1346
01:12:41,160 --> 01:12:46,200
out of, out of Glencore, very
famous copper trader and he's

1347
01:12:46,200 --> 01:12:51,160
sort of running copper there.
And they have a, an agreement in

1348
01:12:51,160 --> 01:12:55,920
principle, essentially $880
million is acceptable with a

1349
01:12:55,920 --> 01:12:58,240
bunch of conditions.
But we need this deal done by

1350
01:12:58,320 --> 01:13:01,800
August 24, which is an
outrageously quick turn around

1351
01:13:01,800 --> 01:13:04,120
time for a deal of this kind of
complexity.

1352
01:13:04,120 --> 01:13:06,840
I mean, they need to, amongst a
whole bunch of other things,

1353
01:13:06,840 --> 01:13:10,000
locking bank financing.
They need to get 5 banks to

1354
01:13:10,000 --> 01:13:13,840
commit $100 million each for a
deal they don't even have

1355
01:13:13,840 --> 01:13:15,200
recourse over.
They're not even going to own

1356
01:13:15,200 --> 01:13:17,280
the asset that.
Is an economic interest.

1357
01:13:17,400 --> 01:13:20,440
An economic interest, yeah.
And on the evolution side,

1358
01:13:20,440 --> 01:13:22,360
they're also selling Pijingo at
this point in time, they're

1359
01:13:22,360 --> 01:13:24,680
doing their full year numbers as
well.

1360
01:13:24,680 --> 01:13:28,880
So it's a busy, busy period
Glencore to hate the stress on

1361
01:13:29,240 --> 01:13:32,400
have the sale process for
lawless bias fall through in

1362
01:13:32,400 --> 01:13:35,240
early August as well.
So they're becoming increasingly

1363
01:13:35,640 --> 01:13:39,680
needy and the deal starts to
sort of happen.

1364
01:13:39,680 --> 01:13:43,680
A lot of these, these processes
in getting a deal done, which

1365
01:13:43,680 --> 01:13:47,000
are meant to happen in a series,
have to happen in parallel to

1366
01:13:47,000 --> 01:13:49,680
get a deal done.
To, to sort of emphasize the

1367
01:13:49,680 --> 01:13:55,800
point, Glencore's share price is
down nearly 70% from their IPO 5

1368
01:13:55,800 --> 01:13:58,600
odd years earlier.
So they start caving on these

1369
01:13:58,600 --> 01:14:01,240
conditions, like you say, that
they're so famous for, for

1370
01:14:01,240 --> 01:14:04,320
hooking into a deal.
And lo and behold, on August

1371
01:14:04,320 --> 01:14:07,760
24th, the deal is announced.
They went from, you know, within

1372
01:14:07,760 --> 01:14:10,520
about four months from just a
concept to having a final

1373
01:14:10,520 --> 01:14:14,360
bidding deal with a company that
many in the industry would call

1374
01:14:14,360 --> 01:14:17,000
the best negotiators there are
just remarkable.

1375
01:14:18,080 --> 01:14:20,440
I, I think, I think it's, it's
wicked.

1376
01:14:20,440 --> 01:14:23,920
I think there's like there's a
lot of reflections to be had on

1377
01:14:23,920 --> 01:14:26,680
the actual, you know, deal
structure and how it got to

1378
01:14:26,680 --> 01:14:31,600
where it did and what that
actually like meant for the look

1379
01:14:31,600 --> 01:14:33,960
of evolution.
Right, because because Evo's

1380
01:14:34,160 --> 01:14:37,360
Evo's yeah, toy the idea of all,
well, you don't want to part

1381
01:14:37,360 --> 01:14:39,720
with the, the copper.
Can we get the gold?

1382
01:14:39,720 --> 01:14:43,520
And so then some back and forth
he's had with toying with with

1383
01:14:43,520 --> 01:14:46,000
the gold interest.
But what what actually ends up,

1384
01:14:46,080 --> 01:14:48,040
you know, you have to you have
to meet both parties interests.

1385
01:14:48,040 --> 01:14:52,880
So it was it was clearly
critical for Evo's to get they

1386
01:14:52,880 --> 01:14:56,120
still got 30% of the the copper
interest as well, right in a in

1387
01:14:56,120 --> 01:15:00,280
a certain designated area that
copper critically important to

1388
01:15:00,280 --> 01:15:01,760
the all in sustaining cost
dynamic.

1389
01:15:01,840 --> 01:15:05,760
You know, you need to have a by
product in order to offset your,

1390
01:15:06,080 --> 01:15:09,240
your like to, to be netted off
of the, the, the, the gold price

1391
01:15:09,240 --> 01:15:12,080
so that you can actually have a,
a negative or in sustaining

1392
01:15:12,080 --> 01:15:13,000
costs.
I don't think they thought it

1393
01:15:13,000 --> 01:15:14,760
was going to be negative.
I think they, they

1394
01:15:14,760 --> 01:15:17,480
underestimated how much the
copper would contribute here.

1395
01:15:17,480 --> 01:15:19,760
So that was a positive surprise
that actually became a negative

1396
01:15:19,760 --> 01:15:24,800
number, which seems absurd.
But then on the yeah, on, on the

1397
01:15:24,800 --> 01:15:29,040
other hand, the way it was, the
way it was accounted as well.

1398
01:15:29,040 --> 01:15:31,440
So they, they structured the
deal as an economic interest.

1399
01:15:31,440 --> 01:15:35,200
It's equity accounted from day
one now that that further has

1400
01:15:35,200 --> 01:15:38,160
implications for your all in
sustaining cost as well.

1401
01:15:38,200 --> 01:15:41,720
It it wasn't a coincidence the
way that that this deal was

1402
01:15:41,720 --> 01:15:46,320
structured, it gave it gave
evolution a completely unfair

1403
01:15:46,320 --> 01:15:48,560
advantage in marketing
themselves as a low cost

1404
01:15:48,560 --> 01:15:52,600
producer.
Albeit it was a facade, but.

1405
01:15:52,840 --> 01:15:57,240
It totally the I mean to to go
on with the complexities you're

1406
01:15:57,240 --> 01:15:59,880
talking about, you're going to
share the numbers of a Glencore

1407
01:15:59,880 --> 01:16:02,200
mine with the the Ato?
Hell no you're not.

1408
01:16:02,440 --> 01:16:06,480
Like all that negotiation needs
to take place in such a confined

1409
01:16:06,840 --> 01:16:08,200
period of time.
It was.

1410
01:16:08,200 --> 01:16:10,400
Conditional on Ferb, it was
conditional on there's, yeah, a

1411
01:16:10,400 --> 01:16:12,840
whole bunch of stuff going on.
Here, Yeah, they needed to raise

1412
01:16:13,320 --> 01:16:15,280
a lot of money to get this deal
done.

1413
01:16:15,560 --> 01:16:19,440
And yeah, just just remarkable.
What's your competitive

1414
01:16:19,440 --> 01:16:20,840
advantage?
Like we mentioned before,

1415
01:16:21,000 --> 01:16:23,840
handling deal complexity check
and check they've they've done

1416
01:16:23,840 --> 01:16:27,560
that phenomenally here.
And this was also interesting

1417
01:16:27,560 --> 01:16:29,720
because a lot of the gold assets
in Australia had started to

1418
01:16:29,720 --> 01:16:32,360
trade, you know, at higher
values.

1419
01:16:32,360 --> 01:16:37,240
So finding a seller who the
timing worked for, they had to

1420
01:16:37,240 --> 01:16:39,040
be creative.
Like we just said, super, super

1421
01:16:39,040 --> 01:16:43,840
creative in in doing a deal here
to go back to your your

1422
01:16:43,840 --> 01:16:46,640
marketing point all in
sustaining cost by the next

1423
01:16:46,640 --> 01:16:50,320
year.
Evolution call themselves the

1424
01:16:50,320 --> 01:16:55,440
lowest cost global mid and major
mining company, gold mining

1425
01:16:55,440 --> 01:16:59,320
company the lowest cost and
Ernest Henry is a great

1426
01:16:59,320 --> 01:17:01,080
contributor to that that low
cost.

1427
01:17:01,800 --> 01:17:05,800
Absolutely helps that you've
got, you've got 100% of the gold

1428
01:17:05,800 --> 01:17:09,840
and only 30% of the copper.
Yeah.

1429
01:17:09,920 --> 01:17:12,360
Wow.
What a what what what a

1430
01:17:12,360 --> 01:17:15,400
remarkable asset to to call a a
gold mine.

1431
01:17:15,920 --> 01:17:18,280
I could, I could talk about that
deal for hours, but we'll, we'll

1432
01:17:18,280 --> 01:17:21,760
move on mate to fly over the
next little period.

1433
01:17:22,160 --> 01:17:24,600
Again, they just hammer down the
debt payments.

1434
01:17:24,600 --> 01:17:26,720
They start with about 600
million and they pay off more

1435
01:17:26,720 --> 01:17:30,480
than half again in the space of
the one year sort of following

1436
01:17:30,480 --> 01:17:33,600
this deal, call it 10 months
with Ernest Henry integrated.

1437
01:17:34,360 --> 01:17:37,800
They then sell Edna May.
So another deal from the the

1438
01:17:37,800 --> 01:17:41,720
foundational merger that's
coming late in, in 2017 that

1439
01:17:41,720 --> 01:17:44,960
sort of received several offers.
No surprises here.

1440
01:17:44,960 --> 01:17:49,960
Edna May was the the lowest
quality asset in the portfolio.

1441
01:17:49,960 --> 01:17:52,360
Just look at this chart here.
You can see the the margins

1442
01:17:52,360 --> 01:17:55,440
really struggling there.
If you're, if you're listening

1443
01:17:55,440 --> 01:17:58,640
into the the podcast, the EBITDA
margins across most of the

1444
01:17:58,640 --> 01:18:01,440
assets around 50% and Edna May
is below 20%.

1445
01:18:02,080 --> 01:18:05,720
And as we heard from the team,
we hated Edna May, so good to

1446
01:18:05,720 --> 01:18:08,080
get that one off.
They sell it to Remelius.

1447
01:18:08,160 --> 01:18:11,000
They sell it to Remelius, paying
up to 90 million, 40 million in

1448
01:18:11,000 --> 01:18:14,840
cash upfront.
The other 50 is contingent and

1449
01:18:15,520 --> 01:18:18,480
you know perhaps marginally
below what consensus thought the

1450
01:18:18,480 --> 01:18:21,760
asset was, was worth.
But these are relatively

1451
01:18:21,760 --> 01:18:25,560
insignificant sums here and good
to to get that one off because

1452
01:18:26,000 --> 01:18:30,960
the portfolio improves again,
the mine life goes up the the

1453
01:18:30,960 --> 01:18:33,360
average all in sustaining cost
improves because it was a higher

1454
01:18:33,360 --> 01:18:37,600
cost asset.
And they are making their way on

1455
01:18:37,600 --> 01:18:40,600
those stepping stones to being a
company with a portfolio of

1456
01:18:40,600 --> 01:18:42,960
assets that are much higher
quality than they were just a

1457
01:18:42,960 --> 01:18:45,200
few short years before an.
Interesting.

1458
01:18:45,200 --> 01:18:47,840
Edna May served as a great
stepping stone for Emilius too.

1459
01:18:48,640 --> 01:18:50,880
Now we've got a period where
they're scratching their heads a

1460
01:18:50,880 --> 01:18:53,240
bit because there's not an
abundance of opportunities out

1461
01:18:53,240 --> 01:18:54,400
there.
You don't have 4 sellers

1462
01:18:54,400 --> 01:18:56,440
anymore.
The gold price is starting to

1463
01:18:56,440 --> 01:18:59,200
tick up, but operationally the
company is just checking the

1464
01:18:59,200 --> 01:19:03,360
boxes. 7th year in a row they
achieve production guidance and

1465
01:19:03,360 --> 01:19:09,240
cost guidance in in FY18 and by
20-19 about three years after

1466
01:19:09,240 --> 01:19:11,200
the Ernest Henry deal, they're
on the prowl again.

1467
01:19:11,280 --> 01:19:16,200
Balance sheet very healthy.
They are a $4.5 billion market

1468
01:19:16,200 --> 01:19:21,000
cap company and growing.
And just a quick one, in Feb of

1469
01:19:21,000 --> 01:19:23,560
2019 actually they they spin up
a bit of an unusual one.

1470
01:19:23,560 --> 01:19:25,520
They take a 20% stake in
Tribune.

1471
01:19:25,520 --> 01:19:28,760
Now unfortunately, we don't talk
about this one too much more as

1472
01:19:28,760 --> 01:19:32,000
much as I'd love to, but Tribune
of course with the JV partners

1473
01:19:32,000 --> 01:19:36,320
with Northern Star in the EKJV,
this one sort of goes quiet for

1474
01:19:36,320 --> 01:19:37,680
a while because they weren't
able to get too.

1475
01:19:37,680 --> 01:19:40,840
Far away, yeah, I mean it would
it would it would later become

1476
01:19:41,160 --> 01:19:43,680
very relevant again.
But clearly the intentions are

1477
01:19:43,680 --> 01:19:47,360
signalled that of course it
makes sense for the for the OR

1478
01:19:47,360 --> 01:19:51,160
at East Kendana to feed the
Magari Mill as opposed to what

1479
01:19:51,320 --> 01:19:54,320
Northern Star were having to
which is which was whole it

1480
01:19:54,560 --> 01:19:56,840
much, much further it.
Makes it makes too much sense

1481
01:19:56,840 --> 01:20:00,040
but sometimes take things take a
little while to to work out.

1482
01:20:00,320 --> 01:20:01,840
But we got a juicy deal before
that, mate.

1483
01:20:02,360 --> 01:20:05,280
Before that, sorry mate.
Why did Northern Star not do the

1484
01:20:05,280 --> 01:20:07,600
deal with the Lamancho if the
synergies are so obvious?

1485
01:20:08,040 --> 01:20:09,440
I've asked that to so many
people.

1486
01:20:10,480 --> 01:20:13,600
Nobody has told me the answer.
Yeah, maybe we should just give

1487
01:20:13,600 --> 01:20:18,000
Northern Star a call.
Yeah, it it just seems so

1488
01:20:18,000 --> 01:20:22,160
obvious.
And I mean, it would in in

1489
01:20:22,160 --> 01:20:26,440
another incarnation happen down
the track here, but not crystal

1490
01:20:26,440 --> 01:20:28,200
clear to me why why that deal
didn't happen.

1491
01:20:28,280 --> 01:20:30,920
They preoccupied themselves.
Yeah, I'm sure.

1492
01:20:30,920 --> 01:20:34,560
I'm sure like Lamont would have
approached Norman Starr having

1493
01:20:34,560 --> 01:20:37,680
said that, like, there was a
view out there that that Evo's

1494
01:20:37,680 --> 01:20:40,480
overpaid for.
Like there was there was a view

1495
01:20:40,480 --> 01:20:42,760
that they paid too much.
So maybe, maybe, maybe there's

1496
01:20:42,760 --> 01:20:43,480
no.
Discrepancy.

1497
01:20:43,680 --> 01:20:47,280
Yeah, the price is very
different to what Norman Starr

1498
01:20:47,280 --> 01:20:51,360
had done their deals for.
There's a bit of a bit of a

1499
01:20:51,360 --> 01:20:56,800
chapter change for for Evos in
the in the next the next deal

1500
01:20:56,840 --> 01:21:03,680
mate, because they go overseas.
They go to Canada, so November

1501
01:21:03,680 --> 01:21:06,880
2019 they do a deal to buy Red
Lake.

1502
01:21:06,880 --> 01:21:11,280
Now this is very different.
So it ultimately becomes a

1503
01:21:11,280 --> 01:21:15,480
expensive lesson that that many
Aussie Goldies learnt the hard

1504
01:21:15,480 --> 01:21:19,320
way in.
In Canada, what they agree is in

1505
01:21:19,320 --> 01:21:25,400
Aussie dollar terms, a $570
million deal upfront, including

1506
01:21:25,400 --> 01:21:28,880
the fees to Newmont Gold Corp,
plus another 100 million US

1507
01:21:28,880 --> 01:21:32,400
contingent.
This is 100% debt funded.

1508
01:21:32,520 --> 01:21:35,880
So they're buying Red Lake with
a healthy balance sheet.

1509
01:21:36,160 --> 01:21:39,160
So they take on the debt to do
this like they've kind of done

1510
01:21:39,160 --> 01:21:42,760
previously, No equity raised.
This time though, $600 million

1511
01:21:42,760 --> 01:21:47,960
loan comes on board and they
label this as a, you know, an

1512
01:21:47,960 --> 01:21:50,360
asset with significant turn
around potential.

1513
01:21:51,480 --> 01:21:55,280
Red Lake at the time, you know,
very historic asset mining since

1514
01:21:55,280 --> 01:21:59,440
the 40s over 25,000,000 oz had
been produced in the area.

1515
01:22:00,320 --> 01:22:02,480
The reserves were a bit below
3,000,000 oz.

1516
01:22:03,040 --> 01:22:07,160
Within a year that goes to
11,000,000 oz processing

1517
01:22:07,160 --> 01:22:10,600
capacity a bit over 1,000,000
tons per annum there across 2

1518
01:22:10,600 --> 01:22:14,360
plants hadn't been operating
anywhere near that for years and

1519
01:22:14,360 --> 01:22:17,320
even evolutions plans went to
get it to name play it for you

1520
01:22:18,120 --> 01:22:21,240
know, for the foreseeable.
If you look at the kind of maps

1521
01:22:21,240 --> 01:22:23,760
here, it's you know, there's a
bunch of complexes.

1522
01:22:23,760 --> 01:22:26,400
This is a you know, gold
everywhere type of thing.

1523
01:22:26,760 --> 01:22:29,920
There's an like an
interconnected underground tram,

1524
01:22:30,280 --> 01:22:32,480
very different to kind of what
we mine here in Australia.

1525
01:22:32,560 --> 01:22:37,040
There's development everywhere.
It's big, it's complicated, it's

1526
01:22:37,040 --> 01:22:38,520
historic.
It is.

1527
01:22:38,520 --> 01:22:41,760
And it's an asset that is not
done well because as Evo's put

1528
01:22:41,760 --> 01:22:46,880
it, the 2016 to 2019 has been a
period characterized by

1529
01:22:46,880 --> 01:22:51,560
underinvestment, underinvestment
in development, in exploration.

1530
01:22:51,560 --> 01:22:53,360
And that's going to need capital
to fix it.

1531
01:22:53,760 --> 01:22:56,960
But when it comes good, maybe
it'll get to its glory days of

1532
01:22:56,960 --> 01:22:59,560
500,000 oz per annum.
They weren't saying that at the

1533
01:22:59,560 --> 01:23:03,120
time, but they were very
confident they could get it over

1534
01:23:03,120 --> 01:23:08,280
there. 200,000 oz per annum
transition target and they also

1535
01:23:08,280 --> 01:23:11,760
called it a beachhead in Canada,
so there was an inkling to do a

1536
01:23:11,760 --> 01:23:15,040
bit more.
The, I mean, the asset had all

1537
01:23:15,040 --> 01:23:18,960
of the hallmarks of, of a, of a,
of a good deal at the time,

1538
01:23:18,960 --> 01:23:21,680
right?
It's, it's, it's being sold by a

1539
01:23:21,680 --> 01:23:23,480
major.
It's, you know, an unloved under

1540
01:23:23,840 --> 01:23:26,240
undercapitalized asset in the
portfolio of a major.

1541
01:23:27,160 --> 01:23:29,920
It's got big, it's got, it's got
scale, it's got long life,

1542
01:23:30,000 --> 01:23:31,840
etcetera, etcetera.
So you could you could have

1543
01:23:31,840 --> 01:23:33,880
wrapped a phenomenal story
around this and the market

1544
01:23:33,880 --> 01:23:37,640
believed the story that
Evolution told at the time that

1545
01:23:37,720 --> 01:23:40,400
it announced the acquisition.
Yeah, the share price went from

1546
01:23:40,400 --> 01:23:43,520
under 4 bucks at the time of the
deal, at the time the deal was

1547
01:23:43,520 --> 01:23:47,800
announced to over $6.50 in about
half a year while the deal is

1548
01:23:47,800 --> 01:23:50,600
getting finalized and that's
through the start of COVID,

1549
01:23:50,960 --> 01:23:52,800
remember?
And that's a tumultuous period

1550
01:23:52,800 --> 01:23:55,160
for for the gold price and for
mining companies trying to

1551
01:23:55,160 --> 01:23:57,360
operate in the other side of the
planet, no less.

1552
01:23:57,360 --> 01:24:00,080
But we'll jump a bit forward
before we analyse this deal

1553
01:24:00,080 --> 01:24:03,000
because they do a bolt on deal
in March 2021.

1554
01:24:03,240 --> 01:24:07,400
Now they buy Battle N not quite
18 months after the the initial

1555
01:24:07,400 --> 01:24:11,880
deal was announced.
Canadian $343,000,000.

1556
01:24:12,040 --> 01:24:15,280
So Evolution is a much bigger
company at this point in time,

1557
01:24:15,280 --> 01:24:17,840
but it's still a fair bit of
cash to to chalk up.

1558
01:24:18,720 --> 01:24:20,840
Now Battle N.
They were the underbidder on on

1559
01:24:20,840 --> 01:24:23,800
Red Lake actually, so it made
sense to consolidate that area.

1560
01:24:24,480 --> 01:24:27,240
Their flagship asset is the
Bateman project.

1561
01:24:27,680 --> 01:24:31,600
So that's got reserves of about
600,000 oz and plenty of

1562
01:24:31,600 --> 01:24:36,280
infrastructure there, a new
mill, plenty of sunk capital had

1563
01:24:36,280 --> 01:24:39,600
gone into to that one as well.
So it makes a whole bunch of

1564
01:24:39,600 --> 01:24:44,120
sense to combine these assets as
you can see on the map and EVO

1565
01:24:44,120 --> 01:24:47,960
say combined we're going to hit
350,000 oz per annum.

1566
01:24:48,520 --> 01:24:52,880
So they're, they're still
telling the, the market in in

1567
01:24:52,880 --> 01:24:57,120
2021 that that this mine is, is
going to be capable of of

1568
01:24:57,120 --> 01:25:01,120
substantial production.
But what we what we what we know

1569
01:25:01,120 --> 01:25:05,360
and reflect on today is that
yeah, but I don't know what

1570
01:25:05,360 --> 01:25:07,480
they're trying.
They're trying, you know, maybe

1571
01:25:07,480 --> 01:25:12,560
backfill, backfill the promises
already and and and red like did

1572
01:25:12,560 --> 01:25:15,840
not live up to the to the to the
story that was initially told

1573
01:25:15,840 --> 01:25:16,880
to.
No, it didn't.

1574
01:25:16,880 --> 01:25:19,520
And and it wasn't for the lack
of capital being spent.

1575
01:25:19,520 --> 01:25:23,040
I mean they outlined $500
million major capital plan

1576
01:25:23,920 --> 01:25:28,160
pretty early on.
But one of the big problems that

1577
01:25:28,160 --> 01:25:33,000
it can comes down to was was a
cultural type change there, you

1578
01:25:33,000 --> 01:25:36,240
know, preconceived thoughts on
the kind of change they could

1579
01:25:36,240 --> 01:25:41,080
instigate at A at a personnel
level just didn't match up with

1580
01:25:41,080 --> 01:25:43,840
reality.
Analysts around the battle time

1581
01:25:43,880 --> 01:25:48,160
are still forecasting 400,000
ounces of production every year

1582
01:25:48,160 --> 01:25:51,920
for over a decade and at a, you
know, at A, at a pretty

1583
01:25:51,920 --> 01:25:54,560
compelling order and sustaining
cost as well, so.

1584
01:25:54,920 --> 01:25:57,200
This is another one.
If I just just tell the analysts

1585
01:25:57,200 --> 01:26:00,520
what the value is, because I
mean you you're looking at EVO

1586
01:26:00,520 --> 01:26:02,920
share price and you've got to
have a target price that's above

1587
01:26:02,920 --> 01:26:04,560
where the share price is.
So you've probably got to have

1588
01:26:04,560 --> 01:26:07,760
some pretty rosy assumptions
about about this assay.

1589
01:26:07,920 --> 01:26:10,560
You do, for those wondering
right now, what guidance for the

1590
01:26:10,560 --> 01:26:12,000
next year is from this point in
time.

1591
01:26:12,000 --> 01:26:15,560
So FY20 6, it's 140,000 oz.
So it's a long way off.

1592
01:26:16,280 --> 01:26:20,160
Of course, margins is what
really matters and the asset did

1593
01:26:20,160 --> 01:26:24,520
$74,000,000 in in cash flow in
the financial year just gone

1594
01:26:24,520 --> 01:26:25,680
that.
Might have been the first

1595
01:26:25,720 --> 01:26:28,360
financial year where it.
That was a record the year

1596
01:26:28,360 --> 01:26:32,280
before it lost $115 million.
I mean, with, with investment,

1597
01:26:32,320 --> 01:26:36,720
you know, going into the ground,
but Evos, I love some of the

1598
01:26:36,720 --> 01:26:39,160
charts that Evos have shown
throughout the years have shown

1599
01:26:39,160 --> 01:26:42,040
some great ones from an
investor's kind of perspective.

1600
01:26:42,040 --> 01:26:45,120
And they, they would show this
fantastic one, which they've

1601
01:26:45,120 --> 01:26:48,440
kind of brought back in various
incarnations where they show how

1602
01:26:48,440 --> 01:26:51,520
much an asset has has paid back
versus the acquisition cost and

1603
01:26:51,520 --> 01:26:53,560
the amount of money that's sunk
into it.

1604
01:26:54,600 --> 01:27:00,520
Quite clearly the, the ROI on,
on Red Lake is nowhere near what

1605
01:27:00,520 --> 01:27:04,560
it has been on, on other assets.
But as is the case with all of

1606
01:27:04,560 --> 01:27:08,040
these things, a a flying gold
price does does help a lot

1607
01:27:09,360 --> 01:27:10,960
there.
There was, there was immediate

1608
01:27:10,960 --> 01:27:14,080
scepticism, you know, going
going back to the, the deal and

1609
01:27:14,080 --> 01:27:16,400
the analysis of the deal and
trying to think about like what

1610
01:27:16,400 --> 01:27:18,600
do people think of at the time?
What do they think of today?

1611
01:27:19,120 --> 01:27:22,240
The North American shareholders
were sceptical kind of from the

1612
01:27:22,240 --> 01:27:24,560
beginning.
And you know, perhaps they were

1613
01:27:24,560 --> 01:27:28,680
the ones that had seen this
asset a bit closer because down

1614
01:27:28,680 --> 01:27:31,360
here in Australia, we're pretty
unfamiliar with the asset Evo's

1615
01:27:31,360 --> 01:27:33,640
targeted many areas of
improvement, you know, mining,

1616
01:27:33,640 --> 01:27:38,160
processing, exploration.
But again, to to go back to that

1617
01:27:38,160 --> 01:27:41,120
point, I think there was just an
an overestimation of their

1618
01:27:41,120 --> 01:27:45,800
ability to to effect a change
and get the asset kind of

1619
01:27:45,960 --> 01:27:49,320
humming again.
It can't just be a cultural like

1620
01:27:49,440 --> 01:27:52,360
I mean the, the, the reserve
gets downgraded like

1621
01:27:52,360 --> 01:27:55,120
consistently.
In fact, even, I think even even

1622
01:27:55,200 --> 01:27:57,960
this year's reserve was
downgraded by like 2G per ton.

1623
01:27:58,360 --> 01:28:02,360
So like consistent reserve
downgrades from I know they

1624
01:28:02,360 --> 01:28:05,480
upgraded it massively and like
immediately after the deal, but

1625
01:28:06,040 --> 01:28:10,520
their their geological DD was
was was clearly not reality as

1626
01:28:10,520 --> 01:28:11,560
well.
Yeah.

1627
01:28:11,560 --> 01:28:15,200
So to to put numbers to that
point, in the most recent

1628
01:28:15,200 --> 01:28:18,160
numbers, they chalked off 4 and
a half million oz from the

1629
01:28:18,160 --> 01:28:20,800
resource.
That's a staggering number.

1630
01:28:20,880 --> 01:28:24,160
And the grade dropped from 7g
per ton to 4 1/2 grams per ton.

1631
01:28:24,160 --> 01:28:27,880
So that's the most recent R&R
statement that we're seeing.

1632
01:28:28,160 --> 01:28:32,320
They are huge drops.
So completely, completely right.

1633
01:28:32,320 --> 01:28:36,960
The ore body has not shaped up
with what they kind of

1634
01:28:36,960 --> 01:28:41,800
previously thought and how they
kind of framed that.

1635
01:28:41,800 --> 01:28:46,280
Now taking a fresh glance at
what things are going to look

1636
01:28:46,280 --> 01:28:48,640
like going forward, they just
sort of say the asset needs to

1637
01:28:48,640 --> 01:28:52,480
consistently deliver if it's to
be worthy of, of any new capital

1638
01:28:52,480 --> 01:28:56,040
going in, whether it actually is
like again, to, to compare with

1639
01:28:56,040 --> 01:28:58,160
the analysts value.
This thing, is it a 2 or $3

1640
01:28:58,160 --> 01:29:01,680
billion NIV asset?
Like there's no way in hell I'd

1641
01:29:01,680 --> 01:29:04,120
be paying anywhere near that for
the, for this asset.

1642
01:29:04,120 --> 01:29:07,800
But you know, perhaps that's the
opportunity, like the gold price

1643
01:29:07,800 --> 01:29:10,760
we're in now affords it a lot of
opportunity to to make money.

1644
01:29:11,280 --> 01:29:16,440
It's a big endowment, there's no
doubt, but a big complex mine.

1645
01:29:16,520 --> 01:29:18,440
And that comes with high, high
costs.

1646
01:29:18,440 --> 01:29:20,760
And there's always the allure of
spending more capital to make

1647
01:29:20,760 --> 01:29:25,080
those costs come, come lower,
But more and more capital kind

1648
01:29:25,080 --> 01:29:26,520
of keeps becoming more and more
capital.

1649
01:29:26,840 --> 01:29:29,520
I think they've learned well.
They they always know they're

1650
01:29:29,520 --> 01:29:31,520
great capital allocators, but
you're always competing for

1651
01:29:31,520 --> 01:29:34,160
capital, you know, to the most
worthy parts of the business.

1652
01:29:34,160 --> 01:29:40,520
And and to your point, like what
is the return on capital to Red

1653
01:29:40,520 --> 01:29:44,080
Lake versus the other assets
when, when it's returned so far

1654
01:29:44,080 --> 01:29:45,800
it's been pretty, pretty de
minimis I.

1655
01:29:46,280 --> 01:29:49,880
Mean it's it's no coincidence
either that every Aussie Goldie

1656
01:29:49,880 --> 01:29:54,480
went to Canada and struggled
like it's not as if there's

1657
01:29:54,480 --> 01:29:56,320
there's not the gold there at
every single one.

1658
01:29:56,320 --> 01:30:00,200
There's there's a few too many
cases in which that's happened

1659
01:30:00,200 --> 01:30:02,600
for it to just be a fluke.
You know the relative.

1660
01:30:02,600 --> 01:30:06,400
Value at that period of time was
was was severe, right?

1661
01:30:06,640 --> 01:30:08,960
Yeah, yeah.
Like like things would bid up to

1662
01:30:08,960 --> 01:30:11,600
extreme over over in Australia
and there was everything just

1663
01:30:11,600 --> 01:30:14,600
looked cheap in in Canada.
So you thought, well, heck, I'm

1664
01:30:14,600 --> 01:30:17,840
going to get outsides returns by
going there, but it didn't quite

1665
01:30:17,840 --> 01:30:19,840
work out.
I sound like I'm very critical

1666
01:30:19,840 --> 01:30:23,560
of this, but you know, I, I
think, I think like on the

1667
01:30:23,560 --> 01:30:27,040
whole, you have to evaluate evos
for the phenomenal like like

1668
01:30:27,360 --> 01:30:29,880
value creation story it is.
And this, this is, this is a

1669
01:30:29,880 --> 01:30:31,120
blemish that they had to deal
with.

1670
01:30:31,320 --> 01:30:33,480
Yeah.
And and if you go back to like

1671
01:30:33,480 --> 01:30:37,280
2019 again and and you look at
this opportunity again, like,

1672
01:30:37,280 --> 01:30:40,400
yeah, I mean, I'd be curious to
know what they'd say about that,

1673
01:30:40,400 --> 01:30:42,440
whether they do the deal again
because it just looks so

1674
01:30:42,440 --> 01:30:45,320
compelling.
So if we, if we keep going in

1675
01:30:45,320 --> 01:30:49,400
between those 2 deals that I
mentioned, firstly, Red Lake and

1676
01:30:49,440 --> 01:30:53,360
Battle N, they divest Krakow,
another asset from, from early

1677
01:30:53,360 --> 01:30:58,160
days, 60 million bucks in the
door upfront with a a total

1678
01:30:58,160 --> 01:31:02,520
price tag of $125 million.
So again choking off one of the

1679
01:31:02,520 --> 01:31:05,400
the weaker assets.
And shortly after the Battle N

1680
01:31:05,400 --> 01:31:09,600
deal, they wrap up the AKJV.
It's a $400 million deal with

1681
01:31:09,720 --> 01:31:16,640
Northern Star getting in 100% of
Kendana, 51% of the AKJV, a

1682
01:31:16,640 --> 01:31:18,920
bunch of other assets in the
Eastern Goldfields kind of area

1683
01:31:18,920 --> 01:31:22,720
and they're elevating Mangari to
a cornerstone asset in their

1684
01:31:22,720 --> 01:31:25,440
portfolio.
All cash deal.

1685
01:31:25,600 --> 01:31:28,520
The the edge of the competitive
advantage here is, is pretty

1686
01:31:28,520 --> 01:31:30,320
straightforward.
Like you mentioned earlier, you

1687
01:31:30,320 --> 01:31:34,080
can just chop that haulage
distance down by nearly 90%.

1688
01:31:34,360 --> 01:31:37,640
So it's it's super kind of
compelling why this deal makes

1689
01:31:37,640 --> 01:31:40,360
sense and why you can pay more
for it than than anyone else can

1690
01:31:40,360 --> 01:31:45,040
because the returns are going to
be great and they raise nearly

1691
01:31:45,040 --> 01:31:48,560
$470 million to to finance this
deal.

1692
01:31:49,320 --> 01:31:53,600
You can see again on the asset
portfolio chart here that things

1693
01:31:53,600 --> 01:31:56,240
are things are looking better
and that is a conservative chart

1694
01:31:56,240 --> 01:31:58,600
because it doesn't show the
margin improvement just yet that

1695
01:31:58,600 --> 01:32:02,040
we'd see in time when they
expand the asset.

1696
01:32:02,040 --> 01:32:07,480
But a smart deal that that just
sort of makes sense and the,

1697
01:32:09,280 --> 01:32:12,440
the, the benefits that come from
it far outweigh the, the cost of

1698
01:32:12,440 --> 01:32:13,880
this one.
The returns have been been

1699
01:32:13,880 --> 01:32:16,200
great.
And you know, add to that the,

1700
01:32:17,280 --> 01:32:20,160
the expansion that they have
done kind of remarkably, they've

1701
01:32:20,160 --> 01:32:23,880
done that nine months before
schedule and under budget as

1702
01:32:23,880 --> 01:32:26,720
well.
That was quoted to be a $230

1703
01:32:26,720 --> 01:32:30,440
million investment to get the
asset over 200,000 oz.

1704
01:32:30,920 --> 01:32:34,080
And what a time to, to do that
sort of expansion act.

1705
01:32:34,240 --> 01:32:37,720
It's going to help the the
payback look very, very good for

1706
01:32:37,720 --> 01:32:41,200
that asset.
It it, I find it, yeah.

1707
01:32:41,240 --> 01:32:43,160
I think your reflections are
right about this deal.

1708
01:32:43,160 --> 01:32:44,880
But I do remember it at the
time.

1709
01:32:44,880 --> 01:32:50,960
Again, now they've they're like
they've licensed to M&A to do

1710
01:32:50,960 --> 01:32:54,440
M&A is a little bit in doubt.
This one, like this one, what

1711
01:32:54,440 --> 01:32:56,160
did they do?
I think at the time the gold

1712
01:32:56,160 --> 01:32:59,040
price was much lower.
I think they paid about like

1713
01:32:59,040 --> 01:33:02,640
full NPV of like, you know,
like, like for Northern Star to

1714
01:33:02,640 --> 01:33:05,920
be a willing seller and, and Evo
used to be a willing buyer.

1715
01:33:06,960 --> 01:33:09,200
Northern Star thought they'll
get a pretty good price.

1716
01:33:09,200 --> 01:33:12,040
And I think evos are effectively
paying full NPV, including the

1717
01:33:12,040 --> 01:33:13,560
synergies that they were
benefiting from.

1718
01:33:13,560 --> 01:33:17,960
So like, yes, like both parties
like, like win, but, but there

1719
01:33:17,960 --> 01:33:20,400
was, there was certainly like I
remember conversations with

1720
01:33:20,400 --> 01:33:23,280
peers thinking, I mean, he, he
was paid top dollar for this

1721
01:33:24,040 --> 01:33:26,440
with the fullness of time and,
and what coal prices done in, in

1722
01:33:26,440 --> 01:33:29,040
the intermediate period and the
additional benefits they've had

1723
01:33:29,040 --> 01:33:32,520
from the other like East Cal
assets, the mill expansion,

1724
01:33:32,520 --> 01:33:35,200
etcetera.
It, it, it looks a good deal.

1725
01:33:35,200 --> 01:33:38,280
But, but, but I think this is a
common theme with Evos is they

1726
01:33:38,280 --> 01:33:39,840
don't always look a good deal on
the outset.

1727
01:33:39,840 --> 01:33:41,880
In fact, the one that looked a
good deal on the outset, being

1728
01:33:41,880 --> 01:33:42,960
red light, turned out to be the
dot.

1729
01:33:43,320 --> 01:33:46,160
Yeah.
And I mean to think about the

1730
01:33:46,160 --> 01:33:50,080
seller in this case.
So Northern Star had just done

1731
01:33:50,080 --> 01:33:53,800
the deal with Saracen as well.
So they've become a much bigger

1732
01:33:53,800 --> 01:33:56,880
company all of a sudden.
This is clearly a lower quality

1733
01:33:56,880 --> 01:34:01,400
asset in their portfolio.
And like you say, with the with

1734
01:34:01,400 --> 01:34:04,400
the upgrade in mind that you can
unlock more value through it

1735
01:34:04,400 --> 01:34:05,880
that way.
Yeah, they might be taking their

1736
01:34:05,880 --> 01:34:08,200
pound of flesh for the synergies
that you're going to experience

1737
01:34:08,760 --> 01:34:13,000
as well.
But I think, you know, time and

1738
01:34:13,000 --> 01:34:17,880
time again that that view that
MPV is different to, to what

1739
01:34:17,880 --> 01:34:21,280
most people might think it is
because, you know, maybe they're

1740
01:34:21,560 --> 01:34:25,600
curtailed by the reserves or
whatever it might be having that

1741
01:34:25,600 --> 01:34:28,280
long term time for you.
And I know it's, it's, it's hard

1742
01:34:28,280 --> 01:34:32,040
because the gold price makes,
makes it look so, so good.

1743
01:34:32,680 --> 01:34:35,040
But.
It was necessary to make

1744
01:34:35,440 --> 01:34:37,200
mangari, what they call a
cornerstone.

1745
01:34:37,200 --> 01:34:39,480
Exactly.
Their portfolio was improving on

1746
01:34:39,480 --> 01:34:42,240
the back of this deal and not
just by a little margin.

1747
01:34:42,240 --> 01:34:45,920
They continue continue to
rationalize non core late life

1748
01:34:45,920 --> 01:34:48,320
assets to improve the the
overall portfolio.

1749
01:34:48,360 --> 01:34:51,920
They finally part ways with with
Mount Carlton after after being

1750
01:34:51,920 --> 01:34:54,720
a pretty important contributor
for for for quite some time and

1751
01:34:54,720 --> 01:34:56,600
having its hallmarks from the
very early days.

1752
01:34:56,840 --> 01:35:00,200
It had it's time, Yeah,
$90,000,000 deal, 40 upfront

1753
01:35:00,400 --> 01:35:03,240
they're getting for this one,
selling it to Navarre.

1754
01:35:03,280 --> 01:35:07,040
So a year before evolution into
that to impair the asset by $100

1755
01:35:07,040 --> 01:35:09,480
million.
So it started to to have a few

1756
01:35:09,480 --> 01:35:11,640
problems getting a bit creaky
and old.

1757
01:35:11,640 --> 01:35:15,520
And yeah, I mean, some, some
assets had this one, some

1758
01:35:15,520 --> 01:35:19,560
analysts rather had this as a
negative MPV on the books.

1759
01:35:19,560 --> 01:35:23,960
So good to get a bit of cash and
again improve the asset, improve

1760
01:35:23,960 --> 01:35:26,480
the portfolio by divesting and
then they consolidate.

1761
01:35:26,480 --> 01:35:33,120
Ernest Henry So November 2021, a
big deal again, $1 billion, you

1762
01:35:33,120 --> 01:35:37,120
know, 800 upfront and 200 just
being paid a year later.

1763
01:35:37,960 --> 01:35:40,240
So the stock bounced 7% on the
day.

1764
01:35:40,480 --> 01:35:42,960
So the market liked this one
quite, quite early.

1765
01:35:42,960 --> 01:35:46,800
And to finance this, they sign
up US $200 million in debt at

1766
01:35:46,800 --> 01:35:48,600
3%.
We're in the zero interest rate

1767
01:35:48,600 --> 01:35:52,280
era here, so you can finance
these things quite cheap.

1768
01:35:52,720 --> 01:35:58,920
They end up going to a net debt
position of $1.3 billion and in

1769
01:35:58,920 --> 01:36:02,200
time you'd kind of see because
they go into a very heavy period

1770
01:36:02,200 --> 01:36:05,440
of investment.
So the balance sheet is a bit

1771
01:36:05,440 --> 01:36:07,680
extended, but it always kind of
extends once they do a deal

1772
01:36:07,680 --> 01:36:11,160
because they tend to sign up
that debt but.

1773
01:36:11,880 --> 01:36:15,800
This is the fruits of their
labor from from the first deal

1774
01:36:15,880 --> 01:36:17,160
kind of coming to fruition,
right?

1775
01:36:17,200 --> 01:36:21,240
Fruits of their labor, fruits of
their, you know, smarts to get

1776
01:36:21,240 --> 01:36:22,920
this one done.
Absolutely.

1777
01:36:22,960 --> 01:36:24,880
We know they're not getting any
more gold here because they're

1778
01:36:24,880 --> 01:36:28,440
already taking all the gold.
So they're getting 70% of the

1779
01:36:28,520 --> 01:36:30,120
the copper and and the silver as
well.

1780
01:36:31,000 --> 01:36:34,880
So EVNS Group all in sustaining
costs would improve by nearly

1781
01:36:34,880 --> 01:36:37,640
$200.00 an ounce in two years
time.

1782
01:36:38,400 --> 01:36:40,920
Isn't this remarkable?
I know with the, I know the

1783
01:36:40,920 --> 01:36:44,080
precedent had been set globally.
And yeah, new Crest was a, a

1784
01:36:44,720 --> 01:36:49,000
leader in, in, in having a, a
reported loyal in sustaining

1785
01:36:49,000 --> 01:36:51,080
costs because they had like
phenomenal kind of copper

1786
01:36:51,080 --> 01:36:54,400
credits in with several assets
in their portfolio, Katia being

1787
01:36:54,400 --> 01:36:57,840
a big, a big run of those.
And I think like, you know, to

1788
01:36:57,840 --> 01:37:01,800
your point on, on, on Jake
studying the what made great

1789
01:37:01,800 --> 01:37:04,880
gold miners.
Well, the, the unspoken rule

1790
01:37:04,880 --> 01:37:08,360
that he didn't list in that
speech is make sure you've got a

1791
01:37:08,360 --> 01:37:10,320
low all in sustaining cost
because you've got copper

1792
01:37:10,320 --> 01:37:14,360
credits.
And it, it like, it tricks, it

1793
01:37:14,360 --> 01:37:17,200
tricks people, it tricks
generalists, it tricks not even

1794
01:37:17,200 --> 01:37:20,200
just generalists, but but
resource specialists, who I

1795
01:37:20,240 --> 01:37:23,360
mean, the, the, the all in
sustaining costs, which was just

1796
01:37:23,360 --> 01:37:26,200
adopted by the entire industry
and popularized by the World

1797
01:37:26,200 --> 01:37:30,400
Gold Council.
It has, it has its pitfalls.

1798
01:37:30,400 --> 01:37:33,000
And but when you just look at
that and you try and think of

1799
01:37:33,000 --> 01:37:37,720
well, who's a, who's a low cost
producer come up with with evos

1800
01:37:37,800 --> 01:37:40,440
with these big cup of credits
despite cash flow not

1801
01:37:40,440 --> 01:37:41,800
necessarily being reflective of
that.

1802
01:37:42,480 --> 01:37:43,960
Yeah, the rules are the same for
everyone.

1803
01:37:44,320 --> 01:37:46,840
They're just, they're just using
them to their advantage, I

1804
01:37:46,840 --> 01:37:49,680
think.
So we've touched on pre emptive

1805
01:37:49,680 --> 01:37:52,640
rights, super important.
They did the groundwork, Yeah.

1806
01:37:53,200 --> 01:37:56,480
Still it was a fairly steep
price that they paid.

1807
01:37:56,480 --> 01:37:59,800
But again, people analyzing the
deal at the time were a bit

1808
01:37:59,880 --> 01:38:03,680
restrained in how they thought
about this deal because of the

1809
01:38:04,240 --> 01:38:08,880
relatively shorter reserve life
that was left, which in in due

1810
01:38:08,880 --> 01:38:12,400
course evolution prove out and
extend the mine life quite

1811
01:38:12,400 --> 01:38:14,320
substantially.
This is a great asset.

1812
01:38:15,240 --> 01:38:16,840
This is a really, really great
asset.

1813
01:38:17,080 --> 01:38:20,560
It's a truly great asset.
They've also, you know, taken

1814
01:38:20,560 --> 01:38:23,000
ownership then they're now the
operator of this one, which is a

1815
01:38:23,400 --> 01:38:25,320
an important detail.
You know you control your own

1816
01:38:25,640 --> 01:38:28,480
destiny by all the cancer
Glencorp joint venture went

1817
01:38:28,680 --> 01:38:30,800
relatively smoothly, but.
Was it a JV mate?

1818
01:38:31,480 --> 01:38:34,760
Economic interest.
Economic interest, call it what

1819
01:38:34,760 --> 01:38:41,240
you like, they in time validate
that that price and financing

1820
01:38:41,240 --> 01:38:46,280
things in that period 3% debt.
That's, you know, I mean, we're

1821
01:38:46,280 --> 01:38:48,520
getting to an era now today
where where interest rates are

1822
01:38:48,520 --> 01:38:51,600
going down again and we'll see
what what miners do with it, but

1823
01:38:51,760 --> 01:38:55,160
very, very smart to to get that
over over the line.

1824
01:38:55,440 --> 01:38:57,240
So that that wraps up the the
kind of history.

1825
01:38:57,240 --> 01:39:00,480
Obviously they do N parks, but
that's too close to where we are

1826
01:39:00,480 --> 01:39:05,520
today to analyze thoroughly, but
well.

1827
01:39:06,120 --> 01:39:09,280
I find that interesting too.
N parks because, because we, I

1828
01:39:09,280 --> 01:39:13,880
remember doing a potty when they
announced N parks and you and I,

1829
01:39:14,400 --> 01:39:16,440
you and I are doing like the
numbers and being like, Oh my

1830
01:39:16,440 --> 01:39:18,840
God, look at the crazy EBITDA
multiple.

1831
01:39:18,840 --> 01:39:21,200
They've paid for this, they've
overpaid, blah, blah, blah.

1832
01:39:22,560 --> 01:39:27,000
The balance sheet was yeah, like
like looking a little bit shaky.

1833
01:39:27,000 --> 01:39:29,680
They, they did a raise to, to
fund part of it, I remember.

1834
01:39:29,680 --> 01:39:32,720
And then and the share price
quickly kind of dips to below

1835
01:39:32,720 --> 01:39:35,320
what the raise price was in the,
in the months afterwards as, as,

1836
01:39:35,520 --> 01:39:39,120
as markets looked a bit, a bit
fragile gold as well.

1837
01:39:39,120 --> 01:39:44,080
And we were critical, but again,
like N parks has the hallmarks

1838
01:39:44,080 --> 01:39:46,640
of a of a, it's a very long life
asset.

1839
01:39:46,640 --> 01:39:49,240
And in the fullness of time, if
you have, if you have the

1840
01:39:49,240 --> 01:39:52,880
commodity tailwinds, which,
which you know, we've been lucky

1841
01:39:52,880 --> 01:39:56,920
enough to have over Evo's
journey today, then it just rubs

1842
01:39:56,920 --> 01:40:00,240
over those, those facts and the
people who maybe like people

1843
01:40:00,240 --> 01:40:03,000
like us who called North Parks
like paying too much at the

1844
01:40:03,000 --> 01:40:04,880
time.
I mean, I can totally imagine

1845
01:40:05,280 --> 01:40:09,080
having the exact same reflection
about our comments then as as

1846
01:40:09,080 --> 01:40:11,920
we've heard about like.
Certain deals that Evos have

1847
01:40:11,920 --> 01:40:14,960
done, like historically as
well-being being Cal, ever

1848
01:40:14,960 --> 01:40:16,560
paying for Cal, Do they ever pay
for Cal?

1849
01:40:17,120 --> 01:40:18,400
You know, this is a common
theme.

1850
01:40:18,400 --> 01:40:20,840
Do they do they ever pay for for
La mantra?

1851
01:40:20,840 --> 01:40:24,160
Do they ever pay?
Like, yeah. 30 plus year mine

1852
01:40:24,160 --> 01:40:28,920
life like you kind of get some
very good years in that time.

1853
01:40:29,200 --> 01:40:32,080
You finally didn't have just a
crazy stream, but that's OK.

1854
01:40:32,200 --> 01:40:35,120
Yeah, yeah, I think, yeah, I
think you're spot on.

1855
01:40:35,120 --> 01:40:40,360
So since the Ernest Henry deal,
the EV of the company has gone

1856
01:40:40,360 --> 01:40:46,840
from $6 billion to $22 billion.
That is despite years of

1857
01:40:46,840 --> 01:40:48,960
actually poor operational
performance.

1858
01:40:48,960 --> 01:40:51,440
They they miss guidance on
several occasions over the past

1859
01:40:51,440 --> 01:40:57,200
few years, very heavy periods of
capital investment and again

1860
01:40:57,200 --> 01:41:00,560
papered over by a phenomenal
appreciation in in the gold

1861
01:41:00,560 --> 01:41:02,640
price.
But where we are today, they are

1862
01:41:02,960 --> 01:41:05,880
they are Australia's 25th
largest public company.

1863
01:41:06,880 --> 01:41:11,840
And Laurie Conway from Jan 23
became the CEO and managing

1864
01:41:11,840 --> 01:41:14,320
director.
Jake became just the exec chair

1865
01:41:14,320 --> 01:41:18,480
at that point in time.
And as of July of 2025, Jake is

1866
01:41:18,480 --> 01:41:21,080
the the non exec chair.
So I think that that puts a wrap

1867
01:41:21,080 --> 01:41:23,440
on on the history.
It's a great history of that,

1868
01:41:23,560 --> 01:41:26,640
like the evolution of evolution
and I know we're capturing it a

1869
01:41:26,640 --> 01:41:32,000
snapshot in time, but it is like
it is a, it's a tremendous

1870
01:41:32,160 --> 01:41:37,280
growth story from deals and
commodity tailwinds and like

1871
01:41:37,360 --> 01:41:39,880
savviness and seeing opportunity
where it isn't.

1872
01:41:41,440 --> 01:41:44,880
And for that reason, mate, we
need to dive just quickly into

1873
01:41:45,560 --> 01:41:47,040
their thinking behind deal
making.

1874
01:41:47,040 --> 01:41:49,840
So they have a three pillared
approach to creating shareholder

1875
01:41:49,840 --> 01:41:53,320
value, operations, discovery and
M&A.

1876
01:41:53,360 --> 01:41:56,160
But as it was put to us now this
is a tongue and cheek comment,

1877
01:41:56,160 --> 01:42:00,960
but I loved it nonetheless.
Operations are where Evos tease

1878
01:42:00,960 --> 01:42:03,640
shareholders about the prospect
of creating value.

1879
01:42:03,640 --> 01:42:07,880
Discovery is where they torture
shareholders and M&A is where

1880
01:42:07,880 --> 01:42:10,640
they really create value.
Now that's the type of comment

1881
01:42:10,640 --> 01:42:14,520
that could only come from the
corporate team and I think it

1882
01:42:14,520 --> 01:42:18,000
actually speaks very highly to
the culture knowing the context

1883
01:42:18,000 --> 01:42:22,640
in which that comment came
internally there.

1884
01:42:23,600 --> 01:42:24,960
But I think it's worth talking
about.

1885
01:42:24,960 --> 01:42:29,600
I mean, Evolution have proven
themselves to be competent

1886
01:42:29,600 --> 01:42:33,000
managers over the long run of
the assets that they've gone.

1887
01:42:33,440 --> 01:42:36,360
The geos on the discovery
component have gone above and

1888
01:42:36,360 --> 01:42:40,040
beyond replacing depletion,
adding to the mine life of many

1889
01:42:40,040 --> 01:42:43,840
of their assets.
They've put themselves in the

1890
01:42:43,840 --> 01:42:47,040
right post codes to do that.
That's coming from the M&A.

1891
01:42:47,120 --> 01:42:50,880
So there's a whole bunch of
things that are lining up there.

1892
01:42:51,840 --> 01:42:54,920
Operations are kind of limited
by your geology.

1893
01:42:55,040 --> 01:42:58,480
You need to be playing in, in
the right areas to, to have the

1894
01:42:58,520 --> 01:43:01,680
the work cut out easily enough
for the operationers team.

1895
01:43:02,320 --> 01:43:05,960
That in turn, you know, allows
Brownfield's exploration to, to

1896
01:43:05,960 --> 01:43:09,840
kind of be successful and, you
know, allows the the geos to, to

1897
01:43:09,840 --> 01:43:13,560
do their work effectively.
And we've seen that in abundance

1898
01:43:13,560 --> 01:43:16,960
at Cal and Ernest Henry with the
mine life extensions.

1899
01:43:17,800 --> 01:43:21,200
But looking at the management
team here, M&A is, is the

1900
01:43:21,200 --> 01:43:23,760
culture, M&A is the the the
focus.

1901
01:43:24,440 --> 01:43:26,000
They are deal makers through and
through.

1902
01:43:27,160 --> 01:43:28,960
They're deal makers, but
thoughtful deal makers.

1903
01:43:28,960 --> 01:43:33,200
They're not deal junkies like
where you are, you do deals

1904
01:43:33,200 --> 01:43:36,520
because you just deal hungry.
There's discipline to the deal

1905
01:43:36,520 --> 01:43:39,000
making.
It's knowing when to be like

1906
01:43:39,080 --> 01:43:42,000
very aggressive and knowing when
to be reserved.

1907
01:43:42,040 --> 01:43:45,680
Like this isn't just a
scattergun strategy where they

1908
01:43:45,680 --> 01:43:47,440
got lucky.
This was a it was a it was a

1909
01:43:47,440 --> 01:43:52,600
deliberate strategy about yeah,
like knowing the time, the cycle

1910
01:43:52,880 --> 01:43:55,640
to be aggressive and knowing,
knowing the times to to peel

1911
01:43:55,640 --> 01:43:58,000
back.
And like this was articulated

1912
01:43:58,000 --> 01:44:00,160
from the very beginning.
There was a deliberate decision

1913
01:44:00,520 --> 01:44:04,360
about like having stepping stone
assets starting with, with a not

1914
01:44:04,360 --> 01:44:08,960
so good portfolio, but using
those assets to acquire better

1915
01:44:08,960 --> 01:44:11,600
assets with longer life, lower
costs over time.

1916
01:44:11,600 --> 01:44:16,200
And they bootstrapped their way
via not so good assets to having

1917
01:44:16,360 --> 01:44:19,640
like a pretty formidable like,
you know, portfolio.

1918
01:44:20,240 --> 01:44:22,720
There, there's a comment that
also really stuck out to me to

1919
01:44:22,720 --> 01:44:25,760
add to what you've just said
there, Jake said that people too

1920
01:44:25,760 --> 01:44:28,560
often have inertia and they
don't do deals because they

1921
01:44:28,560 --> 01:44:31,160
think they're undervalued, that
that didn't hold them back

1922
01:44:31,160 --> 01:44:34,320
because they did deals when
their share price was in the in

1923
01:44:34,320 --> 01:44:36,840
the gutter as well.
They were proactive about doing

1924
01:44:36,840 --> 01:44:38,920
deals.
They were incredibly thoughtful

1925
01:44:39,200 --> 01:44:44,920
about the deals that they did
and to to put a bow kind of on

1926
01:44:44,920 --> 01:44:47,000
on what you've said about the
timing of deals.

1927
01:44:47,360 --> 01:44:51,440
There's a time to do deals and
there's a time to make money as

1928
01:44:51,560 --> 01:44:53,320
as they've always kind of said
and.

1929
01:44:53,760 --> 01:44:56,520
Why do you think evolution
didn't have the inertia that

1930
01:44:56,520 --> 01:44:57,920
other companies might be plagued
with?

1931
01:44:58,680 --> 01:45:00,920
I I think that just comes down
to the culture of the team.

1932
01:45:01,040 --> 01:45:05,200
I think they, they had a culture
within the corporate team that

1933
01:45:05,200 --> 01:45:09,000
made them proactive about that.
They, they wanted to be a mining

1934
01:45:09,000 --> 01:45:12,360
company from, from day dot and
they, they just kind of got

1935
01:45:12,360 --> 01:45:16,080
after it.
The fact Jake was exec chair, do

1936
01:45:16,080 --> 01:45:17,360
you think that made a difference
as well?

1937
01:45:17,360 --> 01:45:21,680
Like you've got a supportive
board of being bold.

1938
01:45:21,680 --> 01:45:24,440
There's no there's not
necessarily pushback from a

1939
01:45:24,440 --> 01:45:27,760
board perspective because like
your exec chair.

1940
01:45:28,080 --> 01:45:31,200
There's phenomenal alignment.
Yeah, great alignment, great

1941
01:45:31,200 --> 01:45:34,040
capital markets backing as well.
Like nothing was impossible to

1942
01:45:34,040 --> 01:45:39,040
finance because you're dealing
with someone and like a team

1943
01:45:39,040 --> 01:45:40,760
which has done it before
together.

1944
01:45:40,840 --> 01:45:44,480
No accidents either.
Like they, they nurture the

1945
01:45:44,480 --> 01:45:46,720
relationship with having a major
shareholder, which a lot of

1946
01:45:46,720 --> 01:45:49,600
people would look as a negative,
having someone sit on your

1947
01:45:49,600 --> 01:45:53,040
register with 30 plus percent.
If we quickly look, there's this

1948
01:45:53,040 --> 01:45:56,120
matrix I want to show in how
they think about the deals.

1949
01:45:56,600 --> 01:45:58,680
And I think it's a, it's a
really cool one to understand,

1950
01:45:58,960 --> 01:46:00,800
you know, a bit of a guiding
light in, in how they think

1951
01:46:00,800 --> 01:46:02,480
about deals.
And it differs for every company

1952
01:46:02,480 --> 01:46:05,320
depending on you, you know, your
expertise, your size, your, your

1953
01:46:05,320 --> 01:46:06,600
balance sheet, all these sorts
of things.

1954
01:46:07,520 --> 01:46:10,600
But essentially for those
listening, it's a, it's a kind

1955
01:46:10,600 --> 01:46:15,120
of circle and it has 10
different boxes to check and you

1956
01:46:15,120 --> 01:46:17,880
can kind of rate them.
When you think about a specific

1957
01:46:18,200 --> 01:46:22,080
asset, we're talking about
things like the mine life, the

1958
01:46:22,080 --> 01:46:25,160
transaction complexity, social
license, commodities, these

1959
01:46:25,160 --> 01:46:27,680
sorts of things.
And I think there's a couple

1960
01:46:27,680 --> 01:46:30,160
points here that need inspection
because they make transaction

1961
01:46:30,160 --> 01:46:34,960
complexity look like something
hard, but that is an edge for

1962
01:46:34,960 --> 01:46:37,600
evolution.
Another one, if we're going to

1963
01:46:37,600 --> 01:46:41,400
be nitpicky on commodities, I'd
almost put copper, gold above

1964
01:46:41,400 --> 01:46:45,040
gold there in how they actually
think about things.

1965
01:46:45,360 --> 01:46:49,000
And then lastly, annual
production there, annual

1966
01:46:49,000 --> 01:46:52,280
production and evolution of
showing this only matters so

1967
01:46:52,280 --> 01:46:56,280
much as in like how much it
impacts your margin.

1968
01:46:56,720 --> 01:46:59,480
That's what really matters
because some of their, you know,

1969
01:46:59,680 --> 01:47:04,560
like Ernest Henry for instance,
that's not, you know, a massive

1970
01:47:04,560 --> 01:47:07,880
gold producer produces a lot of
copper as well, obviously, but

1971
01:47:08,440 --> 01:47:11,520
margin is what really matters.
Which year did you first see

1972
01:47:11,520 --> 01:47:13,920
this in their in their public
materials in?

1973
01:47:14,360 --> 01:47:18,840
The late twenty 10s Wow
internally used before that.

1974
01:47:18,840 --> 01:47:21,760
Before that.
This is this like this one

1975
01:47:21,840 --> 01:47:24,200
image.
This is the evolution playbook.

1976
01:47:24,280 --> 01:47:28,080
Yeah, like your, your, your
sweet spot is becoming a company

1977
01:47:28,080 --> 01:47:32,240
full of assets that have that
that green circle.

1978
01:47:32,480 --> 01:47:35,440
But the only way you get there
is incrementally.

1979
01:47:35,840 --> 01:47:38,320
On the deal making, there's,
there's one more fantastic slide

1980
01:47:38,640 --> 01:47:40,440
we have to show they break this
out.

1981
01:47:40,440 --> 01:47:44,560
I think they showed this one in
2017 or so and they show that

1982
01:47:44,560 --> 01:47:51,640
17% of M&A deals add value.
So if M&A is where you create

1983
01:47:51,640 --> 01:47:55,680
value in your business and only
17% do you have to be bloody

1984
01:47:55,680 --> 01:47:59,200
good at doing deals?
Backed themselves didn't they?

1985
01:47:59,240 --> 01:48:02,440
The only thing I don't like
about this slide mate is the

1986
01:48:02,440 --> 01:48:05,720
source for that stat is a
management consultant.

1987
01:48:05,720 --> 01:48:08,360
KPMG now talk about things that
don't add value.

1988
01:48:13,360 --> 01:48:15,240
Can't I do that?
But no.

1989
01:48:15,240 --> 01:48:18,280
But yeah, like, yeah, these were
deal makers.

1990
01:48:18,280 --> 01:48:20,840
They backed themselves to create
value because because some deals

1991
01:48:20,840 --> 01:48:23,200
do create an enormous amount of
value, but you have to pay an

1992
01:48:23,200 --> 01:48:25,600
appropriate price and get the
like the timing right in the

1993
01:48:25,600 --> 01:48:27,480
cycle.
And those things are very, very

1994
01:48:27,480 --> 01:48:31,520
hard to do.
And, and Evos did it, albeit

1995
01:48:31,520 --> 01:48:35,440
with with commodity tailwinds,
but I don't, it didn't, it

1996
01:48:35,440 --> 01:48:39,040
didn't take a lack of like
these, these, these, this was a

1997
01:48:39,040 --> 01:48:41,680
team in the right place at the
right time with the right skills

1998
01:48:41,680 --> 01:48:43,520
and the right amount of
confidence and they saw the

1999
01:48:43,520 --> 01:48:45,560
opportunity.
And like, what do I mean by

2000
01:48:45,560 --> 01:48:48,520
that?
Like no other mining team, in my

2001
01:48:48,520 --> 01:48:53,000
opinion, I don't think could
have enacted as nimbly as

2002
01:48:53,120 --> 01:48:55,320
evolution were to the
opportunities in front of them

2003
01:48:55,320 --> 01:48:59,200
and being so like being so
thoughtful about even seeking

2004
01:48:59,200 --> 01:49:01,040
the bilateral deals that they
did do out.

2005
01:49:01,440 --> 01:49:04,720
They, they, they, they minimally
used advisors like you mentioned

2006
01:49:04,800 --> 01:49:09,080
that they, they trusted their
own internal team and a small

2007
01:49:09,080 --> 01:49:13,520
number of people to, to take a
view and deliver like the, the,

2008
01:49:13,680 --> 01:49:17,880
these were, these were rapid
succession deals that were done.

2009
01:49:17,960 --> 01:49:21,120
And it takes an enormous amount
of effort to achieve that.

2010
01:49:21,120 --> 01:49:23,760
And the only way in my opinion
that you do achieve that is with

2011
01:49:23,760 --> 01:49:28,640
the capability like the
confidence and also not using

2012
01:49:28,680 --> 01:49:31,600
advisors.
I couldn't agree more and I

2013
01:49:31,600 --> 01:49:34,400
think it's a great segue into
what what are the guiding

2014
01:49:34,400 --> 01:49:39,080
principles to the evolution way.
So firstly, the strategy Jake

2015
01:49:39,080 --> 01:49:41,560
would always say, I'm not
convinced that gold companies

2016
01:49:41,560 --> 01:49:44,880
are scalable, hence may just
aren't the ones that create the

2017
01:49:44,880 --> 01:49:46,240
best returns.
Sorry.

2018
01:49:46,240 --> 01:49:50,880
The strategy Aussie mid tier 6
to 8 assets, 8 year plus mine

2019
01:49:50,880 --> 01:49:55,320
lives, Tier 1 jurisdictions.
Improving the portfolio means

2020
01:49:55,480 --> 01:49:58,480
investing as well as divesting
all these sorts of things.

2021
01:49:59,480 --> 01:50:02,160
They they just sort of ring true
and they didn't change from from

2022
01:50:02,160 --> 01:50:04,920
day one.
Remarkable that strategy has

2023
01:50:04,920 --> 01:50:07,840
stayed the same.
It's consistently said that over

2024
01:50:08,200 --> 01:50:12,080
the last decade plus, this is
the this is what we want to be

2025
01:50:12,240 --> 01:50:18,560
when we're now it and and.
Yeah, add to that knowing your

2026
01:50:18,560 --> 01:50:22,080
competitive advantage, you know
from from the experience selling

2027
01:50:22,080 --> 01:50:25,560
gold concentrate with Mount
Carlton to the complex deal

2028
01:50:25,560 --> 01:50:27,760
making, they knew their
competitive advantage.

2029
01:50:28,440 --> 01:50:31,760
Another part of the evolution
way is marketing.

2030
01:50:31,840 --> 01:50:36,960
We've joked about the marketing,
but it works, it's effective and

2031
01:50:36,960 --> 01:50:39,000
the rules are the same, like I
said, for everyone.

2032
01:50:39,400 --> 01:50:41,760
Do you think just on the
marketing, like not just

2033
01:50:41,760 --> 01:50:46,560
marketing the own sustaining
cost like Evos, Evos is such a

2034
01:50:46,560 --> 01:50:52,040
popular name amongst the Sydney
like generalist funds management

2035
01:50:52,040 --> 01:50:56,560
community, even international,
yeah, international investors

2036
01:50:57,040 --> 01:50:59,560
being acquainted with.
Do you think, you know, and I

2037
01:50:59,560 --> 01:51:01,960
know there's stories like
parallel with with Northern

2038
01:51:01,960 --> 01:51:05,200
Star, but like you couldn't
juxtapose to very different,

2039
01:51:05,200 --> 01:51:08,440
like leaders of those businesses
in Bill and Jake, like, you

2040
01:51:08,440 --> 01:51:11,480
know, Bill, the country guy who
who's like, you know,

2041
01:51:11,480 --> 01:51:15,080
experienced minor and, and
speaks in like a like a speaks

2042
01:51:15,080 --> 01:51:17,960
like a minor.
And Jake the polished like

2043
01:51:18,040 --> 01:51:21,520
Macquarie banker.
He's he's so like schmick

2044
01:51:21,520 --> 01:51:26,120
corporate flair, like, you know,
endorsed by maybe the fund

2045
01:51:26,120 --> 01:51:27,680
manager community.
Do you think there's anything

2046
01:51:27,680 --> 01:51:30,240
about their images and like
characteristics as people that

2047
01:51:30,240 --> 01:51:34,040
also like you know was a, was it
was a marketing advantage or do

2048
01:51:34,200 --> 01:51:35,360
you think I'm reading too much
into it?

2049
01:51:35,760 --> 01:51:38,240
No, I think you're 100% right.
I mean, for one, it shows you

2050
01:51:38,240 --> 01:51:42,400
there's multiple ways to to get
to a fantastic outcome, but

2051
01:51:43,440 --> 01:51:44,680
there's no, there's no
accidents.

2052
01:51:44,680 --> 01:51:46,960
We we've just, you know, spent
hours looking about how

2053
01:51:46,960 --> 01:51:49,480
thoughtful they are about
everything you think their,

2054
01:51:50,160 --> 01:51:53,560
their appearance and reputation
is, is an accident.

2055
01:51:53,840 --> 01:51:56,120
Absolutely not.
I know you're a big believer

2056
01:51:56,120 --> 01:52:00,120
that that companies culture is a
reflection of their founders.

2057
01:52:00,120 --> 01:52:04,800
And in the case of of Jaycar, do
you think yeah, evolutions

2058
01:52:04,840 --> 01:52:08,360
culture is is what it is as a
result of?

2059
01:52:08,640 --> 01:52:11,560
You know, we spoke about the
dynamic of the team coming back

2060
01:52:12,440 --> 01:52:15,040
on board.
I think a little less spoken

2061
01:52:15,040 --> 01:52:17,000
about dynamic is just like
getting the job done.

2062
01:52:17,480 --> 01:52:22,680
Like that shines through when we
talk about doing all those deals

2063
01:52:22,680 --> 01:52:27,960
in kind of quick succession just
to a can do attitude to get the

2064
01:52:27,960 --> 01:52:33,160
job done in a very quick
turnover time period, relying on

2065
01:52:33,160 --> 01:52:34,240
everyone.
You know.

2066
01:52:34,360 --> 01:52:38,520
You got Laurie doing the the
cultivating with the the banks.

2067
01:52:38,520 --> 01:52:42,080
You've got Aaron and and Karen
doing the the more kind of deal

2068
01:52:42,080 --> 01:52:44,840
making aspects.
Jake would be doing the roadshow

2069
01:52:44,840 --> 01:52:47,920
side of things.
All those and a whole bunch more

2070
01:52:47,920 --> 01:52:49,160
people that we haven't met
there.

2071
01:52:49,560 --> 01:52:52,200
But there's that sort of
accountability that that rings

2072
01:52:52,200 --> 01:52:54,880
through and and people having
their responsibilities

2073
01:52:54,880 --> 01:52:57,080
throughout the organization and
just delivering up to them.

2074
01:52:57,400 --> 01:53:00,160
They would, they could make,
they could make things happen

2075
01:53:00,160 --> 01:53:02,880
and fill in the void to back
solve just to get to the

2076
01:53:02,880 --> 01:53:05,480
opportunity.
That's yeah, that's, that's,

2077
01:53:05,640 --> 01:53:09,040
that's a great trait of an
organization to to lean into the

2078
01:53:09,040 --> 01:53:12,880
complexity, even though it's
harder work, but you need the

2079
01:53:13,320 --> 01:53:15,280
just get it done attitude in
order to get it done in the 1st

2080
01:53:15,280 --> 01:53:17,720
place when it's hard.
Yeah, and and it pays off.

2081
01:53:18,000 --> 01:53:21,040
It pays off big time if we
rattle through the other kind of

2082
01:53:21,040 --> 01:53:24,240
parts of the evolution way,
making your people with like

2083
01:53:24,360 --> 01:53:29,120
owners like massive cliche, but
they pay everyone with stock.

2084
01:53:29,160 --> 01:53:31,440
And that's something that
Mcquarrie did as well that the

2085
01:53:31,440 --> 01:53:34,440
Jake experience from when he was
a, you know, a young employee

2086
01:53:34,440 --> 01:53:36,760
there.
They buy from majors and not

2087
01:53:36,760 --> 01:53:39,640
just in the sense that people
think about, oh, you'll get a

2088
01:53:39,640 --> 01:53:43,240
good deal out of a major, but
they just put themselves in the

2089
01:53:43,240 --> 01:53:46,160
areas, you know, in the best
positions geologically and

2090
01:53:46,160 --> 01:53:49,480
otherwise.
So that rings true as well for

2091
01:53:49,480 --> 01:53:52,480
all the deal making now organic
growth is best.

2092
01:53:52,480 --> 01:53:57,960
So if you are in those great
regions, the the geos can find

2093
01:53:57,960 --> 01:54:01,560
the prize brownfields wise.
And lastly, they paid a

2094
01:54:01,560 --> 01:54:03,360
dividend.
They paid a dividend

2095
01:54:03,360 --> 01:54:06,240
consistently because that forces
capital discipline.

2096
01:54:06,520 --> 01:54:09,280
It makes you think more about
the dollars that you have and

2097
01:54:09,280 --> 01:54:11,840
how competitively they need to
be used and invested or returned

2098
01:54:11,840 --> 01:54:15,000
to the owners of the business.
The alignment, The alignment is

2099
01:54:15,000 --> 01:54:19,800
striking in in all three stories
that all three big value

2100
01:54:19,800 --> 01:54:21,600
creation stories that you've
told.

2101
01:54:21,840 --> 01:54:24,760
And yeah, Evo's no different.
Alignment makes such a

2102
01:54:24,760 --> 01:54:28,840
difference. 100% we have
obviously spoken about how

2103
01:54:29,200 --> 01:54:32,000
positive the gold price has been
as well.

2104
01:54:32,080 --> 01:54:35,840
And, and maybe just to, to add
to that, you have the, the

2105
01:54:35,840 --> 01:54:38,800
opportunity there for everyone,
but it was there for, for

2106
01:54:38,800 --> 01:54:41,040
everyone.
The outcome is where execution

2107
01:54:41,040 --> 01:54:44,040
meets opportunity that leads to
success.

2108
01:54:44,080 --> 01:54:45,240
And that's, that's what they
did.

2109
01:54:45,240 --> 01:54:47,840
So maybe for a moment, we can
sort of patent them on the back

2110
01:54:47,840 --> 01:54:50,920
after, after saying the gold
prices treated them so well.

2111
01:54:51,080 --> 01:54:53,720
So some takeaways, mate.
I'm kind of keen to, to hear

2112
01:54:53,720 --> 01:54:56,040
some from you, what you, what
you kind of think and reflect

2113
01:54:56,040 --> 01:54:57,200
on.
But I'll, I'll start with a

2114
01:54:57,200 --> 01:55:01,240
couple, as you mentioned before,
the the alignment.

2115
01:55:01,240 --> 01:55:05,520
So Jake shaped that board and in
a different way to what we've

2116
01:55:05,520 --> 01:55:08,600
seen with many other companies
with that exact chair role from

2117
01:55:08,800 --> 01:55:11,720
very early on.
And you know, maybe if you're

2118
01:55:11,720 --> 01:55:13,680
listening this and thinking as
somebody who wants to build a

2119
01:55:13,680 --> 01:55:16,440
gold company or any sort of
mining business or any business

2120
01:55:16,440 --> 01:55:19,240
at all for that matter, in the
future, that is an interesting

2121
01:55:19,240 --> 01:55:21,480
way to to think about it, which
is not the most common kind of

2122
01:55:21,480 --> 01:55:23,800
route.
You know, maybe it's, it's

2123
01:55:23,800 --> 01:55:27,520
different from a governance kind
of perspective, but it's worth

2124
01:55:27,520 --> 01:55:30,400
noting.
I can't think enough about like

2125
01:55:30,440 --> 01:55:32,240
how many of the people came back
like that.

2126
01:55:32,240 --> 01:55:35,800
That just sounds, that's just
such a, a glowing endorsement to

2127
01:55:35,800 --> 01:55:39,640
have people come back and do it.
One company, maybe a second

2128
01:55:39,640 --> 01:55:42,760
company, maybe sometimes even a
third company together is just

2129
01:55:43,080 --> 01:55:45,520
such a, a glowing recommendation
that you sort of love, love

2130
01:55:45,520 --> 01:55:49,040
working with with the people.
And it's a it's a really cool

2131
01:55:49,040 --> 01:55:51,880
thing to say.
That that is, that's not to be

2132
01:55:51,880 --> 01:55:54,560
like, yeah, I think I'm
understandably spent so much of

2133
01:55:54,560 --> 01:55:59,640
our our life with the people
that we're working with.

2134
01:56:00,280 --> 01:56:03,480
It's a big choice and it's a
huge vote of confidence to even

2135
01:56:03,480 --> 01:56:07,640
though like it would have been
at a, at a, at a substantial

2136
01:56:07,640 --> 01:56:13,320
intensity, I'm sure like to, to,
to have the continuity of of of

2137
01:56:13,360 --> 01:56:15,560
personnel.
Like that's, that's, that's

2138
01:56:15,680 --> 01:56:18,640
that's, that's huge.
A fun one to to think about in

2139
01:56:18,640 --> 01:56:20,480
the takeaways, the deals that
didn't happen.

2140
01:56:21,560 --> 01:56:24,960
So I'm just going to rattle a
few off here, but the Super Pit

2141
01:56:25,280 --> 01:56:30,240
with Newmont before that.
Dundee like they were they were

2142
01:56:30,240 --> 01:56:35,120
trying to be troublemakers when
when Northern star were were

2143
01:56:35,120 --> 01:56:38,080
finalizing, you know, everything
and and to had agreed something

2144
01:56:38,080 --> 01:56:42,040
with crazy like like, you know,
evos were I think it's public

2145
01:56:42,040 --> 01:56:43,760
knowledge.
They were that would really try

2146
01:56:43,800 --> 01:56:47,880
to put forward a a more
compelling deal for crazy and

2147
01:56:47,880 --> 01:56:51,280
they were willing to pay more.
But but but crazy didn't renege

2148
01:56:51,280 --> 01:56:54,600
on his on his word with with
with Norman star.

2149
01:56:55,760 --> 01:56:57,520
Another one that could have been
Kara Sudan.

2150
01:56:58,520 --> 01:57:01,840
This is an interesting 1 to
reflect upon because they were

2151
01:57:01,840 --> 01:57:08,040
fractionally the underbidder
here in a a deal that Saracen

2152
01:57:08,080 --> 01:57:11,240
would win and they were relieved
that they didn't win this one.

2153
01:57:11,240 --> 01:57:15,760
But that led to the emergence of
a a pretty a pretty mighty

2154
01:57:15,760 --> 01:57:18,880
competitor in in Saracen.
They were relieved because they

2155
01:57:19,120 --> 01:57:22,200
they it reminded them of Edna
May and they already had Edna

2156
01:57:22,200 --> 01:57:25,200
May and they had a bunch of
problems and issues and they

2157
01:57:25,200 --> 01:57:27,680
didn't want any more headaches
similar to Edna May.

2158
01:57:27,760 --> 01:57:32,520
But as it turns out, like not
not when Kara Sudan, yeah,

2159
01:57:32,520 --> 01:57:37,320
created, created Saracen.
Like that's the gold landscape

2160
01:57:37,320 --> 01:57:39,400
would look very different.
Sure would.

2161
01:57:40,080 --> 01:57:42,520
Kingsgate as well.
This is one we heard the

2162
01:57:42,520 --> 01:57:46,200
presentation was even done and I
cannot verify at what point in

2163
01:57:46,200 --> 01:57:47,880
time this happened so I'm just
going to leave it there.

2164
01:57:48,120 --> 01:57:51,960
But Kingsgate and the Chat tree
mine in Thailand, that would

2165
01:57:51,960 --> 01:57:53,320
have been different.
That would have been so

2166
01:57:53,320 --> 01:57:56,560
different.
And then there was also Detour

2167
01:57:56,560 --> 01:57:58,920
when they looked in Canada and
they looked in North America for

2168
01:57:58,920 --> 01:58:01,680
a long time.
So Detour is another one that

2169
01:58:02,000 --> 01:58:03,520
might have been.
Yeah.

2170
01:58:03,680 --> 01:58:06,040
So there's like opportunity cost
in the deals you didn't do.

2171
01:58:06,040 --> 01:58:09,400
There's also opportunity cost
obviously in the deals you did

2172
01:58:09,400 --> 01:58:12,840
do.
Do you think Redblake is a deal

2173
01:58:12,840 --> 01:58:16,080
that they shouldn't have done?
I think it's just too hard to

2174
01:58:16,080 --> 01:58:18,600
say if you're there at that
point in time, your balance

2175
01:58:18,600 --> 01:58:20,840
sheet is healthy.
These things are trading super

2176
01:58:20,840 --> 01:58:24,720
compellingly and you know, come
at it from from a finance kind

2177
01:58:24,720 --> 01:58:27,720
of perspective.
Oh, these guys have just under

2178
01:58:27,720 --> 01:58:29,200
invested.
Oh, there's a lot of low hanging

2179
01:58:29,200 --> 01:58:31,080
fruit there.
Sure, you think you can do it

2180
01:58:31,080 --> 01:58:34,400
better so.
Is the risk of like leaving your

2181
01:58:34,400 --> 01:58:38,680
backyard so substantial and
maybe maybe underrated in some

2182
01:58:38,680 --> 01:58:41,560
respects?
Because I think Red Lake was was

2183
01:58:41,560 --> 01:58:44,960
announced, was announced, it was
announced before the Super like

2184
01:58:44,960 --> 01:58:47,480
the Super pit halves kind of
sold in rapid succession in

2185
01:58:47,480 --> 01:58:48,800
between the two, in between the
two.

2186
01:58:48,800 --> 01:58:50,520
Wow.
So like that, that was the

2187
01:58:50,520 --> 01:58:52,040
opportunity cost in some
respects.

2188
01:58:52,040 --> 01:58:56,360
Like I know the upfront price
maybe wasn't as comparable, but

2189
01:58:56,600 --> 01:58:58,480
like in the fullness of time,
the amount of capital that

2190
01:58:58,480 --> 01:59:01,000
they've they've put in and the
additional bolt on acquisition,

2191
01:59:01,000 --> 01:59:04,760
they've put more capital to work
than they would have been

2192
01:59:04,760 --> 01:59:07,320
required for for half of the
Super pit.

2193
01:59:07,560 --> 01:59:09,960
I think that's that's the
opportunity cost that that may

2194
01:59:09,960 --> 01:59:11,480
have been missed.
And I'm sure they're awake to

2195
01:59:11,480 --> 01:59:13,560
that.
And it's rich of me to to say

2196
01:59:13,560 --> 01:59:17,080
and be critical of.
But but yeah, like, you know,

2197
01:59:17,560 --> 01:59:20,400
we're not, we're not perfect
even if we've got like many,

2198
01:59:20,400 --> 01:59:22,880
many runs on the board from a
capital allocation perspective.

2199
01:59:22,880 --> 01:59:24,240
I think that's like a reflection
I have.

2200
01:59:25,280 --> 01:59:28,240
Yeah, I would totally agree.
And my last two, it might be a

2201
01:59:28,240 --> 01:59:31,880
bit sort of philosophical, but I
think that thinking about like

2202
01:59:31,880 --> 01:59:36,360
the the toughest time for the
business is also the best time.

2203
01:59:36,880 --> 01:59:41,280
So 2014 to 2015 you, you know,
you heard all the the costs they

2204
01:59:41,280 --> 01:59:43,320
were cutting out of the business
and all these sorts of things,

2205
01:59:44,000 --> 01:59:46,560
but the deals they did led to
the growth of the company.

2206
01:59:46,560 --> 01:59:47,840
There's there's something kind
of in that.

2207
01:59:48,320 --> 01:59:52,440
And lastly, good things just
take a long, long time.

2208
01:59:52,440 --> 01:59:55,240
We spoke about the amount of
times you could look and take a

2209
01:59:55,240 --> 02:00:00,000
multi year snapshot of the share
price and it would be down or it

2210
02:00:00,000 --> 02:00:03,240
would be flattish.
But if you zoom out long enough,

2211
02:00:03,680 --> 02:00:06,760
it's an incredible value
creation story and.

2212
02:00:07,200 --> 02:00:09,200
I think that just hammers home
the fact that, you know, you

2213
02:00:09,200 --> 02:00:11,160
keep compounding, you keep
working at things over a long,

2214
02:00:11,160 --> 02:00:13,800
long time and it sort of pays
off.

2215
02:00:13,800 --> 02:00:15,960
But you need to be patient.
Takes a lot of patience.

2216
02:00:16,800 --> 02:00:20,400
Yeah, it's, it's a story of
deals.

2217
02:00:21,000 --> 02:00:24,440
There's like a point there on
like, you know, you bring up the

2218
02:00:24,680 --> 02:00:28,240
that slide with all of the peers
and a lot of those peers like

2219
02:00:28,240 --> 02:00:31,800
disappeared or fell over from
like far, far, far more

2220
02:00:31,800 --> 02:00:36,280
erroneous capital allocation
than than than red, red, like

2221
02:00:36,280 --> 02:00:37,720
proved to be the fullness of
time.

2222
02:00:37,720 --> 02:00:43,280
Like like, I don't think like I
can understate how, how

2223
02:00:43,520 --> 02:00:47,720
appreciative I am of like of
capital allocation of gold

2224
02:00:47,720 --> 02:00:48,840
miners.
This is the thing that

2225
02:00:48,840 --> 02:00:52,520
differentiates gold miners from
each other is how you allocate

2226
02:00:52,520 --> 02:00:54,240
capital.
And I think like what is

2227
02:00:54,240 --> 02:00:57,920
evolution as a company?
Like they get capital allocation

2228
02:00:57,920 --> 02:01:01,920
right 9099% of the time.
Like these are these are

2229
02:01:01,920 --> 02:01:04,200
remarkably good capital
allocators.

2230
02:01:04,880 --> 02:01:08,720
They're like thoughtful, nimble
deal makers and they take the

2231
02:01:08,720 --> 02:01:12,080
responsibility like serious.
It's a it's a safe set of hands.

2232
02:01:12,520 --> 02:01:17,240
They're they're they're just
they're they're they're insanely

2233
02:01:17,240 --> 02:01:19,120
backable.
I wonder if you like, if you you

2234
02:01:19,120 --> 02:01:21,880
thought much about that
perception of them as you've

2235
02:01:21,880 --> 02:01:23,200
like put this work together.
JD I.

2236
02:01:23,520 --> 02:01:27,080
Think like a safe pair of hands
is a, is a kind of great way

2237
02:01:27,360 --> 02:01:30,680
that what you mentioned before
the institutional investors in

2238
02:01:30,680 --> 02:01:33,360
particular perhaps the the
generalists would kind of call

2239
02:01:33,360 --> 02:01:35,400
them a safe pair of hands.
They're reliable.

2240
02:01:35,840 --> 02:01:40,040
And again, a bit of a cliche,
but like we say, we do deliver.

2241
02:01:40,040 --> 02:01:42,840
We deliver that type of thing
which they've said for a long,

2242
02:01:42,840 --> 02:01:45,480
long time.
And the consistency comes back

2243
02:01:45,480 --> 02:01:48,560
to the strategy as well, which
hasn't changed throughout.

2244
02:01:48,560 --> 02:01:52,120
And yeah, you can't say the same
for, for a heap of miners out

2245
02:01:52,120 --> 02:01:53,880
there.
So I, I couldn't agree more with

2246
02:01:53,920 --> 02:01:56,440
with what you kind of put
together and the bar you kind of

2247
02:01:56,440 --> 02:01:59,760
put it on there.
It is a remarkable story to, to

2248
02:01:59,760 --> 02:02:02,400
think about, to learn about, to,
to understand.

2249
02:02:02,480 --> 02:02:05,160
And yeah, hopefully there's
there's more than a few sort of

2250
02:02:05,280 --> 02:02:06,840
Nuggets in there for for people
to glean.

2251
02:02:06,840 --> 02:02:10,680
From I've got some more
questions for you unprompted

2252
02:02:10,680 --> 02:02:12,800
mate.
How do you think?

2253
02:02:13,000 --> 02:02:17,800
How do you think evolution
differed from Northern Star?

2254
02:02:18,440 --> 02:02:22,120
I mean, firstly, the stories
kind of track themselves in

2255
02:02:22,120 --> 02:02:26,560
particular once the story gets
going at Northern Star,

2256
02:02:27,320 --> 02:02:30,360
Evolution took an asset that was
more mature.

2257
02:02:30,360 --> 02:02:33,200
They took a producing asset that
wasn't going to shut down in

2258
02:02:33,200 --> 02:02:36,040
seven months time like Paulson's
was.

2259
02:02:36,200 --> 02:02:38,840
So once that quick share price
appreciation is done at Northern

2260
02:02:38,840 --> 02:02:43,560
Star, there's a lot more of a
closer tracking between the two.

2261
02:02:45,000 --> 02:02:47,480
Jundee may be the best deal ever
like that.

2262
02:02:47,480 --> 02:02:49,240
That is one of the the the
takeaways.

2263
02:02:49,560 --> 02:02:52,760
You kind of got to have like 82
and a half million bucks for

2264
02:02:52,760 --> 02:02:54,400
that.
It's just astounding.

2265
02:02:54,400 --> 02:02:56,400
As good as all these deals that
we've spoken about.

2266
02:02:56,440 --> 02:02:58,440
We've just spent two hours
talking about the deal making

2267
02:02:58,440 --> 02:03:01,640
the House of Evolution, but
Jundee is still a far better

2268
02:03:01,640 --> 02:03:03,240
deal than you guys could pull
off.

2269
02:03:04,200 --> 02:03:07,080
I still kind of scratch my head
at at that one.

2270
02:03:07,440 --> 02:03:09,880
And yeah, I mean, I I coming
into it had always thought, you

2271
02:03:09,880 --> 02:03:14,560
know, evolution like the deal
makers Northern Star,

2272
02:03:14,800 --> 02:03:17,560
particularly because of that
early period with, with the the

2273
02:03:17,560 --> 02:03:19,800
G OS and what they had to do to
kick out the life.

2274
02:03:20,160 --> 02:03:23,240
But you know, these these two
stories are far more alike than

2275
02:03:23,240 --> 02:03:26,600
they are different.
Balance sheet do you think like

2276
02:03:26,680 --> 02:03:30,480
yeah, I know, I know evos have
have a you know, their own

2277
02:03:30,480 --> 02:03:32,920
target net debt range or gearing
range and the likes.

2278
02:03:33,640 --> 02:03:37,120
At times, their share price has
been quite volatile because of

2279
02:03:37,120 --> 02:03:41,520
debt in the cap structure.
Do you have any reflections or

2280
02:03:41,520 --> 02:03:44,520
thoughts about about gearing?
Super good question.

2281
02:03:44,520 --> 02:03:48,440
Like today talk about that 15%
gearing and I've reflected like

2282
02:03:48,440 --> 02:03:51,080
a bunch on this because I've
always come from a position that

2283
02:03:51,080 --> 02:03:53,760
like it's kind of terrifying.
And we saw on the other hand

2284
02:03:53,760 --> 02:03:57,080
with with the Fortescue story,
yeah, when it goes well, boy

2285
02:03:57,080 --> 02:04:01,280
does it go well.
But if you have a portfolio of 6

2286
02:04:01,280 --> 02:04:07,360
to 8 assets that operate in the,
the better half of the cost

2287
02:04:07,360 --> 02:04:11,360
curve, then I think 15% is, is
pretty prudent.

2288
02:04:12,360 --> 02:04:15,480
I, I'm a fan of the, the
strategy of taking on a bit of a

2289
02:04:15,480 --> 02:04:19,480
debt if you have the confidence
that within like 2 years you can

2290
02:04:19,480 --> 02:04:22,400
hammer that down.
Like there, there is a bit of

2291
02:04:22,400 --> 02:04:26,520
risk to it, but that, that
amplifies the return quite a

2292
02:04:26,520 --> 02:04:29,080
bit.
And I think they're very,

2293
02:04:29,080 --> 02:04:31,760
they're very sort of thoughtful
with that.

2294
02:04:31,760 --> 02:04:35,840
But again, you know, they,
they'll often say like single

2295
02:04:35,840 --> 02:04:37,560
asset producers are far too
risky.

2296
02:04:38,000 --> 02:04:41,080
They they will say that and they
will after you know, almost all

2297
02:04:41,080 --> 02:04:44,160
I think all their deals they
would hedge in, they would lock

2298
02:04:44,160 --> 02:04:47,760
in a bit to to minimize the, the
gold price falling away risk.

2299
02:04:47,760 --> 02:04:50,440
So I think there is there is
room for that and we see that

2300
02:04:50,440 --> 02:04:52,800
more at the bigger end of minus
which we don't speak quite of

2301
02:04:52,800 --> 02:04:57,160
quite often about being a bit
more sort of thoughtful given

2302
02:04:57,160 --> 02:05:00,200
where they sit in the cost curve
with their assets.

2303
02:05:02,200 --> 02:05:05,280
The, the part of that marketing
pace is the like the dividend

2304
02:05:05,280 --> 02:05:07,600
predictability as well.
Even in the bad years, they'll

2305
02:05:07,800 --> 02:05:10,360
pay a pretty, pretty marginal
dividend.

2306
02:05:10,360 --> 02:05:15,280
But the marketing pace, like, I
wonder what impact that actually

2307
02:05:15,280 --> 02:05:17,920
has to their multiple.
I think it's, I think it's a

2308
02:05:18,040 --> 02:05:22,160
bit, I think they get a fair bit
of, of a multiple rewrite purely

2309
02:05:22,360 --> 02:05:24,240
based on how marketable they
are.

2310
02:05:25,280 --> 02:05:28,360
Like I've spoken to a bunch of
different people over over many

2311
02:05:28,360 --> 02:05:30,120
years.
I always like ask people like

2312
02:05:30,880 --> 02:05:33,240
Evolution's valuation makes
sense, right?

2313
02:05:33,320 --> 02:05:36,760
And yes, gold price keeps going
up and so evolution share price

2314
02:05:36,760 --> 02:05:39,880
keeps going up.
But everyone always says no, a

2315
02:05:40,480 --> 02:05:43,280
lot of people, a lot of people
think that, you know, Evo's

2316
02:05:43,280 --> 02:05:47,200
commands a premium in the market
that is not at all not not that

2317
02:05:47,200 --> 02:05:49,480
is that is that is like
sufficiently larger than what

2318
02:05:49,480 --> 02:05:52,160
the, you know, the, the real
value of, of what their assets

2319
02:05:52,160 --> 02:05:55,360
might be, especially compared to
other people, other, other other

2320
02:05:55,360 --> 02:05:57,360
comparable companies.
And part of that, it's like just

2321
02:05:57,360 --> 02:06:01,400
that, that that marketing factor
and now this company is, is so

2322
02:06:01,400 --> 02:06:03,840
large that it is in enormous
indexes.

2323
02:06:04,640 --> 02:06:06,280
Yeah.
I've always thought the same.

2324
02:06:06,360 --> 02:06:09,080
I've always thought the same
more so in the last few years.

2325
02:06:09,080 --> 02:06:12,960
And that has been tainted by
that period of heavy investment.

2326
02:06:12,960 --> 02:06:18,920
So like, you know, a lot of
money was spent in in 2223 into

2327
02:06:18,920 --> 02:06:23,680
24 and obviously like the the
change in cash on on, on the, on

2328
02:06:23,680 --> 02:06:25,920
the books didn't look that great
through that period because they

2329
02:06:25,920 --> 02:06:27,720
were investing so heavily in the
assets.

2330
02:06:27,760 --> 02:06:30,600
So very kind to see what that
looks like in in the next few

2331
02:06:30,600 --> 02:06:33,120
years.
I want to put like a couple of

2332
02:06:33,280 --> 02:06:38,360
questions to you as well, mate,
just in relation to, I suppose,

2333
02:06:38,360 --> 02:06:42,240
like firstly evolution the
company, like what, Like what do

2334
02:06:42,240 --> 02:06:46,560
you think is next for them?
In some in some ways I, I ask

2335
02:06:46,560 --> 02:06:50,520
you that because the story that
Jake tells with Sino gold is

2336
02:06:50,520 --> 02:06:53,480
sign it like you know, the next
phase of growth for Sino gold

2337
02:06:53,480 --> 02:06:56,080
was not actually was not
actually them embarking on more

2338
02:06:56,080 --> 02:06:58,080
growth.
It was to to to combine with

2339
02:06:58,080 --> 02:07:01,040
another company.
Sometimes the deal is is the

2340
02:07:01,040 --> 02:07:06,800
phase of growth like Jake's
stepping stepping down from an

2341
02:07:06,800 --> 02:07:09,800
executive position into a non
exec and and and embarking on a

2342
02:07:09,800 --> 02:07:12,160
new adventure in a smaller
company.

2343
02:07:13,200 --> 02:07:15,760
Yeah, yeah.
I mean, from Jake sort of

2344
02:07:15,760 --> 02:07:17,920
stepping down, I think growing a
smaller company is just more

2345
02:07:17,920 --> 02:07:20,520
exciting.
But the bigger question about

2346
02:07:20,520 --> 02:07:23,000
where does evolution go from
here is a really interesting one

2347
02:07:23,880 --> 02:07:27,560
because where do you kind of go?
Obviously, you can continue to

2348
02:07:27,880 --> 02:07:30,640
improve the portfolio On paper,
that makes a whole lot of sense.

2349
02:07:30,920 --> 02:07:34,080
How do you actually do that?
The best answer I've kind of got

2350
02:07:34,080 --> 02:07:38,080
is like looking back in time,
looking 10 years back, you wait

2351
02:07:38,080 --> 02:07:40,480
for your opposition to trip
themselves up.

2352
02:07:40,760 --> 02:07:45,080
Like if you can make good cash
when times are really, really

2353
02:07:45,080 --> 02:07:48,520
good and just wait for the bad
times, you don't know what

2354
02:07:48,520 --> 02:07:50,160
opportunities are going to
present themselves.

2355
02:07:50,480 --> 02:07:53,240
But as we sit here today when
everything looks very expensive,

2356
02:07:53,520 --> 02:07:55,480
it's pretty hard to think like,
where do they go from here?

2357
02:07:55,880 --> 02:07:59,720
So remember how different that
landscape looked 12 years ago

2358
02:07:59,720 --> 02:08:01,200
when we looked at all the
companies around?

2359
02:08:01,600 --> 02:08:03,040
What's it going to look like in
10 years?

2360
02:08:03,960 --> 02:08:07,000
Like that comes down to how you
manage yourself in the good

2361
02:08:07,000 --> 02:08:08,880
times.
You, you know, you set the table

2362
02:08:08,880 --> 02:08:10,800
in the good times to what's
going to follow.

2363
02:08:11,640 --> 02:08:13,760
We've spoken about this with
companies taking measly amounts

2364
02:08:13,760 --> 02:08:15,400
of debt when things are really
good.

2365
02:08:15,400 --> 02:08:18,160
And all of a sudden that amount
of debt looks enormous when when

2366
02:08:18,160 --> 02:08:21,640
the tide turns very quickly.
So who knows what opportunities

2367
02:08:21,640 --> 02:08:23,760
will present themselves if you
just remain disciplined in the

2368
02:08:23,760 --> 02:08:25,480
good times.
What do you think?

2369
02:08:25,880 --> 02:08:30,840
I think like even though yeah,
transitions happening with Jake,

2370
02:08:30,880 --> 02:08:33,040
Evo still has great consistency
of personnel.

2371
02:08:33,360 --> 02:08:37,240
There's, you know, like Laurie
has been there for a very long

2372
02:08:37,240 --> 02:08:42,720
time and has like tremendous buy
in from from his employees.

2373
02:08:42,960 --> 02:08:45,040
Yeah, you've still got Kieran
and the BD team.

2374
02:08:45,200 --> 02:08:49,720
There's like there has been
some, some change, but like

2375
02:08:49,720 --> 02:08:52,200
there's still like, you know,
great, great consistency there.

2376
02:08:52,440 --> 02:08:54,600
I don't think you'll have like
massive deviation from the

2377
02:08:54,600 --> 02:08:56,040
strategy.
And I think like the party line

2378
02:08:56,040 --> 02:08:58,360
has been in the good times,
we're more likely to be sellers

2379
02:08:58,360 --> 02:09:00,080
than we are buyers.
Like I should believe them on

2380
02:09:00,080 --> 02:09:01,640
that.
Like I wouldn't be surprised to

2381
02:09:01,640 --> 02:09:05,560
see them potentially rationalize
certain assets in these good

2382
02:09:05,560 --> 02:09:07,200
times.
Like I think of the likes of,

2383
02:09:08,600 --> 02:09:10,800
yeah, if you get if you get a
great offer for red light, do

2384
02:09:10,840 --> 02:09:12,360
you sell it?
Or if you get a great offer for

2385
02:09:12,360 --> 02:09:14,960
mangari, do you sell it?
You know, I think the answer to

2386
02:09:14,960 --> 02:09:17,640
that is is you probably do.
I wouldn't be surprised to see

2387
02:09:17,640 --> 02:09:20,640
them like incrementally continue
to add more like copper.

2388
02:09:20,640 --> 02:09:25,400
And why do I say that?
Because in what worked, like if

2389
02:09:25,400 --> 02:09:31,320
the next phase of growth for for
Evos is, is is unclear, because

2390
02:09:31,320 --> 02:09:33,760
they've already got the right
number of, of mines that they've

2391
02:09:33,760 --> 02:09:35,120
always said that would, that
would have.

2392
02:09:35,160 --> 02:09:38,760
And they, and they trade at such
a like, they trade at such a

2393
02:09:38,760 --> 02:09:41,200
premium that like it never makes
sense for them to get acquired

2394
02:09:41,200 --> 02:09:42,480
at a premium.
Do you know what I mean?

2395
02:09:42,480 --> 02:09:45,240
Like if you traded at a premium
to everyone else, no one's doing

2396
02:09:45,240 --> 02:09:47,400
a deal to buy you at a premium
because it's not in a creative

2397
02:09:47,400 --> 02:09:48,240
deal.
You can't sell that to

2398
02:09:48,240 --> 02:09:51,760
shareholders.
So but adding more copper kind

2399
02:09:51,760 --> 02:09:55,480
of does every everyone, everyone
wants more copper.

2400
02:09:55,480 --> 02:09:59,440
Everyone wants like, yeah, I
think you attract a high, a high

2401
02:09:59,440 --> 02:10:02,800
premium and you can backfill
that with with more copper in

2402
02:10:02,800 --> 02:10:06,560
the very long run.
I think they I think it's a

2403
02:10:06,840 --> 02:10:08,640
merger of equals with a, with a
PRI.

2404
02:10:08,680 --> 02:10:11,880
Think like one of the Canadian
miners, yeah.

2405
02:10:11,880 --> 02:10:15,560
Where where scale becomes
increasingly important, Agnico's

2406
02:10:15,560 --> 02:10:19,600
become like enormous, like as,
as they already are, you know,

2407
02:10:19,600 --> 02:10:22,400
maybe, maybe, maybe Barrick and
and you might merge.

2408
02:10:22,400 --> 02:10:24,600
So where does that leave the,
the tier below that?

2409
02:10:24,600 --> 02:10:26,840
I think you might have yeah, a
merger vehicles.

2410
02:10:26,960 --> 02:10:29,960
That's my prediction completely
unfounded and not substantiated

2411
02:10:29,960 --> 02:10:33,160
by by anyone other than my own
like, like thoughts.

2412
02:10:33,160 --> 02:10:36,720
But yeah, I think the next phase
of gross growth is actually it's

2413
02:10:36,720 --> 02:10:40,360
actually similar to what Sign of
Gold was when when they actually

2414
02:10:41,080 --> 02:10:43,240
had to to sell themselves to El
Dorado.

2415
02:10:44,760 --> 02:10:47,240
I think that's a good take.
What do you think of like

2416
02:10:47,880 --> 02:10:51,240
Jake's?
Yeah, like so he's now he's now

2417
02:10:51,600 --> 02:10:55,840
new vehicle is, is Federation
mining Endura Endura renamed.

2418
02:10:56,480 --> 02:10:59,800
This is a an Aussie super kind
of back back vehicle.

2419
02:10:59,840 --> 02:11:01,760
I'm sure it'll make its way to
public markets at some point,

2420
02:11:01,760 --> 02:11:06,080
but do you just apply cookie
cutter evolution playbook to

2421
02:11:06,080 --> 02:11:08,000
that vehicle and expect that's
what will happen next?

2422
02:11:08,120 --> 02:11:11,760
Well, it's kind of funny, right?
Because Conquest, it was also

2423
02:11:11,760 --> 02:11:15,160
started in a period of a bull
gold market, which we're clearly

2424
02:11:15,160 --> 02:11:17,760
in today.
You're going to have to be a bit

2425
02:11:17,760 --> 02:11:20,600
patient if you want to find kind
of four sellers around there.

2426
02:11:21,040 --> 02:11:24,320
But they've got a bunch of work
to do in in the meantime and

2427
02:11:24,320 --> 02:11:27,040
they're going to have no
shortage of people giving them

2428
02:11:27,040 --> 02:11:31,320
money.
So let's let's kind of say, are

2429
02:11:31,320 --> 02:11:33,440
they going to do something
massively different to what's

2430
02:11:33,760 --> 02:11:35,200
what Jake has kind of done in
the past?

2431
02:11:35,360 --> 02:11:40,160
I find that hard to to believe,
but yeah, it's, it's all about

2432
02:11:40,160 --> 02:11:42,040
the timing and how these things
sort of present themselves, the

2433
02:11:42,040 --> 02:11:45,320
deals that present themselves.
Are there maybe slightly

2434
02:11:45,320 --> 02:11:47,520
different jurisdictions they
could play in perhaps?

2435
02:11:47,520 --> 02:11:49,960
I mean, New Zealand already is
is slightly different, although

2436
02:11:50,240 --> 02:11:53,440
evolution did look there a bit
of exploration there back in the

2437
02:11:53,440 --> 02:11:56,400
day.
But it's it's a tough one.

2438
02:11:56,400 --> 02:11:59,360
How do you think about that?
I think it's, I think it's the

2439
02:11:59,360 --> 02:12:01,720
same playbook that'll will pan
out in time.

2440
02:12:02,400 --> 02:12:07,080
What what you have is like a
serially successful person,

2441
02:12:07,800 --> 02:12:10,280
nominal access to capital is an
opportunity.

2442
02:12:10,760 --> 02:12:14,120
And that's like that's one, one
common theme is like they can,

2443
02:12:14,320 --> 02:12:16,280
yeah, evolution conceive the
opportunity.

2444
02:12:16,640 --> 02:12:20,000
I think it'll be a story of
deals to come there.

2445
02:12:20,360 --> 02:12:25,120
I'm excited to see what deals
can kind of be manufactured in a

2446
02:12:25,160 --> 02:12:27,120
in a new vehicle.
But I've got no doubt that that

2447
02:12:27,120 --> 02:12:28,800
that's where that's what will
happen.

2448
02:12:29,160 --> 02:12:31,320
Commodities are cyclical and
I've no doubt we're going to see

2449
02:12:31,320 --> 02:12:33,160
another cycle in the gold market
sooner or later.

2450
02:12:33,600 --> 02:12:34,760
Another cycle?
What do you mean mate?

2451
02:12:34,760 --> 02:12:35,840
You're predicting the end of
this one.

2452
02:12:37,680 --> 02:12:39,480
It's right when things are so
good that you don't think

2453
02:12:39,480 --> 02:12:42,320
they're going to go bad when
things turn, so let's see what

2454
02:12:42,320 --> 02:12:48,280
happens there. 100% mate.
Well, thank you for for your

2455
02:12:48,280 --> 02:12:50,720
research and thanks for, for
telling the story.

2456
02:12:51,000 --> 02:12:53,920
I, I love it.
I know a lot of other people

2457
02:12:53,960 --> 02:12:57,200
love it get some great feedback
from from the work you've done

2458
02:12:57,200 --> 02:12:58,040
on these mate.
It's.

2459
02:12:58,480 --> 02:12:59,680
Mate, appreciate you putting out
with it.

2460
02:12:59,760 --> 02:13:02,080
It was a long sort of story to
tell, but yeah, hopefully the

2461
02:13:02,080 --> 02:13:05,040
listeners got a bit of value out
of it because the the research

2462
02:13:05,040 --> 02:13:07,240
was super fun to do and I think
it's a story worth telling A.

2463
02:13:07,520 --> 02:13:11,400
100% hoodoo Hoodoo.
And a huge thanks to our great,

2464
02:13:11,400 --> 02:13:14,640
great partners, Mate, Sandy
Ground Support, Focus Platform

2465
02:13:14,640 --> 02:13:16,960
by Market Tech and Intralinks.
Check them out.

2466
02:13:17,400 --> 02:13:21,320
Hoodoo, hoodoo.
Now remember, I'm an idiot.

2467
02:13:21,600 --> 02:13:24,040
JD is an idiot.
If you thought any of this was

2468
02:13:24,040 --> 02:13:26,640
anything other than
entertainment, you're an idiot

2469
02:13:26,920 --> 02:13:28,160
and you need to read out a
disclaimer.