The Unbelievable Story of how Fortescue Beat the Odds

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Forest is pushed out of the
company by the major

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shareholders, bondholders saw a
return of $0.25 on the dollar.

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Twiggy becomes the richest
person in Australia and it was

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less than four years from the
1st hole to the first or in

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commercial production good to
go.

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In the space of 20 years, JD
Fortescue went from being a

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shell company to being worth
over $100 billion in paying out

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more than 42 billion in
dividends.

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It's truly the greatest story of
wealth creation in Australia.

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And as a result of that, we're
so curious about the history

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here.
You're curious about the history

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and you're going to go deep into
the story, the making of the

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early years of Fortescue.
What?

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What a story right there.
There is no shortage of, of

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controversy, of excitement, of,
of tales, of ups and downs

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throughout the whole story.
And I thought it was just a tale

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worth telling, don't you reckon?
Worth telling absolutely

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strangely, like it kind of kind
of it happened before us like

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this, this, this tremendous, you
know, value creation story of,

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of, of Fortescue.
But you know, it was always kind

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of like something that we're
curious about.

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But admittedly, I've never
really done the homework to, to

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know all of the nooks and
crannies and details.

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But this, this one's a roller
coaster.

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It intertwines with the most
fascinating time in commodity

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markets, in Australian commodity
markets history and global

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commodity markets history.
This is the it's also a story of

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the emergence of China and how
that just upended the Aussie

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mining business after quite
honestly decades of kind of

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dismal performance of downward
trending commodity prices.

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And boy, was everyone in for a
sharp turn around.

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It's a story of
entrepreneurship, you know,

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stewarded by none other than,
you know, Andrew Twiggy Forrest,

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who is is an Australian icon and
gets his fair share of attention

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as a as a result of that.
But.

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Fair share attention.
But the force of nature that

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that he is, is is the, you know,
is is, is intertwined and always

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will be with Fortescue.
Yeah, the characters are massive

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here.
Yeah.

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And and we're going to focus on
the first five years of the

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story here.
This is 2003 to 2008, and it's,

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you know, it's an eventful pact
in five years like, like none

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other.
So let's RIP in now.

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Tell me where things start off.
Because Twiggy.

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Twiggy had he, he had a, he had
a a preamble before Fortescue.

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He he did, you know, some might
call him the the the

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stockbroker.
To Alan Bond, there was a whole

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history in in broking, but I'll
I'll start the story with

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Anaconda because that was his
first go at running a mining

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business and it was set the sort
of scene for the the kind of

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form or the the standing that
Twiggy was in pre FMG.

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So he ran the business from the
mid 1990s to the early 2000s and

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Anaconda nickel tried to get the
Marin Marin nickel laterite

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project up and running.
They built the plant, they got

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it up and running.
It didn't quite hit name plate.

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It was, it was a complex
journey, but already Forrest's,

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his sort of status as a a
legendary sort of salesman

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across the industry has been
cemented through his ability to

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to raise capital, to convince
people and bring people along

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with the journey and to try
their hand at developing a

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project that was very unique in
the Australian landscape.

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The the technology itself was
nascent, right?

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We talked about the way that H
pal technologies completely

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transformed the the nickel
market today with it's it's low

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cost application to to
Indonesian laws, but my God,

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where there's some real teething
issues when it was applied to

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the the West Australian laws.
Yeah, Yeah.

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They, they, they were 30 years
early and it was these guys as

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well trying to run 45,000 tons
per annum of nickel output and a

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couple other sort of smaller
operations that were coming

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online at around the same time
to, to finance this thing.

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Twiggy did something unique and
there was a whole bunch of

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unique things beyond just the
the HPL processing that was done

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to try and get this project off
the ground.

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He went to the US bond market,
raised US $420 million, brought

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in the likes of Glencore, who
took a big stake in the project

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as well as in the company
Anaconda Nickel bought in Mark

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Rich separately from Glencore.
This is after he had separated

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from the company he founded.
And then later in the piece,

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Anglo American comes in.
So the ambition was it was

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massive.
It was clear as day.

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There's this snippet that jumped
out at me reading this newspaper

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article.
And I think about the year 2000

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when Anaconda's in a bit of
strife.

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And he's asked would he ever
sell the business?

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And he just, you know, looks the
reporter in the eye and says,

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how often do you get the chance
to establish a major mining

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house?
So he knew what he wanted to do.

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And he didn't quite achieve that
with with Anaconda, but it sort

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of set him on his way.
The vision was.

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Bold and big even before there
was anything.

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Yeah, in some sense.
And you and you, you see that

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with entrepreneurs, right?
So the, the persuasiveness as

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well, you see it in so many
different ways.

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Managed to get the Prime
Minister John Howard to come and

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open the facility at this grand
opening.

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I think there was 300 odd people
there.

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The plant barely worked at this
point in time.

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It's just generous.
It's spitting out a bit of Niku

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at the end, but there's, you
know, there's the flash, there's

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the Ritz, there's the the
cameras and everything.

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But eventually in sort of 2001
type time frame, Forest is

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pushed out of the company by the
major shareholders.

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At that point in time, they had
$800 million in debts.

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The bondholders, who at that
point had lent US $400 million,

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saw a return of $0.25 on the
dollar, and Glencore wrote this

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down as the biggest loss in
their history at that point in

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time.
So off Twiggy goes into

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corporate exile, takes a year
away with his family, goes to

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Europe.
He'd been running this company

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for nearly a decade.
And how old is he at this point

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in time too?
At this point in time, he would

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have been in his late 30s.
Yeah, I believe he was 41 when

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he came back in and and started
Fortescue, right.

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So he walked away with a decent
percent, 4.5% of the company

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Anaconda who had seen their ups
and downs, but it was still

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worth a bit of money.
And he had a severance package,

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but he'd taken on leverage, you
know, he borrowed on margin to

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buy stock.
So things aren't exactly hunky

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Dory on his personal finance
and.

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Yeah.
Yeah, he kind of has to to

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restart ish from that that point
in time.

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And that is the the concise
summary of his time in charge of

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Anaconda Nickel.
With it, you know, when we're

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going to get to Fortescue
obviously is the next chapter,

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but with it, with the people
that he like brought together

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from a team perspective, that
would then emerge in the early

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days of of of Fortescue as well.
Not, not massively, not like

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we've seen in in in other sort
of stories there.

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There are certainly like
reoccurring characters

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throughout his sort of broader
life, but from a technical

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perspective it was a very
different project.

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It was, you know, Fortescue is
much more a logistic type

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project, so you didn't see a
whole bunch of that when he

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comes in.
It's not to say that there

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weren't lessons, like there were
so many lessons that he learnt

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from that time at Anaconda that
you're just going to see through

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every sort of facet of the
Fortescue journey.

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Debt.
Debt is a big one, but you know,

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things like how you build a
project who has control

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ownership both with the company
and the the building of a

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project.
That's just a couple and we're

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going to see plenty more of them
as we kind of go through.

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Right, not not every miner gets
to make that same decision as

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Fortescue to bring it all in
house that that engineering in

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house, delivery in house.
In fact, many miners, they,

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they've got to rely on proven
experts.

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And when you're relying on
proven experts, you want expert

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operators like Axes Mineral
Services.

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Right axes have been crushing
it.

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Literally crushing it for years
all across the gold fields.

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Companies of all different
shapes and sizes.

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I I seriously don't think there
is a mine in the gold fields

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that they haven't worked for.
Like like mobile crushing or

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sorting.
That's their bread and butter,

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right?
And now they've stepped it up.

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They've they've joined forces
with Robex group unlocking

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capability that we haven't seen
before in house engineering,

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mate, They've got a civil works
well.

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W force is part of that family.
Rum walls, whole roads,

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airstrips, axis mineral
services, mate, turnkey solution

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is what they can offer.
And no, I don't use turnkey

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lightly.
Mate, and you mentioned the

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bread and butter as well before.
So that's the the crushing

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capability and that's where
about they're about to change

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the game.
So axes can now build, own and

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operate these semi relocatable
crushing circuits.

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That means the miners can get
rapid mobilization, reliable

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tons, no upfront capital, which
is what we love mate.

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You get a huge CapEx saving by
using Axis Mineral Services.

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You're saying they can do the
whole front end of that plan

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without check, without capital
check?

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That's enormous, mate.
So if you're planning a meal

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expansion, you're restarting an
old plan and you need a front

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end that just fits for purpose
without the CapEx.

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Talk to Axis, they'll come up
with a solution for you.

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And I know this because they're
now bolstered by industry

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veteran, the crushing game mate
Jason O'Rourke.

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In fact, he's never come across
a Rocky can't crush.

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Give Axis mineral services are
cool right now.

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OK, so he's taking he's taking a
year off comes back and the

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beautiful thing about this
industry, mate, you always

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reinvent yourself.
And I'm sure his reputation was,

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you know, was would not have
been in a good place after a

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massive blow up like like
Anaconda.

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Yeah, I, I, I think that's safe
to say.

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You know, you've been a bit
cynical.

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You could say sort of in in
tatters, but it was a very

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complex thing that they were
trying to do.

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And good on him for brushing
himself off after a bit of time

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away and giving something else a
crack.

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So mid 2003, earliest 2003
things start coming together.

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Iron ore at this point in time
is trading at US 30 bucks a ton.

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It's not even indexed, not
traded remotely transparently at

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all.
Mark Caruso, who was the guy who

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facilitated Twiggy's entry into
Allied mining and processing,

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which became Fortescue called
iron ore sewage ship.

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So that just gives you a bit of
a flavour for the, the time

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we're in.
It's not the the ultimate cash

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00:10:10,320 --> 00:10:13,960
cow that iron ore would become
for, for Fortescue and for

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Australia.
So Allied host this AGM at the

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Celtic Club here in West Perth
and this this sort of part of

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the story I find has a a bit of
sort of law to it.

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He gives his first presentation,
it's the AGM presentation where

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they're voting on him getting
his big stake in the company.

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They are voting on the changing
of the name of the business and

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all these sorts of things.
So it is made in public

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presentation and I think it's
sort of 13 odd pages.

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You can find it in in black and
white, big bold letters.

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And the ambition is clear as
day.

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So Fortescue Metal Group is the
new name.

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It's named after the river that
runs through the heart of the

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the eastern Pilbara region.
And he forecast it from 2003 to

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2007.
The iron ore market is going to

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see demand jump from 480 million
tons per annum to 700 million

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00:11:03,080 --> 00:11:05,400
tons per annum.
Now that is an astounding growth

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00:11:05,400 --> 00:11:08,360
rate over a a four year period
if you can believe it.

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And to the supply side of the
story, he forecasts that that

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cannot be met, that there's
going to be an 80 million ton

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per annum shortfall in the
supply and that is the

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opportunity that Fortescue is
going to seize upon.

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So he's, he's taken his, his,
this is an EGM, a company called

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Allied.
He's renaming or rebranding us.

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It's Fortescue or FMG limited.
Yeah, flicking out the the gold

225
00:11:32,520 --> 00:11:34,520
that they had focusing in online
or.

226
00:11:34,680 --> 00:11:36,760
But like, how did, how did, how
did he actually manage to get

227
00:11:36,760 --> 00:11:38,440
control of this vehicle in the
1st place?

228
00:11:38,440 --> 00:11:40,720
Like how did all of that how,
how did he pop in there?

229
00:11:40,880 --> 00:11:44,760
So the guy I mentioned, Mike
Caruso, facilitated this.

230
00:11:44,760 --> 00:11:47,200
He, he, he was sort of running
the company.

231
00:11:47,800 --> 00:11:52,520
Yeah, beforehand.
And what he kind of does is

232
00:11:52,640 --> 00:11:54,960
Twiggy has this group called the
The Metal Group.

233
00:11:54,960 --> 00:11:58,280
That's his personal company.
And in April of that year, 2003,

234
00:11:58,280 --> 00:12:02,560
he'd come to this agreement with
Caruso essentially.

235
00:12:02,960 --> 00:12:06,320
And this would be facilitating
the acquisition of a bunch of

236
00:12:06,320 --> 00:12:11,240
sort of iron ore interests that
the Metal Group had had for

237
00:12:11,240 --> 00:12:13,800
blending purposes in, in
quotation marks.

238
00:12:14,240 --> 00:12:17,000
That's all just shareholder
justification like we can, we

239
00:12:17,000 --> 00:12:19,480
can sort of see through that
right, those those are.

240
00:12:19,560 --> 00:12:22,320
Shooting a tremendous salesman
to with.

241
00:12:22,320 --> 00:12:24,480
A vision they, they are
parachuting someone in who is a

242
00:12:24,480 --> 00:12:27,320
proven, you know, talent when it
comes to salesmanship.

243
00:12:28,360 --> 00:12:30,040
It's just shareholder
justification.

244
00:12:30,040 --> 00:12:33,840
And how it, you know, plays out
in a, in a sort of fiscal sense

245
00:12:33,840 --> 00:12:37,880
is Twiggy gets 5 million shares
free upfront, gets 5 million

246
00:12:38,280 --> 00:12:43,080
options for free.
They are exercisable at $0.08.

247
00:12:43,480 --> 00:12:45,720
Now there's this sort of
executive agreement and it's all

248
00:12:45,840 --> 00:12:48,080
subject to shareholder approval.
But that that's not it.

249
00:12:48,360 --> 00:12:50,080
There's a heap of options that
come in.

250
00:12:50,080 --> 00:12:52,560
And this is famously how he gets
his enormous stake in the

251
00:12:52,560 --> 00:12:56,040
project.
He gets 100 million options, all

252
00:12:56,040 --> 00:12:59,720
exercisable at $0.08.
Now that 100 million is chopped

253
00:12:59,720 --> 00:13:03,800
up into four lots of 25.
And the key conditions there are

254
00:13:03,800 --> 00:13:06,800
getting the share price up,
getting it up to 10 cents, 15

255
00:13:06,800 --> 00:13:12,440
cents, 20 cents, $0.25.
So it's just gonna maintain a

256
00:13:12,440 --> 00:13:15,440
threshold over those levels for
I think a 10 day period.

257
00:13:16,000 --> 00:13:20,080
And he gets his stake.
So by 2005, he would own about

258
00:13:20,080 --> 00:13:23,680
47% of the company.
And that's how that all came

259
00:13:23,680 --> 00:13:25,320
about.
And Caruso sort of said to this

260
00:13:25,320 --> 00:13:27,520
point, I had to incentivize the
man.

261
00:13:27,600 --> 00:13:32,880
So it it kind of, you know, he
also added to that, that Boris

262
00:13:32,880 --> 00:13:35,760
wanted much more than the 110
million shares he ended up

263
00:13:35,760 --> 00:13:37,000
getting.
And that was just sort of part

264
00:13:37,000 --> 00:13:39,480
of the negotiation.
The market started lapping it up

265
00:13:39,480 --> 00:13:42,280
straight away.
I mean, from April through to

266
00:13:42,920 --> 00:13:46,120
July, when that presentation is
given the, the, the stock goes

267
00:13:46,120 --> 00:13:50,920
from like $0.10 to mid 20s.
It is a super thinly traded

268
00:13:50,920 --> 00:13:52,240
thing.
It is, you know, I had a

269
00:13:52,240 --> 00:13:55,360
minuscule market cap.
So don't read into that too

270
00:13:55,360 --> 00:13:58,320
much, but that, that is how that
all kind of came about.

271
00:13:58,320 --> 00:14:02,680
And I think it's worth kind of
adding a few more thoughts on

272
00:14:02,680 --> 00:14:05,320
that because I think, you know,
we've both read a lot of stories

273
00:14:05,320 --> 00:14:07,200
about how, how companies get
founded and stuff.

274
00:14:07,200 --> 00:14:10,440
And like, in my mind, this is
just the, the West Perth way of

275
00:14:10,440 --> 00:14:11,520
the company kind of getting
founded.

276
00:14:11,520 --> 00:14:14,840
This is the the West Perth way
of, you know, someone in Silicon

277
00:14:14,840 --> 00:14:17,360
Valley going into their garage
and starting a company.

278
00:14:17,840 --> 00:14:20,520
The founder wants to have
control of the vehicle.

279
00:14:21,680 --> 00:14:25,560
The company had no value really.
The RTO with no no asset either.

280
00:14:25,840 --> 00:14:28,640
So like that's.
The yeah, yeah, the value is

281
00:14:28,920 --> 00:14:30,800
being a listed entity.
Yeah, that is all of that.

282
00:14:30,800 --> 00:14:34,160
I mean, they claim to have a
billion tons of iron ore, which

283
00:14:34,160 --> 00:14:37,680
was just yeah, yeah.
It, it wasn't worth the paper.

284
00:14:37,680 --> 00:14:39,480
It was kind of written on in the
end.

285
00:14:39,480 --> 00:14:42,480
But that is how these sort of
things come about.

286
00:14:42,480 --> 00:14:46,160
And Twiggy got that all for all
for free, right?

287
00:14:46,160 --> 00:14:49,400
He, he ended up tipping in a bit
more than $8,000,000 to exercise

288
00:14:49,600 --> 00:14:52,640
the 100 million options.
But at that point in time, you

289
00:14:52,640 --> 00:14:56,400
know, he ate, he had
generational paper wealth.

290
00:14:56,640 --> 00:14:58,680
Right.
But even just like the the

291
00:14:59,520 --> 00:15:03,520
fortuitous nature of like the
vision from date out when, you

292
00:15:03,520 --> 00:15:06,000
know, when he comes into the
company, it is it's like clear

293
00:15:06,000 --> 00:15:07,760
and salient.
It's it's it's probably

294
00:15:08,320 --> 00:15:10,760
contrarian at that point in
time, or at least to the extent

295
00:15:10,760 --> 00:15:13,960
that he's forecasting it.
And with the passage of time, he

296
00:15:13,960 --> 00:15:16,720
might have even been kind of,
you know, underestimating what

297
00:15:16,720 --> 00:15:18,960
the what the dynamics would be
in that iron ore market.

298
00:15:18,960 --> 00:15:20,240
But he saw it like, did he?
Yeah.

299
00:15:20,240 --> 00:15:22,640
A. 100%, I don't think many
people would accuse him of of

300
00:15:22,760 --> 00:15:25,720
underestimating too many things.
But you're dead right.

301
00:15:25,720 --> 00:15:27,800
They come out with this vision.
They want to build a mine, they

302
00:15:27,800 --> 00:15:30,000
would want to build a 400
kilometre railway, they want to

303
00:15:30,000 --> 00:15:32,800
build a port.
They give it a rough thumb sack

304
00:15:32,800 --> 00:15:34,800
and say it's going to cost 2 to
$3 billion.

305
00:15:35,400 --> 00:15:38,760
Importantly, they really
emphasize that they are going to

306
00:15:38,760 --> 00:15:41,720
be a multi user infrastructure
developer.

307
00:15:41,760 --> 00:15:45,240
They are going to build IEA
railway that other people can

308
00:15:45,240 --> 00:15:47,520
use.
And they constantly go at BHP

309
00:15:47,520 --> 00:15:49,240
for not letting anyone else use
their things.

310
00:15:49,240 --> 00:15:52,840
So they name projects here, they
name Hope Downs, which hadn't

311
00:15:52,840 --> 00:15:54,040
been developed at this point in
time.

312
00:15:54,040 --> 00:15:57,560
And it's in the same sort of
ballpark in the in the kind of

313
00:15:57,560 --> 00:16:02,560
east of the Pilbara there.
And they say that is a a project

314
00:16:02,880 --> 00:16:04,920
who would benefit from this
shared infrastructure.

315
00:16:04,920 --> 00:16:07,400
And, you know, we're talking
about a point in time where Gina

316
00:16:07,400 --> 00:16:12,360
didn't have a mine in the early
2000s here, but that that one

317
00:16:12,360 --> 00:16:14,960
never kind of comes to fruition.
But they're, they're trying

318
00:16:14,960 --> 00:16:16,040
different things.
They're trying a lot of

319
00:16:16,040 --> 00:16:18,840
different things.
It's, it's a, it's kind of crazy

320
00:16:18,840 --> 00:16:20,240
because of that.
But they didn't actually have,

321
00:16:20,240 --> 00:16:22,960
they didn't have a project.
They didn't have, they didn't

322
00:16:22,960 --> 00:16:24,480
have money.
They didn't, you know, there's

323
00:16:24,480 --> 00:16:26,120
nothing, there's nothing there
yet.

324
00:16:26,120 --> 00:16:27,840
But, you know, we're going to,
we're going to solve the

325
00:16:27,840 --> 00:16:31,280
infrastructure, the mine, the
project, the tenements, the, you

326
00:16:31,280 --> 00:16:35,880
know, the, the buyer, all of
that without having anything

327
00:16:35,920 --> 00:16:37,600
yet.
Yeah, it's a kind of, it's kind

328
00:16:37,600 --> 00:16:39,160
of a.
The the first thing they do,

329
00:16:39,800 --> 00:16:41,200
yeah.
And the first thing they do to

330
00:16:41,200 --> 00:16:42,480
that point is they build the
team.

331
00:16:42,600 --> 00:16:45,960
They they build a great team.
They bring in the likes of

332
00:16:45,960 --> 00:16:49,320
Graham Rowley, Alan Watling,
Chris Catlow and Phil Kirk

333
00:16:49,760 --> 00:16:52,200
Lechner, all with real
experience.

334
00:16:52,560 --> 00:16:55,440
And then they also bring in
Russell Scrimshaw, Herb Elliott,

335
00:16:55,440 --> 00:16:58,280
one of the greatest Australian
runners of all time, Seb Cohen,

336
00:16:58,680 --> 00:17:01,720
Chris Linegard and Ken Ambrest.
A bunch of them sort of fill out

337
00:17:01,720 --> 00:17:04,280
the the board as well as other
roles within the business.

338
00:17:04,640 --> 00:17:07,119
So you've got this crazy
ambitious leader who's convinced

339
00:17:07,119 --> 00:17:09,440
them all to, to come on this
journey against the better

340
00:17:09,440 --> 00:17:14,720
judgement for for a lot of them,
they've haunted down experienced

341
00:17:14,720 --> 00:17:16,920
as well as just energetic
people, people that are that are

342
00:17:16,920 --> 00:17:20,240
keen and they're filling out the
different roles, rail, port,

343
00:17:20,240 --> 00:17:22,760
geology, metallurgy, marketing,
finance.

344
00:17:23,040 --> 00:17:25,680
They are, you know, hiring for
for specific needs.

345
00:17:26,000 --> 00:17:27,839
They've got a conceptual kind of
goal and now they're just

346
00:17:27,839 --> 00:17:30,080
getting after it.
And that is the plan.

347
00:17:30,080 --> 00:17:33,120
And that's what you see in that
kind of ambitious and, and

348
00:17:33,320 --> 00:17:36,200
elegant presentation they put
forward in in 2003.

349
00:17:37,160 --> 00:17:38,960
They've also finished that
quarter with about 1,000,000

350
00:17:38,960 --> 00:17:41,600
bucks in the bank.
So to your point, very, very

351
00:17:41,600 --> 00:17:43,480
small.
But you know, the ambition isn't

352
00:17:43,480 --> 00:17:45,960
restrained by the the market
size at that point in time.

353
00:17:46,760 --> 00:17:50,080
And they want to start
construction by early 2004 on,

354
00:17:50,120 --> 00:17:54,240
on the railway, which is, you
know, very, very ambitious to to

355
00:17:54,240 --> 00:17:55,400
say the least.
So.

356
00:17:56,240 --> 00:18:01,560
Wow.
So obviously BHP like the, the

357
00:18:01,560 --> 00:18:04,600
landscape of iron ore at this
point in time, the likes of BHP

358
00:18:04,600 --> 00:18:08,120
and Rio, they've got the good
stuff like this really can't be

359
00:18:08,120 --> 00:18:12,080
that you know, much opportunity
to actually pick up like

360
00:18:12,080 --> 00:18:14,280
appropriate iron ore.
Yeah.

361
00:18:14,280 --> 00:18:16,440
I mean, it's a, it's a super
valid question.

362
00:18:16,440 --> 00:18:21,000
One of the elements that had
really excited Twiggy and the

363
00:18:21,000 --> 00:18:24,960
rest of the team there is that
they caught wind that the majors

364
00:18:24,960 --> 00:18:28,120
had barely done any exploration.
They thought they had all the

365
00:18:28,360 --> 00:18:30,760
the good stuff and they had so
much of it they didn't feel the

366
00:18:30,760 --> 00:18:33,280
need to.
There was also, I'll go into the

367
00:18:33,280 --> 00:18:37,800
geology in more detail in a
moment, but there was there was

368
00:18:37,800 --> 00:18:41,600
a lot of sort of thinking in the
Pilbara and assumed, you know,

369
00:18:41,600 --> 00:18:45,080
knowledge that didn't prove to
be all that kind of true that

370
00:18:45,200 --> 00:18:48,160
Fortescue would repeatedly kind
of counter and they would try

371
00:18:48,160 --> 00:18:51,160
different things.
So, for example, the, the

372
00:18:51,160 --> 00:18:53,200
deposits, they always thought
they were these deep, deep

373
00:18:53,200 --> 00:18:57,080
things that would sit close to
outcrop that didn't prove to be

374
00:18:57,080 --> 00:18:59,000
true.
And they, you know, challenged

375
00:18:59,000 --> 00:19:01,640
that and it, and it came up with
the goods in time.

376
00:19:01,640 --> 00:19:04,640
So looking at the projects they
have at this point in time,

377
00:19:04,680 --> 00:19:06,680
you've got Mount Nicholas.
That was the, the first real

378
00:19:06,680 --> 00:19:10,560
hope.
And that was where Twiggy pulls

379
00:19:10,560 --> 00:19:12,520
out this map.
He, he circles around Mount

380
00:19:12,520 --> 00:19:16,000
Nicholas, he draws this snaking
line, which is the railway to

381
00:19:16,000 --> 00:19:17,920
the port.
And that's the ambition.

382
00:19:18,000 --> 00:19:21,320
That's the 400 kilometer rail
line.

383
00:19:21,960 --> 00:19:23,400
And that's where they want to
get the ore from.

384
00:19:23,960 --> 00:19:26,920
And then they start testing that
and they realize it's, it's

385
00:19:27,920 --> 00:19:31,360
complete crap.
So in what sense the, the, the

386
00:19:31,520 --> 00:19:33,080
deposit?
I mean, they, they sort of talk

387
00:19:33,080 --> 00:19:36,400
about the stuff being high 40%,
you know, it's riddled with,

388
00:19:36,400 --> 00:19:37,920
with shale.
No good.

389
00:19:37,920 --> 00:19:41,480
They look at another project
called Mount Lewin and they sort

390
00:19:41,480 --> 00:19:44,800
of hit low grade super gene
mineralization there into bedded

391
00:19:44,800 --> 00:19:46,960
again with this sort of thick
shale, which is hard to

392
00:19:46,960 --> 00:19:49,080
beneficiate.
It's, it's no good, but there

393
00:19:49,080 --> 00:19:52,760
are some pockets of hope in
there which which I'll get into

394
00:19:52,760 --> 00:19:57,120
and it kind of gets the, the
technical team thinking and

395
00:19:57,120 --> 00:20:01,720
they, you know, like you say,
they know the majors, BHB and

396
00:20:01,720 --> 00:20:04,560
Rio have a lot of the good
projects, a lot of the good land

397
00:20:04,560 --> 00:20:07,600
tied up.
But they just get super

398
00:20:07,600 --> 00:20:09,720
aggressive in pegging tenements
everywhere.

399
00:20:09,720 --> 00:20:14,080
They're a bit cheeky as well.
They, they chase after BHB in

400
00:20:14,080 --> 00:20:17,400
some cases on tenements that
have been kind of under worked

401
00:20:17,400 --> 00:20:19,760
and they, they call that out and
they, they sort of snap them up

402
00:20:19,760 --> 00:20:21,680
as soon as other tenements
become free.

403
00:20:21,680 --> 00:20:24,600
They just gobble them up.
So they're very aggressive about

404
00:20:24,840 --> 00:20:27,720
picking up as many tenements and
just building that land holding

405
00:20:28,120 --> 00:20:31,720
and they are incredibly
aggressive with drilling.

406
00:20:31,920 --> 00:20:35,080
They spend more money on
drilling than any other listed

407
00:20:35,080 --> 00:20:36,440
Australian company over that
period.

408
00:20:37,000 --> 00:20:40,800
So they just go super hard at
that footy from 2003 to about

409
00:20:40,880 --> 00:20:43,720
2005 before they cotton on to
what really works.

410
00:20:44,080 --> 00:20:46,640
The and the tenements that would
ultimately come to become their

411
00:20:46,640 --> 00:20:48,440
first project.
Like at what point did they

412
00:20:48,680 --> 00:20:52,040
manage to pick them up?
I would say they picked them up

413
00:20:52,040 --> 00:20:56,320
late O3 early O four, yeah, when
they cotton on to what's working

414
00:20:56,320 --> 00:21:01,040
is mid 2004.
Yeah, with the story behind how

415
00:21:01,040 --> 00:21:03,840
they picked up those tenements,
Have you heard that one before,

416
00:21:03,840 --> 00:21:05,080
do?
You have a story to share.

417
00:21:05,240 --> 00:21:08,320
I well, I heard that, you know,
this is just one of the, the

418
00:21:08,360 --> 00:21:13,840
biggest oversights of a major
BHBHPS like tenure.

419
00:21:14,040 --> 00:21:16,120
They let it drop because there
was like, you know, 11

420
00:21:16,320 --> 00:21:19,160
exploration manager or something
who was under the pressure to

421
00:21:19,160 --> 00:21:21,080
kind of cut costs and thought
these aren't going to be in the,

422
00:21:21,280 --> 00:21:24,560
my plan for 4040 odd years.
You know, and all of that is

423
00:21:24,560 --> 00:21:27,680
true, but what's not factored
into that is a consideration

424
00:21:27,680 --> 00:21:31,400
for, you know, allowing the
possibility of a, of a, of a new

425
00:21:31,400 --> 00:21:33,320
competitor like entering the
arena.

426
00:21:33,400 --> 00:21:35,800
It you know it's their own fault
for it.

427
00:21:36,160 --> 00:21:37,760
How good is that?
That's so good.

428
00:21:38,000 --> 00:21:42,520
So the thinking in simple terms
had been prove up 1,000,000 tons

429
00:21:42,840 --> 00:21:46,920
at roughly 50 million, 50
million tons per annum over 20

430
00:21:46,920 --> 00:21:48,560
years.
You can justify the

431
00:21:48,560 --> 00:21:51,800
infrastructure spend that that
sort of rule of thumb type

432
00:21:51,800 --> 00:21:53,120
thinking about how they're going
about this.

433
00:21:53,120 --> 00:21:56,160
They they sign another JV with
this group called Cons Min, who

434
00:21:56,160 --> 00:21:59,960
actually owned Woody Woody.
And they have the Mindy, Mindy

435
00:22:00,480 --> 00:22:02,640
Project that proves to be a bit
of a dead end.

436
00:22:02,640 --> 00:22:06,440
But again, it helps them garner
a bit of attention and also

437
00:22:06,440 --> 00:22:08,880
helps the geologists on this
sort of journey to to finding

438
00:22:08,880 --> 00:22:12,320
those economic projects.
And they just, you know, in that

439
00:22:12,400 --> 00:22:16,600
Chester range part of the world,
keep snapping up tenements all,

440
00:22:16,600 --> 00:22:19,600
all along the way.
All of this talk about the the

441
00:22:19,600 --> 00:22:23,520
multi user infrastructure like
did they did they ever get close

442
00:22:23,520 --> 00:22:28,320
to doing a deal with with Gina?
No, I don't think Gina had any

443
00:22:28,320 --> 00:22:30,200
interest in ever doing a deal
with them.

444
00:22:30,400 --> 00:22:34,280
So Gina at that point in time
was looking to do a deal with

445
00:22:34,280 --> 00:22:36,800
Kumba.
So Anglo is backed Kumba, which

446
00:22:36,800 --> 00:22:38,440
is a South African iron oil
miner.

447
00:22:39,240 --> 00:22:42,120
And I don't think it ever got
close, but Hope Downs needed

448
00:22:42,120 --> 00:22:44,000
rail.
They ended up doing that big

449
00:22:44,000 --> 00:22:47,160
deal in in 2005 with Rio Tinto.
Although Twiggy did kind of

450
00:22:47,160 --> 00:22:50,640
antagonize Gina by hiring her
son John, who worked for the

451
00:22:50,640 --> 00:22:53,760
company for a for a period of
time. 2004 odd.

452
00:22:54,360 --> 00:22:56,200
What else sticks out from those
early days?

453
00:22:56,840 --> 00:23:00,360
But there's there's one thing
that you see from 2003 onwards

454
00:23:00,360 --> 00:23:02,920
and it doesn't stop for a long,
long, long, long, long time.

455
00:23:03,320 --> 00:23:06,160
The regulator is on to their
case straight away.

456
00:23:06,160 --> 00:23:10,440
They they get more price queries
than you can possibly imagine.

457
00:23:10,680 --> 00:23:14,040
It seems like every other month
there's another price query in

458
00:23:14,040 --> 00:23:16,240
the first instance.
Regarding that presentation we

459
00:23:16,240 --> 00:23:20,160
showed earlier, ASIC is asking,
you know, why are you using non

460
00:23:20,160 --> 00:23:23,120
dual compliant resources?
Does Hancock even know you've

461
00:23:23,120 --> 00:23:25,560
mentioned their name with
regards to Hope Downs, where

462
00:23:25,560 --> 00:23:28,120
have you sort of pulled these
cost figures, these development

463
00:23:28,120 --> 00:23:30,760
timelines from?
Do you have the funding

464
00:23:30,760 --> 00:23:32,800
capability there?
There are so many questions they

465
00:23:32,800 --> 00:23:34,960
have about that and you kind of
get the picture.

466
00:23:34,960 --> 00:23:38,040
I won't sort of name them
throughout the the the story,

467
00:23:38,040 --> 00:23:40,040
but there are so many price
queries.

468
00:23:40,040 --> 00:23:44,280
The stock jumps 20, thirty, 40%
peels back and there's so much

469
00:23:44,280 --> 00:23:47,680
happening as well that it, you
know, it catches the eye of of

470
00:23:47,720 --> 00:23:50,720
ASIC and there's the sort of
promotional flavour to it all.

471
00:23:51,000 --> 00:23:54,920
But yeah, that that is a thing
that that sticks for for the

472
00:23:54,920 --> 00:23:56,760
majority of the story we're
going to talk about today.

473
00:23:57,400 --> 00:23:59,520
Yeah, that, that's an
interesting reflection.

474
00:23:59,520 --> 00:24:01,840
I mean, I'm not, I'm not
surprised because there's this

475
00:24:01,840 --> 00:24:04,880
big and bold talk that is, you
know, far further out than what

476
00:24:04,880 --> 00:24:07,320
seems possible by any stretch of
the imagination.

477
00:24:07,320 --> 00:24:12,000
But the ability to kind of talk
so far ahead enable them to to

478
00:24:12,000 --> 00:24:15,320
maybe attract enough market size
to eventually get a financing

479
00:24:15,320 --> 00:24:16,080
way.
Yeah, yeah.

480
00:24:16,400 --> 00:24:18,360
It's one of the parts of being a
public company.

481
00:24:18,760 --> 00:24:23,600
So, so that kind of takes us to
Chapter 2 of of this story in a

482
00:24:23,600 --> 00:24:25,360
way.
And it's kind of hard to

483
00:24:25,360 --> 00:24:27,440
determine at at this point in
time what what is the most

484
00:24:27,600 --> 00:24:29,200
pressing job.
But I think pretty close to

485
00:24:29,200 --> 00:24:32,600
that, you know, top of the list
there would be finding a proper

486
00:24:32,600 --> 00:24:34,280
resource.
They start working on a whole

487
00:24:34,280 --> 00:24:37,400
bunch of different fronts, but
they need to be aggressive on

488
00:24:37,400 --> 00:24:38,960
this punt.
So like I said, the tenement

489
00:24:38,960 --> 00:24:43,680
package within sort of nine
months within 3/4 that lifts 25

490
00:24:43,680 --> 00:24:45,880
fold.
So they're just gobbling up land

491
00:24:45,880 --> 00:24:48,840
left, right and centre.
They come out with this scoping

492
00:24:48,840 --> 00:24:52,280
study, which again is crazy to
think about because they don't

493
00:24:52,280 --> 00:24:56,640
even have a legitimate project
project in terms of the, the

494
00:24:56,640 --> 00:24:58,200
ore.
But they talk about 20 million

495
00:24:58,200 --> 00:25:03,080
tons per annum, billion and a
half CapEx, 850 million MPV.

496
00:25:03,920 --> 00:25:05,760
You know, that's not going to
pass muster, that's not going to

497
00:25:05,760 --> 00:25:07,560
attract anyone.
And there's this interesting

498
00:25:07,560 --> 00:25:10,640
sort of conversation that takes
place between Alan Watling, who

499
00:25:10,640 --> 00:25:14,600
becomes The Who is it the COO
and Andrew Forrest.

500
00:25:14,600 --> 00:25:17,760
So he, he's chatting with Twiggy
and he asks the question, what,

501
00:25:17,760 --> 00:25:19,880
what is the size that that sort
of gets this up?

502
00:25:20,560 --> 00:25:23,440
And he's sort of he's thinking,
oh, maybe 15,000,000 tons per

503
00:25:23,440 --> 00:25:27,160
annum that that is not of
sufficient scale.

504
00:25:27,160 --> 00:25:30,640
And you know, that is not
interesting to Alan, let alone

505
00:25:30,800 --> 00:25:33,960
sort of Twiggy here.
But Alan goes on to say if you

506
00:25:33,960 --> 00:25:36,800
could do 30 million tons per
annum, maybe that's kind of

507
00:25:36,800 --> 00:25:38,840
doable.
And of course, Twiggy just jumps

508
00:25:38,840 --> 00:25:40,560
at that opportunity.
His eyes kind of light up.

509
00:25:40,560 --> 00:25:43,840
So they've got a target and in
short order that actually lists

510
00:25:43,840 --> 00:25:46,960
to 45,000,000 tons per annum.
That is the number that they

511
00:25:46,960 --> 00:25:49,120
strive for for a long period of
time.

512
00:25:49,120 --> 00:25:52,000
That is sort of critical mass
that can get underwritten.

513
00:25:52,360 --> 00:25:54,720
They also come out with these
ore specs.

514
00:25:54,720 --> 00:25:58,240
So we're talking about the iron
content, silica alumina, which

515
00:25:58,240 --> 00:26:00,720
again is just bonkers because
they don't even have a project.

516
00:26:00,720 --> 00:26:03,880
It's like coming out with a
scoping study and saying this is

517
00:26:03,880 --> 00:26:08,720
what we'd like to mine, never
mind, we don't have it, let's

518
00:26:08,720 --> 00:26:12,960
get to work.
Even just the the the team who

519
00:26:12,960 --> 00:26:17,000
was clearly like on a mad rush
to to try and find a suitable

520
00:26:17,360 --> 00:26:21,360
like deposit here, like can can
you just like imagine the the

521
00:26:21,360 --> 00:26:22,840
work that they're having to to
do?

522
00:26:22,840 --> 00:26:26,160
I mean, they're, Twiggy's
clearly got it in him that we

523
00:26:26,160 --> 00:26:28,760
need to, we need to make this
cycle with like hire to mark as

524
00:26:28,760 --> 00:26:30,320
fast as possible this window is
open.

525
00:26:30,360 --> 00:26:32,960
So everyone's in a mad rush to
try and make this window with a

526
00:26:32,960 --> 00:26:35,720
big bold vision.
And at this stage, maybe he's

527
00:26:35,720 --> 00:26:37,920
got some foresight into the
Chinese steel mill demand to,

528
00:26:37,960 --> 00:26:41,480
to, to, to work into it.
But like the geology team, like

529
00:26:42,120 --> 00:26:45,160
they've, they've just got to
find a deposit out of in such a

530
00:26:45,160 --> 00:26:47,000
short period of time.
It's it's kind of remarkable.

531
00:26:47,040 --> 00:26:50,680
Yeah, I mean, we are very early
in that cycle.

532
00:26:50,680 --> 00:26:54,600
Like it is just just picking up
that again, the 1st inklings of

533
00:26:54,600 --> 00:26:56,880
the wave.
Yeah, that starts to come on

534
00:26:56,880 --> 00:26:58,040
very quickly.
Yeah.

535
00:26:58,360 --> 00:27:01,480
And the, the geology team that
they're less than inspired when

536
00:27:01,480 --> 00:27:02,920
they first come in.
They think this is sort of

537
00:27:02,920 --> 00:27:06,760
ramshackle the most unorganized
company they've ever sort of

538
00:27:06,760 --> 00:27:09,560
worked at.
They, you know, they, they share

539
00:27:09,560 --> 00:27:11,840
the results of what happened at
Matt Nicholas.

540
00:27:12,360 --> 00:27:17,280
And they're all terrified to
kind of, but they're sort of

541
00:27:17,280 --> 00:27:20,880
thinking in the background and
they're, yeah, there's a few

542
00:27:20,880 --> 00:27:24,320
names when we crack, you know,
Cloudbreak in, in a moment.

543
00:27:24,960 --> 00:27:27,920
There's some names that deserve
a lot of praise for their, their

544
00:27:27,920 --> 00:27:30,560
kind of thinking.
But the company gets to this

545
00:27:30,560 --> 00:27:34,040
point in time in, in late 2003.
They have the, the annual report

546
00:27:34,520 --> 00:27:37,960
and they, they share the
register for the first time,

547
00:27:37,960 --> 00:27:39,600
which is a really interesting
sort of snippet.

548
00:27:39,600 --> 00:27:41,360
So Twiggy is, you know, he's
there.

549
00:27:41,360 --> 00:27:44,560
He's preaching about cracking
the oligopoly, which is Valet

550
00:27:44,560 --> 00:27:49,520
Rio BHB opening up the pill bra.
And what I love what you see

551
00:27:49,520 --> 00:27:52,680
throughout what you see in the
logo, They're talking about the

552
00:27:52,680 --> 00:27:54,800
national interest.
You know, this is God's work

553
00:27:54,800 --> 00:27:57,600
that they're doing here.
Look at the Register here.

554
00:27:57,600 --> 00:28:01,240
So you can see a name, Emichrome
there.

555
00:28:02,200 --> 00:28:05,160
Emichrome is a company that
belongs to a fellow called Kichi

556
00:28:05,160 --> 00:28:09,920
Wong.
So Mr. Wong is from Sydney, put

557
00:28:09,920 --> 00:28:14,760
in $1 million in 2003, to this
day still owns 3% of Fortescue.

558
00:28:15,360 --> 00:28:19,400
By 2008 he was a, a billionaire.
Now this person had backed

559
00:28:19,400 --> 00:28:22,720
Twiggy at Anaconda and actually
found a bit about him online,

560
00:28:22,720 --> 00:28:25,080
sort of punched it on a, a
number of mining stocks out

561
00:28:25,080 --> 00:28:26,960
there.
This was undoubtedly the the

562
00:28:26,960 --> 00:28:28,920
best.
How's that?

563
00:28:29,920 --> 00:28:32,960
The directors and management
holds 66% of of the company with

564
00:28:32,960 --> 00:28:36,320
the vast majority of that being
Andrew Forrest's holding there.

565
00:28:36,320 --> 00:28:39,040
And they also come out with this
development timeline.

566
00:28:39,040 --> 00:28:44,680
So they want to go from scoping
to PFS to DFS within 3/4 all up

567
00:28:45,600 --> 00:28:47,960
that wasn't actually achieved,
but that that is the goal that

568
00:28:47,960 --> 00:28:49,320
they had.
They want to start construction

569
00:28:49,320 --> 00:28:53,840
now in 2005 and they want to be
shipping all by the end of 2006.

570
00:28:54,160 --> 00:28:59,480
So they are a team on a mission
to answer your question before

571
00:28:59,720 --> 00:29:02,720
about the the rocks that they
are hunting down.

572
00:29:02,720 --> 00:29:07,400
So like I said, Mount Nicholas
was the the initial aim that had

573
00:29:07,400 --> 00:29:11,240
super high levels of impurities.
But there was that, that hope

574
00:29:11,240 --> 00:29:14,640
that I sort of hinted at that
they got to the idea is that

575
00:29:14,640 --> 00:29:18,040
they're testing for these
thinner sheets of iron ore over

576
00:29:18,080 --> 00:29:21,480
much more expansive areas as
opposed to these deeper deposits

577
00:29:21,520 --> 00:29:23,560
that Rio Tinto and BHB had
mined.

578
00:29:23,560 --> 00:29:27,800
So the, the G OS, Barry Knight,
David Mendelowitz and Eamon

579
00:29:27,800 --> 00:29:29,880
Hannon.
And I'm sure there's a a whole

580
00:29:29,880 --> 00:29:33,560
bunch more that deserve credit
as well as John Clout, who was

581
00:29:33,560 --> 00:29:36,360
more from a a metallurgical
background and had worked at the

582
00:29:36,360 --> 00:29:39,760
CSIRO.
They are the the technical team

583
00:29:39,760 --> 00:29:43,000
that is credited with the the
Super original thinking that led

584
00:29:43,000 --> 00:29:45,680
to the breakthroughs that they
had here.

585
00:29:46,000 --> 00:29:48,360
And I mean, we're, we're still
talking about it's banded iron

586
00:29:48,360 --> 00:29:51,240
formation that they're that they
are ultimately still looking

587
00:29:51,240 --> 00:29:52,320
for.
It's not, it's not channel iron

588
00:29:52,320 --> 00:29:53,320
deposit or anything like.
That so?

589
00:29:53,360 --> 00:29:57,240
So they were hunting for these
channel iron deposits and then

590
00:29:57,240 --> 00:30:02,960
they land on these bedded iron
deposits, which ends up being

591
00:30:02,960 --> 00:30:08,600
the dominant mineralization for
for the vast majority of their

592
00:30:08,640 --> 00:30:11,760
their projects from Christmas
Creek through the cloud break.

593
00:30:12,160 --> 00:30:14,800
So, so they're making some
progress on the on the on the

594
00:30:14,800 --> 00:30:16,640
tenements, but what about the
infrastructure mate?

595
00:30:17,280 --> 00:30:19,520
The infrastructure mate can't
understate this.

596
00:30:19,520 --> 00:30:21,400
They were fully committed to
being a multi user

597
00:30:21,680 --> 00:30:23,440
infrastructure player.
They came up with this plan.

598
00:30:23,760 --> 00:30:25,880
They wanted to create the
Pilbara Investment Fund.

599
00:30:25,880 --> 00:30:28,240
They would like to call that the
TPI.

600
00:30:28,920 --> 00:30:33,160
Now this would be housed
separate to FMG mines and it's

601
00:30:33,160 --> 00:30:35,920
ambition would be to
debottleneck the, the Pilbara.

602
00:30:37,280 --> 00:30:41,040
Like this was so different.
Like Fortescue would would be

603
00:30:41,040 --> 00:30:44,480
holding 40% interest in this and
they wanted to list this, you

604
00:30:44,480 --> 00:30:46,360
know, with the idea that
different investors are

605
00:30:46,360 --> 00:30:48,760
interested in infrastructure and
and mining.

606
00:30:49,000 --> 00:30:52,960
So what could have been, but
they, they never sort of

607
00:30:52,960 --> 00:30:54,400
officially stop thinking this
way.

608
00:30:54,400 --> 00:30:56,720
It just kind of whittles away in
the background.

609
00:30:56,720 --> 00:30:59,960
But for, for quite a, quite a
couple years there you, you see

610
00:30:59,960 --> 00:31:03,560
them talking about this.
Meanwhile, they, they hone in on

611
00:31:03,560 --> 00:31:10,160
this $1.85 billion CapEx number,
2/3 infra, 1/3 mining and they

612
00:31:10,480 --> 00:31:12,800
Chuck up in a presentation what
the payback period is going to

613
00:31:12,800 --> 00:31:17,000
be rapid, rapid payback.
How's that for a payback period?

614
00:31:17,000 --> 00:31:21,000
So they're, they're iterating on
a lot of these things and

615
00:31:21,000 --> 00:31:22,360
they've just got a number that
kind of works.

616
00:31:22,360 --> 00:31:25,240
And it it works for a couple
years, they start signing all

617
00:31:25,240 --> 00:31:29,080
these memorandum of of intents.
Yeah, clearly the rationale

618
00:31:29,080 --> 00:31:31,720
behind this, you know, PIF
building infrastructure fund is,

619
00:31:31,880 --> 00:31:34,960
is just, it's, it's a seemingly
insurmountable amount of CapEx

620
00:31:34,960 --> 00:31:38,400
that needs to go into this.
And, and they're trying to

621
00:31:39,120 --> 00:31:42,080
assure like, presumably like
reduce what what Fortescue

622
00:31:42,080 --> 00:31:44,080
themselves have to be able to
fund so that they can actually

623
00:31:44,080 --> 00:31:45,600
get away.
Yeah, 100%.

624
00:31:45,600 --> 00:31:49,480
And I think they can pace in
different types of investors.

625
00:31:49,480 --> 00:31:52,160
You know, there's the the big
allocation from the junk bond

626
00:31:52,160 --> 00:31:54,720
market that they think they're
going to get as well as Chinese

627
00:31:54,720 --> 00:31:57,960
a lot of stuff Chinese state
owned companies particularly on

628
00:31:57,960 --> 00:31:59,920
the on the mining front as well.
They would prepaid, they wanted

629
00:31:59,920 --> 00:32:02,960
to get a lot done via prepayment
and that that type of thinking.

630
00:32:04,400 --> 00:32:08,360
How big is the CapEx like?
When it's all said and done,

631
00:32:09,280 --> 00:32:11,600
it's north of three.
North of three, but they're not

632
00:32:11,600 --> 00:32:12,840
saying it's going to be 3 at
this stage they.

633
00:32:12,840 --> 00:32:16,240
Don't know it's going to be 3 at
this stage, yeah.

634
00:32:16,560 --> 00:32:19,640
Amazing.
So they start saying signing all

635
00:32:19,640 --> 00:32:23,720
these memorandum of intents,
that is, you know, according to

636
00:32:23,720 --> 00:32:26,000
some people in the market, not
worth the paper it's written on

637
00:32:26,400 --> 00:32:28,960
or, you know, the equivalent of
toilet paper as as someone else

638
00:32:28,960 --> 00:32:30,920
sort of said at that point in
time.

639
00:32:31,480 --> 00:32:34,760
But there is interest from the
steel mills because the steel

640
00:32:34,760 --> 00:32:36,680
mills want to crack the
oligopoly as well.

641
00:32:36,680 --> 00:32:40,280
They don't want to be beholden
to the three major companies who

642
00:32:40,280 --> 00:32:42,960
they seriously worried about
having pricing control.

643
00:32:43,240 --> 00:32:47,440
So Russell Scrimshaw and David
Liu, those two deserve a lot of

644
00:32:47,440 --> 00:32:49,400
praise for just going over to
China.

645
00:32:50,080 --> 00:32:54,200
They didn't even have any or to
to sell, but they just hung

646
00:32:54,200 --> 00:32:56,360
around in, in the lobby.
They took every meeting they

647
00:32:56,360 --> 00:32:59,680
could kind of get they, you
know, signed every half decent

648
00:32:59,680 --> 00:33:02,520
deal they could to just start
generating some interest and bit

649
00:33:02,520 --> 00:33:04,440
by bit it started coming
together.

650
00:33:04,440 --> 00:33:07,080
And when they start announcing
these, there's this, you know,

651
00:33:07,080 --> 00:33:10,040
going through the announcements,
there's a bit of language that

652
00:33:10,040 --> 00:33:12,080
really sort of stood out to me.
I, I kind of love it.

653
00:33:12,760 --> 00:33:15,920
FMG will continue to
relentlessly progress this

654
00:33:15,920 --> 00:33:17,000
project.
So at.

655
00:33:17,160 --> 00:33:18,800
This stage, what is the project
by the way?

656
00:33:19,560 --> 00:33:22,200
The the project is loosely that
they're going to mine something

657
00:33:22,240 --> 00:33:24,560
in the eastern Pilbara.
There's going to be a big

658
00:33:24,560 --> 00:33:27,240
railway we don't and a port, so
we.

659
00:33:27,240 --> 00:33:29,080
Don't doubt it.
We don't know what the project

660
00:33:29,080 --> 00:33:31,680
is yet.
OK, No, it's at least that's

661
00:33:31,680 --> 00:33:33,280
remarkable.
You got, you go to China, you're

662
00:33:33,280 --> 00:33:36,840
getting a bunch of yeah, like,
like commitments from steel

663
00:33:36,840 --> 00:33:37,480
mills.
Not, not.

664
00:33:37,800 --> 00:33:40,800
I know it's an MOU, but it helps
you progress things.

665
00:33:41,800 --> 00:33:44,920
I'm, I'm pretty sure the dynamic
for those steel mills as well,

666
00:33:46,160 --> 00:33:49,800
what they needed themselves in
order to be able to, you know,

667
00:33:49,840 --> 00:33:53,560
borrow from the, from the State
Bank and whatnot was was, you

668
00:33:53,560 --> 00:33:57,120
know, a signed indication that
they had supply commitment like

669
00:33:57,200 --> 00:33:58,920
coming through.
So everyone, everyone was

670
00:33:58,920 --> 00:34:00,880
incentivizing, you know?
It was a lot of work, Yeah.

671
00:34:00,880 --> 00:34:03,360
A lot of smaller steel mills
were popping up at this point of

672
00:34:03,360 --> 00:34:04,480
time.
You had the big ones.

673
00:34:04,480 --> 00:34:06,080
Yeah.
But then they need supply they

674
00:34:06,400 --> 00:34:08,800
yeah.
And if you if you just sign

675
00:34:08,800 --> 00:34:10,960
something and I think the
prepaid which ultimately comes

676
00:34:11,000 --> 00:34:13,840
comes to fruition is, is part of
the incentive of the steel mill

677
00:34:13,880 --> 00:34:16,440
to it that that made that'll
happen was their own internal

678
00:34:16,440 --> 00:34:18,719
financing dynamics.
They were hungry.

679
00:34:18,760 --> 00:34:20,520
They were super hungry for
supply.

680
00:34:20,520 --> 00:34:22,080
They actually get another
speeding ticket around this

681
00:34:22,080 --> 00:34:26,560
time, which is worth mentioning
because it it kind of happens in

682
00:34:26,560 --> 00:34:29,600
the in the lead up to the team
flying to China to sign these

683
00:34:29,600 --> 00:34:31,760
agreements.
Graham Rally, one of the

684
00:34:31,760 --> 00:34:37,000
directors buys a bit of stock,
then they sign these agreements,

685
00:34:37,000 --> 00:34:40,360
the very first ones, the stock
ticks up sort of like it was 40

686
00:34:40,360 --> 00:34:43,199
odd percent and that lands them
in a bit of hot water with ASIC.

687
00:34:43,199 --> 00:34:46,800
That one sort of blows over.
I think it was yeah, there was

688
00:34:47,239 --> 00:34:50,679
no kind of male intent there.
They sort of really, really

689
00:34:50,679 --> 00:34:53,480
buying into the the project, the
directors and the team and

690
00:34:53,480 --> 00:34:55,920
everything and there's lots of
announcements.

691
00:34:55,920 --> 00:34:58,200
Things are happening very
quickly at this at this point in

692
00:34:58,200 --> 00:35:00,240
time.
Where's iron ore price at?

693
00:35:01,800 --> 00:35:05,320
So this is something you have to
kind of wrap your head around.

694
00:35:05,320 --> 00:35:08,320
Back then, iron ore was priced
in benchmark, so very similar to

695
00:35:08,320 --> 00:35:12,080
TCRC's in copper.
Today a price would come out at

696
00:35:12,080 --> 00:35:14,280
the beginning of April because
that lined up with the Japanese

697
00:35:14,280 --> 00:35:17,680
financial year and that would be
the iron ore price for the year.

698
00:35:18,000 --> 00:35:23,160
So very different today you'd
have a major producer and a

699
00:35:23,160 --> 00:35:27,960
major steel mill say you know,
Bauer Steel and Farley would get

700
00:35:27,960 --> 00:35:31,600
together and that would set the
the price for the the whole

701
00:35:31,600 --> 00:35:33,480
market.
You know, you see it in zinc,

702
00:35:33,480 --> 00:35:36,480
TCR, CS today.
It was the the sort of way of

703
00:35:36,480 --> 00:35:38,840
doing business back then.
And obviously things changed in

704
00:35:38,840 --> 00:35:41,080
in 2010 is when that that kind
of changed.

705
00:35:41,080 --> 00:35:48,000
But I know in 2004 specifically
jumped up about 20% and Chinese

706
00:35:48,000 --> 00:35:51,960
iron ore demand had been growing
at 16% for the previous ten

707
00:35:51,960 --> 00:35:54,520
years.
So that that is a that's a a

708
00:35:54,520 --> 00:35:56,960
rapid clip to be grown at.
Big time, Big time.

709
00:35:57,880 --> 00:35:59,880
There's one other thing I'll
I'll mention at this point in

710
00:35:59,880 --> 00:36:02,240
time, and I won't touch on it
again throughout the story, but

711
00:36:02,960 --> 00:36:06,560
FNG are constantly trying to get
access to BH PS Rail.

712
00:36:07,440 --> 00:36:12,680
You see these legal letters
coming out all the time and it

713
00:36:12,680 --> 00:36:15,560
ends up being not the right kind
of thing to to chase after.

714
00:36:15,560 --> 00:36:18,040
And they end up just wasting a
little bit of time in, in

715
00:36:18,040 --> 00:36:22,160
hindsight, why they were doing
it is is clear to to chop down

716
00:36:22,160 --> 00:36:26,400
that infrastructure spend.
And they were arguing that third

717
00:36:26,400 --> 00:36:29,160
parties should be able to use,
you know, these these private

718
00:36:29,480 --> 00:36:32,720
bits of rail as they were
national infrastructure.

719
00:36:32,840 --> 00:36:36,560
But BHP was never, never, ever
going to allow that.

720
00:36:36,560 --> 00:36:39,560
And it, you know, just ends up
being a big win for the lawyers

721
00:36:39,560 --> 00:36:42,400
over a number of years.
So they've got to build their

722
00:36:42,400 --> 00:36:46,400
own rail, I suppose they're
they've got to find a deposit

723
00:36:46,400 --> 00:36:50,640
that actually is usable too.
They have to find a deposit and

724
00:36:50,640 --> 00:36:54,120
this is where mid 2004 they
cracked the understanding of the

725
00:36:54,840 --> 00:36:58,080
the now remember iron formation,
what they're really focusing on.

726
00:36:58,080 --> 00:37:01,160
So we mentioned the, you know,
the the CI DS, the channel on

727
00:37:01,160 --> 00:37:05,120
deposits they thought would be
the dominant mineralization

728
00:37:05,760 --> 00:37:09,720
didn't prove to be the case.
The the bedded on deposits are

729
00:37:10,360 --> 00:37:13,520
what you know, ends up being the
sort of pay dirt for them.

730
00:37:13,520 --> 00:37:20,000
So there's a strata form hosted
in ancient iron rich marine

731
00:37:20,000 --> 00:37:22,200
sediments, so kind of old
oceans.

732
00:37:22,600 --> 00:37:26,280
And these are hosted in the
Moody member at the base of the

733
00:37:26,400 --> 00:37:30,000
the mayor member iron formation.
So that we we sort of show a map

734
00:37:30,000 --> 00:37:31,640
and you can have an
understanding of of what the

735
00:37:31,640 --> 00:37:35,280
Pilbara looks like.
But this was unique thinking and

736
00:37:36,120 --> 00:37:38,560
it turned out to be a win for
them because these deposits,

737
00:37:38,560 --> 00:37:41,760
like I mentioned, were were
different pros and cons to it.

738
00:37:41,760 --> 00:37:45,680
But on the positives they had,
they were larger, they were a

739
00:37:45,680 --> 00:37:49,480
bit more consistent and they
could potentially be easier to

740
00:37:49,480 --> 00:37:51,720
mine with a different mining
method.

741
00:37:52,080 --> 00:37:56,080
On the downside, they were lower
grade and could be higher in

742
00:37:56,720 --> 00:37:59,240
impurities.
So it wasn't completely a win

743
00:37:59,240 --> 00:38:02,080
win.
But you can see through that

744
00:38:02,080 --> 00:38:06,520
2004 period, the, the thinking
is really evolving and they

745
00:38:06,520 --> 00:38:10,040
really sort of knuckle down to,
to, to what works.

746
00:38:10,040 --> 00:38:13,720
So I think it May 2004 was when
they first mentioned these very

747
00:38:13,720 --> 00:38:18,640
flat lying deposits and that
that was just counter to all the

748
00:38:18,640 --> 00:38:21,320
assumptions that BHB and and Rio
had.

749
00:38:22,040 --> 00:38:24,920
So in June 2004, they discovered
Cloudbreak.

750
00:38:25,520 --> 00:38:29,560
That is an enormous moment in
time for for the company, like a

751
00:38:29,560 --> 00:38:32,640
a really, really big moment.
It actually takes a while from

752
00:38:32,640 --> 00:38:35,920
when they discover it for that
deposit to become or that area

753
00:38:35,920 --> 00:38:39,080
kind of to to become the the
priority for the company.

754
00:38:39,760 --> 00:38:45,640
And the reason why beyond the
the like geology is that it's

755
00:38:45,640 --> 00:38:48,800
it's 60 kilometers closer than
than Christmas Creek and even

756
00:38:48,800 --> 00:38:52,560
closer than Mount Nicholas to
the port.

757
00:38:52,960 --> 00:38:56,560
So much less rail will be needed
if they can prove that up.

758
00:38:56,960 --> 00:38:59,760
Gotcha.
The the the Geo team there named

759
00:38:59,760 --> 00:39:04,720
it after a wave in in Fiji.
I know it's nothing about about

760
00:39:04,720 --> 00:39:06,840
surfing, but it's kind of, I
like the idea that, you know,

761
00:39:06,840 --> 00:39:10,280
that the Geo team there had had
sort of free reign to to do do

762
00:39:10,280 --> 00:39:13,040
their thing.
And yeah, and.

763
00:39:14,080 --> 00:39:16,080
Is the mineralization a surface?
Is that how to think?

764
00:39:16,440 --> 00:39:21,160
So think kind of 10 to 35 odd
meters of overburden.

765
00:39:21,160 --> 00:39:23,600
OK, yeah, that that's what
you're kind of working with

766
00:39:23,680 --> 00:39:27,640
over, over large kind of swab.
So it's not, it's not that

767
00:39:27,640 --> 00:39:29,520
thick.
It it ranges from like a few

768
00:39:29,520 --> 00:39:34,680
meters in parts to kind of 20
meters in thickness, but 800 to,

769
00:39:34,720 --> 00:39:38,640
you know, 2 kilometers wide in,
in in pockets and 30 kilometers

770
00:39:38,680 --> 00:39:42,960
of strike.
So long flat line sheets now

771
00:39:42,960 --> 00:39:45,760
that those sort of numbers I
just mentioned with for

772
00:39:45,760 --> 00:39:50,320
Cloudbreak Christmas Creek,
which is think of it kind of

773
00:39:50,320 --> 00:39:56,000
like just to the to the
southeast of of Cloudbreak and

774
00:39:56,040 --> 00:39:57,440
what ends up being the second
pine.

775
00:39:57,440 --> 00:40:01,160
It gets hooked up attached later
on, not too much later on that

776
00:40:01,160 --> 00:40:04,640
has a strike length of that 20
kilometers, 500 kind of meters

777
00:40:04,640 --> 00:40:07,520
wide thicknesses up to 35
meters.

778
00:40:08,360 --> 00:40:10,440
So you can kind of mentally
visualize.

779
00:40:10,840 --> 00:40:13,840
What these deposits look like
and and you can see on the on

780
00:40:13,840 --> 00:40:17,080
the diagrams that these are kind
of compressed in because these

781
00:40:17,080 --> 00:40:19,760
things are are quite long in in
nature.

782
00:40:20,360 --> 00:40:23,160
I follow.
How about the metallurgy like?

783
00:40:24,680 --> 00:40:29,120
The Met goes hand in hand with
the the geological

784
00:40:29,520 --> 00:40:32,360
understanding.
So at this point in time, they

785
00:40:32,360 --> 00:40:36,480
mention that this, this type of
ore requires little processing,

786
00:40:36,480 --> 00:40:39,000
which had always been the goal.
You know, you, you want this to

787
00:40:39,000 --> 00:40:42,920
be a, a logistical operation.
Twiggy is petrified of anything

788
00:40:44,040 --> 00:40:47,880
that has complexity to it in
the, in the processing sense.

789
00:40:48,520 --> 00:40:53,680
So they at this point in time,
herald the the identification of

790
00:40:54,200 --> 00:40:57,000
direct shipping ore and a whole
bunch of it at Christmas Creek

791
00:40:57,440 --> 00:41:00,600
because they've cottoned on to
what they started to realize

792
00:41:00,600 --> 00:41:04,720
earlier that the presence of
this micro platy hematite,

793
00:41:04,960 --> 00:41:08,040
which, you know, I'm not a met.
I I I read a lot about to try

794
00:41:08,040 --> 00:41:12,720
and understand and John Clout,
the the met spoke a lot about it

795
00:41:12,720 --> 00:41:14,320
and and wrote a fascinating
paper on it.

796
00:41:14,320 --> 00:41:18,360
But the DSO all had this in in
abundance and the steel mills

797
00:41:18,360 --> 00:41:21,840
really like this because of its
sintering qualities that would

798
00:41:21,840 --> 00:41:25,000
improve the value in use.
Ultimately, it'd make the the

799
00:41:25,000 --> 00:41:26,320
rock that they have more
valuable.

800
00:41:26,360 --> 00:41:30,560
The the Fortescue and Twiggy
dubbed it the the Holy Grail of

801
00:41:30,560 --> 00:41:34,960
iron ore in the Pilbara.
They even plastered it over

802
00:41:34,960 --> 00:41:38,280
their 2004 annual report.
The Holy Grail of iron ore.

803
00:41:38,280 --> 00:41:41,160
Don't just forget the the grade,
but everything else night.

804
00:41:42,480 --> 00:41:45,480
Look at the look at the cover of
the annual report 2004 and what

805
00:41:45,480 --> 00:41:47,160
you can sort of see in the
background is the the

806
00:41:47,160 --> 00:41:50,440
crystalline structure of it.
So that they were, they were

807
00:41:50,440 --> 00:41:53,120
really, you know, thinking this
is a, a big deal.

808
00:41:53,120 --> 00:41:55,800
And the industry hadn't thought
the Chichester range would be

809
00:41:55,800 --> 00:41:59,120
prospective for this.
It was a poorly understood area

810
00:41:59,120 --> 00:42:02,240
that hadn't really been drilled
since the 70s so.

811
00:42:02,400 --> 00:42:04,880
You'd have all of the incumbent
iron ore geologists that are

812
00:42:04,880 --> 00:42:08,160
working at BHP and and Rio kind
of thinking these guys are

813
00:42:08,160 --> 00:42:11,160
crazy.
Yeah, I'm sure that wouldn't be

814
00:42:11,160 --> 00:42:13,720
the only time people thought
they were kind of crazy, but

815
00:42:13,720 --> 00:42:16,960
there you kind of go.
So to to capture where we're at

816
00:42:16,960 --> 00:42:20,480
at this moment in time, they
found these ore bodies, not the

817
00:42:20,480 --> 00:42:24,000
highest grade in the world,
potentially easy to mine and

818
00:42:24,000 --> 00:42:27,200
process, potentially got the
right sort of specs to them.

819
00:42:27,480 --> 00:42:29,320
And you start to form the
picture of a much more

820
00:42:29,320 --> 00:42:33,240
simplistic operation.
This friable ore is suitable to

821
00:42:33,240 --> 00:42:37,200
dry processing, easily crushed
fines without grinding or

822
00:42:37,200 --> 00:42:40,680
anything like that, low mining
cost, don't need to drill and

823
00:42:40,680 --> 00:42:42,480
blast, which we'll get into
later.

824
00:42:43,040 --> 00:42:46,720
Lower processing cost, less
penalties, that doesn't turn out

825
00:42:46,720 --> 00:42:50,520
to be massively true.
And a lower CapEx, still decent

826
00:42:50,520 --> 00:42:53,040
sized CapEx, but the CapEx is
very much weighted to the

827
00:42:53,040 --> 00:42:55,880
logistics, not to the processing
here, so.

828
00:42:56,040 --> 00:42:58,520
What is the grade of this that
you know at this point in time?

829
00:42:58,520 --> 00:43:04,920
What they start delineating is a
lot of ore at 58 ish percent

830
00:43:04,920 --> 00:43:10,240
with high grade pockets of 60.
Yeah 60%.

831
00:43:10,320 --> 00:43:12,720
You know, plus or minus a few
decimal places.

832
00:43:12,720 --> 00:43:17,480
So they're talking about DSO ING
at 58% ish grade, but you know

833
00:43:17,480 --> 00:43:20,240
without beneficiation there's no
market for that yet, right?

834
00:43:20,240 --> 00:43:24,480
Like that's that's not what real
world PHP are exporting.

835
00:43:24,600 --> 00:43:27,000
It's it's parlays beneficiating
themselves to.

836
00:43:27,320 --> 00:43:30,920
I think, you know, iron ore is,
is very nuanced and the, the,

837
00:43:31,200 --> 00:43:34,080
the steel mills look for a
number of different

838
00:43:34,080 --> 00:43:37,960
characteristics and kind of what
we spoke about with aluminium

839
00:43:37,960 --> 00:43:41,240
out, it's the same with bauxite
in that case, like they will,

840
00:43:41,240 --> 00:43:43,760
they will take a bunch of of
different ores and they will,

841
00:43:43,760 --> 00:43:45,200
they will sort of blend it all
together.

842
00:43:45,200 --> 00:43:49,720
So that 15% that 10% this, 25%
that and they'll piece it all

843
00:43:49,720 --> 00:43:51,760
together.
So they start working, you know,

844
00:43:51,760 --> 00:43:55,480
hand in hand with the steel
mills to find a product that is

845
00:43:55,480 --> 00:43:59,240
achievable for them and is
acceptable for the steel mills.

846
00:43:59,240 --> 00:44:05,400
And that fast centring speed
that the the ore has becomes a

847
00:44:05,480 --> 00:44:10,360
an attractive characteristic
that the the meals want.

848
00:44:10,960 --> 00:44:13,320
All this at a point in time the
company is still kept at $55

849
00:44:13,320 --> 00:44:15,200
million.
Wow, is that all?

850
00:44:15,480 --> 00:44:18,200
Yeah.
This is mid 2004. 55,000,000

851
00:44:18,200 --> 00:44:19,120
Bucks.
Yeah.

852
00:44:19,320 --> 00:44:22,160
But I think you can sort of say
that they've cracked the code

853
00:44:22,160 --> 00:44:24,800
geologically.
The PFS is just being kind of

854
00:44:25,160 --> 00:44:27,400
altered on the fly.
They start coming out with

855
00:44:27,880 --> 00:44:30,000
resources now.
So things are chipping away on

856
00:44:30,360 --> 00:44:33,280
on that front.
Christmas Creek is the priority.

857
00:44:33,800 --> 00:44:35,160
They come out with this
quarterly.

858
00:44:35,640 --> 00:44:39,440
And you know, characteristic bit
of spin here, so funny.

859
00:44:39,440 --> 00:44:42,440
One of the highest points for
those listening is brokers

860
00:44:42,440 --> 00:44:46,240
commence positive coverage.
Now at this point in time, at

861
00:44:46,280 --> 00:44:49,040
this point in time, yeah, there
was 1 broker covering them,

862
00:44:49,040 --> 00:44:51,160
Yeah, Who'd done the race for
them earlier that year?

863
00:44:51,360 --> 00:44:54,280
Yeah, but.
There's something to be said

864
00:44:54,360 --> 00:44:57,440
about about what will, you know,
ultimately come, come, come

865
00:44:57,440 --> 00:45:00,480
about from that financing
perspective, because there's one

866
00:45:00,480 --> 00:45:02,400
thing that's true of of earth
brokers.

867
00:45:02,400 --> 00:45:05,480
It's like if you, if you lose
someone money like the brokers,

868
00:45:05,480 --> 00:45:06,840
they're just not going to back
you again.

869
00:45:06,880 --> 00:45:09,600
So he would have been so out of
favour for any, any, any of the

870
00:45:09,600 --> 00:45:12,320
Perth brokers that that had, you
know, kind of followed him in.

871
00:45:12,320 --> 00:45:16,240
So he was into Anaconda.
So it it I can I can understand

872
00:45:16,240 --> 00:45:18,080
why it might have been difficult
in those early years to get the

873
00:45:18,080 --> 00:45:20,160
Perth brokers on board, but he
wouldn't, he wouldn't need them.

874
00:45:20,400 --> 00:45:21,640
Yeah, I think, I think you're
right.

875
00:45:21,680 --> 00:45:26,280
And even in the Anaconda days,
he didn't do the the traditional

876
00:45:26,280 --> 00:45:30,680
route for a couple of reasons.
He wanted to minimize dilution

877
00:45:31,240 --> 00:45:33,760
and people didn't want to back
the project.

878
00:45:33,760 --> 00:45:37,240
They didn't think it works.
So I think the, the whole kind

879
00:45:37,240 --> 00:45:40,680
of Andrew Forrest story has
never been filled with universal

880
00:45:40,960 --> 00:45:45,640
backing of the the Perth
brokerage community, which is in

881
00:45:45,640 --> 00:45:48,400
itself wild because the rest of
Australia, the East Coast

882
00:45:48,400 --> 00:45:51,800
considers Perth brokerage
community a bit a bit wild.

883
00:45:51,800 --> 00:45:55,280
And you know, high on the on the
risk sort of tolerance spectrum.

884
00:45:55,600 --> 00:45:58,440
They keep chipping away on
multiple fronts now and they

885
00:45:58,440 --> 00:46:00,640
start to sign those prepayments
that you mentioned earlier.

886
00:46:00,640 --> 00:46:05,280
So Hebei come in for for 10
million bucks, you start seeing

887
00:46:05,280 --> 00:46:07,280
all this sort of stuff that even
one year earlier would have been

888
00:46:07,280 --> 00:46:09,800
just bonkers, right?
And these steel mills are given

889
00:46:09,800 --> 00:46:11,840
10 million bucks upfront.
For a no, no, there's always,

890
00:46:12,080 --> 00:46:16,160
there's always strings attached.
So another one signed a week

891
00:46:16,160 --> 00:46:20,440
later and how they structure it,
that one's a $28 million

892
00:46:20,520 --> 00:46:24,560
prepayment, but it's think of
like half of it will be payable

893
00:46:24,560 --> 00:46:28,200
when construction starts, half
of it on 1st shipment type of

894
00:46:28,200 --> 00:46:30,920
thing.
So it's it's not as helpful as

895
00:46:30,920 --> 00:46:32,360
it sounds.
It's not cash in their pocket

896
00:46:32,360 --> 00:46:33,360
right now.
Yeah.

897
00:46:33,600 --> 00:46:38,000
It's, it's still, it's, yeah,
it's, it's still a substantial

898
00:46:38,000 --> 00:46:40,640
financial commitment given the
stage of the actual progress at

899
00:46:40,640 --> 00:46:41,840
that point in time.
Totally.

900
00:46:42,120 --> 00:46:46,480
So one of those steel mills that
sign a contract is Fengley along

901
00:46:46,480 --> 00:46:50,520
with the $28 million conditional
prepayment, they make a

902
00:46:50,520 --> 00:46:55,480
$7,000,000 equity investment and
they do that at a 50% premium to

903
00:46:55,480 --> 00:46:57,760
the the closing share price
before.

904
00:46:57,760 --> 00:46:59,520
So they do that at $1.00 a
share.

905
00:47:00,120 --> 00:47:02,680
Wow.
So Wu Yu Mings, this family

906
00:47:02,680 --> 00:47:06,480
group was just a a small small
steel meal on the outskirts, not

907
00:47:06,480 --> 00:47:09,080
a state backed entity.
That stake he bought became

908
00:47:09,080 --> 00:47:11,320
worth $700 million in four
years.

909
00:47:12,400 --> 00:47:14,240
You don't think that when you
pay a 50% premium?

910
00:47:14,360 --> 00:47:16,080
No, no, wrap your head around
that.

911
00:47:17,000 --> 00:47:21,920
They then come out with this
announcement in late 2004, which

912
00:47:21,960 --> 00:47:26,960
like, like barely believable.
You can't quite believe it it it

913
00:47:26,960 --> 00:47:30,280
is looking as if sort of every
Christmas has come at once for

914
00:47:30,280 --> 00:47:32,040
the time as if it's all fallen
into place.

915
00:47:32,040 --> 00:47:35,760
They announced that China
Harbour, China Rail and China

916
00:47:35,760 --> 00:47:40,120
Metallurgy, 3 separate state
owned entities from China have

917
00:47:40,120 --> 00:47:44,120
signed binding agreements to
both construct and finance the

918
00:47:44,120 --> 00:47:48,320
whole project.
They, you know, will see that

919
00:47:48,320 --> 00:47:55,240
FMG pays less than 10% the $1.85
billion upfront to build this

920
00:47:55,360 --> 00:47:59,960
massive logistical and and
mining operation that is just

921
00:47:59,960 --> 00:48:01,480
staggering.
That's.

922
00:48:01,480 --> 00:48:04,760
Crazy the the idea that Andrew
Forest had convinced another

923
00:48:04,760 --> 00:48:07,800
company to not only build but
use their balance sheet to, to

924
00:48:07,800 --> 00:48:11,440
finance The thing is just
amazing.

925
00:48:11,880 --> 00:48:15,920
But there's a a bit more detail
that comes out on this one later

926
00:48:15,920 --> 00:48:17,440
on.
So we'll we'll touch on that.

927
00:48:17,560 --> 00:48:20,840
In a in the form of a prepaid.
They would, they would pay for

928
00:48:20,840 --> 00:48:25,160
it and then Fortescue would pay
them once at all.

929
00:48:25,160 --> 00:48:29,160
It wasn't totally clear that the
idea was that they would pay

930
00:48:29,160 --> 00:48:33,320
them once it's done and partly
through prepayments as well, so.

931
00:48:33,920 --> 00:48:36,600
It's still like, no, no, no,
yeah.

932
00:48:36,640 --> 00:48:40,200
What a non dilutive way to fund
a tremendously enormous CapEx

933
00:48:40,200 --> 00:48:42,880
for a very small company.
Yeah, there's a few twists and

934
00:48:42,880 --> 00:48:46,080
turns along the way in that one,
but they need to get things

935
00:48:46,080 --> 00:48:48,920
approved first.
So, you know, they're kind of

936
00:48:48,920 --> 00:48:50,600
put in the cart before the horse
in in a few ways.

937
00:48:50,600 --> 00:48:54,200
But thanks to some fantastic
lobbying help, they get this

938
00:48:54,200 --> 00:48:57,200
thing called a state agreement.
And a state agreement in in WA

939
00:48:57,200 --> 00:49:01,040
is fantastic because it kind of
clears the path for all your

940
00:49:01,040 --> 00:49:04,320
various forms of approvals
because, you know, if you

941
00:49:04,320 --> 00:49:06,760
actually think about what
they're doing, you need to check

942
00:49:06,760 --> 00:49:09,600
off a bunch of different things.
So this gives you a clear

943
00:49:09,600 --> 00:49:11,480
passage to kind of do it.
And they did this through the

944
00:49:11,480 --> 00:49:15,600
help of Brian Burke and Julian
Grill, who some of the older

945
00:49:15,600 --> 00:49:18,720
money miners out there might,
might know for their presence in

946
00:49:18,720 --> 00:49:21,360
in WA in the heated times of the
1980s.

947
00:49:21,360 --> 00:49:24,480
Now this was a a big deal that
caused a lot of controversy

948
00:49:24,480 --> 00:49:26,480
amongst politicians.
Some politicians are thinking,

949
00:49:26,480 --> 00:49:29,200
hey, why the hell are we back in
this project getting behind

950
00:49:29,200 --> 00:49:31,760
this?
It was done right at the end of

951
00:49:31,760 --> 00:49:34,440
2004.
They were very opportunistic

952
00:49:34,440 --> 00:49:37,560
about how they, you know, they
were cunning in how they got it

953
00:49:37,560 --> 00:49:40,840
away.
And you've also got BHB and Rio

954
00:49:40,840 --> 00:49:43,200
Tinto, who are a bit pissed off
because they're now thinking,

955
00:49:44,080 --> 00:49:47,760
hey, you, the government are
prioritizing this upstart over

956
00:49:47,760 --> 00:49:49,760
projects that are actually going
to get up and running, that are

957
00:49:49,760 --> 00:49:53,160
actually going to, you know,
lend more to your taxpayer

958
00:49:53,160 --> 00:49:55,960
coffers and royalty payments and
so on.

959
00:49:55,960 --> 00:49:59,160
So, yeah, you've managed to
upset a lot of people.

960
00:49:59,240 --> 00:50:03,920
And even funnier, Burke and
Grill thought that they had

961
00:50:03,920 --> 00:50:07,720
negotiated a success fee to get
this away, to get this big bit

962
00:50:07,720 --> 00:50:09,840
of work away.
Now, Twiggy was of the view that

963
00:50:09,840 --> 00:50:13,680
they had negotiate a success fee
to get the state agreement as

964
00:50:13,680 --> 00:50:18,400
well as to get Hope Downs tied
in with what they were trying to

965
00:50:18,400 --> 00:50:22,760
do, and they wanted to get paid
that success fee in stock.

966
00:50:23,200 --> 00:50:27,600
The stock from this point jumps
from late 2004 to early 2005

967
00:50:27,800 --> 00:50:31,080
from $0.60 to three bucks.
So these guys are very pissed

968
00:50:31,080 --> 00:50:34,280
off now that they haven't got
paid in stock and that stock,

969
00:50:34,640 --> 00:50:37,440
you know, went on to 5X.
So it was too bad for them.

970
00:50:37,440 --> 00:50:41,040
FMG had their agreement, they
were on their way to getting

971
00:50:41,040 --> 00:50:42,960
expedited approvals and they're
off to the races.

972
00:50:44,200 --> 00:50:46,480
Unreal bit of lobbying goes a
long way when you.

973
00:50:46,760 --> 00:50:51,000
Goes a long way mate.
Yeah, so chapter 4 mate, 2005

974
00:50:51,000 --> 00:50:52,920
comes.
That is right.

975
00:50:53,160 --> 00:50:58,240
So 2005 starts with a hyper
buzz, and it ends up being a

976
00:50:58,360 --> 00:51:01,160
incredibly testing part of the
the company's history.

977
00:51:01,600 --> 00:51:04,760
Iron ore jumps 71%.
Oh my God.

978
00:51:05,040 --> 00:51:08,320
This is a bulk.
Like 71% is crazy.

979
00:51:08,320 --> 00:51:10,440
It's the largest price rise in
iron ore's history.

980
00:51:10,720 --> 00:51:13,760
The the animal spirits, the
commodity animal spirits are

981
00:51:13,760 --> 00:51:17,400
out.
Steel mills are hungry and the

982
00:51:17,400 --> 00:51:20,120
market cap of the company surges
through $1 billion.

983
00:51:20,560 --> 00:51:23,720
FMG enters the SX-300, then on
to the 200.

984
00:51:24,560 --> 00:51:29,280
Andrew Forest on paper is very
wealthy, exercises the the end

985
00:51:29,280 --> 00:51:32,200
of his sort of options.
So he's got that all in, in

986
00:51:32,200 --> 00:51:36,240
paying up stock in the company
and just if you are thinking

987
00:51:36,240 --> 00:51:40,320
along to what the FMG share
price is today, they would do a

988
00:51:40,320 --> 00:51:45,200
one for 10 share split in 2007.
For 10, so that the 5 bucks is

989
00:51:45,240 --> 00:51:47,240
like $0.50 in today's terms?
That's right.

990
00:51:47,280 --> 00:51:48,040
OK.
Yeah.

991
00:51:48,600 --> 00:51:51,440
So gives you a hint of of what
happens on the on the share

992
00:51:51,440 --> 00:51:53,720
price front there.
So they're on to the better or

993
00:51:53,760 --> 00:51:57,040
they are cracking that code.
They're getting the scale.

994
00:51:57,040 --> 00:51:59,800
The work focuses in on Christmas
Creek and Cloudbreak.

995
00:51:59,800 --> 00:52:01,720
They stop working at Mount
Nicholas, they hit the billion

996
00:52:01,720 --> 00:52:04,800
tons.
Things are chipping away and I

997
00:52:04,800 --> 00:52:07,080
won't mention that kind of too
much more because that just

998
00:52:07,080 --> 00:52:09,560
keeps growing in the background.
They prove out the deposits.

999
00:52:09,560 --> 00:52:14,000
They spend huge amounts on on
exploration to get it there.

1000
00:52:14,000 --> 00:52:16,040
The grades don't end up being
what we'd kind of hinted at

1001
00:52:16,240 --> 00:52:19,240
before, but because of the
qualities, it kind of works and

1002
00:52:19,240 --> 00:52:22,680
they get a very good idea of
where the railway is going to

1003
00:52:22,680 --> 00:52:25,240
go.
They've already hooked in on

1004
00:52:25,240 --> 00:52:27,160
Anderson Point.
They did that actually very

1005
00:52:27,160 --> 00:52:30,120
early in the piece, which is
going to be where the terminal

1006
00:52:30,120 --> 00:52:34,160
is built in Port Hedland.
So things are all happening on

1007
00:52:34,160 --> 00:52:36,840
on that front.
Is it like in terms of just the,

1008
00:52:37,000 --> 00:52:39,920
the certainty of this financing
and everything like at the point

1009
00:52:39,920 --> 00:52:42,400
that the yeah, you get the
Chinese kind of prepaid there,

1010
00:52:43,040 --> 00:52:46,760
is it kind of like a, a
mentality of FID is, is already

1011
00:52:46,760 --> 00:52:47,920
kind of here.
So we're just building it

1012
00:52:47,920 --> 00:52:50,000
already.
But I'm sure there's still, you

1013
00:52:50,000 --> 00:52:52,960
know, parts of this CapEx that
that still are unfunded.

1014
00:52:53,000 --> 00:52:55,760
Like what's the the the thinking
from a project execution

1015
00:52:55,760 --> 00:52:57,240
perspective and and spending
like?

1016
00:52:57,320 --> 00:53:01,600
So the market is more or less
convinced that things are

1017
00:53:01,600 --> 00:53:02,720
happening.
Pockets of the market, they're

1018
00:53:02,720 --> 00:53:04,040
convinced that this is
happening.

1019
00:53:04,080 --> 00:53:08,840
But then you get to March 2005
and I'll, I'll tie this all up

1020
00:53:08,840 --> 00:53:12,920
and call it the the China
financing debacle because it is

1021
00:53:12,920 --> 00:53:14,600
a true disaster.
What kind of happens here?

1022
00:53:14,600 --> 00:53:18,040
So you have these three state
owned entities who have agreed

1023
00:53:18,040 --> 00:53:20,840
to pay for everything, agreed to
build it, construct the whole

1024
00:53:20,840 --> 00:53:22,480
thing.
This comes to a screech and

1025
00:53:22,480 --> 00:53:23,880
halt.
They're no longer happy.

1026
00:53:24,280 --> 00:53:28,440
So China met is fronting the the
group, the three of them and

1027
00:53:28,440 --> 00:53:30,880
they say they're no longer
prepared to back that agreement

1028
00:53:31,400 --> 00:53:36,080
which signed with you in sort of
November, October 2004, at least

1029
00:53:36,080 --> 00:53:38,880
on the terms it was kind of
indicated they wanted equity in

1030
00:53:38,880 --> 00:53:42,200
the project.
Now what they were doing was

1031
00:53:42,200 --> 00:53:44,640
taking a a very big risk.
That's kind of understandable.

1032
00:53:44,640 --> 00:53:48,360
They wanted equity Despite that
not being in the original

1033
00:53:48,360 --> 00:53:52,200
agreement as the market knew it.
And it kind of throws open the

1034
00:53:52,200 --> 00:53:54,760
question, what is this binding
agreement that you've actually

1035
00:53:54,760 --> 00:53:57,040
signed with this Chinese
counterparty?

1036
00:53:57,720 --> 00:54:00,960
It throws open another question.
What good is a a binding

1037
00:54:00,960 --> 00:54:02,720
agreement with a Chinese
counterparty if they don't want

1038
00:54:02,720 --> 00:54:04,440
to do it anymore?
So.

1039
00:54:05,400 --> 00:54:07,320
It's yeah, it's not very good
because yeah, you're not going

1040
00:54:07,400 --> 00:54:09,040
to be able to reinforce that in
Chinese course.

1041
00:54:09,480 --> 00:54:12,080
Exactly.
So to counter the the market

1042
00:54:12,080 --> 00:54:16,400
fallout, FMG publicly share the
agreement.

1043
00:54:16,720 --> 00:54:19,560
It turns out this is just a few
pages and it's titled Framework

1044
00:54:19,560 --> 00:54:22,080
Agreement.
It stipulates the parties will

1045
00:54:22,080 --> 00:54:25,080
work together towards a more
fuller and detailed agreement

1046
00:54:25,080 --> 00:54:28,240
later on.
So the Chinese group indicate

1047
00:54:28,320 --> 00:54:31,200
they are not willing to pursue
this unless they acquire A

1048
00:54:31,200 --> 00:54:33,880
majority interest, equity
interest in the project.

1049
00:54:35,200 --> 00:54:39,000
It's sort of reported that they
would happily take 80 to 90% of

1050
00:54:39,000 --> 00:54:44,200
the project and free carry FMG,
which, you know, wasn't

1051
00:54:44,200 --> 00:54:46,040
considered for a moment by
Fortescue.

1052
00:54:46,040 --> 00:54:48,880
But it's kind of interesting to
think about because at this

1053
00:54:48,880 --> 00:54:53,280
point in time, that would
seriously minimize the amount of

1054
00:54:53,280 --> 00:54:57,360
cash flow and the the value of
the stake in in the business.

1055
00:54:57,560 --> 00:55:01,920
But it would be a very de risked
way for for Andrew Forrest to

1056
00:55:01,920 --> 00:55:05,920
make a a, you know, a lot of
money for, for himself.

1057
00:55:06,320 --> 00:55:08,720
But like I said, that was never
considered for a moment.

1058
00:55:09,000 --> 00:55:14,240
They explored potentially
selling down 2015 to 25% that

1059
00:55:14,240 --> 00:55:18,120
didn't end up eventuating.
So yeah, you you get a whole

1060
00:55:18,120 --> 00:55:21,720
host of questions being thrown
up at this point in time and the

1061
00:55:21,720 --> 00:55:24,760
market is questioning, hey, what
else is there a bit of a bit of

1062
00:55:24,920 --> 00:55:28,360
spin on As well as that they
need to go back to the drawing

1063
00:55:28,360 --> 00:55:30,360
board and and finance this whole
thing.

1064
00:55:30,360 --> 00:55:33,680
So the the whole debacle leaves
them with a fair bit of egg on

1065
00:55:33,680 --> 00:55:37,840
their face.
I wonder if the the the the

1066
00:55:37,880 --> 00:55:40,240
equity kind of component of all
of this.

1067
00:55:40,240 --> 00:55:42,920
I wonder if like part of the
yeah, it's like the the

1068
00:55:42,920 --> 00:55:45,560
strategic national interest of
China is, is, is coming to

1069
00:55:45,560 --> 00:55:48,320
fruition there as it is.
Like if you're a JV partner and

1070
00:55:48,320 --> 00:55:51,440
you require mutual consent to do
things and all of a sudden you

1071
00:55:51,440 --> 00:55:55,560
get a lot more sway in in in the
project than than you would as

1072
00:55:55,560 --> 00:55:58,080
just a the lender.
Yeah, I think you're right.

1073
00:55:58,560 --> 00:56:00,920
You know, we, we always speak
about how strategic they are and

1074
00:56:00,920 --> 00:56:03,040
how, how long term they are in
their thinking.

1075
00:56:03,520 --> 00:56:07,120
So it wouldn't surprise me if if
that was the mindset back then

1076
00:56:07,120 --> 00:56:10,440
as well.
The, the market reaction though

1077
00:56:10,520 --> 00:56:15,760
to FMG and it's sort of stock
is, yeah, it's, it's not great.

1078
00:56:15,760 --> 00:56:20,240
The, the stock had 10X from when
the first agreements came out

1079
00:56:20,240 --> 00:56:25,920
with the Chinese to March.
When this falls apart, the stock

1080
00:56:25,920 --> 00:56:30,680
then drops 40% in a very short
matter of time in about a week,

1081
00:56:30,680 --> 00:56:33,000
I think.
So it goes from 5:50 down to

1082
00:56:33,000 --> 00:56:35,840
3:30.
There's another actually

1083
00:56:35,880 --> 00:56:38,240
hilariously embarrassing bit of
news that comes out.

1084
00:56:38,240 --> 00:56:40,920
One of those prepayments.
It's revealed that it can be

1085
00:56:40,920 --> 00:56:44,240
paid in cash or equivalent.
So the steel mill says we don't

1086
00:56:44,240 --> 00:56:47,200
have the cash we can pay you in
steel plates.

1087
00:56:49,080 --> 00:56:53,760
So again, just how that was kind
of misconstrued to to the market

1088
00:56:54,520 --> 00:56:57,600
raises a few questions, but in
hindsight, it's funny.

1089
00:56:58,840 --> 00:57:01,600
It's very funny.
So on top of that, there's some

1090
00:57:01,600 --> 00:57:04,880
more negative news.
There is a CapEx warning that

1091
00:57:04,880 --> 00:57:09,160
CapEx is going to blow out and
Twiggy is going around

1092
00:57:09,160 --> 00:57:11,320
Australia, going around the
world convincing people that

1093
00:57:11,320 --> 00:57:13,280
that number is not going to
start with a 3, it's going to

1094
00:57:13,280 --> 00:57:18,680
start with A2 as opposed to the
1.85 it had previously come out

1095
00:57:18,680 --> 00:57:22,280
as.
So to buffer that and you know,

1096
00:57:23,040 --> 00:57:25,840
kind of warm up shareholders a
bit, the iron ore price has

1097
00:57:25,840 --> 00:57:30,920
massively risen since they first
came out with that 1.85 number.

1098
00:57:30,920 --> 00:57:33,040
So they're kind of trying to
compensate and say, hey,

1099
00:57:33,040 --> 00:57:35,880
revenues are going to be
substantially up on what we said

1100
00:57:36,000 --> 00:57:37,400
as well.
But they're not a billion dollar

1101
00:57:37,400 --> 00:57:39,000
company anymore.
They're like.

1102
00:57:39,000 --> 00:57:41,520
No, they'd be in the six. 6
hundreds.

1103
00:57:42,200 --> 00:57:44,520
In that sort of range 6. $100
million company that needs to

1104
00:57:44,520 --> 00:57:48,440
fund $3 billion of CapEx and
your source of funding is just

1105
00:57:48,560 --> 00:57:53,080
just vanished.
So it's, yeah, a challenge.

1106
00:57:53,400 --> 00:57:55,200
It is.
They've got a bit of financing

1107
00:57:55,600 --> 00:57:57,040
at that point in time to see
them through.

1108
00:57:57,800 --> 00:58:00,160
But yeah, there's a few other
sort of curveball that

1109
00:58:00,360 --> 00:58:01,840
curveballs that that come their
way.

1110
00:58:02,720 --> 00:58:04,480
They revealed that their
products going to be sold at a

1111
00:58:04,480 --> 00:58:07,720
5% discount to to Rio's high
quality stuff that doesn't

1112
00:58:07,720 --> 00:58:10,080
happen.
They acknowledge that.

1113
00:58:10,360 --> 00:58:12,560
It doesn't happen because
because they're always lower

1114
00:58:12,560 --> 00:58:13,560
quality.
Yeah.

1115
00:58:13,560 --> 00:58:15,760
When you say it doesn't happen,
it's like it's actually more

1116
00:58:15,760 --> 00:58:18,200
than a 5% discount than it sells
that much more, Yeah.

1117
00:58:18,360 --> 00:58:23,120
Much more, yeah.
They they acknowledge that Q6Q4

1118
00:58:23,120 --> 00:58:24,880
2006 isn't going to be
achievable.

1119
00:58:24,880 --> 00:58:27,680
It's going to be pushed to Q2
2007.

1120
00:58:28,440 --> 00:58:32,760
They guard to a 22 month
timeline and they do for the

1121
00:58:32,760 --> 00:58:35,880
first time hone in on Cloudbreak
being the project hub.

1122
00:58:36,720 --> 00:58:41,000
This means 260 kilometers of
rail, not 400, so that's a win.

1123
00:58:42,160 --> 00:58:43,880
They raise a bit of money as
well.

1124
00:58:44,240 --> 00:58:47,560
Equity, no con notes, con notes,
con notes.

1125
00:58:47,560 --> 00:58:51,600
So first up 40 million Aussie
and then US 50 million.

1126
00:58:52,120 --> 00:58:55,600
Now that US 50 million con note,
I have to go on a bit of a

1127
00:58:55,600 --> 00:58:56,840
tangent because it's
fascinating.

1128
00:58:56,840 --> 00:59:00,080
It's with a group called Habit
who sees a hedge fund called

1129
00:59:00,320 --> 00:59:03,040
Harbinger Capital.
Harbinger is run by a fellow

1130
00:59:03,040 --> 00:59:08,120
called Phil Falcone.
Now he would become one of the

1131
00:59:08,120 --> 00:59:09,840
highest earning hedge fund
managers in the world.

1132
00:59:09,840 --> 00:59:13,240
He'd become a billionaire.
He'd make I think a couple

1133
00:59:13,240 --> 00:59:15,680
billion dollars shorting
subprime mortgages.

1134
00:59:16,480 --> 00:59:19,400
He would make a couple billion
dollars on Fortescue.

1135
00:59:19,440 --> 00:59:24,320
I believe he would amass a 16%
roughly stake in Fortescue.

1136
00:59:25,360 --> 00:59:27,920
He was familiar with Twiggy.
He'd backed him at, at Anaconda

1137
00:59:27,920 --> 00:59:31,440
as well, actually.
And yeah, at the, at the kind of

1138
00:59:31,440 --> 00:59:34,200
heart of the financial crisis,
he was, he was the bay's knees.

1139
00:59:34,200 --> 00:59:38,040
He was going around New York,
bought a $50 million U.S.

1140
00:59:38,160 --> 00:59:43,600
House, like a house in New York.
You know, he's, yeah, he's, he's

1141
00:59:43,600 --> 00:59:45,200
feeling himself to, to say the
least.

1142
00:59:45,200 --> 00:59:49,040
But his story is an interesting
1 and it goes a bit pear shaped.

1143
00:59:49,720 --> 00:59:53,320
Firstly 2008 ends up being quite
a poor year like it does for for

1144
00:59:53,320 --> 00:59:55,600
most people, so that's not too
much of A knock.

1145
00:59:55,600 --> 00:59:59,720
But he ends up getting accused
of using 110 million U.S.

1146
00:59:59,720 --> 01:00:04,520
dollars from client funds out of
the fund to pay taxes and then

1147
01:00:04,520 --> 01:00:08,280
gets accused of market
manipulation, which he confesses

1148
01:00:08,280 --> 01:00:12,560
to or gets proven guilty of at
least and gets banned from from

1149
01:00:12,560 --> 01:00:14,360
the industry and later declares
bankruptcy.

1150
01:00:14,800 --> 01:00:15,600
Sorry.
Wow.

1151
01:00:15,840 --> 01:00:18,800
It was a all from grace.
Yeah, it was a a bit of a fall

1152
01:00:18,800 --> 01:00:20,720
from grace, you could say.
A bit of a fall from grace, but

1153
01:00:20,720 --> 01:00:22,080
an interesting story
nevertheless.

1154
01:00:22,080 --> 01:00:25,120
It is, yeah, 2008 now part a
part of the story that we kind

1155
01:00:25,120 --> 01:00:28,880
of haven't haven't talked about
yet was I mean, to build a giant

1156
01:00:28,880 --> 01:00:31,880
260 kilometre rail and a big big
buddy iron old mine in the

1157
01:00:31,880 --> 01:00:35,040
Pilbara, you're going to have to
like negotiate with the

1158
01:00:35,120 --> 01:00:37,240
traditional owners.
Like what were those like land

1159
01:00:37,240 --> 01:00:40,720
access negotiations like for?
Absolutely right.

1160
01:00:40,720 --> 01:00:43,800
So in late 2005 they come out
with their first land access

1161
01:00:43,800 --> 01:00:45,280
agreements.
So the first one is signed

1162
01:00:45,280 --> 01:00:49,760
within Inya Pali people.
Their area covers 80% of what

1163
01:00:49,760 --> 01:00:52,320
was initially going to be mined.
Doesn't prove out to be that

1164
01:00:52,320 --> 01:00:57,120
way, but it's followed up with
agreements with the Paluku and

1165
01:00:57,120 --> 01:01:00,280
the Cariara people.
The, the Cariara people's land

1166
01:01:00,280 --> 01:01:04,960
is most of the infrastructure
and the, the Palakus where

1167
01:01:04,960 --> 01:01:07,000
they're going to mine, where you
can see on the, on the map

1168
01:01:07,000 --> 01:01:09,560
there.
So this wasn't without it's

1169
01:01:09,560 --> 01:01:13,440
controversy that the initial
agreement was reportedly signed

1170
01:01:13,440 --> 01:01:16,600
with six elders who had broken
away from the broader group.

1171
01:01:16,600 --> 01:01:21,240
And there was, or there still is
differences in opinion over the

1172
01:01:21,240 --> 01:01:23,880
presence of lawyers, you know,
something that was agreed upon

1173
01:01:23,880 --> 01:01:26,800
that there wouldn't be lawyers
for the final sign signing and

1174
01:01:26,800 --> 01:01:30,120
so on.
So yeah, that that ends up

1175
01:01:30,120 --> 01:01:31,600
coming together.
I think there's a much more

1176
01:01:32,200 --> 01:01:35,160
controversial component with the
agreements with the Yingjibani

1177
01:01:35,160 --> 01:01:39,960
people that was for for Solomon
that would happen in this kind

1178
01:01:39,960 --> 01:01:42,240
of time frame.
But that that isn't the sort of

1179
01:01:42,240 --> 01:01:43,640
part of the story that we're
focusing on.

1180
01:01:44,200 --> 01:01:46,920
You can see sort of parts of
those discussions on on YouTube

1181
01:01:46,920 --> 01:01:49,920
out there.
But I think to, to round out on

1182
01:01:49,920 --> 01:01:53,720
the point, like Twiggy's views
on providing Indigenous,

1183
01:01:53,920 --> 01:01:57,360
Indigenous Australians with,
with work as opposed to welfare

1184
01:01:57,360 --> 01:02:00,320
payments, you know, he's, he's
relatively outspoken on, on

1185
01:02:00,320 --> 01:02:03,160
those components.
And you can, yeah, you, you can

1186
01:02:03,160 --> 01:02:05,160
see them just with a quick kind
of search.

1187
01:02:05,640 --> 01:02:08,800
His method would always kind of
be awarding contracts to certain

1188
01:02:08,800 --> 01:02:12,120
businesses and and so on.
I think it, everyone listening

1189
01:02:12,120 --> 01:02:15,120
would have their own views.
And, you know, you can sort of

1190
01:02:15,120 --> 01:02:17,760
debate what, what is fair and
what's the, the, the right

1191
01:02:17,760 --> 01:02:23,400
approach and separating native
title groups is, you know,

1192
01:02:23,800 --> 01:02:26,480
certainly a controversial way
of, of going about it.

1193
01:02:26,480 --> 01:02:31,120
But by late 2005, they have sort
of in principle agreed with all

1194
01:02:31,120 --> 01:02:33,760
the relevant native title
holders to to get the projects

1195
01:02:33,760 --> 01:02:36,320
built specifically for here for
for Cloudbreak and Christmas

1196
01:02:36,320 --> 01:02:39,920
Creek to have it get together to
then line up with with the rest

1197
01:02:39,920 --> 01:02:42,600
of the approvals that they have.
That's a, that's a big, you

1198
01:02:42,600 --> 01:02:45,400
know, a big, a big unlock.
They now have a pathway to to

1199
01:02:45,400 --> 01:02:47,520
building it.
I suppose they need they need to

1200
01:02:48,000 --> 01:02:50,800
figure out how they're going to
mine it and and get real funding

1201
01:02:50,800 --> 01:02:52,240
in place.
Yeah, yeah, totally.

1202
01:02:52,320 --> 01:02:56,520
I, man, I, I went down a real
rabbit hole learning about this.

1203
01:02:56,520 --> 01:02:59,120
I found it fascinating because
almost on every front they're

1204
01:02:59,120 --> 01:03:00,080
trying to do something
different.

1205
01:03:00,080 --> 01:03:02,560
They're kind of forced to do
something different to be cost

1206
01:03:02,560 --> 01:03:04,200
competitive.
So I, I found it really

1207
01:03:04,200 --> 01:03:06,680
interesting.
Firstly, on the mining front,

1208
01:03:07,280 --> 01:03:10,920
remember we're talking about
flat lying, thin, shallow

1209
01:03:11,360 --> 01:03:13,760
deposits.
So strip mining conceptually

1210
01:03:13,760 --> 01:03:17,600
makes sense for that.
Think coal mining, although coal

1211
01:03:17,600 --> 01:03:20,600
is a very different material to
to iron ore.

1212
01:03:20,600 --> 01:03:23,640
So conceptually it works and it
would be a big sort of cost

1213
01:03:23,640 --> 01:03:25,640
saving front if they wouldn't
have to go the drill and blast

1214
01:03:25,800 --> 01:03:29,200
route, at least not initially.
So excavators and trucks would

1215
01:03:29,200 --> 01:03:33,440
be used to remove the overburden
that would be replaced into

1216
01:03:33,520 --> 01:03:36,400
mined out panels later on.
Once you've got it exposed,

1217
01:03:36,640 --> 01:03:39,800
you'd have these continuous
miners that would kind of chew

1218
01:03:39,800 --> 01:03:42,440
up strips 2 1/2 metres wide,
sort of foot deep type things

1219
01:03:42,440 --> 01:03:45,880
and spit it out into a truck on
the other end and you'd mine six

1220
01:03:46,000 --> 01:03:47,680
different kind of areas at the
same time.

1221
01:03:47,680 --> 01:03:50,080
You'd have a number of these
strip miners working.

1222
01:03:50,160 --> 01:03:53,240
These are these the giant
surface miners is like how, how

1223
01:03:53,240 --> 01:03:55,600
to think of them, right?
And yeah, they, it's the kind of

1224
01:03:55,600 --> 01:03:58,640
equipment that is, it's, it's
used on like the, you know, the

1225
01:03:58,760 --> 01:04:02,040
the salt lakes of the Atacama
brines and those those kind of

1226
01:04:02,040 --> 01:04:04,480
things.
I saw we'll show a photo these,

1227
01:04:04,480 --> 01:04:07,880
the ones they start with the
Burton 2500, beautiful little

1228
01:04:07,880 --> 01:04:09,640
beast.
They're, they're relatively

1229
01:04:09,640 --> 01:04:13,880
small actually, like I said, as
I said, 2 1/2 meters by a foot

1230
01:04:13,880 --> 01:04:15,200
deep that they're chewing up and
spitting out.

1231
01:04:15,200 --> 01:04:16,520
So you can see there what it
looks like.

1232
01:04:16,840 --> 01:04:20,520
They then migrate to the Burton
2400, which is a bigger beast.

1233
01:04:20,520 --> 01:04:25,240
But yeah, it was it was a novel
approach in in more ways than

1234
01:04:25,240 --> 01:04:28,240
one because you know, the
surface miners, if you think of

1235
01:04:28,240 --> 01:04:29,400
them, they've got these kind of
picks on them.

1236
01:04:29,400 --> 01:04:31,120
They need to to RIP it up.
And these picks were just

1237
01:04:31,120 --> 01:04:34,880
getting completely thrashed.
So they ended up kind of

1238
01:04:34,880 --> 01:04:38,160
engineering their own picks that
they would then build in in

1239
01:04:38,160 --> 01:04:43,360
China and sort of fit them onto
onto their surface miners to get

1240
01:04:43,360 --> 01:04:44,200
the job done.
But.

1241
01:04:44,320 --> 01:04:47,360
Mate, like if you've never seen
one of these things, I suppose

1242
01:04:47,360 --> 01:04:49,720
most people would be like, it's
literally like a big lawn mower.

1243
01:04:51,120 --> 01:04:56,160
Like, that's remarkable, anyway.
It was another, another sort of

1244
01:04:56,680 --> 01:04:58,800
area in which people could kind
of mock them and, and their

1245
01:04:58,800 --> 01:05:00,480
approach and, and saying it
wasn't going to work.

1246
01:05:00,480 --> 01:05:02,800
But yeah, there, there were
plenty of benefits from what

1247
01:05:02,800 --> 01:05:04,080
they were doing.
You could be more selective.

1248
01:05:04,080 --> 01:05:06,600
You could then.
Important lower CapEx startup.

1249
01:05:06,880 --> 01:05:09,520
Yeah, absolutely.
And then you've got, you know,

1250
01:05:09,520 --> 01:05:13,440
selective kind of great control.
It's better for that lending

1251
01:05:13,440 --> 01:05:17,960
purposes, cheaper, less
explosives, you don't need to do

1252
01:05:17,960 --> 01:05:23,840
the big sort of primary crushing
component to it, smoother areas

1253
01:05:23,840 --> 01:05:27,280
for the trucks to drive on.
So, you know, truck tires are a

1254
01:05:27,280 --> 01:05:30,240
big cost for, for an operation
all these things like yes,

1255
01:05:30,240 --> 01:05:33,120
there's a, a productivity
downside to it as well because

1256
01:05:33,120 --> 01:05:36,920
it's smaller in nature.
But I, I love the creativity.

1257
01:05:36,920 --> 01:05:38,680
Yeah.
And, and it didn't kind of end

1258
01:05:38,680 --> 01:05:41,440
there on the processing front.
They incorporated this

1259
01:05:41,760 --> 01:05:45,440
descending capabilities.
So this would lower the alumina

1260
01:05:45,440 --> 01:05:48,400
and the silica levels by
removing these sort of fine

1261
01:05:48,400 --> 01:05:52,120
clays and and bits of shale that
they had in in the OR there to

1262
01:05:52,120 --> 01:05:55,720
make the customer specs like the
the uniqueness of what they're

1263
01:05:55,720 --> 01:06:00,920
doing here is, yeah, having to
create this product from

1264
01:06:00,920 --> 01:06:02,400
scratch.
It's not a marketable product to

1265
01:06:02,400 --> 01:06:03,680
the steel mills like we said
before.

1266
01:06:03,680 --> 01:06:06,040
So they haven't to to work with
them.

1267
01:06:06,040 --> 01:06:08,880
And they did a lot of work with
the university in China that

1268
01:06:08,880 --> 01:06:10,680
would work with the steel mills
to get it done there.

1269
01:06:11,080 --> 01:06:12,880
What about on the on the on the
rail front?

1270
01:06:13,120 --> 01:06:15,320
Kind of think rail is rail.
What what can you kind of do

1271
01:06:15,320 --> 01:06:17,760
differently there?
They come out with these sort of

1272
01:06:17,760 --> 01:06:21,120
40 ton axle loads.
They are the the heaviest in the

1273
01:06:21,120 --> 01:06:25,280
world, Some some say.
And FMG designed these smaller

1274
01:06:25,280 --> 01:06:28,680
wagons a bit of a lower center
of gravity that the ultimate

1275
01:06:28,800 --> 01:06:32,400
length was very similar to and a
half kilometers massive,

1276
01:06:32,400 --> 01:06:35,920
massive, you know, beasts when
they're towing along like

1277
01:06:35,920 --> 01:06:42,120
roughly 32,000 tons of material.
And they really pulled in the

1278
01:06:42,120 --> 01:06:45,040
time frame to build this, that
that was a a cost saving in and

1279
01:06:45,040 --> 01:06:46,600
of itself.
Were there any kind of like

1280
01:06:46,960 --> 01:06:50,960
decisions to to to make the to
minimize CapEx as part of that

1281
01:06:50,960 --> 01:06:53,360
that actual like rail, was it
like a different dimension kind

1282
01:06:53,360 --> 01:06:54,400
of rail to it?
Yeah.

1283
01:06:54,400 --> 01:06:57,920
I mean one of the things they
did was try and build in BH BS

1284
01:06:57,920 --> 01:07:00,440
corridor.
So that corridor had sort of

1285
01:07:00,920 --> 01:07:05,320
been made already by BHB.
So they would save CapEx on, on

1286
01:07:05,320 --> 01:07:09,160
that front.
The the cart turning machines as

1287
01:07:09,160 --> 01:07:12,600
well were relatively not novel
and and newer.

1288
01:07:12,920 --> 01:07:15,640
So they would sort of be more
time effective.

1289
01:07:15,760 --> 01:07:18,400
Yeah, when the the ore came to
Port Hedland and would be

1290
01:07:19,040 --> 01:07:22,400
flipped and and chucked into the
rehandling facility.

1291
01:07:22,520 --> 01:07:24,920
Yeah, yeah.
The symbols involved in rail,

1292
01:07:24,920 --> 01:07:26,600
it's like you're always
underestimated in my head

1293
01:07:26,600 --> 01:07:29,720
because you need the rail to be
so flat as opposed to.

1294
01:07:29,960 --> 01:07:31,440
And so there's so much earth
moving involved.

1295
01:07:31,440 --> 01:07:33,960
It's an expensive operation to
build a rail line, that's for

1296
01:07:33,960 --> 01:07:37,160
sure.
So 2006, I sort of think of this

1297
01:07:37,160 --> 01:07:40,360
as tying up a lot of the, the
kind of loose ends, permits,

1298
01:07:40,360 --> 01:07:43,360
studies, approvals, contracts,
they're all coming in, mining,

1299
01:07:43,360 --> 01:07:47,520
haulage, logistics, that's all
kind of coming together.

1300
01:07:48,280 --> 01:07:50,840
But you've got the one big
obvious thing I need 2 1/2.

1301
01:07:50,840 --> 01:07:52,040
Billion dollars.
Where's the money?

1302
01:07:52,040 --> 01:07:55,400
Where's?
The money, so remember Fortescue

1303
01:07:55,400 --> 01:07:57,480
at this point in time is kept at
$1.4 billion.

1304
01:07:57,880 --> 01:08:00,080
They need 2 1/2 billion.
You know the the Aussie dollar

1305
01:08:00,080 --> 01:08:03,360
is starting to do some really
strong things.

1306
01:08:03,360 --> 01:08:06,720
It gets to a, a level that it
kind of maintains or betters for

1307
01:08:06,720 --> 01:08:11,120
the next 15 years.
And FMJ starts also winning over

1308
01:08:11,120 --> 01:08:14,200
the investment banks, a bit of
backing in that community, which

1309
01:08:14,720 --> 01:08:16,920
isn't the hardest thing when
there's fees up for grabs, but

1310
01:08:16,920 --> 01:08:21,160
they do get in $200 million in a
loan facility that sort of ties

1311
01:08:21,160 --> 01:08:24,160
them through.
And yeah, they they start

1312
01:08:24,160 --> 01:08:27,760
getting a a bit of traction
despite all the the rumors that

1313
01:08:27,760 --> 01:08:31,640
BHB and and Rio are out to kill
them and pressuring banks and

1314
01:08:31,640 --> 01:08:33,520
analysts from covering them and
all that sort of stuff.

1315
01:08:33,520 --> 01:08:36,880
Have they actually started
building anything yet?

1316
01:08:36,880 --> 01:08:38,720
No.
They're doing trial mining.

1317
01:08:38,800 --> 01:08:42,920
Trial mining, late 2005.
And, and honing in that, that

1318
01:08:42,960 --> 01:08:45,640
the engineering kind of
technique to yeah, yeah.

1319
01:08:45,640 --> 01:08:48,479
There's no there's no rail
construction or anything like no

1320
01:08:48,479 --> 01:08:50,160
ordering of long lead items or
anything like that.

1321
01:08:50,439 --> 01:08:54,399
Long lead items start being
ordered in 2006, right on the

1322
01:08:54,399 --> 01:08:57,640
back of that $200 million check.
OK, gotcha.

1323
01:08:57,920 --> 01:09:01,960
This is happening one way or
another, but they get hit with

1324
01:09:02,040 --> 01:09:05,560
some serious charges from ASIC
in early 2006.

1325
01:09:05,560 --> 01:09:10,600
Now this is AAI think a
consequential part of the story

1326
01:09:10,600 --> 01:09:14,000
in the fact that like the
personal toll charges would have

1327
01:09:14,399 --> 01:09:17,479
over over some like over an
individual and over the company

1328
01:09:17,479 --> 01:09:20,880
as well because ASIC were
charging Fortescue as well as

1329
01:09:20,920 --> 01:09:25,640
Forest individually in relation
to its disclosure on what I sort

1330
01:09:25,640 --> 01:09:27,319
of called the China financing
tobacco.

1331
01:09:27,319 --> 01:09:29,319
And this was almost exactly 1
year later.

1332
01:09:29,319 --> 01:09:31,040
So they've been investigating
for 12 months.

1333
01:09:31,680 --> 01:09:36,080
If you remember, the stock had
10X from the first announcements

1334
01:09:36,560 --> 01:09:40,520
to the, the fallout when it
revealed, you know, they weren't

1335
01:09:40,520 --> 01:09:45,000
all that binding or as you know,
as that was sort of reported by

1336
01:09:45,000 --> 01:09:48,760
the Chinese.
So the severity was increased

1337
01:09:48,760 --> 01:09:52,240
with the fact that Forest had
sold $13 million of stock in

1338
01:09:52,319 --> 01:09:56,120
early 2005 after he'd exercised
a bunch of options.

1339
01:09:56,120 --> 01:09:59,240
So on the back of that ASIC,
we're contemplating insider

1340
01:09:59,240 --> 01:10:01,800
trading charges as well.
And they wanted to ban him from

1341
01:10:01,800 --> 01:10:04,440
any company director.
And in this case, we'd go on for

1342
01:10:04,440 --> 01:10:06,640
for years.
FMG would vigorously fight the

1343
01:10:06,640 --> 01:10:10,520
charges, as would Forest.
And interestingly, the market

1344
01:10:10,520 --> 01:10:12,880
wasn't too bothered at this
point in time.

1345
01:10:12,880 --> 01:10:15,360
The, the stock was back over
over 6 bucks.

1346
01:10:15,360 --> 01:10:18,240
But to kind of cut to the chase
on, on what happened.

1347
01:10:19,280 --> 01:10:22,480
Forrest firmly believed that
those contracts were binding.

1348
01:10:22,480 --> 01:10:23,880
And that's, that's what he'd
argued.

1349
01:10:23,880 --> 01:10:28,120
And he, as well as the company
in his perspective, had had done

1350
01:10:28,120 --> 01:10:32,120
nothing wrong.
So he floated the idea that this

1351
01:10:32,120 --> 01:10:35,800
was all just a, a ploy from Rio
and BHB and, and they're kind of

1352
01:10:35,800 --> 01:10:40,320
lobbying to to down the company.
In any case, this toils way in

1353
01:10:40,320 --> 01:10:45,520
the background until 2009 when
Forrest wins all, all cases, you

1354
01:10:45,520 --> 01:10:49,560
know, against him.
However, something actually came

1355
01:10:49,560 --> 01:10:53,240
out in at that point in time, it
was sort of proved that the

1356
01:10:53,240 --> 01:10:57,600
Chinese reviewed all the wording
and approved all the wording of

1357
01:10:57,600 --> 01:11:01,520
the FMG announcements.
And in big bold letters, you can

1358
01:11:01,520 --> 01:11:03,400
see the words binding and these
sorts of things.

1359
01:11:03,400 --> 01:11:05,440
So the Chinese had approved
this.

1360
01:11:05,440 --> 01:11:08,320
So it it was, it was
complicated.

1361
01:11:08,320 --> 01:11:11,120
And I certainly haven't read all
the the court docs, but you can.

1362
01:11:12,000 --> 01:11:13,480
Yeah, there, there's a fair bit
out there.

1363
01:11:13,800 --> 01:11:18,680
ASIC appealed the outcome and
they won in 2010.

1364
01:11:19,720 --> 01:11:22,680
And then by 2012, this goes to
the highest court in the country

1365
01:11:22,680 --> 01:11:26,680
and Twiggy is vindicated.
He wins a clean sweep and puts

1366
01:11:26,680 --> 01:11:29,360
it all kind of behind him.
Although the company was at a

1367
01:11:29,360 --> 01:11:31,800
very interesting point in time
in 2012.

1368
01:11:31,800 --> 01:11:35,080
But thankfully in his case, this
is all sort of put behind him

1369
01:11:35,080 --> 01:11:37,880
and.
Yeah, but he's effectively going

1370
01:11:37,880 --> 01:11:39,720
through the, you know, the most
sensitive period in the

1371
01:11:39,720 --> 01:11:41,720
company's history in some
respects.

1372
01:11:41,720 --> 01:11:45,560
And, and he himself is under
under the massive microscope of

1373
01:11:45,560 --> 01:11:48,000
the regular regular.
I can't imagine what that would

1374
01:11:48,000 --> 01:11:49,240
that would sort of pressure
would feel like.

1375
01:11:49,480 --> 01:11:52,520
I'm sure that yeah, the the
media would have been rampant

1376
01:11:52,800 --> 01:11:54,120
that that period of time as
well.

1377
01:11:54,440 --> 01:11:57,920
Bloody media in the worst.
Yeah, so.

1378
01:11:57,920 --> 01:12:01,400
OK, so I'm I'm following.
I'm following so far.

1379
01:12:01,600 --> 01:12:04,480
Yeah, that that's us in kind of
midish 2006.

1380
01:12:04,800 --> 01:12:09,840
Now they then sign an EPCM
contract with Wally Parsons.

1381
01:12:11,080 --> 01:12:13,760
Now this one is worth stressing
because I think it's a a big

1382
01:12:13,760 --> 01:12:15,720
deal.
This is one of the key learnings

1383
01:12:16,200 --> 01:12:17,960
that Twiggy had from his
Anaconda days.

1384
01:12:18,000 --> 01:12:20,760
He was of the view that the
engineering group flaw back then

1385
01:12:20,760 --> 01:12:24,040
had screwed him over.
He'd signed AUS $1 billion fixed

1386
01:12:24,040 --> 01:12:29,200
price contract and that left
Anaconda just in in floor's

1387
01:12:29,200 --> 01:12:31,360
hands hardly and totally in his
perspective.

1388
01:12:31,360 --> 01:12:33,400
And that's kind of what you get
with an EPC contract.

1389
01:12:33,400 --> 01:12:37,880
So he claimed the bond holders
and Glencore had given him no

1390
01:12:37,880 --> 01:12:43,040
choice and that that gave the
engineer the incentive to cut

1391
01:12:43,040 --> 01:12:47,720
corners to, you know, buffer
their margin APC contract.

1392
01:12:47,720 --> 01:12:50,680
So he said they didn't do solid
work and that ultimately cost

1393
01:12:50,680 --> 01:12:53,360
him his job.
Now that version of events is

1394
01:12:53,360 --> 01:12:57,200
disputed in in more than one
way, but that is what he

1395
01:12:57,200 --> 01:12:58,600
believed.
And you can't argue that that

1396
01:12:58,600 --> 01:13:01,520
shaped the, the journey that
Fortescue went on.

1397
01:13:02,120 --> 01:13:05,880
So I, I, I found that a really
interesting nugget and just

1398
01:13:05,880 --> 01:13:08,320
another one of those big lessons
that, that he learned that,

1399
01:13:08,920 --> 01:13:10,480
that, that shaped his later
career.

1400
01:13:10,520 --> 01:13:14,320
Because all of the all of the
ingenuity and and engineering

1401
01:13:14,320 --> 01:13:18,080
kind of like it's happening to
to date up until this EPCM

1402
01:13:18,080 --> 01:13:21,640
contract with boy Parsons has
been done in house their own

1403
01:13:21,680 --> 01:13:22,920
engineering.
I'm sure there's been like third

1404
01:13:22,920 --> 01:13:24,640
party consultants utilized
heavily.

1405
01:13:24,640 --> 01:13:27,800
But yeah, but he's built an in
house like capability within

1406
01:13:27,800 --> 01:13:29,120
Fortescue.
Yeah, exactly.

1407
01:13:29,120 --> 01:13:32,000
Like even like geologists were
working on those pics I talked

1408
01:13:32,000 --> 01:13:35,040
about on the surface miners
like, yeah, you know, all hands

1409
01:13:35,040 --> 01:13:36,840
on deck to to kind of solve the
problems.

1410
01:13:37,280 --> 01:13:40,240
But why sign this EPCM with with
Wally Parsons?

1411
01:13:40,920 --> 01:13:43,040
Yeah, build you have to.
A project?

1412
01:13:43,040 --> 01:13:47,720
Yeah, yeah, yeah.
So July 2006 stock is on a tear.

1413
01:13:48,280 --> 01:13:51,520
I know it jumps 20%.
The the long lead items are are

1414
01:13:51,520 --> 01:13:53,680
being ordered.
They come out with this

1415
01:13:53,920 --> 01:13:57,600
announcement with a group called
Noble who some people might know

1416
01:13:57,600 --> 01:14:01,360
of a a I'm not sure if infamous
is the right word, but they they

1417
01:14:01,360 --> 01:14:03,920
have an interesting story in the
commodity trading world.

1418
01:14:04,440 --> 01:14:06,040
They wanted to, I think.
Infamous is the right word,

1419
01:14:06,040 --> 01:14:08,280
yeah.
There you go, infamous.

1420
01:14:08,280 --> 01:14:12,800
So they wanted to take a 10%
equity stake for roughly US $300

1421
01:14:12,800 --> 01:14:15,680
million and they wanted the
majority marketing rights, which

1422
01:14:15,680 --> 01:14:19,440
was not palatable to Fortescue
and no deal.

1423
01:14:19,840 --> 01:14:24,840
So a week goes by and they come
out with this monumental deal.

1424
01:14:25,440 --> 01:14:28,840
They sign AUS $400 million
agreement with this investment

1425
01:14:28,840 --> 01:14:30,800
firm called Lucadia.
Tell me.

1426
01:14:30,800 --> 01:14:33,040
Tell me about Lucadia and how
they structured this.

1427
01:14:33,200 --> 01:14:37,200
So Lucadia was a holding
company, think of Berkshire.

1428
01:14:37,240 --> 01:14:41,160
And later Lucadia merged with
the investment bank Jeffries.

1429
01:14:41,160 --> 01:14:43,000
That happened in 2012.
So that's where they're kind of

1430
01:14:43,000 --> 01:14:44,680
at now.
But it was created by these two

1431
01:14:44,680 --> 01:14:49,240
guys incoming and Joe Steinberg
and it played a kind of vital

1432
01:14:49,240 --> 01:14:52,480
role in 42's history and not
always in a positive

1433
01:14:52,520 --> 01:14:55,120
perspective.
But these guys were seriously

1434
01:14:55,120 --> 01:14:58,200
switched on investors, like
seriously impressive in their

1435
01:14:58,200 --> 01:15:00,120
track record.
And I think a bit more should be

1436
01:15:00,120 --> 01:15:01,840
written about them because I
became to read it.

1437
01:15:01,840 --> 01:15:06,800
But they grew Leucadia at 19%
per annum for over 35 years.

1438
01:15:06,800 --> 01:15:12,080
So from the 70s through to the
merger with with Jeffries and

1439
01:15:13,160 --> 01:15:16,040
their investment saw them take
a, a board seat and it was

1440
01:15:16,040 --> 01:15:18,000
interesting going back to their
shareholder letters and seeing

1441
01:15:18,000 --> 01:15:21,000
what they wrote about.
They were very complimentary of

1442
01:15:21,280 --> 01:15:22,720
the Andrew Forest in his early
days.

1443
01:15:22,720 --> 01:15:24,160
I'll, I'll read a little snippet
here.

1444
01:15:24,920 --> 01:15:28,080
FMG is the creation of a
hyperactive, smart, energetic

1445
01:15:28,080 --> 01:15:30,040
Australian entrepreneur named
Andrew Forest.

1446
01:15:30,320 --> 01:15:35,280
Imagine the Energizer Bunny.
So it all starts out kind of

1447
01:15:35,280 --> 01:15:37,560
dandy, but it doesn't end that
way.

1448
01:15:37,560 --> 01:15:40,640
And the the relationship phrase
and ends up going to court.

1449
01:15:41,320 --> 01:15:43,880
They've got, they've got such
like an app synopsis of his

1450
01:15:43,880 --> 01:15:46,400
character, which you do hear
things like that repeated

1451
01:15:46,400 --> 01:15:48,120
regularly over the course of
history.

1452
01:15:48,120 --> 01:15:50,720
Hard work and survival is are in
his DNA.

1453
01:15:50,720 --> 01:15:51,800
Not a bad thing to have written
about.

1454
01:15:51,800 --> 01:15:54,560
Yeah, yeah, it's, I think
you're, you're spot on there.

1455
01:15:54,560 --> 01:15:56,960
It's, it's super sort of
fascinating to to learn more

1456
01:15:56,960 --> 01:16:00,320
about the, the character from
the perspective of these sort of

1457
01:16:00,480 --> 01:16:04,440
really top quality investors.
They they also added that Andrew

1458
01:16:04,440 --> 01:16:07,360
ruled the board with an iron
fist, which I don't think is a a

1459
01:16:07,360 --> 01:16:09,920
surprise to anyone.
Sort of said his personality

1460
01:16:09,920 --> 01:16:12,720
dominated the board.
And this is what kind of led to

1461
01:16:12,720 --> 01:16:16,040
the relationship fraying when it
comes to things like how much

1462
01:16:16,040 --> 01:16:19,320
leverage you're going to take on
as well as expansion decisions.

1463
01:16:19,320 --> 01:16:24,040
It was his way or the highway.
And for perhaps, you know, a bit

1464
01:16:24,040 --> 01:16:28,200
more conservative investors,
that wasn't what they were in it

1465
01:16:28,200 --> 01:16:29,400
for.
Well, they're, they're probably

1466
01:16:29,400 --> 01:16:31,240
also concerned with where they
are in the debt stack.

1467
01:16:31,280 --> 01:16:35,520
And I suppose you've got to tell
me about the instrument. 100%,

1468
01:16:35,520 --> 01:16:39,440
yeah.
So US $300 million of that 400

1469
01:16:39,440 --> 01:16:41,880
is an equity investment at a $15
share price.

1470
01:16:41,880 --> 01:16:45,560
It's a 50% premium.
That he's good at that?

1471
01:16:45,560 --> 01:16:47,320
Isn't he getting 50% premium?
Bloody good.

1472
01:16:47,320 --> 01:16:49,520
Yeah, they took 10% of the
company.

1473
01:16:49,840 --> 01:16:54,240
Now the remaining US $100
million is a 13 year loan.

1474
01:16:54,520 --> 01:16:59,360
Interest payable is 4% of the
revenue from Cloudbreak and

1475
01:16:59,360 --> 01:17:01,800
Christmas Creek.
Net of royalties.

1476
01:17:02,200 --> 01:17:06,320
The iron ore price is nowhere
near what it goes on and heads

1477
01:17:06,320 --> 01:17:08,440
toward, which is close to
$200.00.

1478
01:17:09,000 --> 01:17:12,960
So by 2011, these guys have
reaped US 1.8 billion in

1479
01:17:12,960 --> 01:17:15,400
royalties and stock sales.
They still own a couple $100

1480
01:17:15,400 --> 01:17:19,760
million of stock and a year
later they get bought out of

1481
01:17:19,760 --> 01:17:24,320
that that debt instrument to the
tune of US $700 million.

1482
01:17:24,320 --> 01:17:25,360
It's actually a bit more than
that.

1483
01:17:26,200 --> 01:17:28,640
So what an investment.
Has it come with?

1484
01:17:28,840 --> 01:17:31,840
Does it did it come with
security or anything like that

1485
01:17:31,840 --> 01:17:35,120
with a?
So your your point before was

1486
01:17:36,080 --> 01:17:38,600
very sort of switched on because
they got threatened to get

1487
01:17:38,600 --> 01:17:42,240
shoved down the debt stack when
Fortescue needed to refinance

1488
01:17:42,240 --> 01:17:46,320
themselves in 2012.
That was the impetus to say that

1489
01:17:46,440 --> 01:17:48,240
would let us buy you out.
Yeah, Yeah.

1490
01:17:48,520 --> 01:17:49,640
So.
Yeah, OK.

1491
01:17:49,840 --> 01:17:54,200
I I got you because it's, it's
it like structured as a loan,

1492
01:17:54,280 --> 01:17:57,560
but everything about that is an
equity instrument to me.

1493
01:17:57,560 --> 01:18:00,640
That's like a yeah, it's a
funny, it's a funny.

1494
01:18:00,640 --> 01:18:02,240
It's a.
Convertible.

1495
01:18:02,240 --> 01:18:04,320
It's it's a hybrid instrument.
It's.

1496
01:18:05,720 --> 01:18:08,320
I mean, it's, it's like a, you
know, a short term royalty, you

1497
01:18:08,480 --> 01:18:10,200
know what I mean?
Like you're getting money

1498
01:18:10,200 --> 01:18:12,360
upfront, getting paid back for a
finite period of time.

1499
01:18:12,840 --> 01:18:16,600
It's fantastic, wonderful.
Yeah, or succulent as as

1500
01:18:16,880 --> 01:18:18,560
incoming described it.
Later.

1501
01:18:18,560 --> 01:18:22,880
Yeah, yeah.
Yeah, so Aussie investors like,

1502
01:18:23,680 --> 01:18:27,680
you know, that showed the power
of of Lucadia and the the person

1503
01:18:27,680 --> 01:18:30,720
on that side of the table in in
that point in time, like force,

1504
01:18:30,720 --> 01:18:32,920
you needed the money and the
Aussie investment community

1505
01:18:32,920 --> 01:18:34,240
wasn't prepared to go anywhere
near it.

1506
01:18:34,240 --> 01:18:37,200
And to the point you you
mentioned earlier on on backing

1507
01:18:37,200 --> 01:18:39,120
sort of investors.
I think this really showed the

1508
01:18:39,240 --> 01:18:45,120
EU s s hunger and nature to back
repeat entrepreneurs who might

1509
01:18:45,120 --> 01:18:47,120
not have been all that
successful in in the first run

1510
01:18:47,120 --> 01:18:49,120
at it.
And, you know, that was the

1511
01:18:49,120 --> 01:18:51,320
second time after Harbinger that
it had happened now.

1512
01:18:51,320 --> 01:18:56,840
So yeah, I think it's a sort of
super interesting like quirk in

1513
01:18:56,840 --> 01:19:00,240
the in the story that the Aussie
investment community wasn't

1514
01:19:00,240 --> 01:19:04,360
really along for the ride.
So to be clear, it's not signed

1515
01:19:04,360 --> 01:19:07,400
and delivered.
It's contingent on financial

1516
01:19:07,400 --> 01:19:10,400
close or if you need to get the
rest of the money together.

1517
01:19:11,320 --> 01:19:14,200
They need to get a minimum of US
$2 billion by the end of the

1518
01:19:14,200 --> 01:19:17,960
year for that money to come in.
OK, so that leads to the big

1519
01:19:17,960 --> 01:19:19,280
one.
There's a there's a clock

1520
01:19:19,280 --> 01:19:21,640
ticking now.
The clock is ticking.

1521
01:19:21,760 --> 01:19:22,960
They've got to hit the debt
markets.

1522
01:19:22,960 --> 01:19:26,000
Yeah, 100%.
And this is where I'm going to

1523
01:19:26,000 --> 01:19:28,600
actually play a snippet from an
FMG video because I think the

1524
01:19:28,600 --> 01:19:33,240
way they capture it is so good.
But they secure $2.7 billion

1525
01:19:33,240 --> 01:19:36,800
from a bond offering.
It's just, it's just like

1526
01:19:37,080 --> 01:19:38,800
immense.
There's not too many more ways

1527
01:19:38,800 --> 01:19:41,960
you can, you can put it like, I
think reading all the

1528
01:19:41,960 --> 01:19:45,200
announcements 20 years later,
it's still kind of barely

1529
01:19:45,200 --> 01:19:47,040
believable and you can still
kind of doubt that they're going

1530
01:19:47,040 --> 01:19:50,120
to get it over the line and that
they're going to get this thing

1531
01:19:50,120 --> 01:19:53,800
built and everything.
But yeah, they, they raised $3.2

1532
01:19:53,800 --> 01:19:57,960
billion all in with the Lucadia
money coming over the line.

1533
01:19:57,960 --> 01:20:04,520
So 2.8 ish is in debt, $400
million in equity, less than 10%

1534
01:20:04,520 --> 01:20:08,040
dilution along the way for a
company that was kept at $2.3

1535
01:20:08,040 --> 01:20:11,840
billion before the financing.
Why this is so like, absurd and

1536
01:20:11,840 --> 01:20:13,600
amazing?
Of course it looks kind of not

1537
01:20:13,600 --> 01:20:16,600
not that way in hindsight, but.
But.

1538
01:20:17,200 --> 01:20:20,960
OK, The the the, the Chinese
steel makers they've they've

1539
01:20:20,960 --> 01:20:23,640
literally already reneged on a
commitment, right?

1540
01:20:23,640 --> 01:20:25,080
There's there's already saying
like this.

1541
01:20:25,080 --> 01:20:27,480
No, we, this isn't binding.
We're we're, we're not, we're

1542
01:20:27,480 --> 01:20:29,560
not, we're not providing this
finance the way the restructured

1543
01:20:29,560 --> 01:20:31,880
so that all they've got at this
point in time presumably is

1544
01:20:31,880 --> 01:20:34,800
actually just like, you know, a,
a prepaid that we're going to

1545
01:20:34,800 --> 01:20:36,800
take tons.
But the entire investment

1546
01:20:36,800 --> 01:20:39,720
community, including the debt
markets, must be thinking like I

1547
01:20:39,800 --> 01:20:42,040
I don't believe that you've
already, you've already shown me

1548
01:20:42,040 --> 01:20:43,520
that you're not here for your
word.

1549
01:20:43,560 --> 01:20:46,200
Like I don't how am I supposed
to believe that, you know, any

1550
01:20:46,200 --> 01:20:47,840
of your commitment here is
actually going to be like

1551
01:20:47,840 --> 01:20:50,080
credible and and certainly
upheld in the court of law.

1552
01:20:50,160 --> 01:20:52,800
It's you're taking an enormous
risk as a as a that they're.

1553
01:20:53,000 --> 01:20:56,400
Going to sell the product.
That that the steel mills are

1554
01:20:56,400 --> 01:20:59,000
going to buy it, right?
Like they've said they're going

1555
01:20:59,000 --> 01:21:00,520
to buy it.
They said they've already, but

1556
01:21:00,720 --> 01:21:02,320
they've already, they've already
showed that they're not, you

1557
01:21:02,320 --> 01:21:04,360
know, like going to uphold a
contract.

1558
01:21:04,520 --> 01:21:07,840
I I think that risk is actually
mitigated because the, what I

1559
01:21:07,880 --> 01:21:11,880
mean the deal that fell through
was with like a China rail,

1560
01:21:11,880 --> 01:21:18,000
China met and China Harbour.
They have signed heaps of mois

1561
01:21:18,000 --> 01:21:23,720
which became sales contracts
around this period in time with

1562
01:21:23,840 --> 01:21:28,160
steel mills and they, they would
pretty much spoken for up to

1563
01:21:28,160 --> 01:21:31,160
45,000,000 tons.
And in short order there was

1564
01:21:31,160 --> 01:21:34,320
demand beyond.
I think the investors could see

1565
01:21:34,320 --> 01:21:37,480
that the demand for iron ore was
growing gangbusters.

1566
01:21:37,480 --> 01:21:40,280
There were so many steel mills
coming online.

1567
01:21:41,040 --> 01:21:44,280
These, you know, if they weren't
all sort of solid yet the, the

1568
01:21:44,280 --> 01:21:49,920
sales contracts were becoming
solid and that was diversified

1569
01:21:49,920 --> 01:21:53,160
across, you know, dozens of
steel mills that, that wanted

1570
01:21:53,160 --> 01:21:55,040
product, you know, big and
small.

1571
01:21:55,040 --> 01:21:59,480
So I, I think, you know, just
seeing the way China was growing

1572
01:21:59,480 --> 01:22:03,240
more broadly, investors were at
ease that no matter who it's

1573
01:22:03,240 --> 01:22:06,000
coming from, there will be
demand for this iron ore.

1574
01:22:06,480 --> 01:22:08,720
Gotcha.
Like certainly risk.

1575
01:22:08,800 --> 01:22:11,920
Like certainly a whole heap of
risk going with it in a

1576
01:22:12,120 --> 01:22:15,160
massively sort of crammed in
time frame.

1577
01:22:15,680 --> 01:22:17,440
Should we play the video?
Let's play the video.

1578
01:22:20,840 --> 01:22:23,920
Unfortunately, when the bond
rating did come out from

1579
01:22:23,920 --> 01:22:26,920
Standard and Poor's and it was
very late one night that we

1580
01:22:26,920 --> 01:22:29,920
heard, so it would have been
early Australian time, late New

1581
01:22:29,920 --> 01:22:32,960
York time.
The number or the the rating

1582
01:22:32,960 --> 01:22:35,720
that they were giving us was 2
levels below where we thought we

1583
01:22:35,720 --> 01:22:38,160
were going to be.
And I remember going to bed that

1584
01:22:38,160 --> 01:22:41,160
night and it was probably
midnight thinking I'm dead in

1585
01:22:41,160 --> 01:22:43,160
the water here.
You know, the company's dead in

1586
01:22:43,160 --> 01:22:45,840
the water here.
This is not going to happen and

1587
01:22:45,840 --> 01:22:47,280
everybody's going to walk away
from this.

1588
01:22:47,680 --> 01:22:51,640
They wanted to go different to
Moody's because they're

1589
01:22:51,640 --> 01:22:55,360
competitors and we will be the
sacrificial lamb in that stupid

1590
01:22:55,360 --> 01:22:58,080
game.
And secondly, they're being

1591
01:22:58,080 --> 01:22:59,880
fundamentally lazy and looking
at the strength of the

1592
01:22:59,880 --> 01:23:01,520
proponent, not the strength of
the project.

1593
01:23:01,520 --> 01:23:04,600
In which case the mining
industry could only be developed

1594
01:23:05,320 --> 01:23:08,200
by the existing players.
And if, and I explained, if you

1595
01:23:08,200 --> 01:23:11,680
propagate that process, the
mining industry is going to die

1596
01:23:11,960 --> 01:23:15,520
and you will pay so much more
and your children will pay Even

1597
01:23:15,520 --> 01:23:17,000
so much more and your
grandchildren will pay an

1598
01:23:17,040 --> 01:23:20,840
astronomical amount because you
didn't write mining companies

1599
01:23:20,840 --> 01:23:23,080
projects on the strength of the
projects, but only on the

1600
01:23:23,080 --> 01:23:25,560
strength of the company.
And that means the whole world's

1601
01:23:25,560 --> 01:23:30,240
mining industry, if left to you,
will only be run by BHP, Reon

1602
01:23:30,240 --> 01:23:32,080
Valley.
And they'll set prices at

1603
01:23:32,080 --> 01:23:34,560
whatever they like and control
supply because you established

1604
01:23:34,560 --> 01:23:37,960
their monopoly.
That's well, can you put any

1605
01:23:37,960 --> 01:23:39,560
more money into the project?
That's yes.

1606
01:23:40,360 --> 01:23:44,520
If you give us the double B
rating, we'll put it in another

1607
01:23:44,520 --> 01:23:48,360
100 million.
But you've got to say yes or no.

1608
01:23:48,360 --> 01:23:53,880
Now it's, it's getting on.
We're going to wake up tomorrow

1609
01:23:53,880 --> 01:23:56,640
morning to the press that you
gave us a single V and that this

1610
01:23:56,640 --> 01:24:00,760
project's dusty.
And so the lead guy said done.

1611
01:24:01,400 --> 01:24:04,480
I woke up very early the next
morning, maybe 6:00, went

1612
01:24:04,480 --> 01:24:06,520
straight down to breakfast, and
there's Andrew sitting there

1613
01:24:06,520 --> 01:24:10,320
looking very chipper and happy
that he was feeling pretty good

1614
01:24:10,320 --> 01:24:13,040
about the world.
And I said, why are you so

1615
01:24:13,040 --> 01:24:15,000
happy?
This is not good.

1616
01:24:15,160 --> 01:24:18,760
And he said, well, we've managed
to get the bond rating that we

1617
01:24:18,760 --> 01:24:20,920
wanted.
I said, what do you mean?

1618
01:24:20,920 --> 01:24:24,240
And it turned out, as I
discovered later, that he was up

1619
01:24:24,400 --> 01:24:28,040
all night talking to Citigroup,
talking to the standard poors,

1620
01:24:28,360 --> 01:24:32,120
and he managed to talk them up
two levels during the evening.

1621
01:24:32,240 --> 01:24:33,880
And I remember the Citigroup guy
said.

1622
01:24:34,040 --> 01:24:38,240
I've seen bonds talk up one
level before, but 2 levels is

1623
01:24:38,240 --> 01:24:40,200
just unheard of.
We.

1624
01:24:40,600 --> 01:24:42,320
Went through a billion fairly
quickly.

1625
01:24:42,400 --> 01:24:45,760
We got up to 1.5 and then
everything slowed up and we were

1626
01:24:45,760 --> 01:24:48,400
really quite nervous about
whether we were going to get

1627
01:24:48,400 --> 01:24:51,520
there and they were due to close
the bond within within an hour

1628
01:24:51,520 --> 01:24:56,200
or two.
So Andrew managed to to pull an

1629
01:24:56,200 --> 01:24:58,600
ace out of the hat.
He went to Plan B.

1630
01:24:58,600 --> 01:25:02,240
He called a certain person and
he said, well, what do you need,

1631
01:25:02,240 --> 01:25:04,920
Andrew?
And Andrew said, I need you to

1632
01:25:04,920 --> 01:25:08,320
guarantee that you'll put $150
million into this bond issue if

1633
01:25:08,320 --> 01:25:10,560
we need it.
And there was a silence that

1634
01:25:10,560 --> 01:25:14,960
seemed like forever, with our
hearts beating hard because we

1635
01:25:14,960 --> 01:25:16,360
knew we were playing our last
card.

1636
01:25:17,080 --> 01:25:20,320
And he came back after what I
thought was forever.

1637
01:25:20,320 --> 01:25:23,520
It was probably 10 seconds, and
said, Andrew, I'd be happy to

1638
01:25:23,520 --> 01:25:25,840
help you.
So we looked at at the Citigroup

1639
01:25:25,840 --> 01:25:27,840
guys.
They looked at us and within

1640
01:25:27,840 --> 01:25:31,880
minutes we were watching the
bombs be posted and, and ramping

1641
01:25:31,880 --> 01:25:34,160
up towards $2 billion.
And within a couple of minutes

1642
01:25:34,440 --> 01:25:36,880
we were ringing the bell because
we're over the top.

1643
01:25:36,880 --> 01:25:39,840
We were just over $2 billion.
It would have been about 3:00 in

1644
01:25:39,840 --> 01:25:41,800
the morning.
The text came through to say

1645
01:25:42,000 --> 01:25:44,560
we've done it.
You know, we've closed it just.

1646
01:25:45,040 --> 01:25:46,920
And I mean, it was close.
We just sort of rolled over that

1647
01:25:46,920 --> 01:25:51,960
line and they just, and there
was a real sense of euphoria and

1648
01:25:51,960 --> 01:25:54,440
you could get it across the line
from the people in New York.

1649
01:25:54,440 --> 01:25:57,720
You know, I literally could feel
my heart inside my body jumping

1650
01:25:57,720 --> 01:25:59,400
up and down at that moment.
God.

1651
01:26:01,760 --> 01:26:03,400
Isn't that something?
How cool is that?

1652
01:26:04,000 --> 01:26:07,400
Wow, wow.
I talked, he talked the bond

1653
01:26:07,400 --> 01:26:10,800
ratings out too, not just.
That's fantastic.

1654
01:26:10,800 --> 01:26:15,040
So, So what they signed was debt
that would mature over 5 to 10

1655
01:26:15,040 --> 01:26:17,280
years, a a few different sort of
bonds.

1656
01:26:18,200 --> 01:26:22,600
They would be paying around 10%.
And from this point in time,

1657
01:26:22,600 --> 01:26:25,880
the, the share price just goes
parabolic if it hadn't already.

1658
01:26:26,720 --> 01:26:29,520
They sort of see it fly to 13
bucks and then it just goes

1659
01:26:29,520 --> 01:26:31,360
beyond, oh, oh, put a little
chart there.

1660
01:26:32,360 --> 01:26:35,400
You don't compare it again like
for like, but you can just see

1661
01:26:35,960 --> 01:26:38,680
exponential sort of chart and it
just sort of goes flying.

1662
01:26:39,000 --> 01:26:42,000
This is this is, you know, the
one of the biggest bit of

1663
01:26:42,000 --> 01:26:45,080
uncertainty is, is financing.
Well, there's there's more

1664
01:26:45,080 --> 01:26:47,640
uncertainty to come on.
I've got no doubt but this, this

1665
01:26:47,640 --> 01:26:51,040
is an inordinate kind of, you
know, capital raise.

1666
01:26:51,040 --> 01:26:53,040
And a lot of people were
probably thinking there's going

1667
01:26:53,040 --> 01:26:56,160
to be a lot of dilution to the
equity in, in the, you know, the

1668
01:26:56,160 --> 01:26:59,200
pursuit of the development here.
All that's gone because yeah,

1669
01:26:59,640 --> 01:27:01,240
got enough money now.
Fantastic.

1670
01:27:01,240 --> 01:27:04,280
So late 2006 everything just
clicks into gear.

1671
01:27:04,960 --> 01:27:07,000
They move to doing monthly
construction updates.

1672
01:27:07,000 --> 01:27:10,160
So you can like sort of putting
picture next to picture next to

1673
01:27:10,160 --> 01:27:12,400
picture see in sort of slow
motion that the the thing's kind

1674
01:27:12,400 --> 01:27:15,720
of getting built.
Contracts are rewarded non-stop.

1675
01:27:15,720 --> 01:27:20,640
The initial CapEx at this point
is call it sort of $2.6 billion

1676
01:27:20,640 --> 01:27:22,600
that kind of break out
infrastructure and and mining.

1677
01:27:22,600 --> 01:27:26,080
In a way, Twiggy puts the clock
up in the East Perth office that

1678
01:27:26,080 --> 01:27:29,280
is ticking down the days to 1st
or and it's ticking down the

1679
01:27:29,280 --> 01:27:32,280
days to revenue.
More importantly, with February

1680
01:27:32,280 --> 01:27:36,840
2008 being the goal and things
are just gangbusters.

1681
01:27:36,840 --> 01:27:39,400
And this is the point in time
where Twiggy mentions that

1682
01:27:39,400 --> 01:27:42,400
they'll do an expansion study
for 100 million tons per annum

1683
01:27:42,880 --> 01:27:46,280
while they're at it.
What is what's the perception of

1684
01:27:46,320 --> 01:27:49,880
of Fortescue at this point?
Just like what's, yeah, how how

1685
01:27:49,920 --> 01:27:52,320
is the company received?
How's how's how's everyone

1686
01:27:52,320 --> 01:27:54,680
thinking about the probability
this is going to be a real

1687
01:27:54,680 --> 01:27:57,040
thing?
I think you could sort of safely

1688
01:27:57,040 --> 01:27:58,800
say that there was a lot of
doubt.

1689
01:27:58,800 --> 01:28:01,680
Like there's this famous or
infamous quote from an Aussie

1690
01:28:01,680 --> 01:28:05,040
fund manager saying, you know,
I'd be happy to be strapped to

1691
01:28:05,040 --> 01:28:08,960
the railways in early 2008
because I'm not going to be run

1692
01:28:08,960 --> 01:28:12,000
over by a train.
There is skepticism throughout

1693
01:28:12,000 --> 01:28:14,160
the market that it's sort of,
and obviously that sort of

1694
01:28:14,160 --> 01:28:17,360
changes in part, you know,
financing is a, a big hurdle

1695
01:28:17,360 --> 01:28:19,160
there.
I mean, there's, there's not

1696
01:28:19,160 --> 01:28:23,080
many backers in the, the Aussie
market.

1697
01:28:23,080 --> 01:28:25,720
Charlie Aiken was was 1.
He wrote the famous note.

1698
01:28:25,720 --> 01:28:28,000
Build it and they will come.
Build it, yeah, Yeah.

1699
01:28:28,000 --> 01:28:31,240
So I think that was sort of 2007
type time frame and he was sort

1700
01:28:31,240 --> 01:28:33,960
of cottoning on to the point
that no one else in Australia is

1701
01:28:34,440 --> 01:28:35,800
is getting behind this thing
and.

1702
01:28:36,120 --> 01:28:38,440
After Twiggy, you'd been
barraging him with phone calls

1703
01:28:38,440 --> 01:28:40,200
to come check it out, come check
it out, come check it out.

1704
01:28:40,280 --> 01:28:41,840
Don't doubt it.
And I'm sure he didn't want to

1705
01:28:41,840 --> 01:28:44,720
fly over to Perth, but when you
did, yeah.

1706
01:28:44,760 --> 01:28:49,480
Yeah, so I, I, you know, changes
in time and the, the, the

1707
01:28:49,480 --> 01:28:54,200
warmness in, you know, reception
just day by day changes to the

1708
01:28:54,200 --> 01:28:59,120
point where diggers and dealers
in 2007 and there's not enough

1709
01:28:59,120 --> 01:29:02,000
seats, you know, they have to
lock the doors because everyone

1710
01:29:02,000 --> 01:29:03,440
wants to just get a glimpse of
Twiggy.

1711
01:29:03,440 --> 01:29:08,600
So, you know, people, people in
their sort of perception can

1712
01:29:08,600 --> 01:29:11,520
change.
And he he did a hugely

1713
01:29:11,520 --> 01:29:14,560
impressive job in in changing
that by kind of forcing this

1714
01:29:14,560 --> 01:29:16,680
thing.
Through but this bit here when

1715
01:29:16,680 --> 01:29:18,320
you've got the money and it's
all systems go.

1716
01:29:18,320 --> 01:29:23,120
This is when like the, the, the,
this, the feel around that

1717
01:29:23,120 --> 01:29:26,480
company because you have to
mobilize an inordinate amount of

1718
01:29:26,480 --> 01:29:29,760
people who are, who are, who
are, you know, now given an

1719
01:29:29,760 --> 01:29:33,160
extraordinary amount of like,
like autonomy and leeway to, to

1720
01:29:33,160 --> 01:29:35,120
go do something that's never
been done before in some ways.

1721
01:29:35,280 --> 01:29:38,680
Yeah, yeah, 100%.
And there's actually one

1722
01:29:39,080 --> 01:29:42,240
approval that they still need,
which ends up delaying the

1723
01:29:42,240 --> 01:29:45,360
project a few months.
They need to get approval to

1724
01:29:45,360 --> 01:29:48,720
build the rail through this area
known as Woodstock Abbados.

1725
01:29:48,720 --> 01:29:54,000
And this was a, a protected area
from any sort of development

1726
01:29:54,000 --> 01:29:57,440
under the Aboriginal Heritage
Act going back a little way.

1727
01:29:57,440 --> 01:30:01,880
So Twiggy made the case to the,
the sort of relevant minister at

1728
01:30:01,880 --> 01:30:05,440
the time that they would need to
reroute the, the train that

1729
01:30:05,440 --> 01:30:09,200
would add years and, and true
Twiggy stars sort of said that

1730
01:30:09,200 --> 01:30:11,920
would kill the project.
You know, I think other people

1731
01:30:13,360 --> 01:30:15,960
debated that at the time,
whether, you know, could they

1732
01:30:15,960 --> 01:30:17,840
just reroute it around this
area.

1733
01:30:17,920 --> 01:30:20,200
It, it was an expansive kind of
area, but what they wanted to

1734
01:30:20,200 --> 01:30:24,040
carve out was a 200 meter strip
through which they could run the

1735
01:30:24,040 --> 01:30:26,440
railway for a nearly 60
kilometers.

1736
01:30:26,440 --> 01:30:31,080
So it's a fair chunk of land
politically, nobody, you know,

1737
01:30:31,120 --> 01:30:33,440
as an individual wanted to put
their name to approve this thing

1738
01:30:33,440 --> 01:30:36,440
because it was a bit of a a hot
potato, hence the the delay.

1739
01:30:36,440 --> 01:30:41,040
But in a classically extravagant
pitch, Twiggy makes a statement

1740
01:30:41,040 --> 01:30:44,120
that he'll sort of strap himself
in front of any aboriginal

1741
01:30:44,120 --> 01:30:48,000
carvings along the way for when
that they're these sort of

1742
01:30:48,120 --> 01:30:50,640
blastings take place.
And they make the the promise

1743
01:30:50,640 --> 01:30:54,360
that they will use non and non
explosive blasting methods to

1744
01:30:55,240 --> 01:30:58,640
carve the the path that the
railway can be built on.

1745
01:30:58,640 --> 01:31:02,720
And who knows whether he
actually did that, but that was

1746
01:31:02,720 --> 01:31:05,080
enough to get the deal done.
And they get the approvals in

1747
01:31:05,080 --> 01:31:07,600
late 2006.
And this is where construction

1748
01:31:07,600 --> 01:31:09,320
starts in earnest.
They're off to the races at this

1749
01:31:09,320 --> 01:31:13,560
point and the clock is ticking
and they have pulled in that

1750
01:31:13,560 --> 01:31:15,720
time frame that they want to
build the thing into under 18

1751
01:31:15,720 --> 01:31:18,240
months versus the 22 that I'd
mentioned earlier.

1752
01:31:18,760 --> 01:31:22,480
Under 18 months to build the
entire rail and obviously all

1753
01:31:22,480 --> 01:31:25,400
the minor informations.
And the port and the port dredge

1754
01:31:25,400 --> 01:31:26,600
the port.
They started dredging the port

1755
01:31:26,600 --> 01:31:28,360
actually, but yeah.
All of that, OK.

1756
01:31:28,880 --> 01:31:31,040
Needs to come together like.
If you look, I haven't thought

1757
01:31:31,080 --> 01:31:33,720
about the port yet, Yeah.
If if you look at the Port

1758
01:31:33,720 --> 01:31:38,000
Hedland from Google Maps like
it's it's like marshland and

1759
01:31:38,040 --> 01:31:42,800
like it, you know, hence the you
know, the building of a deep

1760
01:31:42,800 --> 01:31:45,760
water port is the blocker for a
lot of iron ore hopefuls out

1761
01:31:45,760 --> 01:31:47,440
there.
Port Hedland is this one nook

1762
01:31:47,440 --> 01:31:53,520
where BHB ship a lot of iron ore
out of and they build Anderson

1763
01:31:53,520 --> 01:31:58,320
Port, which is just on the the
other side to BHB and they they

1764
01:31:58,320 --> 01:32:00,280
dredge the channel that they
need to do, but that's an

1765
01:32:00,480 --> 01:32:02,960
expensive task as well that
needs to get done.

1766
01:32:04,160 --> 01:32:06,960
They are also iterating on that
component we spoke about before

1767
01:32:07,960 --> 01:32:09,880
getting the products that they
can actually sell.

1768
01:32:09,880 --> 01:32:12,840
And it's kind of probably better
answers your question before in

1769
01:32:12,840 --> 01:32:15,440
a in a way as well.
They're continuously working

1770
01:32:15,440 --> 01:32:18,080
with the steel mills.
They talk about high grade

1771
01:32:18,760 --> 01:32:21,280
product, they talk about super
value product.

1772
01:32:21,960 --> 01:32:25,440
They end up using this super
values product that they have

1773
01:32:26,040 --> 01:32:29,800
and they go a step further and
create what they call FMG rocket

1774
01:32:29,800 --> 01:32:33,120
sinterfines.
Now this is essentially 75% of

1775
01:32:33,120 --> 01:32:38,320
the, the rum is good for it good
on spec 25% will be sort of

1776
01:32:38,320 --> 01:32:40,960
flushed through the the D sand
part of the processing part that

1777
01:32:40,960 --> 01:32:43,960
I mentioned earlier.
It's sort of through a washing

1778
01:32:43,960 --> 01:32:46,800
facility.
And then a portion of that might

1779
01:32:46,800 --> 01:32:48,680
need a bit of gravity separation
as well.

1780
01:32:49,360 --> 01:32:52,360
And bang, you have your magical
product, Rocket Center Fines,

1781
01:32:52,720 --> 01:32:56,120
which is named after the the
rapid speed, you know, the the

1782
01:32:56,120 --> 01:32:59,680
rocket speed that it burns at in
the sintering process before you

1783
01:32:59,680 --> 01:33:02,840
put it in the blast furnace.
So there you go, you've you've

1784
01:33:02,840 --> 01:33:04,320
solved that one.
Solved that one.

1785
01:33:04,720 --> 01:33:08,040
The the year of the golden Pig
market cap through 4 billion

1786
01:33:08,040 --> 01:33:13,240
dollars 2.8 billion in debt iron
oil price jumps again and then

1787
01:33:13,240 --> 01:33:17,080
there's a a really tragic and an
awful event that hits this

1788
01:33:17,080 --> 01:33:22,120
cyclone hits Cyclone George and
it wreaks havoc over rail camp

1789
01:33:22,120 --> 01:33:25,880
one which is 100 kilometers to
the South of Port Hedland 2

1790
01:33:25,880 --> 01:33:30,840
fatalities occur over 700 people
are evacuated from the pilgrat

1791
01:33:31,160 --> 01:33:32,960
down to Perth.
It was the most powerful cyclone

1792
01:33:32,960 --> 01:33:37,480
to hit the area since the 70s.
And obviously that's a shocking

1793
01:33:37,480 --> 01:33:40,000
experience for everyone
involved.

1794
01:33:40,000 --> 01:33:42,760
And unfortunately in the, the
construction process, a

1795
01:33:42,760 --> 01:33:46,720
contractor would die in 2008 as
well in an accident there.

1796
01:33:47,560 --> 01:33:50,600
That sort of awful events that
would have affected the the

1797
01:33:50,600 --> 01:33:54,800
whole team undoubtedly with
regard to the, the cyclone

1798
01:33:55,880 --> 01:33:59,160
remobilization happens over the
space of a, a few weeks.

1799
01:33:59,160 --> 01:34:02,440
It does push the whole project
out and I'm, I'm sure everyone's

1800
01:34:02,520 --> 01:34:06,280
quite shell shocked after that.
It adds significant cost as

1801
01:34:06,280 --> 01:34:08,600
well.
I'd heard numbers about $100

1802
01:34:08,600 --> 01:34:12,720
million CapEx is sort of
upstated to $2.9 billion.

1803
01:34:12,720 --> 01:34:16,040
And yeah, I'm, I'm, I'm sure
this is just a incredibly tough

1804
01:34:16,040 --> 01:34:21,120
period in, in March of 2007 for
the, for the whole organization

1805
01:34:23,000 --> 01:34:25,720
bit.
Bit by bit, they sort of regroup

1806
01:34:25,720 --> 01:34:29,280
and, and, and get themselves to
together and, and start sort of

1807
01:34:29,960 --> 01:34:33,760
building again, getting the team
switched on to, to expanding the

1808
01:34:33,760 --> 01:34:37,400
project, expanding on the the
previous kind of expansion

1809
01:34:37,800 --> 01:34:41,600
attempts, which I think is a a
bit testy with a, a few people

1810
01:34:41,600 --> 01:34:43,080
out there.
I mean, they're not even halfway

1811
01:34:43,080 --> 01:34:45,760
through building they're
45,000,000 ton per annum

1812
01:34:45,760 --> 01:34:47,400
project.
Not a single ton has been

1813
01:34:47,400 --> 01:34:49,800
shipped.
So I think you can imagine the

1814
01:34:49,800 --> 01:34:52,960
expansion plans at this point in
time are, are are ruffling a few

1815
01:34:52,960 --> 01:34:55,480
feathers.
But the company gets through

1816
01:34:55,480 --> 01:34:58,800
this, this point in time.
And the I think that the sort of

1817
01:34:58,800 --> 01:35:02,800
focus comes back in sort of mid
mid 2007 after those kind of

1818
01:35:02,800 --> 01:35:06,200
events.
And they, they, they capitalize

1819
01:35:06,200 --> 01:35:10,600
on the, the stocks love in the,
in the marketplace and actually

1820
01:35:10,600 --> 01:35:14,840
do a capital raising at an
astronomical valuation.

1821
01:35:15,520 --> 01:35:19,920
So they go on to raise $500
million in, in this point in

1822
01:35:19,920 --> 01:35:24,720
time in 2007 dilution of 5%.
So they were a $10 billion

1823
01:35:24,720 --> 01:35:26,280
company.
Yeah.

1824
01:35:26,400 --> 01:35:29,680
Lucadia maintains their stake.
JP Morgan works as lead manager,

1825
01:35:30,120 --> 01:35:32,720
but BHP terminates their
relationship with JP Morgan.

1826
01:35:33,560 --> 01:35:34,600
After Really.
Yeah.

1827
01:35:35,000 --> 01:35:35,560
Yeah.
How good's that?

1828
01:35:35,560 --> 01:35:39,160
Oh my God, yeah.
And wow, I think, you know,

1829
01:35:39,160 --> 01:35:41,680
looking back, this was a
fantastic capital raise to get

1830
01:35:42,120 --> 01:35:44,320
done, 500 million at this point
in time.

1831
01:35:44,800 --> 01:35:47,560
They, they get, they're paying
interest on, you know, pretty

1832
01:35:47,560 --> 01:35:50,440
substantial quantity of, of, of
debt.

1833
01:35:50,520 --> 01:35:53,000
You, you want to have a bit of,
a bit of breathing room at the

1834
01:35:53,000 --> 01:35:54,320
exact same time.
Yeah, yeah.

1835
01:35:54,320 --> 01:35:56,520
The spending is through the roof
during these, you know, final

1836
01:35:56,520 --> 01:35:59,200
stages of construction.
The stock goes on to run to

1837
01:35:59,200 --> 01:36:02,440
$60.00 a share.
It is at that point in time the

1838
01:36:02,440 --> 01:36:05,920
29th largest company in
Australia. $60.00, which is

1839
01:36:05,920 --> 01:36:08,600
equivalent of $6 in today's
yeah.

1840
01:36:08,880 --> 01:36:10,440
Yeah.
So in December of that year they

1841
01:36:10,440 --> 01:36:13,760
do the stock split.
Aussie dollar is powering up at

1842
01:36:13,760 --> 01:36:16,200
this point in time.
For a bit more context, BHB

1843
01:36:16,200 --> 01:36:19,600
makes it's play to buy or to
merge with Rio Tinto.

1844
01:36:20,480 --> 01:36:24,920
So this is this is the golden
times, you know, and you know on

1845
01:36:24,920 --> 01:36:26,720
that one, Twiggy just throw the
book at it.

1846
01:36:26,720 --> 01:36:28,800
He's like, this is anti
competitive.

1847
01:36:28,800 --> 01:36:31,200
The the consequences would be
disastrous.

1848
01:36:31,200 --> 01:36:36,280
But yeah, we're we're at a point
in time in the end of 2007, the

1849
01:36:36,280 --> 01:36:40,920
project is 80 odd percent done.
CapEx is 3 billion now they've

1850
01:36:40,920 --> 01:36:42,840
burnt through or they're
factoring that they'll burn

1851
01:36:42,840 --> 01:36:44,280
through all the contingency
cash.

1852
01:36:44,960 --> 01:36:49,720
FMG still has a few 100 million
left in its coffers and the rail

1853
01:36:49,720 --> 01:36:51,720
is the big block and they're
just going gangbusters.

1854
01:36:51,720 --> 01:36:55,080
They, they build more than 3
kilometers of rail in a day.

1855
01:36:55,920 --> 01:36:57,760
Like I, I find that hard to wrap
my head around.

1856
01:36:57,760 --> 01:37:00,400
I sort of cycle past the the
rail here that they've been

1857
01:37:00,400 --> 01:37:03,840
working on for the better part
of half a year fiddling on the

1858
01:37:03,840 --> 01:37:08,640
sidelines there to to think that
in near Kandasubi there would be

1859
01:37:08,640 --> 01:37:14,480
built all the way to the city in
a day is is hard to visualize.

1860
01:37:14,480 --> 01:37:16,720
You know, like it's so
impressive.

1861
01:37:16,720 --> 01:37:20,680
It's like so impressed by that
and they get it done first or on

1862
01:37:20,680 --> 01:37:24,880
ship they hit the target. 256
kilometers of rail cloud break

1863
01:37:25,600 --> 01:37:30,360
through to port Anderson there
$3.2 billion all up, 10 million

1864
01:37:30,400 --> 01:37:35,200
man hours worked, 330 contracts,
420,000 rail sleepers.

1865
01:37:35,200 --> 01:37:38,560
Those things on the railway, so
many permits, so many people

1866
01:37:38,800 --> 01:37:42,240
responsible beyond the one like
the team has swelled to 1200

1867
01:37:42,240 --> 01:37:44,840
employees, not even including
the contractors.

1868
01:37:45,200 --> 01:37:47,880
Just imagine that the inordinate
amount of things that weren't

1869
01:37:47,880 --> 01:37:50,160
even in the public domain, like
the obstacles that had to be

1870
01:37:50,160 --> 01:37:53,120
overcome, that you know, the
relationship dynamics to to

1871
01:37:53,120 --> 01:37:57,320
manage and and and get past like
so many of the the the the deli

1872
01:37:57,320 --> 01:38:00,160
project delivery pieces wouldn't
have even like emerged in the in

1873
01:38:00,160 --> 01:38:01,760
the public domain.
Absolutely.

1874
01:38:01,760 --> 01:38:06,720
And and Twiggy becomes the
richest person in Australia the

1875
01:38:06,720 --> 01:38:09,520
first time in 20 years.
Someone not called Packer is the

1876
01:38:09,520 --> 01:38:13,280
richest person in Australia, the
the highest dollar value ever at

1877
01:38:13,280 --> 01:38:16,560
the top of that list.
In July, the project is

1878
01:38:16,560 --> 01:38:20,360
officially completed.
And to go back to that 22 month

1879
01:38:20,360 --> 01:38:23,120
construction timeline like this
is super, super important.

1880
01:38:23,120 --> 01:38:26,760
Had that been completed in 22
months, they would have finished

1881
01:38:26,760 --> 01:38:29,840
the project right in time for
Lehman Brothers to go bankrupt

1882
01:38:30,000 --> 01:38:34,760
in the absolute gnarliest part
of the global financial crisis.

1883
01:38:35,120 --> 01:38:39,800
So pulling that in and just
working gangbusters to get there

1884
01:38:40,560 --> 01:38:43,920
was super important.
The iron ore benchmark jumps 80%

1885
01:38:44,320 --> 01:38:47,440
in 2008.
Think about the compounding and

1886
01:38:47,440 --> 01:38:49,360
all those other jumps.
We'd said from that point it

1887
01:38:49,360 --> 01:38:53,320
jumps 80%.
It's north of 150 bucks a ton.

1888
01:38:53,320 --> 01:38:57,600
Like the cash flow is coming in
straight away like a thing to

1889
01:38:57,600 --> 01:38:59,840
behold.
And it was less than four years

1890
01:38:59,840 --> 01:39:05,720
from the 1st hole in Cloudbreak
to the first ore and commercial

1891
01:39:05,800 --> 01:39:09,200
production.
That is the infrastructure bill,

1892
01:39:09,320 --> 01:39:10,760
everything that is.
Mind boggling.

1893
01:39:10,760 --> 01:39:13,680
The whole thing is just just
remarkable, jaw-dropping kind of

1894
01:39:13,680 --> 01:39:16,960
stuff.
And in in the fullness of time,

1895
01:39:16,960 --> 01:39:19,640
like it didn't, it didn't matter
that the, you know, the, the

1896
01:39:19,640 --> 01:39:23,400
realizations on 58% were were
punitive compared to what was

1897
01:39:23,400 --> 01:39:25,920
forecast because my God, the
iron ore price just like

1898
01:39:25,920 --> 01:39:29,160
covered, covered over all of any
of those blemishes like.

1899
01:39:29,160 --> 01:39:34,400
Covered a lot of scenes, yeah.
Costs would rise dramatically as

1900
01:39:34,400 --> 01:39:37,360
you kind of expect when the
times are so good and then they

1901
01:39:37,360 --> 01:39:41,120
have to tighten their belt
dramatically as well in the

1902
01:39:41,120 --> 01:39:44,000
years that follow.
But that is the that is the

1903
01:39:44,000 --> 01:39:48,800
story that is 2003 to 2008.
That is hopefully sort of did it

1904
01:39:48,800 --> 01:39:52,040
a bit of justice to to capture
kind of what what happened

1905
01:39:52,200 --> 01:39:53,360
there, because I think it's
remarkable.

1906
01:39:53,360 --> 01:39:57,640
And the journey beyond that is
like so, so interesting learning

1907
01:39:57,640 --> 01:39:59,440
what happens in the years
following.

1908
01:40:00,600 --> 01:40:03,560
You could chat for hours about
it, but I think there's a number

1909
01:40:03,560 --> 01:40:06,440
of of lessons and I'm keen to
chat through this with you mate

1910
01:40:06,440 --> 01:40:09,680
to like to pull out what kind of
stands out the thoughts that the

1911
01:40:09,680 --> 01:40:13,440
themes because you know there's.
There's there's more than a

1912
01:40:13,440 --> 01:40:17,400
handful to to speak about here.
We've got to got to start with,

1913
01:40:18,480 --> 01:40:21,200
you know, the obvious 1 and
that's just the, the, the

1914
01:40:21,200 --> 01:40:23,800
entrepreneurial kind of story
that's underpinning all of this.

1915
01:40:23,960 --> 01:40:29,240
Yeah, like never taking.
No, like nothing is not

1916
01:40:29,240 --> 01:40:31,280
achievable.
And that's not just like Andrew

1917
01:40:31,280 --> 01:40:32,600
Forest.
That's the the whole kind of

1918
01:40:32,600 --> 01:40:33,960
team.
You know, I, I gave the little

1919
01:40:33,960 --> 01:40:37,880
anecdote about the, the
marketing team going to China

1920
01:40:37,880 --> 01:40:40,720
and not taking no, but there's
this great snippet where Ayman

1921
01:40:40,720 --> 01:40:43,800
Hannan, one of the G OS, the
sort of head of exploration, is

1922
01:40:43,800 --> 01:40:46,560
sort of speaking and saying, I
would not have a single person

1923
01:40:46,560 --> 01:40:49,240
out there on site that didn't
think it was a foregone

1924
01:40:49,240 --> 01:40:51,600
conclusion that we were going to
discover the awe.

1925
01:40:52,120 --> 01:40:54,880
That stuff is incredible.
That attitude is like, you know,

1926
01:40:54,920 --> 01:40:56,880
you can kind of feel it and you
know, with Twiggy himself, it's

1927
01:40:57,000 --> 01:40:59,760
it's kind of clear as day.
Everyone knows the energy and

1928
01:40:59,760 --> 01:41:03,240
the salesmanship on that part,
but it built through the the

1929
01:41:03,240 --> 01:41:06,520
whole team and people that
weren't believers weren't along

1930
01:41:06,520 --> 01:41:08,560
for the journey.
They just wouldn't be a part of

1931
01:41:08,560 --> 01:41:10,360
it.
Another theme is like the, the

1932
01:41:10,360 --> 01:41:15,040
learning from the past lessons.
So we we spoke about what they

1933
01:41:15,040 --> 01:41:18,840
did with the, the, the contract.
That's a that's a massive 1.

1934
01:41:20,160 --> 01:41:24,400
The, the thinking about debt
like didn't change massively.

1935
01:41:24,400 --> 01:41:28,240
You know, still still a big fan,
but utilize and did the equity

1936
01:41:28,240 --> 01:41:32,400
raising at a phenomenal time,
like took the cash when it was

1937
01:41:32,400 --> 01:41:35,520
there.
And that was that was a very,

1938
01:41:35,520 --> 01:41:38,240
very smart decision in in
hindsight.

1939
01:41:38,880 --> 01:41:41,520
Another one of those lessons is
that like Twiggy wanted control.

1940
01:41:42,120 --> 01:41:47,080
He has had 35% plus of this
company since day dot

1941
01:41:47,080 --> 01:41:50,640
effectively.
And he didn't want to be pushed

1942
01:41:50,640 --> 01:41:53,400
out like Anglo were able to do
in Glencoe and stuff were able

1943
01:41:53,400 --> 01:41:55,480
to do in the early 2000s.
And that it's not going to

1944
01:41:55,480 --> 01:41:57,280
happen when you've got 30 plus
percent of the company.

1945
01:41:57,760 --> 01:42:00,920
He wasn't even willing to to
forego, you know, a minority

1946
01:42:00,920 --> 01:42:04,360
stake in the project, like the
equity in the company and the

1947
01:42:04,720 --> 01:42:07,680
and the and the project.
It was non negotiable.

1948
01:42:07,680 --> 01:42:11,000
Like he didn't even didn't even
resort to, you know, selling

1949
01:42:11,000 --> 01:42:13,640
down the rail in due course when
things would would ultimately

1950
01:42:13,640 --> 01:42:16,160
get fragile again.
Yeah, all everything was

1951
01:42:16,280 --> 01:42:18,680
retention of equity at all
costs.

1952
01:42:18,720 --> 01:42:21,760
Yeah, it's sort of all in kind
of stuff comes off the

1953
01:42:21,760 --> 01:42:23,800
entrepreneurial kind of
component.

1954
01:42:23,800 --> 01:42:27,360
You mentioned they took a a
different approach to the

1955
01:42:27,480 --> 01:42:29,880
assumed knowledge that was in
the industry in so many

1956
01:42:29,880 --> 01:42:32,520
different facets.
The the mining machines, you

1957
01:42:32,520 --> 01:42:34,720
know, coming up with a new
geological model for how these

1958
01:42:35,200 --> 01:42:38,280
ore bodies would sort of exist
in the pilgrat the processing

1959
01:42:38,280 --> 01:42:41,400
front, the marketing front, the
rail, you know, the the heavy

1960
01:42:41,400 --> 01:42:44,840
sort of hole using the US bond
market as opposed to going to to

1961
01:42:44,840 --> 01:42:48,360
banks in the the more commercial
kind of split like that.

1962
01:42:48,360 --> 01:42:51,520
That is a handful, but there is
there's so many more that you

1963
01:42:51,520 --> 01:42:53,680
can sort of speak about from
like all handling rail

1964
01:42:53,680 --> 01:42:55,360
unloading.
There's a whole bunch of these

1965
01:42:55,680 --> 01:42:59,400
innovations that they came up
with that would were different

1966
01:42:59,400 --> 01:43:04,680
to the pack by by necessity in a
way to to like the company

1967
01:43:04,680 --> 01:43:06,720
didn't have Adna to start with.
That's what's kind.

1968
01:43:06,720 --> 01:43:09,520
Of like also fascinating about
it's not an established company

1969
01:43:09,840 --> 01:43:13,240
that had to build its own
identity in like it goes from a

1970
01:43:13,240 --> 01:43:17,000
shell to, you know, an, an iron
ore producer that built a port,

1971
01:43:17,280 --> 01:43:21,680
a rail and discovered a mine all
in the space of five years.

1972
01:43:21,920 --> 01:43:26,120
Like, like it's, it's, it's,
it's a, it's a true start up

1973
01:43:26,120 --> 01:43:28,760
competing with, you know,
incumbent giants.

1974
01:43:28,960 --> 01:43:32,640
And, and I think like there's,
there's something about the

1975
01:43:32,640 --> 01:43:35,240
Australian culture as well that
when the like, when, when the

1976
01:43:35,360 --> 01:43:38,520
chips are against you or where,
where it feels like you're the

1977
01:43:38,520 --> 01:43:41,480
underdog, it's, it's actually so
much easier to dig into the

1978
01:43:41,480 --> 01:43:44,000
gritty part of you that wants to
prove everything wrong.

1979
01:43:44,000 --> 01:43:48,720
And I think Twiggy like as a, as
a a type, the type of leader he

1980
01:43:48,720 --> 01:43:51,160
is, he's so good at tapping into
that as well.

1981
01:43:51,160 --> 01:43:52,760
I've got no doubt that the
people I thought it's good to

1982
01:43:52,760 --> 01:43:55,800
have worked like absolute dogs
during that period of time.

1983
01:43:55,800 --> 01:43:58,160
But they would like, you know,
Twig, I'm sure Twiggy had the,

1984
01:43:58,160 --> 01:44:01,560
you know, had the part of him
that could speak to that, you

1985
01:44:01,560 --> 01:44:03,200
know, desire.
And you tell them you're

1986
01:44:03,200 --> 01:44:05,360
building the Sydney Harbour
Bridge here, you know you're

1987
01:44:05,360 --> 01:44:08,000
building something iconic in.
National interests, Yeah, yeah,

1988
01:44:08,080 --> 01:44:11,760
yeah, 100%.
That is phenomenal.

1989
01:44:11,760 --> 01:44:14,720
And the culture part is really
interesting because I like, I'm

1990
01:44:14,720 --> 01:44:18,400
always of the view that the
founder sets the, the culture of

1991
01:44:18,400 --> 01:44:21,160
a business and the culture of
the business is the founder

1992
01:44:21,160 --> 01:44:23,760
replicated.
Like I think that is, you know,

1993
01:44:23,760 --> 01:44:25,640
you see that case in point
throughout kind of history.

1994
01:44:25,640 --> 01:44:28,800
I think the Northern Star
narrative is, is similar.

1995
01:44:29,120 --> 01:44:32,360
And you see it so often because
they hire people sort of like

1996
01:44:32,360 --> 01:44:34,640
them or people that they think
can do the job in the way they

1997
01:44:34,640 --> 01:44:35,760
want the job to kind of get
done.

1998
01:44:35,760 --> 01:44:39,000
And that reads itself through
the the company and it worked

1999
01:44:39,000 --> 01:44:42,240
massively to their success.
And it's certainly not for

2000
01:44:42,240 --> 01:44:44,400
everyone, but it worked in this
case.

2001
01:44:44,560 --> 01:44:46,680
You talked about the past like
Anaconda being informative.

2002
01:44:46,680 --> 01:44:49,520
There's at the core like.
There was, there are a lot of

2003
01:44:49,520 --> 01:44:52,440
like logistical hurdles to
overcome, but the processing

2004
01:44:52,440 --> 01:44:55,480
component of this was much
simpler, like the logistics

2005
01:44:56,120 --> 01:44:57,880
enormously more complicated to
solve.

2006
01:44:57,880 --> 01:45:00,920
But that's a, you know, game of
scale and financing and and

2007
01:45:00,920 --> 01:45:03,280
execution.
But, but the, you know, there's

2008
01:45:03,280 --> 01:45:07,080
less reliance on the, the, the,
the processing methodology here.

2009
01:45:07,200 --> 01:45:09,440
Yeah, like you said, I don't
want to be anywhere near an auto

2010
01:45:09,440 --> 01:45:14,000
club and.
Then then there's another.

2011
01:45:14,160 --> 01:45:16,440
Another reflection I was having
as he was speaking was like,

2012
01:45:17,120 --> 01:45:19,160
where the hell did he get the
foresight from that China was

2013
01:45:19,160 --> 01:45:21,360
coming and that this was a huge
thing.

2014
01:45:21,360 --> 01:45:23,440
And I, I've got to like move in
a big and bold way.

2015
01:45:23,440 --> 01:45:25,440
Like when he took that year off,
did he go to China?

2016
01:45:25,440 --> 01:45:27,000
Like who was he?
Who did he get this?

2017
01:45:27,240 --> 01:45:28,280
Like where did all that come
from?

2018
01:45:28,560 --> 01:45:31,680
All I could find is that he'd
gone to Europe with his with his

2019
01:45:31,680 --> 01:45:33,160
family.
He would have been reading.

2020
01:45:33,160 --> 01:45:35,040
So I think there's a a few
different facets.

2021
01:45:35,040 --> 01:45:39,160
I don't know what actually like
gave him that inspiration.

2022
01:45:39,920 --> 01:45:42,320
Maybe he's just sort of speaking
with people and it kind of came

2023
01:45:42,320 --> 01:45:45,960
about organically in that way.
The other part of the story that

2024
01:45:46,720 --> 01:45:49,120
we mentioned earlier is that the
majors weren't doing any

2025
01:45:49,120 --> 01:45:51,400
exploration and that that was
the opportunity.

2026
01:45:51,400 --> 01:45:55,880
And yeah, I mean it, it is hard
to sort of put your finger on

2027
01:45:55,880 --> 01:45:57,520
exactly.
I'd love to to kind of hear

2028
01:45:57,520 --> 01:45:59,240
that.
But it speaks to the broader

2029
01:45:59,240 --> 01:46:04,000
point of the whole theme of
China in this story, like the

2030
01:46:04,000 --> 01:46:08,400
iron ore price and the
insatiable demand steel as China

2031
01:46:08,400 --> 01:46:12,400
develops is the the sort of
theme that runs through the the

2032
01:46:12,400 --> 01:46:14,920
whole story here, the the Super
cycle, as everyone kind of calls

2033
01:46:14,920 --> 01:46:17,920
it.
And he certainly drew a lot of

2034
01:46:17,920 --> 01:46:20,480
attention to that.
Like I know it goes from 30 odd

2035
01:46:20,480 --> 01:46:24,320
bucks to nearly 200 bucks in a
time when supply is also

2036
01:46:24,320 --> 01:46:26,920
exploding.
Like yeah, yeah, you've.

2037
01:46:27,160 --> 01:46:29,920
You've also got the the steel
mills that are wanting to break

2038
01:46:29,920 --> 01:46:33,000
that oligopoly.
They don't want to buy from like

2039
01:46:33,560 --> 01:46:38,240
BHB, Rio Tinto and Valley.
And I'm sure they were even more

2040
01:46:38,240 --> 01:46:41,720
scared at the idea of BHP and
Rio Tinto merging than Twiggy

2041
01:46:41,720 --> 01:46:43,840
was.
They were terrified that they

2042
01:46:43,840 --> 01:46:47,280
could price the, you know, the
iron ore at whatever they

2043
01:46:47,280 --> 01:46:49,840
wanted.
So that that sort of ran right

2044
01:46:49,840 --> 01:46:50,840
through.
And that's why they're happy to,

2045
01:46:51,200 --> 01:46:54,800
to work with FMG if they could
kind of get it, get it together.

2046
01:46:54,800 --> 01:46:58,960
So I also think there's a kind
of nuanced point on this that

2047
01:47:00,760 --> 01:47:04,720
Twiggy's way of doing business
was much more attuned to the

2048
01:47:04,720 --> 01:47:09,440
Chinese way of doing business
than the Korean or Japanese way

2049
01:47:09,440 --> 01:47:13,000
of doing business.
So I haven't been to China Love

2050
01:47:13,000 --> 01:47:17,040
to go, but from what I've heard,
this directness worked and sort

2051
01:47:17,040 --> 01:47:20,000
of drived in much better with
their sort of style of business

2052
01:47:20,480 --> 01:47:24,480
than the much more formal
approach in Japan where you have

2053
01:47:24,480 --> 01:47:26,600
to form relationships over a
long period of time.

2054
01:47:26,600 --> 01:47:29,560
And you know, Japan and then
like later Korea, they were the

2055
01:47:29,560 --> 01:47:33,920
iron ore, they were the steel
market when you know, the early

2056
01:47:33,920 --> 01:47:37,760
iron ore mines were built.
So this project could not have

2057
01:47:37,760 --> 01:47:41,000
been built in any other five
year period of time than the

2058
01:47:41,000 --> 01:47:42,520
five year period it was built
in.

2059
01:47:43,040 --> 01:47:48,360
And that is a combination of the
right macro settings and the

2060
01:47:48,360 --> 01:47:52,320
right people up for the job.
And that beds in with the idea

2061
01:47:52,320 --> 01:47:55,800
of were they lucky?
Because you always hear people

2062
01:47:55,800 --> 01:48:00,080
say like, he was just lucky.
That's why he's the richest

2063
01:48:00,080 --> 01:48:01,920
person in Australia.
And I don't know how you can

2064
01:48:01,920 --> 01:48:06,560
sort of hear the story and, and
think that because his skill set

2065
01:48:06,560 --> 01:48:10,280
was so uniquely suited to, to
what he did.

2066
01:48:10,280 --> 01:48:14,560
And yet other people made a lot
of money from the the commodity

2067
01:48:14,560 --> 01:48:17,440
boom and from the iron ore
market.

2068
01:48:17,880 --> 01:48:20,720
And there's all the, the bigger
kind of luck with these

2069
01:48:20,720 --> 01:48:23,240
entrepreneurs that he's born in
the settings he was born, all

2070
01:48:23,240 --> 01:48:25,440
these kind of things that you
have to take for granted.

2071
01:48:25,520 --> 01:48:28,320
Lucky's word preparation meets
opportunity 100%.

2072
01:48:28,320 --> 01:48:29,840
And he just grabbed that
opportunity.

2073
01:48:29,840 --> 01:48:35,000
And didn't let it go, so the.
The Yeah, the the story of

2074
01:48:35,000 --> 01:48:37,480
Northern Star that.
You, you told her a couple

2075
01:48:37,480 --> 01:48:41,120
months ago and that was a, that
was a, a story of phenomenal

2076
01:48:41,120 --> 01:48:45,440
value creation through like
savvy, savvy deals, effectively

2077
01:48:45,480 --> 01:48:48,120
very savvy deals, like
tremendously savvy deals.

2078
01:48:49,400 --> 01:48:53,640
This is a story of like
incredible project execution

2079
01:48:53,920 --> 01:48:57,960
against all the odds.
Both of them, both of them had

2080
01:48:57,960 --> 01:49:01,240
the backdrop of a, of a
commodity boom over the duration

2081
01:49:01,240 --> 01:49:03,920
of the, you know, the, the
building of those companies, but

2082
01:49:03,920 --> 01:49:05,920
you need that.
But if you don't have the

2083
01:49:05,920 --> 01:49:08,840
execution or the, or the other
part, then it doesn't come

2084
01:49:08,840 --> 01:49:10,120
together.
Absolutely.

2085
01:49:10,120 --> 01:49:13,600
And the the thinking big like
they thought so big.

2086
01:49:13,600 --> 01:49:16,440
From the beginning, like they
didn't want to be a 1520 million

2087
01:49:16,440 --> 01:49:19,720
tonne per random player that
would be beholden to someone

2088
01:49:19,720 --> 01:49:22,400
else's railway, because that's
what you would be if you're not

2089
01:49:22,400 --> 01:49:25,520
of scale.
They thought enormous and it was

2090
01:49:26,040 --> 01:49:28,240
all or nothing.
The barriers to entry were

2091
01:49:28,240 --> 01:49:30,040
enormous.
Like you had to build a port, a

2092
01:49:30,040 --> 01:49:33,320
rail, find the.
Deposit that wasn't already

2093
01:49:33,880 --> 01:49:37,960
hoarded by the incumbents like
it's I just think of it yeah,

2094
01:49:37,960 --> 01:49:40,720
more challenging like barrier to
entry to and it's capital

2095
01:49:40,720 --> 01:49:43,560
intensive like when you think
about like businesses around the

2096
01:49:43,560 --> 01:49:45,200
world all different shapes and
sizes like.

2097
01:49:46,000 --> 01:49:49,320
These are some of the biggest
barriers to entry in business.

2098
01:49:49,320 --> 01:49:52,040
This isn't a tech startup, you
know, overcome by a shell.

2099
01:49:52,280 --> 01:49:55,080
Yeah, yeah.
Just is incredible.

2100
01:49:55,680 --> 01:49:57,920
You got to touch on the.
The national interest part as

2101
01:49:57,920 --> 01:50:01,720
well, both the FMG logo and the
Anaconda logo were an outline of

2102
01:50:01,720 --> 01:50:06,120
Australia and that's fine.
Just tapping into and, and

2103
01:50:06,120 --> 01:50:09,320
Twiggy would sort of associate
it, brush shoulders with John

2104
01:50:09,320 --> 01:50:12,720
Howard and, and the like.
That actually reflected well

2105
01:50:12,720 --> 01:50:15,840
overseas when people would see
photos by association.

2106
01:50:15,840 --> 01:50:18,240
You think, hey, this guy's mates
with John, you know.

2107
01:50:18,680 --> 01:50:22,520
So whether there's any sort of
truth in it is a is another

2108
01:50:22,520 --> 01:50:25,200
thing.
Having the office in East Perth

2109
01:50:25,240 --> 01:50:28,440
away from little things like
that, that, you know, at

2110
01:50:28,440 --> 01:50:30,440
lunchtime you're not going to
see your mates at BHP or

2111
01:50:30,440 --> 01:50:33,360
anything like that.
They're all isolated in, in a

2112
01:50:33,360 --> 01:50:35,040
little way.
Twiggy sold a bit of stock in

2113
01:50:35,040 --> 01:50:39,520
2005, didn't sell the the rest
of the journey really just sort

2114
01:50:39,520 --> 01:50:41,680
of.
And that's been the case even

2115
01:50:41,680 --> 01:50:45,280
more later on, like after this
he, he goes on margin and buys

2116
01:50:45,280 --> 01:50:47,760
stock.
Like the dividends have been

2117
01:50:47,760 --> 01:50:49,240
tremendous.
Yeah, they have been.

2118
01:50:49,240 --> 01:50:52,000
There's so much of this.
Like story that gets left out

2119
01:50:52,000 --> 01:50:53,440
just.
I mean, you have to.

2120
01:50:53,440 --> 01:50:57,760
Focus on on part of it and but
do you do you think the

2121
01:50:57,760 --> 01:51:01,200
formation is is is more
important than, you know, what

2122
01:51:01,200 --> 01:51:03,840
would ultimately kind of kind of
be the rest of the story that

2123
01:51:03,840 --> 01:51:06,120
comes later because they they
experience tremendous

2124
01:51:06,280 --> 01:51:08,480
vulnerability.
And in some ways, you know, you

2125
01:51:08,480 --> 01:51:11,720
talk about luck again, like the
valet tailings dam disaster, you

2126
01:51:11,720 --> 01:51:14,680
know, is a is a pretty lucky,
lucky phenomenon that will occur

2127
01:51:14,680 --> 01:51:16,760
in fortescues later.
Yeah, periods too.

2128
01:51:17,360 --> 01:51:19,680
There's so many moments when
they when they came to the brink

2129
01:51:19,680 --> 01:51:21,200
again, like we were chatting
about the other day.

2130
01:51:21,200 --> 01:51:24,040
When they're, you know,
stripping ketchup out of the,

2131
01:51:24,680 --> 01:51:28,080
the shell, there's no knives and
forks and cutlery in the offices

2132
01:51:28,080 --> 01:51:29,800
or anything like that.
They've gone down to the bare

2133
01:51:29,800 --> 01:51:32,760
bones.
So yeah, the, the, the rest of

2134
01:51:32,760 --> 01:51:37,640
the journey is, is fascinating.
And you, you reflect on other

2135
01:51:37,640 --> 01:51:39,400
parts of like how they were
thinking about the business

2136
01:51:39,400 --> 01:51:42,240
earlier, like Open Access
infrastructure.

2137
01:51:42,800 --> 01:51:45,040
They were begging to get on BH
BS line.

2138
01:51:45,600 --> 01:51:49,400
They would not let anyone get on
their rail line, that's for

2139
01:51:49,400 --> 01:51:50,480
sure.
So that's something you just got

2140
01:51:50,480 --> 01:51:54,280
to kind of laugh about.
They yeah, they're not they're

2141
01:51:54,520 --> 01:51:56,360
they're probably a pretty
protective of their.

2142
01:51:56,360 --> 01:51:58,480
Own infrastructure these days
not a charity.

2143
01:51:58,480 --> 01:52:01,520
Certainly a question.
Yeah, I think the the last kind

2144
01:52:01,520 --> 01:52:02,720
of question I.
Want to put to you.

2145
01:52:02,720 --> 01:52:05,360
Mate is what do.
You think would have happened

2146
01:52:05,360 --> 01:52:07,600
otherwise?
I think this is a a really

2147
01:52:07,600 --> 01:52:10,400
interesting way, way to to think
about the story.

2148
01:52:11,080 --> 01:52:15,120
I don't think this gets built
like yeah, I it's, it's often.

2149
01:52:15,120 --> 01:52:18,960
Hard to say that in, in, in
almost any, you know, industry

2150
01:52:18,960 --> 01:52:21,080
or whatnot.
If you remove, remove the

2151
01:52:21,080 --> 01:52:23,640
founder, remove, remove the
founder.

2152
01:52:23,920 --> 01:52:25,840
Like I don't think, I don't
think these projects get

2153
01:52:25,840 --> 01:52:28,880
developed.
I don't think we have, you know,

2154
01:52:28,880 --> 01:52:32,000
with a third pager exporter of
iron ore out of out of

2155
01:52:32,000 --> 01:52:34,080
Australia.
I don't think you have what

2156
01:52:34,080 --> 01:52:36,920
would ultimately prove to be
like how much tax have they

2157
01:52:36,920 --> 01:52:39,720
paid?
Like over, you know, corporate

2158
01:52:39,720 --> 01:52:42,400
tax and the likes.
How much GDP has this company

2159
01:52:42,400 --> 01:52:44,320
generated?
It's like it's phenomenal.

2160
01:52:44,320 --> 01:52:46,760
It's inordinate.
How many individuals have earned

2161
01:52:46,760 --> 01:52:49,360
a salary from Fortescue?
Crazy.

2162
01:52:49,720 --> 01:52:52,800
But I, I, yeah, I, I think the,
the, the.

2163
01:52:53,760 --> 01:52:59,160
Like I can't think of an another
individual like an and and

2164
01:52:59,280 --> 01:53:00,320
Twiggy doesn't take all the
credit.

2165
01:53:00,320 --> 01:53:02,520
I'm sure the the team takes an
enormous amount of credit.

2166
01:53:02,520 --> 01:53:05,200
But if you pin it all back, if
you remove Twiggy from the

2167
01:53:05,200 --> 01:53:07,400
equation, I can't think of
another individual that if they

2168
01:53:07,400 --> 01:53:12,000
weren't there for that moment
is, is responsible for so, so

2169
01:53:12,000 --> 01:53:17,480
much like GDP opportunity cost,
like tax revenues for, for, for

2170
01:53:17,480 --> 01:53:20,760
the country, for Australia, go
Australia, then go Australia,

2171
01:53:20,880 --> 01:53:22,240
then Twiggy.
I don't think that's an

2172
01:53:22,240 --> 01:53:24,760
appreciated kind of part of part
of the story either.

2173
01:53:24,960 --> 01:53:26,800
I, I think you're right and
that, and that's part of the

2174
01:53:26,800 --> 01:53:29,040
reason I found it interesting to
talk about this because.

2175
01:53:29,400 --> 01:53:34,040
You know, he he's a man that
everyone you know that how many

2176
01:53:34,040 --> 01:53:37,600
negative articles have been
written about it And obviously

2177
01:53:37,600 --> 01:53:40,280
there's there's there's flaws
with the character like any.

2178
01:53:40,280 --> 01:53:43,280
But I think it's worth
celebrating in in that regard

2179
01:53:43,280 --> 01:53:47,320
because the the value creation,
which obviously he benefited

2180
01:53:47,320 --> 01:53:50,680
from tremendously, but many
other people did so well from

2181
01:53:50,680 --> 01:53:54,240
and Australia did phenomenally
well from you know, is a is a

2182
01:53:54,240 --> 01:53:59,600
hell of a story.
And yeah, maybe if this doesn't

2183
01:53:59,600 --> 01:54:02,560
get built, iron ore would have
been even more expensive.

2184
01:54:02,560 --> 01:54:05,200
Maybe projects bit by bit get
developed in other parts of the

2185
01:54:05,200 --> 01:54:08,640
world.
But would this have been like

2186
01:54:08,640 --> 01:54:11,640
discovered?
Like, yeah, in the matter of

2187
01:54:11,640 --> 01:54:14,360
time, but maybe still not to
this day.

2188
01:54:14,360 --> 01:54:16,680
You know, maybe that's something
still down the down the track.

2189
01:54:16,680 --> 01:54:20,560
I don't think anything close to
this would have happened if he

2190
01:54:20,560 --> 01:54:23,600
hadn't sort of catalyzed it.
Totally, mate.

2191
01:54:23,680 --> 01:54:27,040
Like I'm in complete.
Agreement on that front.

2192
01:54:27,040 --> 01:54:31,560
I think it's a the greatest
story of value creation that's

2193
01:54:31,560 --> 01:54:36,160
ever existed on ASX.
Like from from nothing to a

2194
01:54:36,160 --> 01:54:40,440
Titan, who would have thought
you could become like a truly a

2195
01:54:40,440 --> 01:54:43,760
true, a true major in that in
that sense of a, a mining

2196
01:54:43,760 --> 01:54:47,080
company in the space of, you
know, like 2020 years.

2197
01:54:47,080 --> 01:54:48,640
It took them a lot less than
that.

2198
01:54:48,640 --> 01:54:51,560
But it's a it's crazy.
It's crazy to think, yeah, it's,

2199
01:54:51,600 --> 01:54:54,080
it's significant.
Like it's incredibly significant

2200
01:54:54,080 --> 01:54:56,520
across the the.
Whole Aussie business sort of

2201
01:54:56,520 --> 01:55:00,280
landscape like there's, there's
obviously some wicked, wicked

2202
01:55:00,280 --> 01:55:04,360
companies and heaps of different
stripes out there, but just an

2203
01:55:04,360 --> 01:55:07,920
incredible story and I the other
bit too there that like we, we

2204
01:55:07,920 --> 01:55:10,120
might have touched on, it's just
like the ability to.

2205
01:55:10,120 --> 01:55:14,120
Dust yourself off after after,
you know, an absolute

2206
01:55:14,120 --> 01:55:16,760
catastrophe from an, an equity
sense.

2207
01:55:17,160 --> 01:55:19,480
We wouldn't have had much money
or anything like that.

2208
01:55:20,520 --> 01:55:23,360
Everyone that that putting money
into his thing would have lost

2209
01:55:23,360 --> 01:55:25,160
money.
I'm sure he probably promised

2210
01:55:25,160 --> 01:55:26,400
the world in that in that as
well.

2211
01:55:26,400 --> 01:55:28,400
But just to dust yourself off
and have another crack.

2212
01:55:28,720 --> 01:55:31,920
Like there's a lesson for us as
well in like just rewarding the

2213
01:55:31,920 --> 01:55:34,600
risk taking of being an
entrepreneur because, yeah,

2214
01:55:34,600 --> 01:55:37,920
sometimes it's like, sometimes
it it turns out great, sometimes

2215
01:55:37,920 --> 01:55:39,520
it doesn't.
But if you don't get back up and

2216
01:55:39,520 --> 01:55:43,280
have another crack, then you
never get any of the possibility

2217
01:55:43,280 --> 01:55:46,120
of of of tremendous value
creation totally.

2218
01:55:46,160 --> 01:55:48,840
And like Long Long made the sort
of investment community back

2219
01:55:48,840 --> 01:55:51,640
people like.
This because to do that and like

2220
01:55:51,640 --> 01:55:58,040
you said, to do it after such a
like a public downfall is just

2221
01:55:58,040 --> 01:56:00,800
incredible.
And it would have been very easy

2222
01:56:00,800 --> 01:56:04,400
just to to hideaway, you know.
So yeah, I think that's a good

2223
01:56:04,400 --> 01:56:07,640
put, good point to wrap a bar on
the episode.

2224
01:56:07,640 --> 01:56:11,120
Like this episode came together
reading 20 year old

2225
01:56:11,120 --> 01:56:12,680
announcements.
So I'm sure the the

2226
01:56:12,680 --> 01:56:16,240
interpretation of a lot of these
public releases might have been

2227
01:56:16,280 --> 01:56:19,000
a bit off.
And there were bits that were

2228
01:56:19,000 --> 01:56:21,840
abbreviated and and kind of
missed along the way as well as

2229
01:56:22,000 --> 01:56:23,640
stuff I'm I'm sure I just got
wrong.

2230
01:56:23,640 --> 01:56:26,560
So happy to be corrected on a
bunch of that.

2231
01:56:26,560 --> 01:56:30,560
But yeah, like some wicked
sources out there that FMG put

2232
01:56:30,560 --> 01:56:33,520
up some some books written on
them, like the the Twiggy book

2233
01:56:33,520 --> 01:56:35,920
is a really interesting
perspective as well.

2234
01:56:35,920 --> 01:56:40,520
So many news articles across all
different bits of media from the

2235
01:56:40,520 --> 01:56:43,320
AFR, the Australian, the West,
the The Morning Herald and, and

2236
01:56:43,320 --> 01:56:45,400
all those sorts of things that
that sort of helped it kind of

2237
01:56:45,840 --> 01:56:48,480
paced together and they, they
all sort of deserve sort of

2238
01:56:48,480 --> 01:56:51,080
credit for, for writing the
story along the way.

2239
01:56:51,080 --> 01:56:53,400
But yeah, what a what a story it
was, mate.

2240
01:56:54,280 --> 01:56:56,080
Go Australia.
Go Australia.

2241
01:56:56,680 --> 01:56:58,920
Shall we watch the Go Australia?
From Turkey, Yeah, that's great.

2242
01:56:59,040 --> 01:57:04,360
Yeah.
Go Australia now, remember?

2243
01:57:04,800 --> 01:57:06,320
I'm an idiot.
JD is an.

2244
01:57:06,320 --> 01:57:08,040
Idiot if you thought any of
this.

2245
01:57:08,040 --> 01:57:09,600
Was anything other than
entertainment.

2246
01:57:10,080 --> 01:57:12,240
You're an idiot and you need to
read out a disclaimer.