They've got close to $100 million of net cash on the
balance sheet. They've got a huge amount of
production growth coming up from a high quality asset.
We see that business generating 100 million bucks of free cash
flow on what is today an EB of 250 with a substantial.
Mine mine. Happy Friday, money miners, and
what a Friday it is because you always upload a long form
conversation and Jonas and a Dick darling, you've, you've
managed to get hold of none other than Matthew Fist, AKA
Fisty, who we had the pleasure of interviewing like like a year
ago with, with the live wire guys.
And that was just a, a pleasure. But you, you managed to to pin
him down while you're in Melbourne.
What did you talk about? Yeah, it is hard to believe.
It had been almost a year since we we spoke with him mate and a
lot's happened and he he made some pretty prescient calls back
then, which I'm sure was music to his ears for for me to repeat
to him. But we covered a hyperground.
We, we started with the macro, but 50 really works from the,
from the bottom up finding, finding stocks in that small cap
space. So yeah, it's, it's hard to miss
all the disruptions that have happened across the commodity
world and the, the trade war going on.
So we get into that a bit and then we spoke a good bit about
the Goldies, which I'm sure people will be keen to hear
about his, he's long and strong, a few of the names that we speak
about quite regularly. And then the, the, the
conversation sort of ebbed and flowed its way through lithium,
uranium. We've obviously touched on next
Gen. when we spoke with him quite some time ago.
And yeah, a bit sort of happened on that one and kind of
everything in between. So plenty for the the money
miners to to dig into in this conversation. 50 Of course,
yeah, a portfolio manager at Fire Trail, but he used to be,
didn't he used to be a geologist?
Yeah, Geo scientists at at BHB of all stomping grounds.
Geo scientists, not Geo. Well I'm I'd still be familiar
with this problem that that geos and drillers have.
I'm sure you know when the drill rig is just chewing through bits
faster than you can order replacements.
I hear it is a nightmare mate. I think you're on to something
and there's one company that springs to mind mate.
Black Diamond Drilling Services. BD Drill, our newest partner
with pumped to promote these guys.
They are the go to name for consumables.
So born and bred in Perth, got an office in Sudbury, Canada,
distribution hubs all across the world, even your old stomping
ground. Trev Kalgoorlie.
These guys are known newbies, 30 years in the industry.
They are leading the pack at what they do.
They are. They manufacture over 600,000
drill bits a year I hear. And it's all under strict QA
testing. It doesn't stop at bits.
We're talking down the whole hammers, drill pipes, Subs,
casing systems, even complete drill rigs.
Plus every accessory you can dream of.
Mate what what the BD drill not do?
It does get better though mate, their gear goes the distance.
It means fewer change outs, lower costs for your operation
and that is one of the reasons why these guys have won
contracts with the FM, JS of the World, Rios, Newmont's and heaps
more. And here is the kick out.
They keep inventory on site and backups in their other hubs, so
you are never going to have downtime if you're using BD
Drill. Lower cost per meter drill
making up the team at BD Drill. Drill smarter, not harder.
JD, let's RIP into you. All right, Matthew, Fist from
Fire Trail. It's been a hell of a past
couple weeks in market so I thought I'd start this
conversation, but just gauging the temperature and seeing what
the emotions have been like and what the the feeling amongst
junior portfolio managers has been like over this little
period. Yeah, it's certainly been
eventful. Never a dull moment waking up to
to something new every day. At the moment, as you know, I
think we're measured, we're pretty calm and collected and
we're just taking everything in our stride.
I think heading into this period, there was a real sense
of complacency in the market. Some people were pretty
comfortable with high price earnings multiples.
And I still think there's quite a bit of complacency in the
people who are expecting a lot of these tariffs to be wound
back or policy positions reversed.
We're certainly not approaching our portfolio like that or any
of the stocks in our portfolio. We're assuming that this is very
much the status quo and and making decisions on that basis.
But yeah, as with all market dislocations, this is what we,
this is what we get paid for. This is what we love doing.
And there's a lot of very, very good companies on sale both in
in resources and industrials. So it's the onus is on us as
portfolio managers to to make the right decisions now that
will drive returns over the next three years.
So it's a, it's a great time to be in markets.
Yeah, I'm keen to keen to dive into what you said at the end
there. You know, companies being on
sale, how are you seeing and maybe you just clarify upfront
for the listeners that you're running a small cap fund, so
your benchmark is the sort of 300th to 100th biggest company
companies. That's right.
Yeah. I spend about 30% of my time on
resources. So, yeah, very much looking
across the broader market as well.
And how are you seeing sort of valuations amongst that subset
amongst that subset versus the the bigger names in Australia
and even down the bottom end where you sometimes sort of pick
a story, be nice and early? I mean, if you believe current
market forecasts, then valuations are cheap in
resources and in small caps relative to large.
But the EE or the earnings is wrong clearly for many companies
out there at the moment and that's what the market's telling
us. So we can talk about price to
earnings multiples for cyclical companies across the ASX or in
resources. But given what's transpired over
the past couple of weeks, those earnings estimates need to come
down substantially. And you know, who knows where
where they'll land, but it's very hard to have a Fairview on
on valuation in these sort of markets.
What you can do and what we do is focus on on good balance
sheets and earning certainty. So identifying those companies
that do have any certainty because they're they're going to
be rare in this sort of environment.
And, and you guys sort of by by nature a bottom up, you're
focused on picking out the companies, right, that you
think, you know, resources might be a bit different, but in the
industrial space, the ones that from the from the ground up have
have good earnings. How much time do you actually
spend on the macro? Like it can be pretty tempting
just to to spend all day, you know, reading what Trump's doing
what best and what's happening at a macro level.
How do you sort of divide your time at the moment?
Yeah, we don't look at the macro at all.
It's very important to understand, you know where the
temperature of the markets are, you know hear what you're up
against from a macro perspective.
But we are all bottom up when it comes to resources and
industrials as well. And we're always looking at
valuation relative to market. We don't take a view on cash
versus fixed income versus equities.
We're always 100% equity market exposed.
And as much as possible what we try and do is eliminate any sort
of thematic risk in our portfolio.
So we're very fortunate in small caps.
We can have a portfolio with with very high tracking error or
very different to the benchmark and we don't need to take factor
bets. So we don't need to be long
momentum growth value. We don't need to take massive
bets on industrials versus resources.
We can have a very active and high performing portfolio just
with stock specific risk and that's what we're really focused
on. And is that the core of what we
do? So stepping away from resources
for a moment, if we look at your portfolio, where are you sort of
underweight slash overweight, I know you'd said in the past that
that benchmark is sort of 30 odd percent resources, right?
And you're about on track. If we look across the the
spectrum, where are you? Yeah, that, that's right.
Yeah. So dominated by gold at the
moment as as you and all your listeners will be aware, the
gold sector on our numbers, just looking at the latest numbers
this morning, up to 16% or just over 16% of the small orders
index is gold and roughly 30% is resources.
We are pretty much in line with that on a on a benchmark basis.
We're not trying to take a view here on yeah, macro,
macroeconomic factors as we've talked about.
But within that we have a huge amount of conviction in the
particular stocks where we've selected and their ability to
outperform both in in resources and and gold and energy as well.
And and just to, to understand your style a bit more, how do
you sort of view a a trading mindset versus a buy and hold?
Yeah. You know what, What might your
turnover be over a kind of year? How do you think about that?
Turnover for us is an outcome. So we're not looking to make
decisions based on on turnover. We don't try and target a
certain turnover. If the stock reaches our
valuation and we do have very, very strong views on valuation,
then we will sell. Typically over the last five or
ten years that we've been running the same strategy,
turnovers mean about 100% per annum, but that will spark
materially in times like this where we have a lot of market
volatility and if there's a lot of equity capital market
activity as well. I'm I'm curious to just to, to
learn about the, the fun and sort of, you know, beating,
beating your benchmark, which is obviously what you you strive to
do. You've done well at that so far.
How does it play in with, say, companies that are that are
falling? There's a few in the the
resources space that that spring to mind and also the the rises.
My understanding is that you can play outside the bounds of the
the benchmark a bit to yeah to the to the upside of your your
unit holders. Absolutely, Yeah.
So as you said, the ASX small words index which is is our
benchmark is ASX 300 to 100. We're very happy to to play
below that and we see a huge amount of opportunity in the
market cap stocks as you know particularly in mining, it's a
very inefficient market. It's under researched and that
that is that is just amazing and we can generate a huge amount of
excess returns there. I think in resources that's
particularly been the case in the past couple of years in the
gold sector in particular. And then we can also choose to
invest in in the mid caps if we want so that ASX 51 to 100 we
can take positions in that part of the market pretty rare for
us. But you know, we absolutely will
invest there and hold stocks that RIP through the small wards
and into that mid cap part of the market if we still see some
good valuation upside. And in, in terms of sort of
hedging risk at the moment, I'm kind of curious it's, it brings
to mind everyone's sort of talking about it at the moment.
You hear a couple people that might have called it and they
get all the plaudits. You know, it's kind of few and
far between. But do you think about that at
all? I know you mentioned before that
you don't actually hold a cash pole yet you're fully invested.
How do you think about hedging risk?
Is it purely from a basis of picking good companies?
When, when you say risky, talking about equity market
risk, yeah, yeah. So we, we take the view that if
people are allocating to our fund, they want equity market
risk, they want small cap exposure and we'll deliver that
to them. We'll leave it for asset
allocators to decide if they want to be in cash fixed income.
But if they're invested in our fund, then we take the view that
they're paying us to be fully invested in equities.
And that's what we deliver. At times like this, we do have a
slightly higher cash component of the portfolio.
So typically we'd run 3 to 4% cash at the moment or as of this
morning anyway we're sitting at about 5%.
So slightly overs versus the long term historical average,
but that's fully covered with with futures.
So it's a hundred 100% market exposed at all times.
Yeah. And where we sit sort of today,
are you, are you getting itchy to to deploy that extra bit of
capital? Absolutely.
Yeah. It's, it's always tempting, but
I think in times like this, sometimes the hardest thing is,
is to do nothing for a period of time and, and just let the dust
settle. There's a massive amount of
uncertainty out there and there are a huge amount of
opportunities. It's pretty important to
separate our resources here, I think from the rest of the
market because clearly, you know, resources have their own
own characteristics that are quite unique.
But we are very, very excited about some of the opportunities
that are presenting themselves at the moment.
And as we talked about prior to this of being in WA and, and
Adelaide in the past couple of days, meeting companies, which I
won't tell you who they are for obvious reasons, but you know,
share prices down 3040% in the last month alone, you know, and
we'd love to earn them at a point in time.
Unfortunately, them being down 30 or 40% doesn't really single
them out too much in the moment. Yeah.
So let's let's talk resources, right, let's let's talk
commodities and kind of trace how the the broader macro is
really playing into the the resources.
So I think the, you know, the obvious connections are
terrorists bad China hurts the biggest consumer of commodities
globally and that can really hurt Australia.
We've started to see it in iron ore, which had a bit of a
delayed response. We've seen it amongst some other
sort of commodities, some more dramatic than others.
But what what do you make of the the notion that this trade war
will cause a slowdown for China that's really going to hurt the
Australian economy? I'm concerned about it, yeah.
I think it'd be remiss of anyone not to be, you know, as an
Australian, as an investor in resources as well.
But I think you need to, you know, just take a step back here
and and look at the macro and the context of the individual
companies. We can invest in that position
on the cost curve and what that means for longer term prices.
The moves we're seeing in copper, zinc, aluminium in my
view over the past 3-4 days or three, four trading sessions I
should say, don't really reflect in our view the fundamentals of
what is a pretty tight supply and demand, fundamentally tight
supply and demand market. And they're more driven by
financial market participation, which is, you know, speculating
on a global growth slowdown. And that's that is what it is.
But what I'd say, you know, China is the most important
consumer of, of all commodities, just about particularly the ones
that Australia produce. And over the last 20 years, if
there's ever been a slowdown in the global economy or, or in the
US, they have not hesitate, not hesitate to stimulate their
domestic economy through construction and property and
infrastructure. This will be no different.
The Chinese government started that I think in September last
year. I think we caught out last in,
you know, late in the year after I just got back from China in
November, Robert was hitting the the road then they've continued
that and accelerated, accelerated post the US
election. And this is only going to add
further fuel to the fire. So, you know, I'd say don't get
don't, don't get too negative and particularly don't get too
negative on steelmaking commodities like Coke and Cola
and on. Or.
And yeah, in reality sense, they could actually be set up pretty
well. You're a cool head Fisty.
I'm keen to dive into that more the, the stimulus part, because
one of the arguments that was made at the at the time
September when Chinese equity markets rallied really, really
hard, sort of 30% over the space of the week was that a lot of
that stimulus was sort of monetary and basic kind of
financial assets as opposed to being fiscal that's going to,
you know, kick start property development infrastructure.
Do you anticipate now that we're going to we're going to see more
of this fiscal type stimulus that tries to kind of spur
demand for for commodities as opposed to more monetary side
stimulus? Or look, yeah, I'm trying not to
get in the prediction game too much, even though that's my.
Job. Yeah, you're reaching the limits
of my macroeconomic prediction skills here.
But let's comment about what we're actually seeing on the
ground right now because that's what we can observe and what we
can make decisions on as portfolio managers and
investors. And what we're seeing, whether
it's apartment sale numbers, machinery sales, industry
numbers, we're seeing, you know, double digit increases year on
year up to 20 to 30% in some in some cases.
So last year when we were sitting here talking about
potential stimulus in the Chinese economy, it was really
reading the the policy tea leaves about what could
potentially come now. Now we're seeing that hit the
ground and it's not, you know, speculative anymore.
This is, this is really happening and absent what's
happened in the past week in terms of macro shocks, we think
the commodity sector was was set up extremely well just on that
basis, Lauren and we're going to see further, further stimulus
come through. Very curious to hear as well
from your, your visit there late last year, what, what were the
other sort of takeaways, whether they be sort of specific to
certain commodities or across the board where they were the
things that just you didn't kind of realize were as big a trend
or anything else that really stuck in the mind.
Gosh, that's thinking about. Put you on the spot.
I have to say it was a pretty good trip in terms of terms of
read throughs and yeah, the insights that we got.
We spent a lot of time, a lot of time in the lithium market,
visiting some mines in a couple of different provinces, going to
some car factories. And yeah, I came away amazed
that they're able to mine some of the grades that they do mine
over there and then, you know, do that at a cash cost that
makes sense at current prices or slightly above.
And the fact that those car and battery raw material supply
chains are all within a very confined in a confined space.
And so you're going from mining lithium, even though it's low
grade to producing a battery to producing a car, you know,
confined geographic area with cheap energy, cheap later labor
and very good technology. And, you know, the
competitiveness of the, the Chinese auto sector and, and
even their lithium mines, I think is something that we're
going to have to learn to grapple with because we're, you
know, the, the, the WA mines, they're the high cost ones, I
think when you take into account all the transport and that sort
of stuff. So that was, that was a really
interesting insight. And as anyone who's seen the BYD
cars driving around the road so recently, we've seen those,
those sales explode everywhere. Everywhere.
Yeah. And they're pretty good.
They're pretty good. One of my colleagues, Blake's
got one, He's got the sea lion loves it.
And you know, that is just going to be a continuation of of, I
think we're just in the infancy of that.
Yeah, it's crazy. You saw the the BYD shark as
well. Six best seller in Australia
year to date. I think that's yeah.
I mean, we don't quite have the same tariffs the the rest of the
world has, but you can see why it's such a important part
because the competitiveness is is through the roof, right?
Absolutely. Yeah.
I think it's potentially a byproduct of what we're seeing
at the moment in global markets is really going to be of the
benefit to Australian consumers if we're able to access cheap
Chinese EVs and cheap goods that otherwise might have gone to the
US. On on the topic of EVs, taking a
step back, how do you view the the energy transition trend?
This was sort of all the rage over the sort of 2020 to 23 ish
kind of period. You know, resource investors
were not excluded from that by any means.
You know, they were sort of leading the leading the charge,
but it's sort of been been dialed back as other other
issues come to the fore. How do you how do you see the
broader narrative at the moment? I think it's progressing as as
we forecast AV sales have been volatile, but they're increasing
penetration globally. Yeah, everything else that I
see, stationary storage is increasing rapidly and is going
to become a huge driver of lithium demand and maybe even
overtake EVs in time. So yeah, I think it's
progressing. What's really changed is just
the supply side dynamics. We've gone from a chronically
undersupplied market in many of those raw materials to now being
oversupplied and a huge part of that's come from Africa and
China, and that's just fundamentally changed the game.
So no, no issues on the demand side of the equation.
It's all about supply for me. And what did it sort of leave
you thinking about maybe a few of your exposures in the in the
lithium basket in the in the portfolio coming back.
Some of these names are are notably shorted, not to the same
extent they were last year, but have you, have you taken a sort
of against the grand view on them?
No, we've, we've been pretty cautious on that sector for a
while. I'd say we're starting to get
pretty interested though, I mean, again, taking back to the
actual companies rather than getting too caught up in the
macro companies like IGO, which we don't own at the moment, but
even at current prices generating huge amounts of free
cash flow from Greenbushes. Yeah, that that, that is sort of
hidden if it within different corporate structures and
reinvestment in the asset at the moment.
But yes, companies like that, there's potentially some real
really, really good valuation opportunities emerging.
Remain very cautious on on the higher cost producers.
We think you are going to need to be able to compete at lithium
prices at or around these levels.
But if you can find an asset like Greenbushes that's
generating good cash at current prices with the potential for a
rebound, then to us that's when we start to get excited from an
investment standpoint. And no one's talking about
lithium. So it's always a good time to
invest right when it's gone from being hated to no one's even
talking about it. Yeah, yeah, low on the cost
curve tends to be the, the safer way.
Just to just to expand for a second on, on what you said
though with, with the kind of harsh realization that we in
Washington are much higher, you know, on aggregate and the cost
curve than what we what we kind of thought we were.
Is there any other kind of projects that start to tempt you
or is it a, is it a bit touch and go and you got to kind of
see where we where prices sort of sit and whether these
companies can really pull in prices anymore?
I think there's some, there's going to be some really hard
decisions that need to get made in the next 612 months for some
of these assets. And I think some of them
probably need to go in to carry on maintenance to see the market
rebalance. Yeah, when sort of go into which
assets or anything like that. But yeah, I think, yeah,
Australia is at the top end of the cost curve at the moment and
some of the assets here probably do need to to to idle to see the
market rebalance. How do you think about Aussie
cost competitive more broadly? Not not being specific to the,
to the lithium names, but it's something we'd spoken about on
the show quite a bit lately with the, you know, the futurization
of mines, the automation and, and all these sorts of things.
But you've got very real sort of political kind of challenges,
you know, for the for the cost structure of Australian mining
more broadly. Are there are these sort of
concerns pretty pressing for you or that you think that there's
sort of shorter term quieter noises at the moment?
Yeah. I mean, it's, it's not what I
focus on, but as a, you know, as a participant in, in the market
and someone who's really passionate about the mining
sector, I think that we really need to invest and we need to
have the right settings from a, a political and a a social
perspective to continue to enable the mining sector to keep
on delivering the fantastic windfall benefits that it's
delivered really, you know, since the 1800s to, to
Australia. And it's really concerning to me
when I go to places overseas and see their cost structures, the
amount of infrastructure they have, and then to come back and
see some of our sectors here. And you know, yeah, it, it makes
me concerned as as an investor as well.
Yeah, for sure. Let's let's talk about gold.
So you, you said it's not towards 16% of the of the, the
benchmark that you follow and you know, equally a big part of
your portfolio and I've sort of dug into it quite a bit.
But do you consider yourself a gold bull at all?
Or are you just working again from from the bottom up and
picking companies you like and. Projects you like I'm a genesis
bull I. Might hear that.
So I mean, we we very, very much take the view that gold is a
currency, not a commodity. Against that backdrop, it's very
hard to have a fundamental view on supply and demand, although
you can try, people do, but we're we're confident in our
ability to try and pick stocks within that.
Well, obviously when we're assessing valuation, we'll put
in a range of different assumptions and, and look at
what that spits out, including forward curves, broker estimates
and spot as well and make our decisions on that view.
But we're making decisions on a sector relative perspective from
a sector relative perspective. So you know for the top holdings
in our portfolio at the moment in the gold space, great land
gold in Genesis, we see 50% upside ish route to the rest of
the sector for those companies if they deliver what we think
they can over the next three years.
And so that's the basis on on which we invest and hold them,
not a a top down view on the the gold press all.
Right, let's let's dig into it some more.
So, so Genesis, you've been a fan for for quite some time.
Riley and the team have done a a pretty stellar job since they
grabbed the wheel, you know, 3-3 or four years ago.
Now that we go through it, you, you know, you obviously
highlighted a, a pretty bullish outlook.
I think you've got a much sort of stronger view on, on Tower
Hill getting getting mined before I guess consensus does.
You've got, you know, bullish views on each meal getting
expanded as well in in due course.
Can you can you go into a bit more detail on on why you are
such a fan of the company? Yeah, sure.
I mean, it's very simple, Genesis.
In my view, there's 15,000,000 oz or so of resources and three
in reserves and 3,000,000 ounces in reserves.
The company in our view at the moment is being valued on a base
case plan whereby the company produces at 325,000 oz into
perpetuity or thereabouts and extracts that 3,000,000 oz.
Given what's happened with the gold price in the past 1218
months, even before that, that's just not a realistic scenario at
all. If you look through Janice
Genesis recent quarterly announcements, you can see very
clearly that they're building or stockpiles, they're building
inventory. They are they are meal
constrained at the moment. When you've got that much
inventory again 15,000,000 ounces of high quality inventory
and you're meal constrained, there is only one thing that you
do to to extract the cash flows bring for that MPV for
shareholders and that is to expand meals.
And so yeah, well, so yeah, I don't know.
I strongly suspect that there'll be meal expansions both at
Leonora and at Laverton in the next 12/18/24 months.
And that will enable, you know, the company to bring forward
Tower Hill Australia and a number of other assets as well
that are currently not factored in by the market.
And that will, yeah, consequently result in more
production, more cash flow and a higher valuation.
And we think the market's just just really playing catch up
here. Pretty compelling.
How do you, how do you anticipate the financing of of
the expansions with sort of cash and time that they'll build up?
Do you foresee, I mean, we've, we've spoken in the past about
your views on, on companies with, with debt just to sort of
round out the argument on, on Genesis?
Yeah, it's it'll all be self funded if generating very strong
cash flows given the gold price at the moment.
I think that's probably one thing that really has changed in
the past 12 months. And then the company will tell
you this is they were prepared to take on debt over the next
couple of years to to invest in those growth projects.
There is no need for debt now, certainly no need for equity.
And so we expect that to be all self funded and and as a
consequence it will have a great per share impact.
Genesis, if you guys are thinking of expanding your plant
or any other miners out there, if you've got work that requires
the best engineering capabilities the industry has to
offer, it's time to call that the big guns, Quattro Project
Engineering. JD These guys don't just
engineer projects, they make everything run smoother.
It's true mate, Quattro works at the surface, They work
underground, from blue sky concepts through to the DFS
construction and keeping the whole thing running without a
hiccup to your operations. They'll design it, engineer it,
source the gear, build the thing.
Commissioner. Talk about expertise, JD.
Mate, if you're a minor out there, you might be expanding
your plant, you might be modernizing the circuit, or just
tired of projects that drag on way longer than they should.
Talk to the crew that actually gets the job done.
Jeremy Palmer and the whole team at Quattro Project Engineering.
Engineering experts, no headaches.
Go Quattro. And I think the the sort of
logical next place people would take that sort of debate is when
they have expanded meals, where where do they look around just
to just to fill it out if if need be.
I know you've said they've got a a ton in in resource and and
reserve already. Do you do you have a strong view
here? If you speak to rally, say
there's no need for for M and AI know he's you know can can make
up his own mind. But how do you view that debate?
I think it'll be assessed logically and if there's
opportunities that make sense for shareholders such as
ourselves and the management team who are highly aligned in
in their equity ownership with the company, then they'll look
to execute on them. And you know, companies like
Magnetic Lock, Focus Lock, Bright Star, there's even some
Anglo assets in that part of the world that I think could be
interesting. Yeah, there's a huge amount of
value to be created and unlocked and we'd support that.
The obvious question I'm sure you'll ask me is on is on Vault.
You said it just to preempt that, you know, I just don't see
it. I don't see the relative
valuation stacking up too well at the moment from a Genesis
perspective. I think if the vault portfolio,
I was, you know, singularly focused on that, that king of
the Hills asset potentially that's when it starts to look
more interesting from a Genesis perspective.
But you know, back when there was a lot of speculation about
that occurring, the gold price is much lower.
And what that means in practical terms is the value of the mill
was much higher. So now Genesis can go out and
you know, build or expand their meals for a normal value of
money compared to the the excess returns or the cash flow it's
going to generate. Back then the value of that meal
was was much higher in my view. So I think a lot's changed
there. I think at a point in time
potentially, but I think there's a lot more smaller and more
value of creative deals to be done 1st and they also have to
be assessed in light of what we talked about earlier with with
their own portfolio. So, yeah, I expect them to be to
be active in in the coming years and and that will form part of
the part of the growth. What they really need in my view
is some more grade around Laverton.
So if if there was an asset that added some grade 2-3 grams per
tonne to that meal, that could really, really see it.
Yeah, produce some fantastic cash flows and also oxide
material as well. So they acquired an asset called
Bruno Lewis, good amount of oxide in there.
As many will know oxide goes through the mill much faster
than typical Hard Rock or. And so you meal capacity, whilst
it might be 3.3 on paper or whatever the number is, you know
you can often get up to 25% more if you're feeding oxide
material. So that's another lever for some
value creation there. You mentioned great land before
as well and you, you did a write up not too long ago calling it
the the deal of the decade and I think you, I think you added
that have you, Ron is the best undeveloped resource in
Australia. Am I right?
I have had some people try and correct me on that since, but
something about to stand by it, something about an iron ore
asset, I'm not sure, but yeah, sure, I'll stand by it, yeah.
Let's let's talk about the deal, right.
So yeah, by by all accounts, it's it's been a pretty cracking
deal. But firstly, just curious to
hear it. It is still UK listed at at the
moment, but you've been able to with the anticipation that it
comes here in, in the June quarter get in already.
Yeah, that's right. So we can invest up to 10% of
our funds in what we call pre IPO opportunities, fits
comfortably in that sleeve. Currently, I'm listed as you say
and looking to list here June, July as we understand it, which
we think will be fantastic for Aussie investors to be able to
invest in Telfer and everyone. It's an amazing asset.
For sure. And the, the, the natural
question that that comes to mind is 20 million tons per annum at
at Telfer. Obviously there's, there's a, a
mine plan in place, a 15 sort of month mine plan that they've put
forward already that is, is meant to spit out sort of over
400,000 gold equivalent oz, a bit under 400,000 gold oz.
And you know, the, the expansion sort of starts to to happen
after that heavier on in in due course should come online.
But how do you think they go about filling that meal?
Do you do you have any reservations about it?
Do you think from the offset there they're going to be
filling it or doing a train, train and a half type thing?
Yeah, I think the processing solution is still up in the air.
There's still work happening to determine what the the best
outcome is and the company will go through that engineering
process. None of this stuff happens
overnight. But what is very clear and was
not clear to the market 612 months ago is that there is not
going to be a production gap between Telfra and Have You On.
That was a big concern that they'd have to idle both trains.
There wouldn't be any free cash flow or production for a number
of years whilst Haver On was being developed based on their
recent resource update, mine plan update to a certain extent
that is yeah, completely off the table.
We and I think they'd be able to produce from Telfer at an
annualized run rate of over 300,000 oz per annum of gold
equivalent for the next 10 years based on the open pit stockpiles
there as well as Telfer underground proper and West home
underground. So we see that asset continuing
to generate very healthy cash flows that will then fund Haver
on to your point around Genesis earlier and what really creates
value and resources that that self funding is, is is
fantastic. Yeah.
And they've got pretty hefty stockpiles as well, some some
low grade, some some higher grade as well.
That should help them ease their kind of way through that.
How do you, how do you kind of benchmark their, their value
obviously sort of 400,000 ounces is it's a decent amount.
I think last time I looked in Aussie dollar terms they kept at
2.7 or 2.8 ish. Dear, you know, you mentioned an
upside there 50% before. Is that is that kind of how you
think and how they should play in the in the Aussie market?
Absolutely. I think it gets rewrited when it
lists here based on where it's currently trading and and people
getting more comfort around the sustainability of the production
profile at Telford. There's still work to do there,
but the the cards are out. When we look at valuation for a
company like that, we'll assess it on a range of different
metrics. Ultimately it's MPV, but in this
case you need to look at the sum of the parts MPV for the
existing Telfer asset and then have everyone at the back end
given that it's not currently contributing to cash flows or
production. So that's the way we assess it.
We give a value to Telfer for the for the operations there
that 300,000 oz or so over the next couple of years and then
layer and have everyone over the top of that.
If we, if we look at some of the other sort of major gold
companies in your, your sort of ballpark you, you've said in the
past that you, you don't hold Perseus and Wolf and you know,
for, for jurisdiction risk, right.
But these companies have, you know, today they've performed
pretty, pretty strongly. But if you, if you look around
that part of the world, there's, there's been some pretty big
losses on, on companies that, you know, didn't draw the the
right straw. So to say in in West Africa.
How much of an ingrained view is that?
Is there, is there a point where where value kind of beats out on
these sorts of things? What's your sort of thinking
toward African and. Jurisdictional risk, generally,
we have an attitude across the market that we see.
Every single stock is an opportunity for our investors as
long as it meets a certain base level of criteria with respect
to things like ESG and, and alignment of the board and the
management team. And so we never rule anything
out, never rule anything out. We just haven't felt the need to
invest there given the the plethora of opportunities
available in in Australia and in particular in WA.
Yeah, continue to meet with those companies.
Jeff and and Richard have done amazing jobs and added a huge
amount of value, added massive amounts of cash to the balance
sheet. You just can't ignore no matter
where the asset's located. And you know, from our end of
the situation, it seems like they're going to continue to do
so. So if we'll continue to meet
with them, if they start to stack up, maybe when Genesis
hits 8 box or something, we'll we'll look at if we redeploy
that capital somewhere else. Very interesting you, you speak
a lot to quality management and you just mentioned it there
again with with two teams that have demonstrated you've backed
it in in Genesis and a host of other names.
I guess the way I'd frame this question is you've, you've been,
you've been a manager of money for, you know, the better part
of a sort of decade and in the, the finance world for, you know,
15 odd years or so. How has the the thinking toward
backing proven management teams changed over that journey?
Yeah, I think there's two things that I I value more highly the
the further I go in my investing career and that is a good
balance sheets and good management teams or
conservatively managed balance sheets, I should say.
Yeah, cannot be overstated. And you know, just knowing that
you have a team that's highly aligned, highly competent and
you can believe what they say is, is just yeah, it's a non
negotiable for us and investing. And that's why we find that a
lot of our portfolio is invested in companies both within the
industrial space and resources where management are long term
owners of the business, have significant skin in the game and
you know have been there for a decent period of time as well.
And the, and the point on debt is, is super fascinating, right?
And it, and it feels more sort of, kind of it rings louder
than, you know, than ever right now with everything that we've
seen, like the, the speed at which share prices can, can
fall, commodities can, can fall. I know you said it when we, when
we spoke in, in Sydney a year or so ago, but a super, super clean
balance sheet was your, your outlook in particular for, for
single asset companies. I'm, I'm just keen to, to hear
you expand on that because I think it's a, a point that's not
often well enough appreciated across the market.
I'm keen to learn more about it myself.
I think, you know, corporate finance one O 1 will tell you
that leverage is good and that it increases the equity IRR on a
project in in reality that that doesn't work.
And that particularly doesn't work in resources.
And particularly when you have single asset resource companies,
as you have highlighted. It's not to say it will never
work, but you know, the track record speaks for itself.
It's it's good for for one set of people.
And that's the people that raise money, the investment banks,
because they get multiple cracks of the cherry whenever this
plays out. And so, yeah.
I need to say where we're recording this interview from.
That's right. Shout out to it.
But yeah, so for, you know, we'd much rather companies,
particularly with interest rates where they are at the moment,
you know, pick up the phone, call us.
We're here to provide equity. And you know, we, we don't want
to see hedging, we don't want to see commodity or financial risk
or leverage on top of commodity price risk and operating risk as
well. We, we just don't think it's
needed or appropriate in many instances.
And so it's a key, yeah, red, red flag for us, I suppose.
Yeah. The the point on hedging is when
I want to tap into as well it yeah, it it ebbs and flies with
the commodity price. And right now it's, you know,
it's not in in fashion to have a, a big hedge book, that's for
sure. What do you make of the, the
trend of people actually, you know, buying them out?
You've got it. Say there's a company you're
invested in that that has a hedge book.
Are you a fan of them cancelling that out?
How do you think about? It, yeah, I mean it's easier to
say you're not a fan of hedges when the gold price is ripped
and they're on the nose. They definitely have a place
from a from a risk perspective. And I think they've been used
very effectively in the past by companies like Evolution who
acquired assets, put in place hedging, paid it out.
Did a great job. But you know, philosophically at
the moment if you're investing in a gold company, it's because
you want exposure to to the gold price.
And I think having a management team that might have actively
bet effectively against the gold price through a hedging profile
is a little bit counterintuitive.
So unless there's debt involved, which goes to our earlier point,
I really don't see the need for it.
Let's talk about a couple other Goldies.
Some of them have quite a bit of hedging in place.
I want to talk about Bellevue and tie in Spartan and Remelius.
You made the call when we spoke and I think you're going to love
hearing this. I mentioned it to you just
before, but you, I think the way you sort of framed it was in
about 3 or so years. Let's have a look again at what
the grade is between Bellevue and the grade at Spartan is.
And looking back, I can't remember if Pepper had been
discovered or not at that point in time.
But obviously Spartan has gone from strength to strength.
And I'll disclose that I own a couple Spartan.
But the, the other side of the coin there on, on Bellevue that
that companies had a bit of trouble.
They, you know, they paid down a portion of their, their debt,
but ramp up is hard single asset companies and, and all that,
like you, you mentioned before. What's your, what's your view on
Bellevue? You know, I'll disclose maybe
this interview comes out later, but they're in trading halt
right now when we're recording this this interview.
They're in an interesting position, right?
They're they're one of the weakest performers today versus
their, their benchmark. But that does, to an extent,
make them attractive, right? Absolutely, Yeah, I mean, we're
all waiting to see what happens there.
We're not currently, currently shareholders, but we we know the
guys really well, got a lot of respect for them.
They've created a lot of value. It's looks like a great ore
body. And so there's potentially an
opportunity there. I think just in terms of what
we'd really like to see from from that company from a
disclosure perspective is what's changed with the ore body is it
seems to be that there's the ore body that they thought was there
fundamentally potentially is a bit different.
And so, yeah, it's hard to at this point in time have
confidence in in production targets and things like that
without a recut in terms of stoke sizes dilution, you know,
is a great appropriate, other modifying factors appropriate
all that sort of stuff. So we'll look forward to
engaging with the company in in hopefully the coming weeks or,
or days and, and forming a view on that.
And if there's a potential opportunity.
I think there absolutely is. Yeah, that was my view sort of,
you know, before them going into trading halt.
There's been a production downgrade since then.
But you know, the odd body is still there, an all time high
gold price environment. They've got debt, they've got
hedging that needs to be cleared.
So we look at situations like this is a fantastic opportunity
for our investors. Yeah, it's, it's an interesting
one. I'm very keen to see how they
they come out of this situation on on the flip side, we've got
Spartan who just tied up the deal came to hear your thoughts
on on what you make of the, the deal and the the sort of pro
forma entity moving forward. Yeah, I think Simon Lawson and,
and the Spartan guys have to be congratulated for, you know, not
manufacturing, but you know, delivering such a great amount
of value to shareholders and then rolling into Remelius and,
and, and the value creation that they've seen since then.
Very rarely do you get 2 entities combined or merge like
that and, and see the share price perform as well as it has.
And I think that's a real credit to Zappy and, and Simon, the way
they've communicated that to the market and so on and so forth.
We we don't own either at the moment, but.
There might actually be synergies in this deal.
Yeah, who knows, But yeah, it was an obvious one that had to
happen. And it's good to say.
It's good to say logical deals happen, is the thing I'd say
there, yeah. And if we look across the gold
space, M&A discipline has sort of been a theme of the minus.
It's been sort of hammered into them since, since I guess the,
the downfall of the 2012 cycle that that peeled off.
And you know, you can sort of say that for the, the mining
sort of complex more more broadly, but we have started to
see more and more deals in, in the gold space.
What do you make of the, the trend for, for these bigger now
kind of mid cap dealers? Do you, do you see it playing
through to the, the smaller end? Does it, does it worry you?
Does it kind of excite you? How do you think about it?
Oh, it excised me from an investment standpoint for sure.
Yeah. I mean, would I be invested in a
large cap company with very fully valued paper that, you
know, was lacking production over the long term and had a
short reserve life position? You know, we wouldn't be
investing in those sort of companies.
But if we can find companies that have high grade assets that
they're drilling out like a Spartan, you know, that's a
fantastic place to be because, you know, there's an immense
amount of value creation that can happen there.
So one of our recent investments in the portfolio has been a
company called Gorilla Gold. They previously labyrinth and
they, you know, they've got a suite of fantastic assets that
would make sense in other people's hands.
And we expect them to, to jewel his assets out, find more gold.
And, you know, if it's not appropriate for them to, to
monetize the asset through developing their own mills and,
and, and mining them themselves, then they'll look to, to create
value for shareholders by selling those assets.
And so that it's an opportunity for us to recycle some of the
capital from the Spartan into something like a gorilla.
And Simon Lawson's involved in both.
Some of those assets that might have only just picked up as
well. So how do you, how do you sort
of see the the timelines like the for instance, already just
going going hammer and tongs with the with the drill rig and
churning out results and stuff. Yeah, yeah, yeah.
It's interesting, especially given that was obviously a
Remilius asset as well. I think that history has shown
us in WA Gold that having a different view on assets, on the
geology, turning the jewelry around, drilling in a different
direction, taking a different lens on on assets has created an
immense amount of value. And so I wouldn't write any
asset off on the basis that it's just been acquired for a certain
price and we've just seen this so many times.
Yeah. For sure.
Let's talk about a couple of other commodities.
So to start with copper, I know you said in the past year you're
a fan of the copper dynamic. Let's go to North Queensland to
start AIC mines, Aaron Colleron and the, and the team, you know,
at the, at the smaller end of the spectrum, but sort of
building a company kind of brick by brick.
Are you, are you a shareholder there at the moment?
We are. Yep.
What are you?
What are you sort of thinking going forward about the the
assets they've got the the ability to to kind of scale that
production? Yeah, we're excited about a one.
I think it's a long term, long term story there.
It's nothing's going to happen overnight.
They're developing an asset called Jericho, which will
double production on a on a three view.
That's the reason why we are invested.
It's it's a tough road to get there.
It takes a long time to get these assets built and
developed, but once they get there, there is going to be an
immense amount of value for shareholders.
We would like to see some more consolidation in that part of
the world as well. There's a number of smaller
assets that probably don't make sense to be listed as standalone
entities. And so part of our thesis there
is that Aaron will be able and the team will be able to execute
on some some acquisitions over time and increases the size of
that business. And to be frank, we've probably
been a bit frustrated and I think Aaron would say he's been
frustrated as well with how long it's taken to be able to execute
on some of those. But you know, you can't force
this stuff. You have to act in the best
interest for shareholders. And if people want silly
valuations then then you need to be prepared to walk away.
Yeah, yeah, for sure. You kind of get the impression
it's a it's going to be an overnight success story that
takes kind of 10 years. I think that's for.
That team maybe 2026 story. If we if we go to the other end
of the the ASX copper names sand fire they've you know, it really
does seem overnight become a very large company and they've
yeah, since since management, new management came in in like
21 early 22. The the assets have started to
perform in a Matteo sort of come online and it's it's doing well.
What do you think about the next leg for for that business?
We're not currently investors. I think Brendan Harris has done
an amazing job with that with that company.
What would really sort of change the game for us, and speaking as
a former geologist here, is some exploration success in bots.
I think they've only very recently come to terms with some
of the genesis of that ore body and what that means or the
implications of how the ore body formed for exploration.
And yeah, we're pretty excited to see what they can do and
tracking that closely. Yeah, there's obviously, yeah,
further acquisitions that could make.
I'm not across the the opportunities out there for that
company. It sort of sits above our our
market cup spectrum. But yeah, they've done a great
job. And I think given the
credibility now and the valuation that the market
subscribed to that business, he's got a lot of options to go
out there and and do something else.
So I'm excited to see what what that is.
So maybe it'll be one of the other companies you're holding.
If we look at some of the the smaller names, we've seen more
and more of these Canadians sort of come come across.
But what? What are the copper names that
kind of get you excited at the moment?
Yeah, it's, I mean, it's crazy when you look at the market at
the moment, it's every single gold company.
If you're producing any gold at all, it seems like you've got a
billion dollar market cap and everyone loves you.
You transition that to base metals and there's a number of
companies that that no one cares about.
We own several of them and we're excited about their prospects.
So AMI or really metals, we own Firefly and A1M as as you
mentioned earlier of those, the one that I'm most excited about
over the short term is Aurelia. That company today has got a
market cap. I haven't charged.
It's probably down 10%. It's.
Don't look. Yeah, very under, you know, 350
million bucks. They've got close to $100
million of net cash on the balance sheet.
They've got a huge amount of production growth coming up from
a high quality asset they're developing called Federation.
I was on site 3 weeks ago up in COBA, which was great.
I mean, it's all coming together very well.
And we, we see that business generating 100 million bucks of
free cash flow on what is today an AV of 250 with a substantial
mine life. And so it's opportunities like
that for us that are really, really interesting.
And you know, potentially, you know, as if we're sitting here
to use time, some of these companies might be more
mainstream, like we're talking about Genesis and Vault and some
of the other goals at the moment.
We just think there's a massive opportunity there.
Some people have sort of been banging the table on on
consolidation in, in the COBA. Is that like, is that something
you think needs to happen for some of these names?
Is it way overhyped? What do you what do you kind of
make of, you know, there's some bigger names.
There's a lot of. Smaller names, yeah, there's a
couple. So Poly Metals, what else you
got Peel Mac as well. Yeah.
Look, we don't invest on any company on the basis that it's
going to be taken over. We like to invest in companies
that can stand on their own 2 feet, generate a lot of cash.
And it really certainly fits that bill.
Yeah, I think Peel and, you know, makes a lot of sense for a
couple of companies in that region, but there's just no onus
on anyone to to really move. What's the, where's the, where's
the pressure point to say, you know, to bring companies
together. M and AI find anyway, it's it's,
you know, you need someone to be heavily motivated for, to take
place and sitting there trying to time time stuff, it's very,
very hard. So, yeah, we're not sort of
expecting anything imminently there, but there are deals that
obviously do make a lot of sense.
And particularly with with Peel, I mean, they've got some pretty
good resources and they don't have a meal.
So you don't need to be rocket scientists to work out that
there's synergies there. And they're probably not of a
scale that they can finance their own meal.
Yeah, speaks to your point on on a sort of forced or pressured
seller in in Newmont putting the clock on themselves with with
great land and it leading to a great outcome for for one party
at least. Yep, Yep.
Another company and another commodity that I'm keen to get
your thoughts on is Next Gen. these this is I think in your
words, the best undeveloped resource of any commodity
globally. It's.
As distinct from everyone here. To be clear, it's it is a
cracker bite by all accounts. Yeah, let's let's start with the
resource. They've they've done drilling
lately and people have got pretty excited about it.
I mean, the, the production profile that was already kind of
established was, was quite enormous.
But what does that kind of add to the story for you?
It's a good question. I mean, actually on a on a
spreadsheet, I don't think it adds much, right?
Because, you know, you're not going to build a bigger meal,
you're not going to increase the production rate for the 1st 10
years in our view anyway. So I don't think it adds much
from a spreadsheet, but it does make it much more strategically
compelling for someone like a BHP who will take a very long
term view on these assets and the expansion potential down the
track. Yeah.
So I think that that part of the world is underexplored and
they've demonstrated now that there's a, you know, highly
prospective second asset there that that should in time be a
mine. But the thing that's really
proving difficult there isn't the geology or the quality of
the resource as as you know, it's, it's the permitting
process and and getting it to market.
So, you know, we're not expecting production until 2029.
There's no free cash flow until then.
And in this sort of environment, people want free cash flow.
They want to see, you know, free cash or cash being added to the
balance sheet every quarter. And that's fair enough, but it's
hard for hard for those development companies at the
moment. We're seeing next Gen. fall from
what 1213 bucks to to six today. Nothing has changed in our view.
And so, yeah, you can probably imagine where we're taking
advantage of that for our investors at the moment.
What's a uranium place where you flush through the the decks
long, long term when you think about it and you you build your
your MPV of the the company. Yeah.
So we use 85 in our MPV's base case.
Obviously once again do a range of scenarios around that.
What spot today 64 term price is 80.
So we do see it going up over time.
We think 8085 is the minimum incentive prices required for
brownfields project like a Paladin Lang Heinrich as an
example. And probably 90 to 100 is, is
the incentive price for for greenfields projects that will
be required post 2030. So that's the way we're thinking
about it. Yeah.
It's, it's been a frustrating one, the uranium trade, but
we're we're very confident nothing's really changed from a
fundamental supply and demand perspective.
And so we're backing ourselves in on that one.
Politically, there's been a fair bit of upheaval in in Canada,
you know, at a federal level over the past kind of six
months. And they've got an election at
the end of this month already. Does does that kind of give you
give you hope or have you heard any kind of whispers that
there's a different regime? We'd already seen the, you know,
Carney, the new progressive, if you like, later trying to do
what they possibly can to to win a few votes and and push mining
along the kind of trajectory that it needs to be for for
Canada. And you can imagine on the the
other side of the aisle, it's even more of that kind of voice.
Do you, do you have faith in that kind of do?
You have faith in politicians. I mean, for an asset like this,
I mean the world. The world needs the uranium.
You know, it's, it's a fantastic high quality resource with low
environmental impacts. It's going to benefit the local
communities, it's going to benefit the government.
It's going to, you know, produce low carbon electricity for the
world. I'll say no reason why it
shouldn't be accelerated and you know, investment allowed and I'm
hopeful that it gets accelerated, but I I don't know
not. Gonna hold your breath on that
one. No, I won't hold my breath.
If if we come back to Australia on the uranium names, there are
some pretty, pretty hefty shorts on on Boss and and Paladin.
Yeah, at at the moment. What do you what do you make of
the the sentiment around the the uranium trade being so kind of
whipsaw over the past year? Yeah, yeah, it's frustrating.
One, I think a lot of people liken it to the lithium boom.
I've spoken to a lot of investors.
Often my mates will call me off and say, hey, what's this
uranium thing? Is it like lithium, you know,
five years ago? Should I, should I invest my
house in it? And they're just so
fundamentally different because with lithium, the demand side
can move around much more. It's dependent on EB sales or
stationary storage sales, all that sort of stuff, which is
susceptible to consumer sentiment in any given year.
And what's happening in global auto markets, once you turn a
nuclear power plant on, you don't turn it off, right,
because of the capital costs involved.
And so being able to forecast demand for uranium is very, very
easy. You know, my 4 year old could do
it pretty easily. It's 2 to 3% per annum or
slightly under at the moment, but moving to that level.
And so, yeah, much more steady demand outlook.
And then on the supply side, we've seen just a huge explosion
in supply that frankly we didn't see coming out of Africa in
lithium. And you know, the Chinese have
once again proven their ability to to bring on huge amounts of
supply very quickly to fulfil their needs in the uranium
space. We've just been talking about
next Gen. not producing until 2039.
There is assets like Paladin and Boss that are struggling to come
back into production as quickly as what we thought.
So on both counts, you're just looking at a very different
market. And we're still burning roughly
25% more uranium every year in power plants than is being drawn
out of the ground. So for us, that's just a
fantastic setup. Do you put it kind of to to
market dynamics as well the the impacts of sort of like faster
money if you like that these short positions can can build so
quickly or do you think it is kind of to your point they're
quite a Broadway of playing a short term bearish outlook on on
uranium? Look, I don't know about the
short, short interest. I mean, with those, both those
companies, they're going through ramp UPS and as as we all know,
any company going through a ramp up is a very high risk time and
more often than not, things do go wrong.
Unfortunately, it's rare for a company to bring on an asset
very smoothly. And sorry, I can understand why
there's that level of short interest.
It does surprise me though, given where the uranium price is
and what the outlook is over the medium term.
And certainly if there's any sort of positive news in both
those companies, then investors will be or short sellers will be
in for a pretty rude shock, I think.
But but you know, particularly in the case of Paladin, there's
issues potentially around funding.
So, yeah, so there's, I can see it from both, both sides, yeah.
If we if we look at a couple more commodities quickly just to
to fly through you called METCO your your best or your highest
conviction pick I believe for for 2025.
Yep, standing strong. Yeah, it was always AQ four
story man. Yeah.
It's going. To come in the market Q4, don't
worry about. That when you when you look
around the names out there, what White Haven like just looking at
it earlier today and seeing the, the, the metrics on which the
the 30% sale got got done. You know that that outweighs the
market cap of the whole company right now.
Is that one kind of lens you, you look at it through or do you
think you know, with contingent payments and and other sort of,
you know, costs coming up and where, where they are given
they're a sort of met and thermal player, there is pretty
valid concerns. What do you mean by concerns?
For for the company being able to make some of those payments
and. Stuff, Yeah, I mean, gosh, with
the with the coke and call price where it is and the thermal call
price where it is, I mean, there's no secret they're not
generating a huge amount of cash.
Do we think they need to raise equity?
Absolutely not. We, we think they'll get through
and, and make those payments no problems.
And you know, you have to look at the counterparties there as
well, right? They're not exactly, you know,
you're not dealing with Glencore.
So I think I think that'll be fine.
What's really interesting for me is just what's happened to the
Metco market and the fact that you now have Coronado and
Stanmore in far worse positions. And, and really, I mean, if
Whitehaven are only generating a little bit of cash, then
companies like Coronado and Stanmore are in a world of pain.
And So what does that mean for, for royalties for for costs in
the sector? What can we do to increase the
overall competitiveness and, and what does it mean for M&A as
well? So I think there's some, some
great opportunities there. The best time to invest in a
commodity is when it's in the cost curve like lithium now like
Coke and Co now it's not when it's trading 10 times marginal
costs like lithium was at 80,000.
And so these are the sorts of periods that create
opportunities for people that want to take a three-year view.
Amazing one one other commodity I know you'd talked about and
you were you were quite excited was kind of bauxite, aluminium
supply chain and Metro mining was the the name you'd
mentioned. Now.
These guys have have leverage in, in certain sort of parts.
They, you know, previously were heavily operationally and
financially leveraged, but things are kind of changed
there. You're still still a holder and
still sort of along for the journey.
Absolutely. Yeah.
We love the metros, another good example of of why debt is very
good for investment banks and fees and increases number of
shares an issue. There's a lot of shares an issue
for Metro Mining and we are in yes, a fair proportion of them.
We're very positive on the outlook their operations as far
as where we continue to ramp up really well post the wet season,
the books are prices held in incredibly well.
We don't expect spot bauxite pricing to stay where it is
forever. We value the company very
conservatively and on that basis we think the business can
generate 125 mil of post tax free cash flow per annum.
The the current cap is only two 5300.
And so yeah, we're really looking forward to seeing a
couple of quarters, hopefully the next two quarters where
there's forty $50 million put away to the balance sheet.
And we think that, you know, that will see a big reaction in
the equity or it should because people have to stand up and take
notice then. Fantastic.
I think I've taken more enough, more than enough of your time.
Fisty. Thanks for making the time for
us and coming on money of mine. No worries.
Thank you. Awesome, big thanks to Fisty for
for joining us on money of Mine and I hope the money miners out
there got a kick out of that one.
And a massive thank you as well to all our partners.
Firstly, JRX, get your tickets discounts in the show notes.
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And to the legend at Mineral Mining Services, Grounded Sandy
Ground Support, CRA Insurance, K Drew, WA Water, Quattro, Project
Engineering, KCA Site Services, Black Drummond Drilling
Services, Cross Boundary Energy, Hodoro Hodoro.
Information contained in this episode of Money of Mine is of
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decision, you should consult with your financial advisor and
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