Right on, buddy miners. We've got another another
Indarba episode, The bloody. The fruits are flying off the
tree out of Indarba and we're heading into first quantum
territory. Yeah, mate, this is a a really a
really awesome chat that we've got to have with with Mike
Christie. Mike Christie heads up the the
geology work streams director of geology.
Their first quantum are a company we should spend more
time following because they are, they're entrepreneurial.
They they, they, they build stuff themselves.
Their geology team works across all of the company.
Whenever they look at an asset, they've created serious value by
by buying assets, you know, that are undervalued, like, you know,
developing minds in places that are usually too risky, sometimes
losing their social license along the way.
But it's a really impressive company, and I come around, come
out of that conversation with Mike, just feeling grateful for
having it. Yeah, absolutely.
Mike is, he's written some punchy sort of thought pieces, I
guess you could call them on on LinkedIn and the like.
He's spent a lot of time, you know, boots on the ground in
like you say, Trev, riskier parts of the world from the DRC
to Zambia to Panama. But, you know, by and large,
they've got a lot of stuff done and yeah, a real, a real wealth
of knowledge from the exploration front to, you know,
they're just that geology sense in a, in a much broader
perspective. So yeah, grateful that we had
the chance to pick his brain for a good 30 or 40 minutes.
Yeah, well, you can tell why they go overseas to the risky
jurisdictions. They understand the risk because
they know people like CRE insurance are there to manage
the risk for it. They really it's.
Just take the risk off your hands.
It goes hand in hand, the bloody ass Perseus and waffle.
Bloody good. They manage risk.
They're even doing western NSW mining risk now with their
orange office. Piece of cake after you've done.
Western NSW has never felt safer, never felt that risk
mitigated. First Quantum had a few hiccups
in the in the DRC, but you know, these days they're very, very
comfortable and established in Zambia.
In fact, you, you speak to Zambians, they think First
Quantum is a Zambian company. But but you know, if they had
CRE around back in the DRC days, I think that I think things
would be similar. They wouldn't have had to to
leave when they did. Well, like it rhymes DRCCRE,
like it's just a match made in heaven.
So bloody keep a share, go say get A to him in orange and let's
get into first quantum all. Right, money miners.
We've got a special guest in Mike Christie here at in Daba.
I guess we've been thinking about getting on the show for
for quite some time. So we're excited we can make it
happen. Mike works at First Quantum, has
got a wealth of experience in exploration geologist background
and has done a phenomenal amount for the the sort of geosciences
in in Australia and in the broad exploration industry.
So we're planning to get you on, Mike, and we want to start the
conversation going back to a LinkedIn post you wrote a few
months ago about Western miners and sort of posed the question
to you, Have Western mining companies lost the plot when it
comes to exploration? Yeah, look, thanks, JD Travis,
it's great to be with you guys. It's strange.
We came all the way here to Cape Town to do it rather than doing
it in Perth. Yeah, that that post has really
energized quite a lot of responses from a variety of
people. And I think I started writing it
just as an e-mail to a colleague.
And then I sort of started the thought process and ended up
thinking, oh, I might post this and see what sort of reaction I
got. Because it was spurred by
looking at a, a recent report from SNP who do a lot of data
analysis for exploration and cost of development and and so
forth in the, in the copper world.
And of course copper in the last few years has been very much
the, the, the metal du jour in terms of, you know, we're going
to need more and more of it for the electrical transition.
And yet the, the discovery rate of what we would call world
class proper deposits has been inexorably declining.
And so I wanted to really look at that in the context of what
the both the junior sector and the major sector were going
through in terms of the the change in dynamics, particularly
in the last 10 years or so. And what we've seen is, is a
whole new source of capital coming into the markets from the
Middle East from and from China. And we've seen the the Chinese
being very smart in the way that they have capitalized on new
discoveries, particularly in here in Africa, but throughout
South America since as well. And that hasn't necessarily
translated into the exploration space.
So that capital is not necessarily flowing into the
traditional TSX or ASX juniors. And and the majors seem to be
gun shy of developing deposits. So they're waiting for the
juniors to make those discoveries in the remote parts
of the world that sometimes they're afraid to go to.
And it just hasn't been happening.
And you look at the the graph of discovery's success in the last
10 years and it's miserable. I mean, Kumail Kakula was really
the last big one and other than that, a handful in the last 20
years of what we would call world class copper discoveries,
things capable of producing 250, three, 100,000 tons of copper a
year. So that's really what spurred my
post. How much of this sort of comes
to the the point of permitting and approvals and that whole
process taking longer and longer being a disincentive for majors
so the capital gets push towards brownfield expansion exploring
around the mine you've already got the permits for and set up.
Do you do you think about that sort of balance match?
Yeah, no, the balance is certainly an important one and
undoubtedly the permitting and the the social stories
surrounding modern developments is pushing out the timeline.
In some cases, it will stop the timeline and there will just be
places we can't develop mines. But in many places, it really is
about taking a discovery from those first few drill holes into
a feasibility study. And then how long does it take
from that stage where you know you've got an economic project
through to actually building the mine?
And that seems to be the phase that has been really pushed out.
And typically in the copper industry, I think it's now
running at about 17 years. So people say we need to double
the amount of copper we're mining in the next sort of 20
years. How are we going to do that?
Because we can't develop the the quantity of minds if it takes 17
years to to to do that. We needed to discover them
several years ago and that's not happening.
So yeah, it is. I mean, big companies generally
like stable jurisdictions, but it's interesting to see how even
they are now extending into places like Argentina and of
course into Mongolia and to other countries whereby
previously they would have been seen as probably off the radar
in some of those countries. Like Argentina is now, you know,
really on a good path and, and we're very comfortable there.
So I think that the real gap at the moment is the funding into
the junior sector. And so those discoveries are few
and far between. And, and you saw how BHP Lepton
Filo in, in South America. And I'm sure if there's a
similar discovery here in in Africa, we'll see the same
thing. You, you know, you, you hit up
first quantum exploration efforts and, and had it for a
long time. And when, when you think about
who like, who is most likely to discover, you know, new, new
deposits, new ore bodies, The, the, does it make more sense
that it would be a, a major who has like, you know, far better
balance sheet and capability and ability to pay, pay geologists
and use the best, the best data, etcetera?
Or is it just much more naturally fitting to the junior
who has more risk tolerance? It depends very much.
I don't actually think it's a junior major thing anymore.
I think it's more about the the thought processes of what's
going on. I mean, there's some wonderful
juniors who are prepared to take risks.
And what we've migrated through in the last 10 or 15 years is a
transformation from geochemical surface exploration, which found
an awful lot of ore bodies, as did prospecting before it, to
more conceptual and heavy geophysics based exploration.
That's expensive. It's got a longer timeline and
it needs a real commitment. And I think that's where people
like Ivanhoe have really won because Robert Frieden was
prepared to bankroll deep exploration drilling in the
Congo in the way that probably very few juniors would have been
able to to do. So it's more about having that
funding flow. So this combination of a junior
working together in partnership with a, a major or a funding
group, whether that be out of the Middle East, the Far East or
wherever, that combination can work really well.
But this combination of having to go back to the market every
few months and raise the next $1,000,000, the next $2,000,000
just to fund the the next rule hole.
That is where, you know, we're really seeing things come
unstuck because unless the market gets the results every
every quarter, your share price dives and and you have to dilute
the heck out of it. You mentioned Chinese
competitors in there and we we often see them pop up at the end
stage, buying the project, buying the mine.
Are there things the Western miners can learn from actually
how they approach geology? Maybe in Africa?
Other parts of the world? Yeah.
Look, I, I think we, we've seen a a big change there in the last
decade as well. Generally the the Chinese
companies were picking up established assets with a
feasibility study in the, the sort of what we do, we call the
low risk investment. I think that's changed now where
they are putting in money at an earlier stage.
But to date we haven't seen that in terms of bankrolling junior
exploration. I think there are some moves in
that direction now, but the partnership that Ivanhoe made in
the in the Congo was a very logical one in that it was not a
project they could afford to fund themselves.
It was perhaps not perceived to be the safest investment
destination in the world. So splitting that risk is
somewhere where the market's definitely going to hit, even
between major companies. You're going to see a lot more
in terms of major companies working together in destinations
where, you know, to build a reasonable sized copper mine.
Now you're talking about things in the multiple billions of
dollars and if you've got to spend $10 billion building the
mine somewhere in a remote part of the jungle of South America,
then sharing that risk with someone is is going to be on.
So I think that's where the the Chinese investment is, is being
particularly smart. In the last 10 years, they've
they've started moving further down the curve in terms of the
investment risk and they're looking at projects that are
probably pre feasibility stage. And there are a number of those
in particularly in the northern part of Latin America through
the Ecuador Colombia area and and indeed in in parts of Africa
in the DRC, they've basically wiped the floor.
I mean, they've, they've really managed to to dominate seen
there and we've seen the Dr. CS copper production treble in the
last last decade. So there's a lot to be said for
that. Thank God DRC copper production
travelled because that's a bloody so it's cross boundary
energy. You're demanding a lot of copper
wire for these hybrid power plants they're putting in all
around the world. It is like that is going to be
full of copper, DRC copper, Australian copper, bloody every
copper known to man so. It's a circular reference.
We're in the DRC. We're seeing some copper mines.
You would see the power station supplying the power to the to
the copper mine. Exactly, exactly all.
And look, they are absolute global experts as independent
power producers and we're talking wind, solar, batteries,
thermal base, light, light, the rigid digit power.
Energy, they do it all. And to penetrate the Australian
market, they have made the first big decision they make to do
that was higher the most exclusive business development
person in Australia, and that's Tim Taylor.
So you can tell this company is serious because Timmy doesn't
come cheap. So I get in touch with Timmy
Taylor and the CBA team for how they can give you some hybrid
power. Go CVA.
Tim knows power. So I think they are making smart
decisions and one wonders whether the Western companies
have sort of fallen behind that in a sense that in some cases
they have not invested in until almost it's too late.
In other cases they've probably made some poor decisions.
And other than some quite inspired stories like the BHP
Explore program, which I I fully acknowledge as as being a
wonderful incentive for junior explorers, there's very little
major support for juniors at that first sort of exploratory
stage. You refer to a bit of a change
in approach to exploration and I hate to bring up AI and machine
learning as it's a, you know, overused phrase these days.
But I think it's particularly relevant here because there's
people in the Copper Belt that have been, you know, quite
loudly using this approach in how they, you know, that they've
bought assets, but how they expand the assets and how they
go about things. And I'm came to learn from you
how the average kind of investor can think about a company that
promotes their use of AI in exploration broadly.
Yeah, AI. There's a lot of hot air about
AI these days. It is a fantastic tool for
speeding up the process, whether that be the expiration process
or all sorts of other things around the mining.
I've got two people on my team who've got PhDs in in machine
learning and and AI and we're applying those in very different
ways. And to my knowledge, to date,
there've been no great discoveries by AI.
Undoubtedly some companies are employing the technology
extremely effectively in terms of processing geophysics, in
terms of accumulating enormous datasets, are making much more
of them than we could through manual or analogue ways in the
past. So that to me is where the key
comes in. And certainly we're beginning to
employ that technology and I'm seeing a lot of a lot of
companies do that more recently. But I don't think at this stage
it's not a silver bullet. It's not going to produce the X
marks, the spot drill here that people are talking about.
Unfortunately, a lot of politicians, particularly here
in Africa, have sort of assumed that this is going to be the the
manner from heaven and they're suddenly going to be able to
find every mineral deposit in their country.
And we've been involved in sponsoring a, a large airborne
survey in Zambia. It's a gravity magnetic survey
over the traditional copper belt.
It's actually the first time that whole area's been flown for
50 years, partly because of the sort of mesh of, of small
tenements and, and speculative land holders.
So what we were able to do was fly the whole copper belt with
modern, the, the best resolution you can basically do and come up
with a holistic model. So, you know, sadly a lot of
people then take that as, oh, you must know where the copper
deposits are. It's not that easy.
There's a whole process after that of building A3 dimensional,
sometimes 4 dimensional model of, of that geological history
of the copper belt, trying to understand what the
relationships are between all the rocks before you can then
start to get predictive about drilling deep holes.
And we need to drill deep holes now because the, the big deposit
serves have all been found. So you've, you've got to
translate that information into exploration targeting.
And that's where I think the AI really starts to come into into
play. The we've been, we've been
thinking a lot about, you know, where are the, where are the
remaining like big, big deposits still still to be found?
And it's not a very commercial question to ask.
And, you know, but, but if, if the entire world was you could,
you could mine equally. The governments are all the
same, you know, drilling costs were all kind of equal.
Where? Where would you look for the you
know, the best, the likely best undeveloped deposits?
Well, it sort of depends what you want to look for.
Yeah. And you want big or small and
you want it an open pit or do you want it underground?
And, and at the end of the day, of course, what you want is
something that's going to pay back money.
And in, in my view, really if you want an open pit large scale
copper mine, then the places in the world where you can find
that near surface are diminishingly small.
And it basically it's come down to the jungle clad parts of the
Andes in the in the northern part of South America, perhaps
Central America and perhaps Far East Russia if you're really
keen. And I think those are really the
only two parts of the world where you're likely to see that.
I think there are very good prospects perhaps in Central
Asia as well. We've recently started an
initiative in Kazakhstan which which I'm very bullish about.
Most of the porphyries there are relatively low grade, but it's a
good destination. The cost structure is very low
there. The infrastructure is just
fantastic. So the there's the ability there
to make lower grade minds work. I think the, I guess the other
part of the the response is that what are you looking for and are
you looking for copper porphyries Because we all know
that the story of copper porphyries has been 1 of
declining grade over the last 10 or 15 years.
So now there is a litany of porphyry projects out there in
the world at .2 to .3% copper and most of them are going
nowhere. It needs a complete step change
in the terms of the copper price and or the operating costs of
that mine, whether it's through new technology, employing all of
the new tech that we like to use in some of our minds, the
trolley assist, all of the electrical drills, electrical
trucks, all of that. And that will bring the cost
structure down. And I, I see more of a
incremental change. So I'm not sure that we're ever
going to really get down to the .2% copper porphyry mining
unless there is a really quite significant uptick in in the
copper price because nobody's prepared to make that big
decision to go in to invest in those at the moment.
So one of our big focuses is to look for sediment hosted copper,
which has typically a much more higher grade profile.
Kamawa's the best example and they're more restricted around
the world. Certainly the Central African
copper belt is the main example, but all the deposits through
Poland and the Kuppu Shifa and indeed in Central Kazakhstan are
other good examples. So that's where we're putting a
lot of our effort is to try to find those high grade deposits
because still today great is king.
And if you want to develop a mine, if if as Ivanhoeve very
well proven, if you've got 3 to 5% copper in an underground, you
can develop that for much lower capital costs than you can with
other with these big porphyries, which really is starting to cost
10s of billions. A bit of a different end of the
mining spectrum, but on the plant side with the tech
advancements in processing and just extracting more and more
out of what you've you've kind of got, are you bullish on that
front at all? Yeah, Because I said, I think
they're they're more incremental at this stage.
I think if we get to the point where a sulfide leach technique
is actually proven to work and there's lots of people working
on it, then then you could see a steep change in costs in the way
that we saw with SXCW sort of 30 years ago, where suddenly all of
these oxide deposits became economic that weren't before.
And really that, that then COP kept the copper price down at
about $0.60 for years and years and years because there were
major discoveries all through South America of these oxide cap
deposits and SXCW could process them at a very low cost.
So if if sulfide leach technology started to work and
we didn't have to mill the bejesus out of, you know,
hundreds of millions of tons of rock every year, then yes, that
could make a step change. I'd love to hear a bit about the
the relationship. This is a sort of question
that's been inspired from a mutual friend Ahmed of your
exploration team and the the broader company itself.
First, Quantum came to hear about perhaps what other miners
can learn as it can improve exploration and discoveries
across the industry and how you guys sort of go about leveraging
your expertise to sort of maximum potential.
Sure. I guess there's several parts to
that. Exploration has been very
complementary to the history of First Quantum which really has a
bit over a 20 year lifetime, a company that grew very rapidly,
but it actually originally grew out of building reprocessing
plant in Zambia, a small deposit called Bonner in Kubwa.
And and then exploration added to that by finding some deposits
nearby First Launchee and then Frontier on the DRC side of the
border. And it was a rapidly exploding
story. And that and the cash flow from
that allowed them to to purchase Konsanci, which was sort of the
deal of the century. So it's been very complementary.
And if you look at the history of of the company, exploration
has found about about 5 million tons of contained copper.
But brownfields do exploration and and essentially incremental
additions to our deposits has added something in the order of
12 to 15,000,000 tons of contained copper.
So it's, it's horses for courses and that's what we're seeing
around the world is that actual greenfields discoveries are
diminishingly small and compared to these enormous brownfields
developments and redevelopments as we're seeing particularly in
in Chilean places at the moment. So for First Quantum, our job
throughout that period as an exploration group has really
been been threefold 1 to go out and try and you know, look for
the Holy Grail, the big new development, 10 million tons of
copper or more. Those are very, very rare
discoveries and we know that. So in the meantime, we spend a
lot of time trying to add value to our existing deposits.
We've had a lot of success in that area.
Just a recent discovery near our little Chile mine in Turkey,
which is going to add 10 years to the my life.
It's fantastic. And the guys there who are
looking at basically finishing up this year have suddenly got a
whole new future ahead of them. And, and we've added a lot of
life to places like Concentri and, and we're working very hard
now at Sentinel and Zambia to, to increase those brownfield
tons, which once you build a plant, it's where all the value
is. The the third part is, is really
about assisting our business development team.
And 1st Quantum has acquired a lot of copper through M&A over
the years. I think it's something in the
order of 60 million tons of contained copper have been
acquired through that period. We don't have geologists in a
specialist M and A-Team like some of the bigger companies do
we basically my guys, the exploration guys get pulled out
of the Bush to suddenly go and rush in to look at a project in
Brazil or Kazakhstan or wherever it happens to be.
So we're a very integrated part of the corporate development,
the business development side of the company, which is not
something I've seen very much in other companies.
They tend to have these silos of different, different groups who
don't always talk to each other. And I think that's one of one of
our successes. We've we've been able to to
manage that process and be able to really understand the risks
involved for pretty early stage projects in some cases.
Sentinel in Zambia was a good example where it had a handful
of holes in it. We went in and looked at it and
thought wow, this looks like this actually could be quite
substantial and I was all in favour for a a joint venture.
Went back, talked to my boss and he said Nah, bugger it, we'll
buy it. And we paid $240 million about 3
weeks later and bought this thing with no real resource on
it. And we built a $2 billion mine
on top of it within two years. So that sort of quick decision
making and the ability to act really fast on the technical
advice of a geology team and the engineering team has I think
stood us very well over the years compared to the
bureaucratic process in a lot of the majors.
It's it's really interesting you talk to, you talk to geologists
and you ask them, you know, yeah, which of the producers,
like major producers would like, would you actually want to work
out? Would you, you know, feel like
you're maximizing or utilizing your skills and having a crack,
maybe find something and 1st quantum always comes up as
opposed to the others where, yeah, maybe you'll be that's
iron ore. That's not if you were as a
geologist for a major or anything like that.
But it's the propensity to take risk that kind of keeps popping
up, but in a recurring way. That propensity to take risk
that's kind of inherent to 1st Quantum has also led to some
like challenging times as well. Not just the Cobra Panama black
issue, which is like super, super recent, but front, front
Frontier in the day. No, it wasn't Frontier in the
day. I say it was.
It was Frontier, yeah, where the the license was revoked back in
2009, Yeah. Yeah.
So yes, we take a lot of risks. And if you don't take risks, you
go nowhere. And I was having a conversation
with some of the juniors here at the conference in the last few
days and and they're some of them spending their last dollar
to drill the last hole. But it's like, well, they could
choose to spin that out over a year or two.
So, so first Quantum has grown out of taking risks, going where
others fear to trade. And I think going into the DRC
IN992000 when it was just recovering from civil war and
everything else, that was a really gutsy move.
And people sort of said, well, we, we built 2 mines there.
We were in the process of building a third.
And people say, oh jeez, I bet you wish you'd never been there
because you'd lost the assets and everything else.
Well, if we hadn't done that, we wouldn't have had the cash flow
to build the company in the way we did.
So it's, yeah, it's, it's a 2 edged sword that you take the
risks and certainly building a $10 billion mine in, in Panama
is a significant risk. We're optimistic that that
situation will get resolved. But in the meantime, the, the
company has this ability to pick itself back up off the floor,
dust itself off and go look for the next great thing.
And we're in a very lucky situation that we've got three
potential substantial copper deposits to to build between Tak
attacker and Argentina, which is probably the next one off the
off the rank Hikira in Peru, which we've had for a number of
years and and now a joint venture with Rio and Lagranga.
So not many companies have that sort of pipeline projects to to
back them up, but spreading that risk into different
jurisdictions and now through partnerships with people like
Rio, that's, that's going to become an increasingly important
part of the the equation, I think.
Mike, you've got years more experience on us.
I'm very interested to hear your view on that boldness you speak
to in the mining industry. The, the industry, particularly
in in Australia, I think prides itself on the, the characters
and these sorts of people who took a lot of risk and were
successful. You know, you don't talk so much
about the ones that weren't. But has that changed over your
career? Do you think that boldness is
missing? Yeah, look, I can only speak
from my personal experience. I, I started out my career with
Rio Tinto and, and on a technical level it was
fantastic. I mean, I learnt so much in 10
years with Rio, but then I worked in several companies
after that, which had a real risk aversion.
And I was working at increasingly senior levels in
companies working with a board who I would present multiple
opportunities to that I really thought were a slam dunk.
They just weren't prepared to go that last mile to to make the
investment. And yeah, you don't win them
all. You can't win them all.
But I think now we're in this situation, as I mentioned
before, where I think a lot of the majors are really gunshot to
go out and do these big developments.
And so, you know, they're much more comfortable about putting
their money into Brownfield's expansions at Escondider or
where but I mean Escondider can't expand forever.
I mean, it's there is a limit I think to that equation and the
grades are getting lower and lower and power cuts costs are
going through the roof. And it's, I think people just
really have to look now at balancing that equation with,
but probably what is going to be a lot of deep drilling in new
environments to try and understand where these the
deeper deposits are because and, and how to mine them more
effectively. You know, I mean, we've got
really only two or three companies in the world who are
really good bulk underground miners.
And that was that IP was in EUCRIS and now wrapped up in
Newmont and I'm sure they will do well with it.
And Rio's busy trying to develop that at a togroy.
So, so I think that's, that's the area technology
technologically where we really need to be looking at because I,
I think the days of finding these big multi billion ton open
pits in your surface are disappearing fast.
Block caves that are deep and with little little surface
mineralisation. It's a different payoff profile
as well, right? Absolutely.
And, you know, I remember the early days of, of soul gold and
talking to Nick Mather at the time when he was drilling some
of the the first holes there at Alcala.
And it was like fantastic holes, Nick, well done.
You know, and he was saying, yeah, but nobody's taking any
notice. And of course, eventually the
the world cottoned onto that story and the share price went
ballistic for a while. It's come a bit down to, to
earth now because of the reality of, of developing something like
that. And it's one thing doing it in
South Australia, it's another thing trying to do it in the, in
the high Andes of Ecuador. And there's, there's a lot of
sensitivities, sensitivities around that.
And you've seen how Rio struggled in the early days of
all. You told you to make, make that
block cave work. They had to redesign the whole
thing, as I understand it. So it's not a simple equation.
And you look at projects like Pebble and, and resolution and,
and some of those and sat there for 30 years or more without
being developed. So they will happen ultimately.
But the risk profile in that versus going out looking for new
higher grade underground deposits is what people need to
be thinking about. And I don't know that people are
really appreciating that that equation.
So hence our push into sediment hosted copper territory.
It's a, it's a very different exploration model to a porphyry.
Instead of looking for a nice bright magnetic BLOB in an
image, you're basically having to build a whole geological
framework picture of a sedimentary basin and try and
understand what the fluid flow was in that basin.
It's more like oil exploration in a sense than than the
traditional copper exploration for porphyries.
So, So it's a very different equation in that you've got to,
it's a long time frame, it's a lot of deep drilling and a lot
of dust is on the way, but you use that to build your
geological picture. So yeah, hopefully we can find
more sediment hosted copper, which in an underground mining
perspective is a far easier proposition.
And we've seen that from from the, the really quite wonderful
development at Kamala, which I think Ivanhoe and Xijin really
deserve some pretty good credit for.
They they have done that at a minimum cost for the amount of
copper production coming out of that.
And it's about grade and it's about a very slick development.
What's the the the best thing that the the industry could do
to improve the probability of success with exploration?
Take some risks and better risks and better risks and really
focus on science. You know, I, I see many, many
junior proposals come over my desk and my team goes and
investigates them all over the world.
And a surprisingly small number of them are really using top
class geoscience to to understand what they're what
they're looking at. They're rehashing old data.
They're taking soil samples or rock chip samples in an area
that's been well sampled before. They're drilling shallow holes.
They're not really conceptualizing what could be.
And they're desperate just to get that next drilling stepped
out into the market. So it's, it's not really, and I,
I blame the market for that in a sense that it's, it's just
driving this short term news flow rather than trying to
encourage a company like FILO to go and drill their 1 1/2
kilometer deep hole to look for the the next best thing.
So I think since that discovery, everybody with a, a dud porphyry
in the Andes is drilling a lot of deep holes underneath trying
to find out if there's a mother lode there.
So that's good and, and hopefully there will be some
more discoveries like that. I still think that project is
going to be decades away before it actually produces any copper,
but it, it will be a world class deposit for sure.
So I do think that some enhanced geoscience and I think that's
where the majors have a really big part to play.
You know, we, we pride ourselves and I know Rio and BHP and
others do as well on having top class teams.
We, we really try to have the best structural geologists,
geochemists, and now increasingly people with AI and
programming skills to, to synthesize data and make the
best predictive models we can. But you know, there's a limited
amount of crossover between them and the juniors that have the
ground. So we've got to make that
process work better. Last one from me, Mike, coming
at it from a financial lens, is there an over reliance on NPV
analysis and IRS? Does that forget the optionality
that's inherent in long life projects?
Yeah. And it's a question we ask
ourselves and I think particularly people like BHP
must have asked themselves at all the time, because, you know,
they're looking at assets that, that they want multi
generational assets that we're there for 50 years.
And, and so do we. But when you calculate those
things on an MPV, the, the future returns more than 1020
years away diminish to the point of not being very useful.
So you've really got to get your, your capital back.
I think that's where the, the Chinese have won because they've
been looking at it in terms of, of, of copper production and
revenue rather than an MPV basis.
Everything is driven by revenue in China.
And that's just a function of the way the politics works.
So they will, they will build an asset that will have a long
future cash flow without really worrying too much about the the
payback on, on that. And that's that's the
difference. And I think that's where they've
been able to take some risks that that we haven't.
So yeah, it's, it's, it's a hard one.
I think the real restriction at the moment, it's clearly not a
lack of copper deposits. The world has lots of them.
It is the really rapidly escalating cost of the capital.
And if we look at it over the last sort of 15 years or so,
we've seen the the cost of capital treble or quadruple for
an equivalent development where operational costs might have
doubled in that time. The price of coppers doubled in
that time. But the cost of building these
big deposits, partly because they're low grade and partly
because they're in pretty difficult parts of the world has
has gone up by three to four times.
So we're now talking about $30,000 per tonne of copper
production a year, whereas when we built Sentinel, it was around
7 or $8000 a tonne. So your payback was, you know,
copper price at the time was probably 4 1/2 or 5000.
Your payback was a couple of years away.
Now you're talking about not getting a payback for, you know,
really quite a long time. And that applies to the
brownfields developments. You've seen some of the, the
announcements recently by BHP and Cadelco in South America and
they're vast 10s of billions of dollars going in basically just
to keep level production going over the next 10 years.
So it's, it's a diminishing equation where you're having to
spend more and more capital to get that production even to keep
it going, but certainly on a Greenfield's development and and
that's then stopping companies going ahead to to build them.
So they're just investing the capital in, in expanding what
they've got. So, yeah, it's it, it really,
I'm not a great believer in the the Copper Cliff because I've
been in the copper game long enough to have been shown these
diagrams of, of peaking copper a few years away and how it's all
going to fall off a Cliff and it actually never happens.
I could show you something from 15 years ago that said it was by
2025 would be have have, you know, a really diminishing
profile. But we continue to grow that
that copper production every year by two to 3%, but it's
largely around discovery of near mine resources and and expanding
those operations not through Greenfields.
Greenfields is making a a really small contribution to that.
Fantastic, Mike. We're pretty pumped we could
finally get you on the show, so thanks for making the time for
us. Yeah, pleasure.
Great to be here. Very, very good.
Bloody fancy background there. Love the love the oh here.
That background may have been used on other publications.
Yeah, I'm grateful. We gotta use it once, yeah?
Yeah, yeah, I've can't. I'm curious to see where it's
popped up, but if you're the people, use that.
There's a lot of interviews in front of it.
Credit to the Edin Arbor team for putting it there for us.
But yeah, maybe you might see it in a CNBC interview sometime.
I'll bet I'll love. So how good's Jim Cramer?
It's funny. I'll bet all I'm CNBCI can
picture. That'd be me.
What a mother. Yeah, I didn't see him there,
but you know, same time home he. Might have saw you but JD.
It's true. It's true.
Right. Oh, thanks to all the bloody
partners. Mineral Mining services,
grounded Sandvik ground support, CRA Insurance, cage drill,
Saltbush contracting, Swick, Watro energy and at Watro.
Project Engineering. Fuck.
That'll do Potro energy. It could be an offshoot.
My mind was moving already ahead to who we had in the show cross
boundary. Energy and 100 bucks off your
Aussie MMM Underground Operators tickets.
Here's the card MOM 100 it's $300.
Hoodoo money miners, hoodoo right eye money miners.
Little special trade at the back end of the show here for in the
lead up of underground Operators conference, Aussie MMM Adelaide
April 7th to 9th. And we've got one of the big
dogs, one of the, you know, one of the best friends of Oz IMEM,
you'd say Epirock now. And representing Epirock today,
Martin Waldman, the global portfolio manager for
underground trucks dialing in from the Northern hemisphere.
Welcome to money of mine, copper.
Thank you very much and thank you for inviting.
Me. Oh absolute, absolute pleasure.
Thank Oz IMEM for that, mate. Mate said last underground
operators conference a couple of years ago.
I guess the feel of the industry in terms of automation,
electrification, haulage and everything has probably changed
a lot. How much has it changed from the
epiroxide? What are you seeing the big
ticket items at the moment? I would say, I mean the, the
main focus is still electrification and automation.
That's still the, the big, the big thing.
Of course, the we have continued to continue to develop our
machines or customers. I would say they have also
started to get more and more used to operating electrified
machines. So that's small, small step
forwards around for both us and and our customers.
Yeah, right. So what specific machinery are
we going to see? What normally you guys have just
a big, some big, I don't know how you get the machines in
there. What is going to be the showcase
item? For for the mine, starting with
the mine tracks, we will not have, we will not have the
machine. That machine will be shifting
straight later on this spring. But that is a completely new
mine track with a new new frame, new basically a new cab.
But the big thing is a complete new drivetrain.
We have removed all the basically all the moving
components such as shafts, transmissions, axles and those
things that are placed with electrical motors.
So we still, we start with the diesel engine, but that's kind
of the only thing that the component that is the same as
previous model, but the rest is, is new.
And then we do, we do similar things for the for the loaders,
but then we're still keeping a transmission.
So that's the big thing within the material handling.
And of course we're doing similar, I shouldn't say similar
because it's not, it's not the same thing.
But we we already like to find the drill rigs of course, and
that is what we will display at the show.
Are we offering any discounts in Adelaide for purchase of this
equipment? It's like 2020% off or
something. Usually you've got everything on
show you want to. Sell to come and talk doesn't.
We will see. Right, all right, I'll.
I'll bring him. I'll bring him to you.
Right, mate? Well, I look forward to seeing
you in Adelaide April 7th to 9th.
Cannot bloody. Why have you been to every
underground operators? No, So this will be my first
time we would have a big group of people coming over from
Sweden. So everybody's more than welcome
to join us. Mate, you have a good.
Discussion, hang around me, I'll give you the guided.
Absolutely. We'll have a great time.
Absolutely right. Thanks very much, mate.
Look forward to seeing you. Thank you.
Right. The information contained in
this episode of Money of Mine is of general nature only and does
not take into account the objectives, financial situation
or needs of any particular person.
Before making any investment decision, you should consult
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advice is to your objectives, financial situation and needs.