Righto buddy Miners Thursday, nearly the bloody weekend it's.
The last day of the week. And for?
US nearly nearly the time that new shits coming out for Axis
mine and technology exciting. Ohh, within the month I can feel
it. I could feel it and I'm excited.
And you'll be hearing it about here first.
No, probably other people have heard it, but like Jesus Christ,
I can't wait. Axis, get on it.
Trusted advisor still on survey instrumentation.
Getting a bit. Sleepless at night, Maddie.
Oh, I'm so excited. No, oh not.
I'll need to get an MMS JV so I'll get 8 hours sleep.
People will. Understand that tomorrow.
You'll understand that tomorrow, right?
What do we got where revisited min Reds a bit.
They've poor bastards continue to get hammered on the share
price. 31 bucks today. Far out bloody times can.
The tide can turn very quickly. Coronado also hammered today.
Yeah, a bit more of their their own kind of doing there did get
whacked around by some weather events.
So it's come off the back of a production downgrade.
Yeah, Jay, say you're getting into the world of bauxite.
Go Honda Queensland. Maddie.
Maddie Metro Mining get going on mate.
You are diversifying away from the merchants and I love it.
Diversifying. I love it.
That's a diversified ATF. And mount Catlin use out of
mount. Catlin proposed care and
maintenance next year. So right, let's lay her away.
Me and Rez bring up the bring up the Spark chart.
I think we've got a spark replay of I guess what's happened to
the stock. But yeah, 31 bucks today.
Yeah, poor Jesus Christ, considering the highs of 80 odd
last year, yeah. I think it I think it touched
90. Yeah, it was, it was pretty
pretty. It's fall from grace, but that's
it's leverage, right? I was just going to have a bit
more of a chinwag because I just think it's the most captivating
mining stock at the moment. Like, you know, this is yeah,
like, I mean, we're watching in real time sort of, you know,
billions of dollars of market cap kind of just continue to
kind of come off, you know, each seemingly each day or whatever,
but. Yeah, the poor Mr Ellison yeah
on Piper is I think going from yeah one and a bit billion down
to 600 million the. Equity of the.
Equity value of mid raise a lot are just huge movements yeah it
hasn't sold any salts doesn't matter till you sell it but but
just on Piper yeah yeah big. Move and I think a few things
have happened since we didn't episode last week on Thursday
because that was the the day that they had their earnings
call and earnings results sort of went out the evening before
the the things that have happened since namely share
price pelted like 30% lower since the the pre earnings close
spark charts pretty you know that was that was a story there.
Second thing, I think that that that's happened since then.
If if you were reading Bloomberg last night, you would have seen
Bloomberg run this story. It says traffic euro struck $400
million cash for iron ore deal with Minrez.
Now it's it's not often we're actually onto a scoop before the
excellent business journals of Bloomberg, but in this case, the
readers of our daily email that director special would have read
about this eight days before Bloomberg, because we put the
rumour in our word on the decline section in the directors
special. So just a reminder to, you know,
any of the the listeners out there or viewers out there that
haven't yet done so if you want to get big scoops while there's
still rumours before their Bloomberg News articles and
pause the podcast right now, head to moneyofmine.com.
Put your email in there, click the confirmation email that that
that comes your way and and you'll get our rumours in your
inbox every single morning before they unused.
I'll still love Bloomberg just in case they want to buy us
later. Relationship.
Good, you know. The other thing that's happened
in the last week is I, I always sort of brief bounces on way and
it's, it's you know down US $10 a tonne in kind of no time at
all. It's you know about US $92.00 a
tonne for the 62% fines spot market on the on the index
there. Because it cracked.
It briefly cracked 100 again, didn't it?
But not for frigging long. And you had the there's even
like Chinese media describing the the bounce as irrational.
That's kind of how it's interesting to see that sort of
sort of commentary come out. And I think like it's, you know,
it's important that there's a couple of things got to set the
record straight on from last weeks episode number 1.
I made the unforgivable error of fucking up my currencies
fireable error in in banking that one.
So if my numbers were a bit off to those who are really in the
details because they were off some.
And like, for example, one of the claims I made was the gross
drawn debt was equal to min versus market cap in, in, in,
in, in equity sense. So which which is not right
because I, I had in my head the debt was U.S. dollar denominated
and scratched that, that was oddly denominated well in their,
in their financials. But kind of interestingly, since
the, the, you know, since last week's episode and as, as the
share prices continue to, to, to fall off, that claims not too
far from the truth. Now, if you, if you, if you
throw in the, the $1.8 billion payables into that kind of gross
debt mix, which is a bit cheeky, then then yeah, you, you kind of
that claim kind of stacks up now, which yeah, kind of didn't,
didn't a week ago. But the far more important thing
though, is than than just, you know, that silly kind of ratio
is just, is just min res's ability to service their debt,
right? Like that's what kind of that's
what the market kind of cares about is they're going to be
able to are they going to be able to service their debt and
they're going to be able to generate the free cash flow to
to, you know, to to pay this big, big growth kind of mining
stock story that, you know, that they that they sort of envisage
for themselves. And, and I suspect the share
price movement of the last week has has had a lot to do with
with recalibrations in this respect, sort of estimations
from my side in the street. Just just in in relation to
this. I think, I think, you know,
everyone seems to to be so bearish.
I and all kind of all of a sudden too and and you know and
that's just that's just kind of everywhere you look people
everyone just talking about how bearish they are and all kind of
sort of all all happened at once pretty quickly there.
And I've seen some numbers in the street forecasting means
peak net debt to EBITDA reach 6.8 times in in FY25.
It's pretty pretty hefty. But you can imagine just how
sensitive like that ratio is to any changes in commodity price
because that that hits you, you actually, but during the day.
And I think finally, I thought it'd be worth just sharing a
couple of tweets I've seen the last few days.
As you know, there's a few kind of doing the rounds.
You've got Emmanuel debt he posted today.
Never underestimate how quickly the market can rage quit and
over leveraged cyclical when the tide goes out.
So is is that sound? Like when it is when it turns,
it turns freaking quickly and like, yeah, destructively.
Yeah, it's and I mean his point there is an over leverage
cyclical and like I think that's a fair characterization because
yeah, like because they're the the the leverage is, is what it
is, you know, picking up whatever 6.8 times if that
numbers are out or whatever. Like it just because there's so
much dead in there. Like we we know leverage
amplifies the upside when the times are good, but also
amplifies the downside. It's and that and that point's
kind of teased out in this this next week from David Beth and
Jones. He goes what it looks like when
the balance sheet is, is more your problem rather than just
the commodity price moving around.
And this is a really interesting chart because sort of indexes,
you know, Rio BHP Champion 9 FMG to Terra Min Res all to the 62%
kind of fines price. And you know, you can in the
kind of indexes the most in sort of 2022 and it's it's pretty
stark what you can see there is like this just absolutely kind
of amplified downside response in the latest kind of trend
downwards in the in, in on oil price and that's just that's
leverage to the downside. Yeah.
How much do you reckon is what are you, what are you
attributing to the the thoughts that they might have to capital
rise to get themselves out of it being?
Is there a bit of that being attributed to the sell down as
well or what? What's the talk on the street?
I mean, maybe like I don't, I, I don't know if they, if you, if
your first protocol is, is a cap raise, you'd probably look to,
you know, address some of those sell down opportunities that we
discussed last week as opposed to to cap raise straight away.
So I don't necessarily, I just think it's, it's really like
everyone's, everyone's looked at the, the earnings numbers and
everyone's got got me thrown off guard.
No one kind of all the operating cash flow was basically just
trade payables build up to like the, the, the, you know, there
was a lot to be said for, for the, for the, for the lithium
kind of real, real production numbers and all that sort of
stuff. And, and how that's unfolding.
I think 3 the real the real is the realisations on the
production at at Onslow was probably lower than people were
expecting. Just like what what realisation
were they getting on the, on the index compared to what people
are factoring in and kind of how's all that, that flow in?
But you know, more than any of that, it's just your final price
goes down by 10% in the week like it did well, someone that's
like, you know, got six times like net debt ratio peak
whatever it's gonna it's gonna go down by a lot more than 10%
like because you leveraged. I think you should add .4 was
the the CapEx number. What they still need to spend,
you know, 1.95 billion Aussie over the FY25 was also
substantially higher than what people had estimated.
Yes, yeah, yeah. And there's, yeah, there's,
there's, there's like a bunch of other considerations too, Like
they're not immune from kind of fluctuations in, in FX as well.
I mean, the debt's denominated in a lot of its denominated U.S.
dollars. What happens if if demand for
and all kind of rolls off a bit, then what does that do to the
Aussie dollar and what, you know, when their cost is
denominated Aussie dollars? What does that, what does that
mean for, for men's as well? They can kind of cop it up from
a few different angles. If, Yeah, final demand sort of
Peters out for for extended period of time.
Yeah. So look all eyes on them that
this is maintain the most interesting corporate.
Story would it have to this would have to be the one of the
more critical points of their whole not too up on the min rest
long term history, but this would have have to be one of the
most critical times in their their existence.
While they've been the size they they are for sure.
Well, you think of just the, what is it plus 20% return on
capital invested capital for so long.
They've obviously grown, grown, grown, grown.
But yeah, this is a point where it's just really flipped.
I'd love to know if there was any other time in history of min
res when, when they're under this sort of pressure relative
to the size they are. This would have to be up there
there. Yeah, they've never really been
been of this scale as a company sort of grows.
So if you frame it like that, definitely, I'm sure any company
over a, you know, 30 year history is going to have points
that are touching go, especially in a cyclical industry in which
we're in. You know, you're gonna but
they've become more and more the the owner of mines rather than
just the the person with the contract to operate them.
So that puts them at, you know, more of the whims of the
cyclical prices. What do you think's their first?
Besides selling down those lithium stakes that are doing
nothing? What about on the project level?
What do you think their first port to call to potentially sell
some to get something? What do you think that first
bits are if I mentioned it in the call?
Yeah. If I were them like I wouldn't,
I'd actually, I actually think I'd get Max value by packaging
all the lithium together and selling down 49% of that.
That's what I'd do. Like the whole lot.
As opposed to an, you know an at an individual.
Asset level exactly. Yeah, just call it.
And then it kind of sets you up to the ability to down the track
even sort of spin out your your remaining kind of controlling
interest in that lithium business and things like that
where you could get a a rewrite on, on, on that.
But yeah, I would, I would do a minority sell down of the entire
lithium business. I think that would get Max
value. Is that is that easy enough done
when you've got JV's with Albemarle and gang fan and then
you get into JV on your side as well?
It's. Not easy, but.
Make it a bit complex I would assume.
It's not easy, but it's happened before like.
You'd be the teleson, You'd be the Tianchi.
Sorry, exactly. And Teleson with the 26%.
You'd be the tlar become the tlar.
Yeah, you could. Dominant party partner in that,
though, yeah, as we've learned is important.
Yeah. Yeah, yeah.
TLEA becomes, you know what, Min Well Min Res, lithium, Australia
tie and then yeah, min res are in 51% of that.
Yeah, but the very way they the the random one to lift the
bloody market gap for them is a bloody big humdinger of an
exploration discovery that had that had changed the bloody
thematic probably just need to bloody get drilling and every
driller that's could do it. It's going to be at the 80th
Drill 24 conference. Let's bloody get put a bit more
positivity into it. Perth 15th to 17th of October,
but not. Far.
Away oh mate, I cannot wait to be in a room full of drillers.
I'm going to get a full sleeve tap when I when I rock up mate,
you want to see the latest and most exciting drilling
technology going around. You want to know who the who's
who are in the drilling industry mate, all going to be in run one
room. We're going to be there.
We're all gonna be there. This is gonna be there K drills
gonna be there. You can meet rhino and druba
mate. Bloody CRE insurance is gonna be
there like it's like a bloody sponsor field day for.
US Money Mine Festival I. Think I'm.
I think I'm even doing like a pre start in the morning on the
mic and maybe some panels after lunch.
The lunchtime post post lunchtime panels might be
interesting after. I've had a few points with Druba
but mate link is in the show notes.
Get your tickets 15th to 17th of October and it is going to be a
Corker. Can't wait.
It's bloody. Oh, it's very exciting.
Cheers idea. I love a good, I love a good
conference. I'd rather the conference not to
be in Perth maybe, but. Anyway, who knows, and I'm a as
we know, Ding Ding on on Mens as well.
But moving, moving right on from that bit of I.
Thought you're going to say idea.
No. All righty, all right.
Unfortunately not. More positive news, but so.
We need ads to make it like just to lift.
The lift the spirits there's. Just the energy shit.
Ally will be talking about something a bit more positive in
a moment, but we're going to talk about Arcadia and Lithium
first, obviously owners of Mount Catlin following the.
Merger. Merger of mergers.
Exactly. Well, said Maddie.
So yeah, unfortunately Mount Catlin is going on care and
maintenance. I think the writing was kind of
on the wall. After what Paul Graves, the boss
there said around about the time of diggers, just sort of
indicating that these these lithium prices really hurt.
So the the timing of care and maintenance is after they've
completed stage 3 mining and oil processing, which will come in
the first half of next calendar year.
So there's no word on how many jobs are going to go.
They've they've sort of said that they don't intend to close
Mount Catlin. This is care and maintenance.
There will be more details coming at the Investor Day on
the 19th of September, I believe.
But just, you know, we send our thoughts out to to all those
affected by this obviously a pretty tough time for for
Ravensthorpe and the obviously the the broader mining community
right now, but. Yeah, especially Raven saw
considering first quantum shut as well.
Yeah, now this one. And like, you know, this was how
quick it can turn like they were considering like doing
underground feasibility studies or starting to look down that
road for Mount Catlin. So and it goes from potentially
going deeper to care and maintenance.
It's fuck. Jesus Christ.
Maybe look at how much the independent expert valued Mount
Catlin on when they did the the deal.
It was something like US 600 million bucks or something like
that. Wow.
It's wild because what did it have?
4-4 odd years of mine life, something like.
That, yeah, plus the, you know, potential to go deeper.
Yeah, of course. So I think they're actually
they're going to continue to do that sort of stuff in the
background, but that's not helping anyone right now.
They did wrap a couple numbers around it.
They said this expects to increase net expected cash flow
over 24 and 25 by cumulative approximate US 75 to 100.
So I guess that kind of gives you an indication of how much
money was going out the other way prior to this decision.
I think it you know, taking a step back from Arcadium and
looking at the at the leaf industry more broadly, it is
interesting we're seeing a bit of a supply response now across
the industry. So the numbers were very up and
down at Mount Catlin, you know, over the calendar year 23 is
240,000 tonnes, 5.3% spod. FY24 was sort of circa 130,000.
You know, we've seen I mean res we were talking about just
before Matt Marion that their 50% is going to come down from
220,000 tonnes to 160,000. So there's a step down there.
But on the other hand we've seen pill Gangora that's going up to
825.2% stuff. So that's at 120,000 tonne
increase in the market. Green bushes were talking about
another sort of roughly 100,000 said those ones.
You know, in WA they kind of sound like they're, they're
netting themselves off, but you've got also Mount Holland
adding a few more as they they ramp up.
So things are kind of happening. You know, there are, you know, a
supply response, but it's definitely not even across the
board and it's definitely not what I would have expected to
happen with prices coming off over 90%.
I think there's unfortunately still a bit more to come.
You've got, you know, we haven't even mentioned Kathleen Dowley
still still coming online, you know.
Yes. They haven't even started
stopping yet a lot. I think they've got their open
pit or they're running through at the moment.
I think that they produce 10,000.
First shipment that's going to go out next month.
That's just got announced yesterday, yeah.
I reckon look at that bloody tent there, that the stockpile
of spot it just for when you think about the whole thing,
what they would have went through to get that fucking
flotation working and just everything, just to see that
pile of dirt, you'd be like, oh thank fuck it worked like good
on. It's a bit of a win worth, worth
sort of celebrating, but they've got a lot of work ahead of them
obviously and they need a few things to to go in their favour.
So that's the well 130,000 tonne here, but not really moving the
needle in terms of what's coming out of the market.
As you said, I think there's if there's going to be a the supply
response and curtailing, there'd be a lot more to come to
actually affect things from pure supply.
Absolutely. And as we'll get into the
fortunately. Then there's the demand side
too, right and and like it's easy when things are dire, it's
kind of easy to forget that the the demand story for lithium is
still like like as far as comparing all the commodities,
it's still like really freaking like got a tremendous a serious
forecast growth right which. Is.
Oh yeah. Shit.
So, you know, the demand can catch up the supply and catch
people off guard on the other side of things, but it doesn't
look like it's in the short term.
Yeah, yeah. And it's like who can survive?
It's about surviving like to because as soon as you go into
care and maintenance like you're it's the the race start.
Like you can't just turn it back on.
Yeah, and you got to retrench people then you got to re
recruit. And it is such a fucking hard,
like a big decision to make. I reckon Arjun Murdi, who we
spoke with a couple weeks ago, he sort of, you know, put it in
the best words. I really loved how he sort of
expressed obviously talking about oil and gas companies, but
just the contract concept. Of fortress balance sheet and
you want that defensibility when you're in a cyclical industry
and that really, really stood out as a takeaway from that one.
And you know Pilgrim Minerals, yeah.
And for people, yeah, I mean, W farmers have got a big balance
sheet as well for yeah, for Mount Holland.
Silver minerals, is that good? They're still expanding without
dilution. Yeah.
Yeah, exactly. So I'm sure that.
Picture as well or that the graph rather in that the the
city report that came up the other day as well basically
saying yeah, basically saying at current spot pluses only green
bushes kind of marginally makes a bit of money and no one else
does. Yeah, yeah, that's crazy.
That's such a Flack. Oh skirt.
Now if you'd have what? What's making money?
Green bushes and yeah, stuff out of the out of karma like so I
think. I think people will be keen to
hear a bit more and we actually spoke a lot about it in a
interview that we're going to check up tomorrow.
And yeah, one of the the key elephants in the room that we
haven't spoken about is what happens to lipid light
production out of China. And that, you know, we don't
know, but something could happen on that front and it speaks for
a large portion of supply. And you know, as Minarez again,
case in point, things can move bloody quickly in in
commodities. Well, and the consensus was it's
still gone a little bit, a lot of production, yeah, still shit
load of it. Yeah, be surprised.
Like who would have thought that one a year ago that they'd still
be churning out at 700 roughly bucks.
Yeah, that's crazy. I think there's a, there's a
couple other takeaways that are kind of interesting as well.
One perhaps a bit of a smaller one, but NWH or that's the
that's the tick over NRW the the contractor they signed just a
year ago a $332 million three year contract there.
So if you do just a bit of rough maths on their EBIT, EBITDA
margin, that is a $7.5 million loss for the calendar year, a
bit more given not too far into it.
So that kind of is roughly a bit under 5% of their EBITDA for if
you look at the FY24 numbers. So it's a bit of a hit.
They actually haven't mentioned anything about it.
I guess they kind of deem it immaterial at this point in
time. And the other point that I
wanted to talk about is wage pressures, wage inflation or
deflation now across the, the mining industry.
And we'll pick up a chart here that I, that I came across that
I think is really interesting. You can really see that wages
are starting to go the other way.
You know, it's a trend that's really turned since sort of
2020-2021 period. It was, it was only going up and
then very sharply it's, it's pulled the other way.
And I think there's a, a few 2nd order effects of this that we
will see. But you know, first and
foremost, hopefully that allows the the mining companies to have
a bit more breathing room and see themselves through the the
downturn. I think I was speaking to some,
I was speaking to a project manager for a mining contractor
actually the other week and asked this specific question.
I said, have you as there is the ball getting back in your court
yet for wages, because you know, when there was that deficit of
workers and you know, people and it was happening.
I think when I left, like before I left and then it kept going
where, you know, people are getting paid and seen in amounts
of money to go to a new job. And just that was how you
attracted people was buying more to get them from somewhere else.
And once you're at that level, it's hard.
It's very hard for the companies to just say we're just cutting
wages across the board and takes a because then you just people
might leave for somewhere else. But it's at the point now where
you know, people are coming into it's like, look, you're, you're
not as financially important as you once thought you were
sunshine. So you're going to be going back
down to here because you're getting paid this, but you're
performing at this level. So, And so the power has gone
back to the the contractors in the companies, not the actual
workers, which is just a a cycle that will go on for the forever
in time in mining. But that will, yeah, as you
said, there's usually a bit of a delayed response, but then it's
sort of, but it can happen just so quickly when it turns the
other way, so. Yeah, but, and it can be, you
know, it's a bit grim to think about, but it can be wage cuts
across the border, it can be a lot of job cuts.
So there's a few ways to kind of frame it and.
Yeah. And then, but then the when
you've got the job cuts and you've got more people applying
for jobs, you've usually got the you can get them for cheaper.
Yeah, exactly. And pick the cream of the cop
too. Yeah, exactly it.
Was one of the one of the takeaways I had even listening
to the mid race call this week was like, you know, hearing the
apprehension that that Chris has in, in laying off like, you
know, skilled labour because it's the it's the consistency of
the same person rocking up to the same site over a long period
of time that drives the efficiencies.
And so, you know, yeah, I think that just speaks to the more
friction that there is when it comes to putting putting an
asset on care and maintenance things like.
That oh shit, yeah and I and I think a lot of the mid minres
looking from the outside and I think minres is like it's a it's
a bit of a go getter culture a lot there's a certain people
that work there. It's not a bloody, I think it's
a bit different to BHP law. You expected to go there and
bloody work. So when you you lose those
people and then you have to ramp up again if you can't get those
people. And it's retaining that quality
is so important for longevity. But when you're in the not, not
survival mode, but like really austerity sensitive times like
this when you're fucking like, yeah, what do you do?
So. Yeah.
The decision gets made. Bloody morning contractor.
Jeez, that's even worse than bloody iron in the morning, I
reckon. Oh I can't bloody do.
You reckon Mount Catlin would get snapped up?
It's going to ask you that one, Maddie.
What do you reckon? No.
Would they pivot? Would they pivot?
Yeah, that's probably not a bad idea actually.
Rivo bit of infrastructure. There you can repurpose
infrastructure. How would you go about?
It no shame in pivoting the gold or uranium.
Or antimity. Or antimity right well that well
OK, if you're going to go across all niobium or you could go
fucking everyone's chucking a resource of that out at the
moment. Bloody get K drill to start
pepper and holes down there assay for everything.
I think that's the best chance to revive the.
Full elemental. Chart full elemental bloody
analysis. Just bloody assay and diamonds.
Kaydrill ripping them in there the right that'll I reckon.
Kaydrill could be integral for the rebirth of Ravensault, I
think. Go bloody and pinch first
quantum What pinch bloody first? Quantums one down there too, but
nickel usually gold around nickel.
Just start peppering the joint. I think the only way for us to
get out of this glut is K drill expiration.
The money you'd save employing get K drill down there.
You can you pick up man, Caitlin.
Yeah. Exactly.
Go bloody. They're at drill 24 as well.
Go bloody, go mate. And we're actually selling free
tickets. Come have a pint with me.
Druber and Ryan O'Sullivan. We got I'm doing an event.
What a bloody honour. Come back, come meet the guns.
Absolute JC's are blacks. Arsene Diamond drilling experts.
OK, get them down at Ravo. Ravo.
We're trying to get the bloody the ads to keep some positive.
Yeah, it's. Slowly increasing as the show
goes. JC Bauxite.
She's I love bauxite. So this bauxite in Queensland,
So Metro Mining put out a operational update early today
saying they achieved a monthly record of around 700,000 wet
metric tonnes of bauxite shipped last month.
So for the context, Metro is a book site producer in literally
the most far North Point of QLD possible.
What, near like Cape York Peninsula is it?
Yeah, yeah, right. Yeah, so right up there.
And they started mining their their Bauxite Hills mine back in
2018, about six years ago, so. Even the bauxite's probably
dehydrated up there, they'd be sweating that.
Much. Yeah, probably Jesus.
Christ. Oh jeez, they get a bit of rain
here and there up there as well. Yeah, they get a pretty, pretty
mean wet season up there. So and the.
So this increase is largely a result of the fact that they've
expanded the operations there. So now that a lot of this has
been put in place, all these sort of key expansion components
around screening capacity and transshipping capacity, this has
resulted in this increased production capacity.
So August was 13% higher than last month and 29% higher than,
you know, at the same time last year.
And so far they've sort of shipped just shy of 3 million
wet metric tonnes for the year and all those expansion
components I've, I've put into sort of operated at 7 million
tonne per annum, right. Essentially, they've been fully
integrated now and are the operating at or very, very close
to a name plate, which I mean the timing of this is pretty
great. As far as the commodity price is
concerned, I mean bulk site prices, the Aussie benchmark
price is up 48% since January 22.
And you can see here this is sort of a bit of a chart looking
at their daily shipment sort of rates from 22 and 23 in those
sort of grey lines and then now this calendar year 24 in the
orange sort of as they've been moving up there.
Ali, give us a bit of the, the, the back story because Metro's
really interesting one. They had a, you know, as we've
kind of said in the past, they've had leverage on both
fronts, you know, and it's been, it's been quite a journey, but
things have really started to swing in their favour lately,
hey. Yeah, 100%.
So during COVID they had an absolute shocker over time
because as we remember, all the shipping rates, ocean freight
rates were just going through the roof, almost doubling in
some cases. But then you had Australian
bauxite prices essentially flat for, you know, 20/20/21.
They had a pretty, you know, leverage balance sheet.
They had to do a few save raises and dead extensions and, you
know, convert this and that to equity.
It was just pretty full on. I mean, look at the spark chart
here. You know, they went from sort of
as high as $0.12 to mid ones very, very quickly.
But things started to turn around from about last year.
The ocean freight prices really come off.
They've sort of stabilised now. And as we sort of said before,
bauxite prices have have increased a fair bit since two
years ago as well. The.
Market's really tightened there and, and you know, the, the, the
story when you talk to the, the very few bauxite experts out
there and illuminate experts is that, you know, a lot of, a lot
of what, what China had brought online when, when they, you
know, became kind of superpowers in the whole alumina complex,
sort of depleted. And that's why I kind of had to
go to Guinea and, and, and, and, you know, even go out there to
start bringing in, in bauxite was because they're, they're,
you know, domestic reserves are, you know, becoming higher and
higher cost and, and fewer and fewer of them.
No 100. Percent.
Hence the fragility in the system now.
Yeah. And I mean even in in this graph
here you can see the the Guinea sort of benchmark process for
bauxite sort of experiencing, you know pretty similar hefty
gains as well. And then even as far as Metro
was concerned, I mean they, they actually achieved their, their
guidance last year or just shot 4.6 million tonnes shipped.
They announced FID final investment decision on the 7
million tonne expansion, as we said, sort of through expanding
this sort of trend shipping and, and, and screening capacity
that's all sort of fully commissioned and ramping up.
Well, now they have a revised shipment guidance for, for this
calendar year for six to 6.4 million tonnes and that was sort
of reduced down a little bit due to sort of bit of an extended
wet season at the start of the year.
Their balance sheet has sort of been progressively cleaned up.
I mean they raised $45,000,000 in May earlier this year to it
was essentially called equity for debt rise.
So now they've got about 13 a bit million cash total debt, 88
million as at the sort of 30 June call in that's made up of
Nabari debt, sort of shareholder loans and also an Abari royalty
as well. And metros sort of indicated a
lot in their sort of quarterlies and recent presentations that in
expects to reduce net debt by another sort of $22 million this
half from operational cash flow. And that sort of made me
actually sort of go back and look at the numbers sort of how
they've been going recently. So make they've been making a
small site EBITDA the last few quarters and the the last half
yearly they just put out for 30 June shows they're not
operationally cash flow just yet.
And you can see here this is an extract from the call as far as
the pricing costs, site EBITDA and things like that.
And then the half year report also shows sort of in the notes
section there contractual maturities of non derivative
financial liabilities. Basically what do they have to
pay, what liabilities do they have to pay within the next
year? And they've included sort of
payables in that as well. And they're saying that they
expect $109 million to go out the door within the next year,
so to 30, June 25, which is a lot of money for a company
that's not yet operationally cash flow positive.
So that's super important for them the next couple of quarters
sort of to make those, those requirements that they've
outlined in their half yearly, the expansion CapEx side of
things. I mean that's sort of pretty
much all spent now. So they should have a pretty
clear runway as far as investing, you know, sort of
cash outflows and metro sort of reckon, you know, they're at a
cash generation sort of Inflexion point now and they're
sort of targeting a like a 15 Aussie buck a tonne site EBITDA
for for this calendar year or $18.00 for next year.
For context, the last few quarters just on the the rough
numbers saying they're generating around 4 bucks a
tonne of site EBITDA. So is it similar to like it's a
bit of a sentiment play at the moment, like similar to an aura
Banda? Like it's like that hasn't
really hit the mark yet, but it's like if all the ducks line
end up in a row, it should. I I feel it's very much yeah, as
it's a sort of a sentiment and a bit of a, a bit of obviously,
you know, leverage, leverage to the commodity price sort of play
as well, I mean. And reducing their costs.
And reducing, reducing their, their costs as well, you know,
with the expansion too. So my takeaways from it is, I
don't think they're out of the woods yet, but production's
going the right way, box up, pricing's going the right way.
The balance sheet is better, but it still makes me a little bit
nervous. But the next two quarters are so
critical from a cash flow perspective, which will go such
a huge way to sort of show people how well the the the
expansion to 7 million tonnes is working.
And also from obviously a cash flow perspective to sort of
really get that net debt a fair bit lower because, you know, we
certainly don't want to see another, you know, equity for
debt rise like they did earlier this year.
So it is very much a still, you know, at an Inflexion point.
So yeah, keen to see them get it underway.
Yeah, good, good in the woods, JC, but you're venturing out of
the comfort zone. Take it on bulk site.
That's out of the Manchester so. Proud.
Oh good buddy. There might be some up there,
who knows. Any bulks hot in the merchants
in You didn't. I wouldn't.
You've been on. I'll check on one XR, check on
waggons. Think you'd want it much closer
to the port? Get that logistics.
Oh yes. True, companies like Metro are
the sort of like, yeah, the, the, the, the type of company
that, you know, some people can, who are really good kind of
resources stock because they, they look for companies like
Metro where they're, they've got a busted up balance sheet, you
know, kind of poor operational like like delivery history and
all, all that sort of stuff. But then if they get the
commodity cycle right, also if they're reducing costs at the
same time, you know, via some expansion and those, those can
be pretty transformative kind of moments. 100% and even.
It's like look at look at what Metro is off its base, off its
low. It's just kind of phenomenal.
And some people are really good at picking that those sort of
moments and they're kind of some of the lowest risk kind of,
well, lowest risk in quotation marks sort of, yeah, returns
that you can make in our industry.
Yeah, because it's really, I mean like exactly like you say,
Trevor. I mean from from the mid ones
where it was or low twos where it was for for a while.
It sort of got up to the, you know, fours, fives and sixes in,
you know, in the last last few months, which I mean, that's
that's pretty good in a few months if you're looking at it
from a returns perspective. And you know, they've still got
a bit of a journey to go as well.
So it could be, you know, potentially even more assuming
things you know go well and as as planned, so.
It's pretty fortunate, right? A lot of people were starting to
anticipate that. Yeah.
Hey, I think we're at the woods here.
Sort of, yeah. It reminds me of Saint Barbara
back in the day when I think they went down to about $0.05.
That's great. When they had the Solomon's and
there's another one and like, but it was like, they've still
got Gwalia. And once they flogged all that
off it went. There was some, there was a
truckie that dipped in like a good chunk of money and became a
millionaire, bought at 5-5 or eight cents.
And then it went back up into the 2 bucks and then became St
Barbara again after that. But like had that honey period
where it was just had Gwalia and it fucking ripped.
Yeah. It's.
A great analogy. I should have been on it.
All right. We're going to finish one day.
I'll go to get one one day, one day we're.
Going to finish on a, you know, a bit more of a downer note
after Metro, which is much more of a a positive story.
But Coronado was a, you know, fairly big news out today that
the stock got hammered on the open 15 or 16% down straight
away. And, you know, again, it's, it's
more problems at at Cara. It's been a, you know, a bit of
a, a problem child for for a while now and it was, it was a
downgrade. So they downgraded production, I
think 7 odd percent to 15.4 million to 16,000,000 metric
tonnes of production. And then of course on the back
of that you see costs jump up. So costs jump up from one O 5 to
110 bucks. You know, that's mining costs.
Obviously you Chuck on all your royalties and everything else on
top of that, but that's a 10% jump on that front.
So I think if you were to do a bit of a, you know, relative or
comparative sort of chart, Coronado has just had a terrible
sort of time. They've got assets in different
continents and of, you know, varying degrees of successful,
you know, in operations over the past few years.
And Cara's family been one that's pulled them down a lot of
bad weather and sort of flow on effects and they they've spoken
about, you know. Idling the fleet, you know, all
these sorts of things which might be short term good, long
term bad, all these kind of things to sort of give them a
bit more wiggle room. But it's been, it's been pretty
tough out there. So CapEx is still a decent size
number. They, they kept that the same.
You can see and the thing will flick up here that that stays
between 2:20 and 2:50 US for, for the financial year.
They did say they're going to probably come in at the the
upper end of that one with some work being accelerated into to
calendar year 2024. They also spoke a bit about
organic growth projects at Buchanan and Cara as well.
So you got Mammoth underground. Buchanan by the way, is the one
over in the States and they said they remain on on budget and on
schedule. So there's a a bit of positive
news there. And yeah, I think the last
detail to kind of note, which is something we've seen with almost
every Queensland coal miner, there was more sort of scathing
words around the, you know, quote unquote, extreme royalties
that have been hitting all the miners over there.
And that language hasn't really changed over the past year and a
half. And I don't expect it to, but
who knows if we're going to see any sort of, you know, changes
on that front? Here's a bloody question without
notice. A quiz.
Another one where you see significant rainfall.
You think North Queensland like rainfall?
Well, you get a lot of rain there and then the royalties and
where if you could pick where to have a mining project in
Australia taking into account rainfall like seasonality,
access to water, the quality of water, native tidal, ease of
operation, where would you pick? Good question I.
Wow. Like cat like like Kalgoorlie,
for instance, like water is a water's a challenge there like
you go down South Cambowder and that like the salinity of the
waters an issue and the amount of water. 1.
Model. Think of the merchants.
It's. Actually.
Green bushes is. Oh, that's what, that's what I
was going to say, yeah. Green bushes like that, you
couldn't build it today because. You can't.
It's. In the National Park?
Yeah, exactly. Yeah.
Exactly. But in terms of like probably
seasonality, I assume they got a lot of water.
It's also the right, it's also the right commodity, right?
You're not going to get a a cold Queensland type tax on on
lithium. I think that buddy.
I suppose that Murchison, Leonora, Leinster areas.
Probably not too bad. Not too bad, but then God was
even saying, I think the native title becomes an issue there as
well. Well, that's pretty difficult.
There's probably an issue everywhere.
Now. You go up north, pill, pill,
like you got the potential cyclones.
Yeah. The the operations you're doing
up there are just such massive, you know, open pit operations
which come with their own sort of challenges, native title and
the like, you know, permitting and all these sorts of things
so. Green bushes I wouldn't go to
NSW. No as.
Much as I love the place. Well, I think the question is
very much what would you do in 2024, right?
Because things change over time. Maybe South Australia?
What's that? There's a couple of those mines
that are right next to the Barossa Valley.
I mean, that's pretty cool. Hillgrove.
Hillgrove got it up. There's one, there's one there
that's yeah, it's, it's too close, too close to town.
It's they put a, there's a goldscoping study on one of
them. It's too, it's too, it's too
close, too close and they get permanent kind of thing, but.
Yeah, yeah. And I think there was a bit of
yeah, there was some easy that was a.
Really good question actually. Oh great, that green down South.
CFWAI reckon that might be the spot Maybe Ravens thought.
Ravens thought. I have heard the black cockatoos
a big issue if you're trying to build a mine down South now even
though. Yeah, yeah.
I think it could be hard to get. The whole environmental process
would be tricky. Yeah, yeah.
This is bauxite that. Yeah.
You know, scales many, many 10s of thousands of acres, Yeah.
So I think we're stand Tasmania, that's maybe tricky, pretty
tricky unionised as well. I think Victoria, that's bloody
ARB from permits like Australia's bloody ARB.
We're we're struggling to fall. I'll go on the Murchison.
Let's go to Murchison. Go to the Murchison.
Trying to think of an island somewhere.
New Caledonia, What islands are there?
Caledonia had that was the that was the nickel 1 wasn't it?
Was that nickel in New Caledonia at one stage?
One stage right now. Go get some they had.
The protests there this year. Go get some bloody phosphide
over at Nauru. Yeah, I was going to say the
islands of South America, of Chile and stuff, they were just
just bird shit that were mined for as long as they could be.
They were gold mines for a little while before all
disappeared. And pretty.
Sure, go Brazil. Maybe Brazil is the new hotspot.
Forget Australia. Why choose Africa?
Just cheaper. Yeah, you gotta be specific
about your country. So I think we've come to the
conclusion mining is hard. Mining is pretty.
Hard, good summer. Good summer.
Well, it's not hard to call Axis.
No. There's phone numbers there.
It's in the shine. Just bloody call.
Call Sean, Sean. He's a he's a guru.
Knows everything about drill hole orientation and
instrumentation. Legend.
You can see him at Adia. Drill.
Oh, nice. He's gonna be blind.
Oh, I cannot wait, cannot wait. And and Speaking of Adia, Adia,
Australian. Drilling Industry Association.
That's the one JD I was just tested yeah and MMS mineral
mining services verify Dosi underground Silverstone stop
scrolling too fast and. CRE insurance, Greenland's
equipment. Cage Hue, Spark and Hoodoo
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