It's a cool word. We're going mate.
Bob. Bob.
Yeah, inside. Trav and I are going and we're
bloody pumped about it. We're going in the jungle or
what? We've got a bit planned, got a
week before and a week after going to see a whole bunch of
operations. And yeah, we're pumped to to see
anyone who's also in Cape Town at the time.
So get in touch, let us know and yeah, we can sort of take it
from there. We've got 5 or 6 days in in Cape
Town itself and can't wait for that.
Oh beauty. God, if LGC wasn't in the office
I could walk around nude. I'll be here by myself.
That would be great. Anyway, yeah.
On that note. What are we?
We're also we're also going out for drinks tonight mate.
Oh, we get. Yeah, we better get going.
We've got the Chrissy party. Yeah, right.
We've got what have we got? We've got Spartan bloody Raisin
mud Raisin raisins. Fuck, she's all go.
We've. Got a bit of degrade.
A bit more degrade for like what are you what are?
You up to. Australian Pacific Coal, right?
It's a juicy story with some some big, big names and yeah, an
interesting future. We'll leave it at that for.
Now stock you'd have to put a gun to my head to buy.
Beat me to the punch it. Might go up, might go up.
I'm beveraged. Righto Spartan.
Ding Ding Ding for JD. Yes, that is right.
Well done JD. So Pepper resource upgrade
coming out yesterday and God this happened but it wasn't
recorded and I'm devastated or did say far out they must be
bloody. This must be the queue for a
capital raise. It has to be now back in the
dollar, 40s, whatever. Fuck 2/22/20 big ones. 220 big
ones, I think that's. You did say when they hit buck
50 maybe just three or four weeks ago that they'd be mad not
to raise. They had a dip and then pulled
back up. Yep.
And then they heeded your advice.
I'll see. And you can probably say why
with this Pepper resource coming out.
All all surprised by the increase.
Lives freaking huge. 10.3 Grammes.
Yeah, and like pretty much nearly doubled.
So pepper, pepper sitting at a 873,000 oz at 10.3 grammes.
That's and 88% of that is indicated.
So. Oh fuck, I just didn't think it
was that big. Apparently it is so never, never
in pepper combined now sitting at 2.3 million oz at 9.3 grammes
per tonne for the resource. So, but that is at A2 gramme per
tonne cut off. So they won't be, they won't be
that selective. Trust me, when they're mine and
they'll be taking the whole thing.
So you look at the the full resource at 5.8 grammes per
tonne at the lower cut off grade.
That's probably a better number to go with.
So you're ready. Your reserve will likely come in
I reckon a tiny bit under 5 grammes once it's converted into
a reserve once it put shapes and dilution around it.
So especially if they're going to ramp up, you know beyond 150
and maybe do a 200, which I think would be in the pipeline
with getting a resource like this, you sacrifice a bit of
grade. So yeah, 220 buckaroos, 7%
discount. So yeah, she'll be there is
cash. So look, they've effectively
raised 300 because what they raised 80 to fund the
exploration drill drive and the start of the underground
drilling and everything. So that exploration Dr is the
start of the mind. So I'd class that is 300 raised
for commencing that underground operations.
So we. Just talked about to grade.
It's kind of similar is to what degraded.
They pre empted the market thinking that they come raise in
some ways and and have over funded with equity.
And you look at it now, it's like a like they're probably not
going to need too much more to to build the mine.
No, I wouldn't. I wouldn't think so considering
they've already punched it in the day clients and they're it's
only they're adding half a mil sort of thing.
A lot of infrastructure already there and I they got a got the
ball mill, the thickener or whatever the fly sheets going to
be and the all the other and considering that exploration Dr
gets to the ore body effectively, then they just got
to start punching out. I wouldn't think they'd need
much more could do. I don't think there's any fully
funded comments. God, I hope they bloody don't.
They wouldn't do that. They wouldn't say fully funded,
but why would you? But yeah, well I need another
100 or something but a good spot to be in.
Fully permitted as well was an important sort of approval that
came through not too long ago as well.
It's a bit of a distinction, but you've gone into a bit more of a
compare and contrast with with Hemi as well.
Not requested by anyone. This is what I just woke up and
thought would be the best use of my time today.
Why not talk about of of become an investment banker?
Maddie's Bush? Maths, Investment banking?
Well who's on the ticket for this?
A zoo? Is it a zoo they're on?
They're on the de Grey. So oh, they were, yeah.
De Grey was a de Grey, Baron Joey and then.
So it'd be like Baron Maddie or Azur, I'll be great green bushes
because I'm just better than Azur.
Like this is this is the sort of level of investment banking
we're dealing with here. So final touches added by my
astute colleagues over here SO. Why do we don't give us credit
for this one, Maddie? What did you get tonight?
What did you? Well, we're thinking right
what's look at the decision of Northern Star to allocate
effectively $4.2 billion mid 2025 next year, considering 8
hundreds coming in from the door from the grey and another $2
billion of CapEx to start producing what 530,000 oz by
2029 versus someone acquiring Spartan for let's say 2 billion
today, haven't they might have to Chuck another 100 mil of
CapEx and producing 150,000 oz by 2027, so.
What's their market cap post raise?
Their pro forma market cap. Shouldn't know that let's 1.6 or
something. 1.61.7 tight discount, right?
Let's run with that. And they and the share price of
the raise was was what? 32130 Two 132.
Sorry, $2 billion. Do you reckon you could get it
for $2 billion market cap then? Because that'd be yeah,
wouldn't, wouldn't. Let's keep the numbers round, I
reckon. Keep them round right 2.2 it's
not kind of it won't be too impactful on my spreadsheet that
you have no respect for, as you've said.
I respect it. I respect.
Come on, Trev. Right, let's get into it.
These are now remember, these are all script transactions.
Like likely the, let's assume the Spartan 1 would be all
script Northern star requiring to graze all script.
It's and it took a bit to get my non financial head around.
It is like, yes, it's all script.
I'm like, but what is the difference between is there any
benefits of doing that versus fucking having to give him cash?
Like is it the same value? But it's, it will be the same as
Northern Star raising $4.2 billion at their share price and
handing that cash to Degray, the same as them giving their script
effectively. So exact same dilution for the
shareholders. The Bennett, the benefit with
the script is obviously the rollover relief for Degray, low
risk option for Northern Star as they aren't using debt or
dipping into cash or anything like that, that they will have
to for the CapEx. And because if they raised money
to do it, they'd have to do that at a discount, then they're
paying a bit of a premium for degrade.
So they're getting fisted both ways.
A lot of transaction costs. Yeah.
And it's, and it, I guess it's the easy upfront option, but
Northern Star existing shareholders only get 80% of all
future earnings forever because Degray get the other 20% now.
So that's the catch. So hopefully those added
earnings that way. Yeah, yeah.
It's it's more compelling for the the Degray shareholders
often to get the script because of the rollover relief.
Like you, you say, Maddie, that's a pretty meaningful
thing. Otherwise people get a forced
tax event. They have to accept cash, which
not everyone wants. Tax guy, tax.
I'm glad I'm paying it now. Wasn't paying it.
Wasn't paying it for a year or so.
It was good, right? Let's assumptions for Maddie's
Bush maths model. So let's give Spartan all in
sustaining cost of 1800. Let's give Hemi all in
sustaining costs of 1600. Considering it was 12/29 in the
DFS, 1600 might be a bit under. I'm just gonna up that a bit.
Go to the Johnny Mack cake, add 40% job to to include like
growth capital and other costs. Obviously Northern Star is a
bigger entity, but who knows who might be mining the Dalgar anger
ore body. They might be a big entity too,
so they might have similar corporate costs, who knows?
So let's just let's just say it's even.
Cake for those those new money miners out there.
You corporate all in costs, so essentially capturing what's not
captured in the all in sustaining cost.
Yeah, so I like all your growth capital bloody any other cap
growth CapEx expenditures, the court, the head office, all that
shit. So if we use now, so then you
that's so Spartan cake 2700 an ounce, very high grade but
smaller tonnes than Hemi 2400 an ounce for HEMI very low grade
and refractory, but are fuck loaded tonnes, 10 million tonne
per annum. So it could, could be higher and
I'll show you what the costs are similar later.
So as we said five bill was paid for HEMI in script, but 800 in
the Kitty already. So let's say 4 to 4.2 billion
paid. They did say 1.2 billion CapEx
in the DFS. Let's assume that is going to be
around 2 billion now, which I don't think is that far out of
the question considering those numbers.
And they did say that will be reviewed.
So 6.2 billion to get that into production taken into account
the 800 that's coming to the door, that's for Northern, what
Northern Star are going to pay to get to 1st production.
So and you look at the shade here.
So that's they've spent, they're going to spend 4.2 billion April
next year, then another 2 billion over the following three
years. And they said they're going to
be mining 530,000 ounces in 2029 for 12 years.
At this stage, obviously potential upside to that amount
of Oz and the mine life, but with a big number like that,
let's just keep it 530 flat forever.
So let's say someone took out, decided to take out Spartan
right now at $1.80. That's just a bloody thumb suck.
Heard someone that owned it said I'd love to get taken out of the
dollar ID. So that is the number for today.
So the 220 mil rise by Spartan today, that'll get them pretty
close to 1st production as I said.
But look like considering they've already raised the ID,
they're heading underground already, let's assume net 2
billion to take them out. So that's around what that
dollar ID is. So money that comes in the door
from today's rise plus the existing cash, add another 100
mil contingency for the CapEx 2.1 out the door by 20 in 2025
by the acquirer because that'll be I am.
And then most of the capital is going to get deployed pretty
quickly for that project. I think ramp up 2020 650,000
ounces in 2020, seven 200,000 oz by 2029.
I'm saying the future here. So based on all that, that big
massive CapEx and acquisition of degre 6.2 billion verse bloody 2
and a bit of Spartan and considering the answers in the
timeline, if if both projects started right now at the exact
same point in time, which one would have you first thought
would have got to break even the quickest as in paid back all the
acquisition cost in the CapEx before even though you know the
answer? What are the what have you
thought? Jeez, wouldn't it take shit
loads longer to pay off to grey the 6.2 billion than the two?
What gold price you said to get money?
Oh. 3600 were you using? Gutfield would have been Spartan
marginally because of the year's difference, but.
And the answer is. The answer is to grey degray
actually pays off quicker at the same gold price then Spartan.
I couldn't to think that if you paid 2.1 billion for Spartan at
and even ramping up for 200,000 oz by 29 gone for 12 years at an
1800 all in sustaining cost 3600 fucking 10 to 11 years to pay
that all back. Yeah, I guess 22 is a big take
out number for Spartan so. Yeah, 9 to 10 years for Hemi to
pay back so. What did you what did you get
though all the relative and standing cost?
So Spartan cake is higher than Hemi cake?
That's interesting. Yeah.
One, yeah, I think the Spartan, the Spartan cost will be worthy,
worthy of worthy of interrogation because how how
many mines when you mine in that like 5 grand per tonne reserves
you think it'll be that'll be that'll be pretty attractive
cost basis, wouldn't it? You'd think so.
How many?
But I suppose how many underground mines these days do
you see running well under 2000? Not many, but it's more of a
what's your cost per tonne to mine underground somewhere?
It's definitely north of 100 bucks a tonne underground mining
cost. But it's, you know, maybe call
it to it, you know, around 200 might be the number.
Yeah, All right. That depends on depth.
So there a lot of areas. So you know Guale is more than 5
grammes, but it's 1800 metres underground Spartan.
The thing they do have in their favour, it's not going early
days won't be that deep. Even when it is that deep, when
they get to that real high oz per vertical metre, they're
still going to only get into the pit.
I would assume they'll just dump straight into the pit and then
Chuck it in some bloody Rd trains.
We talked about them Salt Bush. And also the added benefit, I
think you've sort of spoken to this in, in the past of now
having multiple, you know, mining, mining phases.
It's, it's, you know, not just never, never.
But with, with pepper being able to get to 200,000 oz might be a
bit more feasible. And then you can sort of
amortised costs over a larger sort of base and stuff and
pulling those unit costs down. Yeah, and it is high grade, but
remember the lower grade component of the resource is
around 2 grammes. So to really ramp up to that
200,000 oz you're going to be bringing in a lot of lower
grade. It ain't never, never pepper
quality. It might be when they find it,
but I would I did do the case down the bottom where the costs
are flat like because I I think even just I believe it when I
say it, But yes, it's 10 million tonne, but like it's pretty low
grade for Hemi, pretty like it's refractory big pox plant,
potentially underground operations going in if they
depending on how they attack it to achieve 1600 all in
sustaining. It'd be a pretty good bloody
effort. I think with all that it is big
scale, but I think that'd be A so I wouldn't be surprised if
these were very similar costs. Not sure what they are at either
end of the spectrums of scale. Offset the low grade refractory
with the high grade nature. Wouldn't be surprised if they
end up pretty similar costs profiles.
So your takeaway is the price offered by non Starford A grey
yesterday is the roughly equivalent to $1.80 for Spartan?
I don't know, I suppose. Suppose, oh actually it was more
thinking that first thoughts were I'm like, jeez, it's not
someone paying 2 billion for Spartan didn't seem to be as
alarming as paying 5 billion for degree and plus the CapEx as
well. Yeah.
One potential difference is that there's no one out there that
would get, you know, synergistic benefits from buying Hemi.
Yeah, potentially a couple buyers that might, oh, exactly
get synergies if they were to buy Spartan.
Oh and you think when they get Hemi going far out like once
that's if you're looking at just back on a payback perspective.
Like once he's paid back, she's frigging printing money.
It's like considering it goes beyond 12 years.
But I suppose from a capital allocation decision from today
is if like say you someone wanted to buy Hemi and buy
Spartan and think or Spartan and think, right, when am I going to
get, when am I going to pay this back and start producing
earnings and pay back the capital of allocated.
If you look at it here, based on that, that's where Spartan comes
ahead because Hemi's not going to get gone till 2029 in full
scale. If if all goes to plan, Spartan
gets get going a lot quicker. But probably in 2026 they
they'll be in ramp up. You you'd imagine God, I
wouldn't think any sooner, maybe maybe end of 2025 still still
got studies and everything to go, but they are underground.
So they'll definitely be in a good position to start
developing it. So based on this whole thing,
it's like Dalgar anger actually gets paid back quicker than Hemi
just 'cause there's so much less to do there.
Yeah, from today. You've got permitting.
Yeah. Your time.
Yeah. Your timeline before you can
start mining. It's expediated.
Yeah, kind of. Underestimate the value of that.
So it's a very, very, very basic approach, but it it was just it
was a good exercise for myself to around the concept of M&A in
the gold space, because obviously it's much bloody
easier to find this shit yourself and go from there.
Like you look at the performance of Spartan since the rate recap
like degrade share price would have like degrade share price
wouldn't be where it is today. Pray the Northern Star offer if
they had to build it themselves, because they would have had to
have raised a shit load of cash plus a big pile of debt and had
a lot of risks and dollar shareholders.
So just shows that outcome for degrade shareholders.
How freaking good that was to get offered the all time high
share price to hand it over to someone else.
That's an brilliant outcome. That's an excellent takeaway
that you because like in your in your exercise, in your
spreadsheet, what you're doing is you're putting your you know,
your, your, your 2024 cash flows are an acquisition cost of you
know what, what, what was sort of stumped up for these these
things. And that kind of blows out a
hell of a lot of the rest of the equation, right.
So the most value that you can add as a minor eyes with the
drill bit by a country mile because you don't have to you
don't have to fund the acquisition because it came
organically. You just.
Got to pay for the drill. So that's that's take away that
2.1 billion in the first column. She's just fucking easy and
easier. Said than done.
Oh. Yeah, God, you can see why
they'd much rather do. And I suppose like that's why
you'd. I think the interesting one was
Nova for IGO and I remember the saying, oh, it's been such a
great acquisition, it's producing all this free cash and
everything. But I think it was Hoffy or
something that did the numbers. It's like they've only just
nearly paid it back for what they've actually paid for it.
Never mind the opportunity cost. Yeah, Yeah, it's.
So, and I guess that's why you get a bit sceptical about M&A
with these high price tags because as you said, some do
fail, plenty do fail, have a downturn or like get written
down because that just that initial outlay is freaking huge
and takes as we said 9 to 11 years to pay back that initial
outlay. So consider and unless you buy
it in a from a major in a friggin downturn.
Nor like to think back when Northern Star bought John D for
US 91,000,010 years ago. Still producing 200,000 oz today
but gold price was $1400.00 an ounce Aussie then when that
happened compared to 4100 today. But great land, gold bought all
the infrastructure at Telfa, all the Telfa deposit that's there.
The remainder, I have her on the US 475,000,000 just a couple of
months ago. So that's about 78% of what
Northern Star paid for the Grey. So as we said at the time,
that's a bloody good deal like that.
That wasn't one where you're like risky, like that's a
fucking good deal. The Newmont sales have been
really interesting, right? Because they've sort of, you
know, some of them people have said they've netted way more
than was the expectation and others, you know, like this one,
what you just said with with Telfer, Telfer and great land,
people are saying, hey, they got a pretty good deal kind of
right. It was the right.
You can't. You couldn't compete with.
Yeah, yeah, of course it was the right, yeah.
Or they just took them over. Yeah, which, you know, you had
to get shareholder support, which was going to happen.
Yeah. And we'll consider and it
probably doesn't move the needle that much for new.
Newmont made 1.3 billion in free cash flow last September
quarter. So an acquisition, a sale like
that, whether there was another 2 or 300 million on it, it's not
going to move. Not a big thing for them really
considering the size of them. I'm sure they'd like it.
So I guess what does we talked about it yesterday.
What's the northern starter grey thing mean for Spartan?
Doesn't mean anything. Obviously a signal that
companies are willing to pay for answers.
What'd you say? 1.16 times consensus NAV They
paid for degrade. That was my Bush math, yeah,
yeah, I just thought, OK, 1.16 times NAV is what what you know
was paid here. Then can you just apply the same
to Spartans consensus NAV, which before the cap raise consensus
NAV was about $1.85. So 1.16 would be 2 bucks 14.
But now everyone in their models, there would have been
debt funding remaining CapEx and now they've added added more
shares instead. So like your 180 doesn't sound
doesn't sound now unrealistic to me between that take more.
Yeah, it's offered. I, you know, like probably
between 180 and 2 bucks to get a deal done.
Yeah, is my my, my, like literal just gut feel.
Yeah, well, and but the what else do you buy?
Degrade. Degrade's off the table.
Now those those nabs by the way, were at spot prices.
So I think with degrade you weren't having like I've pulled
nabs at spot decks there. So you know, 180 actually
probably makes a lot more sense in 2 bucks because you don't
want to pay above NAV at spot too much.
Now what? Because a long term consensus
gold prices US 2100 it's. Yeah, Yeah, I think that's.
The one that's right, yeah, a lot lower.
But I suppose if you if someone's going to pay 2 billion
for Spartan to develop that mine into 200,000 oz operation, be
interested to see what Ravenswood is going to go for
considering what they're aiming to produce. 2:20 to 2:50 and
it's already in operation. Steady state ticking along.
I hear they want 2 billion. Two billion, Yeah, at least
makes sense. I don't know.
Who knows? There you go.
So I think. They put in 800 Yeah, investing
in it, Yeah, after buying it. Yeah, how much they pay for it?
I think it went up to 300, but that was over time.
Yeah, yeah. They're going to have to pay the
like all of the contingent out. So yeah, that was all 300, yeah.
Yeah, I remelius they're the interesting one here.
What like, I guess what are their options with Spartan and
on the back of because it does tie in with what the whole
Northern Star thing, because we said is the degrade thing then
going to open up the chance that they're going to to be amenable
to selling Carousel Dam? And then obviously Ramilius
would want that to get the infrastructure for to get
Rebecca Row going. God, I think what would they
want for Carousel Dam? At least a billion, probably
bloody more. God, it's producing.
It's at what 2300 all in sustaining Not sure of the
future on it, but it's got the infrastructure like God could be
more if that script that's like could be half of Ramilius's
bloody market cap to get that. So good Spartan.
Yeah, yeah. But like I suppose you do get a,
you do get an operating mine does unlock the million oz at
Rebecca Row for 1.2 grammes. But fuck, it could be yeah, or
it could be what a shit load more.
Yeah. But there's no, I suppose
there's the synergies with Rebecca Rowe.
She's still got to develop that. But if I say there is a lot more
synergies I believe with the Spartan acquisition because if
they will not, they will be able to take that dirt to checkers.
So, and This is why I think Spartan raising this money today
and now having this cash in the door.
I wouldn't be surprised if you're merely saying, well, if
we, if we have a long term plan of having Spartan in the
portfolio, but we don't have an intention of operating the
Dalgaranga mill, we'd rather send it all to checkers and
possibly expand checkers. Would they want Spartan to spend
that capital now on Dalgaranga if they don't intend to use it,
or would they rather take them now for the remaining 81% that
they don't own? They've got the cat, they've got
extra, they've got another 220 cash on the balance that comes
into the pro forma God, they've got 400 out of their own that
they've got plenty of cash to build a mill at Rebecca should
they choose so. And then they just track it to
checkers and expand that. It makes sense that if that's
their long term plan, I think they'd do it now rather than.
I see that tail is in is the most likely like you know yeah
big probability to happen not AQ1 or Q2 next year is my cut
instinct. But I just think like the raise
is a tactical thing in some ways as well because your raise
220,000,000 now it takes the wind out of Remilius's argument
that they would put forward, which would be we solve your
funding problem. You don't have to dilute
shareholders more to fund this because you've now got our
balance sheet. So now can't, you know, well,
they can't really say that now because sponsor, no, we've got
plenty of cash to pretty much fund this.
So yeah, so there's there's you know, I think it's just a little
bit of of gamesmanship to get to the eventual outcome.
Just hadn't, you know, I told you the other day, sometimes you
see deals pop up in relatively like close proximity after an
AGM approves more performance rights.
So people can kind of get a, you know, a top up on things at best
before a change of control and remedies were supportive of the
approval of some contested performance rights of Spartan,
which is, you know, a good pathway to have to get a healthy
relationship on a. Friendly.
Yeah, a friendly takeover just. Goodbye some bloody mates, good
to see everyone's getting along. So I wouldn't, I wouldn't be
surprised to see some progress on that deal.
Yeah, in the future, Maddie. Well, and I don't think you look
at what if you're going to weigh up Karasu Dam and Rebecca versus
Spartan. What's Ramil is done Well, Penny
Waddle Dam, they had the Musgrave acquisition, Vivian,
all high grade, not as big scale mines, Karasu dams, not high
grade Rebecca, right. They've done well with pits as
well, but they like underground high grade gold mines.
They spot that's that's spot and through and through.
So yes, I think that is going to happen pretty bloody quick.
I'm saying I don't think they're going to buy a Karasu Dam thing
to be too much shit loads. It's a big buy.
Could be 2 billion. Let's go with two billion, yeah.
Would Northern Star accept script?
They'd have to, I reckon, to get that deal done, yeah.
Yeah, but would Norman say like, what's if they get Remelia's
script, they'll just bloody start dumping it, wouldn't they?
Like I said, no interest keeping it wouldn't.
They they don't just dump script.
Not like over time, but. Yeah, potentially, yeah, they
might place it out or something like that.
But I, I think the like, like I said yesterday, I don't think
there's an intention to sell Carousel Dam based on the way
they've funded. That would be great because you,
you, you would have cash funded some of that acquisition price
if you knew you were getting more cash in the door later from
it. Sell down of Carousel.
Damn. I think, I think they're
signalling that that's not for sale yet.
We will say everything has a price.
Exactly. Yeah that's what's going to
happen. I hope that bloody happens soon.
Fucking it's just looks like I've really thought about it.
Anyway, go find a gold mine tapes easier.
Do you know if bloody Spartan have chatted to CRE yet After
all our call outs? Have we been notified?
I'd. Be mad not to, right?
Have Amelia's chatted to CRE yet?
I think I have actually, yeah. Have they actually?
I don't know. Well, Zeppe and Lawson, if you
are bloody, listen, if you want me to stop talking about the
both of you getting married, of course Tari from CRE Insurance
and broke a bloody policy for you straight up.
I will ease up on my speculation talk if he's made that call.
So what policies? Could they get Maddie?
Well, Adam's busy sorting out all the cold policies I've
raced. Yeah, Tari's he's he's, he's
already busy doing Hard Rock, but he wants to get busier in
the West, in Africa, in bloody anywhere.
He's he's your Hard Rock man. So Tari in the Perth office
mate, Fucking renewables construction bloody business
interruption. Oh mate, home contents if you
want it like they'll do anything.
Business interruption, why not contents?
Oh, you. Never mind mind contents.
Don't forget about Youi, it's all CRE for me, someone said
life. Insurance the other day anyway.
Not quite sure. Yeah, you should get some of
that right. Revisiting the Northern Star to
Grey deal one more time. Why not?
Yeah. Oh, well, yeah, why not?
I just wanted to point to a phenomenon that happens when you
know, OK, it's an old script deal.
So you can easily, easily back out what the, what the relative
kind of share prices are implying about the proposed
merger ratio. Remember the merger ratio was
like 1.19 Northern Star shares per the ratio.
So do you. Reckon all these bloody ARB
funds they've got like a fucking screen gun that's got that's a
live interactive merger ratio thing.
Totally 100%. Now how do you get one of them?
But wait, you can do that on blood.
I've made it here for you. Yeah, I know.
But Trading View odd is that? Yeah, I can put in a formula.
There you put. There you go.
Yeah, fucking so look, this is what I've done.
I've just gone like the grey share price divided by another
star share price, right? And the blue line roughly
speaking, is what the merger ratio should be 1.19.
Now what you should be seeing here if in a typical deal where
there's like, you know, no interloper risk is it'll come in
a little bit below, just a little bit below that line is
where it should sort of average out at because.
So where the end of that is? Yeah, we're rough.
Yeah, roughly there like a, you know, plus or minus whatever the
reason is the the merger in a, in a rational world like you're
a merger AB will take advantage of when it goes sort of, you
know sufficiently low because by buying your target, shorting
your acquire acquire in exact proportions.
And then there when there's a greater than a risk free rate of
return on that, on that until estimated time of completion, if
they think there's significant like, you know, certainty of
completion, that's what they'll do.
They'll capitalise on that. What you can see here is it's
it's trading, trading at the terms.
It's not, it's not incentivizing their jobs to come to the table
here. That's trading at the terms.
So that could be for a plethora of reasons.
There's a few different ones that I could point to of why it
would be trading at terms at the moment. 1 is when like in
relatively short, short proximity after you get a deal
announced, the short people who were short degrade, they might
come and just cover their short at any price.
So they'll kind of pay up a little bit above what, you know,
the intuitive intuitively things should be doing just because
they're covering at any price. But like, I think it was only a
couple percent short to go. I don't think it was massively
short. And I don't know, like the
volume looks a little bit, you know, higher and it looks like
it's it's trading at terms a bit longer than you'd expect if it
was just sort of short covering. So there could be a little bit
more to this. And you know, if you kind of
cast your mind back to, to other deals that we've commented on in
the past, ones that aren't script deals, for example, you
sometimes like, Remember, Remember seeing like a a zua.
I think it was, yeah, that was like gonna be 380.
But then we went down to like 3:30.
Sorry, I got, I got mixed up there.
It was let's talk about like remember line down when that
traded all the way up to sort of like 3 bucks, which was the
potential offer on the table was gonna be 3 bucks, but there's an
unknown time to completion all that sort of stuff.
So in that case, yes, you had an interloper and quotation marks
was actually a disruptor Gina sort of buying above term like
above in terms because it should have it should have been trading
around like you know that 280 to incentivize yeah, sort of you
know people to even even lock was because it was far less
likely to complete. There wasn't actually a scheme
implementation date or anything like that at that point or at
all with line town that would just yeah reveal bids.
But in the in the case of of here, like you should be like
the discount should be sufficiently large to
incentivize measure apps to come to the table.
But it's not right. So is there an interlope of
buying a little bit above similar to what we've seen in
the past on some things? I'll keep we keep breeding in
the in in in the Australian about a potential envelope for
de Grey being a Nico Eagle. And I'm going to put my
unqualified opinion out there. I don't think AG Nico comes into
the picture at all on this one. Maybe I'll be proven wrong in
time, but I'll just try and frame this chat a little to the
Aussie listeners that aren't, you know, very familiar with
Agnico. Agnico Eagle is the best gold
miner in the world, period. I'll make that statement with
very little knowledge of how mining works.
You guys know that, but lots of knowledge of how cash flow works
and Agnico has controlled costs when every other miner has had
cost creep. This is the chart of what I
mean. Agnico has outperformed the gold
index. It has outperformed the gold
price. It has even outperformed the S&P
500. For gold miner to do that over
decades is a freak of nature. When you just look at the, the
peer group who you know, it's like Newmont, the share price is
the same as it was 20 years ago. You know, like everyone,
everyone else just fucks up. And Agnico have just like
delivered and controlled costs. It's a, it's a, it's, it's
freaking crazy how they've done that.
Is that cost per oz? Yeah, it's that, that what
you're looking at there is per is per.
Yeah. That's just like your, yeah,
your, your, your, your costs, like, you know, Yeah, per Oz.
So, yeah, yeah, so, so it's a function they've obviously.
That's a gross margin thing. Yeah, yeah, yeah.
So. They've got that's a testament
to the assets they've acquired, developed and everything, the
quality. It's a testament to how they
think about capital allocation. Yeah.
And like assets feature into that.
This is a 66 year old strategy that they've been employing
consistently for six decades. It's not it's not like a a fluke
that they just sort of stumbled on the right assets.
It's how they think about deploying their capital.
And if I would kind of summarise when, when they talk about it,
it sounds so simple and it's not I know that, but it sounds so
simple. I'll, I'll play a couple of
clips. But if I were to sort of
summarise the the two things that that really come to mind
that hone in how this company thinks differently about capital
allocation to their to their peers over a long period of
time. One, the first one is this
intense focus on per share metrics.
Return on capital is a per share metric.
This is, are we creating value for them and that's always
matters to our shareholders is are we creating value for them
and that's always on a per share basis.
I see Dave Smith here. If he said per share basis 100
times in an investor meeting, he still had 20 to go.
We've on a per share basis, we've gone gold production an
increase of 2 1/2 times per share.
That's hard. Increasing production is one
thing, increasing it per share, that's hard.
And doing it over that period of time is impressive.
And in that same period of time, our dividends, which is payment
per share has gone up by a factor of more than 50.
And then the second point I wanted to draw your attention to
was they avoid doing what everyone else has done in like
over time, as as gold price goes up, people lower their cut off
grades, as you know, as it goes higher.
And that's how they, that's how AG Nico has captured more margin
over time. Instead of lowering the cut off
grades, they've been like very, very thoughtful about retaining
the cut off grades they have because it lets them focus on
the highest grade Oz sending the right tonnes to the mill and
have the most margin on those Oz.
Kind of how when you would talk about like, it reminds me a
little bit of the way you would talk about, you know, Silver
Lake and they're like it's, you know, always margin every Oz,
all that sort of stuff. Yeah, yeah, that's why they went
against the grind and single boomed and mined things a bit
slower, but it was all in the aim of control and dilution for
an extremely narrow ore body, yeah.
Yeah. When gold spiked, a lot of
companies back then reduced their cut off grade so that they
could show expansion. The big, the big push at the
time, the big pressure on executives was to increase
production with the increased reserves, etcetera.
So they lowered their cut off grade, costs went up.
The margins weren't captured because gold went up and then so
did costs. And if the margins aren't
captured, then your share price doesn't go up and gold equities
underperformed. I mean, that's an
oversimplification. So that was a big part of what
happened. So I, I, I wanted to play that
because I bring it all up. You know, Agnico, they're the
best at capital allocation. They've also to your point
earlier, Maddie, they've, they've had really good success
with the drill bit. They've had, you know, they've,
they've picked assets that have great capability to, to add
value via the drill bit and they've had discoveries, you
know where their existing assets are.
Did that with Kirkland. Like did they?
Merge with, merge with Kirkland, yeah.
Yeah. Did Kirkland have other assets
other than Fosterville? Yeah, yeah, yeah.
So that was all that Foster. That was a fucking phenomenal
all body, that one. Yeah.
And they're like, you know, we talk about, you know, how it's
hard to mine in North America and all that.
They've they've friggin mined an underground in the Abbottibi
belt and making shit loads of cash.
That's where they have amazing edges.
Yeah. Abbottibi is like a phenomenal,
phenomenal location for them. So, so absent some bizarre small
bits that they've got in some dog based metal stocks, Agnico,
a phenomenal capital allocation, look at look at Northern Star
today, they're down another 3%. So that's down nearly 9% since
the deal was announced yesterday.
And the share price is down because the market doesn't
believe it is per share accretive.
I'm not making this up. Here's the the research analyst
City downgrade Northern Star from Biden neutral target price
lowers by $1.30 based on EPS dilution.
NAV dilution is $0.55 per share. Morgan Stanley, we remain
underway. We question the size of the
premium given no accretion until FY20.
Nine, Bank of America on our assumptions, the acquisition is
slightly valuation dilutive with our HEMI valuation by 4%.
My my point is, if the street thinks 5 billion is too much for
Northern Star, do you think the market would support Agnico who
don't have an operating team in WA to pay more than Northern
Star when it's their home home ground?
Probably not. I believe you.
You've convinced me with that narrative.
I like that, Yeah. So there there are certain
miners you put money on to be irrational who would pay up
because you know they've got the wrong incentives in mind.
Or certain miners that you have a history of doing dumb things,
right. All I'm saying is Agnico's DNA
is not to be one of them, but but bringing it, you know, all
back to the the share price of the stocks when when you're
looking at that trading at terms, What could that be?
1 theory is simple. It's just short sellers kind of
covering at any price. Like I said, another another
theory. Simple.
An interlope of buying, buying a blocking stake, maybe.
Yeah, like I said, I don't if so, I don't think that's like a
third theory Gold Rd buying a bit more on market to beef their
stake up a bit so that they can try fish out there a full 20%
instead of a, you know, 17.3% which requires a
disproportionately large amount of voter turn out to offset it.
That's an interesting theory as well.
Maybe not discount it and hypothetically right if I'm
wrong and AG Nico do have interest or anyone, any
interloper has interest. They don't actually have to.
They don't actually have to do to then stamp up more money.
They could actually just yeah, buy buy gold roads pretty
significant 17.3% and a little bit more than you've got 20%.
Then it is kind of hard to get a deal done and things could could
potentially like fall over as well.
So there's and then, you know, you might have a theory or I
could pick up the rest later at a lower price.
But you know, I just I just think net net on balance, don't
think Agnico is coming. Think think Gold Rd will
probably just monetize their their stake in due course and
see what see what they do with it.
Maybe they bid, yeah, bid, bid, bid for something else or or
not. But yeah, what do you guys
think? Jayzod, I don't think fuck me
theory that Northern Star and AGNACA are going to merge is out
the window now. It could.
I mean, Agni could like WA, don't get me wrong.
They they like, they like regions where they've got
they've literally they've explicitly mentioned WA in the
past. Yeah, I don't.
Yeah. Don't but you think of future if
they if like I'll price long term consensus is correct and we
are going to retreat back to 2100 And then Northern Star have
got these big assets with you know still if they've got CapEx,
still got CapEx to deploy there and they're still ramping these
things up. So you've got 27,000,000 tonne
of bloody cow and then 10 million tonne of degree and
process depress It might become attractive to them, yeah,
counter cyclically, who knows. I sort of think that they're
like, you know, they've got gold fields.
Australia portfolio is more more of an agnic style of play than a
than the Northern Star with plus de Grey sort of portfolio
personally. But yeah.
Yeah. As As for the De Grey takeover
and you know the question on whether we're seeing Interlope,
I think I understand by what what we all said sort of
yesterday and again you've kind of reinforced it today.
Find it hard to imagine somebody can make the numbers sort of
work better. I think they'd be running that
margin of safety mighty thin, and I suspect we won't see
anyone come forward. What do you think?
Is there anything beyond after 24 hours later like Northern
Star strategy to do this? Like is there anything we didn't
discuss? Like what what are the benefits?
Is there doing this being the biggest part substantially
biggest gold miner on the ISX in Australia, but I don't know is
there bloody power in the industry for recruitment and and
is there do you think there's any indirect benefits of doing
this for the long term success of the business that we didn't
discuss? I think when you look at, say a
pie chart of what all the big factors are, you know, making
money out of Hemi is 90 plus percent of that.
Then the, you know, it's you can't be pulling at any of those
other marginal ones to try and make a deal stack up.
Then you're, you know, you're really trying to convince
yourself. Maximal leverage got yeah to
gold price Yeah, there's. There must be some.
There must be some upside to that DFS like.
Yeah. I would imagine.
It's reframe it another way, which major miners in Australia
have a growth project that is more than 100,000 ounces?
None. Well, you know, Northern Star
paid up to get the only thing that is a 500,000 oz grass
project. WA It's, I just think it's the
rationales like that, but the yeah, there's there's a risk and
that's why it stands up 9%. Is that does that measure ratio
tick up and down like say the market say if the market
initially people are thinking they've overreacted to Northern
* and then they might trend back up in the days the.
Tucha Track. Yeah, and then degrade.
That's why I follow it. Yeah, and to the line.
Yeah, but they set the their feeling towards Northern Star
dictate the bloody where that trades in it's.
Kind of like Paladin fission, you know, like 2GO hand in hand.
But it's what they think about Paladin more than fission.
Yeah, yeah, yeah. Yes, with confidence the deal
will go through, yeah. Yeah, yeah, there we go.
Greatlands made its way in. Oh, sorry, yeah, I just, I just
wanted to go Greatland. I think what you summed up
before about that value of that Greatland deal makes sense.
And that's like a, you know, an interesting reflection and on
the value of Spartan as well, right, Like big scarcity of
these growth assets out there, you know, to grey despite it's
it's it's it's risk because it's gotten full value in a deal.
What does that mean for Spartan? I also think, you know, what
does that mean for the value of great than when the lease on the
ASX, like when it gets price discovery, just just the yeah,
the deal looks better and better every day based on what other
deals come come out. And then also what about anti
bar, which could could beef out the pro forma of that whole
thing nicely as well. That's had a great run.
It's pulled back a bit but today I saw a director just bought
156,000 bucks on the market 160. 5.
Sorry, 165,000 Walmart. So yeah, I don't know, you
could, you could paint a picture that that all kind of comes
together and the profile and the whole, the whole thing looks
like a pretty interesting vehicle.
Do you know how much bloody odour free resin you could buy
for 165 grand of Sandy ground support?
Fucking hundreds of kilos. Just boxes of the shit.
Under. Free resin?
I had a free resin, mate. You can't put a price on
protecting the health of underground miners.
Did you see Tucker and Dharma the other day?
Like those little twitches they added every now and then?
That's from sniffing too much resin.
That's bloody. That's been taken out of the
equation by the same big ground support division.
Bloody you. You won't have to worry about
getting high as a card anymore. The resin just smells like a
sponge cake. A sponge cake?
What does a sponge cake smell like?
Nothing, but it's bloody good, just like the same big resin.
So Maddie, back in your your jumbo days, if the the mine
manager or whoever does a a big purchase like this, is that just
a a Christmas treat for all the workers?
Right. And do you know what the colour
of the resin is now that you mention it?
Red and green. Red and green.
You've got the green end and the red and the fast end and the
slow end. That's no word.
It's a Christmas gift. It's a bloody Christmas.
I assume they're still that colour.
I think they're, oh, no, maybe they're red.
And yeah, no, I'm pretty sure they were.
But the point is, look after your employees and get an order
in before Christmas. Just like Sam Victor looking
after Derek Heard under the new banner, they are look after
Derek. He's a treasure.
Thanks for nurturing him. Go Sam Victoria.
That's it, right? This is what's going on in the
world of Australian Pacific Coal.
What a what a joint. This is a juicy, juicy, juicy
story in we're going to the hunter the the sort of heartland
of thermal coal mining for this one.
And this story is kind of not not fully formed.
There is a long, long history tree with some super interesting
characters. And I'm sure you know, I'm going
to talk about the the bit of the iceberg that sticks at the top.
And there's this whole sort of 90% of the story that, you know,
the public aren't even aware of, given the sort of dynamics
people trying to buy the company, buy the mine and all
these sorts of things. So I'm sure there's people that
will know that I'm going to get stuff wrong, but I'm going to go
through it anyway and talk about it because it's really
interesting. So Dart Brook is like I said in
the Hunter, this was a mine that was owned by Anglo back in the
day. They put it on care and
maintenance in late 2006, turned it off 2007.
So 18 ish years. It's it's gone unmined until
very recently. So Australian Pacific coal have
recently started mining. They they're in AJV there.
They're not the ones operating it, which I'll kind of get into,
but. For I've got 70% economic
interest in it and that's right. Yeah, a 20% owner of the JV
actually is the operator. Yes, Tetra.
Yeah, Yeah, that's right. So there's an interesting
narrative since coal prices kicked up and even, to be
honest, before that in 2015, sixteen people try to buy this
thing, Nathan Tinkler being one of them, try to get it going
again. Because I saw this sort of as a
depressed ass, an asset in a depressed market to pick up on
the cheap and, you know, try and make a bit of cash off on the
wave of the, you know, commodity upcycle again, lots.
Of latent infrastructure it needs to be reefer but there's
an old wash plant there that. Yeah, I mean, look at the map.
It is, you know, there are huge operations within, you know,
almost the sort of stone's throw all around it big, you know,
Mount Arthur and a whole bunch of other big, big, big
operations owned by the majors like Glencore BHB and the sort
of like. So I.
Think it's also like wine region right?
The hunter like it's great wine region.
I'm pretty sure this is the one where it's Malcolm Turnbull owns
the the farm next door and it's it's like protested so.
I remember seeing signs up all through there because that's how
I used to drive from Imberel to Sydney through that way
sometimes those signs up and bloody everything.
I had, I had a good chat with the mate who went to a wedding
up here, you know, a couple of months back.
I said, oh, you go and see some sort of thermal coal mines here
and there. No, no, no wineries and stuff.
Didn't even know there was any thermal coal mines.
Are you bloody kidding me? There's 200 million tonnes of
coal gets trained through to to the port, yeah, from here so.
You and you literally drive past them, but the road goes in
between the mines and there's freaking drag lines and shit
everywhere. Some of these people you can't
miss. You can't miss.
Them, that's exactly what I thought, so you know.
You know the coal gets there, right?
So that's like the like the millions and millions of years
of decay of like the like the trees and all that sort of stuff
that yeah, it is. That's like the fact that this
beautiful region is in some ways why the coal gets there in the
1st place, I think. The Pete Pete is the worst
swamps. Absolutely.
So this what we're talking about underground mine here, steady
state would be 2.4 million tonnes per annum within sort of
two years. They kind of want to get there.
They're estimating an 80 ish percent plus yield that they'll
get FoB. They quoted under 100 bucks a
tonne and you know, for, for reference, the benchmark which
they're sort of selling against or hoping to sell against, we'll
see what the relativity that they get is, is trading at about
135 bucks. And you can, yeah, just see on a
map there where it kind of sits. So the timeline has slipped.
They wanted this to be producing late last year.
You know, we're at now late 24 and it's just slowly getting
there. They haven't actually made any
sales just yet. They said first coal sales are
imminent, but they've got a few other things they need to sort
of click into gear. Trev, you mentioned the wash
plant, they need to refurb that. That hasn't actually started yet
in Q1 of calendar year 25. They want to do that.
So right now, essentially, they're not going to be making
money on on what they're selling.
No, which is they'll be selling another unwashed, yeah, unwashed
call off the ROM, which is and and they don't have the rail
agreement yet, right? Yes, they need port and rail,
very, very important things. So they need to get.
There you. Are they've got a production
target of a minimum of 50,000 tonnes a month and they just
sort of hit that by Jan before they commence that, that refurb
and a couple other details to flag right now.
And you know these were flagged in a recent capital raise as
well. Like we said, Tetra are the ones
operating. They've got a 20% economic
interest in the project. They're the JV partner, the Dart
Brook JV. Imagine that having a 20% like
you own, you've got technique, 80% of the JV or 70% economic
interest, someone else is operator.
It's not great. Let's stitch up.
Yeah. I mean, we've, we've spoken a
bunch about it over the past year.
Can you know, it's all good when things are hamming along, but
when things aren't hamming along, that's when those JV
start to, you know, really, really bad heads.
Fucking listen to you mate. I believe there'd be a bit of
that going on, Maddie. So they're also working on a six
year extension. This is another sort of
potential catalyst if you like that might help the company out.
Right now it's sort of permitted up to 27.
They want to kick that out to to 2033.
So the resources and reserves aren't aren't the issue.
They need to get that approval as well.
And then you come to the debt. Now this is a sort of big one.
So the J VS debt was recently upsized from US 60 million to US
90 million. That was just in October.
Now that yet comes from the mega commodity trader Vito.
So they're more known for oil, but they've been branching out a
little bit. So they of course nabbed the
marketing rights like any commodity trader would do.
And as a condition of that upsizing, they being AQC had to
go and do a 20 million Aussie capital raise and they would put
forward another $20 million working capital facility.
If you're still following me, that working capital facility
for the joint venture was shipped in 5050 by Vitol and
AQC, the parent there. So as of last reporting, US 55
million is drawn in debt. That doesn't include the
capitalised interest, which is important because the interest
rate they're paying is sofa plus 15%.
Holy snap and duck shit. And that changes to sofa plus
10% after first coal is produced.
It's even sofa plus 10 is bloody or.
It bloody is. It is.
With a repayment date that is proximate, it's it's only two
years away, so it's. Very important detail.
Yeah, that is not long away. And that leaves you in the hands
of the creditor really. So at the AQC group level
there'd be roughly 10 million ish after the recent raise, the
JV had a bit over 1,000,000 bucks at the end of the quarter
and I'm sort of estimating 75 ish Aussie in that undrawn.
You know what they can still draw upon, hence the company
saying that they're fully funded.
So they've got cash but the terms aren't favourable and
they're gonna need to repay it not too far down the down the
line so. Plus there's part of that part
of the debt facility, there's CPS where yeah, we, we don't
know what all the CPS are, but they do disclose in the cap
raising debt that some of the CPS and, and conditions
subsequent are out of are out of the control of AQC.
So the ability to actually draw down in fullness this this
upsize facility is in doubt. Yeah.
So if all that was like a lot of numbers, you can just sort of
think of it as this is a company that is very financially
leveraged at the moment and. Without without An Ave yet to
make money off its production. Yeah.
So as we've sort of spoken about restart projects in the past,
they're operationally leveraged as well.
They're they're gone at it from sort of both ends.
So that brings us to the AGM which happened last week and the
details get even juicier here. So the managing director and CEO
resigned immediately after the AGM in late November.
That is not totally normal for a company.
You know this is one of the red flags we speak at for a company
in ramp up for the boss to leave raises all sorts of questions.
Just after the IGN, Yeah. So I would have presented at the
IGN and then resign. That is out there.
Yeah, you think? They went up for re election or
anything like that there. It's not like they like one of
those ones where the resolutions withdrawn.
It was just a there were protest fights though, like on a few
resolutions. But yeah, well.
Yeah, this Miss Saridas who was the CEO was actually just
initially the the interim boss for a period.
So sort of with the company that 2:00-ish years became full time
in June 24 and it's now sort of stepped down.
And that wasn't the only interesting bit of news at the
AGM. So we've got to talk about this
major shareholder, a group called Trepang, They own roughly
37% of the company. They were previously the biggest
creditor, which might tell you a thing or two about what has
happened to this company in the past.
How they got their shareholding? So this is a group that's backed
by John Robinson and Nick Paspali.
So Robinson is a non exec director with AQC and is also
acting as the chair at the moment.
And AQC tried to sell Dart Brook in 2022 whilst the company was
buried in debt with Trapang being the biggest creditor
there. Trapang reportedly loved a
beard, but for whatever reason, that's what it didn't go
through. And hence recapitalization.
And we sort of are where we are today.
But they did actually support the October raising.
They they chipped in and they took up some of the the
shortfall as well. But Trapang is not.
They're not, I don't think their incentives are exactly like all
other shareholders because they're also the company.
Trapang is like a mining camp provider, you know, certain
mining service services provider.
And I think they're a part of the whole restructure.
There's this fee that comes out of the business and goes to
Trapang. It's like an annuity for
provision of camp and other services.
I think it's like 1,000,000 bucks a year or something like
that, yeah. With, with companies like this
and you know, a whole heap of resources, companies look very
closely at all the other costs laid in the, the royalties and
you know, the land lease agreements and, and everything
to get a good feel of what people's intentions are.
Some people obviously get paid on profit, some people get paid
on the top line and all these other things.
So it's super important to look at it.
So then we get to the AGM resolutions and there were some
interesting ones that got put forward too that really sort of
stood out. Firstly, ratifying the placement
of shares from the October raise.
This essentially allows them to refresh their 15% placement
capacity going forward. And then there was also another
resolution that they sought which was the approval of an
additional 10%, essentially saying giving them the
capability to top up again the raising equity and in future.
And Japan voted against both of those.
Given Japan's like nearly 40% shareholding, that was enough to
to not carry those resolutions, which in effect means that
there's no placement capacity in this vehicle, neither 7.1 or 7.1
a placement capacity. So if if IQC needed to raise
more equity, they couldn't do it via replacement without
shareholder approval takes time. You could do an entitlement.
So far it's a different thing. But again, you know, there's
there's a timing factor. So yeah, Topanga's intentionally
wanted to not provide placement capacity to this company for
some reason. Exactly.
There's a that is. The reason?
Before when they lobbed a bid. Maybe they see some sort of
writing on the wall, maybe they don't want to just sort of put
more cash in. It's a, it's a distressed asset.
Yeah, yeah. I mean, this company can't raise
one more dollar from equity. Without and it's already been
recapped. Yeah.
A couple times. Couple.
Times the tolls. The tolls got security.
Yeah, a pretty, pretty egregious sort of debt debt terms.
Can you can I see a scenario where where IQC gets the rail in
place, draws down the debt, refurbs the wash plant and
starts making money and all that sort of stuff.
There's a chance. I don't think it's a my greatest
probability chance at the moment.
I think there's a lot more factors working against it that
could see this not go so. Well, so you put more money on
Hemi? I put more money on Vital
getting 100% of this. These guys are between a rock
and a very, very, very hard place operationally.
They've got, they've got to pull off everything to have half a
chance, like you said, all those things and, and some, you know,
that they need to do everything they can operationally.
And even then they're in the hands of the creditor.
They don't have capacity on the the equity side.
The creditor will put on the squeeze.
If there was any other trying debt, they try and do something
with, you know, they, if they're going to be unfriendly about it,
they could just be looking right over their shoulder and waiting
for the company to to sort of slip up.
You know, all the while you've got your big debt pile that's
just growing and charging 20% interest.
That is not where you kind of want to be at this point in ramp
up. Ramp up is super hard as we
know. So I mean, fingers crossed
there's an, there's an outcome for equity holders, hopefully
something, you know, we can come to some sort of outcome where
the mind works well and in turn it, it makes money and they
don't get completely squeezed, but it's it's a bit out of their
hands the way I kind of see it right now.
Jeez I hope they got some bloody Qantas points with that debt.
If they're paying 20% interest it's like having a freaking
credit card. Bloody hell.
It's just about that bad. Hey, yeah, yeah.
The, the, the blocking the placement capacity is an
interesting one, right? Because maybe maybe some of
those things blow out from a timing perspective.
But you sort of want the company to have the ability to raise
more equity as it needs and all that sort of stuff.
But their ability to do that, it's just been Hanford without
shareholder approval thanks to Japan, which is still confusing
to me, to be completely honest. Yeah.
And that's why I sort of set it up front.
I mean, imagine these guys actually do everything
operationally and they can get to that point and they've got
line of sight to where they can make money.
You know, they're higher on the cost curve, but if things sort
of go their way and they can make money, the commodity price
goes in their favour, then there might be a point in time where
there's another sort of partial recapitalization of the business
and it's a bit rejigged from that debt to equity kind of mix.
And maybe shareholders would be willing to tip in.
But right now they don't really have that on the table.
And so, yeah, we'll sort of say over the over the next year what
what kind of happens. But yeah, like we sort of said,
rock and a hard place the. Fucking confidence oozing out of
you about this one. It's an interesting sort of
narrative and like, you know, we want to see them sort of get up
and kind of do well, you don't want to see creditors swoop in,
but have they got a bit of a, you know, loan to own type of
mentality here? Maybe they do.
The choice of debt. Exactly.
God is debt. Ever been this dirty of a word
as it is in this mining era we're in now?
I wouldn't call it a a dirty word.
It's just all in kind of proportion and and with this
company right now, it's just a bit out of proportion.
You know, I mean, what, what Daco and Fisty sort of spoke
about when we spoke with them half, half a year ago, it
actually really stuck with me. Like I do think about that and
you know, the idea of degrade, for instance, being able to to
get there and that risk being a bit more buffeted.
Forget the paid, but then be able to get that mine online,
you know, with a bit less risk versus a single asset producer.
Thinking like that and what the appropriate amount of debt and
equity is, is, you know, been a big sort of lesson.
You know, when things go well and your ramp up goes smoothly
and the commodity price helps you out, you think, oh, why
don't I just do it a bit, a bit more debt.
But, you know, look at the alternative, Callitus at other
companies, you know? Yeah, they said they wanted
Spartan. Fully funded with equity.
And they were correct. Yeah, go darker.
Go fisty shout. Out boys, if you're.
Listening. Carl.
JDI think after that mate, I want you to keep it going.
I want you to bring it home with the partners mate.
Just why not put some energy into it mate.
Massive thank you to Mineral Mining Services.
Grounded Sandy Ground support, CRE insurance, K drill, Dysat
and saltpush contracting Udaru Money miners udaru.
Let's go get pissed. The information contained in
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