It's the 37th week of the year guys, and there's some some real
optimism in the uranium market. You know, I'm hearing all of
these rumours surfacing around Twitter everywhere that, you
know, there's, there's four prices as high as 85 bucks per
pound being thrown around, you know, post sort of WNA and, and
big lofty ceiling prices in that, in that term market as
well. I'm so keen to get into that.
And we're also going to look under the hood at the the
Palladium and platinum markets. Thanks to Sibanya, Stillwater
stumbling and China mate, they're sending us some mixed
messages in the rare earth market as well.
Maybe as usual, I can't wait to bring you all of that today as
Maddie's over East. But first we got a funny voice
memo sent through to us the other day, didn't we team?
Oh, we did we. Did indeed?
Let's RIP it, I reckon. Let's have a listen.
Let's. Play this one for the money
miners Zai. I'm out in lock and fold, belt
man in RC rig trying to work out the world underneath me from the
scale of a piece of grapple. And what do you know what pops
up in front of me but a tablet with Axis mining technology and
displaying the surveys that the drillers have just completed.
While dust is flying, the chips are being washed and by God the
hole is bending like a banana. Straight from the mouth of one
of Australia's best geos, hey? Mate, that's bogan owe you a
carton for that wonderful bit of promo in the absence of Maddie.
Didn't have to RIP it out ourselves team, but go to hell.
What is going on in the uranium world?
Yeah. So as we know the West nail for
those who don't know, the World Nuclear Association conference
was held a few weeks ago. Big anticipation this year with
you being obviously a fair bit higher than previous years when
the conference has been held that this is where you have all
the uranium companies, fuel buyers and all the like having
to talks, you know everything you and nuclear.
And there was a great article that come up over the weekend
from Kuppi called you need to focus on term.
So this is from Kuppi's Corner and it had some interesting
takeaways from the conference and sort of looking at you and
nuclear going forward. Puppy is Harris Cooperman.
Isn't that right? JD?
If. Yeah, he's a a fundy over in the
States who put a couple feelers out to to get on the show.
But for those that aren't familiar, he's a fund manager
who's been watching the uranium space for for quite some time,
as well as a few of the other commodities that we that we like
to like to follow. Mate I.
Remember looking at his funds performance and just being like.
That real? That was my first thoughts as
well mate. That's.
A pretty good, pretty good performance, but yeah.
So what were those takeaways, Ally?
So first one which I think to be honest you could apply this to.
A lot of. Commodities.
No pun intended to a few different commodities, but he
highlighted sort of again that investors are very fixated on
the most recent data points, you know, sort of bit like goldfish
and a bit I'll pick at times. So, you know, we saw uranium
spot price, you know, peak over 100 bucks a pound early in the
year. It's since fall back from then
and this pull back seems like investors are sort of obsessing
and catastrophizing over and it's sort of been amplified by a
bit of a misunderstanding of uranium market and how it
operates, which sort of naturally leads to take away
too, which is the spot price is a price, it isn't the price.
And I think, I think we we all know Ali to to what you're
saying there, what the spot price is, what the term price
is. But reading through the article,
I thought it was, it was pretty sort of funny and interesting.
So I'll just read out a a couple of sentences.
Firstly, talking about the the spot price.
So to start with, it's where miners choose to sell their
pounds or purchase pounds when they can't meet contractual
obligations. It's also a market where
momentum based hedge funds go to express a view in another sort
of sentence, he says it's a a market where enriches dump their
excess pounds from under feeding.
So what you can essentially take from that is it's it's the place
where hedge funds carry traders, producers, utilities,
speculators all go, go. And you know, he, he summed it
up quite well with it being the most quoted price out there, but
also largely the most, well, the most effectively irrelevant
price that you see out there. Any he put some numbers to that.
It only makes up 10% roughly of the pounds that utilities get.
And then on the flip side of that, you've obviously got the,
the term price, which in simple terms for people that haven't
followed uranium for, for some time is where the, the utilities
go and lock in the longer term contracts.
These are, you know, executed over many years and they've got
prices that reference ceilings, they're reference floors.
They're not just flat prices, they involve periodic deliveries
as well. I.
Always thought that, you know, the difference between the, you
know, the focus on the spot price and then you look at the
the, the term price and you know, the term price is the one
that matters. But you know, like maybe a
misconception that that I and, and even and other investors out
there kind of had is I always sort of thought the spot price
might have been like the tail that wags the dog kind of thing.
But yeah, I think this article kind of questions that that
interpretation as well. I was gonna say this meme Tuppy
had in his cool trap probably very accurately sums that up,
right? Yeah, that's, that's a good one.
I also, you know, find it kind of funny, right?
Because I'm sure this is where a bit of Cappy's kind of edge
comes from being able to take the differentiated longer term
view. So maybe it's a bit tongue in
cheek that he calls it out or he's, he's obviously, you know,
disclosed at the bottom of the the piece that he's got an
interest in uranium at the moment.
But I'm sure this shorter term focus which is commonplace in in
markets today and I think it has been for us as long as time is
where he actually makes a bit of his alpha.
Absolutely, and I'll quite like this other quote from his
article as well. He says if the vast majority of
the total transaction volume takes place in the term market,
then it seems odd that so many investors use the most recent
spot trade to guide the sentiment.
Instead, they should be focused on the term market.
But unfortunately there are a number of problems with using
the term market as a benchmark because a lot of those contracts
as, as you sort of highlighted JD, they're, they're bespoke and
sort of quite unique to particular situations, mines,
fuel buys, etcetera. They're often, you know, the
terms of that are pretty confidential.
The actual volume of these transactions is a bit on the
lower side as well. So there's sort of the pros and
cons, but again, just just highlighting that focus on this
is where the majority of pricing is determined over here, not,
not the not necessarily the spot price what's.
Actually happened to the term market over like the last six
months when you know spot's been under pressure and and equities
have certainly been under pressure like the term market's
actually each tier, right. Yeah, I think, I think the
important thing that that people are picking up on and clearly
that's what Cappy's honing in on here is that you see a a gradual
rise in the floors and the ceilings.
And obviously they've got they've got features in them
that can allow that to rise going forward in time as well.
But when they're sort of priced today, what he's talking about
floors of 85 bucks, ceilings of 135 that that's not throughout
the rest of the life of the contract that can, you know,
elevate over time. Again, if that's the way in
which the uranium price trends. But the broader trend of having
those floors being set higher and the ceiling set higher is
the positive trend that people are sort of fixing on, right?
Yeah. And probably the the final take
away from this piece is from Cuppy's piece is that utilities
are increasingly hungry to contract for uranium.
You know, supposedly utilities are submitting, you know, to
market RFP's requests for proposal in the next few weeks
sort of post WNA mining companies have sort of sensed
this change in sentiment and you know raising pricing and
anecdotally sort of as you sort of mentioned, JD heard that
miners are now quoting $85 floors and $135 ceilings.
That's wild, right? Which is $85 floor when your
spot's 80 thereabouts. It's kind of kind of weird.
Yeah, no, it's, it's, it's pretty huge, right.
But I guess the question to ask is that's all good from the
mining company side, but are utilities actually willing to
transact at these sort of elevated prices that are, you
know, especially from the ceilings as far as the ceilings
concerned well above current spot prices?
And is the lack of transaction volume on these term contracts,
is it due to this Mexican standoff between the the miners
and the fuel buys? Or is it because there's a bit
of a dearth of miners with uncontracted new term
production? You know, perhaps it's a bit of
both. And I guess that dynamic can
really only last so long given there's already pretty low
uranium inventories. We're coming into the Northern
hemisphere winter. So they'll start getting chewed
up. You know, there's been guidance
cuts, as we've seen recently from the world's biggest
producer. So there's a lot of, you know,
things sort of have played out and are playing out now and
imagine some of that pricing for the term market will, you know
begin to crystallise soon can. You point the alley on bit of a
stand off. Gosh, I, I, I would have always
thought like the initial kind of, you know, interactional
interest in, in securing supply. Like it's the it's the, you
know, the nuclear buyer that kind of has that power to begin
with to actually, you know, initiate, discuss discussions to
lock in supply because they're trying to whatever they're, you
know, they've got to meet their like contractual obligations and
they've got like they're doing the power forecast.
But then it's the setting, the actual price is sort of where
where some degree of leverage might come to the come to the
miners. But yeah, I'm the, the, the
rhetoric on Twitter would be that that Mexican standoff is in
some part just due to the, the cyclical nature and actually
these contracting cycles. And you know, rather than kind
of seeing this, this homogeneous flow of contracting kind of
happening throughout the year, it's actually, you know, these
these multi year kind of cycles. And you know there can be a
Stampede of everyone trying to do at the same time at all,
which you know people with the bull thesis will point to.
Yeah, I think you've, you've framed the, the discussion
really well there, Ally, with the the two sides.
I mean, we've, I've personally got no, no great insight into
it, although I'm pretty interested because one way or
another it seems like we'll find out in the, you know, the
relative near future what the outcome is going to be.
And that would sort of imply a movement one way or another.
A sort of line that really stood out from, from the article was
that the uranium market moves at glacial pace their utilities,
after all. And I think that's firmly what
we're kind of seeing here. I just sort of caveat the, the
article, if people go and read it themselves, you sort of
finish reading that and you've, you've got a bit of an
optimistic view, You've got a really bullish view.
And you see the, the sort of downtrodden sentiment in the
uranium stocks and more broadly across the, the nuclear kind of
universe at the moment. And that that's a sign that kind
of gets me excited. But anecdotally, we'd heard from
other people as well out there that, you know, it wasn't quite
as as bullish as the article might have you believe.
There were people with different points of view saying the, the
utilities out there, they're pretty content.
They're not feeling the need to rush in.
But, you know, who knows? Maybe that's a broader disregard
that they've had for the uranium producers out there for a while
to come, and maybe that comes and bites them in the ass in the
future. Who kind of knows?
Yeah, another, another piece of, you know, feedback we'd received
is it it seemed like the mining of uranium was a bit of an
afterthought for fuel buyers, which to be honest could be a a
blessing and a curse for them. Sort of think thinking in that
way. You know, some people believe
that because that a problem is sort of addressed the next 12
months of the sulfuric acid shortfall, which has been quite
a topical issue the last few months.
So it seemed like a lot of the finance guys and gals reckon
yous going to the moon, but then, you know, you had nuclear
insiders sort of a bit more muted on that front.
So yeah, definitely a bit of a range of anecdotes and
perspectives coming out from the conference, sort of depending on
the on the party I guess. Yeah, Speaking of conferences,
Ali. Oh, Speaking of conferences, we
have to talk about AUS big next event coming up, Drill 24, only
29 sleeps away guys. Oh, wait, wait, we're.
Going to be there. And we're going to be there too.
So look, if you haven't got your tickets yet, links in the show
notes, get your tickets sorted. It's October 15th to 17th in
Perth at the Convention Centre. It's as simple as that.
We've got, you know, they'll be showcasing all the latest and
greatest in drilling tech and equipment and drillers take note
because reps from the major modern companies based here in
Perth will be there. So get yourself there.
That's the mining tech mate. Will help you.
Will help you drill more efficiently and cheaply.
Yes, Oh, if if anything in this cost inflationary environment
that's all you can ask for. And like Trev said, we're all
going to be there. Maddie's going to be doing a bit
of M saying it is all happening at drill 24.
That's. The real selling point did
Maddie M saying the show big tickets.
They're in the show notes. To.
A another, another commodity market, JD, where, you know,
we're seeing a good chunk of supply curtailment maybe not
coming in the uranium space, but this is, this is five years ago
you saw plenty of curtailment in the uranium space.
But yeah, the the Palladium made Palladium surging.
Wasn't that, wasn't that uranium curtailment a sign of things to
come? For the patient investors out
there, it's almost like this. It's very cyclical nature of
commodities where you have over investment and then lag time and
construction and then commodities.
It's kind of, it's kind of funny if you zoom out.
So we, we both listened to this one mate and I, you know, we, we
spoke about it this morning. It was, it was really
interesting and it's a basket of commodities PGMS that are just
really interesting. I think the, the first time we
spoke about it was a good three or four months ago and we
described the, the hated environment that I think perks
all of us up and really stands out to those, those investors
that love trolling for, for beating up stuff, right.
Mate, I think it's the only like if you're interested in a
commodity sector to like, you know, have positive PNL, it's
the only way to to do that effectively over time is to look
for the look. Look for when the the commodity
is absolutely in the in the doldrums.
That's when. 100%. Excited as opposed to follow
the, you know, the whims of human emotion, which is follow
the thing that's going up. Yeah.
So I mean that that is the perfect segue to Subarnay
Stillwater. So to to simplify the business
real quick for people that aren't familiar, they are,
they're not obviously listed in Australia.
They're to NYSE and a Joburg listing.
I'll flash up their guidance to give you a a flavour of what
they kind of produce for people listening in.
It's PGMS across the the US and South Africa.
There's also gold in South Africa.
In Europe, you've got a nickel refinery and a lithium project
that they've sunk a fair bit of money in.
Bizarrely, you've also got the Century Zinc operations as well
as Mount Lyell here, both in Australia.
And then there's also a uranium project which is earmarked to be
sold. But in, in revenue terms, just
kind of think 1/3 gold, 2/3 PGMS in you know kind of simplified
terms. And what did you guys sort of
get out of the the call that happened?
The call was really interesting Ally.
So it was two hours long, a big, a big presentation because there
was a bit to kind of chew on what they'd kind of done on an
operational management balance sheet kind of front and then AAQ
and A at the end. So the, the features that stood
out are the the losses at an income statement level as well
as in sort of free cash terms. The income statement losses come
broadly off the back of a bunch of impairments that they had to
do. That is because like Trev said,
they're curtailing production in the US Unfortunately, that also
leads to roughly 800 job losses at in Montana where they have
their operations. And then like I sort of said,
the the, the sort of underlying theme of saying our balance
sheet is OK. You know if you if you do listen
to the call, it might remind you a little bit of min res out
there, although there are some sort of key differences which
will kind of hone in when we get to the more broader Platts
Palladium market near the end. So it's.
Pretty interesting, right, because there was a lot of yeah
market rhetoric in the lead up for this like earnings event.
And I think in some ways like there was an expectation that
they would, you know, completely curtail production from the
Stillwater OPS in Montana there they sort of, you know, half
curtailed them and stock basically shut up.
I think on expectation that we've like that that'll, that's
basically kind of the, the, the, the bottoming of the, you know,
Palladium market price sort of downturn.
Yeah. And I mean also sort of playing
in perhaps that's the the bottoming of the the
restructuring that kind of have to do.
I mean it, it sounds like it might sort of save money and all
this sort of stuff, but just shutting off a mine is expensive
as well, which they kind of pointed out, you know, running
things on care and maintenance everything.
And then there's but they'll. Lose the money from there like
that operation was, yeah. Yeah, that they, they were
losing money. So interestingly they talk about
chalking off 200,000 ounces of 2 E production.
That's about a halving of what they're producing out of there
whilst trying to get the oil in sustaining costs down to about
US 1000, which is not the easiest thing when we always
sort of think of logistics and economies of scale in mining.
On the balance sheet front, they were talking up seeking
prepayments. That's kind of their their final
piece of looking after the the balance sheet.
So they've done a whole bunch of other things.
They've, you know, renegotiated their their debt covenants to
buy them a bit more breathing room.
They've already got $100 million prepayment for the gold that
they're going to produce in the near term, but they want to get
this UUS $700 million prepayment over the line.
Now the the language around this is kind of interesting because
the question came in, aren't you just kind of giving away your,
your future upside? So the response was that they're
very much focused on, you know, settling out streams and
whatever other sort of premayment, prepayment
structures you can think of for their secondary products.
And they pretty much said analysts don't care about
whatever your secondary product is.
So you may as well just kind of prepaid it, which is.
Then then why did they invest in lithium and fucking you've?
Been in that one, Trevor, we'll get there.
So they they looked to really address the the equity raise
concerns. You know, this is I guess the
the min raise kind of comparison in, in my head again, they
referenced it plenty in the call.
They referenced it in the presentations in the in the half
year docs. So they pretty much said the the
perception should now be moot that we need to capital raise
so. I'm not sure if it's completely
done and dusted, but I think they have gone a long way to to
assuring investors by Catalian production, I mean, what we
mentioned here today is a kind of almost a drop in the ocean.
They've done a lot of this over 2023 in the first half of this
year already. So lithium Trav, the the Calibre
lithium project is 1. I think you might be referencing
they got €500 million in financing for this.
I want first production in 2026. It's up in in Finland.
I mean, putting aside for a moment the idea that they've got
lithium in amongst the portfolio with zinc and undeveloped
uranium and copper project PGMS, goldmine in the US in South
Africa, that they're very adamant that with regional
managers they can manage this all.
But I kind of think for, you know, poor old investors, it's a
bit too much to to kind of take on.
There's stuff kind of everywhere.
I'm very concerned that, you know, hydroxide production who
has done that well in the in the last few years of the kind of
western miners. I'm sorry, no one really.
I just, I just think it's very hard.
I think that could be a potential money sink.
They've got rhyolite Ridge eye knees project.
That was, you know, a big sort of announcement in back in 2021.
A new century as well. Yeah.
There has been some sort of confusing, Yeah, there's been
some confusing, confusing acquisitions, right?
Yeah, yeah, real confusing capital allocation at certain
points, but yeah, I actually think, I think when, you know,
Once Upon a time this was a gold company, it was a buying a gold
and yeah, they acquired the PGM business in South Africa, which
was like a phenomenal acquisition.
Actually I kind of delivered some brilliant free cash flow,
especially especially during the, the big PGM kind of spike
that happened in kind of 2021-2022 around that Russia,
Ukraine invasion period. And it, it was so like
remarkable the free cash flow that came in that like if you,
if you look at Sibanya's market cap today in U.S. dollars, it's
about 2.5 billion US in in market, sorry, 2.7 billion U.S.
market cap today. Well, in 2021 financial year,
Subarnier generated 3.4 billion operating cash flow, which kind
of converted to US 2.5 billion in unlevered free cash flow.
So like that's the kind of capability the business has to,
you know, spit out free cash flow in the good times.
But when you Chuck in the debt and the pretty average capital
allocation that that's sort of, you know, happened since it
probably explains some of the substantial selling off the
stock has had, but also the interesting kind of part to some
some investors. So we're really trying to, you
know, get, get, get talk if they're, if they're predicting a
turn around too. Yeah.
I mean, they were a $15 billion market cap companies a few years
ago. It's kind of wild.
And it is interesting what you kind of touched on there, Trav,
how the company kind of came together.
You got the PGM acquisitions and I think 2016 and then Stillwater
2017. And you know, a few years later,
you know, after you've had a few years of just Ripper cash flows,
you end up with a good bit of it just being spent on all these
kind of random things. But I mean, at the end of the
day, right now, they're a company that is, you know,
financially leveraged and operationally leveraged to PGMS
and gold. That's where they are kind of
right now. They're super beaten up.
They've got a bit of optionality slash cash sinks in, in lithium
and uranium. But it's a it's an interesting
company to kind of look at to, to round out on the, I mean to
kind of find our way into what's happened in Palladium and Platts
markets rather. It was interesting to note that
straight away on the back of them having to unfortunately lay
off people in Montana, you see these senators from Matana jump
on and say, hey, we should ban all imports into the US of
Palladium. And then you got the the company
kind of playing into this saying Italy's Russia is inundating the
Palladium market to tank its prices and the responsible and
sustainable mining and metals processing that Sibanye does is
just going to be much, much more expensive than Russian
competition. So it's eerily similar to what
we spoke about about six months ago in the nickel market, right?
Yeah, it's funny, right? Because there's this like line
of argument, they often say the, the big talking points are that
there's no, there's no like this is the, the only strategic kind
of production of PGMS outside of Russia and South Africa.
That's like a big talking point, right?
But I'm not sure that's right. I'm pretty sure there's a lot
that comes out of Zimbabwe. They're forgetting the good
people of Zimbabwe. No, you're spot on.
I do. I, I see where they're coming
from. Although if I, I just sort of
thought, you know, history kind of teaches us that putting these
bands and stuff just isn't a, a kind of long term solution.
You know, maybe it kind of helps people in, in the short term.
And I, you know, I fully appreciate the, the difficulties
there. But I think there's got to be
some other sort of solutions and some thinking that kind of needs
to be done to build a bit more resiliency into the into the
supply chain as opposed to just once people have already been
laid off banning production. I think it's.
It's not too late then, isn't it?
Yeah, Yeah. So I don't think it's the kind
of right way, but it's a difficult kind of situation.
I think it's worth just a quick chat as well about the
restructuring and maybe just sharing a couple of comments
whether we think they're kind of done given everything that's
gone on the last year and a half.
So we spoke about all the assets they've accumulated over the
past few years and I wonder if it's kind of worth selling or
spinning any of the other remaining kind of assets out to
get a more simplified kind of structure.
The company was, you know, uranium was the one that they
said, yeah, we're happy to kind of sell that.
But the rest they said they kind of want to hold on to or maybe
they're not able to sell, but uranium assets, Centuries Inc,
Mount Lyell, Gallican, that's this sort of pecan nickel
refinery in France, Rhylite Ridge, Calibre, the the lithium
project. And then you've of course got
South Africa and USPGMS and gold.
I think there's just a bit too much in there, right?
Like so if you if you got rid of century zinc and Mount Lyell, so
they they picked both of them up by acquiring century now, Yep, I
think there's no way in hell that they would be able to sell
that those assets for what they they paid for it.
And it just requires like a bit of, you know, a bit of eating
someone's going to eat their own shorts, you know, to because of
those acquisitions at the price they did.
And then yeah, yeah. The other ones I'm not sure of
maybe what are you going to get for them?
Like probably, probably like, well, yeah, every last dollar
kind of helps. But if, if they think that their
their cash flow is OK and they'll see it through.
And especially if these PGM prices kind of re rebound
relatively quickly here, it'll probably just go to the back
burner. Yeah, I, I think you're right.
I'm, I'm kind of curious about how much of their sort of
capacity, it's kind of taken up the, you know, calibre's the one
that's requires a, a fair bit of cash.
There's €300 million earmarked for that one for this year.
But they've got a a sort of green funding line that as they
call it to, to see them through on that one.
But I can see, you know, I don't think they're really going to
get rid of anything else. That uranium asset is in South
Africa. So even that one I think might
be quite hard to to kind of pass on or sell.
I just, yeah. Yeah, I sort of agree with you
JD, as far as you know that that there's a lot of in amongst
their main operations and then all the ones that you've just
listed there. Like you know, how can you
spread all your not just from a money perspective, but as far as
people, resources, IP spreading across all of these different
projects. Like what's actually more
important where, where's the best use of time and human
capital? Where is that best spent?
Now there was one more bit that we have to quickly quote from
from the call you pointed this one out I.
Did want to play this one. Yeah.
I also read much around the issue, issues of diversity with
suggestions that if you go work, you go broke and, and again, I
think that's such nonsense. We will continue to drive
inclusivity, diversity and belonging as we believe it
creates a competitive advantage for a company like ourselves.
Go away, go broke. What do you reckon, Janie?
I do love that it got to mention it's pretty funny, yeah.
I mean. Looking they do go broke now
though. That would be particularly bad.
Although, I mean, you know, on a, on a kind of serious note,
looking into Sibanye's safety record, it is, you know, pretty,
pretty awful reading. So there's definitely stuff on
that front that needs to be addressed.
Like unfortunately, a couple of the the miners out there.
Hey, oh. Mate, they're like these South
African PGM miners are particularly like atrocious on
the safety front. But I think a lot of that's to
do with the, the, the union workforce and all that sort of
stuff out that way. But yeah, yeah, this whole like
topic of, you know, mining companies going woke is, yeah,
big, a big theme out there. A lot of discussion, a lot of
like rediscussion around DI kind of policies that have been
adopted by some of the, you know, the largest mining
companies out there and and question marks on their
effectiveness. And then, you know, on the other
side, you're going to have the, the like, you know, the boards
and CEOs defending them like you see, you see here.
Do you think, yeah, the diversity and inclusivity was
around commodities 'cause it feels like they're trying to
include everybody commodity in the in the company.
Like that's the way I took to interpret it.
Like Jesus. Christ.
Well played, well played. So, so why did the PGMS price
surge so recently, JD, after this, you know, sort of
production cuts that Sabania put out?
Well, this is the the kind of point that really perked up our
interest. There's a, there's a few
different kind of factors at play, but one of them was
undoubtedly Putin's comments that we touched on on Thursday
of last week. So you saw a good kick up in on
Thursday, on Friday as well. Obviously we mentioned Sibanye
jumping up 11% on the back of it.
They obviously curtailed a bit. It all kind of plays into it
more broadly. You've got stocks that have been
built up and they're now kind of unwinding and stuff.
And I think there's a, another feature of the, the Palladium
market specifically, not not as prominent in the Platts market,
but there is a huge like a record short position out there.
Now. If you think back to what we
spoke about in the lithium market last week, it just makes
those, those turnarounds quite jumpy.
When you have a a large short interest in the stock, you kind
of have covering and all these things which lead it a bit, you
know a bit sprung or tightly wound to sort of spring to the
upside when it does kind of go. There was also a an interesting
question in talking about like where does Platts, where does
Palladium kind of go? And to be clear, like Sebania
talk about very much like a A2 E way of thinking because they
think firmly that Platts and Palladium are interchangeable.
The question was relating to to loading.
What this kind of means is how much of either, you know, the
two E is required in the hybrid vehicles going forward.
And the question was kind of angled at has PGM demand been
overstated because the Chinese have developed new technology
where they don't quite need as much PGMS in a hybrid or an ICE
vehicle. And you know, Sibanya battered
the the question off quite well. They kind of said that they are
totally aware of this and they have forecast into their models
these reduced amounts of PGMS that are needed in the in the
new cars. But I thought that was a
different way of thinking about where this market could
potentially go and who's kind of modelling it, right?
But I remember it's been a while, but I remember back, back
when I was at Macquarie there there's this like commodities, I
remember what it's called, but like this kind of big
commodities write up and like the commodity strategists would
would put out their thought pieces on like all of the
commodities and which one are five year coming?
If it was a five year or ten year outlook, they were doing a
10 year outlook. They were most like bullish on
and most bearish on. And I remember clearly most
bullish was carbon of all commodities, most bearish
Palladium. Yeah, right.
So yeah, in terms of like sort. Of 2022 time.
Yeah, this, this was, this was like, yeah, like 2022 when this
way. But yeah, I just, yeah, things
have changed a little bit and sometimes you kind of hit the
Contra. Yeah.
Well, I just think that the, you know, taking the contrarian view
is where the opportunity kind of lies.
And that's not to say it's right.
I just think that's the the place where you kind of need to
look. Mate, I'd love to see if you're
you want to be a contrarian in this market which you've
historically called too hard. Definitely China.
Rare earths, eh? Rare earths in general.
Yeah, I just want to give this story a quick will, mostly
because I I'm trying to get people to see if they'll send in
information that they know about it because I've found it
particularly hard to get information on this story.
But I saw this this headline, I think it was the bottom of the
UBS note. I had to do some Googling to
even substantiate the story before I put a link in the
director special this morning. So there's this news from from
China that China Rare Earth Group has had an exploration
breakthrough and that would result in it producing an
additional 5 million tonnes of rare earth oxides. 5 million
tonnes is a lot in that market. I don't know, I assume it can't
be paramount, but an exploration breakthrough.
Look, So what interesting wording it's, it's, I mean, I'm
sure it's been translated, but so yeah, my first thoughts too.
Just take it all with with a bit of a.
It's full of salt. Some little Chinese whispers to
this one so why is it interesting There's a few
reasons right first of all, let me just give a bit of context
about this state owned enterprise trying to rare earth
group from what I can find online, this state owned entity
actually formed because China merged sort of these three
separate state owned entities in late 2021 to in quotation marks
increased pricing power and efficiency.
So forget antitrust I suppose, because it's OK if you're just
making W more anti competitive that's OK.
I I I read some reports that this kind of like mega code of
of rare earth production sort of just captured just you know
stupid majority of heavy rare earths.
So the first question, what the hell is an exploration
breakthrough that can like definitively lead to a
quantifiable increase in production?
Like what does that, what does that even mean?
It seems pretty wild to to state that, right?
What do you what do you think? I think that is mixed in
translation to be honest, and I'd be curious what was meant by
the writer. Yeah.
And I mean, if there's going to be a breakthrough that leads in
to more production, I would have thought that might have been
more the processing part of the supply chain to sort of get
more, you know, out of the rock. But you know, put simply, I'm
not sure how doing that front end, but I'm just yeah, I'm, I'm
confused. I.
Don't mean unless it's an actual discovery, yeah.
Yeah, unless it's. But yeah, it must be or or
unless it's a discovery. That's all very possible, but
then I had the thought could China's state owned enterprise
potentially have just discovered verifies AI capability?
Because I think it's possible, right?
I actually, I actually put the question to rock, which is if
you didn't know, is the the AI chat insider Twitter.
And yes, I used AI to ask about AI and, and look like rock stood
back from giving me a, a definitive answer.
But I said is verify an expiration breakthrough for
China and I'll just, I'll read out this little bit of response.
Rock says Verify AI focuses on using AI for mineral expiration,
which could potentially revolutionise how mineral
deposits are identified and explored China or globally.
Its technology aims to integrate and analyse vast amounts of
geological data to pinpoint prospective mineral deposits
with greater accuracy than traditional methods.
This could be considered a technological breakthrough in
exploration methodology. But kind of, you know, stood
back from definitively answering my question.
But, you know, I, I must say I'm, I'm pretty suspicious that
this is actually the, the real explanation for China's
exploration breakthrough now. And last I heard, there's a fat
waste waiting list for verifiers, AI technology.
But the, the 3D models that help you communicate, yeah, your
deposit, they've been gangbusters.
And apparently there were 47 of them on display at 47 Beaver
Creek last week. They're they're also on the
ground at Denver Gold Forum too, and they're even an AIMIC
member. So getting amongst the other
mining community. So hit up grant to verify.com or
Nathan at verify.com. Nathan's Perth based.
So righto. Anyway, back to back to the rare
earths in China. Guys.
Last time we, we had a chin wag on the topic of of rare earths.
I think we pointed to what looked like it could be, you
know, bottoming out of the, the NDPR prices.
In fact, the state owned enterprise China Northern Rare
Earth actually recently raised their list prices by 5% as their
you know second quarter earnings were zilch.
And that triggered basically these magnet makers to rush
their seasonal restocking apparently which sent like NDPR
spot prices to $62.00 US per kilogramme last week.
And to China Northern Rare Earth they they raised their list
prices, magnet producers flare to restock NDPR spot price
climbs. And now magically, China
Northern Rare Earth have had an exploration breakthrough
allowing them to produce 5 million tonnes more oxide.
Call me a conspiracy theorist on the timing of it all.
Might have to. And look, throw this one into
the timing mix. Northern Minerals, the listed
hairy, heavy rare earth developer on the ASXER.
They've been the subject of a lot of, you know, geopolitical
archibaldy. They raised a whopping $43
million Australian via 2 tranche placement just announced the
details today. That's about a third of its free
raise market cap, which is chunky.
And in a raise where I look at the the uses of funds in the
raise and mate how's this $23.5 million is in that use of funds
table for working capital site and corporate costs?
Nah, that's more than half. Yeah.
What? No, you can't.
Yeah, no matter how you cut it, it seems bizarre.
So look, something strange is going on in the in the rare
earth market right now. You can you can connect a few
dots and come up with some theories, but I'll let the money
miners do that themselves. And if you happen to have some
Intel, end it in. Very curious, how do you how do
you listen to something like that and not just think it stays
in the too hard basket? I'm with you, JD.
Once Upon a time, uranium was too hard.
Uranium, you can do a bit of digging it, it just doesn't have
that monopolistic, you know, Chinese grip all over it.
It's obviously concentrated in, in some markets and you know,
with regard to where uranium comes from and where things
happen. But I I don't know how you can
be filled with confidence listening to that, even if there
was a conspiratorial tone. But this?
Is why I like gold. JD Not in a too hard basket.
Back, back to gold. Let's go to Denver, Ali.
Oh, sorry. Honestly, this has been quite
the week. I mean, but for LE GS say I mean
like gold is at record highs. Bloody Oscar piastres run the F1
GPA over the weekend like it's it's just been a great start to
the week. So and what a week literally to
kick off the world's oldest and largest precious metals
conference. So this is the Denver gold forum
in Colorado. So as, as we said, sort of, you
know, gold prices hit bloody record highs over the weekend.
Gold equities are on a tear. So the the G DX, which is
basically a VANIC gold ETF is up 9%, then the GDXJ up 40% in the
last five days. Deals.
More importantly, I think the the L e.g.
CETF must be great. She's doing all right.
And then you know this this. Is bumping up off a low base.
Oh yeah. Yes, yeah, that, that is the
caveat that needs to be made there.
Just just a lot of talk and buddy, you know, deals are being
done left front and centre. So, you know, we had great Land
and Telfer last week, Anglo Gold and Cinnamon last week,
Goldfields and a Cisco not too much earlier than that.
You know, Perseus getting into predictive, you know, it's all
happening. Great time to be a gold ball.
I was almost tempted to join our our favourite gold price
reporters on LinkedIn, Simon Lawson and Alex Scanlon, but I
thought I'd best leave that to the experts.
So the conference actually officially kicks off later our
time tonight. And I thought, you know what,
where, where is this bloody hotel that they have this
conference? And look at this, this is the
Broadmoor Hotel in Colorado Springs where the, the, the
Denver Gulf War is all happening.
Look at that. Stunning, that is.
Just gorgeous. Straight out of like Succession
or something. Oh, I actually love that.
Great. Place to get a lot of work done.
Oh yeah, lots of work, JD. Good place.
To spend shareholder money. Look at it but so.
You've been to the place where this is what you're funding,
yeah. Have a look here.
Could you investors don't forget that picture?
But no, look, there's already been some news flow coming out
in and around the conference. So Endeavour mining commercial
production at their bikes expansion and La Figuay growth
projects. Apologies for sort of announce
it incorrectly and West Gold put out the FY25 guidance and some
you know reserve resources updates and is used as well as
the usual Schmidt, you know corporate comments preso so.
And the exploration target, Ali? Forget.
Yeah, sorry. Don't forget the exploration
target as well. So no super keen to say what are
the now that the conference sort of officially kicking off later
tonight, what are the news flows sort of comes out in the next
few days and we'll be certainly keeping our eyes healed.
Well, you know, you're an ASX company.
Yep. You're supposed to not time your
news flow with a conference. You you've got a an obligation
to disclose anything material. As it becomes material, it's
continuous. Like that?
It's it's all part of the process.
At least there's A1 commodity out there at least getting a bit
of love. It's been pretty, pretty bare
and the the kind of sentiment's been a bit beaten up across the
across the space, but came to have a few a few chats with
people from from China and the ones looking at the industrial
metals in the in the coming weeks to get a a bit more of a
better feel for everything going on out there.
Hey. Absolutely.
All right, let's wrap it up there guys.
Got to thank the partners Axis Mining Technology.
During the show we had good on verify and ADR get get amongst
them Mineral mining services, MMS get get amongst DSI,
underground, Silverstone, CRE Insurance, Greenland's
equipment, K drill and spark use a spark shop.
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