Right eye buddy miners. Welcome back to another week,
boys. You got a big bloody humdinger
of a segment deal in the big, big cap space to go through
here. We do it it extrapolated
massively from the the initial kind of story, but we're talking
mineral sands most of. In small caps.
Yeah, Most of the mineral sands players in that kind of niche
part of the mining world. And yeah, M&A has its big place
in this story as well and a bit of history as well that you you
love Maddie. I love Speaking of history on
the back of some visible gold intersections.
Today I'm going through visible gold history slash visible gold
porn. Really.
We've got a lot of bloody few pictures and there's one picture
I cannot get ahold of, but I'll keep it for the money miners.
I think I know the one you're talking about.
Hmm, this was a photo from underground.
Hmm, yes, did did the rounds maybe like five years ago.
Was it maybe 90, 90? He was in the 90s, so.
That's a bit more than oh mate. Elusive from the photo anyway,
I'm a bit slow today boys. I just had a gut full of
Italian. Down at 6011.
Cheers sals. I'm a bit bloody parched
actually. Hold on, I've just got to get a
water. Hey Gerard, James, can you get
us some water mate? WA water boards?
I could get you a bloody drink of water if you want.
Direct to your hand. That's the relationship we have
with him mate. Great to have him back in the
back in the team finding water for the WA mining industry.
Buddy and matey can find water and get rid of the water if they
want. But he's but the mines are
parched. He gets him, he gets some.
Water he's he's ending around Mount Franklin's like they're
going out of fashion up at site. So mate, you want anything water
bore drilling related? Gerard James at the team at WA
Water Bores. He'll go anywhere as well.
Anywhere he will go. Any I know where for a fact
he'll go anywhere. He'll get and he'll do anything
for you. Right lads?
Take it away. What's going on?
Riya, Tinto, Kenmar and Oryx Global.
Yeah, exactly. And we've been taught Maddie
that it's Ken Mayer, apparently. So I know how grating it can be
listening to a podcast and somebody sort of pronounces
things and I'm sure. We do this Kenmare, Kenmar.
Kenmar Which? Is exactly how I pronounced it
to start with, but we've been taught it's a.
Kenmare Yeah, that's obvious, yeah.
It's a company from Dublin, they're based in Ireland and
listed on the LSE. So there was an eye-catching
takeover attempt on Friday that came out Maddie Orix Global.
This new sort of PE shop, which will give a bit of a one O 1 on
in a moment teamed up with Michael Carville, who's the
former managing director of Ken Mare resources.
It only left in September of last year and they came in to
try and take over his old business bidding at a 92%
premium. The the last close, so is.
That Cash, Cash, all cash, all cash, all cash.
There's a fair bit. To this one, all right, mate.
So. So who are The Who are the
parties involved? So we've got Ken Mare, like I
said, LSE listed, Dublin based. They've been around quite a
while. They were a oil and gas shell
back in the day, 70s and 80s. And then and then Michael came
along in 8687 and sort of took the company to what it is today.
He's run the company for about four decades.
So the company itself operates the MoMA titanium mine in
Mozambique. This one came into production in
2007, fourth largest producer in the world of titanium
feedstocks. So we're talking ilmenite,
brutal zircon, all these kind of products and that makes up a bit
under 10% of global supply, one of these mega long lived assets
sort of 100 years they say at. 100 and my life.
Crazy crazy. So I assume it.
Like there's probably more beyond that too.
If you've got 100 years, there's probably some other shit you can
take. Too, There's no point counting
beyond that kind of irrelevant at that point.
The the company after the share price bump is capped at £360
million and it's also in a bit of an investment phase right
now. So they've guided to $150
million to be spent this year alone.
That project that they're kind of in the midst of comes in at a
total of $340 million. It's already kind of exceeded
initial plans, which has agitated a few shareholders out
there. So in the context of all of
this, you've got a mineral sands market which has been fairly
weak since really the the back end of 2022, which was a
volatile time for the market. More company specific.
You've got political upheaval that we touched on late last
year following an election in Mozambique.
We saw miners like CSIRO as well as S 32 were both impacted by
this and their operations in in country there.
And added again to be a bit more specific on Ken Mare is a few
question marks around royalty agreements and these sorts of
things, but won't dive too much into that side note at the
moment. How about how about Michael
Carville? Yeah, so.
Obviously knows the company inside and out, ran it for the
best part of of four decades. And it wasn't that long ago that
he kind of stepped down, stepped down and became a consultant to
the business. He's in his mid 60s now, but
clearly is a big believer in the business, has always been a big
believer. He was resistant to takeover
attempts throughout the the 20 tens.
But yeah, he's come back for another part of the cherry and
you've got RX Global Partners, the group that he's teamed up
with. They're a relatively new private
equity group. Some people might recall just
last week Elizabeth Gaines, obviously the the former boss at
Fortescue Medals and Laura Tyler who people might know from her
time at BHP as well as more recently at at Adriatic.
They joined the team in in varying kind of capacities just
last week. So the group itself is Abu Dhabi
based, very limited info on them, don't really know how much
capital they've got to deploy, whether that cash is kind of in
the accounts yet or what kind of stage they're at.
There's no other sort of big deals that they've got their
name tied to as far as I could kind of tell.
And their mandate is pretty broad.
So they talk about looking at opportunities through the entire
minerals value chain that can be from mining itself to mining
tech related to services, power generation, a whole suite of
things. So there's, yeah, a bit more
questions than answers on the on the front of Oryx Global, but
I'm sure in due course we'll find out a bit more about them.
So, so a bit of a bit of £5.30 cash, but the market didn't
didn't go anywhere near that that share price.
So really, really interesting, right?
So like you, like you said, they're Trev, 5 lbs, thirty, all
cash. Kenmark came out and rejected
it. When they told the market about
this, they said that added they'd given the consortium
access to limited due diligence info, which is kind of funny
because I don't think there'll be anyone in the world that
knows more about the business than Michael given his sort of
tenure there. But that'll perhaps help them a
little bit because of course, these UK and or more
specifically Irish takeover rules in in this case, those two
are kind of similar in the fact that you guys will remember when
we spoke about Anglo and BHP, you've got these kind of put up
or shut up rules, they call them within a sort of month or so.
I think April 17th is the date where they have to announce a
firm intention to make another bid.
Or. Walk away.
But like you say, Trev, 93% premium, but the stock only
closed up 40%. So that tells you a fair bit
about the the market's belief on the bid itself, on the sort of
solidness of the bid, you might say on whether they might come
back, what the kind of actual intentions are.
It's yeah, it's an interesting one, right?
Totally. It it tells you that the bid
might have some uncertainty about it in the market.
Absolutely. I mean, a Oryx, like you said,
does, do we know how much money they really have?
Like there might be uncertainty about that.
The wording of the announcement itself was kind of interesting.
It said the most recent proposal received was at a price of
£5.30. So there'd been previous
proposals in place, but they've chosen kind of now to disclose
to the market that they've rejected a, a proposal.
So what's the, what's the rationale for that?
Is this like an attempt to try and kind of elicit a, a, a
competitive outcome with, with, with other parties?
Like what's, yeah, what's the, what's the motives?
Regardless of what that is, what the share price is telling you
is that there's there's some doubt about the the realness
that this will convert into a real offer.
Yeah, it's, it's super, super juicy that the wording again
leaves a few more questions and answers, but we're we're getting
closer to what's going on. And I think we should feel that
the money mine is in on a bit of history.
We found out not that long ago. We're talking about 2024 here.
You got Rio Tinto as well as the UA ES international resources
holding those. Both of those parties ran the
numbers on Ken Med's sort of been reported.
So money miners, right might remember IRH, that group, that
really generically named group, they came in with a last minute
bid to buy 51 per stake in Zambia's Mopani copper mines.
So it's some famous assets and they got very close to actually
picking up Con Cola also in Zambia off Vedanta, some pretty
well known copper operations. That one didn't pan out.
And we'll talk a bit more to the the Rio Tinto angle in a moment.
But this all came from an activist investor, the big
london-based investor, Jo Hambro.
They ran a bit of an activist campaign early last year.
They got in touch with the company.
They put forward obviously a few suggestions, one of them kind of
being that perhaps more value would be realized if this were
to be merged into a bigger group and didn't have that solo asset
single, you know African jurisdiction kind of rich risk
associated to it. And you know, I think at the end
of the day, they were a bit frustrated having seen their
shareholding go up through 2122 and then write it back down.
They wanted to see a bit more action on that that price front.
Is Ji related to heavy hambra? Yes.
What? What brothers or some or?
I think the firm goes back longer and my understanding is
Evie is one of the children. Yeah, right.
Yeah, go, Evie. Yeah, it's a, it's a kind of
important money manager and family in in London there
they're. Right.
Come on the show whenever you want, Ham Bros.
Get back in touch. So it was a bit more history,
Maddie. This is what I was referring to
earlier that I wanted to dig into.
And this is the the 20 tens. And I've just found it super
fascinating. And I think it gives more
context to the the story that we're talking about here.
So the early twenty 10s Kenmare is just flying.
This is on the back of the China boom.
Everyone wants these titanium feedstocks.
Global GDP is moving upwards, specifically driven by that
China boom. Dow Chemical were apparently
circling the company, as were Rio Tinto back then, and they
reportedly considered a £2.4 billion bid just be enormous,
but that didn't actually eventuate.
It's got to be said that Ken Mayer's Max valuation only
peaked at £1.2 billion, but that's still pretty lofty.
And then unfortunately, as China kind of cooled, you get to the
point in 2014 where the sting has really come out.
The stock, they've taken up a massive CapEx program to expand
production. They've debt funded that, which
has put them in a world of pain. Aloka comes in and bids €500
million for the stock, but over the next 18 months, they
continue to revise that down as conditions continue to fall and
the ability for the company to service its debt looks more and
more precarious. So at the end of the day, in
about December 2015, about when commodity markets are reaching
an absolute low, Aloka just walks away and they kind of call
it and Kenmer OPS with the route of a capital raise.
And this capital raise is done at a hugely dilutive price.
There's a 90% dilution on all the previous shareholders.
So complete rapid recapitalization of the
business. The previous equity investors
get wiped out. The Armani monarchy, the
Sultanate of Oman comes in and takes a 30% stake in the
business. And they over the last 10 years
have bit by bit. It took them a while, but
they've been selling into buybacks and other capital
returns programs from from the company.
And the final little twist here that I think is particularly
relevant to the the takeover is that Ken Mayer signed up
Rothschilds to be on defence for them.
And subsequent to that, about four years ago now, you've got
the lead banker who ran defence for them, joined Ken Mayer as
the chairman. Then you've got the long time
managing director step back from the company and he's the one
who's now come and try to buy it.
So there's been a bit of role reversal between two guys who
were formerly on the same side and now one's playing off
against the other, trying to extract a bit more value.
Yeah, right. Every time you bloody.
Here's another twist for you. When you mentioned Rothschilds,
it just gets me. I'll just think of Sean Russo
'cause that's his old employer. You think of hedging, you think
of hedging risk, you think of CRE insurance.
That's you've sent me down another 7° of separation J.
It's the logical connection. Didn't you think of that?
Didn't you? Didn't CRE insurance just pop in
the air there? I couldn't get CRE out of my
head the whole time. I could imagine anyone listening
in Orange right now be already thinking of them 'cause they
would have probably had a coffee next door to them at their
Orange office. You could say the same about
Perth, Brisbane and Sydney as well mate.
Where's next? Mining in Mozambique.
They are phenomenal at operating interdictions like that.
Maddie, have you got any spare office space in Mozambique?
I reckon we've got a tenant CRE insurance ready to tackle
Mozambique. I think that'd be perfect over.
There in the meantime, they'll do it from Perth.
They will, they will. They'll go over there if you
need them. Too, But there's there's a fair
bit of business interruption that can sometimes happen from
time to time, including in the story I'm about to tell, and CRE
Insurance can help help help in those situations with the
insurance required. Yep, just give them a call
regarding what Trav is about to tell you.
Right, Take it away. What is take?
Just take it away. What?
One of one of the One of the? Yeah, like questions we're
trying to answer in in, in going into this story is it's maybe
the revelation of this, this, this bid from Marks or whatever
is it. Is it a bit of an attempt to try
and get Rio to come to the party and and pay up for for for Ken
Mayer at A at a pretty elevated price?
Bit of gamesmanship. Chunky premium, yadda, yadda,
yadda. They've had, you know, interest
dating, dating all the way back. And, and so I, I just, I was
kind of, I've got down a bit of a rabbit hole to, to really look
at Rio Tintos like history and mineral sands in this part of
the, in Africa specifically. And I came away with some big
kind of takeaways as they relate to where they're at right now
with their infrastructure and their operations in South
Africa. Their, their mineral sands
history in the African continent is so interesting.
If we, if we take a good look, we can try to have a guesstimate
about, you know, whether they're going to pop up and, and, and
bid for, for Ken Mare, but also like, are they going to, are
they going to bid for ASX listed sovereign metals, for example?
And I'll, I'll get to that. So rethink those major mineral
sands operations in South Africa.
This is the, the Richards Bay Mineral sands operations, but
they also have operations in, in Madagascar near Fort Dauphin.
They've got a growth project in Mozambique themself, but that's
got complications I'll talk about soon.
Plus they own 19.9% stake in sovereign metals in Malawi,
which I'll get to. Richard's Bay Minerals.
It's a complicated asset for Rio.
They, they're basically sold like Rio's sold, I think all of
their other assets out of Rio Dinto except for Richard's Bay
Minerals. But they've kept this and that's
as South Africa has become an increasingly challenging
jurisdiction to to invest in, but they've kept rich as Bay
Minerals and that's because it's a strategic asset for them.
It's, it's one of the largest sources of, of titanium
feedstock and, and zircon on a globally and real.
They've got, you know, vertical integration in this market.
They've got, yeah, they've got, they've got a smelter at
Richards Bay as well, which helps produce an Illmaris slag.
And they've also got some downstream stuff going on on in
Quebec. It, it and and collectively all,
all of these sort of assets position Rio with like a 14%
market share in that titanium feedstocks kind of market, which
which is an an important market share if in an industry where
you kind of want to have some volume and pricing power because
prices are often times contract based and opaque.
So when, when JD, when you said Ken Meyer was the 4th biggest
producer in the world? Is Rio's sovereign in the top
three items? Sovereign's not a sovereign
stock. There yet?
You've got, you've got Iluka, you've got Tronox as well.
Rio being the the biggest. Yeah, yeah.
These guys at 4th, I want to say Aramet do a bit as well.
And Sierra Rizal. Leon Oil.
Come Sierra Rizal. I.
Haven't forgotten where it is. Yeah.
And then you and then you've got about 35% of the market coming
out of China. Yeah.
And a lot of that is a byproduct from iron ore mining.
What? What's where's Sovereign going
to sit once they do start? Once they eat 9 plate I.
Don't quote me on that. Yeah.
Yeah, it's a, it's a very big asset, but yeah, I'll.
Yeah, there's a bit of framing on what size it comes out at and
and how we kind of go. I think, I think we should put
in in perspective the, the size of this kind of market and think
about what, what these earnings kind of mean for for Rio.
Make Rio. Rio is like a funny company,
right? They've got like exposure to so
many different commodities, but like really when you look at
their earnings and what actually moves the dial, it's like
Pilbara iron ore and and that's it.
And I say that kind of like tongue in cheek, but it's, if
you just like compare the EBITDA from their entire what they call
this, this this kind of business line, they call it titanium and
iron. And that is in 2024 a mere
$609,000,000 in EBITDA. Compare that to Pilbara iron
ore, $16.5 billion. So I mean, it was just we're
just like in a whole another ballpark, but.
Then you got the north of Canadian iron ore as well.
Yeah, yeah. But even that's tiny in here.
Like that's only 700? Million, but just iron, iron ore
for them. Well, you think Rio?
Rio's a smaller company than BHP, but they produce more iron
ore. So that shows how leverage they
are to iron ore. Yeah, absolutely.
On the on the Richard's Bay front, you, you gave a bit of
colour on them. The there was a, a pretty
important part of the history sort of in, in 2021, there was a
pretty sort of violent event that happened.
This is kind of following after Rio Tinto had already tried to
make a, a partial kind of exit from South Africa.
They were, they were holding onto Richard's Bay.
But this would have done a bit to their thinking.
Hey, right. It's, it's, it's, it's horrible
this part of history. Look at, you know, an executive
was murdered. So the context, which is Bay
Minerals operates in in an area of, of South Africa historically
occupied by Axillo speaking communities.
There's there's several different clans with the with
the influence over the area and and they've got kind of
contested claims themselves. In 2018 to 2019, there were
violent protests at Richard's Bay Minerals Basic demonstrators
were blocking roads, setting vehicles on fire, damaging
property. This set of protests led to a
temporary mine shutdown mid 2018.
The cause was put down to local communities demanding more and
preferential jobs and also just rival rival clans forward over
contracts for transport security supply services.
When RBM resumed operations after some government
intervention like in in due course, but but then that unrest
did set the stage for for future disruptions.
In 2021, more protests, so arson attacks and disputes over jobs.
Nico Swart was the general manager of Richards Bay
Minerals, responsible for security operations and he'd
been involved in in managing tensions with some local
communities. On the 24th of May that year, he
was on his way to work when his car was ambushed by gunmen.
He was shot at least 27 times in just an utterly horrible event
in the history of RBM and Rio Tinto.
So what? What kind of happens subsequent
to to that awful, awful murder? So Rio, Rio, they suspend the
operations, they, they also put the development of Zulti S on
ice where it still remains on ice today.
And Zulti S is an incredibly important part for for Richard's
Bay Minerals because when when this development was approved in
2019, there was, you know, nearly 500 million U.S. dollars
that was agreed to be invested, which would effectively sustain
RB Ms. current capacity at that point in time and extend it's my
life. So as RBM sort of sits today,
they are yeah, producing out of out of four mines in the Zolti N
lease area only. And plus there's a giant kind of
mineral separation plant and a smelting facility as well that
constitutes the the infrastructure.
So Zolti S underpins Rio's substantial kind of
infrastructure already to, to keep things you know, like like
at full capacity or what not, but it's, it's been on ice for
four years and that sets the same for for Rio's potential M&A
appetite today. I think because they, they, you
know, they have the, the infrastructure which requires
kind of concentrate in order to, to be fully, fully utilized to,
if you think of their mineral separation plant that they've
got, that's being fed from these four mines.
And each of those mines has its own kind of concentrate plant.
So there's 35,000,000 tonnes of ore from those mines generates
1.2 million tonnes of heavy minerals concentrate and that
feeds the mineral separation plant.
That mineral separation plant, you know, separates into
ilmenite, zircon and rutile. And the ilmenite, which is rich
in titanium is sent to the smelter there for further
processing into a titanium slag and also pig iron.
Our our word on the decline is that Richards Bay's
infrastructure is is being constrained by its inputs.
All right, let's kind of run through those those inputs.
There's a couple big ones that come to mind, right?
It's twofold. First is concentrate supplies.
They can't get enough concentrate at the moment to
keep the the minerals at the MSP and smelter fully utilised.
And the second one is is power issues like which is by
minerals. They face frequent kind of load
shedding issues. It's connected to the state
owned power utility S Com, which has had a litany of issues over
over recent history and the smelting phase here is really
energy intensive. These are electric arc furnaces,
which require stable and A and a really high amount of power.
So you can imagine the power side of things has undermined,
you know, the the the competitive positioning of the
product production you're actually making and reagent is
pretty concerned about that. Their current predicament.
They they came to get more concentrate and frankly they've
got limited options here as well.
Yeah, it's really interesting. It looked like South Africa last
year was kind of turning a bit of a corner on the on the power
front. S commerce troubled a lot of
downstream production in in country for years and years and
years and years far, far too long.
And it looked like they were kind of turning a coin actually
up until this year when we were there.
And then they had these yeah, power outages again, which is a
bit sort of disappointing to see.
But you know, that's going to kind of run its course and
hopefully it turns to the positive.
Let's focus. On a few Pbas as well of power
purchase agreements with, you know, separate, independent so.
They don't have to rely on on SCOM.
Let's focus on the the concentrate side of things
because there there are a few options on the table.
And you know, in time was kind of circle back to to Ken Mare,
but they can look at a few different projects around the
world as well as what they've got in their their own growth
projects. I think I think their first
choice would be develop Zalty South.
This is complicated given the the historical tensions and
violence, but it appears Rio is is gearing up to pull the
trigger on, on this development. You know, absent kind of any,
any more tensions or escalations or violence or property damage
etcetera. We, we, we think that they have
signalled a decision around mid, mid year this year to, to, to
develop Zalty S second choice or potential choice is Mozambique
And not, not that not can can, can, can be like you talked
about. But remember I said Rio Tinto
had a growth project of their own in Mozambique.
It's called a Tumba and a pilot plant was even built there in
2020. I, I, I don't get a good feeling
about its prospects to fit in the mix here because there isn't
much information since and the JV partner Savannah, they pulled
out of the JV in 2021, which let Rio take the lot for a pretty
small sum of money. What what we hear is this
project Matamba is kind of compromised by the very large
community displacement that would be required to to mine
there. So yeah, put a, put a, put a
question mark slash lines with that one.
And then we go to Madagascar, don't we?
Not the movie. Their choice.
Yeah. So Rio actually has a mineral
sands operation in in Madagascar already.
And best I could tell operations late life grades are declining.
You know, my, my life will extend, but it's sort of five to
10 years my life remaining at the moment that there's already
an MSP at that operation. And best I can tell some of some
of the, the ilmenite that comes from the MSP does in fact get
shipped to this, this Rio's smelter in, in South Africa
already to produce the titanium slag.
But also in in Madagascar is a substantial mineral sands
development project which used to be owned by Base Resources.
Now Energy Fuels, I think they call it the Toliara approach.
Toliara, yeah. And that sounds all systems go.
So in the next few years, you know, that'll, you know,
hopefully be a be a fully operating mine.
But the fact Energy Fuels acquired Base Resources and not
Rio Dinto acquiring base Resources sort of begs the
question about Rio's long term view of remaining operating in
that country in that industry itself, I think.
And then sovereign metals kind of is worth worth raising in
this in in this discussion you got to Katia.
Absolutely mate. I, I think I, I pronounce it
Kaija but I'm probably saying that wrong.
But yes, this, this, this one will pique the interest of the
ASX punters. Kaija is, it's one of those
exciting rutile development projects.
It's in Malawi. It's it's owned by ASX listed
sovereign metals. Rio Tinto actually owns a 19.9%
interest in sovereign metals already from a a strategic
agreement struck between the two companies in 2023.
Part of that agreement, Rio has the exclusive right to, to take
operatorship. And if they do that, then they
maintain 40% rights to the product that comes out of Kasia.
And yeah, but there's a, there's a few parts to, to Kasia itself.
It's, it's enormous. It's the largest natural route.
Our project globally, the the PFS says it will produce 2
products, one natural rutile and the other one is a graphite
product. And whenever, whenever we think
graphite, I always just get sick feeling in my stomach.
But yeah, that's just because of the historic, historic stuff
around graphite. Yeah, it's been a tough Rd. for
some Aussie listed graphite producers in that sort of part
of the world, hasn't it? Has.
Anyone done graphite good or been successful at it?
China natural graphite. Not yet.
Tough market. Just we're we're one day closer.
One day closer, yeah, one day closer.
If you, if you look at the the PFS of it like it's, it's in
Malawi, right And that's landlocked.
So to get the product to one of the ports, you know, you're
paying substantial kind of logistics costs here about 100
bucks per tonne is required to to get it to a a port.
But that's OK because the two products they want to sell sell
for a fair bit more than that. But you've got a really long my
life because it's a big resource that the PFS has an initial my
life for 25 years and an IRR of 27%.
So that's certainly in in, you know, in the in the ballpark of
an asset that is is fit for a major like Rio Tinto.
When you've got the healthy IRR long my life and, you know, in
the in the in rutile, which they care about.
While graphite has been a disaster fair for everyone that
has kind of tried to make it work in the West.
Hopefully the project could buck that trend.
Both brutal and graphite make up roughly half of the revenue each
in there in the optimised PFS economics.
I, I, I think, I think the KJ is, is, is interesting, but it
isn't, isn't cheap. There's a $560 million market
cap and the stock's near all time highs.
But they're going to have to kick a few goals on that
graphite product. They're risking too.
They've been putting out, you know, more and more information
as it relates to this, and I've listened to Jacob Starsam at at
reginto talk about, you know, the potential of entering the
graphite market. And he said, where's the effect
of, you know, we're already in their gene commodities, like it
doesn't bother us if we're in, if we get into one or two more.
So they're open minded about that referencing, you know,
graphite specifically. And I think just given the
complexities of of the market, it's, it's worth a bit more
scrutiny as well. When we just look at the study
numbers of Keja, because Sovereigns PFS they use a
graphite price of roughly US $1300 per tonne and they defend
that as conservative versus fast markets long term forecast of US
1846 per tonne. But just look at the recent
prices, you can see the price of flake graphite fines kind of
nosedives below $400.00 per tonne.
And it's the fines which is actually the big part of the
market, the course. The course flake is a much, much
smaller part of the market even though you get a higher price
for it. It's the fines that is used in
battery anodes. Yeah, it's a, it's a super
interesting market. And also it stands out that they
don't really push The xx China like that's the big sire route
that they've gone down, got that DOADOD funding package sending
stuff to America that pointing to that being the only way that
they can survive in this market and that they're going to get a
differentiated price due to the the manipulation that China has
done. So it's a, it's a, it's a
strategy that stands out in its approach in my eyes.
Well, you might get 19.9% more now, less than the 20% China
tariff. Yeah, and and maybe and now
Rio's like gobbled up Arcadium then you know that there's
probably going to be internally more efforts on the fully fully
integrated and downstream kind of battery stuff.
And this can kind of potentially feed it.
But yeah, on on on my scan, you know, you're looking at roughly
40% of cages products sort of meets the the finds Micron cut
off or their thereabouts, which which has me just wondering if
if their assumption on on price is, is is reasonable and it's a
pretty meaningful part of the revenue, right.
So when you're talking about the yeah, yeah, 50% of revenue
versus versus the retail itself, all I have to say if Rio can get
comfortable on the on the graphite part, which is where,
you know, the majority of the question marks are going to be,
then then sovereign looks attractive.
Absolutely. And it's, I mean, it's hard to
distinguish with the, the share price rise, how much is that
like other investors getting comfortable with the fact that
Rio Tinto is now there or rewarding the company as they
kind of get closer to, to making a call.
But at this point in time, it's been a, it's been a really good
last year or 18 months for the company on that front as they
continue to release all that network that you kind of speak
to there, right? Yeah, yeah.
And yeah. So it is interesting, like I
think after doing all that deep dive on, on, on Rio Tinto and
their history in, in mineral sands, like they've got, they've
got deal appetite. They're, you know, interested
in, in 3rd party sources of, of concentrate.
I mean, there are going to be logistics challenges to actually
get a concentrate, but maybe you can get at least the almanide to
help feed the smelter from, from somewhere else.
And yeah, so there's a there's a bunch of a bunch of potential
things on the line there. The one thing to just watch is
around around mid this year if they pull the trigger on on
salty South or not. Yeah, right.
What do you mean? Speaking of Aussie based mineral
sands, Petrotherm that's getting talked about, that's actually a
rutile in South Australia. What's bloody what's the Goss on
that? It's.
Been very volatile, hasn't it? It came off a lot since it's a
yeah. Right.
It just did, just did a rise I think, Yeah.
So come off a bit there, but that's like Aussie based seems
to be the one behind sovereign on the listed ones in Australia.
I mean, you, you look at Iluka and their their working capital
build or their inventories, whatever way you want to slice
and dice it. But they call it a billion
dollars that they've now got in inventory.
In inventory. Wow, they're kept at less than
two billion. So inventory has swelled
massively since 2022. It's a, it's a, yeah, a super
interesting, somewhat opaque market.
And to round it back to, to Ken Meier, you've got a pretty
limited number of potential buyers.
So obviously we went into detail on Rio Tinto's interest and
capacity to to have a look and and take them out.
I don't think they will. It's my gut feel, by the way.
Yeah. And then you've got Tronox, who
admittedly we went far less deep on, but the gut read was that
this wouldn't be the right opportunity for them.
So there's not an awful lot of buyers for Kenmare if they're
thinking someone's going to come in over the top.
But going back to Africa, Yep, they've yeah, had a go at that
in the past. And I think they'll stay on
Aussie shores for now. So it's like the whole with this
increased activity on the back of the Sierra rutile battle,
mind you, but even like take away like considering the
inventory you said that I look has got is like the rutile, like
the global titanium market. Is it is it peak?
Is there a structural supply deficit coming up?
Like what's the market feel? What's the vibe of it is?
Is there differing views of it or?
Every market's got a structural supply deficit coming, Betty.
Yeah. They've got one of those charts
where supply goes down like that and and demand goes up.
I I think of the market as kind of roughly following global GDP,
but you've got those opaque factors, you've got those by
product elements that play a play a role in it.
A lot of it for a while was sort of tied in with this Chinese
property boom. Obviously that's cooled down and
you know it's all happened at a time that a lot of the producers
were expanding supplies. So that all culminated in a
number of additional supply and decrease in demand factors
hitting at the same time, which was not good for the market
outlook. So it is come off pretty
substantially since 2022. The conflict in Ukraine and
Russia impacted markets as well. But it's, it's kind of cagey
right now. And I think that's a bit
reflective of kind of how we think of like iron ore and these
sorts of things as well, maybe not so much on the supply side,
but just like the world's growth is looking a bit more shaky at
the moment. So it's kind of 1 lens to think
of it as. Yeah, what What gives the what's
the most leverage to titanium? Like what's the biggest factor
in increasing demand for titanium globally?
Increasing demand, increasing the standard of living across
the world. Paint.
Paint it. Paint.
How many? How many?
How many coats of Dulux do you want on you?
Yeah. And how rapidly do you, you
know, repaint your stuff? 10% of the market is of the
titanium goes to titanium metal which is used in aerospace, so
both defence and plane parts. So again, that sort of has a
part military application as well as just overall people
flying in more planes. So yeah, they they put a chart
of GDP going up one way on their on their map and titanium demand
kind of following that and interesting.
The, the, the, the thing JD mentioned too is like the
tendency of producers in this industry to build massive
stockpiles when they can't get the price that you know is
appropriate really limits the upside in this market.
You don't get big flex, flex UPS in sort of price because the
producers build inventory and then they release that inventory
when prices are appropriate. But that keeps, you know, you
don't get really volatile upswings like you would in other
commodities as a result of that. Yeah, look at 2022 and look at
Iluka's inventory balls of 21 as well.
It started but 22 drops 23 it starts picking up massively
again. And so new supply is really,
really responsive to better pricing environments too.
There's a, if you think of this, the types of operations these
are, you can somewhat easily just start, you know, mining and
processing a bit more. There's, there's often times
spare capacity. Think of, think of Myluca having
their, their, you know, synthetic kiln, one kiln 2.
This, this swing capacity that can kind of come online as, as
the market requires a bit more capacity.
And then it pretty quickly gets supplied when the demands there
and and all of a sudden prices don't stay elevated for long.
Very interesting. I I know more about titanium as
of 10 minutes ago. Thank you very much, gentlemen.
I know far more as than I did as of this morning.
It's interesting one. Good stuff, right?
A bit of bloody visible gold porn we're going through.
Have a look at this period. Oh, this is new Murchison gold.
Hit the bloody a good chunk of flake here on Ding Ding Ding.
Oh yeah, Ding Ding alley. GC is dinging the crap out of
the joint today, buddy. I I looked at this chord.
I'm thinking holy snapping duck shit.
I've not in terms of when you say visible Guild, I'll bring up
some historical ones, but it's usually a speck or something.
There's not many that actually look like this, which really
sparked my attention. So doing a bit of extensional
drilling outside the resource and the pit.
They've obviously, as we've mentioned, got the West Guild,
have got their foot on them pretty much for mine and a
million tonne out of that open pit.
So this is beyond that for the for the future.
So I thought why not looking at that call, look at some visible
gold from history and just say there's there's one I haven't
been able to get a hold of yet but I'll I'll get it in due
time. Got to go through type visible
gold in the chat. GPT was the 1st starting point.
Walk us through history mate there.
Was actually one in February this year, Advance Metals,
they're down in the Victorian gold fields.
So you can see, as I said, there's me bloody what's me
going? It's actually on mobile view too
and it's bloody shitting. Victorian gold fields have been
have been good for the visible gold, haven't they?
Yeah, I think all one I've probably missed was Southern
Cross. I think they hit some as well.
So you say this one that's a there's your visible gold, which
is for the money miners that that don't know when like to
have visible gold is not as common like most, most gold you
cannot see like 99% of drill intersections is gold you cannot
see. That's why it's in when it says
10 grams per, which is pretty good grade, that's 10 parts per
million. So hence you it's gold that is
very that small, you just cannot see it.
So in these are the cases where you can see it, which sometimes
not all the time is an indication of higher grade
because it might be just very isolated.
Yeah, I think it's important to remember it isn't always.
So it can be a bit deceiving and you can mentally throw you off
when you see a big chunk of yellow stuff, but the grade
doesn't come out quite as good as you think it might.
Yeah. And then and you got to also
think of how they extrapolated over the like if it gets smeared
across a resource here, if they put top, and we'll show here
where they put top cuts on assays where they say, right,
we're not reporting anything above 50 grams because they
don't want to blow out the area of influence of this one bit of
visible gold. And then you end up mining next
to it and there's fucking no gold.
So so that's a that's a small little speck there in the
Victorian goldfields. Next one we'll bring up on
visible Maddie's visible gold. I'll stop saying porn ballymore
Ballymore resources. This one's a bit of a fine spec
as well. I think that was a picture I was
bloody talking about there. What that come back at?
.4 of a meter at 54g per ton, so even visible gold was still 54.
So it's not like knockout knockout next one Odyssey gold.
These guys fly under the radar a bit of I.
Remember this one? Yeah, 2021 and it's like it
obviously looks so yeah, gold like, but I remember it come
out. A subsequent announcement said
that it broke the upper bound of the machine.
Yeah. So I've actually got that that.
When that happened. That, that one here, the central
sub sample has exceeded the laboratory upper detection limit
of 12,000 grams per tonne. So it's just pretty much gold in
that section, yeah. That's West Perth Hall of Fame
I. Love it.
So they're 'cause they're actually in the got it.
They're right in the right in the Murchison.
Bloody thing. But just north in between maker
and Q that which is actually pretty close to where new
Murchison have hit theirs. So that's that's not a bad look
at that's a pretty good looking one.
The Odyssey 1 great boulder. They remember the this was the
one where they went into trading halt straight away because
visible gold was coming out of the RC chips and paddow actually
put in the announcement. We had to go into the trading
halt before the drillers got to the pub.
So that one actually, this one actually come back at 1m at
3451g per tonne. So that was a bit of a bit of a
hemdinger you'd think with bloody Spartans resource they've
got, they should have had some visible gold at some point.
They have these, this was the, I think it's one of the early ones
from when they were still called gas coin.
You can see the bloody little specks there.
Not not huge amounts that come back at you know, that was a
like a pretty much did the whole thing at 29 meters at 11 grams.
But as I was mentioned about top cuts here, you say assays top
cut to 50 grams per ton. So in the intervals they were,
if something blew the machine apart like Odyssey did, they'd
just get a 50 gram top cut to mean that right doesn't smear
across the resource and then potential upside later if you do
have those top cuts in place, it's a bit more of a
conservative approach. I'll still remember this is one
of my favourites from back in the day 2011, the early Northern
Star days. This is actually when I was
there. This is I think Voyager 2.
This was the and just the the way that the announcement, just
the biggest baldest riding 12,178g per tonne.
That was bloody bill in bloody. He was in Max gold mode then he
loved it. So I think that's you can see
visible gold on the corner there at the top of the core.
So it wasn't like a for that grade.
So there was obviously a shit load of fine gold in there, not
just a big bloody gold flake. So it comes in different shapes
and sizes. Don't think the ASX would let
you do that one anymore. Nah, yeah, Good, good.
Bloody a lot. I love the font good font size
there now one of the biggest humdingers of gold deposits that
were found that just look like a friggin Abscess come off this
ore body was Fosterville, which was Kirkland Lake.
Then obviously Agnico Agnico Eagle took over Kirkland Lake
and they're not in the the heyday that Fosterville was like
they the I think it was a 30 gram head grade going through
the mill there like it. Was good Oz.
Phenomenal. And here's a picture of the I
think this looks pretty zoomed in of some core at Fosterville
and you but you look at you look at the infill drilling results,
these these drilling results aren't that core, just it was
from a different time, but 976g per tonne over 7 meters, 933g
per tonne over 6 meters like that is the friggin gold.
The Fosterville was just this absolute anomaly.
It was unbelievable. The now the probably I don't
know if this was the one you were talking about JD beta hunt,
beta hunt. So beta hunt back in when was
this 2019, around 2018-2019. They were they were it was a
nickel mine. They weren't even a bloody gold
mine. It was owned by RNCS.
That was a Canadian company and it was, they're trying to sell
it as a nickel mine. And it was just, you know, it
was tough going there. And they knew this.
They knew gold was in pockets in random places.
And I remember I was at, I think I was working at Daisy Milano at
the time. So a lot of the people at Daisy
were in drive out of Cambalda. So I was all part of that
Cambalda community and this they've pretty much taken I
think he just took an air leg drive cut and they've come down
and he started washing it down and they were like that to ring
up and say, I think Jr., you got to get down here because there
it was just fuck and gold everywhere.
And you can see the see these rocks here.
So you've just got these. I don't know what it looks like.
It's got gold mould on it. Like there's just gold growing
on the rock. It was just, and it was, they've
obviously just hit this patch and then they've kept going on
it. And then I think a year later as
well there they hit another patch.
And so the the sales process just became so much easier.
It just went from not being able to sell it at all to assume they
sold it. RNC sold it to Korora.
Korora would just rename. I'm not sure.
I'm not sure actually. Yeah, yeah, yeah.
Maybe they maybe they did. Maybe that that was it.
Yeah. So it was.
That's obviously the beta hunt that W Guild have as we speak.
So don't worry about the nickel. This is gold.
So that was a 90K gold specimen that rock.
So I don't know what the bloody grade of that was.
So the the one I can't find that I remember getting showed at the
at the wet mess. So and it was a photo.
So it's one thing at the wet mess.
That was definitely true. And it was this picture from an
all drive at Yulgan Star, which is Southern Cross, which is on
what is it, Bartow Gold Minjar, now that area.
And it was from I think it was the 90s.
And it was so, you know, like the yeah, Bellevue's and Horror
banders and that like you just have the quartz vein going
through the guts. This was a drive like that.
But the vein which was like pretty bloody thick was just a
gold vine. Like it was just frigging pure
gold. I've never seen anything like
it. It was just absolutely
phenomenal. I wish I had the photo.
If I find the photo I'll I'll show everyone, but I'll it was
just a thing of absolute beauty. Chuck it in the director
special. Mate, Yeah.
And then I've also heard if anyone's got photos, these are
real back in the day, I've heard Norseman back in the day, like
Harlequin of. Well, the shift boss who worked
with at Paulson said, you know, most minds you got, what was it
like? It'd be all quartz.
Like I know Paulsen's was all quartz in the ore body.
And then you'd have a, you know, the gold bearing vein in the
middle. He said, I think, I think it was
Harlequin or one of the northern gold parts was the opposite.
So you'd have all gold and then just quartz veins here and
there. So there's a yeah, God, but
people were with all that free gold comes a lot of gold in
people's pockets as well, so. There's socks and.
Yeah, yeah. And there's all there's some
some stories from back in the day of the gold that the the
reconciliation wasn't there and like pay you like I've heard
people that like when once the authorities actually came to
sight and people knew they were buggered, there was yeah, there
was some horrible events that happened on the back of that.
So and that but and gold was what, in the hundreds of dollars
an ounce then when that was happening.
So could you imagine running into that stuff now at 4600?
So good luck. Just keep fucking drilling
aisles everyone. You will find it.
To wrap up that'll. Be into it, but I'm not going to
RIP them out for you nice and quick.
Was it? Was it?
Was it RNC? Royal Nickel Corporation in June
2020 changed its name to Carolla.
There you go. Yeah, beautiful.
Nothing like a name change. It's like M&A happened.
Beautiful mate. 100 bucks off yours.
IMM underground operators tickets April 7th to 9th in
Adelaide. Can't bloody wait.
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