The Trump trade you didn’t know about

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Righto buddy miners.
What a bloody talk about a red,

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white and blue day.
USA, OH.

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Far out does it.
Bloody Twitter and everything

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get taken over by the friggin US
election anyway.

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Open Twitter for min twit news
and but yeah, I think there's a

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48 hour just it's complete
politics.

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Yeah, no, we're gonna, we've
found some mining to put in

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relation to this.
Obviously gonna talk about the

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Trump win and what that's gonna
do for Bloody, what it's done

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and what it possibly might do to
the mining world.

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We'll make it mining.
Who needs JD from Macro?

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Maddie, 'cause you're next, JD.
Macro Maddie mate, he'd be lucky

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if he gets let back in the door
with my macro expertise today.

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I've just realised I don't even
need him.

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But anyway, we'll see JD judge
me on it, see how we go.

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Trav bloody interesting comments
in the world of lithium last

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time from the biggest lithium
company.

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Yeah, fascinating.
Totally, Yeah, I'm keen to to

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just look at what's going on
with Albemarle under the hood.

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They've reported their their Q3
and he's also made some dire

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comments about the cobalt market
from the world's biggest cobalt

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producer too.
Oh, interesting.

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That's a funny Trump trade I
want to talk about, which is in

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our world of mining.
Junior mining stocks went up

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108.
Percent.

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I was about to say, I can't
believe it's not Bitcoin that

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you're going to talk about.
Yeah, well, that didn't go up

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100%. 28% yeah.
So anyone that lived under a

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rock yesterday, you would have
know that big Trumpy ended up

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just bloody smashing the crap
out of old Kamala.

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Yeah, absolutely.
You'd class it as a bit of a

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landslide victory.
So, but the effect on, you know,

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commodities and equities and
stuff that whether who predicted

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what would happen?
Like copper down 4.2% on the

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back of it.
They're back down to 4 bucks, 17

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a pound.
I guess the comments and some of

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these comments from the UBS
night this morning about

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concerns of slower energy
transition and weakened demand.

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But funny that Tesla was
actually up 22.8% after they

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win.
So it doesn't go against, but

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sounded like that is from the
whole Trump, Elon Musk bromance

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that's coming up.
God, if Joe Rogan podcast had

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shares as well, that would have
went up.

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So yeah, there's a bit of a you
can see what was going on there.

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But that was that's a huge move
for a company that size gold.

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So you've read on the Goldies
today down 2.7%, so 2676.

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So because the dollar, U.S.
dollar rallied on the Trump

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victory gold, Aussie gold prices
retreated from 4190 to 4064 in

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two days.
Still bloody.

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Yeah, so it's a bit of a sad
day.

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Bucks an ounce, but yeah, it's.
Sad day for LG so but no and

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that's the thing it's The thing
is to remember is we we are

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still stupidly somehow at out
and above Aussie $4000 gold gold

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price.
So let's let's not forget that.

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Yeah, because that UBSUBS note
was like, I guess their view was

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the the Republican win could be
a bit of a negative for

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industrial metals in the near
term.

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So like, because the, the risk
of like, you know, a bit of a

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trade war and we'll go into like
this whole tariff thing and

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what's what potentially could
happen with Trump.

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On the gold front, Maddie, the
geopolitical lens there isn't

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like, you know, the the market
thinks Trump's got a better

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probability of just getting a
deal done with Putin.

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And so if you have like reduced
kind of tension with Russia,

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then that's less geopolitical
kind of concerns which, you

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know, make gold less relevant in
that environment.

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And do you reckon Taiwan as
well?

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So I cook in terms of a risk
thing there.

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Maybe just just AG you don't you
don't need to go invade that

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joint.
Come on.

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He always thought on the a lot
of reference would be from the

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Joe Rogan episode.
He did.

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He just, he talks like I talked
to Vladimir, like I told him

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like, come on, man, you wouldn't
have don't go into Ukraine.

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Like he's like, he's like he's
just casual, just casual.

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But Spain on the blower.
He said he wouldn't have gone in

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for if he he was in.
So yeah, it's funny.

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That's a freaking honest.
It's a hilarious interview to

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listen to.
So, yeah.

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And also the make America Great
again as well.

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So the I guess this is the the
medium term impact, like metal

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demand, because is there is
there going to be more

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manufacturing hubs and the track
like just how this trade flow is

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going to work between China Usus
going to be like de Chinering,

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de rushering.
Everything's going to come into

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country.
So it's going to be frigging

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fascinating.
And then but then you've got

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also the China stimulus as well
coming up because that's going

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to be like another macro
catalyst.

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So I think their NPC meeting 4th
to 8th of November.

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So they're thinking, is that
going to be where the third

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actual what stimulus in China is
going to be happening?

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Is that going to be announced?
So that's that's sort of pretty

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much what end of tomorrow.
So what's today is 7th, 7th.

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Yeah.
So and but they're thinking they

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don't know if there's, I think
they have another meeting in

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March as well.
So he's saying what happens

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between if Trump is going to
increase tariffs, like like

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really up this whole tariff
thing because he's all all these

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comments are around like
lowering income tax rates in US

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and offset that boy increase in
the tariffs.

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Like taking America back to the
olden days where they were just

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the richest country in the world
because of all these tariffs

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getting.
And then that's going to offset

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the income tax lowering and
apparently start paying the debt

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off as well, which is what is
it, 37 trillion?

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Yeah, I know a few economists
that would argue that

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globalisation leads to higher
income standards.

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Yes.
Rather than the other way

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around.
But the de globalisation is a

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trend.
I get a bit nervous.

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I mean, you described the whole
kind of push on mad in country

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industrialization.
That's a theme stimulus from

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from China at the exact same
time that's another theme.

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Both of those things just result
in adding more and more

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government debt and you know,
also an environment where

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reducing taxes, but you're not
actually not actually cutting

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out a lot of government spending
that just, you know, short term

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sugar hit markets rally, blah,
blah, blah.

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What happens in two years time
when you know, like, is there

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some sort of something that
happens where all of a sudden

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the market is pretty nervous
that literally like you might

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have some like inability for a
sovereign country to repay its

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debt?
That's a scary thought.

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Yeah, yeah.
And then the inflation factor as

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well by adding all those.
Tariffs on you'll need inflation

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to reduce the the, you know, the
the real value of the debt.

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You'll have to run a you'll have
to run an economy at pretty high

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inflation.
And then but high inflation

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means you can have higher
interest rates, which kills,

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kills the equity fund because
it's like, you know, yeah, it's,

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it's a complicated thing.
But short term sugar here is

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what what you saw.
And I just think like Stan

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Stanley Druckenmiller, he was
interesting.

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He had some really interesting
comments in an interview that

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went up overnight and he sort of
talked about, yeah, he's getting

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pretty he's he's he's, he's,
he's positioning like being

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pretty, pretty fearful for the
return of inflation at a time

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when the, you know, the Fed has
actually guided towards a Fed

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rate cuts.
So yeah, just he doesn't think

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inflation's actually a forgotten
factor.

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He thinks it could return in a
in a, in a heated way, Yeah.

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And like, because if you, if
you, you step through what might

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happen with this, I guess the
tariff side, like really just

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tariffing the shit out of
everything.

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So, and you think of commodities
and think of what's coming out

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of China, which is freaking
effectively everything.

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So imagine like disrupting that
global supply chain with this

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increased tariff.
So potential supply shortages,

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so which could effectively drive
up commodity prices.

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So you drive up commodity prices
from a supply shortage, that's

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there's inflation right there.
Everything will just start

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costing more.
And then you couple that with

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lowering the income tax rate.
So they're at 21% now, the

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corporate income tax rate for
America.

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He talked about lowering that to
15 eventually.

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So that increases your
disposable income, increases

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your spending, that'll stimulate
economic growth.

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Yes, but will the demand like
the supply side for the all the

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goods and services for the
increased demand, your supply is

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the is the last thing to come
because you know that lowering

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the income tax rate, you know,
might promote more investment,

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but but that's what takes years
and years and years to actually

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get that supply response to the
increased demand, because he's

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he's big on also reducing red
tape.

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You'd say talks a lot about like
the regulatory processes, like

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it's pretty, it's pretty clear
on environmental, the

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environmental and 1st nation
side for, you know, oil like

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obviously big on U.S. oil mining
will be the same talking about

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what effect that has on bringing
on those projects.

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So whether the regulatory
process lowering, But still,

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even if you lower that, you
still got to build everything.

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And it's, it's a big, big delay
to get to that point.

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And as you said, the only way to
control all this increased

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demand if there's more money is
interest rates.

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So the actual lowering of it
all.

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The policy stuff is
inflationary.

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Yeah, yeah.
And with inflation comes higher

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interest rates.
With higher interest rates comes

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you killed the party.
Because what's his view on

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energy?
Or or nuclear and uranium?

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Oh jeez.
Isn't it funny?

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Why would you like, not want to
talk about what would happen in

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with uranium?
Because like, I feel like it'd

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be like I'd automatically get
asked that on Twitter.

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What what else went big Elon,
Elon tweeting the other day.

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We should definitely increase
nuclear power.

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No brainer.
So I think, I think it's kind of

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he's very holistic energy, isn't
he?

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Yeah, Not it's not just nuclear.
He wants to energy.

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Security, yeah.
It actually reminds me a lot of

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like Arjun Murti, who's just big
on, you know, yeah, energy

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availability and kind of, you
know, the abundance of energies

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is like the kind of priority in,
in energy policy as opposed to

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what specific source of the
energy it is.

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And like if you if he's if he's
going to lower the regulatory

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requirements and everything,
it's body you if you if you

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stack it up for uranium.
And this is like a lot of these

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comments came from the great Art
Hod on Twitter, who we are we

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were discussing today for all
these views we consider art

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patient zero use views on
uranium and nuclear because like

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all these views in the media,
they have to come up with some

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from come from somewhere that
created the idea.

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We think art is patient zero.
He creates these ideas.

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Thank you, art.
So combined regulatory streaming

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that Trump proposes, obviously
bipartisan support for nuclear

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energy in the US, the more
independent sort of fuel cycle

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free from Russia.
So as part of the enriched

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uranium import ban from Russia,
federal funding for nuclear

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projects.
So and then there was also the

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credits under the IRA for
existing NU nuclear units.

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00:11:15,240 --> 00:11:17,040
So you can bind all that
together.

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That's pretty bullish for
uranium and nuclear in the US

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Should the US like they've
obviously got a the old school

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nuclear power plants that are
all being from the previous era.

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But if they sort of turn up the
doll for nuclear investment,

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like it could just for the, you
know, the world's biggest

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economy that is would be pretty
friggin interesting.

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So if the US lot start really
investing into it.

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Totally.
I, I see it as like a, you've

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got a president who's super
sympathetic to the, the kind of

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the tech tech bro regime these
days, maybe in part because of

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running mate JD Vance, who's
just super in tune with all

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that.
And they are becoming big, big

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00:12:00,520 --> 00:12:03,440
advocates for for that whole
nuclear investment thesis.

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So I think I think we've come to
the consensus that Trump is

227
00:12:08,280 --> 00:12:10,920
potentially inflationary.
He.

228
00:12:10,960 --> 00:12:13,360
Certainly, yeah, every option
was inflationary though, I

229
00:12:13,360 --> 00:12:15,320
think.
But yeah, yeah, I think it's

230
00:12:15,320 --> 00:12:17,720
probably like, you know,
commodities do OK in that

231
00:12:17,720 --> 00:12:19,400
environment.
You know, there's volatility.

232
00:12:19,600 --> 00:12:22,680
The commodities do OK, yeah.
Yeah, because you can't really,

233
00:12:23,000 --> 00:12:27,080
you think you can't really just
turn up copper supply like that

234
00:12:27,600 --> 00:12:30,280
Copper, I don't know, Copper's
really interested me that it

235
00:12:30,280 --> 00:12:33,920
went goes down like you think of
if there is all this extra

236
00:12:33,920 --> 00:12:38,960
activity and bloody data centres
and fucking EV bloody demand

237
00:12:38,960 --> 00:12:41,240
increases because there's more
spending like copper's lot.

238
00:12:41,240 --> 00:12:44,320
One thing that you just can't
turn up quickly in this sort of

239
00:12:44,320 --> 00:12:48,120
structural supply, potential
structural supply shortage.

240
00:12:48,240 --> 00:12:50,360
So I don't know, copper
interests me.

241
00:12:52,240 --> 00:12:57,080
I would the only thing I don't
think that will be affected by

242
00:12:57,840 --> 00:13:02,000
this in like an inflationary, an
increase in the inflationary

243
00:13:02,000 --> 00:13:06,880
environment considering Cross
boundary energy already are

244
00:13:06,880 --> 00:13:11,320
fully funded and equipped to
deploy their hybrid power

245
00:13:11,320 --> 00:13:13,440
stations.
Like yeah, because they're like

246
00:13:13,440 --> 00:13:15,600
they're sitting there ready to
go and already funded.

247
00:13:15,600 --> 00:13:19,440
So why would inflation affect
them?

248
00:13:20,360 --> 00:13:23,720
That was the one that was the
one I sort of landed on like,

249
00:13:24,640 --> 00:13:26,360
yeah.
Do you do you agree, don't you?

250
00:13:26,360 --> 00:13:29,640
Yeah.
I I actually do agree it's only

251
00:13:29,640 --> 00:13:33,600
inflationary if you have to
yeah, buy it again or and it.

252
00:13:33,600 --> 00:13:36,680
Won't affect the miner, no, No,
it won't affect the miner

253
00:13:36,680 --> 00:13:38,640
because it's zero CapEx for the
miner.

254
00:13:39,080 --> 00:13:40,720
So who?
Cares.

255
00:13:41,320 --> 00:13:44,360
Well, it's that's not inflate
that you can't inflate $0.00

256
00:13:44,360 --> 00:13:49,040
because like Cirrus boundary are
the ones funding it building,

257
00:13:49,080 --> 00:13:51,720
owning, operate.
So that's not inflationary, they

258
00:13:51,720 --> 00:13:53,400
do.
The boom model for these home

259
00:13:53,400 --> 00:13:55,200
power stations.
What's that?

260
00:13:55,600 --> 00:13:57,680
Build, own, operate I'll.
Build own, operate, Yeah.

261
00:13:57,840 --> 00:14:00,240
Power purchase agreements.
Mine that is that?

262
00:14:00,280 --> 00:14:02,800
How good's that so?
00 dollars upfront 0.

263
00:14:02,880 --> 00:14:05,920
Nothing 0 they will build.
Own and operate it.

264
00:14:06,120 --> 00:14:09,280
Yeah, that, that makes the CapEx
a lot more palatable.

265
00:14:09,680 --> 00:14:12,480
Great for an MPV cause like
you're pretty much a cost of

266
00:14:12,480 --> 00:14:15,760
power from 10 years isn't even
in the MPV so who cares.

267
00:14:15,920 --> 00:14:19,400
Like it's just perpetuity so
easy as that.

268
00:14:19,400 --> 00:14:21,120
Rio Tinto was a client.
How much?

269
00:14:21,200 --> 00:14:24,800
How much more bloody validation
do you need to get cross

270
00:14:24,800 --> 00:14:27,320
boundary energy to build your
hybrid power station?

271
00:14:27,960 --> 00:14:31,880
Same as the CapEx #0.
I see you've got a bit of a

272
00:14:31,880 --> 00:14:33,600
competition here, Maddie as
well.

273
00:14:33,600 --> 00:14:36,200
Well, I.
Think I would say I will I will

274
00:14:36,200 --> 00:14:39,080
tell you who to call a cross
boundary but why don't the first

275
00:14:39,080 --> 00:14:42,440
person that comments on the
YouTube video of who you call a

276
00:14:42,440 --> 00:14:45,560
cross boundary energy gets free
money of mine T shirt.

277
00:14:46,120 --> 00:14:47,560
You should know by now you
should.

278
00:14:47,720 --> 00:14:51,560
I'm I'm not going to spoon feed
everyone, call cross boundary

279
00:14:51,560 --> 00:14:57,320
energy, get a free T shirt.
Oh, what a bloody day job back

280
00:14:57,880 --> 00:15:00,360
Travis Travis.
Travis Travis Matthew.

281
00:15:00,760 --> 00:15:03,840
The world of lithium.
Lithium and cobalt and cobalt.

282
00:15:03,840 --> 00:15:04,840
Yeah.
Pretty big.

283
00:15:04,840 --> 00:15:09,840
Comments out recently, Trev.
Yeah, they, they kind of just

284
00:15:09,840 --> 00:15:11,560
strike you a bit.
There could be some gamesmanship

285
00:15:11,560 --> 00:15:13,960
with the with the comments.
But in like, you know, basically

286
00:15:13,960 --> 00:15:17,640
in the last 24 hours, you've got
these quotes circulating out

287
00:15:17,640 --> 00:15:20,440
there from both the world's
largest lithium producer and

288
00:15:20,440 --> 00:15:23,120
Albemarle and the world's
largest cobalt producer in

289
00:15:23,120 --> 00:15:26,720
Seamock, which kind of just like
stop you in your tracks.

290
00:15:26,720 --> 00:15:28,800
I think the the, the one I'll
read first.

291
00:15:28,880 --> 00:15:32,840
This is our comments from C
Mock, the world's largest cobalt

292
00:15:32,840 --> 00:15:34,680
producer does.
Does that come from the same

293
00:15:34,680 --> 00:15:36,840
mine as the niobium or
different?

294
00:15:38,240 --> 00:15:41,760
C Mock stands for China
Molybdenum.

295
00:15:41,760 --> 00:15:45,160
It's not the other.
It's not C MB CBMM.

296
00:15:45,240 --> 00:15:46,760
Yeah, but it isn't.
C Mock the there's.

297
00:15:46,880 --> 00:15:49,920
A there is another yeah.
C Mock owned owned the the

298
00:15:49,920 --> 00:15:51,600
smaller mine.
Yeah, yeah.

299
00:15:51,800 --> 00:15:55,120
Yeah, same Seymoc that I'm the
Niobium 1 correct?

300
00:15:55,120 --> 00:15:57,520
Very good.
Yeah, sorry mate, continue.

301
00:15:57,960 --> 00:16:02,560
So yeah, this this comment is we
predict that EV batteries will

302
00:16:02,560 --> 00:16:06,120
never return to the era that
relies on cobalt.

303
00:16:06,360 --> 00:16:09,240
Cobalt is far less important
than imagined.

304
00:16:09,560 --> 00:16:12,480
The proportion of batteries
containing the metal may

305
00:16:12,480 --> 00:16:14,880
eventually drop to less than a
10th It's.

306
00:16:15,920 --> 00:16:16,680
Pretty.
Powerful.

307
00:16:16,880 --> 00:16:18,840
Crazy.
And they've been, they haven't

308
00:16:18,840 --> 00:16:20,520
been tapering their cobalt
production.

309
00:16:20,520 --> 00:16:23,160
They've actually just been kind
of, yeah, like selling heaps of

310
00:16:23,160 --> 00:16:26,600
cobot into the market still,
whereas, you know, others in

311
00:16:26,600 --> 00:16:28,840
that market being blank or
they're they've sort of been

312
00:16:28,840 --> 00:16:32,760
pretty cautious about how much
they're selling into the market

313
00:16:32,760 --> 00:16:33,760
at these sort of depressed
levels.

314
00:16:33,760 --> 00:16:37,520
But seem, be it gamesmanship or
otherwise, are putting those

315
00:16:37,520 --> 00:16:39,560
comments out into the open,
which really kind of, you know.

316
00:16:40,160 --> 00:16:43,200
That is punchy.
Punchy, punchy, very punchy.

317
00:16:43,200 --> 00:16:45,680
So.
Is there, what are they, is, is

318
00:16:45,680 --> 00:16:49,440
there a different chemistry now
for the longer range batteries?

319
00:16:49,440 --> 00:16:51,320
Like is that, is it the same for
nickel?

320
00:16:51,640 --> 00:16:54,680
Like like, you know, I gather
we're talking about the the old,

321
00:16:54,960 --> 00:16:57,680
the original pieces of the NMC
battery.

322
00:16:57,680 --> 00:16:58,360
That's how I.
See it?

323
00:16:58,720 --> 00:17:01,000
Yeah.
I wonder if if there's an

324
00:17:01,000 --> 00:17:03,600
alternate long range chemistry
that still requires nickel but

325
00:17:03,600 --> 00:17:06,160
not as much cobalt.
Well, I think you're getting

326
00:17:06,160 --> 00:17:08,960
better and better range out of
the LFPS as well as the LFPS.

327
00:17:09,520 --> 00:17:12,359
So fascinating though.
Well, that's.

328
00:17:12,400 --> 00:17:16,280
Right.
You wonder if LA the longer

329
00:17:16,280 --> 00:17:21,400
range will just the hybrid
models will be the longer range

330
00:17:21,880 --> 00:17:23,920
instead of.
Precisely, yeah.

331
00:17:24,000 --> 00:17:27,880
So if you're going to have
longer range, why have a longer

332
00:17:27,880 --> 00:17:30,520
range battery way and you can
just have a hybrid like in?

333
00:17:30,520 --> 00:17:32,880
Hybrid, yeah.
Anyway, there's there's still a

334
00:17:32,880 --> 00:17:36,000
lot to come out in the consumer
preferences of AV is it's kind

335
00:17:36,000 --> 00:17:38,520
of hard to and then they change
a lot, the chemistry changes a

336
00:17:38,520 --> 00:17:39,320
lot.
Yeah, and.

337
00:17:39,320 --> 00:17:43,080
Then the the big comment from
Ken from Albemarle as well.

338
00:17:43,360 --> 00:17:45,680
Yeah, this is I think it, I
think the actual comment might

339
00:17:45,680 --> 00:17:48,640
have come a little bit earlier,
but it's, it's, it's done the

340
00:17:48,640 --> 00:17:52,440
rounds in Liberalis headlines
today in relation to their to

341
00:17:52,440 --> 00:17:55,040
their Q3 results.
They've actually got a call

342
00:17:55,040 --> 00:17:58,720
tonight 9:00 PM that time in, in
relation to their their

343
00:17:58,720 --> 00:18:00,920
quarterly results.
But you know, they effectively

344
00:18:00,920 --> 00:18:03,160
like their they they lost a
billion bucks net profit in

345
00:18:03,160 --> 00:18:06,360
there in the in the quarterly
in, in the quarter, which is a

346
00:18:06,360 --> 00:18:08,600
fair bit of money quarter in the
quarter.

347
00:18:08,600 --> 00:18:10,400
Yeah, well, that's right down
there.

348
00:18:10,440 --> 00:18:15,120
But you know, the the cap, the
cash is still dire like, but

349
00:18:15,120 --> 00:18:19,200
this comment is we do think the
price is going to be lower for

350
00:18:19,200 --> 00:18:21,560
longer.
We're positioning the company to

351
00:18:21,560 --> 00:18:23,680
compete at that level.
And you know, this is in

352
00:18:23,680 --> 00:18:26,440
relation to a, a bunch of kind
of job cuts that have that have

353
00:18:26,440 --> 00:18:28,480
happened throughout that
company, a bunch of CapEx.

354
00:18:28,480 --> 00:18:32,280
It's been, you know, tapered
and, and halted.

355
00:18:32,280 --> 00:18:34,680
And, you know, we've seen the
impacts of that in, in, in WA.

356
00:18:34,680 --> 00:18:37,720
But I did want to, I did like, I
did want to peel into Albemarle

357
00:18:37,720 --> 00:18:41,000
because it's AUS company.
We don't always kind of go into

358
00:18:41,000 --> 00:18:44,560
the weeds on it, but it's
fucking important and a very

359
00:18:44,560 --> 00:18:47,720
important player in the lithium
industry and their, their views

360
00:18:47,720 --> 00:18:49,920
probably should be interrogated,
right?

361
00:18:51,160 --> 00:18:55,280
They are reducing their
workforce by 67%, representing

362
00:18:55,280 --> 00:18:57,120
15% of non manufacturing
workforce.

363
00:18:57,320 --> 00:19:03,120
They're decreasing the FY25
CapEx by 50% versus FY24 to an

364
00:19:03,120 --> 00:19:06,000
anticipated, you know,
approximately 850 million bucks

365
00:19:06,000 --> 00:19:10,520
CapEx to be spent in FY25, which
still seems like a lot

366
00:19:11,920 --> 00:19:13,720
specifically on them.
There's, there's a, there's a

367
00:19:13,720 --> 00:19:17,120
slide I want to draw attention
to because this is, This is why

368
00:19:17,120 --> 00:19:19,600
Albemarle have their hands full
from just an acquisition

369
00:19:19,600 --> 00:19:22,240
perspective at the moment.
If you, if you remember in

370
00:19:22,240 --> 00:19:25,120
February, we actually did a show
and it was when they were

371
00:19:25,120 --> 00:19:27,240
raising money.
And I think I talked about how

372
00:19:27,680 --> 00:19:29,880
the, the, the raise was really
to do with their financial

373
00:19:29,880 --> 00:19:31,840
covenants.
They actually, they, they

374
00:19:31,840 --> 00:19:35,240
reshaped those covenants to
avoid breaching them back then.

375
00:19:35,240 --> 00:19:37,440
And they've, they've reshaped
them again slightly in, in

376
00:19:37,440 --> 00:19:41,040
October.
Well, here's what the, the, the,

377
00:19:41,120 --> 00:19:43,960
the covenant to pay attention to
here is their leverage ratio

378
00:19:43,960 --> 00:19:46,080
limit.
And the way that leverage ratio

379
00:19:46,080 --> 00:19:50,920
is defined in in their in their
debt docks is, is this adjusted

380
00:19:51,240 --> 00:19:55,880
is a net debt to Adjusted EBITDA
or adjusted net debt to Adjusted

381
00:19:55,880 --> 00:19:59,240
EBITDA.
And you can see in the September

382
00:19:59,240 --> 00:20:03,480
quarter that ratio was 3.5
times, which they rightly say is

383
00:20:03,480 --> 00:20:05,960
well below the limit of 5.5
times is the, you know, the

384
00:20:05,960 --> 00:20:09,840
upper bound of that covenant.
But that's 5.5 times upper bound

385
00:20:10,120 --> 00:20:13,120
in September.
What about next quarter?

386
00:20:13,400 --> 00:20:17,960
In the next quarter, that upper
bound falls to four times so.

387
00:20:18,560 --> 00:20:21,080
You know, four times as being
the upper bound on, on that

388
00:20:21,080 --> 00:20:23,800
covenant ratio when you're
currently sitting at 3.5 times.

389
00:20:24,080 --> 00:20:27,360
They're going to be cutting it
real skinny to, to, to, to not

390
00:20:27,360 --> 00:20:29,440
breach that covenant.
And, and hence, I think why you

391
00:20:29,440 --> 00:20:31,720
can see them just in absolute
kind of austerity mode.

392
00:20:31,720 --> 00:20:34,000
You know, they don't want to
have to draw down any extra debt

393
00:20:34,000 --> 00:20:37,480
because that puts in a further
risk of, of breaching that

394
00:20:37,480 --> 00:20:39,320
covenant.
There's two things you can do to

395
00:20:39,320 --> 00:20:42,440
improve that covenant.
You know, be, be very cautious

396
00:20:42,440 --> 00:20:45,960
of what your net debt is or be
very focused on what your

397
00:20:45,960 --> 00:20:48,160
EBITDAR is.
And you can, you can control

398
00:20:48,160 --> 00:20:51,960
the, the net debt incrementally
more by just pausing CapEx and

399
00:20:51,960 --> 00:20:54,520
all that sort of spend.
But that, you know, it's a, it's

400
00:20:54,520 --> 00:20:56,960
a, it's a tough time for them,
even though they are, you know,

401
00:20:56,960 --> 00:20:59,080
the lowest cost bloody lithium
producer, which is, which is

402
00:20:59,080 --> 00:21:00,880
really fascinating to watch play
out.

403
00:21:01,240 --> 00:21:05,080
So, so if that if that covenant
is breached, I'm sure it's

404
00:21:05,080 --> 00:21:09,440
different depending with whoever
debt and per company, but I

405
00:21:09,440 --> 00:21:11,960
assume it's a you'd have to
nearly raise money.

406
00:21:12,320 --> 00:21:13,400
Yeah.
And that's what happened.

407
00:21:13,640 --> 00:21:14,800
That's what happened in
February, right.

408
00:21:14,800 --> 00:21:17,720
Like they were basically on
track to to breach the covenant

409
00:21:17,720 --> 00:21:20,440
and they did that.
It was a disguised, it was

410
00:21:20,440 --> 00:21:22,760
disguised as like a convertible,
but it was basically an equity

411
00:21:22,760 --> 00:21:26,240
raise that they did in, in
February and like could

412
00:21:26,360 --> 00:21:28,440
restructure the, the debt
covenants as a part of that.

413
00:21:28,440 --> 00:21:32,720
And that enabled them to yeah,
to, to live out a more

414
00:21:32,760 --> 00:21:35,760
pronounced kind of depressed
market as their, as their EBITDA

415
00:21:35,760 --> 00:21:38,360
really became compressed because
that was the what, what was

416
00:21:38,360 --> 00:21:40,800
causing the, the stress in the,
the previous sort of metrics.

417
00:21:41,040 --> 00:21:43,560
So I think, I think that's the
risk that you see for for

418
00:21:43,560 --> 00:21:46,840
Albemarle over the, you know,
over this, if that, if, if it's

419
00:21:46,840 --> 00:21:50,200
looking pretty skinny on that
front, maybe maybe get like a, a

420
00:21:50,200 --> 00:21:52,800
waiver because you, you agree to
sell down an asset.

421
00:21:52,800 --> 00:21:56,520
Or maybe you, you, you raise
equity, a little bit of equity

422
00:21:56,520 --> 00:21:58,920
to, to keep out of trouble there
and pay down some of that debt.

423
00:21:58,920 --> 00:22:02,440
Because you can actually see on
this chart here the wiggle room

424
00:22:02,440 --> 00:22:04,320
on liquidity.
Like they do advertise that

425
00:22:04,320 --> 00:22:06,600
they've got total liquidity of
3.4 billion.

426
00:22:06,600 --> 00:22:09,080
But because that covenant,
right, you're not going to want

427
00:22:09,080 --> 00:22:13,200
to dip into drawing any more of
the debt and that available

428
00:22:13,200 --> 00:22:14,760
liquidity.
Maybe, maybe you got some cash

429
00:22:14,760 --> 00:22:17,600
and equivalency.
It's OK to to to to tap into,

430
00:22:17,600 --> 00:22:20,360
but but the cash and equivalents
actually part of that adjusting

431
00:22:20,360 --> 00:22:22,560
that debt calc, it's net debt,
not not drawn debt.

432
00:22:22,560 --> 00:22:24,000
Sorry.
Yeah, touching any of that

433
00:22:24,000 --> 00:22:26,520
liquidity is kind of hurtful to
your calculation on the covenant

434
00:22:26,520 --> 00:22:30,000
front.
So you're just the liquidity is

435
00:22:30,000 --> 00:22:32,440
somewhat irrelevant at the
moment, while they're kind of

436
00:22:32,440 --> 00:22:33,880
close to the you're.
Watching, you're watching the

437
00:22:33,880 --> 00:22:35,920
covenant more than you're
watching anything else.

438
00:22:35,960 --> 00:22:39,440
So, yeah, and and they've got,
they've got 3 point US $3.5

439
00:22:39,440 --> 00:22:43,400
billion in long term debt drawn.
But when you adjust that number

440
00:22:43,400 --> 00:22:46,640
for their share of debt inside
the Winfield JV as well and and

441
00:22:46,640 --> 00:22:50,520
their cash, their adjusted net
debt by this covenant comes to

442
00:22:50,840 --> 00:22:55,200
US 2.6 billion on.
And what they do, the EBITDA

443
00:22:55,200 --> 00:22:58,520
they use is just like a last 12
month Adjusted EBITDA that's

444
00:22:58,520 --> 00:23:01,360
753,000,000.
You can say though, because it

445
00:23:01,360 --> 00:23:05,400
takes the last 12 months EBITDA,
what we'll roll out of that is

446
00:23:05,400 --> 00:23:11,000
the what happened, you know, in
the quarter 31 December 2023.

447
00:23:11,000 --> 00:23:12,800
And that was the, that was the
worst one.

448
00:23:12,800 --> 00:23:15,400
So the, the EBITDA should
improve if you just kind of look

449
00:23:15,400 --> 00:23:17,600
at the four quarters that are
being included in there.

450
00:23:17,600 --> 00:23:20,560
So they'll have some respite on
that front, assuming that this

451
00:23:20,560 --> 00:23:22,880
quarter's not horrible, but
they're still under a fair bit

452
00:23:22,880 --> 00:23:26,120
of pressure.
God, you couple that with what

453
00:23:26,120 --> 00:23:32,320
we talked about with the the
Jaina Min res theory God, you

454
00:23:32,320 --> 00:23:34,880
could see you're picking up 100%
or watching it pretty easily.

455
00:23:36,280 --> 00:23:37,600
Oh yeah.
Do you think?

456
00:23:37,600 --> 00:23:39,920
That what do you think that what
do you think their views of the

457
00:23:39,960 --> 00:23:43,240
Australian assets are I.
Honestly think like Albemarle in

458
00:23:43,240 --> 00:23:45,400
the long run is going to be like
they'll be fine.

459
00:23:45,400 --> 00:23:47,520
Like they're the world's lowest
cost producer.

460
00:23:47,520 --> 00:23:49,280
Maybe they sell down an
incremental interest in

461
00:23:49,280 --> 00:23:52,720
something or they're just
prudent on, you know, fixing up

462
00:23:52,720 --> 00:23:55,560
the balance sheet by, you know,
raising some equity.

463
00:23:55,840 --> 00:23:58,480
Either way, they'll be able to
emerge out of this fine.

464
00:23:58,480 --> 00:24:01,320
You shouldn't you shouldn't be
distressed as the lowest cost

465
00:24:01,320 --> 00:24:04,200
producer in any commodity.
That's kind of a crazy sort of

466
00:24:04,200 --> 00:24:07,040
circumstance, right?
So as long as they can just

467
00:24:07,040 --> 00:24:09,280
manage the balance sheet, I
think they'll be OK.

468
00:24:09,520 --> 00:24:11,960
I think they can do that without
having to sell down once, you

469
00:24:11,960 --> 00:24:14,560
know, I think, you know, look at
other levers before doing that,

470
00:24:14,800 --> 00:24:17,000
but you never know, never say
never.

471
00:24:17,440 --> 00:24:21,800
I just think like they, I'd be
keen to see them have some

472
00:24:21,800 --> 00:24:24,800
introspection about how they've
allocated capital as a, as a

473
00:24:24,880 --> 00:24:28,280
company because some pretty
questionable kind of capital

474
00:24:28,280 --> 00:24:30,880
allocation that they, they
rolled out over the, you know,

475
00:24:30,880 --> 00:24:33,400
the three years before.
And imagine if they'd end up

476
00:24:33,400 --> 00:24:35,360
paying like $6 billion for Lion
Town as well.

477
00:24:35,360 --> 00:24:37,480
They'd be not all, all sorts of
pain, right?

478
00:24:37,480 --> 00:24:40,640
Debt funded.
So there's, you know, I think a

479
00:24:40,760 --> 00:24:44,480
good chunk of management in that
company, maybe like, you know,

480
00:24:44,520 --> 00:24:48,200
your McKinsey, kind of like, you
know, XPCG kind of management

481
00:24:48,200 --> 00:24:50,520
consultant types.
But they all think they're

482
00:24:50,520 --> 00:24:53,200
really clever, but they don't
understand the cyclicality of

483
00:24:53,200 --> 00:24:55,280
commodity markets.
And now they're getting a bit of

484
00:24:55,280 --> 00:24:57,440
a wake up call.
Like I would be keen to see some

485
00:24:57,440 --> 00:25:00,840
introspection there.
You would say the capital

486
00:25:00,840 --> 00:25:04,080
allocation is probably the
opposite of Pilgrim minerals.

487
00:25:05,240 --> 00:25:08,000
Yeah, how they.
How they how they acted during

488
00:25:08,000 --> 00:25:11,760
that boom period 100.
Percent it's.

489
00:25:11,760 --> 00:25:15,800
Yeah, I think you'd say even
especially considering what

490
00:25:15,800 --> 00:25:19,520
Pilbara, the acquisition of
Latin and the you know the the

491
00:25:19,520 --> 00:25:23,240
dilution and how that worked
like being all script like

492
00:25:23,240 --> 00:25:26,160
wasn't that impactful.
Look at what they got for it.

493
00:25:26,720 --> 00:25:30,040
Look at what album I'll did on
the sending, you know, 20

494
00:25:30,040 --> 00:25:32,000
lawyers to conferences and
things like that.

495
00:25:32,800 --> 00:25:34,880
It's a bit different, very.
Different.

496
00:25:36,080 --> 00:25:40,120
They are, I think on those on
those Australian operations like

497
00:25:40,120 --> 00:25:41,600
because it's, and that's the
thing.

498
00:25:41,600 --> 00:25:46,400
It's like it's just freaking all
it's all in lithium, like all in

499
00:25:46,560 --> 00:25:50,080
like you, you know where you got
all these freaking rich

500
00:25:50,520 --> 00:25:55,480
pegmatites sitting around?
Like I just, I just think they

501
00:25:55,480 --> 00:25:59,280
need a Daish SAT helicopter
hovering right over all those

502
00:25:59,280 --> 00:26:03,400
bastards right now and just test
yes, they do gravity magnetic

503
00:26:03,400 --> 00:26:06,480
testing and just see if there's
some other commodities there

504
00:26:06,760 --> 00:26:09,680
they can diversify like Daish
SAT.

505
00:26:10,120 --> 00:26:13,600
Our new bloody partner should be
bloody flying the shit over

506
00:26:13,920 --> 00:26:17,840
bloody green bushes.
Wodgina might even Kemerton.

507
00:26:18,200 --> 00:26:20,200
That is, you'd.
Never know if there's any, like

508
00:26:20,200 --> 00:26:23,040
there might be some gold, copper
or something right next to that

509
00:26:23,040 --> 00:26:24,280
Kimberden plant.
It's worth.

510
00:26:24,320 --> 00:26:26,360
A check but you.
Won't know if you don't get

511
00:26:26,360 --> 00:26:28,800
Daish sat to pump out of
gravity.

512
00:26:29,200 --> 00:26:33,440
A a seismic survey mates.
Some Daish SAT salt sampling

513
00:26:33,640 --> 00:26:34,840
mate.
Doesn't even need to be

514
00:26:34,840 --> 00:26:38,680
helicopter bloody drones on the
ground mate.

515
00:26:39,000 --> 00:26:40,280
So.
This is this is the stuff that's

516
00:26:40,280 --> 00:26:43,480
in the air that helps you
understand what's on the in the

517
00:26:43,480 --> 00:26:44,200
ground.
We.

518
00:26:44,200 --> 00:26:46,960
Used to talk about verify but
verify would be nothing because

519
00:26:46,960 --> 00:26:49,080
they wouldn't have the surveys
to put into the models and

520
00:26:49,080 --> 00:26:52,040
they'd have no videos to show
anyone and it all come from

521
00:26:52,040 --> 00:26:54,840
dash, SAT the.
Data you need to understand the

522
00:26:54,840 --> 00:26:57,560
rocks which leads to discoveries
well.

523
00:26:57,680 --> 00:27:01,600
Mate, at least to share prices
going off their head, it's I've

524
00:27:01,600 --> 00:27:05,240
got a a case study Regis.
They've had five crews working

525
00:27:05,240 --> 00:27:08,280
at Regis for Garden Garden,
well, doing gravity surveys.

526
00:27:08,560 --> 00:27:11,200
Nothing to do with gold price,
nothing to do with closing out

527
00:27:11,200 --> 00:27:13,720
the hedge book.
That's a Daesh sat effect.

528
00:27:13,920 --> 00:27:16,120
Look at that share price.
What?

529
00:27:16,760 --> 00:27:18,680
Mate?
Give Nathan Daesh a call and

530
00:27:18,680 --> 00:27:21,520
just like he'll absolutely.
Yeah.

531
00:27:21,520 --> 00:27:25,000
And yeah, it's like there's no
customer survey at the end.

532
00:27:25,000 --> 00:27:28,360
They do enough surveys already
because you don't need it

533
00:27:28,360 --> 00:27:30,720
because it's just five stars for
everything.

534
00:27:30,720 --> 00:27:33,640
Phone number in the show Nuts.
Right work dash set right?

535
00:27:33,640 --> 00:27:37,160
Trev, the Trump trade that is
not Bitcoin.

536
00:27:37,440 --> 00:27:39,480
What is it?
Trilogy Medals?

537
00:27:40,720 --> 00:27:43,520
It's esoteric and that's why I
wanted to highlight it.

538
00:27:43,520 --> 00:27:44,960
What's?
Esoteric, mate, it's a bit.

539
00:27:44,960 --> 00:27:47,280
Different, you know, it's off
the beaten track.

540
00:27:47,280 --> 00:27:48,840
Oh, it's learning, yeah.
Add that to the.

541
00:27:49,040 --> 00:27:51,320
Thesaurus.
Yeah, What's that mate?

542
00:27:53,080 --> 00:27:57,200
Shift F7, yeah.
Yeah, I just think it's an

543
00:27:57,200 --> 00:28:00,240
example of of some some of the
really interesting kind of event

544
00:28:00,240 --> 00:28:03,200
driven trades that exist in our
niche markets, you know like

545
00:28:03,200 --> 00:28:06,560
mining juniors for example, like
this is a a junior mining stock

546
00:28:06,560 --> 00:28:10,520
that went up 108% overnight and
it was probably off your radar.

547
00:28:11,120 --> 00:28:15,600
The stock is listed on the TSX
and it's now capped at $240

548
00:28:15,600 --> 00:28:17,720
million.
But yeah, obviously like half

549
00:28:17,720 --> 00:28:21,200
that a day ago.
And it basically Trilogy metals.

550
00:28:21,200 --> 00:28:25,040
They share a 5050 JV with S 32
in Alaska, which hosts the

551
00:28:25,120 --> 00:28:28,360
Ambler copper deposit.
So why was it a Trump trade?

552
00:28:29,120 --> 00:28:32,240
In Trump's last office, the, the
US Bureau of Land Management

553
00:28:32,240 --> 00:28:35,560
approved a 340 kilometre Rd
through the wilderness to kind

554
00:28:35,560 --> 00:28:40,080
of, you know, enable this
project to, to, to advance more

555
00:28:40,080 --> 00:28:41,680
and, you know, more exploration,
all that sort of stuff.

556
00:28:42,240 --> 00:28:44,800
And then in Biden's term, the
same Bureau said that it

557
00:28:44,880 --> 00:28:47,520
preferred the road not to be
built and kind of put a, put a

558
00:28:47,520 --> 00:28:50,440
halt in, in those efforts.
So kind of, you know, change,

559
00:28:50,880 --> 00:28:52,760
change, change the view on the
whole Rd, which unlocks the

560
00:28:52,760 --> 00:28:55,880
deposit and the view there was
to protect the environmental

561
00:28:55,880 --> 00:28:58,840
features of the district.
A trilogy sort of since that

562
00:28:58,840 --> 00:29:01,400
Biden kind of administration rug
pool.

563
00:29:01,400 --> 00:29:05,000
They, they publicly stated that,
you know, proving the, the road

564
00:29:05,000 --> 00:29:07,560
under a different administration
would be a lot more likely and

565
00:29:07,560 --> 00:29:11,600
timely and blah.
The, the copper deposit, it's

566
00:29:11,680 --> 00:29:15,280
actually a feasibility study on
that, which was done in 2023,

567
00:29:15,280 --> 00:29:18,920
but was updated for metal prices
as as late as as recently as

568
00:29:18,920 --> 00:29:22,080
August.
And in those updated prices, it

569
00:29:22,640 --> 00:29:29,080
puts out AUS $1.7 billion NPV S
32 just to earn that 50%.

570
00:29:29,080 --> 00:29:32,080
They've spent USA 180 million
bucks over the last seven years.

571
00:29:32,120 --> 00:29:35,480
So they've, they've put a bunch
of money in into it to to, you

572
00:29:35,760 --> 00:29:37,640
know, get this thing forward and
to earn 50%.

573
00:29:37,640 --> 00:29:41,360
They've got a view on it, right?
And with the new administration,

574
00:29:41,360 --> 00:29:45,240
it's going to be interesting to
watch if South 32 choose to

575
00:29:45,240 --> 00:29:47,160
consolidate it.
And if so, at what price?

576
00:29:47,520 --> 00:29:49,960
They already own 12% of of the
trilogy.

577
00:29:50,640 --> 00:29:53,480
So I think I think it's just
it's just interesting to see

578
00:29:53,480 --> 00:29:56,000
that, right, because 108 percent
is quite a lot Trump trade that

579
00:29:56,000 --> 00:29:58,760
was off everyone's radar.
People are are thinking, how do

580
00:29:58,760 --> 00:30:01,480
I play it?
You know, it's like, well, yeah,

581
00:30:01,760 --> 00:30:03,720
it it was that one on anyone's
radar.

582
00:30:03,760 --> 00:30:06,560
Big shout out, I think goes to a
speculator.

583
00:30:06,560 --> 00:30:10,160
He wrote about this Catalyst
play 20th of November last year

584
00:30:10,160 --> 00:30:12,400
in a series titled 2024 Plays to
Watch.

585
00:30:12,400 --> 00:30:14,840
The dude nailed it.
Oh, good to see him back.

586
00:30:15,400 --> 00:30:19,040
No, this is yeah, he doesn't
write sub stacks anymore, but

587
00:30:19,240 --> 00:30:21,080
oh, but he wasn't a version.
Yeah, he went.

588
00:30:21,080 --> 00:30:22,240
Off Twitter for a bit, didn't
he?

589
00:30:22,280 --> 00:30:23,480
Yeah, he.
Takes a break on.

590
00:30:23,560 --> 00:30:26,200
Time take a break just like good
to like good to see you

591
00:30:26,400 --> 00:30:29,240
batteries are recharged for
speculator.

592
00:30:29,360 --> 00:30:31,360
Yeah, love your shit, Is that
which?

593
00:30:31,400 --> 00:30:33,680
Is Trilogy worth like the
market?

594
00:30:34,160 --> 00:30:36,600
Cap it's 2:42. 40, yeah.
Canadian.

595
00:30:36,840 --> 00:30:38,040
Yeah.
Yeah, surely.

596
00:30:38,040 --> 00:30:42,600
You'd see Seth to just
consolidate it be pretty bought

597
00:30:42,600 --> 00:30:44,840
sized for them, right, but.
Yeah, totally.

598
00:30:44,960 --> 00:30:47,240
Yeah.
I think that's the, you know,

599
00:30:47,360 --> 00:30:48,880
everything's price dependent as
well.

600
00:30:48,880 --> 00:30:51,720
And maybe they maybe they want
to see a bit more kind of

601
00:30:52,200 --> 00:30:54,080
movement from at the
administration level or a bit

602
00:30:54,080 --> 00:30:57,640
more certainty or maybe they
want, they want more kind of de

603
00:30:57,640 --> 00:30:59,120
risking at the asset level
itself.

604
00:30:59,120 --> 00:31:04,560
But yeah, a day ago they could
have snapped it up like half

605
00:31:04,560 --> 00:31:06,040
price, you know?
Yeah.

606
00:31:06,720 --> 00:31:08,840
That's true.
Can't wait for all the Dutton

607
00:31:08,840 --> 00:31:13,280
trades next year.
Oh, it just doesn't have the

608
00:31:13,280 --> 00:31:14,920
same ring to it, does it?
That was.

609
00:31:14,920 --> 00:31:17,560
A Dutton trade?
Well, what could you call that

610
00:31:17,560 --> 00:31:20,720
Trump trade?
A Dutton double down?

611
00:31:20,920 --> 00:31:21,960
A Dutton double.
Down.

612
00:31:21,960 --> 00:31:24,080
Dutton double down a patented
it.

613
00:31:24,440 --> 00:31:25,880
Oh, love it.
Very.

614
00:31:26,200 --> 00:31:29,040
Good.
Oh buddy, Mineral Mining

615
00:31:29,040 --> 00:31:34,160
Services patented open pit
mining JVS Fun fact.

616
00:31:35,600 --> 00:31:40,040
Yeah, good on your MMS.
Like a patented Paul Natoli

617
00:31:40,720 --> 00:31:43,480
grounded camp with cannolis
instead of soap.

618
00:31:44,280 --> 00:31:47,800
That's bloody brilliant mate.
Don't forget our bloody great

619
00:31:47,800 --> 00:31:53,440
mates, a cross boundary energy
CB inflationary, just non

620
00:31:53,440 --> 00:31:56,120
dependent.
Bloody how good are they mate?

621
00:31:56,120 --> 00:31:59,200
Sam big ground support division.
Jeez, that's going to be flying

622
00:31:59,200 --> 00:32:01,440
with trumping.
I don't know, probably not.

623
00:32:01,440 --> 00:32:03,040
Maybe it's just going to be
flying anyway.

624
00:32:03,400 --> 00:32:06,720
CRE insurance K drill Tees.
They're going to be punching

625
00:32:06,720 --> 00:32:09,160
some holes in if there's some
increased consumer spending.

626
00:32:09,640 --> 00:32:14,400
Dysat geophysical survey
experts, God love them and

627
00:32:14,520 --> 00:32:20,360
bloody just go Australia.
Go Australia Information

628
00:32:20,360 --> 00:32:22,840
contained in this episode of
Money of Mine is of general

629
00:32:22,840 --> 00:32:25,160
nature only and does not take
into account the objectives,

630
00:32:25,280 --> 00:32:28,480
financial situation or needs of
any particular person.

631
00:32:28,800 --> 00:32:31,840
Before making any investment
decision, you should consult

632
00:32:31,840 --> 00:32:34,880
with your financial advisor and
consider how appropriate the

633
00:32:34,880 --> 00:32:38,560
advice is to your objectives,
financial situation and needs.