Why Tether’s Gold Mining Royalty Play is a Massive Deal

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Over 5 billion in physical gold
bars on the balance sheet,

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Tether has been pouring their
profits into gold.

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Like a small country.
Yeah, and enormous they are.

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They're buying a lot of gold.
These guys are gold bulls.

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JD, you thought that Franco
Nevada had the most beautiful

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business model in the world.
And it is.

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It is up there, I assure you.
I'm going to tell you why

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There's an even better one than
that and it's Tether.

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Stay with me here.
And they've just done a deal to

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buy a mining royalties business.
I'm going to talk all about it

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today.
Mate, we're also going to talk

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about coal, one of the most
fascinating names in the game at

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the moment, Coronado.
They're getting battered from

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all ends.
They need a saviour though, and

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we're going to dive into whether
they will find that.

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Saviour talking about coal and
crypto.

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I don't know if our yeah, the
people that that love Bunny mum

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will be paying attention to this
journey, but they're they're

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riveting stories.
I can't wait.

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You know what else I can't wait
for?

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Before we talk about the latest
and the greatest in the mining

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world, we need to talk about a
certain GC grounded

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construction.
I know you're a you're a keen

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reader of the Financial Review
AFR.

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I am indeed.
And you might have caught this.

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I saw this headline just this
week.

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Lavish food and luxury FIFO
workers just want a good night's

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sleep.
That's the finding of the most

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comprehensive study of workers
in mining camps, which

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researchers hope will help
resource giants keep staff.

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Happy.
Do you know what that sounds

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like to me mate?
That is more confirmation for

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anyone out there that if you're
going to build a mining camp,

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you need grounded.
That should be your first call.

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Make 170 projects completed,
$1800 delivered and work across

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nearly 300 assets.
Enormous.

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Goes beyond that as well, mate.
They've worked with FMG, they've

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worked with Rio, they've worked
with Goldfields, just to name a

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couple of their great partners
out there.

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Look.
Here's the thing, the FIN survey

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is probably the best insight
we've seen into what workers

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actually value.
And we know if workers are

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happy, they're more productive,
but what are those top points

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that they care about, mate?
These are the points that your

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miners really care about.
They care about noise

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insulation, they care about room
size.

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They care about the ability to
personalise their room, room

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aesthetics as well as the
overall camp design.

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That just to me, it's like I
know the solution, you've ratted

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off the problem, but I already
know the solution.

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So but it's kind of it all makes
sense, right?

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You kind of insulation.
Yeah, well, you don't want to be

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awake from the noise near the
camp like you need sleep. 100%

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mate if you want to keep the
campers doing the hard yards out

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there, the guys and girls
working in the mine happy, just

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give grounded construction a
call mate.

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I will indeed.
I look forward to calling Paul

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Natalie.
OK, you probably didn't see this

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coming because the world's
largest stable coin issuer,

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Tether, yes, the same Tether
behind USDT has taken a

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meaningful stake in a in a gold
and copper mining royalty

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company, elemental Altus
royalties.

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And I don't think it's a side
bet.

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I think this is a signal.
Yeah, I I wanted to like,

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underline and highlight what you
said there.

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Like this is so fascinating.
It's it's so interesting.

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So why don't you start us off by
just saying first who tether,

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tether investments are and then
secondly about elemental out as

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the the royalty group?
Yeah, well, Tether investments

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like think of them as a
assistant entity of of Tether.

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The stable coin issue up.
They've acquired this 34% stake

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in Elemental Otis Royalties.
That stake came by paying

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122,000,000 Canadian dollars to
Lamancha.

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You remember Lamancha?
JD had him on the show.

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Mate had had, Yeah, we did.
We had groom groom on the Greek.

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A lot of time.
To be on the show, yeah, but but

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that's of course the the
resource fund of the Egyptian

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billionaire, the grip size.
But Tether didn't stop with the

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34% stake and now simultaneously
with the deal, they got this

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option to buy another 14% of
Elemental from A1 for another

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53,000,000 Canadian dollars,
which if they exercise the

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option that would leave Tether
with a 48% stake in in Elemental

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alters.
And on Elementals side, they're

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one of the smaller listed
royalty companies out there with

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just a a couple of producing
royalties and and a lot of

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development ones in their
portfolio.

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A couple in our backyard mate.
Yeah, indeed, their, their like

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portfolio is, is gold dominant
and, and the flagship royalty

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there is, is Karla Window.
That's a 2% NSR over Capricorn's

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color window.
But they've also got this 0.5%

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NSR over Lundin's Casarones.
And yeah, but a very gold

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dominant portfolio.
OK, so so dive into what what

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makes you so interested about
this deal and what things could

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look like going forward.
This is Tether, like a lot of

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people have probably heard of
Tether and a lot of people are

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suspicious of Tether and a lot
of people, you know, like there

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was a lot of a lot of a lot of
kind of like negative thoughts

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and views out there about, about
Tether.

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But I just want to pause all of
that for a moment.

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And so I don't think many people
are actually aware of just how

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phenomenal the business model
of, of Tether is.

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It's utterly insane how good of
a business this is.

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And it's so simple.
Tether popularized the tokenized

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stable coin U.S. dollars is of
course the the flagship product

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there, which they wrap into USD
T And it turns out there's a

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huge amount of demand for crypto
native U.S. dollar, mainly

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because people want to use that
in the many online casinos that

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are crypto exchanges and
associated products of that

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ecosystem.
You give Tether $1.00, you

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receive 1 USD T just Tether
stable coin in return, right?

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You can use that USD T in crypto
markets, think DFI apps,

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etcetera.
Now Tether, what they do is they

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keep your $1.00 instead of
putting it in a vault.

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They invested mostly in short
term U.S.

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Treasuries which are yielding
like 5% plus per year.

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Tether earns interest on your
dollar JD.

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They don't pay you any interest
though.

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So you hold a digital IOU which
is a USDT not a deposit.

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Tether keeps 100% of that yield,
which is attractive at the

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moment.
They have issued over 150

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billion USD T That is a
staggering number to sort of

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conceptualize.
Now even if only 80% of that is

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backed by treasuries, that's 120
billion U.S. dollars earning 5%

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annually.
That's over 6 billion in annual

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profit from the treasury
interest alone, with a tiny team

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to the House of like 125 staff
and like effectively negligible

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operating costs.
Phenomenal.

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There's not too much more to be
to be set on it.

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It's just it's incredible.
It's it's good business if you

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can get it.
Crazy.

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It's yeah.
Like they print digital dollars,

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they earn interest on real
dollars, and they give holders

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none of it.
That's like why it's the most

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kind of profitable company
you've never heard of and never

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seen audited.
But you know, irrespective, you

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kind of have to just respect the
operational efficiency of that

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business model, which is
experience like tremendous

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tailwinds, but just tremendous
like market dominance,

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tremendous growth in all, in all
aspects.

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It's a truly phenomenal
business.

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And in the mining industry, we
have our own truly glorious

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business models being the
royalty companies.

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You only need a handful of of
staff, right?

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You collect a check every month
from your royalties and it

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scales so well.
You never need a big team as

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your revenue grows in theory,
right?

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So Franco Nevada being kind of
the industry leader for for a

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very long time and I always find
it astonishing to learn the, the

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profit of that business for, for
so few employees.

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Like take the 2024 numbers of
Franco, their net income is

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$552,000,000 and a head count of
45 people.

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That's $12.3 million in profit
per employee at Franco Nevada.

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Like there is not a mining
company in the world that could,

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could achieve that, but a
royalty company can because of

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the beautiful, the beautiful
model that a royalty is.

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It's a staggering number, and
you would have a tremendously

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hard time finding a business
that comes kind of close to that

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in any industry, except I
happened to know one, JD.

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Let.
Me guess in 2024, get this

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profit, an astonishing 13
billion U.S. dollars on an

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employee headcount of like 125,
right, That's 104 million profit

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per employee that yeah, the
operational efficiency is just,

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yeah, unparalleled.
That's eight times Franco Nevada

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is profit per employee who I
thought would be impossible to

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be.
So whatever your opinion of of

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crypto is, Tether is just a
truly tremendous business and

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both Tether and royalty
companies operate with lean

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teams and high margin business
models.

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All right, pulling it back to
the deal now.

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I I really want to point out a
couple of lines from the

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announcement out of out of
tether right now.

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I'll read these quotes Out says.
The acquisition was made as part

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of Tether investments growing
commitment, tangible assets and

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precious metals as part of its
broader vision to enhance the

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transparency, utility and
accessibility of digital assets

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backed by real world value.
This investment reflects our

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long term confidence in the
fundamentals of gold and its

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critical role in financial
markets.

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Elementals royalty model
provides diversified exposure to

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gold production around the
world, aligning strategically

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with our vision or Tether gold
and future commodity backed

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digital asset infrastructure.
It's a bit to take in there,

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right?
But to start with, I want to

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hone in on that last sentence
where Tether's CEO mentions

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Tether Gold specifically.
And you know that glorious

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business model I described of
Tethers as it related to USD T?

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Well, Tether has another
product, a much more nascent one

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called XAUT or to the Gold and
the concept is similar.

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You know, it's this gold backed
digital tokenized asset.

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At the moment there's 150
billion USDT in circulation yet

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to the gold or XAUT only has
about 0.5% the the the size in

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00:09:53,800 --> 00:09:58,000
in circulation of 246,000 ounces
of gold you can think of that's

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like U.S.
Dollar terms like just less than

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600 million at our current
market value.

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00:10:03,520 --> 00:10:05,120
But there's a big difference
with the business model.

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There is like the economics
aren't the same at all.

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This is an asset backed token,
so the gold that's backing that

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asset is stored in a Swiss
vault.

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00:10:13,560 --> 00:10:16,680
And unlike U.S.
Treasuries, that gold earns no

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yield.
Right?

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00:10:17,720 --> 00:10:23,320
So XAUT is a far less lucrative
product for Tether than USDT.

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Yeah, there's demand for this
product, right?

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Because many crypto natives
would would rather their spare

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capital be sitting in the thing
that tracks the gold price, not

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the US dollar, right?
So is Tether investing in mining

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royalties as a means of backing
their product then?

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Tether gold I was.
Trying to figure this out JD,

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because they mentioned Tether
Gold explicitly in that that

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announcement.
But here's a few other things

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you need to know about Tether.
That company, like private,

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still still a private company.
They have not paid many

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dividends historically.
So they reinvest.

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00:10:54,400 --> 00:10:56,640
They reinvest the profits.
And I already told you like how

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phenomenal the profits are in
recent history.

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And if you look at the they do
release like a balance sheet as

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00:11:02,440 --> 00:11:06,200
a thirty 30th of of October, I
could find one.

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00:11:06,760 --> 00:11:10,040
And on that balance sheet, what
you can see sitting on there

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over 5 billion in physical gold
bars on the balance sheet.

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That's that at the time 10 times
the value of the the tether

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00:11:20,400 --> 00:11:22,640
gold, you know, gold tether on
on on on issue.

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So it's best I can tell Tether
has been pouring their profits

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that I get from their cash
printer into gold.

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Like a small country.
Yeah, it's, it's right and and

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enormous they are they're buying
a lot of gold even when it's not

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needed to back their gold Tether
product.

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00:11:40,720 --> 00:11:44,120
These guys are gold bulls and
Bitcoin bulls because on that

227
00:11:44,120 --> 00:11:48,040
balance sheet, there's also over
$5 billion in Bitcoin, not

228
00:11:48,040 --> 00:11:50,760
altcoins, not Ethereum, not any
crypto note, not NFTS.

229
00:11:51,080 --> 00:11:53,880
This is it's Bitcoin and gold
and U.S.

230
00:11:53,880 --> 00:11:57,320
Treasuries like is there's,
there's none of the other crap,

231
00:11:57,320 --> 00:11:58,840
right?
This, this is a hard money

232
00:11:58,920 --> 00:12:00,520
crowd.
Whatever you, whether you agree

233
00:12:00,520 --> 00:12:03,080
with their definition of hard
money or not, that's what's

234
00:12:03,360 --> 00:12:06,320
like, that's the the view of the
the people behind Teller.

235
00:12:07,360 --> 00:12:09,160
Fascinating mate.
So what does it all mean?

236
00:12:10,160 --> 00:12:13,200
There's a few things here like
#1 if you just think of

237
00:12:13,760 --> 00:12:16,200
Elemental Altus as a, as a
royalty company, like if you're

238
00:12:16,200 --> 00:12:18,840
willing to pay 48, if you're
willing to buy 48% of the

239
00:12:18,840 --> 00:12:22,200
company, you could ensure a bet
they'd be willing to buy 100%.

240
00:12:22,560 --> 00:12:26,640
Now, the way the initial deal is
structured here, it bypassed in

241
00:12:26,720 --> 00:12:30,320
Canada's like annoying laws.
So if, if, if they embarked on a

242
00:12:30,320 --> 00:12:32,480
full change of control, like, it
could be a different story for

243
00:12:32,960 --> 00:12:36,160
actually getting a deal done.
But yeah, I dare say they'd

244
00:12:36,160 --> 00:12:40,320
they'd want to wrap the whole
thing up #2 Tether's business

245
00:12:40,320 --> 00:12:44,480
model at its core is profiting
off the devaluation of the

246
00:12:44,600 --> 00:12:46,920
dollar.
Like that 5% yield, thanks to

247
00:12:47,440 --> 00:12:49,640
like that, that interest rate is
there thanks to inflation.

248
00:12:50,080 --> 00:12:53,800
That's profit for for Tether.
And paradoxically, even though

249
00:12:53,800 --> 00:12:56,520
they're profiting from dollar
devaluation, they're

250
00:12:56,520 --> 00:12:59,400
phenomenally important in the
context of the US financial

251
00:12:59,400 --> 00:13:02,320
system because they've become
one of the largest buyers of

252
00:13:02,440 --> 00:13:03,320
U.S.
Treasuries.

253
00:13:03,760 --> 00:13:05,800
You know, like when people are
depositing dollars at Tether,

254
00:13:05,800 --> 00:13:07,320
what is Tether doing?
They're buying U.S.

255
00:13:07,320 --> 00:13:11,280
Treasuries to ensure that that
that USD TS is is at least

256
00:13:11,280 --> 00:13:13,680
backed.
Now they're not.

257
00:13:13,760 --> 00:13:14,920
And what are they doing?
Their profits.

258
00:13:14,920 --> 00:13:16,440
They're not.
They're not putting them into

259
00:13:16,440 --> 00:13:17,960
more treasuries.
Their profits.

260
00:13:17,960 --> 00:13:21,080
They're putting into Bitcoin,
into gold and now into gold

261
00:13:21,120 --> 00:13:23,880
royalties.
This is yeah, like, like I said,

262
00:13:23,880 --> 00:13:26,640
this is a really, a really hard
money crowd and they've got more

263
00:13:26,640 --> 00:13:30,360
weight than most central banks
and they know that royalties are

264
00:13:30,360 --> 00:13:33,200
like, I suppose the superior
hard asset when it comes to

265
00:13:33,520 --> 00:13:36,240
exposure to the, to the, you
know, to gold equities.

266
00:13:36,320 --> 00:13:40,640
You you much prefer the royalty
company, you know, over the long

267
00:13:40,640 --> 00:13:43,440
term as opposed to being exposed
to the capital allocation

268
00:13:43,760 --> 00:13:46,680
dilemmas of of of most of the
miners over over the duration.

269
00:13:47,040 --> 00:13:52,000
And if you just think of Tether,
right, the available powder that

270
00:13:52,000 --> 00:13:56,000
that entity has to deploy here
is next level.

271
00:13:56,200 --> 00:13:58,680
They if, if they're motivated
enough to do this deal with

272
00:13:58,680 --> 00:14:00,680
Elemental, you've got to ask
what's next.

273
00:14:01,240 --> 00:14:04,960
Like Elemental was a neat deal
where they could get 48%

274
00:14:05,240 --> 00:14:07,640
exposure in a single
announcement or a single deal.

275
00:14:07,640 --> 00:14:10,800
Like there's not too many
royalty companies where you

276
00:14:10,800 --> 00:14:12,960
could do that.
Like, in fact, I can only think

277
00:14:12,960 --> 00:14:16,280
of one other one where you could
get a meaningful stake in one

278
00:14:16,280 --> 00:14:18,320
announcement.
And that's like triple flag,

279
00:14:18,320 --> 00:14:20,960
right?
You've got Elliott owning 67% of

280
00:14:20,960 --> 00:14:23,200
that company, a $6.6 billion
company.

281
00:14:23,200 --> 00:14:26,760
And it might seem crazy, but I
genuinely could envisage a world

282
00:14:26,760 --> 00:14:28,880
where Taylor bought Elliott
steak and triple flag.

283
00:14:28,880 --> 00:14:32,480
Like that's just the amount of
profit that this, this company

284
00:14:32,480 --> 00:14:34,960
kind of produces annually.
It could, it could, it could

285
00:14:34,960 --> 00:14:37,400
reasonably be be distributed to
something crazy like that.

286
00:14:37,400 --> 00:14:41,800
You know, I would, I'd love to
see, I'd love to see like how

287
00:14:41,800 --> 00:14:44,400
much of Franco Taylor already
owns or how much of Wheaton or

288
00:14:44,400 --> 00:14:47,560
Royal Gold or Cisco royalties
that Taylor already owns.

289
00:14:47,560 --> 00:14:50,920
Because I imagine they've got
investments and stakes in these

290
00:14:50,920 --> 00:14:52,760
royalty companies already if
they're pretty familiar with the

291
00:14:52,760 --> 00:14:54,960
asset class.
Yeah, you have to think that

292
00:14:54,960 --> 00:14:57,720
they've picked up stakes across
a raft of them.

293
00:14:57,920 --> 00:15:00,520
Anything else would have come to
mind diving into this one.

294
00:15:00,600 --> 00:15:04,560
I've seen like some some people
talking about this deal and kind

295
00:15:04,560 --> 00:15:07,280
of reflecting and thinking that
maybe it's a prelude to a

296
00:15:07,280 --> 00:15:09,400
potential launch of a tokenized
royalty stream.

297
00:15:10,080 --> 00:15:13,960
That's kind of interesting.
And if you can acquire a decent

298
00:15:13,960 --> 00:15:17,320
enough like portfolio of
royalties, which Tether can

299
00:15:17,320 --> 00:15:20,760
because they've got the cash to,
to do that, that is a much

300
00:15:20,760 --> 00:15:24,880
faster way to get a product to
market than like the myriad of

301
00:15:24,880 --> 00:15:27,440
sort of start-ups that are are
trying to do a similar thing.

302
00:15:27,440 --> 00:15:29,560
Like a lot of there are
start-ups out there trying to

303
00:15:29,600 --> 00:15:32,120
tokenize royalties and they kind
of have to finance them into

304
00:15:32,120 --> 00:15:34,240
existence sometimes or do some
quirky thing.

305
00:15:34,240 --> 00:15:37,560
And you've got to wait 20 years
for hopefully that royalty to

306
00:15:37,560 --> 00:15:39,040
now be producing to be worth
something.

307
00:15:39,760 --> 00:15:41,400
And you face a lot of liquidity
constraints.

308
00:15:41,400 --> 00:15:45,200
But Tether can just buy decent
royalties and maybe build, yeah,

309
00:15:45,200 --> 00:15:47,480
some some infrastructure or
product around a tokenized role

310
00:15:47,480 --> 00:15:49,080
with your stream.
I think it's a bit to play out

311
00:15:49,080 --> 00:15:51,600
there, but.
To sling one more question on

312
00:15:51,600 --> 00:15:53,960
you mate, can you envisage your
world?

313
00:15:54,360 --> 00:15:57,320
I'd imagine some money miners
want to hear this question where

314
00:15:57,920 --> 00:16:01,120
these players would finance some
of the bigger gold mining

315
00:16:01,120 --> 00:16:08,160
companies directly.
I don't think so, yeah.

316
00:16:08,160 --> 00:16:10,120
I don't like.
I just don't like.

317
00:16:10,280 --> 00:16:13,800
I think there's like a lot of
expertise that comes with, with

318
00:16:13,800 --> 00:16:18,760
writing royalties and I don't
think like an industry outsider

319
00:16:18,760 --> 00:16:22,280
could, could actually acquire
like 100% stake in like a in one

320
00:16:22,280 --> 00:16:25,160
of those companies and, and, and
replicate that, that discipline

321
00:16:25,160 --> 00:16:26,920
and that skill and that
knowledge you have to.

322
00:16:27,440 --> 00:16:29,400
Money goes a long way to to
solving those problems.

323
00:16:29,400 --> 00:16:30,840
But who?
Cares if you get the royalties

324
00:16:30,840 --> 00:16:32,960
at like the world's best
royalties, then you know, but.

325
00:16:33,400 --> 00:16:35,240
When you when you've got the
people running those companies

326
00:16:35,240 --> 00:16:37,360
that aren't the ones that put
those royalties in place anymore

327
00:16:38,200 --> 00:16:41,120
and they don't have all the
upside from from what the

328
00:16:41,120 --> 00:16:44,560
earlier people at the companies
did in doing those deals, then

329
00:16:44,560 --> 00:16:47,760
perhaps as Wiggle Run to
incentivize them, yeah, who

330
00:16:47,760 --> 00:16:50,240
knows.
Yeah, you probably, Yeah, that

331
00:16:50,240 --> 00:16:52,800
is an an interesting point like
I could see Ted to be.

332
00:16:52,800 --> 00:16:56,480
Without a team of just like a
list royalty riding.

333
00:16:56,600 --> 00:16:58,320
Yeah.
I could see, I could see where

334
00:16:58,320 --> 00:17:01,080
we're like, yeah, Tethers cash
was capital that could be tapped

335
00:17:01,080 --> 00:17:05,640
into by, you know, a partially
tethered owned royalty Co and

336
00:17:05,640 --> 00:17:09,040
used to used to finance like I
could see that yeah.

337
00:17:09,480 --> 00:17:11,440
And Taylor was a company that
was really on the fringes of

338
00:17:11,440 --> 00:17:15,839
like acceptable, but has been
like completely endorsed from a

339
00:17:15,839 --> 00:17:17,160
credibility perspective in and a
few.

340
00:17:17,160 --> 00:17:19,359
Wobbles along the way, but yeah.
Yeah.

341
00:17:20,119 --> 00:17:20,920
Yeah.
Oh, awesome, mate.

342
00:17:20,920 --> 00:17:24,200
Before we jump into Coronado, I
want to share a snippet from a

343
00:17:24,200 --> 00:17:27,400
recent conversation we had with
none other than Derek Heard

344
00:17:27,520 --> 00:17:30,800
Sandwich Ground Sport boss.
So this is a man who knows more

345
00:17:30,800 --> 00:17:33,880
about ground support than almost
anyone in the business.

346
00:17:34,160 --> 00:17:36,640
Hear it from him now.
What's the biggest misconception

347
00:17:36,640 --> 00:17:39,680
about ground support?
But it is that simple.

348
00:17:39,760 --> 00:17:41,760
It's a consumable.
That's the biggest thing, that

349
00:17:41,760 --> 00:17:44,840
it's a simple, simple thing.
I could just buy from anyone,

350
00:17:46,000 --> 00:17:48,800
you know, and it's, you know,
traded product at the end of the

351
00:17:48,800 --> 00:17:50,520
day.
What's the risk of thinking that

352
00:17:50,520 --> 00:17:52,920
way?
That's the the quality and

353
00:17:52,920 --> 00:17:55,040
safety aspects.
You know, it's it's a safety

354
00:17:55,040 --> 00:17:57,840
product.
Yes, we're consumable in nature.

355
00:17:58,320 --> 00:18:02,320
We're a volume business and we
do get put into the consumable

356
00:18:02,320 --> 00:18:05,640
category, but we're a safety
product and that's why that

357
00:18:06,200 --> 00:18:09,480
quality assurance and the the
after sales backup is so

358
00:18:09,480 --> 00:18:12,000
critical and that's what we
really focus on.

359
00:18:12,960 --> 00:18:14,880
Thanks, Derek.
Go Samic ground support.

360
00:18:15,360 --> 00:18:17,200
All right, mate.
What is going on with Coronado?

361
00:18:17,680 --> 00:18:20,200
All right Coronado, there's a
there's a few questions to try

362
00:18:20,200 --> 00:18:22,880
and answer here Firstly, is New
Hope going to come and try and

363
00:18:22,920 --> 00:18:27,760
save the day?
Is 7 that kind of elusive family

364
00:18:27,760 --> 00:18:31,360
office of a Czech billionaire
lurking in the background, who

365
00:18:31,360 --> 00:18:33,320
mind you would be counting their
lucky stars they didn't buy

366
00:18:33,320 --> 00:18:38,160
these massive stake some 12
months to 18 months ago.

367
00:18:38,760 --> 00:18:42,560
You've also got distressed debt
players out there swirling

368
00:18:42,560 --> 00:18:44,880
around.
And to make the story even more

369
00:18:44,880 --> 00:18:47,800
fascinating, you've got a stock
that's down 90%.

370
00:18:47,800 --> 00:18:50,720
So this might be a bit better
for a lot of equity holders.

371
00:18:50,720 --> 00:18:54,000
But we are going to try and
flesh out some potential Silver

372
00:18:54,000 --> 00:18:57,400
Linings in this story as well
and see if there is anything

373
00:18:57,760 --> 00:19:01,000
left or in any case if there's
any learnings from other people

374
00:19:01,000 --> 00:19:04,440
who are keen on the coal space.
I'm tremendously interested.

375
00:19:04,600 --> 00:19:06,720
I mean, when you see volatility
like that in a share price and

376
00:19:07,040 --> 00:19:09,040
liquidity concerns, you've got
me interested.

377
00:19:09,040 --> 00:19:12,400
Why are you interested, Janie?
I am interested for a bunch of

378
00:19:12,400 --> 00:19:15,600
reasons mate, probably lining up
with why you're interested as

379
00:19:15,600 --> 00:19:19,920
well, but it falls in that area
of like a a potentially

380
00:19:19,920 --> 00:19:23,400
interesting opportunity for some
of the obvious reasons.

381
00:19:23,400 --> 00:19:27,480
Massively depressed commodity
price potential recapitalisation

382
00:19:27,560 --> 00:19:32,200
event, a a equity where the
market hasn't given it too much

383
00:19:32,200 --> 00:19:35,080
hope of survival.
You know, see the, the share

384
00:19:35,080 --> 00:19:38,000
price for that one.
And I thought regardless, given

385
00:19:38,000 --> 00:19:40,760
the state of where coal markets
are at, given the state of how

386
00:19:41,240 --> 00:19:44,240
some of the other players are
trading, it'd be worthwhile just

387
00:19:44,240 --> 00:19:47,720
refreshing ourselves on on the
space to to see what we can kind

388
00:19:47,720 --> 00:19:51,640
of do here going forward.
What is like, yeah, like, I

389
00:19:51,680 --> 00:19:53,640
don't know if I've ever done a
deep dive on Coronado, and I

390
00:19:53,720 --> 00:19:56,000
probably should have, but like,
what's the 101?

391
00:19:56,960 --> 00:19:59,520
I think funnily enough, I'm in
the same boat as you and it's

392
00:19:59,520 --> 00:20:02,320
because of the, the problems now
facing them.

393
00:20:02,320 --> 00:20:04,760
They were just too much of A
turn off to do the deep dive.

394
00:20:04,760 --> 00:20:08,880
But the, the one-on-one is that
Coronado is a predominantly met

395
00:20:08,880 --> 00:20:14,200
coal producer operations in
Australia and USA sort of 2/3

396
00:20:14,200 --> 00:20:17,240
Aussie, 1/3 USA split by
revenue.

397
00:20:17,240 --> 00:20:22,080
Cara is the the asset we we talk
about here in Australia, 90% of

398
00:20:22,080 --> 00:20:25,480
the revenue is is met coal, but
that kind of comes on the back

399
00:20:25,480 --> 00:20:28,400
of this deal.
They signed with the Queensland

400
00:20:28,400 --> 00:20:31,240
government, well it was related
to the tenements and then signed

401
00:20:31,240 --> 00:20:33,720
with the the Queensland
government, which I only

402
00:20:33,720 --> 00:20:35,880
mentioned because it becomes
relevant to some of their

403
00:20:35,880 --> 00:20:39,840
financing discussions now.
But that that is the thermal

404
00:20:39,840 --> 00:20:42,280
coal that gets sold to the
Queensland Government to fire

405
00:20:42,280 --> 00:20:44,520
the coal-fired power plants
there.

406
00:20:45,400 --> 00:20:47,600
So there's a strategic
importance of supply.

407
00:20:47,680 --> 00:20:52,280
There is because an agreement is
coming or is changing in 2027

408
00:20:52,280 --> 00:20:55,160
and it gives them new material
to market and they've just

409
00:20:55,160 --> 00:20:58,040
signed an agreement to to sell
it to the Queensland government

410
00:20:58,080 --> 00:21:00,600
again.
So that that is in a nutshell.

411
00:21:00,600 --> 00:21:02,720
A couple of points on Coronado
mate.

412
00:21:02,920 --> 00:21:05,800
What's and what's going on with
the the latest sheet?

413
00:21:06,120 --> 00:21:08,840
So to, to capture it in like 1
line, you've got high cost

414
00:21:08,840 --> 00:21:11,520
operations, you've got
plummeting commodity price and

415
00:21:11,520 --> 00:21:16,440
you've got debt and that equals
a very troubled outlook and the

416
00:21:16,440 --> 00:21:19,040
company's sell.
The recipe first disaster in our

417
00:21:19,040 --> 00:21:21,520
world yeah, exactly.
Financial leverage operational

418
00:21:21,520 --> 00:21:22,320
leverage.
Yeah.

419
00:21:22,320 --> 00:21:23,640
Back body prosper.
Oh, but it's beautiful.

420
00:21:23,640 --> 00:21:24,560
There's nothing going for you.
It's.

421
00:21:25,080 --> 00:21:27,520
Beautiful when it goes well, but
it doesn't always go well.

422
00:21:27,520 --> 00:21:30,640
So these guys have been actually
investing heaps in their assets,

423
00:21:30,640 --> 00:21:36,520
which is interesting given 2223
was a you know, a really rich

424
00:21:36,720 --> 00:21:38,960
vein of profit years for the
coal miners.

425
00:21:39,520 --> 00:21:42,200
They've now been investing a lot
of cash in their assets, but

426
00:21:42,200 --> 00:21:44,240
they've remained indebted
through throughout.

427
00:21:44,240 --> 00:21:48,760
So they, you know, having had
that combination of being

428
00:21:48,760 --> 00:21:52,400
unprofitable and all that debt
are are now coming unstuck

429
00:21:52,400 --> 00:21:54,920
because coal prices have peeled
off so much.

430
00:21:55,280 --> 00:21:57,960
And if you just look at the last
quarter, the March quarter like

431
00:21:57,960 --> 00:22:00,640
these guys report on a calendar
year basis, but March quarter

432
00:22:00,640 --> 00:22:05,080
saw cash drop US $110 million in
quarter.

433
00:22:05,600 --> 00:22:09,040
Now a good chunk of that was
investing cash flows, but that

434
00:22:09,200 --> 00:22:12,000
kind of tells you to an extent
what you need to know.

435
00:22:12,360 --> 00:22:16,520
Yeah, and the debt?
So the debt is, as of last

436
00:22:16,520 --> 00:22:20,240
reporting before these latest
negotiations come into account,

437
00:22:20,720 --> 00:22:23,440
about 200 million U.S. dollars
in net debt.

438
00:22:23,760 --> 00:22:25,520
Now.
Yeah, it's likely a bit.

439
00:22:26,320 --> 00:22:28,480
There's been changes given
they're bringing cash in the

440
00:22:28,480 --> 00:22:32,480
door, but it's given their loss
making been expanding out the

441
00:22:32,480 --> 00:22:34,760
other way as well.
That's greater than their market

442
00:22:34,760 --> 00:22:38,160
cap now, which in Aussie dollar
terms is below 300 million

443
00:22:38,640 --> 00:22:40,520
dollars.
So the the key piece of debt

444
00:22:40,520 --> 00:22:44,680
they've got $400 million bond,
which is a tradable bond pays a

445
00:22:44,680 --> 00:22:49,080
bit over 9%.
Now that costs them on a yearly

446
00:22:49,080 --> 00:22:53,560
basis about US $40 million.
So just making that payment

447
00:22:53,560 --> 00:22:56,520
alone is is a bit hard Yaki,
given they're not making any

448
00:22:56,520 --> 00:23:01,080
profit and the bond cents have
traded off to $0.70 on the

449
00:23:01,080 --> 00:23:03,760
dollar, which means they're
yielding like 18%.

450
00:23:03,760 --> 00:23:05,600
And I'm sure there'll be a bunch
of people out there who aren't

451
00:23:05,600 --> 00:23:09,200
so financially inclined and, and
don't care about how bonds trade

452
00:23:09,200 --> 00:23:11,640
and all that stuff.
So what it means in a nutshell

453
00:23:11,640 --> 00:23:15,400
is that lenders or people that
play in the, the bond market,

454
00:23:15,760 --> 00:23:18,880
I'm not certain they're going to
get back every dollar that has

455
00:23:18,880 --> 00:23:23,920
been lent to the company.
And given that debt comes before

456
00:23:23,920 --> 00:23:27,720
equity in, in the stack, it's a,
it's a pretty ominous warning or

457
00:23:27,720 --> 00:23:32,080
sign for shareholders out there.
And it's no surprise that you've

458
00:23:32,080 --> 00:23:35,800
seen the stock right massively
down as well as you know on the

459
00:23:35,800 --> 00:23:38,600
back of seeing that the bonds
trade down massively in the past

460
00:23:38,600 --> 00:23:42,120
couple months.
Yeah, man, $0.70 on the dollar

461
00:23:42,120 --> 00:23:44,040
fee bonds, not a not a good
sign, no.

462
00:23:44,040 --> 00:23:45,960
No, it's not at all.
So what can they do in this

463
00:23:45,960 --> 00:23:47,720
situation so.
They've got, they've got a

464
00:23:47,720 --> 00:23:51,480
couple levers to pull and you
know, I trust they are looking

465
00:23:51,480 --> 00:23:53,960
at every single one of them.
But firstly they're negotiating

466
00:23:53,960 --> 00:23:55,040
with the the Queensland
Government.

467
00:23:55,040 --> 00:23:58,840
So this is their agreement with
Stanwell coal-fired power

468
00:23:58,840 --> 00:24:01,520
stations as I sort of mentioned.
So who's behind Stanwell?

469
00:24:01,520 --> 00:24:02,520
That's the that's the
government.

470
00:24:02,520 --> 00:24:03,560
That's the Queensland
government.

471
00:24:03,560 --> 00:24:05,920
So these guys have been selling
a bit over 3,000,000 tons per

472
00:24:05,920 --> 00:24:09,120
annum thermal coal.
And firstly they've been paying

473
00:24:09,120 --> 00:24:12,920
these massive rebates, which
ties into the tenements, goes

474
00:24:12,920 --> 00:24:15,480
back to the the asset, the
history there.

475
00:24:16,480 --> 00:24:18,280
And secondly, they've been
selling that at essentially

476
00:24:18,400 --> 00:24:23,160
massively discounted prices, but
that was going down to 2.2

477
00:24:23,160 --> 00:24:27,040
million tons being forced to be
sold to the government in 2027

478
00:24:27,320 --> 00:24:31,160
onwards, which essentially means
they are negotiating a, a

479
00:24:31,160 --> 00:24:35,520
prepayment for those tons that
they're going to produce from

480
00:24:35,520 --> 00:24:38,160
those years onwards.
So what they're saying to the

481
00:24:38,160 --> 00:24:41,240
Queensland government is we'll
continue to give you the amount

482
00:24:41,240 --> 00:24:44,800
that we've been giving you
today, but we need cash upfront,

483
00:24:44,800 --> 00:24:47,240
we need it now.
And you're incentivized because

484
00:24:47,240 --> 00:24:49,760
you want us to be around to
deliver the tons to you.

485
00:24:50,120 --> 00:24:54,920
So that explains the US $150.00
agreement with the, the state

486
00:24:54,920 --> 00:24:58,640
government there.
It's a, it's a kind of split 75

487
00:24:58,640 --> 00:25:03,920
of that is a temporary waiver on
this rebate, which is not

488
00:25:04,000 --> 00:25:05,920
insignificant.
That rebates cost them over $100

489
00:25:05,920 --> 00:25:10,920
million in in a given year and
then 75 is prepayment for coal

490
00:25:10,920 --> 00:25:14,400
that they're going to deliver.
So if you step back and try and

491
00:25:14,400 --> 00:25:18,800
value the business, this is not
good for the overall like NPV of

492
00:25:18,800 --> 00:25:21,800
the the project or the sort of
DCF for the business like your

493
00:25:21,880 --> 00:25:25,080
your foregoing future profits to
get cash in the door right now,

494
00:25:25,080 --> 00:25:27,880
but you have to do it.
They can solve a liquidity

495
00:25:28,200 --> 00:25:29,240
issue.
Then exactly.

496
00:25:29,240 --> 00:25:31,160
Yeah, if it keeps you in the
game, you've just got to do

497
00:25:31,160 --> 00:25:32,600
these.
Things and sometimes your share

498
00:25:32,600 --> 00:25:35,200
price like falls off because the
market's pricing in a cap raise.

499
00:25:35,560 --> 00:25:37,640
You can solve that with a
prepayment instead.

500
00:25:37,640 --> 00:25:40,720
Then you might get some short
term repriv on that front which

501
00:25:41,320 --> 00:25:42,680
you know might make an eventual
cap raise.

502
00:25:43,000 --> 00:25:46,200
Yeah, exactly.
And cap raise and Speaking of

503
00:25:46,200 --> 00:25:48,800
other negotiations that there
are a few on the table.

504
00:25:49,160 --> 00:25:51,840
So firstly, you've got this deal
with oak tree.

505
00:25:51,840 --> 00:25:56,160
They came out with a great deal
with oak tree binding, they

506
00:25:56,160 --> 00:25:59,040
called it.
Although both parties can still

507
00:25:59,040 --> 00:26:01,480
back out the deal.
So it's not completely binding I

508
00:26:01,480 --> 00:26:02,600
mean.
Oak trees.

509
00:26:02,960 --> 00:26:04,320
These are distressed debt
experts, right?

510
00:26:04,320 --> 00:26:06,720
Yeah, yeah, they, they
absolutely are.

511
00:26:06,720 --> 00:26:10,120
The stock ripped 50% on the news
that they'd signed this deal.

512
00:26:10,400 --> 00:26:14,000
So it was an asset backed
lending facility, 150 million

513
00:26:14,160 --> 00:26:18,080
U.S. dollars to keep the lights
on essentially that's on the

514
00:26:18,080 --> 00:26:21,120
table now.
Then you've got rumors that New

515
00:26:21,120 --> 00:26:25,360
Hope, the thermal coal producer
who plays in both NSW and

516
00:26:25,360 --> 00:26:29,240
Queensland, is potentially going
to come in with refinancing or

517
00:26:29,240 --> 00:26:31,880
to acquire Coronado.
It's super interesting.

518
00:26:32,840 --> 00:26:36,080
And I mean it gets more
interesting for New Hope as

519
00:26:36,080 --> 00:26:37,920
well.
I think because they've been

520
00:26:37,920 --> 00:26:41,320
held back to an extent by
potential M and AA lot of people

521
00:26:41,320 --> 00:26:44,160
thought they were going to take
over Maliba, which they own 22

522
00:26:44,160 --> 00:26:47,680
ish percent in.
And you know, for for a number

523
00:26:47,680 --> 00:26:49,600
of reasons, this has held them
out because that was going to be

524
00:26:49,600 --> 00:26:51,160
a rumoured billion dollar
transaction.

525
00:26:51,160 --> 00:26:52,960
Yeah, you compare it with this
now.

526
00:26:53,400 --> 00:26:56,680
And if they were to take over
Coronado, yeah, they would be

527
00:26:56,680 --> 00:27:00,520
getting 3X the amount of volume
and they would be paying a much

528
00:27:00,520 --> 00:27:03,280
smaller price tag.
But a lot of asterisks is there.

529
00:27:03,520 --> 00:27:05,400
Shooting the debt, Yeah, They've
also got a.

530
00:27:06,000 --> 00:27:07,160
Yeah.
And that doesn't even take unit

531
00:27:07,160 --> 00:27:08,920
costs into account and
everything and the CapEx?

532
00:27:08,920 --> 00:27:10,400
It might still have to be dark,
yeah.

533
00:27:10,720 --> 00:27:13,880
But New Hope have a much
healthier balance sheet and

534
00:27:13,880 --> 00:27:15,600
they're backed by Sol Pats as
well.

535
00:27:15,680 --> 00:27:19,440
So if we're going to dive in
deeper into potential

536
00:27:19,440 --> 00:27:22,200
acquisitions, we've got to talk
about EMG.

537
00:27:22,720 --> 00:27:25,400
These are the private equity.
This is the private equity group

538
00:27:25,720 --> 00:27:31,360
that listed Coronado in 2017 at
a 3 1/2 billion dollar

539
00:27:31,360 --> 00:27:34,240
valuation.
They still own 51% of the

540
00:27:34,240 --> 00:27:35,840
company.
So no deal gets done without

541
00:27:35,840 --> 00:27:38,480
their say.
So super hard to get a read into

542
00:27:38,480 --> 00:27:41,520
them.
They're an American group, do a

543
00:27:41,520 --> 00:27:43,560
lot in the oil kind of space as
well.

544
00:27:44,000 --> 00:27:45,200
Yeah.
We don't know how much sort of

545
00:27:45,320 --> 00:27:47,680
cash they have, how much they
would want to tip in, but they

546
00:27:47,680 --> 00:27:50,240
have final say off essentially.
They they certainly wanted

547
00:27:50,320 --> 00:27:54,880
wanted an exit like 18 months
ago when that was supposedly a

548
00:27:54,880 --> 00:27:58,680
done deal with 7, but never
that, you know, that never

549
00:27:58,680 --> 00:28:00,600
actually eventuated.
Yeah, it it.

550
00:28:00,640 --> 00:28:03,440
It would be tough not to to
ponder that one every time you

551
00:28:03,440 --> 00:28:05,960
wake up and you look at what
Coronado is currently trading

552
00:28:05,960 --> 00:28:08,200
at.
But times have changed quite a

553
00:28:08,200 --> 00:28:12,160
bit.
And given where natural resource

554
00:28:12,160 --> 00:28:15,720
PE has been in that, the sort of
state they've been in lately,

555
00:28:15,720 --> 00:28:19,520
it's hard to get a gauge on how
much liquid cash these guys

556
00:28:19,520 --> 00:28:21,480
would actually have, what they
can actually do.

557
00:28:22,160 --> 00:28:24,560
So we'll, we'll, we'll talk
about a few other options.

558
00:28:24,560 --> 00:28:26,840
You've also got 7 like you
mentioned there.

559
00:28:26,840 --> 00:28:31,720
They were rumored to be buying
the debt of Coronado just

560
00:28:31,720 --> 00:28:33,280
recently buying buying a
Porsche.

561
00:28:33,280 --> 00:28:35,840
On market, yeah.
On market $40 million was the

562
00:28:35,920 --> 00:28:37,200
the rumor there.
Yeah.

563
00:28:38,040 --> 00:28:40,560
Now we know they're interested.
They're trying to buy a big

564
00:28:40,560 --> 00:28:43,200
stake in the company not too
long ago.

565
00:28:43,200 --> 00:28:46,960
They have bought numerous assets
in in Australia in the past.

566
00:28:47,760 --> 00:28:49,240
That's a that's a big question
mark.

567
00:28:49,240 --> 00:28:53,560
Like you, you need deep pockets
to take on this operation in

568
00:28:53,920 --> 00:28:58,160
Coronado because you are buying
loss making mines.

569
00:28:58,160 --> 00:29:01,520
So even if you can stump up the
money to buy the company out,

570
00:29:01,760 --> 00:29:05,280
you need to be able to stomach
potential losses for a number of

571
00:29:05,280 --> 00:29:07,840
years to come as CapEx is being
spent.

572
00:29:07,840 --> 00:29:10,960
Like CapEx has been pulled all
the way down to just critical

573
00:29:10,960 --> 00:29:12,960
stuff.
Yeah, So they've got big

574
00:29:12,960 --> 00:29:18,360
expansions, Buchanan and here
here in Australia as well, going

575
00:29:18,360 --> 00:29:21,160
underground at Cara.
It's been winding down, but you

576
00:29:21,160 --> 00:29:22,720
still need to spend a lot of
money on the assets.

577
00:29:22,720 --> 00:29:25,120
So you need to be pretty deep
pocketed to do a deal here.

578
00:29:25,280 --> 00:29:29,320
Well, if they're buying the,
the, the listed bonds on market

579
00:29:29,320 --> 00:29:34,520
at whatever $0.70, then like the
bigger risk when you get a

580
00:29:34,520 --> 00:29:36,720
distressed situation like this
and you've got stressed that

581
00:29:36,720 --> 00:29:39,400
guys like floating around is
that you get primed and there's

582
00:29:39,400 --> 00:29:43,080
some new debt that enters the
cap structure, which is, you

583
00:29:43,080 --> 00:29:46,200
know, seeing you secured and
ranks high than you and yours

584
00:29:46,920 --> 00:29:49,240
like you rank even lower than
that because you bought the

585
00:29:49,240 --> 00:29:51,120
listed bonds, which may be
unsecured.

586
00:29:51,120 --> 00:29:52,480
Are they unsecured or?
Secured.

587
00:29:52,840 --> 00:29:56,080
I believe they are secured.
Well, yeah, regardless.

588
00:29:56,080 --> 00:30:00,080
Like you could still
theoretically get primed, but

589
00:30:00,480 --> 00:30:02,840
maybe they just want like they
want to sit at the table.

590
00:30:02,840 --> 00:30:05,040
Maybe they're buying secure deck
because they want to sit at the

591
00:30:05,040 --> 00:30:06,280
table.
Maybe they have interest in

592
00:30:06,480 --> 00:30:10,040
Australian asset, so all the US
ones but not both.

593
00:30:10,040 --> 00:30:13,880
Like I'd be very curious what
the ambitions of Seven Group

594
00:30:14,120 --> 00:30:15,640
are.
Yeah, You'd have to be doing

595
00:30:15,640 --> 00:30:17,960
your homework and potentially
like you say there, you could

596
00:30:17,960 --> 00:30:19,760
buy it.
If you do want to buy it, split

597
00:30:19,760 --> 00:30:22,160
it out and try and sell.
I mean, even in this

598
00:30:22,160 --> 00:30:24,040
environment, you're not going to
get a great price for the US

599
00:30:24,040 --> 00:30:25,760
assets.
But if it goes under like and

600
00:30:25,760 --> 00:30:28,840
you've got secured debt, even if
you do get primed, you've got a

601
00:30:28,840 --> 00:30:31,200
pretty meaningful like seat at
that table as opposed to it.

602
00:30:31,720 --> 00:30:34,360
Things get messy.
And that oak tree facility,

603
00:30:34,360 --> 00:30:40,400
there is a refinancing of an, an
already existing facility.

604
00:30:40,400 --> 00:30:44,080
So they're in and around there.
And these guys, yeah, they

605
00:30:44,080 --> 00:30:46,360
breached covenants already and
they didn't report that for a

606
00:30:46,360 --> 00:30:47,720
number of months after it
happened.

607
00:30:47,720 --> 00:30:50,040
So there's a, there's a fair bit
going on.

608
00:30:50,040 --> 00:30:54,040
And then, you know, an equity
raising is also potential on the

609
00:30:54,040 --> 00:30:55,520
table.
I mean, it's essentially A

610
00:30:55,520 --> 00:30:59,120
recapitalization at this price.
And then we know there's other

611
00:30:59,120 --> 00:31:02,720
groups that like financing coal
players, Farallon is the name

612
00:31:02,720 --> 00:31:04,200
that comes to mind areas as
well.

613
00:31:05,040 --> 00:31:09,120
Given the the profitability
again of the assets, I'm not

614
00:31:09,120 --> 00:31:10,680
sure how much more they could
actually stomach.

615
00:31:10,800 --> 00:31:14,640
So it's it's a tough question to
answer, but potential that

616
00:31:14,640 --> 00:31:16,680
they're floating around too.
It doesn't.

617
00:31:16,680 --> 00:31:21,280
It kind of all come down to can
can the assets turn around or

618
00:31:21,280 --> 00:31:23,600
not?
Well, here's the thing going

619
00:31:23,600 --> 00:31:26,680
back to the point that I made
earlier mate on them investing

620
00:31:26,680 --> 00:31:29,760
in in the assets so that they
have been putting a lot of money

621
00:31:29,760 --> 00:31:31,640
in.
They are expanding the profile.

622
00:31:32,360 --> 00:31:34,640
Overall output is going to be
3,000,000 tons higher.

623
00:31:34,840 --> 00:31:37,040
As you said, Cara.
This is a cross.

624
00:31:37,080 --> 00:31:40,440
So they have been Buchanan is
the is the expansion in the

625
00:31:40,440 --> 00:31:42,760
States and Mammoth is the
underground at Cara.

626
00:31:43,360 --> 00:31:46,880
So unit cost across both
operations should be coming down

627
00:31:47,520 --> 00:31:50,800
that they will come down.
It's just what shape Coronado is

628
00:31:50,800 --> 00:31:54,080
in by that course those rebates
they are coming off.

629
00:31:54,200 --> 00:31:58,680
So you know that that agreement
with Stanwell will happen and

630
00:31:58,680 --> 00:32:02,240
the you know, come 2027 unit
costs will be lower.

631
00:32:02,240 --> 00:32:04,600
It just depends what state the
company is in.

632
00:32:04,880 --> 00:32:06,720
CapEx is coming down, although
it's still pretty hefty.

633
00:32:06,720 --> 00:32:12,120
It's going to be about 70 ish,
$1,000,000 going forward and

634
00:32:12,360 --> 00:32:15,040
you've got others, you know
potential levers you could pull.

635
00:32:15,040 --> 00:32:18,480
There is marketing rights they
could sell again, kind of

636
00:32:19,160 --> 00:32:22,640
selling a bit of your future
upside for cash in the door

637
00:32:22,800 --> 00:32:26,280
today.
So there there's a few options

638
00:32:26,280 --> 00:32:29,800
on the table and I mean we need
to talk a bit about the coal

639
00:32:29,800 --> 00:32:33,240
price, right, because there's
not many players in the market

640
00:32:33,240 --> 00:32:36,480
that are so unbelievably talked
to the coal price right now like

641
00:32:36,480 --> 00:32:40,920
this stock is so beaten up.
If there were to be some sort of

642
00:32:40,960 --> 00:32:44,240
incident or disruption, supply
disruption or something like met

643
00:32:44,240 --> 00:32:46,880
coal prices is very weak.
Demand has been weak at the

644
00:32:46,880 --> 00:32:50,480
moment for a number of factors.
But if there was to be an uptick

645
00:32:50,480 --> 00:32:54,200
in that, the thing would thing
would RIP higher because the the

646
00:32:54,200 --> 00:32:56,160
dynamic would completely change.
Yeah.

647
00:32:56,320 --> 00:33:00,080
Now you, you can't sit around
hoping that'll happen, but it's

648
00:33:00,080 --> 00:33:01,320
something you got to keep in
mind.

649
00:33:01,480 --> 00:33:03,480
Yeah.
Whether we see a capital raise

650
00:33:03,480 --> 00:33:06,880
as well is another potential
catalyst.

651
00:33:06,880 --> 00:33:10,240
If you're someone on the outside
looking in, if you're, if you're

652
00:33:10,240 --> 00:33:13,280
there right now, it's maybe not
what you're you're hoping for,

653
00:33:13,280 --> 00:33:16,360
but everything needs to kind of
be on the table to to save the

654
00:33:16,800 --> 00:33:20,680
business.
Yeah, and you're also making an

655
00:33:20,680 --> 00:33:25,240
equation or an estimate on the
like the the state government's

656
00:33:25,240 --> 00:33:29,920
like propensity to actually,
yeah, provide more generosity as

657
00:33:29,920 --> 00:33:32,280
things like could, could look
worse more and more diet you

658
00:33:32,280 --> 00:33:34,480
have you have the state
government putting their hand

659
00:33:34,480 --> 00:33:36,840
out more.
It's kind of interesting that

660
00:33:36,840 --> 00:33:40,680
they they had asked for royalty
relief again and they were sort

661
00:33:40,680 --> 00:33:44,200
of rejected on that front.
But maybe if the thing the

662
00:33:44,200 --> 00:33:47,360
situation gets even worse, the
the state government changes

663
00:33:47,360 --> 00:33:48,640
their tune a bit more on that
one.

664
00:33:49,320 --> 00:33:51,160
I wouldn't hold my breath
because.

665
00:33:51,640 --> 00:33:54,440
Well.
Yeah, Carl, you need to see that

666
00:33:54,440 --> 00:33:56,600
happen before you're turning the
lights off.

667
00:33:56,600 --> 00:33:58,840
You know, you need the line of
sight on that.

668
00:33:58,840 --> 00:34:02,360
So yeah, yeah, there's there's
there's a bit to to Stew on

669
00:34:02,360 --> 00:34:09,360
there, but there's certainly
players interested in giving

670
00:34:09,360 --> 00:34:11,480
cash and making sure this this
operation, this company

671
00:34:11,480 --> 00:34:14,120
survives.
So yeah, we'll see if it's too

672
00:34:14,120 --> 00:34:16,639
little too late or if a few
parties can come together and

673
00:34:16,639 --> 00:34:17,360
make something happen.
You.

674
00:34:17,760 --> 00:34:21,480
Can make and lose a lot of money
by like yeah, doubling in these

675
00:34:21,480 --> 00:34:25,880
sort of situations like just as
easily have like a double as you

676
00:34:25,880 --> 00:34:27,639
could lose all your money I'm
taking.

677
00:34:27,920 --> 00:34:29,639
Yeah.
But I mean imagine there is the

678
00:34:29,639 --> 00:34:34,199
recapitalization and you get a
bit more clarity on on on unit

679
00:34:34,199 --> 00:34:35,600
costs and all those sorts of
things.

680
00:34:37,000 --> 00:34:40,080
You could be in a interesting
position if you've you've got a

681
00:34:40,080 --> 00:34:43,080
three or four year time horizon
looking forward because coal

682
00:34:43,080 --> 00:34:47,400
prices at a low ebb talk like we
mentioned, but you need to kind

683
00:34:47,400 --> 00:34:50,400
of get there first.
Any other takeaways, JD?

684
00:34:50,920 --> 00:34:53,080
Mate, there, there.
There's a sort of couple, right?

685
00:34:53,239 --> 00:34:58,960
The, the like way in which we're
seeing commodity cycles and

686
00:34:58,960 --> 00:35:00,840
capital cycles play out.
I find fascinating because we've

687
00:35:00,840 --> 00:35:04,080
spoken heaps about it over the,
the, the past couple years, but

688
00:35:04,080 --> 00:35:06,160
I feel like we're actually
seeing it in, in real time now.

689
00:35:06,200 --> 00:35:08,480
It's, it's pretty exciting.
Like it's unfortunate here in

690
00:35:08,480 --> 00:35:11,480
Coronado situation, but if you
look around the market at this

691
00:35:11,480 --> 00:35:14,240
point in time, like Platinum's
another one in the PGM space,

692
00:35:14,240 --> 00:35:17,160
we've seen it like these things
take years to sort of play out.

693
00:35:17,640 --> 00:35:19,560
Coal was booming when we started
the potty, right?

694
00:35:19,560 --> 00:35:21,960
Like the guys were making money
hand over fist.

695
00:35:22,360 --> 00:35:28,400
And how the companies invest
that money in the good times is

696
00:35:28,400 --> 00:35:30,960
like an indicator of how they're
going to perform in the long

697
00:35:30,960 --> 00:35:33,440
term.
If they are, you know, building

698
00:35:33,440 --> 00:35:37,120
a solid cash ball and going to
take advantage of the the weak

699
00:35:37,760 --> 00:35:41,240
and lower sort of cost
environment times is a super,

700
00:35:41,240 --> 00:35:42,680
super, super important
indicator.

701
00:35:43,400 --> 00:35:45,760
And these guys didn't
necessarily do the wrong thing.

702
00:35:45,760 --> 00:35:49,640
They're like in they've invested
in their assets, but they still

703
00:35:49,640 --> 00:35:52,480
held debt.
And maybe they did a little bit

704
00:35:52,480 --> 00:35:54,760
too late if you're going to be
cynical, but that that is

705
00:35:54,760 --> 00:35:57,760
something that really kind of
comes to mind here.

706
00:35:57,880 --> 00:36:00,320
And yeah, I'm just thinking
about that heap lately.

707
00:36:00,760 --> 00:36:02,520
I've got one more for you
actually as well.

708
00:36:03,120 --> 00:36:06,080
These guys had their AGM just
recently and it was a completely

709
00:36:06,080 --> 00:36:10,000
virtual AGM.
Don't like it, don't like it.

710
00:36:10,000 --> 00:36:11,440
Also like.
I remember looking at their

711
00:36:11,440 --> 00:36:16,160
notice of meeting by the way and
giant board across yeah,

712
00:36:16,360 --> 00:36:19,880
multiple jurisdictions with an
absolutely bizarre peer comp for

713
00:36:19,880 --> 00:36:23,320
the for the R.E.M.
Benchmarking and unfathomable

714
00:36:23,320 --> 00:36:29,560
amount of GNA going towards yeah
the yeah, the overheads

715
00:36:29,560 --> 00:36:33,600
department to to the board which
couldn't fathom for the size of

716
00:36:33,600 --> 00:36:35,480
the company.
Yeah, there's, there's a few

717
00:36:35,480 --> 00:36:38,480
sort of question marks there.
I think with with virtual Agms

718
00:36:38,640 --> 00:36:41,960
like the preferences, it's got
to be virtual and in person.

719
00:36:42,200 --> 00:36:44,640
Yeah, it's just, yeah, it's got
to be in this day and age and

720
00:36:45,120 --> 00:36:48,160
like, yeah, you can't just
silence shareholders like that.

721
00:36:48,160 --> 00:36:51,600
But anyway, I think that's
enough on on Coronado and a good

722
00:36:51,600 --> 00:36:54,720
bit to to think about there for
the punters out there.

723
00:36:55,600 --> 00:36:57,040
Absolutely mate, we've got some
partners to thank.

724
00:36:57,080 --> 00:36:58,600
We do have a couple partners to
thank mate.

725
00:36:58,720 --> 00:37:01,240
A massive thank you to Mineral
Mining Services, grounded

726
00:37:01,240 --> 00:37:03,600
sandwich ground support, cage
rule and cross boundary energy.

727
00:37:04,280 --> 00:37:11,040
Now remember, I'm an idiot.
JD is an idiot.

728
00:37:11,560 --> 00:37:13,960
Thought any of this was anything
other than entertainment.

729
00:37:14,440 --> 00:37:16,600
You're an idiot and you need to
read out a disclaimer.