Uranium Catalysts are Coming with Tom Solomon

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Right eye money miners, The boys
are back in the flesh.

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Welcome back gentlemen, from
your African safari.

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Thanks for holding the Fort.
Hardy.

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That's Maddie.
Great time.

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Oh right, give us the quick.
Before we get into today's yarn

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with Tommy Solomon from Parlour
Investments, give us a bit of an

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In Darba recap the highlights.
What did you see?

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Mate, we saw a lot, not just in
Darba, but we went to a bunch of

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operations in the Rustenburg
area on the the western limb of

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the Bushfield complex in the
week before.

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And then we went to the DRC for
about the week after the

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conference too.
So it was awesome.

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The the mining industry is way
bigger than you think.

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Just here in in Perth there was
some big characters, people from

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all over, from from London
Middle East and the sorts of

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characters that don't
necessarily come to diggers and

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dealers that you see it at in
Darba, which was pretty, pretty

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eye opening.
Felt like we're in a pretty

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small bubble here Maddie after
going going there, but super

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keen to bring some of the
conversations and content that

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we we had over there to the
money miners over the following

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weeks.
Since I should.

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I think we trebbled the amount
of mines we've actually been to,

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which is awesome.
We're getting close to your

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numbers, Maddie.
So that was awesome.

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And yeah, there's a a lot of
people were very grateful and

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thankful for that.
Over time, we'll hopefully pay

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it back for for hosting us, for
making our life very easy.

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Handed over a bit of cash, true
African style, are you JD?

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None of that mate in kind.
Oh, sorry, right.

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Tell us about your first cab off
the rank for one of the Indarbor

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interviews or African interviews
you did.

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So we managed to pin down Tommy
Solomon who works at Parlour

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Investments for a good half an
hour and we covered a lot of

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ground in this chat.
Uranium, copper, gold, macros

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got a a great sort of lens with
which he he views the world as

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well as if you quick takes on
some other commodities as well.

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For those that don't know,
parlor is Swiss based.

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Tommy runs the public equities
side of their portfolio.

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They're active on a few
different fronts, but he does

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all public equities.
Long.

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Short.
Yeah, long, short, they are

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mining natural resources
focused.

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So not, not a a big generalist
or or something like that very

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into the nitty gritty of mining.
So it was a an awesome chat and

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in time we'll get him on for a
deep dive where we will take

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about a couple of hours of his
time.

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I reckon 1.
A bit of stuff in here I might

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like I, I.
Think so the word.

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Geranium was mentioned once or
twice.

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Very good.
There's a cracker and he was

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across it the whole world as
well, you know, knew the ASX

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inside out, but had great views
on Europe, North American names

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and everything.
Very good.

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Did you tell him about
Grounded's new website while you

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were?
Young, He already knew about it,

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he.
Was oh, he's probably flipping

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through groundedgroup.com dot
AU.

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Yeah, just look at the bloody
ship flying around everywhere.

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Check out the portfolio, the
project portfolio we've been

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talking about for freaking ages,
boys, the play.

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Look at this.
Rockley, Rio Tinto, Jeroy, Rio

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Tinto, Kitabi for Iluka Club
Hamilton for Fortescue.

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That place sounds cool Club.
And the list goes on.

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Go check out the sexiness of the
Grounded Group and just talk to

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him about making your mind so
it's sexier a. 100% this is

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luxury and it doesn't come at a
luxury price tag.

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They don't build shit.
That's it.

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Look after your employees.
They're the right.

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People.
Get the right people guy.

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Get a grounded village.
Slogan.

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JD live from in Darber again and
here with us we've got Tom

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Solomon from Parlour
Investments, another fellow

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Australian, but don't spend too
much time in Australia yourself.

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Tom, thank you so much for
making the time to join us and

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and talk about all the things
that sort of matter in the the

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investment landscape for, for
the mining stocks today.

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It's a pleasure guys, great to
be on this for the first time

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and my first stop here at in
Darva.

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So, words of wisdom to come.
First of many, hopefully.

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So let's get straight into it.
I want to talk about uranium.

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Obviously your in this, you know
beautiful continent now and

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you're going to tack on some
sort of site visits, but what's

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the sort of temperature gauge
from you the uranium market more

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broadly?
We had some interesting

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quarterly results for the for
the Aussie names and we spoke

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before we started recording
about a bit of a dislocation

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with the North American names
and the Aussie names.

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How you feeling about the the
narrative?

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Yeah, I suppose if if we look
back to last year and especially

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sort of coming into year end and
and the second-half, clearly

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huge dislocation as the North
Americans rallied on data center

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news, small modular reactor news
and a lot of the Magnificent 7

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talking about this demand drive
to come.

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Clearly the Australian names,
which had run much harder

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earlier in the year and maybe
the Aussies were earlier into

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the cycle than the North
Americans, clearly had further

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to fall, but definitely did not
get a bid.

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Paladin's miss, I would say, to
put it lightly on expectations,

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definitely added added fuel to
the fire on that sort of

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allocation away from uranium in
Australia.

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Paula's investment process
though, where we do try to take

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maybe a little bit more longer
term and really do the deep dive

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into these niche commodities.
And I'd say uranium is still on

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the niche when it comes to that.
Look, clearly we were

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constructive at $20 a pound, but
actually I'm more constructive

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now than when we're than when we
were at 20.

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And the main reason for that is
this period of consolidation

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hasn't changed the fundamentals.
To me, SMRS are not impacting in

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any way, shape or form our
supply.

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Our a significant demand driver
for the next 5, I'd say at least

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10 years.
The demand driver of this is

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China and it's building new
reactors, doing three times an

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initial loading when you when
you when you start up a reactor

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as well as building inventory
levels.

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So people look at global
inventory levels.

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To me that's a misdemeanor
because actually, yes, China's

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got high inventories.
That's not coming to the market.

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US or North American and
European utilities are at two

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years of inventories and they've
been depleting them quite

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significantly.
The spot physical trust that

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those tons are not coming to the
market.

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So as we look through this, the
market is extremely tight from

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this historic sort of supply
from different sectors or

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different areas that have
historically come to ruin the

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party, whether that be post sort
of Fukushima or most recently

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Western destocking.
But the Chinese are coming

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through and when the Chinese say
they're going to do something,

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we've seen it in iron ore, we've
seen it in lithium.

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And the Chinese go from your
apparent consumption below 20%

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to nearly 40% in the next 8
years.

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I think that's going to change
the market.

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And so that's one thing.
Now I'm not clearly not calling

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this next iron ore, but I do
think that that demand drive is

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something to watch.
I then also touched on a

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bifurcation of supply chains.
Clearly the Russian bans, we've

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had some waivers coming in, but
I don't believe that I, I

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believe that these bans were,
had had actual bipartisan

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support in the US.
And even if Trump wanted to on a

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potential resolution to the
Ukraine conflict, I'm not sure

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that he could actually get
something through either way.

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If you're a Western utility, you
can't be contracting out three

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years for a, for some Russian
supply and something could very

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likely change in that timeframe
where therefore you are being

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caught short of your required
demand of your required

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consumption.
So because of that, I actually

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think it's going to be
self-imposed by the utilities.

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And so if we look at the low
inventory levels, meaning that

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they do need to contract, we saw
Q4 the highest contracting

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quarter in quite a few years,
term price moved up, yet the

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lowest spot market activity in
quite a few quarters that was

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weighed.
The spot market is a very small

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part of the market and it's the
tail wagging the dog here.

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But on that bifurcation of
supply chains, what is really

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under, under appreciated is the
over feeding when it comes to

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the enrich, the limited
enrichment capacity available to

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the West on our numbers that's
nearly going to have a £20

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million delta over the next few
years where historically we've

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been undefeating the enrichment
capacity.

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Now due to the limited capacity
available to the West and we are

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trying to build more, but we're
going to literally switch from a

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sort of five to 10 million
undefeating to five to 10

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million over feeding
requirement.

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To me, all of these factors lead
to quite a tight market.

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Is that a per annum number
you're you're talking about

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there?
Yes.

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So a per annum number, clearly
the data trying to model the

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uranium is I'd say one of the
hardest things I've ever done.

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It's a real black box and
especially when you talk about

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trying to get data out of China
or understand the inventory

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levels there.
Yeah, capital cycles and you

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know, resource companies being
very prominent in how cyclical

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they are notoriously difficult
to to model demand supply.

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Do you, do you really come at it
from the perspective of having a

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foundation in the supply
narrative understanding that

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much better because the the
demand side of it seems to

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fluctuate.
You know, data centers are super

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hot.
They've been hot for a while and

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then deep seek yada, yada,
they're not quite as hot.

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Do you have your sort of
foundation of confidence in the

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the supply side?
Is that how you kind of think

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about it?
So you yes, we definitely do

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think about it that way.
I think all of these factors

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though a different duration.
So from a demand side, we know

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the base load reactor
requirements.

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However, demand and consumption
in uranium are two very

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different things because of the
high inventory levels and the

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ability to draw or build those
inventories.

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Data centers to me are much more
long duration trade, especially

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SMRS, how they're going to be
implemented.

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I, my, my views differ from
other people in the market, but

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it doesn't, it doesn't matter
near term for the next 5 years

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to 2030.
That's really where we're

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looking to model out.
You've got a much greater

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clarity on the supply and that's
going to have sort of the bigger

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delta.
Clearly you've seen mines in

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Niger being being being taken
away from Urano and Western

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producers.
You've seen mines in Kazakhstan

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historically that we're tied to
Russia going into Russia now

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going to China.
So a lot of the growth in

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Kazakhstan is coming from China.
The black box is understanding

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if cosatomprom can actually get
this sulphuric acid issues under

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control and ramp up, they're
building their own plant.

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But over the next few years,
it's going to, it's still

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uncertain.
But for me the big swing factors

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driving the near term uranium
price is the secondary supply.

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So that is strategic stockpiles.
I believe the DOA has released

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what they can.
Then you talk about the over

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undefeating of enrichment which
was spoken about.

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But then you look at commercial
inventories, you saw Western

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commercial and financial
commercial infantry sorry

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release 30 to £40 million a year
for per per sorry per year over

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the last sort of five years.
It's clearly fluctuated quite

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significantly.
A lot of that excess supply that

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came was taken out by the
financial purchases.

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So the likes of Sprott, these
are the factors, these huge

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swing factors which could be
50,000,000 lbs in a £200 million

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market which can really impact
near term prices.

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The, the other part of the
supply there is, is, is 'cause I

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had a problem who in the latest,
latest reporting didn't

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reference the word sulfuric acid
and may be surprised with some

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of their, their forward-looking
guidance and production

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capability.
Are you paying close attention

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to that or are you relatively
confident that their, you know,

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supply challenges?
Aren't aren't over.

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I have to admit, each month I
change my view on on what I

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think of Kazaa from we've tried
to stay quite, quite close to

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00:11:41,160 --> 00:11:43,920
this.
I think you've got two things.

229
00:11:43,920 --> 00:11:46,600
There are clearly operational
challenges and securic acid

230
00:11:46,600 --> 00:11:50,240
shortages.
Now there is sufficient sufuric

231
00:11:50,320 --> 00:11:53,280
acid in country, but clearly a
lot of it's going to agriculture

232
00:11:53,280 --> 00:11:55,720
and elsewhere.
How much can they take?

233
00:11:56,080 --> 00:11:57,920
They could also purchase a lot
more.

234
00:11:57,920 --> 00:11:59,320
They are the bottom end of the
cost curve.

235
00:11:59,360 --> 00:12:01,560
It's not necessarily going to
alter that much.

236
00:12:02,920 --> 00:12:05,640
The other point which some
people are talking about is,

237
00:12:05,640 --> 00:12:09,440
look, they're actually some of
the wells we've got at the

238
00:12:09,440 --> 00:12:11,360
moment have sort of been
depleting a bit.

239
00:12:11,760 --> 00:12:14,840
Actually, they're conserving
this sufuric acid for bringing

240
00:12:14,840 --> 00:12:18,960
on this new production, saving
that, saving the remaining sort

241
00:12:18,960 --> 00:12:21,720
of tons in the ground for for
the higher prices.

242
00:12:22,600 --> 00:12:25,240
All in all, I feel like comes
back to a political

243
00:12:25,560 --> 00:12:27,520
understanding of what's going on
in country.

244
00:12:28,000 --> 00:12:31,320
Now we can talk about that the
Kazakhs say openly that no, they

245
00:12:31,320 --> 00:12:34,400
want to supply both the West as
well as China and Russia.

246
00:12:35,200 --> 00:12:38,200
But clearly a lot of the, so the
newest asset that they're

247
00:12:38,200 --> 00:12:41,920
bringing on those tons off take
is over to Russia.

248
00:12:43,440 --> 00:12:47,200
And I I have to admit I'm quite
confused about what is the

249
00:12:47,240 --> 00:12:51,840
actual strategic diplomatic plan
which the Kazakhs have.

250
00:12:53,840 --> 00:12:59,560
One more in uranium, Tom, the
the sort of group of uranium

251
00:12:59,560 --> 00:13:04,200
miners and developers in on the
ASX up there with the most

252
00:13:04,200 --> 00:13:07,640
shorted names on the exchange.
What do you what do you sort of

253
00:13:07,640 --> 00:13:12,040
make of that trend?
As we all know, commodity

254
00:13:12,040 --> 00:13:15,880
investment is highly cyclical if
the commodities themselves are

255
00:13:15,880 --> 00:13:20,240
cyclical, but the sentiment
towards them can change even

256
00:13:20,240 --> 00:13:23,400
faster than that.
So if I look through clearly,

257
00:13:23,680 --> 00:13:26,600
I've shown that I'm quite
constructive on the uranium

258
00:13:26,600 --> 00:13:29,240
complex.
I think where I want to be

259
00:13:29,240 --> 00:13:33,680
positioned is until the Rook.
Mine comes in, call it 20-30,

260
00:13:33,680 --> 00:13:36,160
but clearly there's leeway.
Maybe a bit before, probably a

261
00:13:36,160 --> 00:13:37,720
bit later.
If someone else buys them,

262
00:13:37,720 --> 00:13:40,520
redoes the buying plan, the
market's tied.

263
00:13:40,560 --> 00:13:44,200
Therefore, I want exposure to
companies which have, which are

264
00:13:44,200 --> 00:13:47,720
not contracted out at fixed
prices that are lower than where

265
00:13:47,720 --> 00:13:50,760
they currently are or even at
current prices I would.

266
00:13:50,880 --> 00:13:54,480
I want upside exposure to the
commodity price and near term

267
00:13:54,480 --> 00:13:57,560
production.
So for me there's only really a

268
00:13:57,560 --> 00:14:00,720
few names.
Paladin Emboss clearly at the

269
00:14:00,720 --> 00:14:04,840
front there on core energy in
the US is also one.

270
00:14:06,080 --> 00:14:08,760
But really when I think about
it, the market is clearly being

271
00:14:08,760 --> 00:14:11,040
quite short.
I mean boss I think is now over

272
00:14:11,040 --> 00:14:16,040
20% short interest.
Paladin just below that clearly

273
00:14:16,040 --> 00:14:19,000
become both companies.
Balance sheet is fine.

274
00:14:19,160 --> 00:14:21,560
Paladin especially post the
fission transaction, they got

275
00:14:21,560 --> 00:14:25,880
140 million of Canadian to to
shore up the balance sheet not

276
00:14:25,880 --> 00:14:28,840
that it needed to previous
quarter was free cash flow

277
00:14:28,840 --> 00:14:31,440
positive.
We now look to boss clearly the

278
00:14:31,440 --> 00:14:34,920
ramp UPS going all right.
So I struggle to see any balance

279
00:14:34,920 --> 00:14:37,720
sheet issues coming up.
So clearly it's must be a view

280
00:14:37,720 --> 00:14:39,760
on the commodity.
Now if it's a view on the

281
00:14:39,760 --> 00:14:42,280
commodity, there are a lot other
names which I find much more

282
00:14:42,280 --> 00:14:44,280
expensive that I'd rather short
here.

283
00:14:44,800 --> 00:14:47,640
So the risk reward as these
shorts have to cover I think

284
00:14:47,640 --> 00:14:51,720
looks quite nice.
Now our our mutual friend Tom

285
00:14:51,720 --> 00:14:55,120
Warrick has dobbed you in for
being quite, quite good on gold,

286
00:14:55,520 --> 00:14:58,440
copper and macro.
I understand your time with us

287
00:14:58,440 --> 00:15:00,920
is is short.
So how are you thinking about

288
00:15:00,920 --> 00:15:03,600
those three very broad topics at
the moment, Tom?

289
00:15:04,440 --> 00:15:06,000
It's very favorable comment from
Tom.

290
00:15:06,000 --> 00:15:09,440
So I'll take that.
Clearly investing in

291
00:15:09,440 --> 00:15:13,480
commodities, you need to
understand the macro and how

292
00:15:13,480 --> 00:15:16,840
that impacts our fundamental
bottom up view on the supply and

293
00:15:16,840 --> 00:15:21,080
demand of these commodities.
Also understanding the flow in

294
00:15:21,080 --> 00:15:23,680
the in the investment dollars
coming into our sector.

295
00:15:24,520 --> 00:15:28,840
So if if I think about the the
two commodities which you've

296
00:15:28,840 --> 00:15:34,720
touched on gold and copper,
firstly on gold, clearly this is

297
00:15:34,720 --> 00:15:37,520
more of a currency out of any
commodity which we cover.

298
00:15:38,440 --> 00:15:43,080
And to me the main driver here,
you've either got fear in the

299
00:15:43,080 --> 00:15:45,800
developed markets or greed in
the emerging markets.

300
00:15:46,520 --> 00:15:50,920
Last year it was that greed in
the emerging markets, firstly by

301
00:15:50,920 --> 00:15:54,400
the Chinese central bank,
secondly Chinese retail, which

302
00:15:54,400 --> 00:15:56,680
really pushed gold in the first
half of the year.

303
00:15:57,800 --> 00:16:01,040
We're now starting to see that
fear factor come through and

304
00:16:01,040 --> 00:16:04,160
that fear factor is more driven
by your real rates.

305
00:16:04,520 --> 00:16:08,080
And so the when we actually look
at it, the dislocation of gold

306
00:16:08,080 --> 00:16:10,000
to rates last year was quite
astonishing.

307
00:16:10,440 --> 00:16:14,040
Emerging markets made-up for it.
As we go forward from here, I do

308
00:16:14,040 --> 00:16:19,160
think that that medium term
thematic of de dollarization of

309
00:16:19,160 --> 00:16:22,160
actually getting off U.S. dollar
for a lot of the reserves of

310
00:16:22,160 --> 00:16:26,000
these emerging markets will
continue, especially Chinese

311
00:16:26,000 --> 00:16:28,920
consumers clearly being sort of
hesitant on the renminbi

312
00:16:28,920 --> 00:16:30,880
devaluing.
So that continues.

313
00:16:33,000 --> 00:16:37,200
I do think maybe we've seen a
sharp rise here on this

314
00:16:38,040 --> 00:16:42,600
importing into the US due to
potential near term shortages

315
00:16:42,600 --> 00:16:46,360
due to ideas of trade
restrictions or tariffs coming

316
00:16:46,360 --> 00:16:48,400
in.
So I think that could unwind

317
00:16:48,400 --> 00:16:50,680
maybe from this overinflated
levels, but I think we

318
00:16:50,680 --> 00:16:55,480
definitely do grind higher to
above that 3000 US an ounce

319
00:16:55,480 --> 00:16:58,080
mark.
So gold definitely quite

320
00:16:58,080 --> 00:17:01,720
constructive, Clearly a bumpy
ride as usual when it comes to

321
00:17:01,720 --> 00:17:04,480
the equities, A lot of these
equities, you've now actually

322
00:17:04,480 --> 00:17:09,960
getting back into a into a
scenario where there's over 20%

323
00:17:09,960 --> 00:17:12,200
free cash flow yield.
This is nice.

324
00:17:12,200 --> 00:17:15,280
You can stick with those free
cash flow names benefiting from

325
00:17:15,319 --> 00:17:18,640
the lower Australian dollar or
the OR the lower currencies

326
00:17:18,640 --> 00:17:22,200
elsewhere in the world.
And clearly the risk profile, a

327
00:17:22,200 --> 00:17:25,960
lot of people and I know we're
out in Darby here, but clearly

328
00:17:26,000 --> 00:17:29,360
after what's going on in Mali,
Mozambique and elsewhere, a lot

329
00:17:29,360 --> 00:17:31,480
of people are very hesitant to
put their money to work there.

330
00:17:32,520 --> 00:17:34,840
So.
But before you jump into copper

331
00:17:34,840 --> 00:17:39,280
there, Tom, I'm keen to ask a
kind of specific one on the

332
00:17:39,280 --> 00:17:42,600
hedging practices of a lot of
the the gold miners out there.

333
00:17:42,920 --> 00:17:46,560
You've seen this big trend,
people buying back the book, you

334
00:17:46,560 --> 00:17:51,640
know, clearing that liability as
it kind of where is, is that a

335
00:17:51,640 --> 00:17:54,880
trend that you think is pro
cyclical and bad for the the

336
00:17:54,880 --> 00:17:57,120
safety of the business or is
that one that you're pretty

337
00:17:57,120 --> 00:17:59,840
supportive of because the free
cash flow generation is is

338
00:17:59,840 --> 00:18:04,280
better over time?
So look, if you chat to 20

339
00:18:04,280 --> 00:18:06,920
different investors, you get 20
different answers when it comes

340
00:18:06,920 --> 00:18:09,760
to hedging shareholder return
policies and the like.

341
00:18:12,160 --> 00:18:15,280
I tend to think the majority of
people own gold miners for their

342
00:18:15,280 --> 00:18:17,760
leverage to the gold price,
whether that operational or

343
00:18:17,760 --> 00:18:23,480
financial leverage in which case
I think that the majority don't

344
00:18:23,840 --> 00:18:27,400
would not like them to hedge.
Now I believe that they can

345
00:18:27,400 --> 00:18:30,480
hedge if you're going through a
ramp up of the mine or a

346
00:18:30,480 --> 00:18:35,360
particular area of high risk to
hedge that 1224 month period,

347
00:18:35,760 --> 00:18:39,080
perfectly fine with that.
I think a long term strategy of

348
00:18:39,160 --> 00:18:44,600
hedging gold, I mean people talk
about 0 cost, it's not

349
00:18:44,600 --> 00:18:48,360
necessarily 0 cost.
A CRA insurance review of your

350
00:18:48,360 --> 00:18:52,040
existing policies is 0 cost.
We have offered that before.

351
00:18:52,160 --> 00:18:55,640
It is still on the table and you
can even pop into their office

352
00:18:55,640 --> 00:19:00,840
in New Office NSW to get one of
these.

353
00:19:00,840 --> 00:19:03,320
Mate, they are all those cobar
hopefuls.

354
00:19:03,320 --> 00:19:06,200
Anyone around Kaidia bloody like
cow for evos.

355
00:19:06,520 --> 00:19:09,520
Like if there's a you get a
mention on the show.

356
00:19:09,520 --> 00:19:13,520
If you spot a CRE insurance
person in Western NSW, bring it

357
00:19:13,520 --> 00:19:17,480
in, we'll give you a mention.
Keep on the lookout for the CRE

358
00:19:17,480 --> 00:19:19,360
insurance crew.
Bloody mate.

359
00:19:19,360 --> 00:19:24,920
Anything about insurance broking
for mining, and I'm talking any

360
00:19:24,920 --> 00:19:28,120
mining, construction,
renewables, oil and gas.

361
00:19:28,440 --> 00:19:31,040
They mining services.
Mining services.

362
00:19:31,400 --> 00:19:33,640
Hedging might be debatable,
Maddie, whether you do it or

363
00:19:33,640 --> 00:19:35,680
whether you don't, insurance is
not debatable.

364
00:19:35,880 --> 00:19:38,160
You've got to do it, and you've
got to do it with CRA insurance.

365
00:19:38,480 --> 00:19:42,880
And it's mandatory to do the
insurance and to do it with CRA,

366
00:19:43,360 --> 00:19:46,120
mandatory hedging.
I just say we we weren't going

367
00:19:46,120 --> 00:19:48,360
to get travel insurance until we
spoke with Adam.

368
00:19:48,360 --> 00:19:51,640
We let.
Everyone know that too, so use

369
00:19:53,080 --> 00:19:55,200
probably wouldn't be alive if it
wasn't for CR.

370
00:19:55,320 --> 00:19:57,400
AI think it's safe to say thank?
You very much.

371
00:19:57,640 --> 00:20:02,760
Go CRA.
So I, I, I personally don't

372
00:20:02,760 --> 00:20:05,560
think if the gold miners think
that they can trade gold better

373
00:20:05,560 --> 00:20:07,520
than anyone else, then become a
gold trader.

374
00:20:08,680 --> 00:20:12,120
But actually you can hedge the
operational risk.

375
00:20:12,120 --> 00:20:13,880
But otherwise I'd say stay
unhedged.

376
00:20:15,200 --> 00:20:18,120
Let's continue on with with
copper then what's the the

377
00:20:18,120 --> 00:20:20,600
thoughts on the the red metal
that a lot of people in this

378
00:20:20,600 --> 00:20:23,000
conference pretty constructive
on?

379
00:20:25,880 --> 00:20:31,480
So copper clearly the bellwether
commodity for commodities, it

380
00:20:31,480 --> 00:20:36,120
has been there.
It's copper also is now going

381
00:20:36,120 --> 00:20:39,840
through a bit of a flux I would
say, where just as with iron

382
00:20:39,840 --> 00:20:43,080
ore, China has been the main
driver of the demand side of

383
00:20:43,080 --> 00:20:46,680
this commodity for as long as
I've since really before the

384
00:20:46,680 --> 00:20:50,680
GFC.
That is slightly changing now

385
00:20:50,680 --> 00:20:55,960
where people are trying to say,
well, yes, China's a bit weak

386
00:20:55,960 --> 00:20:58,000
now.
We personally think, look, China

387
00:20:58,000 --> 00:21:00,680
isn't great right now.
We need to see what the policy

388
00:21:00,680 --> 00:21:03,680
response will be before we can
take a proper view on where

389
00:21:03,680 --> 00:21:06,480
China leads from here.
And clearly that policy response

390
00:21:06,480 --> 00:21:08,280
is not necessarily going to be
property driven.

391
00:21:09,680 --> 00:21:12,200
So housing starts may not come
through, but you know,

392
00:21:12,200 --> 00:21:14,200
completion's coming through.
It's still a positive cop up,

393
00:21:15,080 --> 00:21:17,600
but people are now turning their
attention to infrastructure

394
00:21:17,600 --> 00:21:22,440
build out or the build out as
within the developed world and

395
00:21:22,440 --> 00:21:27,640
particularly the US.
And so if if we think about that

396
00:21:28,480 --> 00:21:31,360
commodity build out there,
clearly that's a longer duration

397
00:21:31,360 --> 00:21:34,760
trade and again leads back to
policy, which as we've seen over

398
00:21:34,760 --> 00:21:37,520
the last sort of week or so
since Trump's been in office,

399
00:21:37,800 --> 00:21:39,960
that policy could fluctuate
quite significantly.

400
00:21:40,560 --> 00:21:43,520
So I hate trying to call
politics because I'm never going

401
00:21:43,520 --> 00:21:45,640
to get it wrong.
I love talking about it, but

402
00:21:45,640 --> 00:21:48,120
very difficult to therefore make
a call either way.

403
00:21:49,000 --> 00:21:51,640
But I do think from the demand
side, we need to talk about two

404
00:21:51,640 --> 00:21:54,360
different trades.
There's the energy transition,

405
00:21:54,360 --> 00:21:57,120
which is a long duration trade
and that is continuing

406
00:21:57,120 --> 00:22:00,880
underneath despite the recent
backlash against work ISM or

407
00:22:00,880 --> 00:22:05,000
other terms for the like.
But then there's the other sort

408
00:22:05,000 --> 00:22:08,000
of shorter duration trade, which
is a security of supply.

409
00:22:08,560 --> 00:22:11,480
And the Western world is now
really understanding that and

410
00:22:11,480 --> 00:22:14,800
you've seen Trump do that.
So I do think we start to see

411
00:22:15,000 --> 00:22:19,280
more incentives for domestic
production or production within

412
00:22:19,280 --> 00:22:20,960
friendly countries or friend
shoring.

413
00:22:22,400 --> 00:22:26,520
But clearly I, I don't think at
the moment, I'm not calling for

414
00:22:26,520 --> 00:22:30,200
a price dislocation for Western
supply versus versus elsewhere.

415
00:22:30,840 --> 00:22:35,640
But that trade and actually
understanding where that near

416
00:22:35,640 --> 00:22:37,680
term demand is coming from, I
think is crucial.

417
00:22:38,800 --> 00:22:41,360
The main point which people talk
about on copper is the copper

418
00:22:41,360 --> 00:22:44,960
supply Cliff.
There's been a copper supply

419
00:22:44,960 --> 00:22:48,520
Cliff three years out for my
entire career, I would say.

420
00:22:49,160 --> 00:22:52,200
Now I'm not saying it's not
coming and we need a lot more

421
00:22:52,200 --> 00:22:54,160
copper.
And you look at what the what

422
00:22:54,160 --> 00:22:58,600
BHP has put out and it's some
amazing research clearly to

423
00:22:59,080 --> 00:23:04,000
develop Escondida, the high
CapEx for a brownfield project.

424
00:23:04,920 --> 00:23:07,400
When you look at that compared
to a Greenfield, clearly we need

425
00:23:07,400 --> 00:23:10,320
higher copper prices.
Now the question is the market

426
00:23:10,320 --> 00:23:14,120
at the moment is telling in is
rewarding companies for

427
00:23:14,120 --> 00:23:15,840
shareholder returns and not
expansion.

428
00:23:16,560 --> 00:23:19,400
This takes us all the way back
to sort of previous cycles.

429
00:23:19,400 --> 00:23:22,800
We've been in this sort of
shareholder return landscape for

430
00:23:22,800 --> 00:23:26,800
quite some time.
It's only at the point when the

431
00:23:26,800 --> 00:23:28,880
investors will start rewarding
for growth.

432
00:23:29,480 --> 00:23:32,040
But I think that starts to
change and clearly price in the

433
00:23:32,040 --> 00:23:33,880
medium term will actually solve
that.

434
00:23:34,440 --> 00:23:36,760
So I don't necessarily believe
that there's a copper supply

435
00:23:36,760 --> 00:23:38,720
Cliff.
The copper prices do need to

436
00:23:38,720 --> 00:23:40,720
come on to incentivize higher
supply.

437
00:23:43,120 --> 00:23:45,400
Last one for you, Tom, we're
going to have to invite you back

438
00:23:45,920 --> 00:23:49,120
to, to, to go deeper into some
of these topics and and others

439
00:23:49,480 --> 00:23:52,280
for a future chat.
But what's your most non

440
00:23:52,280 --> 00:23:54,640
consensus view on the mining
investment landscape right now?

441
00:23:58,320 --> 00:24:01,760
Well, given the short interest
in you right here, I'd have to

442
00:24:01,760 --> 00:24:04,400
say, I'd have to say uranium
here.

443
00:24:05,440 --> 00:24:09,240
The other one is, I mean we've
touched on that clearly mining,

444
00:24:11,120 --> 00:24:13,160
mining commodities and the
equities tend to be main

445
00:24:13,160 --> 00:24:17,120
reverting and it's all about
understanding as you've touched

446
00:24:17,120 --> 00:24:20,080
on where there is a lack of
supply coming through, but

447
00:24:20,080 --> 00:24:22,120
demand is coming.
So I suppose another commodity

448
00:24:22,120 --> 00:24:25,760
which I quite like is met coal.
We're now down at 120.

449
00:24:25,760 --> 00:24:31,480
Sorry, we're down at 190.
I start we're we're definitely

450
00:24:31,480 --> 00:24:33,120
starting to be in the cost curve
here.

451
00:24:33,120 --> 00:24:35,680
Some of the US mines will start
to see come offline.

452
00:24:36,640 --> 00:24:39,960
Clearly the Indians were
supposed to come back last year

453
00:24:39,960 --> 00:24:43,120
post a delayed monsoon to buy
and that didn't quite eventuate

454
00:24:43,640 --> 00:24:46,280
after Chinese New Year.
Maybe they step back in and the

455
00:24:46,280 --> 00:24:49,720
Indians do need to come back.
But if I look through, I don't

456
00:24:49,720 --> 00:24:53,720
know where any new supply is
coming from and Indian demand is

457
00:24:53,720 --> 00:24:55,840
coming.
I know it's always been a jam

458
00:24:55,840 --> 00:24:58,440
tomorrow story with India, but
that is coming.

459
00:24:58,440 --> 00:25:01,000
People then also talk about
China and the Mongolian supply

460
00:25:01,000 --> 00:25:03,880
ramping up from sort of 40 to 80
million tons.

461
00:25:04,800 --> 00:25:07,920
Either way, that is displacing
lower quality Chinese material,

462
00:25:07,920 --> 00:25:11,480
which is which, which which is
depleting and therefore they

463
00:25:11,480 --> 00:25:14,200
continue to need to hit the
seabor market for just for

464
00:25:14,200 --> 00:25:16,880
blending purposes.
So if I look through, yes,

465
00:25:16,880 --> 00:25:20,080
Chinese seaborne demand maybe
comes down, but it's staying 10

466
00:25:20,080 --> 00:25:23,120
to 20 million tons.
India ramps up, no more supply.

467
00:25:23,720 --> 00:25:26,720
So maybe not near, near term,
maybe we bounce.

468
00:25:26,720 --> 00:25:29,400
But over the next few years,
yes, I do believe we're going

469
00:25:29,400 --> 00:25:32,880
higher and that's not the Glen.
Glencore now controls a lot of

470
00:25:32,880 --> 00:25:34,840
metal.
That's always a pretty good

471
00:25:34,840 --> 00:25:39,840
managing markets, I'd say.
The there are two things that

472
00:25:39,840 --> 00:25:42,360
like I love metal, love love the
thesis.

473
00:25:42,360 --> 00:25:46,480
I'm, I'm with you on the, the
trade, but I, I, the, the side

474
00:25:46,480 --> 00:25:48,920
of things that, you know, I'm,
I'm looking at that, you know,

475
00:25:48,920 --> 00:25:53,520
contradict that is the, I think
there was an approval recently

476
00:25:53,520 --> 00:25:57,760
for Mongolia to now be, to
upgrade the, the rail to be

477
00:25:57,920 --> 00:26:01,200
capable of sending 120 million
tons to China instead of 80,

478
00:26:01,800 --> 00:26:04,520
which would further like if and
when that all happens, would

479
00:26:04,520 --> 00:26:07,640
further displace more seaborne
tons from the market.

480
00:26:07,640 --> 00:26:13,960
And then on the India side, the
CJCX kind of like like basically

481
00:26:14,000 --> 00:26:17,520
looking to enter agreements with
Mongolian coal producers as well

482
00:26:17,800 --> 00:26:20,640
where they could, you know, get
get the tons cheaper than they,

483
00:26:20,680 --> 00:26:23,360
they would from from Australia
and the and the likes and Siebel

484
00:26:23,360 --> 00:26:25,840
market.
So those kind of factors are you

485
00:26:26,080 --> 00:26:30,120
thinking about as as real
limitations to the to the ball

486
00:26:30,120 --> 00:26:33,080
thesis here.
You've hit the nail on the head.

487
00:26:33,080 --> 00:26:35,800
Those are the two big risks and
something we're still looking

488
00:26:35,800 --> 00:26:38,080
into.
We're not quite all in on these

489
00:26:38,080 --> 00:26:41,800
trades as yet.
The Mongolian supply, but

490
00:26:41,800 --> 00:26:44,240
clearly some people even model
it and they just put it in

491
00:26:44,240 --> 00:26:46,600
Siebel and supply.
It's not Siebel and supply.

492
00:26:46,600 --> 00:26:49,880
You look for the country is in
the, it's, it's the whole same

493
00:26:49,880 --> 00:26:51,800
design or this is a logistics
game.

494
00:26:52,640 --> 00:26:57,160
So our understanding so far
though, is that the you need to

495
00:26:57,160 --> 00:27:00,400
look at the quality of both
Mongolian supply, but as well as

496
00:27:00,400 --> 00:27:02,360
the Chinese supply, which is
depleting.

497
00:27:02,880 --> 00:27:06,000
You then understand what the
Chinese need need to import to

498
00:27:06,000 --> 00:27:11,120
actually blend to make up and
keep the keep a level where

499
00:27:11,120 --> 00:27:13,560
they're all right at.
Now clearly if Chinese steel

500
00:27:13,560 --> 00:27:16,760
production also comes down,
that's a very large risk to this

501
00:27:16,760 --> 00:27:20,040
trade here.
But our view is even in

502
00:27:20,040 --> 00:27:22,840
Mongolian supply ramping up,
that is merely displacing

503
00:27:22,840 --> 00:27:25,360
Chinese production which is
depleting.

504
00:27:26,000 --> 00:27:29,160
And either way, the quality of
the Chinese material is not the

505
00:27:29,160 --> 00:27:33,200
same as the premium Australian
quality which we export.

506
00:27:34,240 --> 00:27:38,000
So for that I it's definitely a
risk, something we're monitoring

507
00:27:38,000 --> 00:27:39,840
closely.
But either way, I don't see

508
00:27:39,840 --> 00:27:45,080
China going to a net exporter
over the next few years.

509
00:27:45,080 --> 00:27:48,880
I really struggle to see that.
And so even if we're wrong on

510
00:27:48,880 --> 00:27:52,440
Chinese continuing to to
actually require Sieborn tons, I

511
00:27:52,440 --> 00:27:56,040
don't think they turn into an
exporter and India is a much

512
00:27:56,040 --> 00:27:58,480
bigger slice of the pie.
Now I've seen some numbers from

513
00:27:58,480 --> 00:28:03,040
different analysts talking by a
sort of 2035 that India is

514
00:28:03,040 --> 00:28:06,120
anywhere between 150 to 250
million tons.

515
00:28:06,120 --> 00:28:09,680
Now this market cannot
accommodate that and I believe

516
00:28:09,680 --> 00:28:11,680
those numbers are maybe slightly
inflated.

517
00:28:12,240 --> 00:28:14,160
But either way, India is coming
through.

518
00:28:14,160 --> 00:28:18,640
Now the question is, can they
get this from Mongolia, from

519
00:28:18,640 --> 00:28:20,760
Russia, from elsewhere?
How do you figure out that?

520
00:28:20,840 --> 00:28:22,360
How do you figure out that
logistics?

521
00:28:22,360 --> 00:28:24,560
And that's a very good question
which we're trying to get to the

522
00:28:24,560 --> 00:28:26,360
bottom of.
Awesome.

523
00:28:26,360 --> 00:28:28,320
Tom, I've just got one last one
for you.

524
00:28:28,320 --> 00:28:31,360
Maybe it's a bit of a teaser for
a longer discussion next time.

525
00:28:31,360 --> 00:28:34,760
But lithium, are you bearish or
bullish?

526
00:28:34,880 --> 00:28:36,480
You can keep it relatively brief
if you want.

527
00:28:36,480 --> 00:28:38,640
We can leave that as a teaser
for next time.

528
00:28:41,120 --> 00:28:46,080
Look, the demand side of lithium
is very strong, However, the

529
00:28:46,080 --> 00:28:49,520
supply comes on and off.
And so despite demand being very

530
00:28:49,520 --> 00:28:52,360
strong, clearly we're in an
oversupplied environment on our

531
00:28:52,360 --> 00:28:55,480
numbers that oversupply
maintains through this year and

532
00:28:55,480 --> 00:28:59,200
into next year.
I do believe that we're bouncing

533
00:28:59,200 --> 00:29:02,160
along the bottom here for the
commodity price.

534
00:29:02,600 --> 00:29:07,520
And at some point it will turn,
however difficult to get

535
00:29:07,520 --> 00:29:11,680
excited, I think on any
developers or earlier stage

536
00:29:11,680 --> 00:29:16,880
names in that environment until
people can actually really have

537
00:29:16,880 --> 00:29:19,200
something to hold on to that the
market is turning.

538
00:29:19,560 --> 00:29:22,760
So at the moment we don't have
any exposure to the to the

539
00:29:22,760 --> 00:29:24,680
lithium space.
I mean the easy money in the

540
00:29:24,680 --> 00:29:28,240
shorts was done the last couple
of years was quite fun there.

541
00:29:29,920 --> 00:29:32,080
But I think that easy money's
been made.

542
00:29:32,320 --> 00:29:34,760
There's clearly trading ranges
you could do into some of the

543
00:29:34,760 --> 00:29:39,440
producers here, but we're not
really constructive in the near

544
00:29:39,440 --> 00:29:41,320
term for us to deploy at the
moment.

545
00:29:42,320 --> 00:29:44,520
Fantastic.
Great to chat Tom, and thanks

546
00:29:44,520 --> 00:29:46,680
for making the time for us.
Thank you very much guys.

547
00:29:46,680 --> 00:29:50,080
Have fun and in Darba.
Righty, there you go, you gotta

548
00:29:50,080 --> 00:29:51,840
keep doing outros.
I haven't even fucking listened

549
00:29:51,840 --> 00:29:53,240
to him yet.
But how good was that, Maddie?

550
00:29:53,280 --> 00:29:57,360
How good was?
That, but I predict sensational.

551
00:29:57,920 --> 00:30:00,760
If you predict correct, you know
who else is sensational, Maddie.

552
00:30:00,840 --> 00:30:04,720
Tell me, JD.
All these guys MMS, grounded,

553
00:30:04,840 --> 00:30:08,200
Sandvik ground support, CRA
insurance, K drill, Saltbush

554
00:30:08,200 --> 00:30:15,040
contracting, Swig, Kotro, cross,
boundary energy and poodoo money

555
00:30:15,040 --> 00:30:16,760
miners.
Jeez, that's the quickest that's

556
00:30:16,760 --> 00:30:20,320
been done in three weeks.
Don't forget about your discount

557
00:30:20,320 --> 00:30:22,240
for Oz IMM underground
operators.

558
00:30:22,360 --> 00:30:24,520
MOM. 100 hundred bucks off a
ticket.

559
00:30:24,600 --> 00:30:27,320
It's free, 100 bucks.
Poodoo poodoo free money.

560
00:30:28,440 --> 00:30:31,080
Information contained in this
episode of Money of Mine is of

561
00:30:31,080 --> 00:30:33,160
general nature only and does not
take into account the

562
00:30:33,160 --> 00:30:36,760
objectives, financial situation
or needs of any particular

563
00:30:36,760 --> 00:30:38,800
person.
Before making any investment

564
00:30:38,800 --> 00:30:41,840
decision, you should consult
with your financial advisor and

565
00:30:41,840 --> 00:30:43,920
consider how appropriate the
advice.

566
00:30:43,920 --> 00:30:47,200
Is to your objectives.
Financial situation and needs.