Will the Paladin-Fission deal blow up?

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Righto money borders.
The only thing as good as the

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Atamaska basin is Axis modern
technology.

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I've figured out the trusted
advisor, the Drillo survey

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instrumentation, and they're
going to be absolutely getting

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shit as accurate as possible in
Canada forever.

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They're over there.
Yeah, mate, they're over there.

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They're not just Australia, they
are global experts.

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Get them involved in your
business, boys.

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Conveniently, there's a bit more
uranium news.

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Happy to help, it's what I do
looks.

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Like a deal could be falling
over Maddie.

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Maybe there's a bit of there's a
I'm going into some unwanted

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history, but the history does
mean something and it's going to

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be a punchline at the end.
It's like Pulp Fiction all

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coming together like it.
But I'm excited to see what

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you've come up with.
You boys have, you're probably

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the only boys in Australia that
can make financial results so

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interesting.
I don't think it's ever been

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done before.
The big Australian, they came

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out with their their annual,
annual results, which JD's

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caught.
Yeah, thankfully.

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Before you fall asleep.
It is actually interesting.

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No need for coffee with the boys
getting into the weeds.

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Trav, you got bloody.
What are you?

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You got a bit going on.
Bit of Yeah. 29 medals.

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I did, I did.
I just tried to to pick a couple

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of interesting stories out
there, like 11 being glands got

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this, you know, off take maybe,
which isn't with Glencore, by

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the way.
And then 29 medals like their

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statements come out and I just
always it's kind of like

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quarterlies made.
I read them back to front.

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And so I just, I just
highlighted a couple of things

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in the notes section of the
financial statements I think are

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worth worth highlighting.
Are they still alive?

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Yes, yes, yes.
I still have.

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I have a pulse.
And I've got a little bonus, a

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little bonus one right at the
end that just a couple numbers

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that you got.
You got to try and guess if the

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story is true or not.
It's a real company or not.

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I like it.
I've got I've got a fun little

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little quiz question as well
that sort of popped up, so we'll

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keep them rolling.
Oh, beautiful boys, right?

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Just to keep Twitter happy,
we'll start with the uranium

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story.
Aye, fuck it mate.

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You lead out with the uranium
story.

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Double S the views.
Yeah, yesterday's episodes

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Flying the Kazaram prom 10.
Cheers to all me mates out

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there.
Right, Fission and Paladin.

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Now for those who don't know
that haven't tuned in.

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So Paladin and Fission Uranium
Corp are in the process of

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trying to lock in all script
mergers.

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So plenty of commentary around
the you'd say the lack of

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geographical synergies.
They do have uranium as a

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synergy.
So that that does help.

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Yeah.
And people.

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And so Paladin, Paladin have got
the Langa Heinrich mine, which

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is now, you know, processing the
old stockpiles in Namibia.

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Restart job due to start mining
in the coming years again and

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they've also got the advanced
exploration projects in WA and

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Queensland which have pretty
much been on us due to, you

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know, uranium prices and
government.

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They've also got the Michelin
deposit all the way over in the

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east of Canada in Labrador.
And then Fission has the

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Patterson Lake South project,
which is also called PLS in the

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out of Atabaska Basin, right
next door to Next Gen's Arrow.

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It's like not high grade like
Next Gen, but a lot shallower

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so.
There's a lot of PL SS in our,

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our world.
There's, there's, that's the PLS

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project, there's PLS which is
the ticket for Pilbara.

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And then sometimes when you talk
about ISR companies, there's

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pregnant leach solution.
PLR, there you go.

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So anyway, maybe pay Pilgrim
Minerals might get into uranium.

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There's a synergy.
Never say never.

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Oh, say say bloody chained,
right?

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So the date what's happened
today?

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The date of the Paladin fission
scheme vote.

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So the, I think the date of the
vote, the meeting itself has

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been extended to September 9th.
They're trying to encourage

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proxy votes after be in before
the 5th of September.

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I think the meeting was
previously 26th of August.

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So why would you extend a
meeting?

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I think we can infer infer they
are struggling to get a

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sufficient amount of yes votes
casted.

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Yeah, percentage of yes votes.
Their proxies would have come in

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already for the, for the meeting
that was scheduled for

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yesterday, whatever.
And they're, they're like, well,

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we're trying to buy a bit of
time today.

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We haven't got enough yeah,
yeah, yeah.

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So and I even I had it wrong in
me head this morning anyway

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bloody we had a bit of finance
education from the powers that

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be here.
So they need, they need 2/3 of

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votes cast in favour and that's
inclusive of options that vote

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as well.
It's like 2 separate parts of

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it.
I'll bring up the explanation

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here.
So that's not 66 and 2/3 percent

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of total shares at 66 and 2/3 of
who votes of the shares that.

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So some people can not vote and
abstain their vote effectively.

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And you also need same in same
as in AUS you need a simple

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majority of persons present IE
50% of the security holders

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present by number.
Whereas Australia for schemes

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are usually 75% instead of 66
and 2/3.

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So bit easier to get done here
than Australia.

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Australia's still back to 50 by
number.

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Do you need a minimum number of
shares to vote as well?

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I don't know, do you?
I I tried to find out I did a

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pretty brief.
Set I've done, I think they're

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the only conditions.
Yeah, I'll just.

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Those I thought so I just wanted
to double check.

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Yeah, so interesting.
And the why, so the and what

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they're what they're saying in
today's announcement is the

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majority of votes cast to date
support the arrangement, which

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is still less than the 66 and
2/3 required to approve the

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arrangement.
So it's saying that the percent

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yes votes that have been cast so
far must lie in between 50% and

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66 and 2/3.
Very interesting.

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Which it needs to be so sorry.
Even though majority of vote in

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favour, that's good for fuck all
if you ain't got the 66.6%.

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So basically, unless, unless
they get a giant influx of

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people who'd previously, you
know, hadn't even bothered to

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vote yet, just come in the door
over the next week and vote yes,

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then it it looks pretty unlikely
to just simply pass that

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through.
As long as more than 2/3 of them

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that come in the door vote yes,
it might get up to 2/3 a little

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bit, right?
So what's?

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That you did.
A bit of history here, man.

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So I I delved into the history
and it might or might not be

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pertinent, but we'll get to the
punch line at the end.

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So one of those two.
This is why fucking how goods

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Canada Canada is West Perth and
Cottesloe on steroids.

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It is bloody spin out central
love the joint.

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It's bloody plenty happening.
So fission uranium history.

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So look, because the current CEO
of fission uranium Corp is Ross

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McElroy, but the big dog who
started all this is this Dev

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Rendawa.
So he founded Strathmore

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Minerals back in 1996, and then
in 2007 Dev spun Fission Energy

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Corp, not Fission Uranium,
Fission Energy Corp out of

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Strathmore to focus on uranium
exploration in Saskatchewan.

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So and then Dev went to run
fission energy and then current

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fission uranium CEO Ross
McElroy.

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He joined fission energy in
2007.

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I think he was with like Kamiko
on that.

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Before that he was part of the
MacArthur River discovery, I

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think.
So they've obviously had a lot

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of uranium tenure.
And so he come on as like the

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head of the technical team, the
the CEO chief GI and that led

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the the discovery of the
Waterbury Lake project.

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And then they also discovered
the PLS deposit, which is

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Fission Uranium's flagship
thing.

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They've got today discovered
that in 2012.

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Now Fission Energy Corp then
sold it's this Waterbury like

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discovery and the larger
selection of bloody other assets

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to Denison mines in 2013.
That was an old script deal.

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And part of that deal was to
spin out Fission Uranium Corp,

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which is the vehicle that held
50% of the PLS deposit.

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Other 50% was held by this Alpha
Minerals and then Dev ran

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Fission Uranium Corp and Ross
McElroy was again the head of

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the technical team.
And then you also had this F3

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Uranium incorporated in 2013 as
a that was a wholly owned

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subsidiary of Fission Uranium
and that held all the other

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exploration assets other than
the PLS project.

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And you would you'd say F3
uranium floating around today

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have a.
Guess that gets spun out.

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So it was, it was like a, it's
like a spin out after this spin

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out.
So so then in November 2013,

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Fission Uranium did this all
script deal to acquire alpha

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minerals to get 100% ownership
of PLS.

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Then from that Fission 3 point O
was spun out and F3 uranium was

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no longer a subsidiary of
Fission.

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And that held like I'll bring up
the map that holds the like the

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Patterson Lake North project.
So 10 year around PLS and

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Nextgen's Arrow and everything.
So that Fission 3 point O was

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renamed to F3 Uranium last year.
So it's just like right.

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It's just shit.
It's just like pick a bloody

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pick a number out of the jar.
So good.

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So and then since it's
inception, F3 Uranium's been run

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by Devrand Dawa, who's been the
CEO, CEO.

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So he just always runs the spin
out of the spin.

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Out runs the spin and he runs he
so he was running F3 and he was

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also running Fission Uranium as
well.

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And then it was only in 2020
then that Ross McElroy was

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became CEO of Fission Uranium
and Dev stepped down.

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But interestingly in 2015
Denison who did the deal back in

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2012 which what Fission Uranium
got spun out to.

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Denison and Fission Uranium were
actually going to merge, but the

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retail punters blocked the deal.
Exact same wording was used in

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that deal failure as it was
today for Fission and Paladin.

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Majority of Fission shares were
voted in favour of the merger,

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but the total fell short of the
required 2/3 needed to close the

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deal.
Wow, so I found that very.

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Interesting.
Do you know any, do you have any

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information about the like who
the blocking shareholders?

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Were they said?
The article I read it said it

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was retail mostly mostly retail
that blocked the deal.

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Interesting.
And often the it's a retail

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contingent that's kind of, you
know, friends of management or

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friends of the founders and
stuff like that, that maybe the

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00:11:00,600 --> 00:11:02,480
the founder has.
Influence over Could have been

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00:11:02,480 --> 00:11:04,200
the rise of two.
Could have been the Twitter

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00:11:04,200 --> 00:11:07,040
force back in 2015.
Was Twitter big in 2015?

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00:11:07,040 --> 00:11:07,680
I don't.
Think so.

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00:11:08,120 --> 00:11:10,280
Could have been What was that?
What are those?

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00:11:11,840 --> 00:11:15,400
Nah, that.
Well, I'm thinking of GameStop.

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What was the big chat that that
was a red straight, wasn't it?

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00:11:18,480 --> 00:11:19,800
But I think maybe there was a
black.

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00:11:19,800 --> 00:11:21,240
Straight bets Canada would have
been.

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00:11:21,480 --> 00:11:24,080
CEO straight bets, that's it,
yeah.

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00:11:24,080 --> 00:11:28,360
So that, yeah, but anyway, so as
I said, 2020, that's when Ross

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took over CEO role at Fission
Uranium and then obviously Dev

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still held the CEO role at F3
Uranium, which he still does

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00:11:37,200 --> 00:11:39,640
now, so.
And they had a, they had a

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bumper run, I think late 22,
early 23.

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00:11:43,320 --> 00:11:46,440
They jumped over 5X in a pretty
short period of time.

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00:11:46,440 --> 00:11:50,600
And I remember a couple fundies
mentioned them when we, you

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00:11:50,600 --> 00:11:52,960
know, early days on the podcast,
mid 23.

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00:11:53,120 --> 00:11:55,240
So they've fallen back a little
bit, but they had a hell.

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00:11:55,240 --> 00:11:58,800
Of a did have 1/2 decent some
half decent hits and discoveries

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00:11:58,800 --> 00:12:01,560
there, but it sort of just
hasn't really taken off.

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00:12:01,560 --> 00:12:04,120
I remember yeah, I remember one
of the fun sign there that was

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00:12:04,120 --> 00:12:07,280
the one that we're looking at,
but it just hasn't really come

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00:12:07,280 --> 00:12:09,680
to fruition yet.
Even talk about another spin

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00:12:09,680 --> 00:12:11,200
out.
This one's unrelated before I

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get to the punch line, but F3's
spinning out 17 exploration

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00:12:15,920 --> 00:12:18,280
assets into F4.
Oh no.

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00:12:18,320 --> 00:12:22,800
And it was it was approved, the
court approved it a week and a

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00:12:22,800 --> 00:12:25,720
bit ago.
Oh no, how good is Canada?

226
00:12:25,720 --> 00:12:28,120
Get me over there.
So we've got to have four now

227
00:12:28,120 --> 00:12:29,840
coming.
That'll be trading soon by the

228
00:12:29,840 --> 00:12:32,240
sounds.
Now let's look at the top

229
00:12:32,240 --> 00:12:36,800
shareholders of Fission.
Now it's, I think I got this off

230
00:12:36,800 --> 00:12:39,800
as a tip ranks or something, but
so I'm not sure how accurate

231
00:12:39,800 --> 00:12:42,360
this is.
I think it's pretty hard to get

232
00:12:42,360 --> 00:12:47,040
Full disclosure on top
shareholders for TSX companies.

233
00:12:47,040 --> 00:12:53,200
But CGN, the Chinese nuclear
company, they own 11.26%.

234
00:12:53,200 --> 00:12:56,200
I think they were about, they
originally came in at like 20%,

235
00:12:56,200 --> 00:12:58,480
but they're, they, they're
obviously big shareholders.

236
00:12:58,480 --> 00:13:04,200
So you would assume they just
want the fucking uranium.

237
00:13:04,200 --> 00:13:07,000
So you would assume they would
vote in favour.

238
00:13:07,000 --> 00:13:15,240
Don't know, don't know Sprott 8%
doing some bloody Johnny.

239
00:13:15,240 --> 00:13:19,400
Give me a call mate.
If you're listening, he's I

240
00:13:19,480 --> 00:13:22,680
don't know what where Sprott
sits with this, but the

241
00:13:22,680 --> 00:13:26,520
interesting bit and you're
talking about influence Trav Oh

242
00:13:26,600 --> 00:13:30,280
Dev.
He looks to still hold about .61

243
00:13:30,280 --> 00:13:33,400
and a bit percent of vision.
That's the shares though, but

244
00:13:33,400 --> 00:13:35,840
he'd he'd probably own a bunch
of the options if it was a.

245
00:13:36,040 --> 00:13:38,760
Yeah, I.
Reckon he would have just laced.

246
00:13:38,760 --> 00:13:41,160
His pockets, yeah.
So I don't know if he's still

247
00:13:41,160 --> 00:13:42,800
got options.
I'm not sure.

248
00:13:42,800 --> 00:13:45,720
I probably got fucking yeah.
Have to go into Cedar and not

249
00:13:45,720 --> 00:13:47,000
help.
Me and he'd probably, he'd

250
00:13:47,000 --> 00:13:50,920
probably control a large block
of whoever has the options just

251
00:13:50,920 --> 00:13:53,160
by influence.
And yeah, and also the shares

252
00:13:53,160 --> 00:13:53,840
too.
Yeah.

253
00:13:53,840 --> 00:13:58,120
So that and as we said, options
are part of this 66th and 2/3.

254
00:13:58,120 --> 00:14:04,600
So and word on the decline.
I am pretty sure he opposes the

255
00:14:04,600 --> 00:14:08,680
deal.
I've been told so Dev opposes

256
00:14:08,720 --> 00:14:12,120
the fission Paladin deal.
So the fact that he's on the

257
00:14:12,120 --> 00:14:16,240
register, not sure if he has
options or not, but obviously

258
00:14:16,240 --> 00:14:21,840
being around the traps and the I
guess the OJ of these companies

259
00:14:22,640 --> 00:14:26,480
going to be interesting to see
if he is what's going on there

260
00:14:26,480 --> 00:14:29,760
and if that's part of why
they're not able to get the

261
00:14:29,760 --> 00:14:31,960
votes yet or not so.
There's a few things that could

262
00:14:31,960 --> 00:14:34,120
happen here, Maddie, like, and
if Canada's anything like

263
00:14:34,120 --> 00:14:38,480
Australia, which probably is the
Bay, proxies like, you know,

264
00:14:38,520 --> 00:14:43,080
proxy solicitation firms engaged
and they'd be calling up the

265
00:14:43,080 --> 00:14:45,360
shareholders being like, oh,
have you voted?

266
00:14:45,360 --> 00:14:47,160
You sure you haven't voted?
You need assistance like all

267
00:14:47,160 --> 00:14:49,240
this sort of stuff.
There'd be a lot of campaigning

268
00:14:49,240 --> 00:14:52,920
to to encourage it.
That's a great point, Trevon.

269
00:14:53,200 --> 00:14:55,640
What what do you think they
would advise because they'd be

270
00:14:55,640 --> 00:14:59,400
advising obviously and that, you
know, the flow on is the ETFs,

271
00:14:59,400 --> 00:15:02,560
the uranium ones, the, you know,
the Sprott Junior ETF and those

272
00:15:02,560 --> 00:15:06,040
ones I'm sure like I haven't
looked, but they would hold a

273
00:15:06,040 --> 00:15:10,160
decent position as well.
I mean, we tend to see these

274
00:15:10,160 --> 00:15:14,000
guys vote in line with board if,
you know, everything's sort of

275
00:15:14,000 --> 00:15:16,320
kosher.
Yeah, I, I'm not sure what, what

276
00:15:16,320 --> 00:15:18,000
votes have been received.
If this happened, I would have

277
00:15:18,000 --> 00:15:21,440
thought the the Atfs would have
to vote for the, you know, for

278
00:15:21,520 --> 00:15:24,960
the the proxy, Yeah.
I don't, I don't think Sprott

279
00:15:24,960 --> 00:15:26,920
would.
I'm not sure because they'd.

280
00:15:26,920 --> 00:15:28,440
Be part of it.
Yeah.

281
00:15:29,160 --> 00:15:31,400
Oh, no, because there, that's, I
think that's Sprott there.

282
00:15:31,400 --> 00:15:34,240
That would be the Sprott ETF
probably, yeah.

283
00:15:34,240 --> 00:15:38,360
Probably because Global X is.
Yeah, I'm not sure.

284
00:15:38,480 --> 00:15:42,560
In in, in general, it's pretty
damn tricky for the ETFs not to

285
00:15:42,560 --> 00:15:44,240
vote in favour of a board
recommended deal.

286
00:15:44,360 --> 00:15:49,440
Yeah, the and then you've like
it's kind of open game for for

287
00:15:49,440 --> 00:15:51,920
an interloper if they want to
pop up here with a better offer,

288
00:15:52,920 --> 00:15:55,440
you know, is it is it, is it too
late for a recut of the deal as

289
00:15:55,440 --> 00:15:57,040
well?
Sometimes minority hold out

290
00:15:57,040 --> 00:15:59,480
because they want, they want,
you know, a bit more of the pie

291
00:15:59,480 --> 00:16:02,080
and that can sometimes swing,
swing these voters who've been

292
00:16:02,480 --> 00:16:04,560
opposing it.
Because I saw the bit of

293
00:16:04,560 --> 00:16:07,240
analysts commentary today on
what it's valued at today

294
00:16:07,240 --> 00:16:09,280
compared to when it the deal was
done.

295
00:16:09,280 --> 00:16:11,360
They said at the time of the
announcement, the transaction

296
00:16:11,360 --> 00:16:16,600
implied $1.30 per share
valuation for Fission .64 times

297
00:16:16,600 --> 00:16:20,840
consensus NAV because Paladin
share prices obviously dropped

298
00:16:20,840 --> 00:16:25,440
as well along, but I think along
with Fission as well.

299
00:16:25,440 --> 00:16:28,840
But the share process today
imply a valuation of a dollar

300
00:16:28,840 --> 00:16:33,960
seven per fission share and the
often now equates to .53 times

301
00:16:33,960 --> 00:16:37,720
visions consensus nab.
So whether and you'll you look

302
00:16:37,720 --> 00:16:40,960
at the old Twittersphere a lot
of chat about whether people are

303
00:16:41,640 --> 00:16:45,240
holding out hoping for either a
deal ray card or or an

304
00:16:45,240 --> 00:16:48,520
interloper or something.
It's like it looks like they're

305
00:16:48,520 --> 00:16:52,160
a lot of them are sitting back
not voting to see what happens.

306
00:16:52,160 --> 00:16:56,760
So they obviously didn't get won
the percentage through the door

307
00:16:56,760 --> 00:16:59,680
and obviously enough, not that
enough fights count, but they

308
00:16:59,680 --> 00:17:01,840
need a lot more blade.
They know it's still a lot of

309
00:17:01,840 --> 00:17:04,480
still on the solid on and they
need them to tick bloody yes.

310
00:17:04,839 --> 00:17:11,440
So it's very, very interesting.
I can see the the Sprott Uranium

311
00:17:11,440 --> 00:17:16,319
Miners Trust holds 43,000,000
shares, so that going roughly

312
00:17:16,319 --> 00:17:19,359
off an 830 million market cap
and a a share price just under a

313
00:17:19,359 --> 00:17:22,480
buck is a bit over 5% yeah,
maybe there's.

314
00:17:22,680 --> 00:17:24,440
Yeah.
So unless I don't know if they

315
00:17:24,440 --> 00:17:27,599
hold any separate to the ETFs or
not because that one says

316
00:17:27,599 --> 00:17:30,320
69,000,000, but as I said
they're not can't say that is

317
00:17:30,320 --> 00:17:33,280
100% accurate so.
There could be Sprott Wealth

318
00:17:33,280 --> 00:17:35,000
Management, these these sorts of
things too.

319
00:17:35,000 --> 00:17:36,800
I'm not sure if they're clumped
in together or not.

320
00:17:36,880 --> 00:17:38,960
Yeah.
So there's a bit of bit of

321
00:17:38,960 --> 00:17:42,120
action.
Yeah, buddy, be very

322
00:17:42,120 --> 00:17:44,880
interesting, very interesting.
What do you think?

323
00:17:44,880 --> 00:17:47,400
Fascinating.
I think it is super interesting

324
00:17:47,400 --> 00:17:52,760
when a deal outs up in yeah,
you're kind of, yeah, you hope

325
00:17:53,280 --> 00:17:55,080
share.
Generally shareholders kind of

326
00:17:55,080 --> 00:17:59,240
vote in line with deals.
It's kind of unusual that you

327
00:17:59,240 --> 00:18:01,560
have enough of a contingent kind
of holding out for for a deal

328
00:18:01,560 --> 00:18:04,400
not to get over the line via,
you know, a scheme vote,

329
00:18:04,400 --> 00:18:07,160
especially with only a 66% kind
of threshold in Canada, but.

330
00:18:07,600 --> 00:18:09,200
Yeah, tough for you.
You wouldn't get it through in

331
00:18:09,200 --> 00:18:11,800
Australia if they can't get it
through 66, two thirds in

332
00:18:11,800 --> 00:18:12,480
Canada.
Yeah.

333
00:18:12,560 --> 00:18:16,920
So it'd be interesting to see if
it's based on what uranium's

334
00:18:16,920 --> 00:18:19,800
doing at the moment, because
it's been bloody hammered down.

335
00:18:19,800 --> 00:18:22,240
Everything's gone down a lot
since this has happened.

336
00:18:22,240 --> 00:18:25,040
If that's just changed the
sentiment a bit and they're

337
00:18:25,040 --> 00:18:28,120
going to hold out.
Yeah, volatility is just bad for

338
00:18:28,120 --> 00:18:29,960
deals in general.
Like you need kind of stability.

339
00:18:29,960 --> 00:18:32,480
You got a deal over the line.
Otherwise, you know, one party's

340
00:18:32,480 --> 00:18:34,720
winning more than the other and
people get unhappy, blah blah

341
00:18:34,760 --> 00:18:36,520
blah.
Yeah, yeah.

342
00:18:36,520 --> 00:18:39,720
So anyway, we can, we can Chuck
up a video that we've shown

343
00:18:39,720 --> 00:18:43,080
before of the PLS project.
Have a look at it here.

344
00:18:43,080 --> 00:18:45,000
Bloody money miners.
I'm saying to mine.

345
00:18:45,680 --> 00:18:48,240
I'm saying water.
You know what else I'm saying?

346
00:18:48,440 --> 00:18:50,080
What?
Greenland's equipment.

347
00:18:50,520 --> 00:18:53,880
Oh, every time I see water now I
just think freaking Greenlands.

348
00:18:53,880 --> 00:18:56,880
You think mining, you think
water, you think Greenlands, but

349
00:18:57,360 --> 00:19:01,680
get get Greenlands over the
Attabaska Basin to analyse that

350
00:19:01,680 --> 00:19:04,280
water.
They analyse water before,

351
00:19:04,280 --> 00:19:07,000
before they do anything.
Water analysis experts.

352
00:19:07,320 --> 00:19:08,640
What?
How do they analyse water?

353
00:19:09,440 --> 00:19:12,120
If I knew there wouldn't be a
need for Greenlands.

354
00:19:12,800 --> 00:19:16,880
No one knows this is proprietary
how they do it, but they they

355
00:19:16,880 --> 00:19:19,600
even analyse water that you
don't have and then bloody

356
00:19:19,600 --> 00:19:22,160
they'll just smash the ball
fields in to get that water for

357
00:19:22,160 --> 00:19:24,040
you.
Like turn Key mine water

358
00:19:24,040 --> 00:19:27,040
management bloody like they're
not scared of the Attabaska

359
00:19:27,040 --> 00:19:28,000
Basin.
Nah at all.

360
00:19:28,000 --> 00:19:30,280
They'll get a deal over the line
for you, but you get them over

361
00:19:30,280 --> 00:19:31,480
there.
They're probably going to set up

362
00:19:31,480 --> 00:19:34,120
an office over there.
Bloody expand from Perth and

363
00:19:34,120 --> 00:19:36,120
Leonora.
So I get in quick before they

364
00:19:36,120 --> 00:19:39,200
get huge.
Don't Greenland recommendation

365
00:19:40,080 --> 00:19:43,040
beauty, right?
Let's get into the financial

366
00:19:43,040 --> 00:19:45,320
stuff.
I'm saying dollar signs.

367
00:19:46,240 --> 00:19:48,640
Big dollar signs, mate.
We're going to talk about BHB

368
00:19:48,680 --> 00:19:50,640
now.
So obviously the annual results

369
00:19:50,640 --> 00:19:54,920
came out as we said before.
And I, I can't quite believe you

370
00:19:54,920 --> 00:19:56,600
know what annual reporting has
kind of come to.

371
00:19:56,600 --> 00:20:02,640
There was 7 announcements and
466 pages today, so the fair bit

372
00:20:02,640 --> 00:20:06,120
of sifting to try and find
what's actually worth reading

373
00:20:06,120 --> 00:20:07,400
says.
You're the right man for that

374
00:20:07,400 --> 00:20:10,400
job, JD.
It just about defeated me.

375
00:20:10,400 --> 00:20:13,240
I'm not sure about that mate,
but I I thought it'd be

376
00:20:13,240 --> 00:20:16,000
interesting to try and pull out
three details that are

377
00:20:16,000 --> 00:20:18,520
interesting and just have a bit
of a chat about them.

378
00:20:18,520 --> 00:20:20,080
I'm keen to hear what you guys
think too.

379
00:20:20,440 --> 00:20:22,960
So the first one, something I
kind of dug for, it's pretty

380
00:20:22,960 --> 00:20:26,040
keen to hear their commentary.
They do this sort of, you know,

381
00:20:26,360 --> 00:20:31,040
global economics and commodity
commentary, talking about all

382
00:20:31,040 --> 00:20:35,200
the the metals and industries in
which they're in, as well as,

383
00:20:35,200 --> 00:20:37,720
you know, inflation and these
sorts of things around the

384
00:20:37,720 --> 00:20:39,680
world, in particular in the
countries in which they're

385
00:20:39,680 --> 00:20:42,400
operating.
So iron ore, obviously it's been

386
00:20:42,400 --> 00:20:44,840
a a huge deal.
We've been seeing newspaper

387
00:20:44,840 --> 00:20:48,120
headlines every other day about
what it could kind of means for

388
00:20:48,440 --> 00:20:51,000
Australia, what it means for our
budget, what it means for all

389
00:20:51,000 --> 00:20:54,120
the miners out there.
You can just look at the the

390
00:20:54,120 --> 00:20:57,200
year to date performance of
Fortescue, all the majors,

391
00:20:57,280 --> 00:21:00,200
Minres, Champion, Iron to
Terror, all of them are down

392
00:21:00,480 --> 00:21:02,560
quite substantially year to
date.

393
00:21:02,560 --> 00:21:04,680
So I thought it'd be good to get
a feel for it so.

394
00:21:04,920 --> 00:21:07,560
Up for the first last night, JD,
she had a bit.

395
00:21:07,560 --> 00:21:13,320
I think it's back 900 now.
Yeah, yeah, I saw a one 101

396
00:21:13,320 --> 00:21:17,000
bucks, I think it hit 92 or
something a couple weeks ago.

397
00:21:17,000 --> 00:21:21,240
So the, the longer term trend or
the, the medium term trend, I

398
00:21:21,240 --> 00:21:23,760
guess hasn't been quite as
friendly.

399
00:21:24,280 --> 00:21:27,000
And what, what I get to at the
end of this really speaks to

400
00:21:27,000 --> 00:21:28,200
that and it's really
interesting.

401
00:21:28,440 --> 00:21:30,520
So firstly on the Chinese
property market, because that's

402
00:21:30,520 --> 00:21:32,840
what everyone sort of points to
straight away.

403
00:21:32,840 --> 00:21:35,920
So they expect that the Chinese
property market will bottom next

404
00:21:35,920 --> 00:21:38,400
calendar year.
And they they say what to look

405
00:21:38,400 --> 00:21:42,640
out for is first a a slow down
in housing sales and then

406
00:21:42,640 --> 00:21:45,800
construction activity naturally
will roll off after that.

407
00:21:45,800 --> 00:21:48,480
Is that, is that consistent with
what they've been predicted so

408
00:21:48,480 --> 00:21:53,240
far, JD or is it been changing?
I mean it, it always kind of

409
00:21:53,240 --> 00:21:55,360
chops and changes.
I mean, I think they've got a

410
00:21:55,360 --> 00:21:58,600
lot more clarity on it now.
I, I haven't actually honed in

411
00:21:58,600 --> 00:22:01,720
too much on what BHB have said
on this in, in the previous

412
00:22:02,000 --> 00:22:05,280
annual results, but I, I think
this is coming to a lot more of

413
00:22:05,520 --> 00:22:07,560
focus.
You know, next year's relatively

414
00:22:07,560 --> 00:22:09,520
short.
We're already here in August.

415
00:22:09,520 --> 00:22:12,800
I anticipate something's going
to stop kind of mid next year

416
00:22:13,360 --> 00:22:16,120
in, in these kind of markets.
That's happening pretty quickly.

417
00:22:16,120 --> 00:22:19,440
And I mean, a lot of it has come
back on the, the commentary that

418
00:22:19,440 --> 00:22:22,880
the Chinese, you know, Communist
Party has come out with that

419
00:22:23,120 --> 00:22:25,360
they're going to boost it,
they're going to try and destock

420
00:22:25,360 --> 00:22:28,080
the, the vacant housing and all
these sorts of things.

421
00:22:28,080 --> 00:22:30,960
But it was interesting to, to
put that into context because we

422
00:22:30,960 --> 00:22:33,920
always think of the Chinese
property market being the, the

423
00:22:33,920 --> 00:22:35,720
sort of sink for all this
demand.

424
00:22:36,120 --> 00:22:39,760
But they said that the machinery
and equipment sector is now

425
00:22:39,760 --> 00:22:42,400
going to overtake the
construction sector as the

426
00:22:42,400 --> 00:22:45,320
largest share of steel demand.
And we'd kind of spoken about

427
00:22:45,320 --> 00:22:47,640
this the the past couple weeks,
but I thought that was pretty

428
00:22:47,640 --> 00:22:49,840
interesting to to have it
actually quantified and

429
00:22:50,240 --> 00:22:52,720
confirmed.
What about another one?

430
00:22:52,880 --> 00:22:56,240
What about old India?
The Rise of the NJD.

431
00:22:56,840 --> 00:22:58,680
India is super interesting
because we'd spoken about it a

432
00:22:58,680 --> 00:23:02,840
lot in the context of met coal
last week and that, you know,

433
00:23:02,840 --> 00:23:04,520
tied in very well with what they
said.

434
00:23:04,720 --> 00:23:08,720
It's, you know, a benefit on two
fronts for BHP.

435
00:23:08,720 --> 00:23:10,640
You got your iron ore and your
met coal.

436
00:23:10,640 --> 00:23:14,200
They already sell over 40% of
their met coal to India and

437
00:23:14,200 --> 00:23:15,520
they're super bullish.
India.

438
00:23:15,520 --> 00:23:18,480
They're talking about a 4X in
the demand over the next couple

439
00:23:18,480 --> 00:23:22,080
decades in stainless steel
demand out of India, which is,

440
00:23:22,080 --> 00:23:24,120
which is super interesting to
see.

441
00:23:24,120 --> 00:23:27,240
It's been confirmed by every
other miner out there.

442
00:23:28,080 --> 00:23:31,640
Now the last point that I found
really interesting guys is on

443
00:23:31,640 --> 00:23:35,600
the, the iron ore cost curve.
Because I think you see, you see

444
00:23:35,600 --> 00:23:38,640
probably too much fear mongering
out there that there's going to

445
00:23:38,640 --> 00:23:40,600
be a massive crash in the iron
ore price.

446
00:23:41,000 --> 00:23:44,000
Australia's budget's going to be
cooked and people just kind of

447
00:23:44,000 --> 00:23:45,920
run with it.
So it's, it's really interesting

448
00:23:45,920 --> 00:23:50,200
to hear that kind of quantified
not just the sort of why, but

449
00:23:50,200 --> 00:23:53,600
the the what.
So they're talking about a cost

450
00:23:53,800 --> 00:23:56,440
support level between 80 and 100
bucks.

451
00:23:56,760 --> 00:24:00,800
Obviously I was talking in 62%
equivalent here and they talk

452
00:24:00,800 --> 00:24:04,600
about heaps of support coming
from three different players.

453
00:24:04,600 --> 00:24:07,080
You got your, your juniors in
Australia and Brazil.

454
00:24:07,280 --> 00:24:11,040
You got the higher the high
cost, lower grade Indian exports

455
00:24:11,480 --> 00:24:14,080
and then you've got the shoulder
of the Chinese domestic cost

456
00:24:14,080 --> 00:24:16,960
curve.
Now that kind of equates for 170

457
00:24:16,960 --> 00:24:20,120
million tonnes out there.
That comes in over 80 bucks a

458
00:24:20,120 --> 00:24:24,600
tonne.
Now the context that is on a 1.6

459
00:24:24,600 --> 00:24:29,120
billion tonne seaborne market or
a 2.5 billion tonne annual

460
00:24:29,120 --> 00:24:34,240
consumption in in iron ore?
So pretty pretty not.

461
00:24:34,600 --> 00:24:38,800
What about 10%?
Yeah, yeah, 10%, so.

462
00:24:39,120 --> 00:24:39,920
Yeah.
So, OK.

463
00:24:39,920 --> 00:24:45,040
So if I know dig below, go below
80 bucks a tonne, is it like

464
00:24:45,040 --> 00:24:48,120
those ones potentially start
curtailing what's probably going

465
00:24:48,120 --> 00:24:50,840
to happen?
Yeah, You need to see one or a

466
00:24:50,840 --> 00:24:52,920
combination of two things.
Obviously, it's always demand

467
00:24:52,920 --> 00:24:54,960
and supplies.
So on the demand front, This is

468
00:24:54,960 --> 00:24:56,320
why everyone's honed in on
China.

469
00:24:56,320 --> 00:24:59,800
You'd need demand to roll off
quite seriously and for that to

470
00:24:59,800 --> 00:25:02,480
happen in one country alone
would be massive.

471
00:25:02,480 --> 00:25:05,520
It I don't think it's feasible.
You'd need A roll off in demand

472
00:25:05,520 --> 00:25:08,480
across the world.
But on the supply side I found

473
00:25:08,480 --> 00:25:11,600
it even more interesting.
You'd essentially need that 170

474
00:25:11,600 --> 00:25:15,040
million tonnes to be replaced by
lower cost operations.

475
00:25:15,400 --> 00:25:17,800
And I think over time there's
actually a real cost that the, a

476
00:25:17,800 --> 00:25:20,360
real chance that this happens
because you've got some and do

477
00:25:20,360 --> 00:25:24,000
come in online that's 100 to 120
million tonnes.

478
00:25:24,640 --> 00:25:28,440
Then you've got BHB, FM, G and
Rio all wanting to ramp up, you

479
00:25:28,440 --> 00:25:31,520
know, 1020 million tonnes per
annum production.

480
00:25:31,920 --> 00:25:33,720
You've also got min res trying
to bring on.

481
00:25:33,720 --> 00:25:36,360
So online they're talking about
35,000,000 tonnes of a lower

482
00:25:36,360 --> 00:25:38,760
grade sort of product.
And you know, I've seen some

483
00:25:38,760 --> 00:25:41,640
analysts out there thinking a
way bigger number than that.

484
00:25:42,080 --> 00:25:44,720
Again, this this will take time,
but it's it's interesting to

485
00:25:44,720 --> 00:25:48,200
have this sort of quantified and
say that support level around 90

486
00:25:48,200 --> 00:25:51,480
bucks actually hold up pretty
strongly over the past half

487
00:25:51,480 --> 00:25:53,160
year.
Yeah, because what?

488
00:25:54,000 --> 00:25:57,240
Yeah, what, what is mean?
What do you know what the Onslow

489
00:25:57,720 --> 00:26:00,000
cost is?
Or it's a hard one to figure out

490
00:26:00,000 --> 00:26:02,680
because of the whole Rd Jobby.
Do you want the cost that they

491
00:26:02,680 --> 00:26:03,880
tell you it's going to be or do
you want?

492
00:26:04,320 --> 00:26:06,880
Yeah, what do they, what do they
tell us at the?

493
00:26:06,920 --> 00:26:10,680
Moment there's a bit of a change
in of hands with the, you know,

494
00:26:10,680 --> 00:26:14,840
CSI and all these sorts of
things, so I haven't had a

495
00:26:14,840 --> 00:26:16,880
close.
Quote of mid 60s, you know,

496
00:26:16,920 --> 00:26:19,360
fully loaded cost, but yeah,
yeah.

497
00:26:19,360 --> 00:26:21,720
And keep in mind, they don't.
Technically the whole Rd, but

498
00:26:21,720 --> 00:26:24,760
then that.
They're not producing a 62% like

499
00:26:24,760 --> 00:26:27,960
yeah, either It's, you know,
it's a deduction.

500
00:26:28,320 --> 00:26:30,200
Yeah, yeah.
Yeah.

501
00:26:30,200 --> 00:26:32,080
So they're going to get a
discount to that, that price

502
00:26:32,080 --> 00:26:34,160
we're talking about there.
Yeah, right.

503
00:26:34,280 --> 00:26:36,360
OK.
So what's what's the next thing

504
00:26:36,360 --> 00:26:38,760
you got going on?
All right, the next one's way

505
00:26:38,760 --> 00:26:40,560
more.
The next one is way more than

506
00:26:40,560 --> 00:26:41,720
you like.
It's just a dividend.

507
00:26:41,720 --> 00:26:43,160
And it's the fact that they've
cut it.

508
00:26:43,160 --> 00:26:46,680
This was the headline story on,
you know, the AFR and everywhere

509
00:26:46,680 --> 00:26:48,000
else that was reporting about
it.

510
00:26:48,520 --> 00:26:51,120
Yeah.
So it's, it's pretty interesting

511
00:26:51,120 --> 00:26:53,680
to look about it, look at it in
detail because the underlying

512
00:26:53,680 --> 00:26:57,080
earnings of the company were up,
you know, EBITDA profit, it was

513
00:26:57,080 --> 00:26:59,960
a strong year.
Commodity prices were decent all

514
00:26:59,960 --> 00:27:02,880
round.
As a reminder, BHB pays out a

515
00:27:02,880 --> 00:27:05,840
minimum of 50% of their
underlying profit.

516
00:27:06,200 --> 00:27:07,600
Now I straight away thought
about Yanko.

517
00:27:07,600 --> 00:27:09,640
A lot of their shareholders
would have loved to have a

518
00:27:09,640 --> 00:27:11,880
policy like that in place.
But they had it.

519
00:27:12,080 --> 00:27:14,280
They just chose not to do it.
They treated it like a special

520
00:27:14,280 --> 00:27:18,720
dividend.
Fuck Well, yeah, you need you

521
00:27:18,720 --> 00:27:22,720
need with in BH BS case as well.
The you know, the the three

522
00:27:22,720 --> 00:27:24,400
caveats that they kind of put in
place.

523
00:27:24,400 --> 00:27:27,880
But jeez, Can you imagine if a
BHB just ignored those?

524
00:27:27,880 --> 00:27:30,800
I think they'd be, yeah, almost
riots on the street with all the

525
00:27:30,800 --> 00:27:33,440
retirees out there.
Oh mate, I'll tell you, you know

526
00:27:33,480 --> 00:27:36,440
the big the biggest impact of
all those dividends getting cut

527
00:27:36,720 --> 00:27:40,080
is like, think of your your
local RSLS for the roast pork

528
00:27:40,080 --> 00:27:43,280
special on a Wednesday night.
Like the 70 year olds aren't

529
00:27:43,280 --> 00:27:45,960
going down there and they're not
slapping tenor in the pokies

530
00:27:46,200 --> 00:27:47,840
because they're not getting
their dividends.

531
00:27:48,000 --> 00:27:50,560
This is spreading far.
And what the effect of these

532
00:27:50,560 --> 00:27:53,160
dividends?
It's, it's the economy's, no.

533
00:27:53,160 --> 00:27:56,440
Good mate, no good far.
What was what was the the

534
00:27:56,440 --> 00:27:58,200
percentage payout that Yankel
have?

535
00:27:58,280 --> 00:28:02,080
I think it was, it was some like
they could choose between a

536
00:28:02,440 --> 00:28:05,720
lower range, a lower and an
upper bound of of the the

537
00:28:06,160 --> 00:28:08,240
greater or lesser of impact and
free cash flow.

538
00:28:08,240 --> 00:28:10,520
I can't remember the exact
numbers, but yeah, they do have.

539
00:28:10,520 --> 00:28:13,520
They do have a dividend policy.
Yeah, interesting.

540
00:28:13,520 --> 00:28:17,960
So they paid 54% here and that's
the the lowest it's been since

541
00:28:17,960 --> 00:28:21,640
2017.
Now the why behind it is is way

542
00:28:21,640 --> 00:28:24,440
more interesting.
Essentially it's the focus on

543
00:28:24,440 --> 00:28:28,200
growth IE CapEx.
So it really kind of hits home

544
00:28:28,520 --> 00:28:32,960
how capital intensive mining is.
And you know, the the flow on

545
00:28:32,960 --> 00:28:36,720
effect of or the flow on kind of
thought of that is that yeah,

546
00:28:36,720 --> 00:28:40,520
it's explained why BHB loves
these long life low cost assets.

547
00:28:40,520 --> 00:28:45,320
So you see pretty close to the
front, these margins are 68%

548
00:28:45,320 --> 00:28:48,640
EBITDA margin on the iron ore
business, which is phenomenal by

549
00:28:48,960 --> 00:28:51,360
any account.
But that only comes after the

550
00:28:51,360 --> 00:28:55,240
billions and billions have been
sunk over time in in CapEx.

551
00:28:55,600 --> 00:28:57,680
And it's a another reason why
you shouldn't just look at the

552
00:28:57,680 --> 00:28:59,480
multiples of these mining
companies.

553
00:28:59,480 --> 00:29:02,920
You should you know look at NAV
and do various forms of analysis

554
00:29:03,160 --> 00:29:07,400
and BHB love to show this off by
talking about the the three year

555
00:29:07,400 --> 00:29:12,720
average Royce and that is
essentially just showing the the

556
00:29:12,720 --> 00:29:16,160
higher returns on the cap on
capital employed that BHP have

557
00:29:16,520 --> 00:29:18,520
versus Glencore, Rio Tinto and
all these.

558
00:29:18,520 --> 00:29:21,840
Other is that return on invested
capital, is that that one Rawic

559
00:29:21,840 --> 00:29:23,680
or whatever?
Return on capital employed is is

560
00:29:23,680 --> 00:29:25,640
the metric, yeah.
Oh, that's another one they

561
00:29:26,000 --> 00:29:27,840
return on rice.
Oh yeah, yeah, right.

562
00:29:27,840 --> 00:29:30,240
Not Rawic rice, right?
Yeah.

563
00:29:30,560 --> 00:29:32,280
Slightly different, equally
confusing.

564
00:29:32,360 --> 00:29:34,440
Yeah.
So to to put it in a couple

565
00:29:34,440 --> 00:29:38,320
numbers, they did US 9.3 billion
in CapEx this year.

566
00:29:38,440 --> 00:29:42,880
CapEx and exploration they got
into a medium term of US 11

567
00:29:42,880 --> 00:29:46,680
billion per annum in CapEx.
Now that's a that's a real step

568
00:29:46,680 --> 00:29:49,240
up from the seven and a half
billion sort of level that we

569
00:29:49,240 --> 00:29:52,640
saw for quite a few years.
So you can see as they look to

570
00:29:52,640 --> 00:29:54,960
get all these copper assets and
all these sort of future facing

571
00:29:54,960 --> 00:29:57,760
commodities as they put it
online, there is a huge tick up

572
00:29:57,760 --> 00:30:01,400
in the CapEx that needs to be
spent to to see the the returns

573
00:30:01,400 --> 00:30:03,360
that justify it.
Yeah.

574
00:30:03,360 --> 00:30:06,640
And when you think of like the
like pretty hefty return on

575
00:30:06,640 --> 00:30:08,800
capital employee numbers, it's
just because you got all this

576
00:30:08,800 --> 00:30:10,600
sunk infrastructure in the
Pilbara.

577
00:30:10,680 --> 00:30:13,360
And so you can spend some
marginally small amount of

578
00:30:13,360 --> 00:30:16,640
capital in the Pilbara to just
expand iron ore a little bit.

579
00:30:16,640 --> 00:30:19,360
And like the IRR on that is like
fucking in the triple digits.

580
00:30:21,200 --> 00:30:22,320
Exactly.
Yeah.

581
00:30:22,920 --> 00:30:26,440
So the the last thing that stood
out was their commentary on a

582
00:30:26,440 --> 00:30:28,240
whole bunch of different things.
I'm just going to kind of clump

583
00:30:28,240 --> 00:30:30,920
together green transition,
future facing commodities

584
00:30:31,200 --> 00:30:33,720
inflation and I'll rattle off a
few different parts.

585
00:30:33,720 --> 00:30:36,040
You guys can jump in if anything
sort of piques your interest.

586
00:30:36,520 --> 00:30:39,160
The first one was on copper.
They're talking about calendar

587
00:30:39,160 --> 00:30:43,560
year 24 and 25 Chinese copper
demand expectations being

588
00:30:43,560 --> 00:30:46,560
downgraded.
So that saw 6% growth over the

589
00:30:46,560 --> 00:30:48,920
last year, but they're
anticipating only one or two

590
00:30:48,920 --> 00:30:50,920
percent growth in the coming
year.

591
00:30:51,960 --> 00:30:54,600
Now to add to that, on the
copper market, they're seeing a

592
00:30:54,600 --> 00:30:57,360
surplus over this year and next
year as well.

593
00:30:57,920 --> 00:31:00,760
The next point that stood out
was on blast furnaces.

594
00:31:00,760 --> 00:31:04,920
So this is what you need cooking
coal for in the steel making

595
00:31:04,920 --> 00:31:08,480
process.
And they said it is unlikely to

596
00:31:08,480 --> 00:31:11,360
be or blast furnaces are
unlikely to be displaced at

597
00:31:11,360 --> 00:31:13,600
scale by any new tech for
decades.

598
00:31:13,920 --> 00:31:15,000
Now.
That's not surprising.

599
00:31:15,000 --> 00:31:17,520
We spoke with Matt Water and
we've spoken with other people

600
00:31:17,520 --> 00:31:20,560
about that, but it's not
something to generally see BHB

601
00:31:20,560 --> 00:31:22,880
talk too loudly about.
So it's interesting to see them

602
00:31:22,880 --> 00:31:26,680
actually put it into words in in
their presentations.

603
00:31:27,280 --> 00:31:30,000
The next thing that really stood
out is on the back of again, the

604
00:31:30,000 --> 00:31:33,360
cold chats that we had last
week, they are talking about a

605
00:31:33,400 --> 00:31:37,800
durable premium for the higher
grade met coals out there.

606
00:31:38,160 --> 00:31:41,000
And this is directly a result of
regulation specifically in

607
00:31:41,000 --> 00:31:43,480
Queensland, as well as supply
issues.

608
00:31:43,480 --> 00:31:46,440
So they're seeing a whole bunch
of historically good assets move

609
00:31:46,440 --> 00:31:49,360
up on the cost curve as they
just become more challenging.

610
00:31:49,360 --> 00:31:50,560
Yeah.
True.

611
00:31:50,840 --> 00:31:54,600
When do we say in those premiums
there there is there a premium

612
00:31:54,600 --> 00:31:55,560
anywhere at the?
Moment.

613
00:31:55,720 --> 00:31:57,600
I mean coal.
Prices, you absolutely see them.

614
00:31:57,800 --> 00:31:59,640
Coal prices elevate.
Yeah.

615
00:31:59,640 --> 00:32:00,720
That's what that's what they're
talking.

616
00:32:00,840 --> 00:32:04,120
I mean, there are all of these
like it's not just like you have

617
00:32:04,120 --> 00:32:07,680
one cooking coal price and one
thermal coal price.

618
00:32:07,680 --> 00:32:09,200
There's, there's all of these
like, you know.

619
00:32:09,200 --> 00:32:10,480
The High Vol.
Mid Vol.

620
00:32:10,480 --> 00:32:12,440
Exactly.
Yeah, everything's bespoke.

621
00:32:12,640 --> 00:32:15,560
And so it comes into these kind
of deductions from the index

622
00:32:15,560 --> 00:32:18,120
depending on what spec of
product you provide from which

623
00:32:18,120 --> 00:32:20,080
location.
So Carl, Carl's probably the

624
00:32:20,080 --> 00:32:22,080
best example where we're seeing
premiums.

625
00:32:22,080 --> 00:32:23,960
I think they exist every
everywhere.

626
00:32:23,960 --> 00:32:26,560
It's just like and it's but it's
not, it's not, it doesn't

627
00:32:26,560 --> 00:32:29,720
reflect in the LME price.
It's just a deduction or or or

628
00:32:29,720 --> 00:32:32,680
an addition to to your index
based on the spec of the product

629
00:32:32,680 --> 00:32:34,600
you provide in in any market,
yeah.

630
00:32:34,720 --> 00:32:37,160
Yeah, she's a handshake deal.
Yeah, yeah.

631
00:32:37,160 --> 00:32:39,360
Like you know, the copper
traders will not like, you know,

632
00:32:39,440 --> 00:32:41,800
they'll be all these deductions
based on the, the smelting kind

633
00:32:41,800 --> 00:32:43,040
of quality and all that sort of
stuff.

634
00:32:43,080 --> 00:32:46,000
The the arsenic content, all of
that's in my mind like the

635
00:32:46,080 --> 00:32:48,960
effective premiums and stuff
flowing through for better

636
00:32:48,960 --> 00:32:50,640
quality.
Yeah, yeah, absolutely.

637
00:32:50,640 --> 00:32:53,720
You see it in Payabilities.
They talk about in nickel, in

638
00:32:53,720 --> 00:32:58,120
copper, how the TCS are
reflected and in coal you're

639
00:32:58,120 --> 00:33:01,120
talking about relativity.
Like we spoke about Whitehaven

640
00:33:01,120 --> 00:33:05,880
and that is why BHB have sort of
fine tuned their portfolio and

641
00:33:05,880 --> 00:33:07,960
sold White.
Well, one of the reasons sold

642
00:33:08,200 --> 00:33:10,960
Whitehaven and and Dornier.
And now they talk about a

643
00:33:10,960 --> 00:33:15,280
greater portion of the portfolio
receiving, you know, or being

644
00:33:15,280 --> 00:33:21,000
indexed to the the PLVFOB index,
which is the, you know, the kind

645
00:33:21,000 --> 00:33:25,160
of call it premium METCO index
out there.

646
00:33:25,840 --> 00:33:28,360
There's just not premiums based
on where it comes from yet.

647
00:33:28,680 --> 00:33:32,240
No, no.
No, I mean they, they do speak

648
00:33:32,280 --> 00:33:37,080
about that though and they, they
highlight, I mean it's not, it's

649
00:33:37,080 --> 00:33:39,720
not evident yet, but they
highlight that their portfolio

650
00:33:39,720 --> 00:33:44,040
of coke and coal assets sets
them up well for a future where

651
00:33:44,040 --> 00:33:47,480
the carbon intensity of the
product is taken into account or

652
00:33:47,480 --> 00:33:51,000
if there is a, a carbon tax or
anything like this, they are

653
00:33:51,160 --> 00:33:53,040
well positioned for that.
But it's not something we're

654
00:33:53,040 --> 00:33:56,000
seeing just yet.
Did well find in that in 600 odd

655
00:33:56,000 --> 00:33:57,400
pages JD.
Well done mate.

656
00:33:58,600 --> 00:33:59,280
Thanks mate.
What?

657
00:33:59,280 --> 00:34:02,160
Do you got next?
So the next few points that

658
00:34:02,160 --> 00:34:07,040
really stood out are inflation
in again in in copper, but this

659
00:34:07,240 --> 00:34:11,199
time in regards to CapEx.
So they're talking about copper

660
00:34:11,199 --> 00:34:14,159
CapEx remaining, you know,
stubbornly persistent.

661
00:34:14,159 --> 00:34:17,480
And straight away I'm thinking
about the the ramifications of

662
00:34:17,480 --> 00:34:19,040
that.
Is it to sort of bet on

663
00:34:19,040 --> 00:34:21,679
producers out there because it's
harder to get, you know, new

664
00:34:21,679 --> 00:34:25,600
production online?
Is it a heightened risk for

665
00:34:25,600 --> 00:34:27,159
single asset developers out
there?

666
00:34:27,159 --> 00:34:29,199
Maybe they're going to
experience CapEx blowouts.

667
00:34:29,600 --> 00:34:32,159
They're just a couple ideas that
kind of come to mind on that

668
00:34:32,159 --> 00:34:34,760
front.
The next couple points really

669
00:34:34,840 --> 00:34:37,480
hone in on EV.
So they're talking about a real

670
00:34:37,480 --> 00:34:41,600
slow down in EV sales across the
developed world specific to the

671
00:34:41,800 --> 00:34:43,560
US.
They're talking about the

672
00:34:43,600 --> 00:34:46,600
emission standards across fleets
being watered down.

673
00:34:46,960 --> 00:34:49,400
This means from the, I think the
second biggest car buyer in the

674
00:34:49,400 --> 00:34:52,840
world, a real slow down in EV
uptake, which was sort of

675
00:34:53,239 --> 00:34:56,120
interesting to to put in
perspective.

676
00:34:56,840 --> 00:34:59,320
And then the last couple of
points on inflation.

677
00:34:59,320 --> 00:35:02,640
So this will be a welcome news
and I'm sure a lot of the

678
00:35:02,640 --> 00:35:04,600
companies out there are
experiencing it already.

679
00:35:04,920 --> 00:35:08,000
But inflation in Australia in
particularly in wages, they've

680
00:35:08,000 --> 00:35:11,200
seen start to pull back.
Now they've had productivity

681
00:35:11,200 --> 00:35:14,480
work against this a bit, but it
is still a good sign for a lot

682
00:35:14,480 --> 00:35:16,600
of the miners out there in
Australia.

683
00:35:16,880 --> 00:35:18,840
Unfortunately in Chile though,
where they've got a fair few

684
00:35:18,840 --> 00:35:22,960
operations, they've seen
inflation pick back up over the

685
00:35:22,960 --> 00:35:25,800
past couple of months.
And the detail that I've no idea

686
00:35:25,800 --> 00:35:29,280
about, the Chilean central bank
has already cut interest rates

687
00:35:29,280 --> 00:35:32,320
by 5.5%.
So they had them over 11%.

688
00:35:32,320 --> 00:35:37,040
That pulled them all the way
back to 5.75% in in recent

689
00:35:37,040 --> 00:35:38,880
months to try and stimulate the
economy.

690
00:35:38,880 --> 00:35:41,240
And then they've seen inflation
kick up again.

691
00:35:41,240 --> 00:35:45,680
So it's a, a real balancing act
and you know, obviously not

692
00:35:45,680 --> 00:35:48,600
exactly like Australia, but
there are similarities between

693
00:35:48,600 --> 00:35:50,560
the, the Chilean economy and the
Australian economy.

694
00:35:50,560 --> 00:35:53,560
So maybe one for the the central
bankers to to kind of look at

695
00:35:53,560 --> 00:35:55,400
there.
And.

696
00:35:55,840 --> 00:36:02,600
That is me one quick, one quick
quiz question fellas.

697
00:36:03,000 --> 00:36:07,000
What do you reckon in terms of
millions of U.S. dollars, a

698
00:36:07,000 --> 00:36:11,360
$1.00 change in the iron ore
price does to the underlying

699
00:36:11,360 --> 00:36:16,240
EBITDA of BHB?
What was their EBITDA this year?

700
00:36:16,880 --> 00:36:21,320
29 billion.
How many, how many millions of

701
00:36:21,320 --> 00:36:23,480
tonnes of of iron ore they
produce?

702
00:36:26,800 --> 00:36:28,920
270.
I'm going to go.

703
00:36:29,840 --> 00:36:32,560
What'd you say, 29 billion?
Was there a bit DA?

704
00:36:33,040 --> 00:36:37,040
29 billion and jeez off the top
of my head, two 2/3 of the

705
00:36:37,040 --> 00:36:37,960
income.
Transfer.

706
00:36:37,960 --> 00:36:40,520
I'm going to say maybe even.
More.

707
00:36:41,640 --> 00:36:48,360
Between one and 3 billion. $1.00
change yeah, it's a bit, it's a

708
00:36:48,360 --> 00:36:50,360
bit lower than that it.
Was a guess.

709
00:36:51,040 --> 00:36:56,400
What did you guess?
1 billion. 011 billion and it's

710
00:36:56,400 --> 00:36:59,720
lower than 1 billion.
This is just a $1.00 change in

711
00:36:59,720 --> 00:37:02,960
the iron ore.
Price does to the EBITDA, yeah,

712
00:37:02,960 --> 00:37:08,440
I don't know what's the answer.
233,000,000.

713
00:37:08,840 --> 00:37:11,520
My my calculation was 189 that I
did in my my math.

714
00:37:12,480 --> 00:37:14,800
I'll set, I'll set it $1.00
because I produce it what,

715
00:37:14,800 --> 00:37:17,560
bloody 20 bucks a tonne.
So I'm like, it should be 5% in

716
00:37:17,600 --> 00:37:20,480
EBITDA.
So that's that's what's that

717
00:37:20,520 --> 00:37:25,440
whatever that is 150 million, so
a bit above that 299 there you.

718
00:37:25,440 --> 00:37:29,360
Go logic isn't bad, not a.
Billion, 1:00 to 3:00.

719
00:37:30,640 --> 00:37:31,680
That's it.
All right.

720
00:37:31,680 --> 00:37:33,720
Let's talk about a bit of
lithium again.

721
00:37:33,720 --> 00:37:35,960
Hey, go.
On yeah mate, thanks for making.

722
00:37:36,120 --> 00:37:38,120
It's pretty interesting for
once.

723
00:37:39,200 --> 00:37:41,480
This was I tried.
Oh, oh, you're going to say

724
00:37:41,480 --> 00:37:42,960
that, but I'm going to say what
you were going to say.

725
00:37:42,960 --> 00:37:47,920
I'll let you say it.
Go on the the Argentinian

726
00:37:47,920 --> 00:37:51,480
lithium lithium brine developer
that that of Whirlwind at the

727
00:37:51,480 --> 00:37:54,280
time lately with a strange
unsolicited takeover bid from

728
00:37:54,280 --> 00:37:57,000
Energy X that leaked St talk
over the Diggers week.

729
00:37:57,360 --> 00:37:59,320
That was WhatsApp was flying at
Diggers.

730
00:37:59,320 --> 00:38:01,720
Everyone's like, is there any
news on the Galan deal?

731
00:38:01,720 --> 00:38:03,560
I'm like, sorry, I'm at the
palace.

732
00:38:06,200 --> 00:38:08,960
Well, today they've they've come
out with this off take

733
00:38:08,960 --> 00:38:14,800
prepayment Mou with this is a
mouthful Chengdu Chem Fizz

734
00:38:14,800 --> 00:38:16,400
Chemical Industry Company
Limited.

735
00:38:16,720 --> 00:38:20,360
The key parts of this Mou to to
keep in mind is that Chem Fizz

736
00:38:20,360 --> 00:38:24,040
is going to provide Golan with
AUS $40 million facility that

737
00:38:24,040 --> 00:38:26,160
they can use to continue project
development.

738
00:38:26,400 --> 00:38:29,800
Golan is committed to supplying
a minimum of of 23,000 tonnes

739
00:38:30,160 --> 00:38:34,120
LCE to to Chem Fizz and kind of
none of the you know, the, the,

740
00:38:34,320 --> 00:38:36,880
The Dirty terms are in the in
the announcement, but but Chem

741
00:38:36,880 --> 00:38:39,880
fears would get first ranking
security over the the HMW

742
00:38:39,880 --> 00:38:43,400
project of of glands as well.
Chen Do, Is that China?

743
00:38:43,800 --> 00:38:45,920
Yes.
Good guess.

744
00:38:46,560 --> 00:38:48,400
And those that have been
following gland, they might be a

745
00:38:48,400 --> 00:38:53,560
bit confused because this non
binding off take MOU comes after

746
00:38:53,560 --> 00:38:56,800
a binding off take agreement.
It was announced with Glencore

747
00:38:56,800 --> 00:38:59,920
back in November last year.
And at the time that was

748
00:38:59,920 --> 00:39:03,880
announced, it was stated to be
subject to due diligence.

749
00:39:04,200 --> 00:39:07,120
We we know that Glencore
completed a site visit in

750
00:39:07,120 --> 00:39:09,760
January this year, according to
glands March quarterly report.

751
00:39:09,760 --> 00:39:12,160
But then kind of things went a
bit quiet on the Glencore front.

752
00:39:12,840 --> 00:39:14,840
And in today's announcement,
there's this paragraph which

753
00:39:14,840 --> 00:39:18,080
doesn't name Glencore, but
clearly it's about Glencore.

754
00:39:18,360 --> 00:39:21,280
It says in relation to the
offtake and financing prepayment

755
00:39:21,280 --> 00:39:23,560
facility.
Now 16th of November 2023, the

756
00:39:23,560 --> 00:39:26,840
company notes that it has not
received both an offtake and

757
00:39:26,840 --> 00:39:28,760
financing proposal from the
counterparty and accordingly,

758
00:39:28,760 --> 00:39:31,040
the company could no longer
proceed with that option.

759
00:39:31,640 --> 00:39:34,680
Now when I read that statement,
I assume Glencore walked away

760
00:39:34,680 --> 00:39:36,800
from the deal while in the due
diligence phase.

761
00:39:36,800 --> 00:39:40,320
That's my assumption and I think
there's a few things worth

762
00:39:40,320 --> 00:39:43,760
mentioning with Quran that might
not be immediately apparent too.

763
00:39:44,080 --> 00:39:46,760
Gaan's arrangement with with
Glencore would have seen them

764
00:39:46,760 --> 00:39:49,600
selling the lithium chloride
concentrate product to Glencore

765
00:39:49,600 --> 00:39:52,600
who would have told treated it
to carbonate in Argentina.

766
00:39:53,240 --> 00:39:56,080
The lithium chloride concentrate
is it, you know, it's a brine

767
00:39:56,080 --> 00:39:59,760
concentrate it it's in solution.
Is that what comes out like just

768
00:39:59,880 --> 00:40:01,280
is that what comes out of the
ground?

769
00:40:01,440 --> 00:40:04,640
Oh, it's, it's an, it's an Yeah,
It's an early step in the in the

770
00:40:04,640 --> 00:40:05,320
process.
Yeah.

771
00:40:06,040 --> 00:40:09,000
So logistics are a bit bit
challenging to work with that

772
00:40:09,040 --> 00:40:12,320
early stage product, right.
Unless Galan comes up with the

773
00:40:12,320 --> 00:40:15,200
capital required to create like
even an intermediate product,

774
00:40:16,000 --> 00:40:18,920
they might be able to, you know,
convert it into an anhydrous

775
00:40:18,920 --> 00:40:20,680
product.
And, and I wouldn't be surprised

776
00:40:20,680 --> 00:40:25,160
if if some of this, you know, US
$40 million facility is, is, is

777
00:40:25,160 --> 00:40:26,600
penned for, for that kind of
work.

778
00:40:26,760 --> 00:40:29,240
But at the moment, like Galan's
just in a very precarious

779
00:40:29,240 --> 00:40:31,840
financing situation.
Take a look at the Spark chart.

780
00:40:32,720 --> 00:40:36,440
They topped it around $2.35 in,
in, in early 2022.

781
00:40:36,440 --> 00:40:39,520
They've fallen 95% since then,
which is pretty ugly.

782
00:40:40,200 --> 00:40:42,760
Lithium prices obviously in the
dunny and the, you know, the

783
00:40:42,760 --> 00:40:45,280
drawing on this at the market
facility, which nukes their

784
00:40:45,280 --> 00:40:48,200
share price even further.
And, and there's, there's

785
00:40:48,200 --> 00:40:51,440
clearly still, you know, a
funding gap to get through to

786
00:40:51,800 --> 00:40:53,920
production when they expect that
next year.

787
00:40:54,280 --> 00:40:56,720
And, and now we've got an
announcement of an MOU.

788
00:40:57,000 --> 00:40:59,880
Now MOU is of course a, a flimsy
to start with.

789
00:40:59,880 --> 00:41:02,040
You know, this one's kind of
heavily conditional as well.

790
00:41:02,720 --> 00:41:07,560
Yeah, before you finish the that
at the market facility, Yep.

791
00:41:07,680 --> 00:41:11,920
Is that like, let me know if
this metaphor is correct.

792
00:41:11,920 --> 00:41:15,040
Like the money is the keg of
beer and the tap is the at the

793
00:41:15,040 --> 00:41:17,480
market facility and you just go
pour it whenever you want.

794
00:41:17,480 --> 00:41:19,520
It's kind of like that, except
you get punched in the face

795
00:41:19,520 --> 00:41:21,040
every time you.
Yeah.

796
00:41:21,080 --> 00:41:22,720
And you got you got to pour
yourself a beer.

797
00:41:22,720 --> 00:41:24,520
It's like boom boom boom.
Yeah, right.

798
00:41:24,520 --> 00:41:25,920
And.
That that that's a metaphor.

799
00:41:26,280 --> 00:41:29,640
The level of the the level of
the keg is the share price.

800
00:41:31,320 --> 00:41:33,520
It's a bit worse.
The keg falls even fast.

801
00:41:33,520 --> 00:41:37,640
So, yeah, yeah.
Right, all good.

802
00:41:39,320 --> 00:41:43,160
Well, I'll wrap it up with this
remark, Glencor.

803
00:41:43,320 --> 00:41:45,400
Like I don't just walk away from
a good deal.

804
00:41:45,560 --> 00:41:48,000
Yeah, it'd be like walking away
from a pint with Droba.

805
00:41:49,400 --> 00:41:52,640
It's like, why would you do it?
Trooper from Kdrill.

806
00:41:52,640 --> 00:41:56,120
Droba from Kdrill like that's a
that's a good deal that I don't

807
00:41:56,120 --> 00:42:00,280
think anyone else anyone's
walked away from in history No

808
00:42:00,400 --> 00:42:02,880
you wouldn't JD, you know you
wouldn't walk away from a pint

809
00:42:02,880 --> 00:42:03,720
with Drogo, would you?
It'd.

810
00:42:04,360 --> 00:42:06,640
Be rude to say no.
More oh mate, I'm look, I'm

811
00:42:06,640 --> 00:42:10,040
putting it out there to the
bloody crew and the team and the

812
00:42:10,040 --> 00:42:11,720
listeners.
I just don't think there's any

813
00:42:11,720 --> 00:42:15,720
other WA expiration drilling
company that offers such a

814
00:42:15,720 --> 00:42:18,480
bloody good turnkey solution for
drilling.

815
00:42:18,720 --> 00:42:23,240
I'll, I'll map it out for you.
Well, you he hasn't been given

816
00:42:23,240 --> 00:42:25,840
much love recently, but you got
the best in the game.

817
00:42:25,840 --> 00:42:29,080
Ron O'Sullivan, managing the
drilling contract elite.

818
00:42:29,240 --> 00:42:32,240
You've got the best drillers in
the game drilling the ASA and

819
00:42:32,240 --> 00:42:34,760
diamond holes.
They do, and you get to have a

820
00:42:34,760 --> 00:42:37,000
point with Druba.
You could want.

821
00:42:37,320 --> 00:42:40,800
That is speedy team.
By they are literally now this

822
00:42:40,800 --> 00:42:44,080
is fact they are the only
drilling company in history to

823
00:42:44,080 --> 00:42:46,760
have both Drew Harvey and Ron
O'Sullivan working for him in

824
00:42:46,760 --> 00:42:50,520
the same at the same time in the
history of drilling dream team.

825
00:42:50,520 --> 00:42:53,640
So heart and soul to Goldfields
explorational drill and drew his

826
00:42:53,640 --> 00:42:56,760
emails in the show notes.
Hit him up for a pint and he'll

827
00:42:57,040 --> 00:42:59,040
he'll have you bloody.
He'll have K drill drilling

828
00:42:59,040 --> 00:43:00,960
holes for you.
That's quicker than you can say

829
00:43:00,960 --> 00:43:04,440
How good's Droba?
Very true, buddy, yes, pivot to

830
00:43:04,480 --> 00:43:07,280
a company who who did an off
take deal with Glencore that

831
00:43:07,640 --> 00:43:11,040
that you know, Glencore didn't
walk away from 29 medals.

832
00:43:11,560 --> 00:43:13,920
So they they they're all sorry
enough in a financing

833
00:43:13,920 --> 00:43:16,040
predicament of their own, though
29 medals.

834
00:43:16,040 --> 00:43:17,800
They they reported their half
year results this morning.

835
00:43:17,800 --> 00:43:20,360
And rather than dwell on all of
the details, I just wanted to

836
00:43:20,360 --> 00:43:22,320
highlight a couple of in the
weeds elements from the the

837
00:43:22,320 --> 00:43:25,360
reporting.
First one, how's this sentence

838
00:43:25,520 --> 00:43:27,200
on the front page of today's
announcement?

839
00:43:27,200 --> 00:43:28,680
It's the 7th dot point from the
top.

840
00:43:28,760 --> 00:43:31,800
It says balance sheet
strengthened during the six

841
00:43:32,000 --> 00:43:35,400
month reporting period with US
$50 million off take finance

842
00:43:35,400 --> 00:43:38,480
facility with Glencore finalised
and an additional unallocated

843
00:43:38,480 --> 00:43:40,280
progress payment of $16,000,000
received.

844
00:43:40,960 --> 00:43:43,960
Now personally, I'm not sure
it's fair to describe your

845
00:43:43,960 --> 00:43:46,880
balance sheet as as strengthened
when you became more leave it.

846
00:43:47,320 --> 00:43:53,560
Net debt went from from $55
million to $132 million in the

847
00:43:53,560 --> 00:43:55,960
last six months.
And if you just isolate the

848
00:43:55,960 --> 00:43:58,880
operating cash flow on the
investing cash flow from the

849
00:43:58,880 --> 00:44:01,160
last six months, we're looking
at negative $50 million for the

850
00:44:01,240 --> 00:44:04,120
for the first half and despite
sort of stellar couple prices in

851
00:44:04,120 --> 00:44:05,440
the period.
So I think it's a bit of a bit

852
00:44:05,440 --> 00:44:07,840
of an unfair characterization to
describe the balance sheet of

853
00:44:07,840 --> 00:44:09,920
strengthened.
So what do you say liquid, did

854
00:44:09,920 --> 00:44:12,600
liquidity increase but the net
debt increased as well?

855
00:44:12,680 --> 00:44:15,200
Is that right?
Liquidity.

856
00:44:15,320 --> 00:44:19,800
I can't see the available funds,
but to me balance sheet strength

857
00:44:19,800 --> 00:44:23,640
is determined with how resilient
are you looking forward And, and

858
00:44:23,640 --> 00:44:26,400
you know, it's pretty they're
pretty objectively less

859
00:44:26,400 --> 00:44:30,880
resilient as a result of having
more drawn more net debt in the

860
00:44:30,880 --> 00:44:34,040
in the capital structure and,
and and clearly less free cash

861
00:44:34,040 --> 00:44:36,760
flow generation potential to
service that debt as evidenced

862
00:44:36,760 --> 00:44:39,320
by the last six months of highly
negative cash flow.

863
00:44:40,160 --> 00:44:42,120
There's, there's a few head
scratches, especially on that

864
00:44:42,120 --> 00:44:44,680
first page, but I'm I'm sure
you'll get into it so I won't

865
00:44:44,680 --> 00:44:46,200
step on your feet there.
Yeah.

866
00:44:47,120 --> 00:44:51,080
But then, then I went to the
back, JD 'cause I just thought

867
00:44:51,080 --> 00:44:54,320
got to go to the back of the the
financial statements and some

868
00:44:54,320 --> 00:44:56,040
really interesting detail on
Capricorn Copper.

869
00:44:56,640 --> 00:44:59,440
Basically they, they paid Cap
Copper by a a further $30

870
00:44:59,440 --> 00:45:00,480
million in this reporting
period.

871
00:45:00,480 --> 00:45:07,240
Now the net assets of the Cap
Copper segment are 167 million

872
00:45:07,320 --> 00:45:09,720
in the financial statements,
which is pretty damn similar to

873
00:45:09,720 --> 00:45:12,400
the 172 million six months ago.
So you're probably wondering how

874
00:45:12,600 --> 00:45:15,520
can they pay 30 million but have
a relatively similar carrying

875
00:45:15,880 --> 00:45:17,080
value still.
Does that make sense?

876
00:45:17,960 --> 00:45:20,840
Well, they provide some good
detail on the assumptions used

877
00:45:21,200 --> 00:45:23,960
to calculate the carrying value
of cap copper.

878
00:45:23,960 --> 00:45:26,680
Check them out here.
So compared with a year ago,

879
00:45:26,920 --> 00:45:30,880
they're now calculating the
carrying value using a long term

880
00:45:30,880 --> 00:45:34,240
copper price $900 higher.
It's going up from their assumed

881
00:45:34,240 --> 00:45:37,440
copper price is going up from,
you know, just above 8000 to to

882
00:45:37,440 --> 00:45:40,600
nearly 9000.
The assumed fair value of the

883
00:45:40,600 --> 00:45:43,800
copper resources not in the mine
plan has has arbitrarily lifted

884
00:45:43,800 --> 00:45:46,440
from 50 million to 85,000,000
too.

885
00:45:47,520 --> 00:45:52,320
And they, they attribute $26
million to to cap copper CapEx

886
00:45:52,320 --> 00:45:54,600
in the half to Chuck in some
depreciation that wrote down 30

887
00:45:54,600 --> 00:45:57,760
million plus another 9 million
right down for the ROM

888
00:45:57,760 --> 00:46:00,800
stockpiles, which you know
apparently no longer valuable

889
00:46:01,000 --> 00:46:03,760
and they've reaching assumptions
in the mine plan.

890
00:46:03,760 --> 00:46:06,640
So net assets look OK, right O
so?

891
00:46:07,120 --> 00:46:09,120
The assume fair value for the
copper resource.

892
00:46:09,120 --> 00:46:11,440
That's a result of lifting that
copper price.

893
00:46:11,440 --> 00:46:13,560
No, that's, that's not, not in
the mine plan.

894
00:46:13,560 --> 00:46:16,560
So that's just basically you're
doing an EV per tonne not

895
00:46:16,600 --> 00:46:19,640
calculation and you're probably
looking at market comparables

896
00:46:19,640 --> 00:46:22,000
and saying, well, copper
equities who you know aren't

897
00:46:22,000 --> 00:46:24,240
producing anything with their
copper in the ground or went up.

898
00:46:24,240 --> 00:46:27,360
So therefore I can use a
different rule of thumb metric

899
00:46:27,360 --> 00:46:30,840
on on my copper copper tonnes
that I'm never going to mine in

900
00:46:30,840 --> 00:46:32,920
my current mine plan.
So you don't apply a commodity

901
00:46:32,920 --> 00:46:34,440
price to that to get that
figure?

902
00:46:34,760 --> 00:46:38,240
No, yeah, no, you've got a mine
plan on the stuff here, you've

903
00:46:38,240 --> 00:46:40,120
got a mine.
And then and then that, you know

904
00:46:40,600 --> 00:46:42,720
how they spell it out is, yeah,
market comparables.

905
00:46:43,160 --> 00:46:44,760
OK.
Yeah.

906
00:46:44,960 --> 00:46:46,760
It's kind of like the
exploration upside in a broker

907
00:46:46,760 --> 00:46:53,880
report, you know, And OK, so
then, then if, if you're curious

908
00:46:53,880 --> 00:46:56,520
like me, how sensitive cap
copper's carrying value is to a

909
00:46:56,840 --> 00:46:58,600
change in some of the
assumptions.

910
00:46:59,400 --> 00:47:02,560
Thankfully, we have been
provided this neat sensitivity

911
00:47:02,680 --> 00:47:05,120
table.
Look, look here.

912
00:47:05,120 --> 00:47:09,160
So if, if, if long term copper
price was closer to $9500 a

913
00:47:09,160 --> 00:47:12,240
tonne, which is still higher
than than they assumed a year

914
00:47:12,240 --> 00:47:16,920
ago, mind you, then that wipes
off $80 million of value of the

915
00:47:16,920 --> 00:47:18,920
carrying value.
And, and, and if if operations

916
00:47:18,920 --> 00:47:22,400
restart 12 months later than
they're assumed, second half of

917
00:47:22,400 --> 00:47:25,720
of 2026 wipes off $46 million of
value.

918
00:47:26,200 --> 00:47:29,080
Yeah.
So yeah, good old capital the

919
00:47:29,120 --> 00:47:30,680
assumptions and make it all look
OK, so.

920
00:47:32,480 --> 00:47:36,000
What's the summary of that?
Read back to front.

921
00:47:36,040 --> 00:47:38,600
Read back to front.
What's a big yeah yeah, he's.

922
00:47:39,680 --> 00:47:41,440
I think you can kind.
Of bloody Ryan.

923
00:47:42,760 --> 00:47:46,240
Yeah, yeah, it's not good.
You can see the the operations

924
00:47:46,240 --> 00:47:50,600
just aren't making any money and
there's a big pile of debt which

925
00:47:50,600 --> 00:47:53,680
is a a bit of a sort of slow
burning tie bond.

926
00:47:53,680 --> 00:47:57,560
Is that was there any commentary
on Capricorn Copper around the

927
00:47:57,600 --> 00:48:01,200
operation, the water, the start
or like what is actually

928
00:48:01,200 --> 00:48:04,520
happening out there?
Yeah, I it's more of the same

929
00:48:04,560 --> 00:48:06,520
that we've been talking about
for ages, you know, just.

930
00:48:06,520 --> 00:48:09,040
Yeah, just highlight a couple of
of interesting details.

931
00:48:09,280 --> 00:48:12,920
But one last one for you,
though, Maddie and JD, this is

932
00:48:14,200 --> 00:48:15,360
Yeah.
I just want you to tell me if

933
00:48:15,360 --> 00:48:16,560
you think this is real or not,
right?

934
00:48:17,280 --> 00:48:19,400
What'd you guys think?
If I told you there was a mining

935
00:48:19,400 --> 00:48:22,680
company out there that reported
full year results today, It did

936
00:48:22,680 --> 00:48:26,480
about $35 million impact in
FY24.

937
00:48:26,960 --> 00:48:30,840
They're guiding about $55
million in in EBITDA next year.

938
00:48:30,840 --> 00:48:37,120
In FY25, it has no debt and an
EV of $16,000,000.

939
00:48:37,520 --> 00:48:42,600
Would you believe me?
It must be here.

940
00:48:42,600 --> 00:48:43,840
Why?
You've asked a question and

941
00:48:43,840 --> 00:48:46,160
saying yeah.
Something on a very very very

942
00:48:46,160 --> 00:48:49,080
low multiple.
What's on low multiples?

943
00:48:49,120 --> 00:48:52,080
Must be Carl.
It is a coal company, it's the

944
00:48:52,080 --> 00:48:54,440
company's Bathurst resources.
They're producing just shy of

945
00:48:54,440 --> 00:48:58,160
2,000,000 tonnes of coal as New
Zealand's largest coal producer.

946
00:48:58,640 --> 00:49:01,600
As always, you know there's some
what's here and to make about

947
00:49:01,680 --> 00:49:03,760
completely fair.
The consolidated cash balance

948
00:49:03,760 --> 00:49:07,440
actually fell in in FY24 spot
modest investment in their

949
00:49:07,440 --> 00:49:10,120
development project.
So, you know, take the impact

950
00:49:10,120 --> 00:49:12,760
with a grain of salt, but but
you know, now those numbers are

951
00:49:12,920 --> 00:49:15,680
what they report.
So there's, yeah, it's pretty

952
00:49:15,680 --> 00:49:18,680
startling to kind of just read
those numbers and think that's

953
00:49:18,800 --> 00:49:21,360
an actual company.
Yeah, we had so 22 million tonne

954
00:49:21,360 --> 00:49:23,800
of Carl a year and a 16 mil AV.
Yeah.

955
00:49:23,960 --> 00:49:26,640
It's like $136 million market
cap, but they've got a bunch of

956
00:49:26,800 --> 00:49:30,640
consolidated cash, various joint
venture levels that kind of, you

957
00:49:30,640 --> 00:49:34,920
know, add up to a bit over 100.
There you go, Bathurst.

958
00:49:34,960 --> 00:49:38,080
I would have always thought
Bathurst Resources was in

959
00:49:38,080 --> 00:49:42,320
Bathurst in NSW, but it's not
and I'll think of what I was

960
00:49:42,320 --> 00:49:45,000
thinking before I assumed it was
there, but it's obviously not.

961
00:49:45,800 --> 00:49:47,480
Oh, there you go.
Very interesting.

962
00:49:48,360 --> 00:49:50,880
That is interesting, shows you
how much like impact can just be

963
00:49:50,880 --> 00:49:54,040
an accounting construct and you
need to look at all the various

964
00:49:54,040 --> 00:49:56,200
kind of data points out there.
What was bloody?

965
00:49:56,800 --> 00:50:00,920
Was it buffered or manga?
Your mates JD that said you'd

966
00:50:00,920 --> 00:50:04,200
never apply EBITDA to anything
that requires a lot of capital.

967
00:50:05,640 --> 00:50:07,520
Yeah, EBITDA is just bullshit.
Earnings.

968
00:50:07,760 --> 00:50:09,840
CapEx is a real expense that
people need to pay.

969
00:50:10,400 --> 00:50:13,400
I'm sure they'd love to not have
to do these numbers well.

970
00:50:13,400 --> 00:50:17,280
I can just do quarterlies but
must be required for some

971
00:50:17,280 --> 00:50:20,360
reason.
Yeah, I think it's required with

972
00:50:20,360 --> 00:50:24,200
good reason.
Oh good stuff boys, good in the

973
00:50:24,200 --> 00:50:28,080
weeds.
Access modern technologies in

974
00:50:28,080 --> 00:50:30,240
the weeds for drill.
All survey instrumentation.

975
00:50:30,360 --> 00:50:33,720
They go to the same detail you 2
went to just then to make sure

976
00:50:33,720 --> 00:50:36,960
shit is straight or tell you if
it's not straight.

977
00:50:38,080 --> 00:50:39,200
Show me who else gets in the
weed.

978
00:50:39,640 --> 00:50:42,960
Mate MMS, they get in the weeds,
they bloody dig up the weeds and

979
00:50:43,040 --> 00:50:45,480
fucking all the rocks below it
and just move it everywhere.

980
00:50:45,480 --> 00:50:48,160
Bloody verify you can fly over
the weeds.

981
00:50:48,160 --> 00:50:51,080
Bloody smack power and
technology, you can electrocute

982
00:50:51,080 --> 00:50:53,680
the weeds.
Bloody DSI underground, you can

983
00:50:53,680 --> 00:50:56,000
bloody dig a weed out with your
friggin bolts.

984
00:50:56,000 --> 00:50:59,000
Bloody Silverstone mate.
Mate.

985
00:50:59,040 --> 00:51:01,560
What though?
Drive over them you.

986
00:51:01,680 --> 00:51:03,920
Can power them, you can power
the weeds.

987
00:51:04,120 --> 00:51:08,600
I was gonna say they grow weeds
but I'll delete that bit.

988
00:51:09,640 --> 00:51:12,280
CRE insurance mate.
You want your weeds insured.

989
00:51:13,240 --> 00:51:16,640
CRE do weed insurance as well
but not say that.

990
00:51:19,720 --> 00:51:21,600
The crop insurance.
Croppy, Croppy.

991
00:51:21,600 --> 00:51:23,480
You want to insure your crops
bloody?

992
00:51:23,840 --> 00:51:25,280
Oh, Greenland's equipment.
Yeah.

993
00:51:25,280 --> 00:51:27,200
You want your weeds to get
bigger, you can water them

994
00:51:27,280 --> 00:51:28,680
bloody.
Nitrill.

995
00:51:28,880 --> 00:51:32,240
They'll just send a bloody
drill, bloody drill bitch

996
00:51:32,240 --> 00:51:34,920
straight through all the weeds
and find you some frigging ore

997
00:51:34,920 --> 00:51:37,440
and spark charts.
Probably got nothing to do with

998
00:51:37,440 --> 00:51:40,280
weeds at all.
Some of the stocks actually look

999
00:51:40,280 --> 00:51:43,360
like a weed.
So hoodoo money miners?

1000
00:51:43,600 --> 00:51:47,680
Hoodoo hoodoo lads.
Information contained in this

1001
00:51:47,680 --> 00:51:50,440
episode of Money of Mine is of
general nature only and does not

1002
00:51:50,440 --> 00:51:53,080
take into account the
objectives, financial situation

1003
00:51:53,160 --> 00:51:55,120
or needs of any particular
person.

1004
00:51:55,440 --> 00:51:58,480
Before making any investment
decision, you should consult

1005
00:51:58,480 --> 00:52:01,560
with your financial advisor and
consider how appropriate the

1006
00:52:01,560 --> 00:52:05,240
advice is to your objectives,
financial situation and needs.