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All right, my Manas, I've got a 
special chat that I'm excited to

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do. 
I'm here with the the founders 

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of Baza Capital, Braden and 
Will. 

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Thanks for joining me guys. 
G'day JD big fan of the pod, so 

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great to be here. 
Appreciate it. 

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We've got a heaps to heaps to 
talk about. 

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I was pretty excited reading up 
on your your funds history. 

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So I kind of want to start there
and I want to start with you 

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guys starting the fund January 
ish of of 2020 and just getting 

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absolutely smashed in the in the
first few months. 

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What what was that kind of like?
Talk me through it. 

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Yeah. 
I mean, we've been moonlighting 

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for a while. 
So we've got the funds set up 

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and the business set up. 
But yes, we did indeed push the 

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boat out in January 2020 and 
that was in our Baselhack 

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conviction emerging companies 
funds. 

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So right on the avant garde with
respect to small caps and you 

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know, risk being off for a very 
sharp period and and and a very 

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sharp decline. 
But you know, happy to say that 

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we hadn't fully kind of put put 
our cash to work at that point 

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in time. 
And we'd, you know, done a lot 

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of work on their companies that 
we, you know, put into. 

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And so we didn't need to make 
too many changes in the 

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portfolio, even though it was, 
you know, a pretty stark start 

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to the fund. 
And then of course you see what 

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happened, the V shaped recovery 
and it, it turned out to be a 

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great time to start a fund 
honestly 2020-2021 great period 

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of outperformance for us and 
small caps and junior mining, 

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which are, you know, the things 
that we focus on. 

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So we're probably pretty lucky 
in the end. 

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So how long did it kind of take 
to get fully invested in that 

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fund? 
You sort of get the cash on the 

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door. 
I'd imagine there's a lot of 

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fundraising that goes on in in 
the kind of year prior and then 

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you ended up having a bit of 
cash balance. 

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Just sort of reading through 
those, those monthly reports 

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worked out well in in hindsight,
I guess. 

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Yeah, it was I think rolling 
back to that January, the market

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was relatively toppy I think was
the the feel. 

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And then when we started 
deploying, it did take a lot of 

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time. 
I'd say we were probably 3/4 of 

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the way through when the initial
reports of what was this, you 

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know, emerging pandemic coming 
from China and and overseas. 

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So, you know, we had I think we 
all painted a pretty rosy 

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picture of that initial days. 
There were certainly some very 

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dark, dark times, but a. 
Couple of sleepless nights. 

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Many, I think there was, you 
know, genuine excitement with 

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starting something and then 
that, you know, goes in lots of 

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different emotions in that first
few months. 

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But I think the story of 2020 
and then large part of 20/21 was

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1 of genuine excitement because 
there was a lot of, you know, 

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opportunities to deploy money, 
obviously a lot of capital 

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raisings from that, you know, 
April, April, May, June period 

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throughout 2020. 
So it was, it was quite 

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exciting. 
I think the one investment that 

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probably marked almost the 
bottom of the market or 

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certainly from our fund was that
Chalice initial hit, which was 

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probably the towards the end of 
March, March 23 and and. 

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Had you owned Chalice before or 
did you own it in there, or was 

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that just something that that 
stood out at the time? 

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But very quickly then, we did. 
Yeah. 

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Awesome. 
Would have worked out quite 

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well. 
It did, yeah. 

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I think Chalice was one of the 
better performers for us in 

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2020. 
Certainly it's been a a good 

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holding for the fund at, at at 
various points. 

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We still have a small holding 
in, in, in the fund at the 

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moment with Chalice and I think 
that broadened pretty quickly. 

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At the time we were towards the,
I guess higher end of the metals

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and mining exposure, just to 
clarify to generalist fund. 

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So at the moment, we probably 
would have 80% of the investment

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sitting in industrials, 
healthcare, IT services and 

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circuit, 20% within the mining 
space at the moment. 

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In 2020, I think it got up to a 
high of about 40%, largely 

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through price appreciation, but 
also the opportunity set. 

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So you looked at a good few 
Goldies at the time as well as 

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well as sort of having that that
cash buffer. 

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So the the portfolio was pretty,
pretty stocked up with that 

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weighted to your producers. 
Did you sort of mix it or stay 

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where you the area you kind of 
know, know a bit better those 

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developers and that end of town?
It was towards that end of town 

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and clearly Gold had had a good 
time of it in 2020. 

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But I mean we try not to be too 
macro or make particularly not 

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make tactical decisions around 
macro. 

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And so Brandon and I are out of 
mining finance for the majority 

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of our career. 
And so gold companies, analysing

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them, doing due diligence on 
them, the personalities there, 

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our network which can kind of 
enrich that due diligence. 

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It was just a comfortable place 
for us to start our investment. 

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And so, you know, probably a bit
of luck that that ended up being

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a great place to be investing at
the time. 

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But yeah, we certainly added to 
it as that, you know, gold 

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environment was clearly opening 
up for us. 

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And then sort of just zooming 
out on the on the history coming

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through 2021, that was a hell of
a year, especially in the sort 

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of area you guys like to play, I
mean, for for most sort of 

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sectors. 
But what was that part of the 

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roller coaster kind of like flat
out every day a bit more 

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exciting, relaxing in a way, or 
is it sort of different? 

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Yeah. 
I mean, it was great to start 

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with the, you know, that initial
pretty difficult market because 

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you're haunted by that and it 
sticks with you and it and it 

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gives you a discipline that 
you're going to take through 

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your career with you. 
And actually in my career before

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this, I started in the year of 
the GFC. 

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So I had a had a very, very 
similar kind of baptism by fire.

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Yeah, you really do need to keep
your head. 

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There's plenty of everything has
a different more positive 

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complexion when you know, things
are going up and to the right. 

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And so we just needed to really 
make sure that we're still 

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investing on fundamentals. 
You know, we weren't grabbing it

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every piece of candy at the in 
the store. 

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And yeah, we're really happy 
with the portfolio we put 

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together at that time, took good
advantage of the bull market. 

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But yeah, have been able to 
still, you know, have good 

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returns. 
Speaking of candy, have a look 

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at this piece of eye candy, Paul
Natali from Grounded. 

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What a good looking rooster as 
I've alluded to before. 

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And mate, the precursor to the 
eye candy that is a grounded 

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can. 
Grounded village in 

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construction. 
That's candy. 

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This out. 
Wow. 

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I'm seeing bloody diggers with 
Grounded on them. 

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I'm seeing bloody grounded signs
everywhere. 

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Grounded you. 
It's Grounded gear that is a 

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full turnkey construction 
solution for the mining 

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industry. 
JA trap far. 

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Right camps look divine. 
Divine mate, anything that sits 

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above the ground on a bloody 
mine site grounded can build it.

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All your non process 
infrastructure, just get onto it

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right And and the best thing is 
they're building they're 

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bringing the building standards 
from the greatest country in the

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world to Australia, the 
motherland Sicily, right. 

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Unfortunately, looking at that 
photo before like Paul Mottoli 

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is married. 
So the closest thing you can get

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to Paul himself is a grounded 
camp, so. 

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Get yourself sorted. 
So so why don't we talk a bit 

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about the the fund, the initial 
fund that was set up. 

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The bars are high conviction. 
How many companies do you like 

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to hold? 
What do you sort of classical 

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holding periods if you like and 
all these kind of broader 

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details to start? 
Yeah, we'll go through the one O

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1. 
So as a high conviction, that 

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initial fund that we launched in
the start of 2020, it's a 

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traditional long only emerging 
companies fund only invested on 

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in the ASX as well. 
There are probably three key 

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differentiators to other 
traditional small cap funds. 

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The first being we take it 
relatively concentrated 

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portfolio. 
Our top 10 holdings would 

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probably comprise close to 7080%
of total fund. 

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I think the total portfolio is 
between 25 to 30 at the moment. 

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That's largely due to our 
approach of the mining tail 

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running a commodity bucket as 
opposed to an individual 

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industrial business. 
Has it has it been refined or 

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was it always from the go that 
many sort of companies that was 

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the the way you guys wanted to 
go about? 

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It, it's probably shrunk over 
time. 

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We, we are an emerging fund 
manager. 

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We always are quite 
introspective and wanting to I 

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guess improve and reflect what 
we have been doing. 

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And I think some analysis that 
we ran close to 18 months ago, 

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it was quite obvious that the 
largest holdings were 

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disproportionately better 
contributors to alpha, meaning 

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that even accounting for their 
waiting, they were generating 

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larger returns for unit holders 
than a tail that we were 

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maintaining. 
And it wasn't, we weren't 

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holding 100 companies. 
You may have instead of been 

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holding 25 to 30, we could have 
been holding 5040 to 50. 

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And so a lot of that centres 
around the reason for being more

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concentrated, having high 
conviction in a name and really 

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just keenness to keep things 
simple was the overriding 

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factor. 
And we looked at each other and 

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said, let's just build a 
portfolio of, you know, really 

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the core ideas. 
And for that there wasn't too 

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much changing within the 
portfolio. 

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A lot of it was just naturally 
letting those larger businesses 

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appreciate and probably taking a
more harsh view to the long tail

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that we were maintaining. 
That's, that's really 

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interesting what you say about 
the, the return sort of being 

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driven by those best peaks. 
Do you do you put that down to 

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putting more work, having more 
conviction? 

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Is that, is that a market 
structure type thing where these

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guys go into the Atfs, they 
attract more capital, more 

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generalist funds. 
Look at them. 

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What, what does it kind of come 
down to the the fact that a lot 

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of these sort of markets are 
subsets of markets end up 

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accruing to to one, one sort of 
powerful name, Yeah. 

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I, I think it's, it's not so 
much the size of the company, 

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it's more the size of our 
holdings. 

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So actually one of our best 
returners ever was only a kind 

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of a forty, $50 million market 
cap IT services company that 

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ended up getting taken over and,
and that ended up being a, a 

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00:10:32,600 --> 00:10:38,080
fantastic win for us last year. 
But it's, it's more so that I 

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think, you know, it may even 
sound obvious, but we have the 

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conviction to to make these our 
largest holdings and there are 

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reasons for that. 
It is the amount of work we've 

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done, but it is clearly the 
amount of attractiveness there 

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is there. 
And then these stocks that were 

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more sitting around than maybe 
1%, two percent, 3% of the 

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portfolio. 
Clearly we've got the foot in 

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both camp because we're not 
comfortable to put it 5% plus. 

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00:11:01,800 --> 00:11:06,600
And so it really makes sense, I 
guess that what we found was the

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ones which we where we did have 
that confidence were the ones 

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that returned best. 
So why not just cut out the the 

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ones that we didn't have the 
conviction on? 

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00:11:13,840 --> 00:11:16,760
Yeah. 
Yeah, I'm, I'm keen to to hear 

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how you find these names, how 
you screen for these names. 

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00:11:19,560 --> 00:11:22,920
And I think we should talk about
the responsible investing or 

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the, the mandate that you guys 
operate with to, to kind of 

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start with. 
And I think one of the one of 

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the questions to ask off the bat
is, is it kind of misunderstood 

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the the reputation of this style
of investing has changed quite a

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00:11:35,440 --> 00:11:39,120
bit over the the guys that you 
that the period that you guys 

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have been in kind of operations.
How do you think about 

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00:11:43,680 --> 00:11:48,040
responsible investing as a 
broader sort of sector or 

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00:11:48,040 --> 00:11:51,800
thematic at the moment? 
Yeah, I guess we don't think of 

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it as a sector or a thematic. 
We, we think of it as, you know,

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a philosophy, philosophy for 
investment and probably wouldn't

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00:11:59,080 --> 00:12:01,320
say it's misunderstood. 
I think it probably just means 

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00:12:01,320 --> 00:12:02,880
different things to different 
people. 

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00:12:03,400 --> 00:12:08,080
And for us, it's always been 
really important that we invest 

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00:12:08,080 --> 00:12:11,360
in line with, you know, our 
values and, and, and where we 

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00:12:11,360 --> 00:12:15,840
see the future heading. 
And so it's no surprise that 

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electrification and 
decarbonisation is a big theme 

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00:12:18,720 --> 00:12:22,280
of what we do, both in terms of 
what we don't invest in, but 

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also in what we do invest in. 
And then as an adjunct to that 

227
00:12:26,720 --> 00:12:28,800
and, and what's really 
important, particularly on this 

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00:12:28,800 --> 00:12:31,760
podcast is metals are such a big
part of that. 

229
00:12:31,960 --> 00:12:36,200
And so while we're responsible 
investment, there wouldn't be 

230
00:12:36,440 --> 00:12:39,000
many out there who are 
responsible investors who are as

231
00:12:39,000 --> 00:12:43,040
comfortable as us to invest in 
mining stocks and particularly 

232
00:12:43,040 --> 00:12:45,000
those that are tied to 
electrification. 

233
00:12:45,000 --> 00:12:48,160
So it was really important to us
to be able to kind of bridge 

234
00:12:48,280 --> 00:12:51,280
what's seen as, you know, kind 
of these two different sets of 

235
00:12:51,280 --> 00:12:55,040
investors, one that's, you know,
happy to invest in anything, 

236
00:12:55,040 --> 00:12:58,160
just give me the risk return. 
And then the others who are 

237
00:12:58,160 --> 00:13:01,080
more, you know, I want to invest
in what's good for the world. 

238
00:13:01,080 --> 00:13:04,680
I mean, we kind of see it as why
can't we do both? 

239
00:13:04,760 --> 00:13:09,760
And and so we invest with risk 
return as our first and foremost

240
00:13:09,760 --> 00:13:12,600
and you know as as a North Star 
as it should be for a fund 

241
00:13:12,600 --> 00:13:17,440
manager, we do cut out things 
and and we do add scale up our 

242
00:13:17,440 --> 00:13:20,120
investments in in some positive 
industries. 

243
00:13:20,480 --> 00:13:23,800
But our opportunity set 
operating in the ASX listed 

244
00:13:23,800 --> 00:13:28,160
small cap space is such that we 
can still invest in about 1012 

245
00:13:28,160 --> 00:13:31,880
hundred companies. 
And so we really don't feel like

246
00:13:31,880 --> 00:13:35,400
we're being stifled by the 
things that we're cutting out. 

247
00:13:35,920 --> 00:13:39,160
And so, yeah, we just see it as 
a really positive way for us to 

248
00:13:39,160 --> 00:13:42,280
invest. 
We also and it's in this is 

249
00:13:42,280 --> 00:13:46,160
important I think because of the
way we structure our responsible

250
00:13:46,160 --> 00:13:49,600
investment framework. 
We tend towards industries with 

251
00:13:49,640 --> 00:13:53,120
with long term tailwinds and you
know that is circulated being, 

252
00:13:53,120 --> 00:13:55,800
you know good investment in our 
view anyhow and and leading to 

253
00:13:55,800 --> 00:13:59,480
good risk returns. 
So yeah, I, I probably, yeah, 

254
00:13:59,480 --> 00:14:03,080
hopefully that gives you a bit 
of an insight into it maybe to 

255
00:14:03,080 --> 00:14:06,040
add. 
Yeah, I mean, just in practise 

256
00:14:06,040 --> 00:14:10,040
maybe Braden, what that kind of 
looked like, looks like because,

257
00:14:10,240 --> 00:14:12,640
well, you've spoken about the, 
you know, there's no shortage of

258
00:14:12,640 --> 00:14:16,240
companies that 1200 is a lot to 
kind of choose from. 

259
00:14:16,240 --> 00:14:19,360
But setting up the fund like 
this, I'd imagine there's a, 

260
00:14:19,440 --> 00:14:22,400
there's a mandate and that sort 
of plays into perhaps how you, 

261
00:14:22,400 --> 00:14:25,320
how you screen for companies to 
maybe on a a sort of day to day 

262
00:14:25,320 --> 00:14:27,520
kind of basis. 
I'd love to learn what that 

263
00:14:27,520 --> 00:14:29,720
actually means, how you you pick
out opportunities. 

264
00:14:31,760 --> 00:14:35,040
And maybe just to, so you get 
deep a bit deeper into 

265
00:14:35,040 --> 00:14:38,800
responsible investment. 
I think some of the confusion, 

266
00:14:39,120 --> 00:14:42,080
if there is, I think a lot of 
you know, perhaps your listeners

267
00:14:42,080 --> 00:14:46,240
and and others would have a good
understanding of what is the 

268
00:14:46,240 --> 00:14:48,480
core of responsible investment 
or ESG. 

269
00:14:49,360 --> 00:14:54,800
But the confusion maybe around 
with how different funds and 

270
00:14:54,800 --> 00:14:58,160
there are lots of different 
methodologies and how that's 

271
00:14:58,160 --> 00:15:01,120
actually then applied because 
everyone has quite different 

272
00:15:01,120 --> 00:15:02,880
processes. 
We'll go through ours. 

273
00:15:03,520 --> 00:15:07,040
There will be different 
processes and people will apply 

274
00:15:07,040 --> 00:15:09,880
in different ways with different
negative screens. 

275
00:15:10,360 --> 00:15:14,680
Some funds will use the United 
Nations Sustainable Development 

276
00:15:14,680 --> 00:15:19,520
Goals, UNSDGS, some nation, some
funds will track carbon 

277
00:15:19,520 --> 00:15:21,720
intensity and have that as a key
metric. 

278
00:15:21,720 --> 00:15:25,920
There just hasn't been something
that centralises a lot of 

279
00:15:25,920 --> 00:15:28,960
responsible investment reporting
and that's unfortunately where 

280
00:15:28,960 --> 00:15:33,440
some of the confusion lies. 
There's no joke code at the 

281
00:15:33,440 --> 00:15:35,680
moment. 
So you know, clearly setting out

282
00:15:35,680 --> 00:15:38,120
what's measured, what's 
indicated, etcetera. 

283
00:15:38,600 --> 00:15:40,920
That just hasn't come to the 
industry as yet. 

284
00:15:41,440 --> 00:15:44,600
We're clearly hoping it does 
because it'd be great then have 

285
00:15:44,600 --> 00:15:47,680
everyone reporting and then 
allow whether it's prospective 

286
00:15:47,680 --> 00:15:50,920
investors or particularly 
companies that we meet with have

287
00:15:50,920 --> 00:15:54,320
a great idea about what's what's
is actually applied. 

288
00:15:54,320 --> 00:15:58,160
So coming back to bars are 
capital and the bars are high 

289
00:15:58,160 --> 00:16:01,520
conviction fund just. 
Before you get into just to keep

290
00:16:01,520 --> 00:16:03,440
going on the response best 
because I think it is important,

291
00:16:03,440 --> 00:16:07,880
but I mean that's why what we 
value most in our business is 

292
00:16:07,880 --> 00:16:09,880
transparency. 
So people can see on our 

293
00:16:09,880 --> 00:16:12,440
website, you know, our 
information memorandum on the 

294
00:16:12,440 --> 00:16:15,160
back of our monthlies what we do
and don't invest in. 

295
00:16:15,160 --> 00:16:17,920
And so the unit holder makes 
their choice about whether 

296
00:16:17,920 --> 00:16:20,320
that's something that they're 
comfortable with as well. 

297
00:16:20,320 --> 00:16:23,440
I mean, I think maybe people 
start to have an issue with it 

298
00:16:23,440 --> 00:16:26,400
when they feel it's been forced 
on them or is, you know, lacks 

299
00:16:26,400 --> 00:16:30,480
transparency and, and you know, 
it's like someone's trying to 

300
00:16:30,480 --> 00:16:33,920
force their values on onto them.
So we would have a unit holder 

301
00:16:33,920 --> 00:16:37,200
set that some are very focused 
on the responsible investment 

302
00:16:37,200 --> 00:16:40,120
side of the business and you 
know, probably maybe gravitated 

303
00:16:40,120 --> 00:16:43,280
towards us because of that. 
And then some that were probably

304
00:16:43,280 --> 00:16:44,800
a bit more ambivalent towards 
it. 

305
00:16:44,840 --> 00:16:48,200
And and they're just there, you 
know, because they're they enjoy

306
00:16:48,240 --> 00:16:51,480
the risk return hopefully. 
But yeah, to to get into 

307
00:16:51,480 --> 00:16:52,840
actually how we build the 
portfolio. 

308
00:16:54,640 --> 00:16:59,520
So it comes on the outset. 
So as we define our universe, 

309
00:16:59,920 --> 00:17:03,440
we'll use what's called negative
screens within the industry. 

310
00:17:03,440 --> 00:17:08,280
So they're typically on a 
sector, gambling, tobacco are 

311
00:17:08,400 --> 00:17:12,319
common negative screens. 
And so you run through now 

312
00:17:12,319 --> 00:17:16,440
mandate the ASX listed universe 
and then we'll screen out. 

313
00:17:16,440 --> 00:17:19,880
These are the companies that 
would have primary operations 

314
00:17:20,119 --> 00:17:24,319
that relate to gambling or 
tobacco and there's some common 

315
00:17:24,319 --> 00:17:28,000
negative screens that you run 
through and we list ours all on 

316
00:17:28,000 --> 00:17:31,960
our reporting website, keeping 
it as transparent as we can. 

317
00:17:32,640 --> 00:17:39,200
And so that then reduces our 
investment universe and then as 

318
00:17:39,560 --> 00:17:43,440
we progress through the 
investment process, which is 

319
00:17:43,440 --> 00:17:47,800
typically then risk and return 
driven, engaging with management

320
00:17:47,800 --> 00:17:52,760
teams, going through financial 
reports, the notes, collecting, 

321
00:17:52,800 --> 00:17:56,640
you know, information, building 
our financial models as we meet 

322
00:17:56,640 --> 00:18:00,160
with the companies often within 
also asking questions around 

323
00:18:00,600 --> 00:18:04,960
what's your strategy for, you 
know, introducing renewable 

324
00:18:04,960 --> 00:18:09,760
energy to your project. 
Do you have a strategy? 

325
00:18:10,080 --> 00:18:13,000
If not, sometimes there's an 
opportunity for us then to 

326
00:18:13,360 --> 00:18:16,840
introduced to perhaps it's a 
consultant that can help provide

327
00:18:16,840 --> 00:18:19,600
some initial feedback and and 
that's, you know, something that

328
00:18:19,600 --> 00:18:23,000
we're really helpful to do. 
But you know, ultimately the 

329
00:18:23,000 --> 00:18:25,520
management teams and the 
businesses obviously making 

330
00:18:25,520 --> 00:18:28,840
their own decisions and there's 
hundreds of thousands of other 

331
00:18:28,840 --> 00:18:31,920
shareholders that have their say
in the business and how it 

332
00:18:31,920 --> 00:18:33,560
operates. 
So I'm. 

333
00:18:33,560 --> 00:18:36,480
Keen to learn a bit more about 
how the two of you kind of work 

334
00:18:36,480 --> 00:18:39,320
together and then how that kind 
of feeds into actually picking 

335
00:18:39,560 --> 00:18:42,240
the companies that you 
ultimately investing. 

336
00:18:42,240 --> 00:18:46,360
Do do you find, you know, do 
you, for instance, need full 

337
00:18:46,360 --> 00:18:48,440
agreements on each name that 
goes into the portfolio? 

338
00:18:48,840 --> 00:18:51,560
Do you let one take the lead on 
on a name if they've done a bit 

339
00:18:51,560 --> 00:18:53,480
more work? 
What's that sort of working 

340
00:18:53,480 --> 00:18:54,840
relationship like? 
Yeah, I. 

341
00:18:54,840 --> 00:18:57,760
Think I can start by saying, I 
highly recommend if anyone's 

342
00:18:57,760 --> 00:19:00,400
going to start their own fund 
that they do it with two people 

343
00:19:00,400 --> 00:19:04,960
because, you know, particularly 
in those early days, we were 

344
00:19:04,960 --> 00:19:08,320
able to, you know, kind of take 
a lot of confidence from the 

345
00:19:08,320 --> 00:19:11,040
discussions that we'll about be 
able to have with each other. 

346
00:19:11,040 --> 00:19:13,880
And, you know, when one person 
was emotional one day, the other

347
00:19:13,880 --> 00:19:17,240
person could, you know, pick up,
pick up the, the ball and, and, 

348
00:19:17,240 --> 00:19:20,000
and vice versa. 
But where, as it relates to 

349
00:19:20,000 --> 00:19:23,680
Brayden and I, we've actually 
worked together in two other 

350
00:19:23,680 --> 00:19:27,120
places before this, so 
investment bank UBS and, and 

351
00:19:27,120 --> 00:19:29,520
then a boutique advisory called 
Vesparum Capital. 

352
00:19:29,520 --> 00:19:33,800
So before we started bars, we 
had a really good idea for how 

353
00:19:33,800 --> 00:19:36,840
we work together. 
And I think over the years and 

354
00:19:36,840 --> 00:19:38,680
you know, many years we've 
worked together. 

355
00:19:38,680 --> 00:19:41,880
Now we've probably built 
somewhat of a fraternal bond, 

356
00:19:41,880 --> 00:19:46,440
which is allows us to really 
have quite robust discussions 

357
00:19:46,480 --> 00:19:50,880
and really, you know, kind of 
one person comes up with this 

358
00:19:50,880 --> 00:19:54,360
idea, not just glad handed and 
yeah, let's go. 

359
00:19:54,560 --> 00:19:57,800
It's really why. 
And you know who, you know where

360
00:19:57,800 --> 00:20:01,400
that idea come from? 
What's the analysis you've done?

361
00:20:01,400 --> 00:20:03,720
I agree with that aspect, that 
type of thing. 

362
00:20:03,720 --> 00:20:08,000
So that's been. 
Really positive for us and, and 

363
00:20:08,000 --> 00:20:11,160
I think you know, we can, we've 
we've always able to dust 

364
00:20:11,160 --> 00:20:14,000
ourselves off after one of those
robust discussions and, and just

365
00:20:14,000 --> 00:20:16,320
get on with it as well. 
So we kind of have that real 

366
00:20:16,320 --> 00:20:20,040
understanding in terms of our 
individual attributes. 

367
00:20:20,120 --> 00:20:24,480
And Brayden is just an absolute 
efficiency machine, just 

368
00:20:24,480 --> 00:20:27,920
crunches through data screening 
analysis. 

369
00:20:27,920 --> 00:20:31,920
And so that really helps us to 
take that huge opportunity set 

370
00:20:32,160 --> 00:20:34,400
down to a, a smaller opportunity
set. 

371
00:20:35,040 --> 00:20:37,920
And probably where like I come 
into it and we, we're going to 

372
00:20:37,920 --> 00:20:40,640
meet in the middle is a very 
OCD. 

373
00:20:40,640 --> 00:20:44,040
I, I, I'm, I'm very focused on 
our processes and our risk 

374
00:20:44,040 --> 00:20:48,160
management and yeah, really keen
for us to make optimal 

375
00:20:48,160 --> 00:20:50,960
decisions. 
And so putting those together, 

376
00:20:51,120 --> 00:20:53,440
we probably made in, you know, 
where we're making the actual 

377
00:20:53,440 --> 00:20:57,080
investment decisions. 
I think what's interesting JD, 

378
00:20:57,080 --> 00:21:00,400
and something that we certainly 
learned a lot has been 

379
00:21:01,200 --> 00:21:05,760
psychological aspects of 
investing can at times be the 

380
00:21:05,760 --> 00:21:09,280
most valuable or at least could 
be on the other side the most 

381
00:21:09,280 --> 00:21:13,000
detrimental. 
And So what we do with each 

382
00:21:13,000 --> 00:21:18,560
other as well is get to 
understand someone's taken the 

383
00:21:18,560 --> 00:21:22,000
stock through from, you know, 
initial screening through to 

384
00:21:22,000 --> 00:21:23,800
investment. 
They're very, you know, 

385
00:21:23,800 --> 00:21:27,760
confident, perhaps too much for,
you know, they have this. 

386
00:21:28,000 --> 00:21:32,080
I've done so much work in this. 
We need to step in and then, you

387
00:21:32,080 --> 00:21:36,120
know, check each other's biases 
as well as sometimes someone can

388
00:21:36,120 --> 00:21:40,560
be too negative on a story. 
It just helps to have that 

389
00:21:40,800 --> 00:21:45,440
second brain personality, call 
it that will be in a different 

390
00:21:45,480 --> 00:21:49,360
head state as you in any given 
day to then just check. 

391
00:21:49,360 --> 00:21:53,720
And essentially the best thing 
is to be, as you know, not 

392
00:21:53,720 --> 00:21:56,920
dispassionate, but just to be as
level headed when you're making 

393
00:21:56,920 --> 00:21:59,400
decisions. 
And just having the two, two of 

394
00:21:59,400 --> 00:22:03,240
us working together has helped 
us, or at least that's that's 

395
00:22:03,240 --> 00:22:05,120
really what we strive to do. 
Do you? 

396
00:22:05,120 --> 00:22:09,320
Find one of these more cynical. 
I think we can. 

397
00:22:09,320 --> 00:22:12,520
Be equally cynical. 
And I think that's what helps. 

398
00:22:12,600 --> 00:22:15,520
Yeah. 
So it'll usually Mystic people. 

399
00:22:15,520 --> 00:22:18,560
Oh, yes, we're gonna have to, 
we're glass half full in 

400
00:22:18,560 --> 00:22:21,360
general. 
But I think when it comes to, we

401
00:22:22,680 --> 00:22:27,240
do play the good cop, bad cop 
because it I think it helps to 

402
00:22:27,240 --> 00:22:29,720
have the person who's got the 
exuberance about a a particular 

403
00:22:29,720 --> 00:22:32,880
story, probably because I've 
done more work on it and and, 

404
00:22:32,960 --> 00:22:35,720
you know, maybe fallen out of 
love with it to some extent to 

405
00:22:35,720 --> 00:22:38,440
have the person really challenge
that on the other side. 

406
00:22:38,440 --> 00:22:40,440
I I think is, is highly 
valuable. 

407
00:22:41,400 --> 00:22:44,520
And so, yeah, I think we can 
both play that role in yeah. 

408
00:22:44,920 --> 00:22:47,920
But this, I mean, this does 
obviously doesn't have to occur 

409
00:22:47,920 --> 00:22:51,840
with, you know, going out and 
joining, investing accounts and 

410
00:22:51,840 --> 00:22:55,000
going out and doing everything 
with a a partner side by side. 

411
00:22:55,000 --> 00:22:58,880
I think just having a discussion
with someone who's either very 

412
00:22:59,040 --> 00:23:01,400
cold or new to an idea could be 
anything. 

413
00:23:01,400 --> 00:23:05,160
You could be looking at, you 
know, a new gold company that 

414
00:23:05,160 --> 00:23:09,040
you've picked up and then to 
have a cross check with someone,

415
00:23:09,440 --> 00:23:12,040
someone new and you take them 
through essentially, you know, 

416
00:23:12,120 --> 00:23:14,000
protocols in my investment 
thesis. 

417
00:23:14,000 --> 00:23:16,880
It could be one of your friends,
it could be, you know, a broker 

418
00:23:16,880 --> 00:23:19,560
that you really respect that's 
incredibly valuable. 

419
00:23:19,880 --> 00:23:24,960
I think one of the key learnings
for me personally has been the 

420
00:23:24,960 --> 00:23:28,760
real value of some of the 
probably more the softer 

421
00:23:28,760 --> 00:23:33,400
qualitative pieces of analysis 
or, or, or skills or assessment.

422
00:23:33,720 --> 00:23:38,560
I think when we came in to funds
management, our backgrounds were

423
00:23:38,560 --> 00:23:42,760
quite analytical, like coming 
from investment banking and, 

424
00:23:42,800 --> 00:23:45,280
and, you know, really focused, 
you know, OK, what's the 

425
00:23:45,280 --> 00:23:49,440
numbers, what's the modelling 
that's has been called the bread

426
00:23:49,440 --> 00:23:51,680
and butter. 
But we feel most comfortable 

427
00:23:52,040 --> 00:23:55,160
sitting in, you know, the notes 
of an annual report and 

428
00:23:55,160 --> 00:23:58,680
unpicking some of those insights
and building a financial model. 

429
00:23:58,680 --> 00:24:03,800
But really value comes from 
asking someone that's either in 

430
00:24:03,800 --> 00:24:08,440
the industry and is working at a
competitor or I actually started

431
00:24:08,440 --> 00:24:13,160
civil engineering at, at uni 15 
years ago and we were looking at

432
00:24:13,160 --> 00:24:14,920
an engineering consultancy 
business. 

433
00:24:14,920 --> 00:24:18,800
And a lot of my peers and, and 
friends still are in the 

434
00:24:18,800 --> 00:24:21,600
industry to be able to pick up 
the phone and just ask some of 

435
00:24:21,600 --> 00:24:25,280
those softer questions. 
How hard has it been to hire 

436
00:24:25,280 --> 00:24:27,120
people? 
You know, what do you think of 

437
00:24:27,120 --> 00:24:29,960
this competitor? 
You know, have you come across 

438
00:24:29,960 --> 00:24:33,160
them on, you know, other, other 
transactions or other bids? 

439
00:24:33,160 --> 00:24:37,400
This is the, the softer skills. 
Sometimes you find that a 

440
00:24:37,400 --> 00:24:42,360
conversation with, you know, a, 
a research analyst may throw up 

441
00:24:42,360 --> 00:24:47,040
a fatal flaw in your analysis 
and saved you 1520 hours of 

442
00:24:47,040 --> 00:24:49,960
work. 
So some of the softer side of, 

443
00:24:50,160 --> 00:24:53,800
you know, talking to either 
friends or ex colleagues is 

444
00:24:53,800 --> 00:24:56,400
being incredibly, incredibly 
important. 

445
00:24:56,760 --> 00:24:59,840
And I think from our initial 
approach, which focused around 

446
00:24:59,840 --> 00:25:03,600
analysis to then build that in, 
we're probably finding we do 

447
00:25:03,840 --> 00:25:07,760
more of that as we progress. 
So going deeper on those sort of

448
00:25:07,760 --> 00:25:10,800
softer skills, you talk about 
defined meeting management has 

449
00:25:10,800 --> 00:25:14,160
become an absolute staple. 
Or are there cases where you can

450
00:25:14,160 --> 00:25:17,560
sort of learn enough from from 
the paper, from interviews or 

451
00:25:17,560 --> 00:25:19,760
these sorts of things beforehand
that would? 

452
00:25:19,760 --> 00:25:23,120
Be one of our rules effectively 
have to meet management and 

453
00:25:23,640 --> 00:25:26,680
given we're in small caps, even 
though we're a relatively small 

454
00:25:26,680 --> 00:25:29,520
fund at this point in time, our 
access is really good. 

455
00:25:29,520 --> 00:25:33,960
So we in general will be able to
meet anyone that that we wish to

456
00:25:33,960 --> 00:25:37,360
in, in, in terms of companies 
that we would like to invest in 

457
00:25:37,360 --> 00:25:40,240
and and we'll often do that 
multiple times before making 

458
00:25:40,240 --> 00:25:43,440
investment and then once we're 
invested regular catch UPS. 

459
00:25:44,400 --> 00:25:47,000
One more on just sort of 
starting the fund who needed the

460
00:25:47,200 --> 00:25:50,360
the final push to to maybe leave
a job or get over the line or 

461
00:25:50,360 --> 00:25:53,520
was it a an idea that had been 
scheming for for quite some time

462
00:25:54,320 --> 00:25:56,120
I. 
Reckon Brayden came up with the 

463
00:25:56,120 --> 00:25:57,680
idea. 
I remember the cafe we were 

464
00:25:57,680 --> 00:25:59,920
sitting in when he approached me
on it. 

465
00:26:00,480 --> 00:26:03,840
So probably me, but I don't 
think I needed too much 

466
00:26:03,840 --> 00:26:06,200
encouragement. 
I, I think I talked to my wife 

467
00:26:06,200 --> 00:26:09,560
about it that weekend and she 
just, she, she knew I didn't 

468
00:26:09,560 --> 00:26:13,120
love my, my previous job. 
She said go for it. 

469
00:26:13,480 --> 00:26:16,200
I think she had a lot of respect
for Brayden and, and what we 

470
00:26:16,200 --> 00:26:19,680
might be able to achieve. 
So I think once we decided to go

471
00:26:19,680 --> 00:26:22,560
for it, it just was pretty 1 
directional. 

472
00:26:22,640 --> 00:26:24,600
Yeah, awesome. 
That's a great support too. 

473
00:26:24,600 --> 00:26:28,400
Yeah, let's let's talk about 
some mining related businesses. 

474
00:26:28,400 --> 00:26:30,920
So we, we were chatting prior to
this and we thought we'd go 

475
00:26:30,920 --> 00:26:32,920
about it a different way. 
Obviously we love to talk about 

476
00:26:33,040 --> 00:26:35,560
mining companies, but there's a 
whole sort of subset of 

477
00:26:35,560 --> 00:26:39,400
companies out there that can, 
you know, ride the same sort of 

478
00:26:39,400 --> 00:26:44,280
wave if, if you like, of a 
commodity cycle or various 

479
00:26:44,960 --> 00:26:48,040
commodities and their respective
cycles. 

480
00:26:48,040 --> 00:26:52,760
So maybe it's a sort of picks 
and shovel way, but as a broader

481
00:26:52,760 --> 00:26:55,360
sort of space, whether it be 
sort of mining services and all 

482
00:26:55,360 --> 00:26:57,600
these sort of other, other 
companies that we we're going to

483
00:26:57,600 --> 00:27:01,520
chat about, they they have been 
pretty unloved for for quite 

484
00:27:01,520 --> 00:27:03,560
some time from from my 
perspective. 

485
00:27:03,560 --> 00:27:05,480
Is that something you guys would
agree with? 

486
00:27:06,840 --> 00:27:10,360
Unloved from the perspective of 
perhaps trade at lower 

487
00:27:10,520 --> 00:27:12,280
valuation, is that what you're 
getting at? 

488
00:27:12,280 --> 00:27:14,800
Yeah, Yeah. 
I mean, I think a lot of that 

489
00:27:14,800 --> 00:27:20,480
comes to what's the market's 
appetite for cyclical risk and 

490
00:27:20,520 --> 00:27:24,880
you know, divergent views on the
commodity outlook, divergent 

491
00:27:24,880 --> 00:27:28,520
views on where we are at the 
like which point in the economic

492
00:27:28,520 --> 00:27:32,520
cycle are we at the moment. 
But in terms of just general, 

493
00:27:32,520 --> 00:27:36,920
you know, we look at mining 
services, probably stretch it a 

494
00:27:36,960 --> 00:27:40,560
little and say what are the 
businesses and companies that 

495
00:27:40,560 --> 00:27:43,560
stand to benefit from? 
You know, we're pretty 

496
00:27:43,560 --> 00:27:48,080
constructive on that mid to long
term outlook for commodities, 

497
00:27:48,280 --> 00:27:52,120
whether it's tied through to 
those commodities needed for 

498
00:27:52,120 --> 00:27:56,520
electrification or through to, 
you know, a growth in emerging 

499
00:27:56,520 --> 00:28:01,120
markets in all the commodities 
that'll be consumed as global 

500
00:28:01,120 --> 00:28:05,560
GDP or GDP per capita increases.
So for us, what are the 

501
00:28:05,560 --> 00:28:06,920
businesses that stand to 
generate? 

502
00:28:06,920 --> 00:28:10,000
And it isn't just businesses 
that have, you know, the 

503
00:28:10,000 --> 00:28:12,600
capability around drill and 
blast, although the, you know, 

504
00:28:12,880 --> 00:28:14,800
fantastically leveraged to that 
thematic. 

505
00:28:15,320 --> 00:28:18,240
But we look at, you know, 
companies that in the WA 

506
00:28:18,240 --> 00:28:21,160
economy. 
I think if you're bullish on the

507
00:28:21,320 --> 00:28:24,520
outlook for commodities, you 
probably are then going to be 

508
00:28:24,600 --> 00:28:28,120
pretty bullish on the outlook 
for the WA economy, which is 

509
00:28:28,120 --> 00:28:31,280
already, you know, the jewel 
within the Australian crown at 

510
00:28:31,280 --> 00:28:33,560
the moment. 
And we say that coming from we 

511
00:28:33,560 --> 00:28:35,280
say that coming from Melbourne 
right here. 

512
00:28:35,280 --> 00:28:39,880
But essentially yours Hartley's 
is a good example of a business 

513
00:28:39,880 --> 00:28:44,600
that we've invested in a 
fantastic balance sheet was 

514
00:28:44,600 --> 00:28:49,880
really the key draw card for us.
But we believe that that will be

515
00:28:50,040 --> 00:28:54,520
a business that throughout the 
cycle will have its moments. 

516
00:28:54,520 --> 00:28:58,080
And we think that if you are 
constructive 5 to 10 year 

517
00:28:58,080 --> 00:29:00,760
outlook, it may not happen in 
the next six months. 

518
00:29:00,760 --> 00:29:04,200
It'd be great if it did, but 
that's a great business that's 

519
00:29:04,200 --> 00:29:08,000
really set up to whether if 
there is, you know, whether the 

520
00:29:08,000 --> 00:29:11,400
storm, if there is, you know, 
continued softness in the 

521
00:29:11,440 --> 00:29:13,160
particularly junior mining 
space. 

522
00:29:13,600 --> 00:29:17,360
But they've got great leverage 
to a recovery in, you know, 

523
00:29:17,520 --> 00:29:22,600
mining capital raising volumes, 
you know, the general wealth of 

524
00:29:22,600 --> 00:29:25,960
WA increasing. 
They've got fantastic, you know,

525
00:29:26,040 --> 00:29:28,840
private, private client 
advisors, wealth advisors that 

526
00:29:29,280 --> 00:29:31,120
we work with over the years as 
well. 

527
00:29:31,120 --> 00:29:34,120
So that's an example of a 
company that you wouldn't 

528
00:29:34,120 --> 00:29:38,280
necessarily think is a directly 
related to, you know mining 

529
00:29:38,280 --> 00:29:42,720
services, but mining adjacent 
businesses is how within our 

530
00:29:42,720 --> 00:29:47,920
fund we'll also take that 
thematic and and invest in not 

531
00:29:47,920 --> 00:29:51,480
just the upstream mineral 
producers, but then have a 

532
00:29:51,480 --> 00:29:56,280
broader set of industrials or 
financials that are tied to that

533
00:29:56,280 --> 00:29:59,600
mining growth. 
That's such a fascinating way of

534
00:30:00,120 --> 00:30:03,840
playing the the resources space.
How do you think about valuing 

535
00:30:03,840 --> 00:30:06,240
name like this? 
Like you mentioned heaps of cash

536
00:30:06,240 --> 00:30:09,400
on the balance sheet, I'd 
imagine it's the type of company

537
00:30:09,400 --> 00:30:12,800
that would just pay have a very 
high payout ratio when it comes 

538
00:30:12,800 --> 00:30:14,720
to it. 
But in a in a time like this, 

539
00:30:14,880 --> 00:30:17,320
how do you get there from a 
valuation perspective? 

540
00:30:17,840 --> 00:30:19,880
Yeah. 
There's there's some great ways 

541
00:30:19,880 --> 00:30:24,200
to look at it. 
It's multifaceted, but just what

542
00:30:24,200 --> 00:30:27,560
draws to it and and Brayden 
somewhat mentioned in this is 

543
00:30:28,320 --> 00:30:32,480
currently 135 mil market cap 
with $92 million of cash 

544
00:30:32,480 --> 00:30:35,840
investments. 
So you've got this really strong

545
00:30:35,840 --> 00:30:39,320
capital support to your entry 
price and so that gives you a 

546
00:30:39,320 --> 00:30:43,320
lot of DE risking. 
Then you look at the history and

547
00:30:43,320 --> 00:30:46,840
in the 20 or so years that EUR 
has been listed, they've paid 

548
00:30:46,840 --> 00:30:51,480
345,000,000 bucks of dividends 
and $40 million of capital 

549
00:30:51,480 --> 00:30:54,480
returns on top of that. 
So that's almost triple the 

550
00:30:54,480 --> 00:30:56,320
market cap that you're currently
looking at. 

551
00:30:56,320 --> 00:30:59,680
So it does show that they've had
a strong propensity to to pay 

552
00:30:59,680 --> 00:31:03,120
out previously. 
And they quite recently did a 

553
00:31:03,120 --> 00:31:07,040
major payout to shareholders 
when they they actually divested

554
00:31:07,040 --> 00:31:11,200
their funds management business.
So then you look at, OK, well 

555
00:31:11,480 --> 00:31:13,800
what kind of profitability 
metrics can these guys do, 

556
00:31:13,800 --> 00:31:15,520
noting that it's highly 
cyclical. 

557
00:31:16,320 --> 00:31:20,800
You look at their history and in
the really tough times, they are

558
00:31:20,800 --> 00:31:24,920
generally able to stay break 
even, maybe small losses here or

559
00:31:24,920 --> 00:31:28,560
there or or small profitability.
But then what you look at is in 

560
00:31:28,760 --> 00:31:32,880
the good times, so 2021 probably
being the most recent example of

561
00:31:32,880 --> 00:31:36,880
that, they had a net profit of 
over 50 million bucks. 

562
00:31:36,880 --> 00:31:39,640
So at the top of the cycle, 
you're buying something that 

563
00:31:39,640 --> 00:31:42,880
could be on a three times PA as 
well. 

564
00:31:42,920 --> 00:31:46,720
All that capital backing as well
as all the tailwinds that we 

565
00:31:46,720 --> 00:31:49,960
believe they have through this 
multi decade boom ahead in in 

566
00:31:49,960 --> 00:31:53,480
metals and and the strength of 
the WA economy. 

567
00:31:53,480 --> 00:31:57,800
And then on top of that, you've 
got this strategic aspect of it.

568
00:31:57,800 --> 00:32:01,280
So we actually think EUR 
Hartley's would be a fantastic 

569
00:32:01,280 --> 00:32:04,720
entry to the WA market for 
either a larger East Coast 

570
00:32:04,720 --> 00:32:08,600
competitor or even potentially 
an international organisation, 

571
00:32:09,280 --> 00:32:13,200
even believing that WA has some 
attributes that lend itself to a

572
00:32:13,200 --> 00:32:16,840
really strong location for 
wealth management. 

573
00:32:16,840 --> 00:32:18,560
You know, the amount of 
billionaires, I think there's 

574
00:32:18,560 --> 00:32:22,200
more 100 millionaires per capita
in WA than anywhere else on 

575
00:32:22,200 --> 00:32:23,640
Earth. 
And so you've got this real kind

576
00:32:23,640 --> 00:32:26,320
of Switzerland, Norway potential
even as well. 

577
00:32:26,400 --> 00:32:29,320
Yeah, I think. 
I saw Peppy Grove 2021 too. 

578
00:32:29,320 --> 00:32:33,360
Was the highest earning suburb 
or post code in in Australia. 

579
00:32:33,560 --> 00:32:35,600
Yeah, fighting out the likes of 
Melbourne and Sydney there. 

580
00:32:35,640 --> 00:32:38,680
Yeah, there. 
You go and we've operated with 

581
00:32:38,680 --> 00:32:42,520
them for a long time at both 
through bars and in previous 

582
00:32:42,560 --> 00:32:45,320
careers. 
There is a mark of quality to 

583
00:32:45,320 --> 00:32:47,920
Euros Hartley's. 
They've got a great, a lot, a 

584
00:32:48,200 --> 00:32:51,480
lot of great personnel. 
They're growing their business. 

585
00:32:51,480 --> 00:32:53,760
They've got this new graduate 
programme, which is kind of 

586
00:32:53,760 --> 00:32:57,360
cultivating new, new talent. 
And they've got a bit more of a 

587
00:32:57,360 --> 00:33:00,040
focus on this more wealth 
management side of the business,

588
00:33:00,040 --> 00:33:03,120
which is $4 billion under 
management, which is another way

589
00:33:03,120 --> 00:33:05,600
that you could value them and, 
and have a look at it from that 

590
00:33:05,600 --> 00:33:09,760
perspective. 
And that is, you know, truly a 

591
00:33:09,920 --> 00:33:12,640
large amount of farming in the 
context of the WA market. 

592
00:33:14,320 --> 00:33:17,400
People don't. 
Generally think of brokers as 

593
00:33:17,400 --> 00:33:20,800
not looking after themselves to 
to kind of put it bluntly, do 

594
00:33:20,800 --> 00:33:24,440
you think there is enough inside
ownership in the business that 

595
00:33:24,760 --> 00:33:27,400
shareholders are the ones that 
get rewarded when when times are

596
00:33:27,400 --> 00:33:29,280
good? 
That's the thing that gives us 

597
00:33:29,280 --> 00:33:34,600
comfort is it is really highly 
owned by the key decision makers

598
00:33:34,840 --> 00:33:38,720
as well as Hartley's got 
purchased through your script. 

599
00:33:38,720 --> 00:33:41,520
And so there's a lot of the 
Hartley's people that came over 

600
00:33:41,520 --> 00:33:44,440
and a lot of them are, are 
really great, you know, 

601
00:33:44,440 --> 00:33:46,760
executives and and other 
personnel as well that are 

602
00:33:47,440 --> 00:33:49,400
highly personally invested in 
the business. 

603
00:33:49,400 --> 00:33:53,560
So yeah, while people will have 
their own P&L internally, you 

604
00:33:53,560 --> 00:33:58,160
know, I, I, I imagine there is a
lot of drive to get shareholder 

605
00:33:58,160 --> 00:34:00,800
returns. 
Awesome, like a podium is 

606
00:34:00,800 --> 00:34:04,400
another name you guys suggested 
and it was pretty interesting 

607
00:34:04,400 --> 00:34:06,680
digging into this. 
So I think it's a name that'll 

608
00:34:06,680 --> 00:34:09,440
be familiar to a lot of people 
that follow the resources space.

609
00:34:09,440 --> 00:34:12,320
They you know, be with the 
projects, these sorts of things.

610
00:34:12,320 --> 00:34:16,400
So it was quite interesting 
digging into it. 90% weighted to

611
00:34:16,400 --> 00:34:19,800
the resources space with a bit 
of other sort of infrastructure 

612
00:34:20,120 --> 00:34:23,400
work and also quite a strong 
weighting to African projects. 

613
00:34:23,400 --> 00:34:26,280
I think it's all 60 odd percent 
as well as gold. 

614
00:34:26,360 --> 00:34:30,199
How do you think about the 
diversification of projects 

615
00:34:30,199 --> 00:34:31,679
within within the business 
there? 

616
00:34:33,440 --> 00:34:36,760
Yeah, like a podium has been a 
holding for probably close to 

617
00:34:36,760 --> 00:34:40,800
two years for the fund. 
So we've initially like, again, 

618
00:34:40,800 --> 00:34:43,880
it's it, it's not always the 
case, but had a very strong 

619
00:34:43,880 --> 00:34:48,400
balance sheet. 
They have a real focus on not 

620
00:34:48,400 --> 00:34:50,480
issuing shares and, and, and 
EPS. 

621
00:34:50,480 --> 00:34:54,960
I think they've held 39 million 
shares for the last, you know, 

622
00:34:54,960 --> 00:34:58,080
15 years. 
And so it's yeah, it's, it's, 

623
00:34:58,080 --> 00:35:00,240
it's rare to say and, and really
pleasure. 

624
00:35:00,240 --> 00:35:04,880
And that was quite attractive. 
When we spoke with Peter, the 

625
00:35:04,880 --> 00:35:08,560
Managing director, we spend a 
lot of time working through 

626
00:35:08,560 --> 00:35:13,440
there was a period, I think it 
was 2013, 2014, 2015 where, you 

627
00:35:13,440 --> 00:35:16,040
know, there were a number of 
probably projects that they had 

628
00:35:16,040 --> 00:35:20,280
successfully delivered that 
rolled off without that backlog 

629
00:35:20,280 --> 00:35:23,560
of work to keep forward. 
And and that's when you saw the 

630
00:35:23,720 --> 00:35:27,000
profitability take a hit. 
And just understanding the 

631
00:35:27,000 --> 00:35:31,320
evolution of the business from 
that period probably close to 10

632
00:35:31,320 --> 00:35:34,760
years ago to now. 
And I think the the depth of the

633
00:35:34,760 --> 00:35:38,800
team this the spread of the 
team, so different parts of the 

634
00:35:39,680 --> 00:35:42,960
a mining project that would be 
focused in on, I think there was

635
00:35:42,960 --> 00:35:47,800
a big focus on getting expertise
in many different commodities. 

636
00:35:48,200 --> 00:35:54,520
So gold has been a key focus, 
but copper and also lithium and 

637
00:35:54,520 --> 00:35:57,280
you know, two commodities where 
there's projects currently being

638
00:35:57,280 --> 00:35:59,600
delivered. 
A lot of studies they're doing 

639
00:35:59,800 --> 00:36:02,640
are really or delivering a 
really big project, which is a 

640
00:36:02,640 --> 00:36:05,760
real step. 
You know, a huge step forward is

641
00:36:05,760 --> 00:36:10,320
the barracks project in 
Pakistan, Rico Dix. 

642
00:36:10,320 --> 00:36:13,320
That's that's an enormous 
project that will take like a 

643
00:36:13,320 --> 00:36:16,440
podium a number of years to 
deliver and and obviously will 

644
00:36:16,440 --> 00:36:19,440
have a positive impact on 
earnings is our view. 

645
00:36:19,920 --> 00:36:23,080
But they've been able to 
diversify across multiple 

646
00:36:23,080 --> 00:36:25,480
commodities. 
They've got a great team. 

647
00:36:25,680 --> 00:36:29,720
The biggest bottleneck to growth
has been finding staff and 

648
00:36:29,720 --> 00:36:33,280
that's been probably a feature 
of or rather engineering 

649
00:36:33,280 --> 00:36:35,880
consultancies over the last two 
or three years. 

650
00:36:35,880 --> 00:36:39,000
And you know, when we spoke to 
the management, there was a real

651
00:36:39,000 --> 00:36:42,240
focus on no, we just have to 
make sure that we attract the 

652
00:36:42,240 --> 00:36:45,760
right staff and they weren't 
just on an expansion for the 

653
00:36:45,760 --> 00:36:48,840
sake thereof. 
So very measured, very, very 

654
00:36:48,840 --> 00:36:52,800
disciplined and diversification 
and, and, and managing that 

655
00:36:52,800 --> 00:36:54,960
risk. 
Part of that due to the balance 

656
00:36:54,960 --> 00:36:58,480
sheet, part of that's due to 
being able to deliver different 

657
00:36:58,480 --> 00:37:02,280
projects and work at different 
components of a of a mining 

658
00:37:02,280 --> 00:37:04,520
project. 
And also I think their 

659
00:37:04,520 --> 00:37:09,440
industrials business delivering 
projects for CSL, you know 

660
00:37:09,480 --> 00:37:11,400
that's a, that was a project 
that they delivered in 

661
00:37:11,400 --> 00:37:13,760
Melbourne. 
So there's there is a lot of 

662
00:37:13,760 --> 00:37:17,960
diversification within the 
business notwithstanding a key 

663
00:37:17,960 --> 00:37:22,000
attraction to us is the outlook 
for particularly copper and 

664
00:37:22,160 --> 00:37:25,680
particularly, you know their 
ability to deliver projects that

665
00:37:25,680 --> 00:37:29,040
probably require, you know a 
high degree of technical 

666
00:37:29,040 --> 00:37:32,960
expertise and being able to 
navigate, you know, some tougher

667
00:37:32,960 --> 00:37:36,120
jurisdictions that they've just 
shown time and time again they 

668
00:37:36,120 --> 00:37:38,640
can deliver so. 
One of the sort of challenges 

669
00:37:38,640 --> 00:37:42,320
for a lot of similar type 
companies was finding people. 

670
00:37:42,360 --> 00:37:45,480
Like you mentioned is finding 
people to build the things or 

671
00:37:45,720 --> 00:37:51,280
work on like engineering 
projects as well as in the in 

672
00:37:51,280 --> 00:37:54,080
the offices as well the the 
white collar sort of jobs. 

673
00:37:54,440 --> 00:37:57,200
Do you think most of that at 
least in Australia has kind of 

674
00:37:57,520 --> 00:38:00,920
washed through and they 
shouldn't have that sort of cost

675
00:38:00,920 --> 00:38:03,840
inflation that could be onerous 
on on the margins of the 

676
00:38:03,840 --> 00:38:05,280
business? 
Yeah. 

677
00:38:05,560 --> 00:38:07,560
Look, it's absolutely a key 
question. 

678
00:38:07,720 --> 00:38:10,480
I think we've, you know, we've 
been asking and listening to, 

679
00:38:10,480 --> 00:38:16,520
you know, Agms and, and the 
financial reporting on how easy 

680
00:38:16,520 --> 00:38:19,920
is it to, to retain labour. 
We were catching up with 

681
00:38:19,920 --> 00:38:23,400
actually a company recently that
was talking about, they just 

682
00:38:23,400 --> 00:38:28,120
gave their staff an out of 
cycle, you know, essentially a, 

683
00:38:28,120 --> 00:38:31,440
a pay rise. 
And they had a, at at the time 

684
00:38:31,440 --> 00:38:34,120
that, you know, pretty heavy 
blue collar workforce and they 

685
00:38:34,120 --> 00:38:35,560
looked around and said, this is 
fantastic. 

686
00:38:35,560 --> 00:38:38,640
We weren't expecting this. 
And so there is that, you know, 

687
00:38:38,640 --> 00:38:41,360
still pressure from from from 
wages. 

688
00:38:41,360 --> 00:38:45,000
I think it's going to vary not 
just state by state within 

689
00:38:45,000 --> 00:38:47,280
Australia, but also the 
disciplines. 

690
00:38:47,600 --> 00:38:51,160
It'd probably start to find that
it's going to be much easier to 

691
00:38:51,520 --> 00:38:55,120
find staff in the white collar 
prior to blue collar. 

692
00:38:55,120 --> 00:38:59,480
I think that's still, you know, 
like if you are or, or, or you 

693
00:38:59,480 --> 00:39:02,680
know someone in that industry, 
it's certainly one where there's

694
00:39:02,680 --> 00:39:06,840
a lot of work still and actually
finding people who, you know, 

695
00:39:07,080 --> 00:39:10,960
have the ability and, and, and 
the resilience to work in tough 

696
00:39:10,960 --> 00:39:14,960
environments is, is, is, is 
obviously getting harder and 

697
00:39:14,960 --> 00:39:17,280
harder. 
So I think for workers that can 

698
00:39:17,280 --> 00:39:19,680
do that deserve clearly to get 
paid. 

699
00:39:19,680 --> 00:39:23,240
Companies are having to pay up. 
The white collar is softening. 

700
00:39:23,240 --> 00:39:25,200
That's the feedback that we get 
at the moment. 

701
00:39:25,200 --> 00:39:28,560
That's for sure to. 
Your comment on the the cycle is

702
00:39:28,560 --> 00:39:33,280
not lasting for forever. 
What, what are the signals that 

703
00:39:33,280 --> 00:39:37,960
you'd look for that it's not 
quite working out or you know, 

704
00:39:37,960 --> 00:39:40,720
that might be company specific, 
it might be across the the whole

705
00:39:40,720 --> 00:39:44,760
space where we're talking about,
but how do you sort of catch 

706
00:39:44,760 --> 00:39:46,800
that before it it kind of 
happens? 

707
00:39:49,120 --> 00:39:53,520
Oh look for different businesses
will be different inputs for one

708
00:39:53,520 --> 00:39:59,400
of our holdings that was 
acquired 2023 was DDH and you 

709
00:39:59,400 --> 00:40:02,560
know a key signal or leading 
indicator was. 

710
00:40:02,920 --> 00:40:06,880
ACM activity or looking at how 
many, like what's the quantity 

711
00:40:06,880 --> 00:40:12,120
of capital that's being raised 
by smaller companies to go out 

712
00:40:12,120 --> 00:40:15,000
and then commit to exploration 
programmes. 

713
00:40:15,000 --> 00:40:18,720
So that would be probably 1. 
But like, I think at the moment,

714
00:40:18,720 --> 00:40:22,600
we're seeing that largely or 
hopefully bottoming out at the 

715
00:40:22,600 --> 00:40:26,320
moment and, and we'll see an 
uptick of that, you know, junior

716
00:40:26,320 --> 00:40:29,960
minor capital raising activity. 
But that would be 1 kind of 

717
00:40:29,960 --> 00:40:33,840
leading indicator for the for 
parts of the mining cycle 

718
00:40:34,720 --> 00:40:38,360
utilisation where you can get 
that data is fantastic for 

719
00:40:38,360 --> 00:40:41,440
different businesses that are 
probably more, you know, asset 

720
00:40:41,440 --> 00:40:44,960
driven mining services. 
So when you can get data on 

721
00:40:44,960 --> 00:40:47,080
utilisation, starting to see 
that turn. 

722
00:40:47,520 --> 00:40:51,960
I think for us, we well 
definitely is timing extremely 

723
00:40:51,960 --> 00:40:57,680
important for mining services 
just being prepared by managing 

724
00:40:57,680 --> 00:41:01,920
risks wherever you can. 
I think from our perspective, 

725
00:41:02,400 --> 00:41:07,640
having debt and seeing that as a
key risk and a lot of the, the 

726
00:41:07,640 --> 00:41:10,720
big issues with mining services 
and when things can go South is 

727
00:41:10,720 --> 00:41:14,600
when there's a very large debt 
load or gearing within a 

728
00:41:14,600 --> 00:41:18,800
business. 
As a general rule, we will model

729
00:41:18,800 --> 00:41:22,240
out the debt and covenants. 
But when you see in an investor 

730
00:41:22,240 --> 00:41:25,520
presentation, you know, one or 
two or three slides where they 

731
00:41:25,520 --> 00:41:28,600
have to go and explain this is 
our covenant ratio and this is 

732
00:41:28,600 --> 00:41:31,840
where we see it in gearing. 
That's probably the first orange

733
00:41:31,840 --> 00:41:34,400
flag. 
And then from that you then have

734
00:41:34,400 --> 00:41:37,840
to go and do your own modelling 
on to say, OK, I, I'd like to 

735
00:41:37,840 --> 00:41:39,720
understand what the gearing 
ratio is. 

736
00:41:39,720 --> 00:41:42,280
I understand interest coverage 
for this business and that's a 

737
00:41:42,280 --> 00:41:46,720
risk that I'm confident on if 
revenues drop 2030%. 

738
00:41:47,520 --> 00:41:50,320
Yeah. 
You know, where possible to find

739
00:41:50,320 --> 00:41:53,160
a business without debt is, is 
is obviously key. 

740
00:41:53,240 --> 00:41:57,360
Not with not to say that you 
don't see material draw downs or

741
00:41:57,360 --> 00:42:00,560
you know, in, you know, balance 
sheets being impacted when you 

742
00:42:00,560 --> 00:42:04,840
do see the cycle reverse. 
But it is, yeah, it is something

743
00:42:04,840 --> 00:42:08,160
that we try to manage as best we
can on the debt front. 

744
00:42:08,160 --> 00:42:10,680
And I, I think you've. 
Seen from the two examples that 

745
00:42:11,720 --> 00:42:15,160
we are comfortable to invest in 
them because they have been good

746
00:42:15,160 --> 00:42:18,000
at managing the poor cycles for 
themselves. 

747
00:42:18,240 --> 00:42:21,440
And then when it's the good part
of the cycle, you know, it kind 

748
00:42:21,440 --> 00:42:24,560
of takes care of care of itself.
But just as you need to have 

749
00:42:24,560 --> 00:42:27,280
discipline when you're buying 
and you know, hopefully you're 

750
00:42:27,280 --> 00:42:29,280
getting towards the bottom of 
the cycle for some of these 

751
00:42:29,280 --> 00:42:31,960
names, you need to have 
discipline in, in selling. 

752
00:42:31,960 --> 00:42:34,640
And, and when you're investing 
in cyclical businesses, it can 

753
00:42:34,640 --> 00:42:38,320
be a bit more active in the way 
you invest as opposed to, you 

754
00:42:38,320 --> 00:42:40,800
know, more of a like kind of a 
long term compound, a kind of 

755
00:42:40,800 --> 00:42:44,200
classic industrials company 
with, with, with steady growth. 

756
00:42:44,200 --> 00:42:47,960
So you just need to recognise 
that when times are good, that's

757
00:42:47,960 --> 00:42:50,200
not going to last forever. 
And maybe it's time to manage 

758
00:42:50,200 --> 00:42:52,800
some of your position. 
And just as when times are not 

759
00:42:52,800 --> 00:42:55,280
so good, maybe that's a good 
time to be having a good look at

760
00:42:55,280 --> 00:42:57,880
it the the. 
Last company I'm keen to chat 

761
00:42:57,880 --> 00:43:00,240
about and I'll disclose that I 
actually own a few of these ones

762
00:43:00,320 --> 00:43:02,800
Vysan. 
So yeah, I'm pretty excited to 

763
00:43:02,800 --> 00:43:06,440
to talk about this business and 
get the perspective that you 

764
00:43:06,440 --> 00:43:11,160
guys have to start with a couple
acquisitions in the the past 

765
00:43:11,160 --> 00:43:16,200
quarter 11 bigger than the other
that CMP and wastewater 

766
00:43:16,200 --> 00:43:18,120
services. 
How did you kind of think about,

767
00:43:18,120 --> 00:43:20,680
you know, that this is a, a 
company like we spoke about 

768
00:43:20,680 --> 00:43:23,600
before that doesn't love to 
issue paper unless they kind of 

769
00:43:23,600 --> 00:43:27,560
need to and there's a, a, an 
appropriate opportunity. 

770
00:43:28,000 --> 00:43:30,800
And I saw in your, your recent 
note that you guys chipped in 

771
00:43:30,800 --> 00:43:33,320
having invested a year or so 
ago. 

772
00:43:33,560 --> 00:43:36,640
So how are you thinking about 
those acquisitions in and the 

773
00:43:36,680 --> 00:43:39,240
the business in a broader sense?
Yeah. 

774
00:43:39,640 --> 00:43:43,960
So we talked with James Clement,
the MD of ISON, quite often. 

775
00:43:43,960 --> 00:43:47,280
And I'll just start by saying he
he's probably one of the better 

776
00:43:47,280 --> 00:43:49,960
managing directors that we've 
come across in small cap space. 

777
00:43:49,960 --> 00:43:53,360
And so we've got a lot of 
confidence in what he's doing 

778
00:43:53,360 --> 00:43:56,080
and then the team that he's been
able to build underneath him. 

779
00:43:56,520 --> 00:43:59,320
And they have some very strict 
criteria when it comes to 

780
00:43:59,320 --> 00:44:02,920
acquisitions. 
And they also see this giant 

781
00:44:02,920 --> 00:44:07,120
opportunity in water 
infrastructure on the East Coast

782
00:44:07,280 --> 00:44:11,080
when they already are quite, you
know, well covered in in WA. 

783
00:44:11,080 --> 00:44:17,120
And so the acquisition of CMP 
has materially diversified. 

784
00:44:17,120 --> 00:44:21,280
Their client said, I think they 
go from almost 100%, you know, 

785
00:44:21,280 --> 00:44:26,280
mining in WA to, to down to 70%.
And that that 30% that comes 

786
00:44:26,280 --> 00:44:31,040
from CMP is largely government 
and, and water agencies on, on 

787
00:44:31,040 --> 00:44:33,120
the East Coast. 
There's going to be something 

788
00:44:33,120 --> 00:44:37,320
like $60 billion spent on water 
associated infrastructure in the

789
00:44:37,320 --> 00:44:39,440
East Coast over the next 5 to 10
years. 

790
00:44:39,440 --> 00:44:43,880
And so James and his team made 
the really strategic and clever 

791
00:44:44,400 --> 00:44:47,520
approach to, to CMP and, and 
have been able to absorb that 

792
00:44:47,520 --> 00:44:50,560
into the business. 
So that adds a new division for 

793
00:44:50,560 --> 00:44:53,320
them and a new geographical 
location. 

794
00:44:53,320 --> 00:44:57,240
And then the wastewater services
also EPS accretive and also 

795
00:44:57,240 --> 00:45:00,440
makes a lot of sense. 
It's still in WA, but it does 

796
00:45:00,440 --> 00:45:04,600
provide them with a new division
to their their water service 

797
00:45:04,600 --> 00:45:06,600
offering. 
And really what they're trying 

798
00:45:06,600 --> 00:45:11,440
to do is be a vertically 
integrated water services 

799
00:45:11,640 --> 00:45:15,720
provider across consulting, 
engineering, design, 

800
00:45:15,720 --> 00:45:20,880
implementation and of course, 
and, and maybe you're like 

801
00:45:20,880 --> 00:45:24,120
you're about to ask about this, 
but they have this blue sky of 

802
00:45:24,120 --> 00:45:26,640
this water asset management 
that's that's coming over the 

803
00:45:26,640 --> 00:45:29,120
top. 
And so, yeah, yeah. 

804
00:45:29,200 --> 00:45:32,520
Came to unpack that more and 
what that could sort of mean to 

805
00:45:32,520 --> 00:45:37,240
the the valuation of the 
business and the potential 

806
00:45:37,240 --> 00:45:40,320
competitors that might come into
the arena if if you know that 

807
00:45:40,320 --> 00:45:42,240
they seem to be the first mover 
in in that one. 

808
00:45:42,240 --> 00:45:46,240
But you know these things in in 
capitalism attract opponents. 

809
00:45:46,240 --> 00:45:47,640
So how are you thinking about 
that? 

810
00:45:47,680 --> 00:45:51,400
Yeah, so. 
I mean, if you look at the the 

811
00:45:51,400 --> 00:45:55,440
current business and take the 
acquisitions into account, 

812
00:45:55,760 --> 00:45:58,520
you've got the company business 
trading on, you know, somewhere 

813
00:45:58,520 --> 00:46:03,160
between the 15 to 20 times PA 
multiple which given the growth 

814
00:46:03,160 --> 00:46:06,720
and execution that they've been 
able to show that's quite 

815
00:46:06,720 --> 00:46:08,440
comfortable. 
It's not you know, you're not, 

816
00:46:08,440 --> 00:46:10,120
you're not getting a super 
cheap, but it's quite 

817
00:46:10,120 --> 00:46:13,040
comfortable. 
But then there's not really any 

818
00:46:13,040 --> 00:46:15,320
value for the water asset 
management in that. 

819
00:46:15,360 --> 00:46:21,240
And that aspect is hard to value
for now until we really see some

820
00:46:21,240 --> 00:46:24,360
nuts and bolts put around it. 
But just for the listeners who 

821
00:46:24,360 --> 00:46:29,280
who aren't as as O5 with vice on
what they've done is they've 

822
00:46:29,280 --> 00:46:32,960
collected a bunch of water 
titles in WA and they've done 

823
00:46:32,960 --> 00:46:35,800
that in a really clever fashion.
And, and some of the most 

824
00:46:36,000 --> 00:46:41,080
compelling water titles, they've
also, and this is just 

825
00:46:41,240 --> 00:46:43,840
fantastic, what they've been 
able to do is they've entered 

826
00:46:43,840 --> 00:46:47,040
into joint ventures with 
traditional owners and they will

827
00:46:47,040 --> 00:46:49,840
share the economics on a, on a 
5050 basis. 

828
00:46:49,840 --> 00:46:54,280
And so they've they've really 
ensconced themselves well in 

829
00:46:54,280 --> 00:46:58,320
being able to be a a strong 
operator and and obviously get 

830
00:46:58,320 --> 00:47:02,640
the good regulatory outcomes on 
the water, water services that 

831
00:47:02,640 --> 00:47:06,920
they're providing. 
And what the grand plan is in, 

832
00:47:06,920 --> 00:47:12,360
you know, the vast spaces of WA,
there is some areas that have a 

833
00:47:12,360 --> 00:47:15,040
lot more water than is required 
and some areas which have a lot 

834
00:47:15,040 --> 00:47:17,160
less than they're required. 
And there's a lot of mining 

835
00:47:17,160 --> 00:47:21,680
projects, infrastructure 
projects, agriculture, energy 

836
00:47:21,680 --> 00:47:25,480
projects that require water that
are currently, you know, if not 

837
00:47:25,480 --> 00:47:28,080
stranded, but you know, paying 
more than they would like to be 

838
00:47:28,080 --> 00:47:30,040
or, you know, or struggling for 
water. 

839
00:47:30,040 --> 00:47:33,360
And so the idea for the team 
with the vice on water asset 

840
00:47:33,360 --> 00:47:37,960
management business is to 
transport water from the, you 

841
00:47:37,960 --> 00:47:41,000
know, where they're able to find
big aquifers on, on, on native 

842
00:47:41,000 --> 00:47:44,760
title land to the places where 
it was where it is required. 

843
00:47:44,760 --> 00:47:48,080
And so that's going to require a
huge amount of infrastructure in

844
00:47:48,080 --> 00:47:52,160
terms of pipelines and the like.
And their idea is to partner 

845
00:47:52,320 --> 00:47:55,600
externally for the funding and, 
and potentially, you know, 

846
00:47:55,840 --> 00:47:58,760
management to some extent of 
that with, you know, more 

847
00:47:58,760 --> 00:48:02,800
established and, and larger 
major infrastructure providers. 

848
00:48:03,000 --> 00:48:07,560
And they've brought in Richard 
Lowry, who is an ex investment 

849
00:48:07,560 --> 00:48:10,920
banker, but also water 
infrastructure kind of 

850
00:48:11,520 --> 00:48:15,600
experienced guy and he is 
leading that operation. 

851
00:48:15,600 --> 00:48:18,240
And our understanding is there's
going to be, you know, a lot 

852
00:48:18,240 --> 00:48:20,720
more information on this coming 
out over the next kind of three 

853
00:48:20,720 --> 00:48:23,240
to six months. 
And what sort of timeline do you

854
00:48:23,240 --> 00:48:26,200
think about that, that business?
Is that something that comes 

855
00:48:26,200 --> 00:48:29,960
into effect? 
I'm sort of thinking 3-4 years 

856
00:48:29,960 --> 00:48:32,920
it it could be. 
Obviously it's a journey to get 

857
00:48:32,920 --> 00:48:35,080
there and things need to to get 
built. 

858
00:48:35,080 --> 00:48:37,960
But if you're if you were to 
look at the blue skies, that how

859
00:48:37,960 --> 00:48:39,600
you kind of think about it. 
Yeah. 

860
00:48:39,600 --> 00:48:40,600
What? 
Do you think from a timing 

861
00:48:40,600 --> 00:48:42,960
perspective, yeah. 
I think three to four years is 

862
00:48:42,960 --> 00:48:46,720
probably right before you start 
to see the projects really get 

863
00:48:46,720 --> 00:48:48,920
going. 
In saying that, I think we 

864
00:48:48,920 --> 00:48:53,000
probably start to get a better 
handle on the economics or 

865
00:48:53,000 --> 00:48:56,800
whether that starts with just 
the sizing of the water resource

866
00:48:56,800 --> 00:49:01,280
and and and how they would go 
about structuring or tolling 

867
00:49:01,280 --> 00:49:05,080
what's the toll fees etcetera 
over the coming 6 to 12 months. 

868
00:49:05,080 --> 00:49:08,720
But you know, that's that's our 
hope and and for us it as Will 

869
00:49:08,720 --> 00:49:13,240
said, you've got really the core
operating profitable business 

870
00:49:13,640 --> 00:49:17,800
that's really underwriting a lot
of our attraction to vice on. 

871
00:49:18,080 --> 00:49:21,360
And so as we get a lot more 
information on the economics for

872
00:49:21,360 --> 00:49:24,080
the water asset management, it's
just going to add to that. 

873
00:49:24,840 --> 00:49:28,120
And how do you think about the 
company moving away from, I 

874
00:49:28,160 --> 00:49:30,200
mean, I guess the against the 
other companies who've spoken 

875
00:49:30,200 --> 00:49:33,680
about the, the cyclicality of 
the business, it sort of started

876
00:49:33,680 --> 00:49:38,080
as a business that is pretty 
exposed now with the the rigs to

877
00:49:38,520 --> 00:49:42,560
the mining cycle. 
But it seems to be on a on a 

878
00:49:42,560 --> 00:49:45,680
journey to move itself away from
that. 

879
00:49:45,680 --> 00:49:48,080
Where do you see them on that 
journey right now? 

880
00:49:49,320 --> 00:49:53,640
Yeah, like a lot of other mining
services companies, there is 

881
00:49:53,640 --> 00:49:57,960
this big focus on diversifying 
away from mining, which sounds 

882
00:49:57,960 --> 00:50:00,280
funny, but also WA to some 
extent. 

883
00:50:00,280 --> 00:50:02,600
I mean, we're invested in 
another electrical services 

884
00:50:02,600 --> 00:50:05,520
provider that was traditionally 
as a Southern Cross Electric 

885
00:50:05,520 --> 00:50:09,120
traditionally 100% mining that 
are now that's much less a part 

886
00:50:09,120 --> 00:50:11,400
of what they're doing. 
And and what they're really 

887
00:50:11,400 --> 00:50:15,040
trying to do is de risk that 
cyclical nature of mining with 

888
00:50:15,040 --> 00:50:18,760
vice on. 
I mean, we see this as a natural

889
00:50:18,760 --> 00:50:23,080
expansion and they'll still get 
great benefit from mining, but 

890
00:50:23,400 --> 00:50:26,640
you know, to to grow and be able
to expand and be able to kind of

891
00:50:26,640 --> 00:50:29,600
smooth out some of their growth 
trajectory by being on the East 

892
00:50:29,600 --> 00:50:31,440
Coast. 
That's really positive from our 

893
00:50:31,440 --> 00:50:34,400
perspective. 
Of course, this water asset 

894
00:50:34,400 --> 00:50:37,960
management is going to be highly
leveraged to to mining. 

895
00:50:38,240 --> 00:50:41,080
So they may actually kind of 
increase their exposure as they 

896
00:50:41,080 --> 00:50:44,760
go through, but that should be 
more of an infrastructure style 

897
00:50:44,960 --> 00:50:46,680
kind of steady income style 
risk. 

898
00:50:46,680 --> 00:50:48,920
So I mean it is it is multi 
tinged. 

899
00:50:48,920 --> 00:50:52,160
They've got the cyclical mining,
the more steady, you know, kind 

900
00:50:52,160 --> 00:50:54,200
of water consulting to 
governments and the like, which 

901
00:50:54,200 --> 00:50:56,760
they're building out and then 
hopefully an infrastructure 

902
00:50:56,760 --> 00:50:59,080
style play. 
So altogether it should make for

903
00:50:59,080 --> 00:51:01,160
some quite, you know, rich risk 
return. 

904
00:51:02,720 --> 00:51:04,000
Yeah. 
I think at the moment they're 

905
00:51:04,000 --> 00:51:09,760
probably seventy 8090% would be,
you know, outside in guessing 

906
00:51:10,120 --> 00:51:12,440
percent of the way through the 
diversification that they want 

907
00:51:12,440 --> 00:51:15,880
to achieve. 
I think FY24 there was still you

908
00:51:15,880 --> 00:51:19,440
know, I think they had some rigs
in a nickel project that they 

909
00:51:19,440 --> 00:51:22,480
had to you know, push elsewhere 
within the portfolio. 

910
00:51:22,480 --> 00:51:25,800
So I think there's there, there 
has been some of that of recent 

911
00:51:25,800 --> 00:51:30,120
times drag, but with the 
acquisition and particularly of 

912
00:51:30,120 --> 00:51:33,600
the East Coast consulting 
business, we see them as really 

913
00:51:33,600 --> 00:51:37,840
well and truly on the way to 
getting that diversification and

914
00:51:38,000 --> 00:51:41,800
you know, giving themselves some
immunity to to that, you know, 

915
00:51:41,800 --> 00:51:45,160
harsh cyclicality of the mining 
so of, of mining services. 

916
00:51:45,680 --> 00:51:48,480
So we've, we've talked around 
the mining industry for quite 

917
00:51:48,480 --> 00:51:50,720
some time, but you guys are 
pretty tapped into the, the 

918
00:51:50,720 --> 00:51:54,160
capital raising cycle, in 
particular with the, with the 

919
00:51:54,160 --> 00:51:56,320
juniors. 
And it's been pretty, pretty 

920
00:51:56,320 --> 00:51:58,520
active. 
Even even today I saw a, a good 

921
00:51:58,560 --> 00:52:01,520
few coming through. 
And I saw in your quarterly you 

922
00:52:01,520 --> 00:52:03,880
mentioned you're looking at 3:00
to 6:00 opportunities a day, 

923
00:52:03,880 --> 00:52:06,480
which I'm sure keeps you kind of
busy. 

924
00:52:06,680 --> 00:52:09,120
How, how do you look at these 
opportunities? 

925
00:52:09,120 --> 00:52:11,720
Are you, I'd imagine you're 
familiar with most of the 

926
00:52:11,720 --> 00:52:15,120
companies beforehand. 
Is it a, is it a quick answer 

927
00:52:15,200 --> 00:52:18,080
once you know the sort of to see
the term sheet, you know the the

928
00:52:18,080 --> 00:52:19,840
details or what's that process 
like? 

929
00:52:20,800 --> 00:52:24,960
Yeah. 
So you have to be able to say no

930
00:52:24,960 --> 00:52:29,360
quickly and a lot because of 
just the the huge amount of 

931
00:52:29,360 --> 00:52:33,120
opportunities that come through.
But I mean we're talking about 

932
00:52:33,120 --> 00:52:35,840
cycles a lot. 
But cap arising's in mining 

933
00:52:35,840 --> 00:52:39,360
companies come in to come in 
quite sharp waves. 

934
00:52:39,360 --> 00:52:43,240
And so where there's been 
probably a year or two of quite 

935
00:52:43,240 --> 00:52:49,000
subdued kind of activity in that
space, we are we have seen a 

936
00:52:49,000 --> 00:52:52,160
ramp up in the last two months, 
not to say we haven't seen you 

937
00:52:52,160 --> 00:52:54,960
know ramp UPS over over that 
last two year period. 

938
00:52:54,960 --> 00:52:58,880
So we're still just working out 
how sustainable it is at this 

939
00:52:58,880 --> 00:53:03,080
point in time. 
But what you do say at the start

940
00:53:03,080 --> 00:53:06,880
of the wave of a kind of a cat 
raising cycle for Genia Mining 

941
00:53:06,880 --> 00:53:13,120
is the more quality names are 
coming to market 1st or, and, or

942
00:53:13,440 --> 00:53:17,080
you're getting better terms on 
the, the things that do get to 

943
00:53:17,080 --> 00:53:19,760
market. 
And so it is really important to

944
00:53:19,760 --> 00:53:23,120
make sure you're on top of that 
and, and, and really able to 

945
00:53:23,120 --> 00:53:26,400
participate, You know, if you've
got the spare capacity and, and 

946
00:53:26,400 --> 00:53:28,640
if you've got a good 
understanding of the 

947
00:53:28,640 --> 00:53:31,240
fundamentals of, of particular 
companies. 

948
00:53:31,800 --> 00:53:34,800
But what happens is that then 
builds, you know, the 

949
00:53:34,800 --> 00:53:38,320
aftermarkets get better, you 
know, the FOMO trade starts to 

950
00:53:38,320 --> 00:53:43,680
kick in and then you start to 
see worse terms on, on, on the 

951
00:53:43,680 --> 00:53:46,760
equity raisings and probably 
poorer companies being able to 

952
00:53:46,760 --> 00:53:48,840
get to market. 
And that's where you really need

953
00:53:48,840 --> 00:53:52,160
to keep your wits about you and 
and say no even even more than 

954
00:53:52,480 --> 00:53:55,520
you had been before. 
The sort of timing there is is 

955
00:53:55,520 --> 00:53:58,320
super fascinating. 
How do you think also as it ties

956
00:53:58,320 --> 00:54:02,520
in with positioning yourself in 
a company? 

957
00:54:02,520 --> 00:54:05,240
I know there's certain funds 
obviously is very size 

958
00:54:05,240 --> 00:54:08,280
dependent, but they will wait 
for the the raisings because it 

959
00:54:08,280 --> 00:54:11,040
gives them an opportunity as 
opposed to being on the market 

960
00:54:11,040 --> 00:54:13,840
and buying day after day. 
Does that play into your 

961
00:54:13,840 --> 00:54:16,000
thinking a lot it. 
Definitely does. 

962
00:54:16,320 --> 00:54:19,400
I mean mining companies are, are
always raising equity. 

963
00:54:19,400 --> 00:54:21,720
I mean, and, and you just have 
to be aware of that if you're 

964
00:54:21,720 --> 00:54:24,080
investing in mining. 
I mean, if they're an explorer, 

965
00:54:24,080 --> 00:54:27,640
they don't have any revenue and 
and they need to raise equity in

966
00:54:27,640 --> 00:54:29,760
order to explore. 
And it's very hard and and 

967
00:54:29,760 --> 00:54:33,000
probably not recommended to take
on any debt at that point in 

968
00:54:33,000 --> 00:54:36,160
time for developers. 
Maybe they've got a more 

969
00:54:36,160 --> 00:54:38,480
established project, maybe 
they're able to raise more 

970
00:54:38,480 --> 00:54:43,480
money, but it is almost always 
like still quite high proportion

971
00:54:43,480 --> 00:54:45,560
of equity. 
And then, you know, you look at 

972
00:54:45,560 --> 00:54:49,480
some Barbara today raising $100 
million, their producer and you 

973
00:54:49,480 --> 00:54:50,880
know, they need to raise equity 
as well. 

974
00:54:50,880 --> 00:54:55,120
And that can be expansion CapEx,
it can be covenant issues, it, 

975
00:54:55,160 --> 00:54:57,920
you know, it can be acquiring 
another company. 

976
00:54:57,920 --> 00:55:00,960
So there's always lots of 
reasons for minors to raise 

977
00:55:00,960 --> 00:55:05,240
equity in order for us to enter 
a position. 

978
00:55:05,760 --> 00:55:07,520
We will. 
One of the first things we'll 

979
00:55:07,520 --> 00:55:09,520
look at is the cash balance and 
the cash burn. 

980
00:55:09,840 --> 00:55:13,480
And so we need to see how much 
of A runway this company has 

981
00:55:13,480 --> 00:55:15,280
before it does need to raise 
equity. 

982
00:55:15,520 --> 00:55:19,120
And if that's an uncomfortable 
runway, then it doesn't matter 

983
00:55:19,120 --> 00:55:21,920
how much we love the commodity, 
the project, the team, you know,

984
00:55:22,080 --> 00:55:25,320
etcetera. 
You're probably going to be more

985
00:55:25,320 --> 00:55:28,200
so waiting for the equity 
raising to come around. 

986
00:55:28,400 --> 00:55:30,960
And then what you've got to take
the view on is that, that 

987
00:55:30,960 --> 00:55:34,160
management team is a type of 
management team that can add 

988
00:55:34,160 --> 00:55:37,160
value with that capital so that 
the next time they need to raise

989
00:55:37,160 --> 00:55:39,920
equity, it's it's at a high 
price and and you're not seeing 

990
00:55:39,920 --> 00:55:45,240
dilution for shareholders. 
Will you guys ever encourage a 

991
00:55:45,240 --> 00:55:50,760
company that you've already 
invested in to you know, go to 

992
00:55:50,760 --> 00:55:53,680
the market, you know, now you 
know, this week you'd say for 

993
00:55:53,680 --> 00:55:56,680
for gold companies it's a good 
time that there seems to be 

994
00:55:56,680 --> 00:55:58,760
demand. 
Obviously every every case is 

995
00:55:58,760 --> 00:56:00,760
kind of different, but how do 
you think about that? 

996
00:56:02,240 --> 00:56:05,360
There's there's certainly an 
element of if this going's good,

997
00:56:05,680 --> 00:56:09,440
you know, grab some capital 
while you can, because those 

998
00:56:09,440 --> 00:56:12,440
that hold out, you know, for 
high prices or catalysts or what

999
00:56:12,440 --> 00:56:14,200
have you, things can go against 
them. 

1000
00:56:14,200 --> 00:56:17,760
And and maybe you, you get more 
dilution than than you were 

1001
00:56:17,760 --> 00:56:21,640
expecting or hoping for or maybe
have to hold on for longer and 

1002
00:56:21,640 --> 00:56:24,280
not able to do all the capital 
works that you're after. 

1003
00:56:24,280 --> 00:56:28,600
So we certainly ask a lot of 
questions and, and, and get 

1004
00:56:28,600 --> 00:56:31,200
involved with companies with 
respect to their capital 

1005
00:56:31,200 --> 00:56:33,360
requirements. 
And, you know, coming from a 

1006
00:56:33,360 --> 00:56:36,480
mining finance background, you 
know, we do have some 

1007
00:56:36,480 --> 00:56:39,240
understanding of that and so 
hopefully can provide some, you 

1008
00:56:39,240 --> 00:56:42,560
know, I don't know, informative 
discussions with with mining 

1009
00:56:42,560 --> 00:56:46,160
companies on that. 
So yeah, we absolutely keep in 

1010
00:56:46,160 --> 00:56:50,640
touch with companies on it and 
yeah, try to lend a hand when we

1011
00:56:50,640 --> 00:56:53,560
can. 
Couple last ones to to wrap up 

1012
00:56:53,560 --> 00:56:57,520
guys, what are you most excited 
about looking out the the market

1013
00:56:57,840 --> 00:57:00,880
right now, I think. 
The money miners will be happy 

1014
00:57:00,880 --> 00:57:02,400
to hear that it is junior 
mining. 

1015
00:57:02,600 --> 00:57:04,360
We're really excited about 
junior to hear it. 

1016
00:57:04,520 --> 00:57:07,000
Yeah, exactly. 
So, I mean, we're seeing some 

1017
00:57:07,000 --> 00:57:09,960
green shoots in gold, silver, 
antimony. 

1018
00:57:10,080 --> 00:57:13,800
I had to look up how to look up 
how to pronounce that today. 

1019
00:57:14,120 --> 00:57:19,560
Yeah, but what what we've really
seen is a long time in the 

1020
00:57:19,560 --> 00:57:22,200
wilderness for a lot of these 
junior mining companies. 

1021
00:57:22,320 --> 00:57:24,200
We know where we need to get to 
with a bunch of these 

1022
00:57:24,200 --> 00:57:26,760
commodities from a down demand 
supply perspective. 

1023
00:57:27,120 --> 00:57:29,440
There's lots of interesting 
projects out there. 

1024
00:57:30,200 --> 00:57:32,360
You know, something's got to 
give and and we will have a 

1025
00:57:32,360 --> 00:57:35,160
really good time in junior 
mining hopefully in the not too 

1026
00:57:35,160 --> 00:57:36,960
distant future. 
I can't say exactly when that 

1027
00:57:36,960 --> 00:57:39,680
will be, but we're, we're 
certainly very excited by that. 

1028
00:57:40,360 --> 00:57:44,080
You know, we're exposed to it. 
And yeah, we're, we're always 

1029
00:57:44,360 --> 00:57:46,200
there watching and. 
Knock on wood. 

1030
00:57:46,200 --> 00:57:49,320
And lastly, any sort of 
contrarian picks, you've you've 

1031
00:57:49,320 --> 00:57:52,000
got going against the grain a 
bit, yeah. 

1032
00:57:52,000 --> 00:57:55,320
We thought we'd, we thought we'd
go with mining on this front as 

1033
00:57:55,320 --> 00:57:58,800
well. 
So rare earths, such a tough 

1034
00:57:58,800 --> 00:58:00,160
one, right? 
I mean, you've got all the 

1035
00:58:00,160 --> 00:58:03,920
different mineralisation types, 
you've got the market seemingly 

1036
00:58:04,320 --> 00:58:08,360
changing it's views on which 
mineralisation style will win, 

1037
00:58:08,760 --> 00:58:12,640
you know, on a weekly basis. 
But there's one the way like 

1038
00:58:12,640 --> 00:58:17,480
called Veritas Mining. 
So they're a Brazilian rarest, 

1039
00:58:17,800 --> 00:58:20,280
you know, hopeful developer, 
hopeful producer. 

1040
00:58:20,920 --> 00:58:23,400
They're in the same region as 
Meteoric. 

1041
00:58:23,880 --> 00:58:25,600
So they've got the caldera 
project. 

1042
00:58:26,120 --> 00:58:28,000
Veritas has the Colossus 
project. 

1043
00:58:28,800 --> 00:58:33,120
As far as we can see, the 
Veritas project is rather 

1044
00:58:33,120 --> 00:58:37,120
analogous to Meteorics project. 
Veritas has got a slightly 

1045
00:58:37,120 --> 00:58:40,440
smaller resource at this point 
in time with you know two 200 

1046
00:58:40,880 --> 00:58:43,720
odd million tonnes at at a 
similar grade which is around 

1047
00:58:43,720 --> 00:58:48,040
that 2600 parts per million 
TREO. 

1048
00:58:48,040 --> 00:58:50,480
And then they've actually got 
quite a high proportion of 

1049
00:58:50,480 --> 00:58:52,920
magnetic rare earths at about 
26%. 

1050
00:58:53,560 --> 00:58:59,000
So you compare those two side by
side, Meteoric probably, you 

1051
00:58:59,000 --> 00:59:02,080
know, anywhere between 3:00 to 
12:00 months ahead. 

1052
00:59:02,800 --> 00:59:04,960
You know, some would argue 
longer than that, some would 

1053
00:59:05,120 --> 00:59:07,680
argue shorter. 
They've released a scoping 

1054
00:59:07,680 --> 00:59:11,600
study. 
They're a 220 mil market cap and

1055
00:59:11,600 --> 00:59:14,280
you've got Veritas at at a 35 
mil market cap. 

1056
00:59:14,280 --> 00:59:18,240
So it's, it's something like a 
Meteoric is trading at 7 times 

1057
00:59:18,240 --> 00:59:20,600
what Veritas is. 
So there's a bit of buffer there

1058
00:59:20,600 --> 00:59:23,120
that we think is quite 
interesting just in terms of how

1059
00:59:23,120 --> 00:59:27,320
similar their projects are, but 
also just we recognise the 

1060
00:59:27,320 --> 00:59:28,880
risks. 
You know, people are worried 

1061
00:59:28,880 --> 00:59:32,760
about the processing of these 
ionic clays that hasn't hasn't 

1062
00:59:32,760 --> 00:59:35,640
been done at scale, you know, in
this area. 

1063
00:59:35,640 --> 00:59:38,440
And so, you know, there's always
going to be risks in in the ramp

1064
00:59:38,440 --> 00:59:41,040
up the metallurgy. 
While they have done a lot of, 

1065
00:59:41,040 --> 00:59:43,240
you know, testing on that, it 
still hasn't been done at, you 

1066
00:59:43,240 --> 00:59:45,880
know, at great scale. 
And then, you know, Brazil is 

1067
00:59:45,880 --> 00:59:49,240
still somewhat of an uncertain 
jurisdiction for some. 

1068
00:59:49,240 --> 00:59:53,160
But on the flip side of that at 
the current, you know, market 

1069
00:59:53,160 --> 00:59:56,160
cap with the resource that they 
have and, and A and a great 

1070
00:59:56,160 --> 00:59:58,600
management team in place and, 
and pretty strong capital 

1071
00:59:58,600 --> 01:00:01,920
markets following, we actually 
see Brazil as quite a positive 

1072
01:00:01,920 --> 01:00:04,280
jurisdiction. 
They're, they're permitting is, 

1073
01:00:04,280 --> 01:00:07,400
is almost world leading now in, 
in terms of electrification 

1074
01:00:07,400 --> 01:00:08,840
minerals. 
You certainly saw what happened 

1075
01:00:08,840 --> 01:00:12,280
with Sigma. 
Yeah, exactly. 

1076
01:00:12,280 --> 01:00:15,480
Latin resources were really 
confident on on how quick their 

1077
01:00:15,480 --> 01:00:17,840
permitting is going to be. 
There's been some focus on 

1078
01:00:17,840 --> 01:00:21,080
meteoric and and various with 
the respect to permitting. 

1079
01:00:21,800 --> 01:00:24,760
These are huge resources. 
They're high grade by, you know,

1080
01:00:24,760 --> 01:00:30,840
clay and ionic clay standards. 
And we believe just the, you 

1081
01:00:30,840 --> 01:00:34,440
know, the kind of the risk is, 
is, is in the favour of, of this

1082
01:00:34,440 --> 01:00:36,360
company at at this point in 
time. 

1083
01:00:36,360 --> 01:00:40,400
And that, you know, just to give
you a sound by we believe this 

1084
01:00:40,400 --> 01:00:43,760
could be, you know, the Pilbara 
of Rarest where they are in 

1085
01:00:43,760 --> 01:00:45,800
Brazil. 
And I'm saying it's definitely 

1086
01:00:45,800 --> 01:00:48,080
going to happen. 
But as as far as you know, 

1087
01:00:48,120 --> 01:00:52,440
having a plan on Rarest goes, we
we believe Rudis is a really 

1088
01:00:52,440 --> 01:00:53,920
good exposure. 
Yeah, awesome. 

1089
01:00:53,920 --> 01:00:57,320
The the clays are a fascinating 
1 to watch and the the rarest 

1090
01:00:57,320 --> 01:01:02,200
market is is so complex and 
opaque, but fascinating at the 

1091
01:01:02,200 --> 01:01:04,480
same time. 
Will and Braden, thanks for 

1092
01:01:04,480 --> 01:01:06,600
making the time. 
It's been awesome to chat and 

1093
01:01:06,680 --> 01:01:07,840
learn about Bazaar. 
Thank you. 

1094
01:01:08,120 --> 01:01:08,960
Yeah. 
Cheers, JD. 

1095
01:01:08,960 --> 01:01:09,920
Thanks. 
Thanks, JD. 

1096
01:01:10,320 --> 01:01:12,520
Thank you. 
John, it's Benedict Dawling and 

1097
01:01:12,520 --> 01:01:14,760
the bloody lads from Bazaar 
capital. 

1098
01:01:15,240 --> 01:01:16,520
That was sensational. 
Bloody. 

1099
01:01:16,520 --> 01:01:18,400
That's a good night. 
He's. 

1100
01:01:18,960 --> 01:01:19,240
A. 
He's a. 

1101
01:01:19,520 --> 01:01:22,720
He's a. 
Such an Aussie sounding fund 

1102
01:01:22,920 --> 01:01:24,880
manager name isn't it? 
I don't think you could get a A.

1103
01:01:25,400 --> 01:01:27,600
European or an American Baza, 
right? 

1104
01:01:27,600 --> 01:01:29,200
I'm gonna start. 
Sharon Capital. 

1105
01:01:30,160 --> 01:01:31,040
Sharon. 
I got some. 

1106
01:01:31,040 --> 01:01:33,600
More more names. 
I like guys mineral mining 

1107
01:01:33,600 --> 01:01:36,080
services. 
I like grounded cross boundary 

1108
01:01:36,080 --> 01:01:38,720
energy sands at ground support 
CRE insurance K. 

1109
01:01:38,720 --> 01:01:41,160
Drill dates that go Australia 
go. 

1110
01:01:41,240 --> 01:01:44,960
Australia Australia The 
information contained in this 

1111
01:01:44,960 --> 01:01:47,720
episode of Money of Mine is of 
general nature only and does not

1112
01:01:47,720 --> 01:01:50,320
take into account the 
objectives, financial situation 

1113
01:01:50,400 --> 01:01:52,400
or needs of any particular 
person. 

1114
01:01:52,720 --> 01:01:55,760
Before making any investment 
decision, you should consult 

1115
01:01:55,760 --> 01:01:58,800
with your financial advisor and 
consider how appropriate the 

1116
01:01:58,800 --> 01:02:02,480
advice is to your objectives, 
financial situation and needs.