Rhino money miners. Another bloody huge deal.
JD, you're. Bringing a massive 1.
And what was I supposed to say again?
Well, JJ's got is a $5 billion gold tie up in Canada.
Usus the big real billions. I'm going to the the monopoly in
the cesium market and it has some implications.
There's some some juniors out there that are having some wins
off the back of some a discovery, but I'm gonna go into
that whole market, which monopolies are awesome mate.
They're very cool and rare in our industry.
They they don't have it very often.
So that's true. And another.
Big gold deal closer to? Home talk about this is mate
could be creating a Kalgoorlie monopoly.
Not really, but if. You can.
Fit if you're talking. Monopoly.
Yours might be a Mayfair. This is more What are the old
Kent Rd. possibly. Oh, right now take it away.
Equinox caliber tire. All right, we're going to North
America for this one. This is a America's focused deal
and there was pretty mixed reactions to it.
So share price on the Equinox side, they're the the bigger
party. You know that they kind of call
it a merger, call it whatever you like, but they're really
taking out the other party caliber in an all script deal.
They were flat and calibres share price was in for a bit of
a rough ride. They ended up peeling off 7%.
Shareholders weren't all too chuffed.
Mate, I saw a lot of deal, a lot of posts on Twitter, like kind
of right after this came out and not a single post was there.
A happy shareholder on either side.
Yeah, so, so negative reaction on both sides.
Of course, sort of, you know, Twitter can be a bit anecdotal.
You want to piece it together with the every every sort of bit
of info you can find. But I mean, just looking at the
share price, right, people aren't happy with with how it's
sort of gone about, especially if you're calibre, because
really it's a, a new premium or if you want to be generous, a, a
2% premium take out. So we'll, we'll get into it.
There's a, a few interesting slides in the, the pack that
they put out. Equinox shareholders have a, a
pretty well known share for Aussie, Aussie listeners to the
show. Ross Beatty is the chair of
Equinox, very well known in Canadian mining circles.
And the stock has been on an up and down ride over the last few
years. So they, they put this little
chart in the deck that they put out.
And I think it's a little bit cheeky because you can see on
the, the Y axis there, they're talking about market cap.
Now, if you actually look at the share price, it's, it's not
quite as flattering because you know, the, the crux of the story
is that they've had to dilute to be on this growth journey that
they're on to, to finance the development of a lot of
projects. We've spoken about Greenstone,
that's their, that's their big project.
I think Maddie was you and I speaking about when they
consolidated ownership there, they took the other 40% that had
been with Orion Online Finance, grouped it all together.
So they were the 100% owner of that asset.
Before that, Gold Rd. We're rumoured to be pretty
advanced trying to trying to pick that share up.
That's right. Yeah, I remember that.
Another group of shareholders that weren't too happy with with
a potential deal. In that case, on the caliber
side of things, you've got a company that's grown from an
explorer not all that long ago. So if you go back just to 2019,
they're they're an explorer and through the sequence of doing a
number of deals, they've become a pretty handy sized miner.
So this deal sort of puts their market cap at Canadian 2.6
billion, I think US about 1.7. They've got 3 producing assets
now and Valentine is their big growth project that's meant to
pour first gold in Q2 of this calendar year.
So pretty, pretty imminent on that front. 195,000 oz per annum
at the initial sort of phase. And yeah, doing doing studies to
to scale that one up. I liked a trading view, highly
compliments to the change of colour scale there on the lines
is that? It's a funky one, that's.
Bloody, I don't know, I'm like, is that my eyes?
Anyway, cool, just adds that extra layer to it does matter up
or down, right? So let let's talk about the,
the, the details around the deal because you know, myself and I'm
sure a bunch of the Aussie listeners won't be all that
familiar with the assets that we're talking about here.
But as a combined group, if the deal goes through, you've got
non producing mines and a mine under construction, the one I
just mentioned in Valentine, there's question marks around
Equinoxes, Los Filos. That's not really factored into
any of the production assumptions going forward
because there's community related challenges that they're
experiencing there in in Mexico. You've got a ten person board to
start with chaired by Ross Beatty.
I'd expect that to be trimmed down once the deal is sort of
bedded down. And I also expect there to be a
bit of rationalization of the, the smaller high cost assets in
the portfolio there. With regard to the, the deal
itself, how it's kind of been structured, I think the, the new
premium aspect is the, the logical starting point.
I mean, hey, it's awesome. If if you're sort of Equinox
taken that point of view and you're happy with everything
else, great. Getting a, a company at a, a nil
premium, that's, that's awesome. But there's, there's always a
bit more to it. The details are that Caliber
shareholders will get 0.31 Equinox shares per share that
they hold to the pro forma ownership will be 65% Equinox,
35% CXB. That's that's Calibre and
standard sort of matching rights in the conditions of deal, but
in the conditions of the deal as well as needing a vote to go
through. Similar to when we spoke about
Kora West Gold, caliber shareholders need to get behind
this deal to the tune of 66.6%. On the other side, Equinox also
have to vote, but they just need a simple majority shareholders
to get that one over the line. On keep one on the new premium,
I don't actually, I don't mind it if they're going to at least
it's a deal where you're going to get to, but there's no
synergies. And if there's no synergies, I
don't think it's particularly appropriate to pay a premium if
you're not getting like the synergy value.
So if you've got no synergies, no premium, you're doing it for
scale sake so you can get into an index and don't pay a
premium. And that's that's where you go
about. I think that's more defensible
than paying a premium, to be honest.
Yeah, no, 100%. I agree with you.
That's pretty much what I'd written out over the the next 5
minutes that I was going to chat through.
Sorry. Why do they?
That's the crux of it. You, you, you search for
synergies in the presentation, you get one hit and it, it feels
pretty obligatory for them to, to write it in there.
But investors ask the question on the call as well.
There's no asset synergies. You might get a a few savings
here and there on the on the corporate side of the business,
but that is not why you're doing this deal.
Why do they have to vote both sides on this case, JD where we
only have to vote on one side over here?
It's a good question I couldn't answer specifically.
I'd imagine just because it's a, a massive deal sort of on, on
both sides, a big, a big use, you know, you're, you're issuing
a substantial amount of capital. That's why Equinox has to be
kind of similar. I guess if you're thinking about
a massive capital raise near the company as well on that side of
it, you need to get shareholder approval, that type of
perspective. There was one feature of the,
the deal itself, which was interesting.
I think it raised a few eyebrows, this sort of
concurrent financing that they speak about.
It's nothing new to see the target company get a bit of
financing to see themselves through to completion caliber,
call it insurance, but the the nature of it sort of stood out.
So they're going to take in $75 million via unsecured
convertible notes, 40 million of which is going to go to Equinox.
They're going to just eliminate them.
Assuming the deal goes through. The remaining 35 will go to a
couple different groups, one being best Core and the other
being Trip Trinity Capital Partners.
Now the the terms of the conduct are fairly standard five years
at a premium of 37 1/2%, but they don't actually mention in
the presentation anywhere that there are warrants attached to
this or options if you're an Aussie.
So you only see that in the announcement in the in the fine
print that 0.66 warrants are going to be issued per
convertible share. So.
With a five year term, yeah, you're getting a really generous
coupon in addition to the upside of that that can convertible,
you know point gold market with five years of volatility in your
favour. And then the warrant, the free
warrant for every 0.66 kind of notes you own, like I'd say
where can I sign myself up for some of them?
Yeah. The the way I kind of came to
think about it is it, it is what it is.
You know that the financiers, they this always kind of happens
one way or another. It's it's not unusual that we
kind of see this. It's always a bit more than the
terms that you read. There's always a bit more
compensation going and you've just got to, if you're the
mining company, you've just got to pay the price.
There's not not too much you can kind of really do is, is the
view that I've come to. I like, I don't like that it's
not included in in the presentation.
I think just kind of be upfront about it, show it.
But I mean, if like, yeah, it's, it's quite a sort of.
It is unusual for it to like like a working capital loan from
the acquirer to the target. Not unusual.
It is unusual for there to be other other parties to that,
especially when one of those parties is the financial advisor
to the acquisition. I yeah, I I hear you in in this
specific, in this specific case, I'm more sort of generalizing
the point of these sorts of convertible notes.
It does always seem like there's finer print or if it's like a
pre payment or something like that, there's always a bit more
payment. You know, the the make a deal.
That one comes to mind where you had to do a bit more unpacking
on the on the gold line type type situation.
And at the end of the day that that is the kind of market rate.
It's not like a straightforward percentage that you're just kind
of paying, but that is the the market rate, whether whether you
kind of like it or not. And it's up to the company to
try and get the most attractive terms.
That's just their their job to, to try and look after the
interests of shareholders. What?
Do you think of what do you think of Deal, Deal Security
JDI? Think there's I think there's a
small chance of an interloper coming in to So to start with on
the on the break fees US 85 million to Equinox or
145,000,000 to Calibre. Should the other party be in the
deal given that there's you know to new premium, someone could
kind of come in with a modest premium, but it's Canadian 2.6
billion, it's got assets in America, Canada and Nicaragua.
Given the scale and the appetite for that kind of portfolio of
assets, I think there's a fairly limited number of other parties
that would be attracted to that. There's also a bit of debt which
you know, I think minimizes the the interest for a few
respective buyers. So you know, despite the fact
we're in a gold bull market, I think there's a, a substantial
focus on returns to shareholders, not blowing it on
M&A being disciplined, all these sorts of things.
And I think if you sort of accumulate all of the above
would have just kind of mentioned, I think there's
limited, not not no chance, but a sort of limited chance that
somebody's going to have a swing.
You know, what I wonder is if there's actually more appetite
for the acquirer in this specific, in this instance and
there is for the target like you know, was was Equinox actually a
much more attractive target than Calibre and hence path to
survival is to, you know, each not be eaten.
Yeah, interesting train of thought.
I think the Greenstone and the Valentine assets, people would
love those two people would love one of those as well.
If you could get both of them, that'd be awesome.
But you know, 11 is with each of the parties, so a bit easier
said than done. But I call it Valentine for
nothing, Joe. There's a lot of love there
mate. A lot of love, mate.
Let's kind of chat about the, the nature of this.
We've, you know, you mentioned synergies there, Trev, like
trying to get into the mindset of Equinox and why you're doing
this deal is an interesting thought process.
And yeah, in in large part, like you say, just to become a bigger
company, very simple prioritizing Canadian answers.
50 plus percent of the NAV is going to be in Canada.
And Ross Beatty put it super succinctly on the call.
We want to get big quick. It's you know, it's that in a
nutshell. I'll Chuck up a chart here which
speaks to it. It's a, you know, Maddie, like
we kind of joke about it's a flow of funds game.
The big get bigger. That's what they're targeting.
And it reminded me of a bit of a meme that Ali chucked in the
directed special newsletter a couple weeks ago.
So I kind of compare and contrast.
One of them is saying the same thing in corporate speak.
The other one is just in main form, but for those listening to
the podcast, you've got this slide where Equinox is showing
all the constituent companies in the GDX and the GDXJ by market
cap and they group them. You've got 41 businesses that
are in that one to $4 billion range.
You've got 8 businesses in the 4 billion to $10 billion range.
And beyond that, beyond $10 billion in market, $10 billion
in market cap, you've got 7 companies.
And what the main just shows is that when investors come and
they want to invest in gold, they look at gold, they look at
the gold trust, they look at New York listed mega cap companies.
And there's a very, very sort of little trickle down in capital
to the juniors in the space, hence the rationale for becoming
a bigger company. And this issue I see being even
more pronounced in North America than it is in in Canada.
I think the juniors in Canada and smaller companies get even
less love than they have been getting here in Australia.
Is that I know, Do you reckon they're paying a bit for Ross
Beattie? He's he's like that name like
you play zero premium, but you get Ross Beattie.
That's the Canadian market, right?
That you've got to have one of those names attached.
To it like they yeah, bloody Rick rules always.
Oh, Ross. He's always talks about Lundeens
and Ross Beattie and it's the brand that comes with it.
Yeah, I think there's. I think there's always value in
that. Yeah, we're, we're susceptible
to it in Australia. You know, you got the Clarky
outrageous, you've got you got rally, you got bill.
These guys attract a premium valuation, but you know, it's
like you're stapling it to the presentation in in Canada.
Like it. You need a promoter in Canada,
yeah. And it's almost a necessary
function of that market for some reason.
Yeah, Friedland, probably another one we can mention there
as well. On the the Canadian side of
things, we've got to talk about the the cheapness or the the
value of the deal. I think would be a bit remiss
to, to not speak about it. They're not paying a premium.
As I mentioned that that kind of helps on cap IQ.
You can see 9 analysts cover caliber.
They sort of peg the, the pay NAV right now at .75 times.
And you know, there's, there's development risk in that
business. You, you sort of look at the,
the group of peers, it's not totally out of place.
You look at Equinox, they're trading at .73 times.
So very, very similar ballpark despite it being a bit of a bee
of business and then slightly different position producing
more Oz and all those sorts of things.
But I think that just sort of hammers home that price is not
why they're doing this deal. Why the shareholders pissed off
me? But I'll try and summarize it
from two different perspectives because you've got shareholders
pissed off on, on both sides of the aisle here.
And I'll just try and summarize their their frustration as I
kind of see it. On the Equinox side, you've got
Greenstone, the big project coming online.
It's it's ramping up right now. And I think there was a sort of
expectation amongst investors that this would come with a de
risking of the business. It would come with a
deleveraging of the business as cash flow ramps up.
And, you know, that would come in tandem with a rewrite in the
share price. So, you know, tying that in with
the view that the timing just wasn't right.
Why not do this in future when you can get better bang for your
buck? That ties in with the yeah, you
know, a talking point on dilution.
You got to do more dilution at this share price then if you
were to, to rewrite, you're also getting exposure to places like
Nicaragua. And if you're an investor, maybe
that's not what you signed up for, you know, maybe that's not
why you're there. I, you know, I understand that,
that perspective on the, on the CXB side of things, the, the
real frustration, the real question that you're asking as
an investor is why have you agreed to sell the company for
no premium? You know, you, you want that
standard 3035% premium if someone's going to take you out,
which this kind of is at the end of the day, that's the big one
people want answered. And maybe it is valid that the
growth potential being combined with Equinox is, is maximized.
Maybe it's better than if you're just going at solo Valentin is,
you know, coming online this quarter or next quarter.
As I sort of mentioned, maybe the project risk is better
handled in a bigger organization where you're sort of spreading,
spreading that risk across more cash flows, more assets.
So you see that in the in the con note as well, like there's a
no for better or worse, there's a bit of a top up financing
going on there so that they don't have to dilute more in the
future. They are dilute like there's a
dilution effect from urging 2 businesses.
But yeah, yeah. Yeah.
So it it, it's open-ended. We'll see as as ramp up goes on,
we'll see if they do attract more generalists, more
institutional investors where the management is right in their
judgement that this is the the way to attract more capital and
better you know share price accretion.
Rewrite's an interesting one. It's like a recession.
It's not like there's one day shit.
This is all happening. We're having a rewrite right
now. Like it's like, is it?
It's never an instantaneous thing, is it?
Is it when you say improv people that you know the definition?
Like are you saying a rewrite like saying we're gonna
outperform over a year for instance, post this happening
cause the story's better at once greenstone come online or like
this rewrite thing isn't an instantaneous event, is it?
I think if a rewrite is multiple expansion, so like maybe, maybe
beforehand you were trading it like three times EBITDA, you
know, a year from now you're trading at four or five times
EBITDA. Yeah, better appreciation for
what you've got. Yeah, kind of just you go better
in a year's time. Yeah, Effectively, yeah.
It's like a recession. It's like there wasn't a
recession. It's like the backward.
Looking thing, or maybe there was one back then.
Yeah, it wasn't very good. I holy shit, it's a recession.
Yeah, today. No, absolutely.
So to, to put it all in a nutshell, if, if I'm going to
give kind of my, my thoughts on the deal from a strategic angle,
I get it, you know, growing the business in an absolute sense,
index inclusion, trading liquidity, all that sort of
stuff, low cost answers in Canada, you know, maybe trimming
the portfolio in time, spreading the risk over more assets.
So I understand that on a value basis, I'm I'm not quite there.
You know, you're paying in stock for a company that's trading at
a kind of similar, maybe slightly richer, multiple, not
super earnings accretive if you're, you know, looking,
looking into the details there. But in all honesty, the the
company is not trying to sell you on that.
That's not how they're packaging up this deal.
They're not talking about per share metrics whatsoever.
It's all about getting bigger. It's all about being a leading
Canadian, the gold miner. It's about increasing
attractiveness to generalist investors, to big institutions.
So from my perspective, I think it's a bit counter intuitive if
you're coming from the lens of, you know, a value investing
orientation. It's not quite my style, but no,
there's there's good odds it it works.
So we'll see if they are getting more bang for the buck, you
know, getting more value on the answers they're producing, more
value on the dollars they're earning in in due course.
There you go. Go international.
That's it. Bloody YouTube and a.
YouTube's loving the international stories.
They fucking love it, right? Next up, the Cesium Balter, and
I won't give any a lie. There's there's a stock on the
TSXV chance that is had a stellar run this year.
It's it's power metals, it's up to 213% year to date.
I think if you look at it on a one year basis, it's up over
400%, which gives this little company a market cap of 212
million Canadian dollars at the time of recording.
It's it's on, it's on the back of the discovery, you know,
particularly niche commodity, which is cesium.
Now cesium is a, is a commodity. I, I actually took a bit of
interest in this commodity late last year because I met a fellow
who was telling me how Sino mine has a monopoly on the cesium
market. And that got me really curious
because monopolies are these beautiful but rare phenomenons
in, in commodity markets where they can surface is though is in
pretty niche minerals which have a small market size.
And cesium market fits that bill absolutely completely.
This market is super opaque for what it's worth.
So these, these numbers I'm about to throw out there are
susceptible to being very wrong and there's a lot of variation
in the numbers you'll find when you doing research on the size
of this market. But, you know, for all intents
and purposes, my, my research estimate of the size of the
market, it's kind of being serviced by, you know, I mean a
20,000 tons of, of cesium polycyte.
Also, I'm talking about the actual ore tons being mined,
which those that ore is processed into a a variety of
different midstream products. The main one or most popular one
is, is cesium formite, which is actually a brine used in the oil
and gas industry as a drilling fluid.
But there's a bunch of other types of kind of, you know,
midstream products including cesium carbonate, cesium
chloride, cesium nitrate, cesium hydroxide, cesium sulfate.
Is that a? Is that a screen grab from
ChatGPT? Yeah, but I've heard it in a
podcast too. So, so I've read some some
estimates that the the annual value of all of these cesium
products is, is ballpark US $340 million per annum.
OK. It's a small, it's remarkably,
it's a small, small market, right?
There's a lot of variability in these estimates of market size.
I'm sure the only, the only party that really knows the
answer to this question is actually signed in mind.
But regardless, the market, it's not, it's not a huge market in
terms of value, but what's more, it's, it's pretty technical too,
because the, there's the refining component of the of the
various cesium products. You got to have some technical
expertise in order to turn the ore into all of those various
different sort of, you know, extreme or downstream products
that I talked about. The majority of the world,
cesium comes from one single mine in Canada.
It's called the Tanko mine. Yes.
Who owns tanko sign a mine? Who would have thought?
I got a picture here of what the
mine looks like and it's, it's obviously it's, it's kind of
remarkable when you look at it, you can see these giant pillars
holding up the roof of, of, of the underground.
And that's because it's actually under a lake.
Yeah, right. It's like it's like a room and
pillar joby but the the rooms are much bigger than the bloody
pillars. The harder you want to take the
rib pillars out at some stage. Yes, that's buddy.
That's where friggin Sandvik ground support comes in.
See the gaps there? They could just pepper all in
between the pillars. Yes with Sandvik ground support.
Just to make sure it holds up. I would propose the new Sandvik
dynamic bolt. So it's normally, for now, hear
me out. It's normally for high stress
environments. You think of all the boats and
shit going along the lake and the bloody the tides and the
bloody, just the turbulent nature.
Pretty stressful. That is a friggin dynamic
environment and that's where this could friggin come in.
So this is perfect for the turbulent lake water and take
out the sebic dynamic bolt. Mate, these bolts have been drop
tested. They've had the living shit drop
tested out of them. I'll show you a video here.
Just hear the bank. Like at the bloody Wasam testing
facility. You know it's good.
And mate, anything that comes out of Wasam, you know, it's the
best. So that is right.
They they they could go down the road of call on this the
dynamics bolt. As I said, I reckon we could get
a better name for it, like D for dynamic.
The logical name for this bolt is the Derek Bolt in order of
the great Derek heard. I propose the name of this is
the Derek Bolt coming out the bloody look at it, the paddles,
the friggin springs to mix, the resin D bonded in the centre,
the perfect Derek, the dynamic bolt.
We got a petition going. I didn't change.
Derek the dynamic bolt. The Bolt innovation at this
company mate. I'm just, I'm impressed.
Oh mate, well there's obviously been like issues previously with
dynamic bolts of the mixing of the resins.
So what are they put the mixing springs on the top and the on
the collar and the toe? Because that's what Sambic does.
It's a company that listens mate.
Oh mate, so OK well once after they go and they are they
planning to extract these pillars?
They, they actually, they actually do like so, you know,
these, these pillars are what they do really want to mine, but
they're because there's a lake on top.
Their plan is to, you know, drain or divert the lake so that
they can actually just open pit to access the, the, the pillars
eventually. But crown supports another great
alternative. I think they, the, the way that
sign of mine actually got their hands on this mine is super
interesting to me. Like they, they bought this in
2019. They paid $135 million US for
the operation. And, and, and, and, and imagine,
imagine paying 135 million US to get a monopoly on a critical
metal. Like it's just an, an, an
amazing deal. I, I think this was 2019, right
before the West just started to crack down on Chinese investment
into critical minerals. And instead of objecting to the
deal, which would certainly happen today, the, the Canadian
regulator approved it in the minimum time frame of 45 days.
But that that approval didn't didn't age particularly well
because within a few years the Canadian government started to
put the squeeze on some of mine's ability to, you know,
invest and expand. One of the orders that the the
the Chinese government save to sign of mine was ordering it to
sell its equity stake and off take in none other than power
metals. That equity stake that that
equity stake in power metals is the very equity stake that ASX
listed Winsome resources ended picking end up picking up.
They paid 2,000,000 bucks for 7.5 million shares and 7.5
million warrants, which were which are well in the money
today and they they tipped in a bit more later on.
I'll get to the implications for for winsome shortly.
The power metals they're case like project has come across
some high grade cesium polysite, which is yeah, what what you're
looking for and it's near surface it's yeah, decent grade.
So everything is promising and but if you think of the the
concentrated supply of this critical better production in
the in the hands of the Chinese, yeah, the, the stocks had a a
really strong run like we talked about.
But it's early days and there's, there's plenty to play out to
see if the, the market cap can can today can justify the, the
potential. But that's the nature of
discoveries in our our industry. Yeah, you know, the, the share
price will run, but there's uncertainty, there's upside.
You're trying to find the middle ground.
And with commodities that are monopolised in some part of the
processing, like we, we do have here with the, with the, and the
reliance on the Chinese power metals, they've got their work
cut out to sort of forge their own pathway.
And yeah, I think it's, that's, that's all ahead of them.
But the whole thing is, is particularly interesting for ASX
listed Winsome because the value of their stake in the company is
now valued at 48 million Australian dollars.
Winsome's market cap is only $76,000,000.
And they'll also have $34 million in cash after the raise
they just did. So you can do a fully diluted EV
of Winsome and back out a pretty tiny EV for that company right
now, which unfortunately speaks to just the state of the lithium
market. Yeah, Jesus Christ.
Pretty negative AP. Huh.
It's yeah, I think fully diluted it's slightly positive, yeah.
Oh yeah, interesting. Tell, tell us a bit more.
I've got a few sort of questions, but sure you've done
a bit of digging on sources of cesium and and just the the kind
of market in general. So one of the one of the claims
I read when I was researching this market is, is there are
only three minds globally that have ever produced cesium.
Tanko being the, you know, the dominant one, obviously, which
I've I've talked about. The other two cesium mines are
fascinating for different reasons.
The first one is Bakeda, which JD, you and I are a bit more
familiar with after a trip to Africa.
This is better known as one of the lithium mines in Zimbabwe,
which has a lot of pedalite lipidalite, but also cesium
polycyte. And guess who owns this mine?
Cynomine. None other than Cynomine.
Of course, the other mine, possibly a surprise to you, but
maybe not given what we discussed before we started
recording. It's a mine called Sinclair, and
Sinclair Cesium deposit was discovered in 2016, delineated
in 2017, then completely mined out in 2018 and early 2019.
Was X strata? No, it was a company called
Pioneer, which became essential, which is now developed.
Yeah. Yeah, yeah, right.
Yes. Oh, Sinclair.
Sinclair deposit, No Burncard had a contract at Sinclair,
Yeah. Where, where is the?
Deposit. So this is this is like Pioneer.
It's like 60 kilometres South of Norsemen.
Oh it is. Sinclair Deposit is part of
Pioneer. Sinclair is, is is, Yeah, it's,
I mean, it's tiny. It's completely mined out.
And obviously the market size is small as well.
But yeah, that's where, that's where this where caesium was,
was developed. Yeah, it was in there.
It was in develops. I think it was a quarterly or
something talking about the potential cesium deposit.
I'd Zinclair, yeah. I've read through the the scheme
docs just when I was researching this piece to see any talk of
that cesium deposit and everything, but yeah, that there
there was AI didn't see anything that kind of talked about future
opportunities or whatever but yeah who knows there might be
yeah, might be more defined there, but I'd.
Be curious to hear from them. It was used to be.
Was there a Sinclair nickel mine?
Maybe. Unless it's the same fucking
mine. I'd be curious to know from any
any geos given the sort of relationship with lithium type
type. Water bodies.
Sinclair was where is it? No, it's obviously it was.
Obviously it was West 81 K is West of Leonora.
That was the Sinclair nickel mine owned by Xstrata.
So this is a different, Yeah, that's why.
What I did come across when I was researching this market is
it's actually much harder to find than than spot.
You mean because you don't have the outcropping to go off when
you're actually exploring for, yes, your cesium deposits?
Very small market. Fuck we we found out how easy it
is to find Spodumain because friggin everyone found it.
Just wait for a price rise and get everyone.
Looking at the predicament we're in, sorry, it was very easy to
find pigmentites. Some of them were spodumain
dummy ass on one that wasn't very good bloody.
Really interesting. Very.
Interesting, buddy. Right, I'll, I'll Billy bought
it. Mightn't have been about the
lithium, could have been the cesium.
You know what I think if it, if it.
Ends up going off. You'll definitely climb it, I'll
know that. Before this, the only use case
for cesium that I knew about and obviously it's used in oil
drilling, bronze or oil drilling way more than this, but was
like, you know, the atomic clocks that are so precise,
that's like on the decay of a cesium Adam or something like
that. That's, you know, it's all I'd
ever come across Cesium. Back there you go.
Wow, well they wanted home 'cause me freaking battery keeps
running out and then the kids are late for school all the time
'cause my clocks wrong. I need some cesium all.
All our clocks are synced to him.
Alright, let's go bloody, let's go local.
We've got Black Cat grabbing the Lakewood biggest not not the
best cast. Bloody secret.
It was in the IFR that West Gold were selling it.
Blackout have picked it up. Obviously all the bloody look at
the tenants they got boys. The Kalis now feeding into the
postage stamp. That is bloody Lakewood mate.
Oh look at those tenements. K drill doesn't start with AK
for no reason. It is Kalgoorlie drilling and by
within the proximity to Kalgoorlie you want to you want
to drill the shit out of anything near Kalgoorlie K drill
first call. Like not even this is like
central gold fields like mate. First call, second call, last
call. K Drill.
I won't mention what they'll get in trouble for mentioning that
company they get they're too precious to K.
They sponsored the rou cocktail function.
They did. I saw you had a brew with.
They're now bringing the K, the Kalgoorlie Goldfield support to
Perth. Like say they're giving back to
to WA, give back to K drill by letting them blackout.
Let them drill the shit out of all those bloody tenements out
to the east there by the the imagine the Cal E contract.
Everything they know at Paulson's is cause of Ron
O'Sullivan anyway because they drilled that back in the day.
It's a connection. Pay back Ron O'Sullivan by
letting K drill drill those tenements.
Anyway, let's get into the deal that was I think it's worst kept
secret that Westgar was selling the Lakewood mill Black cat were
the last company named in in that article they went through.
There was God word on the decline that northern star with
had picked it up because it's obviously a bus to I'll bring up
the thing picture here. It's like a postage stamp right
next to the Super pit waste dumps effectively.
So you know, it'd be Norton star might like it to extend their
waist dumps. They might.
There's word on the decline. There's an all body under it.
Like who who knows? But anyway, so this is pretty,
this is pretty bloody big news for black cat and it really sets
them up for their the Cal E project.
So like, because the Cal E Black cat was Cal E like that was the
big, that was their development pathway before Paulson's and
coyote and coyote like that was. And then that sort of got
pushed, pushed to the side and then the focus was on Paulson's.
But now, like, we'll go through this and you know, this is, you
know, doesn't a freaking good gold price help?
When we first talked about Black cat, talking about the the
gabbro vine mineral resource and all that.
Yeah, yeah. And thinking, God, it's going to
be frigging hard to mine low grade.
You know, gold was 2900 an ounce Aussie then and we're now
sitting at 4600. So it's amazing how everything
has changed so quickly in gold. So look and what they've got
today and this Cal E is like, you make your own judgement, but
it's like there is a lot of friggin Oz they can punch
through here now. So they've picked it up off West
gold. Westcott obviously got it from
the Corolla deal 85,000,000 consideration 70 million is in
cash staged over nine months and 15,000,000 Black Cat shares at
$0.76. So they're already up on the
script. So 1,000,000 deposit 24 mil by
around 31st of March, 20 mil 30th of June, another 20 five
30th November this year. So they've got currently got 50
because they did the big cap rise to sort of negate all the
debt needed for the Paulson's refurbishment.
So that 56 mil in the Kitty by the end of December quarter.
So they're looking at you know, they've already they've they've
been toll trading the gold at Paddington already.
They've got the JV with MMS, free ad for MMS and Bob bloody
salt pusher doing the haulage for it as well.
God, I did the two wrong sponsors yesterday.
This is not there. So bloody God, if I'm going to
give it away to anyone, I'll give it to them too.
So the, you know, the cash is starting to come in the door.
They're mining or at the Myre. They've poured first gold at
Paulsen's. That's all starting to ramp up
and they're saying that they'll be able to, you know, pay this
off with operational cash flows. Got toll trading arrangement
with West Gold. So it's a 1.2 billion tonne
plant. West gold can toll trade 200,000
tonne a year for the next two years.
They have the option too. So potentially they can make
revenue from the toll trading while Cal E ramps up if needed.
Like so you think of like not that they'd do this but
hypothetically a 1.2 million tonne mill they could toll trade
at 50 bucks a tonne. So you could bring in 60 mill
revenue a year. Mine is all the cost just from
using that as a toll trading plan.
Yeah, the benefit to them now because they're gold sale, so
they'll sell on the gold to Paddington Norton Goldfields.
With that, the you have to agree on a gride.
So there'd be like, you know, top cuts and everything.
You have to agree on recovery processing costs and everything.
And now I have full control, full upside to that process of
bringing the gold to their plants.
So obviously coughing up cash for that privilege, I would
imagine for that. So it's AJV with four in regards
to the JV with MMS. So they have to blackout, have
to 1st repay the development costs to MMS, which I assume is,
you know, the pre everything, the cost of everything to 1st
all. That's how I interpret
development costs. Once I pay that back, Black cat
then get the next 30 mil of cash flows and then following that
it's the JV, which I think is pretty sure it's 3070 thirty 30%
MMS, 70% black cat. Profit share after that, yeah.
So now I was showing with this, I think it's be better for both
parties. They get the upside of the
processing like upside of grade recovery and everything should
generate cash quicker on a tolling arrangement because
you're not paying to trade it or you're not selling it to Norton.
They don't, they don't buy the gold at a loss.
So it's it's good there. So, so I'll be thinking and the
whole thing is right, can they will all that cash be enough to,
you know, pay these stage payments for the year because
it's a bit of cash going out the door this year they've.
Gone. To be clear, it's not that long
a timeline. No, no, it's not it's not not
production based, it's time based.
So you know, it's looking, looking with what they've gotten
gold revenue coming in should like, should be able to do it.
But and you know, they're unhedged and everything.
So the, the thing about the Lakewood thing, I mean, you've,
you've chatted about it before is the lifespan and that is the
question. So they've just put a, you can
see here the big picture, the it's on a bit of a postage chair
stamp. They got a brand new tailings
dam there. But the, the exact time
lifespan, I know I've heard many different versions.
I've heard fight once they've got all the lifts, they approve,
they've got approved. It's a 5.
They've got five years worth of tailings they can put in there.
Yeah, it might be a bit confusing to people listening.
We're not talking about the mine itself, we're talking about the
lifespan of the plant because of the limited space to put your
tailings. There's nowhere else to put a
tailing stand so and they can you can only it's approved to I
think lift I'm not sure what it is.
It's usually what 4 lifts or something.
As in pretty much build the walls high so you can put more
tailings in of her. There's possibility of going
beyond that to nine years. I don't know if.
There was talk at the pub. There was talk at the pub and it
might have been incentivised talk, don't know, but five
years, if we work on five years because you look at the ground
they've got around for the Calais, there's obviously
Boundary Mario which they got at the moment, they got that
fingers, fortune, everything to the South.
So there's and you, you look at like collectively so. 1.2
million tonne mill, let's just say 1,000,000 tonne a year.
What what's there there it and it's got a fixed lifespan.
It's like this is like what the direction of this company is
like hypothetically, you don't want to tolerate too much
because that's taken off your or that you want to put through in
that five years. Let's say you've only got five
years worth of milling to do because if you like, if you add
up their resource like look at Myre Underground, Majestic
Underground, Trojan resource and fingers open pits, there's
that's over 5 million tonne at 1,000,000 tonne a year.
So it's like they've got enough resource at the moment to fill
that mill over that time. So but the pressure will be on
will they have enough cash flow coming in to pay that without
raising, without having to, you know, toll trade other people's
dirt to bring in a bit of revenue to satisfy that.
So I think that's where the balance of what their journey is
going to be to get all these things into production, make the
cash flow because they don't want to.
Yeah, they you don't want to get into a place like shit, we can't
use the mill anymore in five years time.
When you talk. Or if it goes to nine years,
it's all good. When you talk trade, are you and
total trading contracts typically structured as like a,
you know, a dollar per tonne of ore?
Do you get some of the upside of like of the, Because let's say
if if that was total trading stuff that was three times the
grade of theirs and they're getting a share of the upside in
the in that person's ore, then it actually does make sense to
prioritize someone else's ore if it's three times a grade.
Depends on yeah. It depends if it's a ore
purchase agreement like if they're.
On the terms, yeah. So like you know, I'll bring up
West W Golds and new merchants and one I think it's at the
bottom Ding Ding, Ding for allergy.
So there. So there I think it works out
effectively lot they have to pay 30 to $45.00 of processing cost
per tonne which gets taken off the gold price and all that.
So it works out, they get I think new purchase and get 83%
of the gold price. But if the gold price is high,
as you said, they're getting more bang for Bucky out of West
gold are getting more bang for Bucky out of the 17 percent, the
17 percent of a higher gold price is worth more.
So that that's for an all purchase agreement.
If it's a like a toll treating agreement, it might be we'll
send you all the ore. It's frigging we campaign and
we'll charge you 50 bucks a tonne and you get the gold out.
So they're not they're stopping all their all, but they're
trading your all in one parcel. So you know, 50 bucks a tonne
for a whole year. There's 60 Miller revenue.
So yeah, all. Depends how yeah structure it.
I wouldn't depending on price or this would be a thumbs up, but I
would imagine you would make more money long term trading all
of your own ore instead of having an arrangement with
another company for their role. And the, the, the value of the
infrastructure, like even though it's got the limited lifespan,
I'm pretty sure the dynamics and category at the moment are like,
OK, where else can you total trade?
Or if you a lot, a lot of random projects are suddenly in the
money, right? Yep.
As long as you can get your process at a meal somewhere that
is economic to track to. Well this is it's in a good
location, plenty of things attractable to it and capacity
at meals. You can actually total trade at
close to 0 like people have been doing it at Paddington.
Like that's because FMR which is typically where you go to to to
Toll Tree fucking booked out by Northern Star.
Yeah, yeah. And then I suppose there's, you
know typical supply and demand. It mightn't be if there's
nowhere to put it, people might pay 60 or $70.00 a tonne, I'm
not sure. Totally, totally.
So they might, they might sacrifice production later on
and take a bit of sugar. But then it'd be interesting to
see as the KCGM expansion ramps up how that yeah, you know,
supply dot to make the. Capacity maybe, yeah.
Yeah. And then if that, like imagine
if someone then picks up Command and Bell that gets taken out of
Golden Star. And then so I think there's a
lot of, there's a journey of processing to happen in and
around Kalgoorlie. It's lots of expansion that's
happening too, yeah. Like.
Yeah. Evolutions still expanding and
and Digeon's massively expanding, yeah.
Yeah, like we'll like I think Silver Lake have got a pretty
big between the stockpiles and all the pits they're bringing
on. Like Mount Mongers probably got
a bit of life there. Like does that come into the
mix? Like does Jubilee get
refurbished by someone? Does Northern Star get rid of
that? Like there's my whiff.
We should just do a meal episode.
Can't Storis is on the board now.
You probably can't do podcasts. A lot of deals to be done in the
area. Store it says you're bloody is
Someone Like You that's not on a board that could come and talk
shit on a podcast. Let us know.
So I, I think that whole, I think it's given him a lot of a
bit of bloody bit of power in the district, like with on a
smaller scale, like being able to, you know, hold the keys to
processing who's going to process what.
Like there's a bit of, there's obviously got a lot of resource
areas to develop out at Calais there.
So yeah, it's really fucking looks.
Looks like a bit going on there. Yeah, and hence West Gold
retaining that optionality, just getting the first priority case
they want it that 200,000 oz per annum.
Yeah, smart thing to do if you're the the seller.
Yes, sorry, 1000 tons forever. And I suppose it shows like
what's what's this mean for Westgard?
You could infer that, OK, they didn't they didn't have enough
dirt to fill both Higginsville and Lakewood at the moment.
Would do. I reckon it's it's a win, win,
win. Great.
Great for them because they're like bloody, they get 7570 mil
cash within the year and they're already up on the bloody Black
Cat shares, which are escrowed for 12 months.
Pardon me? They can roll that into
expanding Higgins Field. They're talking about expanding
Higgins Field. Wiser.
For a period of time, they were they, they they'd switched off
their open pits in the Southern Goldfields region, West Gold,
and now they're coming back on. So like to the extent they were
fairly constrained, maybe that was a temporary thing because
you didn't have the open pit feed.
Yeah, yeah, yeah. To your point, it's all about
it. Makes sense that like is you
know Pantoro going to be on the on the radar for West Guild to
make more out of that region. Who?
No deal Roadshow just happened. No deal roadshow like is like if
they expand to 4 million tonne will astral like they got, you
know, get 1,000,001 to 2,000,000 tonne out of that a year.
Once that pick gets flawed, probably like that could be the
supplement. They could really start
consolidating that region. So it'd be interesting to see
what they're if I'll just keep, I suppose.
Would you say in history sometimes, like when the
companies are down, it's like right, we might as well just
keep bloody pump and script and do deals and set ourselves up
for the future. Who knows?
Who knows if that's going to be West Gold's mentality.
So I can't. But yeah, beta getting beta hunk
on that's. Getting getting bigger has been
part of the MO for for a while. Oh, and it's good I didn't, I
didn't realise that. Like, it's pretty deep, mind.
Yeah, you were saying down at Beta Hunt.
Yeah, Fletcher where they're, I was in.
Yeah, I did. I did not realize how deep it
was, but it's there's some freaking high pockets of high
grade there if they can make it bloody happen.
So yeah, big going on. So buddy, what's black Black
Cats? What half a billion dollar
company now? Lot has changed in the last 18
months, hasn't it? Yeah.
So there's going to be a bit going on there, yes, so good.
Leave a go. I love talking about gold.
More deals to come, Maddie. I think that's the the way to
sign off on that 10. Mate, every bloody mate.
That's the thing, like everyone's saying, oh, we have
to. All the pits are being mined.
We have to go deeper for gold. Not the case because all the
pits that were mined, that were economic, there's frigging gold
everywhere. Going to set up a different
grade now, right? Speaking of making a Black Hat,
better Mineral mining services. MMS they are.
Oh mate, they're going to be bloody.
The cash will be coming in for them soon.
Grounded construction Group, Sammy Ground support taking
advantage of the cesium mayhem and CRE insurance.
That joint looked like probably needs insurance once they ripped
those pillars out. Catering, propelling, black cat,
salt Bush contracting. They're already all into
Paddington now that we all into Lakewood.
Swig 78,000,000 metres. That's all I have to say.
Quattro project engineering could do a bit of refurb on the
Lakewood if needed. Call Quattro cross boundary
energy. I'll now that have to Yeah I
know to be out there somewhere and get your bloody underground
operators tickets. 100 bucks off.
Link of the show notes. Hoodoo money mods.
Go Australia, hoodoo. Gosh, information contained in
this episode of Money of Mine is of general nature only and does
not take into account the objectives, financial situation,
or needs of any particular person.
Before making any investment decision, you should consult
with your financial advisor and consider how appropriate the
advice is to your objectives, financial situation and needs.