Alright, buddy, borders, we're going to bloody North America,
Canada, we've. Got 2 fields in North Korea.
Today, Oh yeah, go go the Maple syrup.
Today, we're on fire. That's it.
I'd pancakes on the weekend too it.
Was. I did too.
There you go. Oh.
Well, there we go. Alright, so big deal coming out
of bloody Newmont divesting one of their non core assets to a
company I've never heard of, but we'll know sheet loads of out of
them today after today. Ola, Ola Mining Ola, they've got
a bit of a brand reputation out in North America.
They've got a bit of a management premium associated
with the money. They're well, they're they're
obviously not big enough to buy all the new Mons non core
assets. They've just bought one of them
Ahead. We've got Spartan met results.
Why not go into a bit of metallurgy and Sayona Piedmont?
That's it walking down the aisle.
Take it away, boys. We'll start with Ola like you
said, Maddie scooping up an asset muscle white from Newmont.
So up in up in North America headline was up to an $850
million U.S. dollar deal 800 and few 810 rather being upfront
with 40 contingents. So everyone knows Newmont, but
why not share a bit of colour on all?
I think to our North American audience, like you say, Trev
might be quite familiar, but down under they're a bit of an
unknown entities. So they've got a producing
asset, the Camino Rojo mine in Mexico and a development asset
in the States, currently just producing about 135 oz per
annum. Market cap 1.9 billion, actually
bounced a bit on this deal. So the market kind of liked it.
And like you say again, Trev, supported by the market, bit of
a premium in terms of shareholders, peerless on about
10% of the company personally. Then you've got Fairfax, not the
Aussie Media Group. Thank you for answering my
question I was about to ask. You also got Newmont as big
shareholders and Agnico and then there's they're all pretty
chunky shareholders and then there's a sort of trailing list
of single digit percentage. That's a that's an attractive
list of shareholders to have, which you imagine kind of, yeah,
it gives them a bit of firepower when, when it comes to wanting
to do a deal. Not that they raised equity
here, but yeah, nonetheless. Definitely mate and the last fun
fact about Orla is that their non exec chair Chuck jeans.
He ran Goldcorp from 2009 to 2016 so he would be quite
familiar. That's a period in which
Goldcorp was the owners of the Muscle White mine.
So, so tell us about the muscle white mine.
What are the metrics? The metrics, so Canadian
Underground goldmine 6 point 2-3 grammes per tonne reserve grade.
The acquisition is based upon a reserve life that runs out to
2030. They're talking about an all in
sustaining cost of a bit under US 1300.
So 1270 is the the price that sort of quote there 200,000 oz
per annum. In terms of the the processing
plant, maybe 1.5 million tonnes per annum, although it currently
only runs at 1,000,000 tonnes per annum and decent recoveries,
not unexpected given the, the high grade we're talking about
96% historically is what they talk up.
It's also a FIFO operated mine, which is interesting in lot of
comments you've made previously with regards to mining towns
having sort of somewhat different cultures about how
long they want the the mine to you know operate for and they
these sorts of things. So it kind of it stands out
culturally as quite a a positive type operation where you're not
maybe entrenched with unions and other type of things like that.
Are they? So is it firefighters in as in
expats or is it firefighter for Canada and America?
Canada, Canada and US. Yeah, I'd imagine the majority
just fly from other Canadian cities.
Yeah, I did. I I I was watching one of the
videos regarding the firefighter on the camp aspect to Australia.
We're in the process of doing a camp upgrade right now.
Sounds like that camp upgrade needs to be a bloody grounded
camp upgrade, boys. The only way to go.
He's a no brainer right If you've got an old shit ass camp
like I don't know if muscle ward have got mate if grounded do the
upgrade. It's then considered a grounded
camp. One of the best camps beyond a
Newmont standard. You can't acquire, you know, an
asset from a major like new Modern.
They're not not give it a Tier 1 camp.
No, mate, you got to put a bit of love into it.
You got to put a bit of a Sicilian feel into the into the
camp. And look, Paul Natali, if you're
listening mate, I've done a bit of digging for you in terms of
Ontario builder recruitment if you do get.
This gig, what did you? Find as of 2021 Canadian census,
approximately 905,000 individuals in Ontario reported
Italian ancestry. So about 6 1/2 percent of the
population. And then of that there is
estimated 10% of them are from the southern regions of Italy,
notably Sicily. So there is potentially 90,000
Sicilians in Ontario right now. The grounded construction group
could pick from to help build this camp.
So anyone in Ontario that's just finished their building
apprenticeship, give Paul Natalie an email.
He's in the show. It'll give you a gig straight
away. Grounded to go on International.
Grounded straight, Ontario. Get on board.
Can't wait, right? So what about the ore body, JD?
So the ore is mined from a couple main sources.
The ore the the mine rather is, is pretty old now 28 years.
So it's been going a while. Obviously you're getting a bit
deeper and deeper, like a lot of these in Canada sits under a
lake, uses a conveyor to get the order surface, which is the the
the cause of a fire in 2019. That sort of happened early
2019, which was the same year that Newmont took over Gold
Corp. That was a sort of $10 billion
script deal. So came into the the fold with
Newmont, but the the mine was out of action for about a year
and then it was actually disrupted quite a bit in 2020
due to COVID restrictions as well.
So yeah, the company talks up that they use that time to work
on other improvements, improve the infrastructure at the site.
But yeah, what was out of action for a little while there, but
6,000,000 oz been mined here over its history, 1.5 million
ounces in reserve. So I got a bit to bit to work
with. It's funny when you talk about
the reserves and yeah, yeah, look at this one like it's
actually not that deep. Looking at they'll bring up the
cross section, the long section of the ore body like it's what
friggin. Not steeply dipping at all.
What is a bit about 12-13 hundred, I think.
Oh, no, sorry, that's, that's not a it's only mine down to
about 1000. But you look at that plunge,
that's what we refer to as the plunge.
Like it's freaking flat. Like if you put it, compare it
to, I'll show you the picture of Tanamoi.
Like Tanamoi plunges at about 45°.
This one plunges at like 30. So it presents a massive
challenge for determining your reserves because what happens is
as when your decline gets down to a certain point and the the
all bodies plunging away from you.
I'll try to keep your hands close so the camera remains
focused. It's not going in and out when
it plunges away. You can't just fucking drill
over there and get a good angle on the ore body to properly
define it. They're long and they're
intersecting at a freaking shitty angle.
It's part of the reason it's always had a sort of six year,
seven year, yeah. Which is 6-7 years and that's
probably a function. Of course it's plunging.
So much like the, the, the gold or per vertical metre is a lot
higher, like 'cause it's like your body's gone that way
instead of that way. So what, So what they've got,
what you've got to do with these cases to prove up your reserves
is like pretty much put these massive fucking ven exploration
drives out away from where you are to then get over the top of
the ore body down there and get a better, a better angle.
But it's a, it's a lot of development, those exploration
drives, especially once you get to a kilometre deep and you got
the, the, you know, thermal side of things and the auto
compression. So it's getting hot.
They're a single head. And that's but and it's a lot of
unnecessary capital to explore. But then your couple, you can
kill two birds with one stone in terms of like another challenge
with these plunging ore bodies is the ventilation.
So and they do mention it in one of the causes like maintaining
the ventilation to death because one, it's under a like so you
can't just punch a rise bore up through the surface to for your
return airway system because there is water.
And so you've got to keep linking your return airway up.
But as as the mine gets deeper, so you go down the level.
So you're over here and the bottom of your return Airways
over here. You've then got to drive back
that way to link that return airway up.
So it's a lot of ventilation Dr development, but I'm not sure if
they do this. But what you what they could do
is that with those big long exploration drives you use, you
could then once you've finished exploring and then you go down
to the bottom. You're then below then you could
punch a rise bore up and use that exploration drive as you
return airway later on. So like there, there is options
to to do that, but it's just a lot different to a verdict.
A dead vertical. I remember at Warrunga Agnew,
which was gold fields like it is fucking vertical.
Like it is that day going down that decline.
It is just a spiral and you'd be driving down there and just like
fucking hundreds and kilometres it just it just a dead vertical
spiral. Oh God, it would have been a
pint. You imagine being on the decline
Jambo, you block and I just get a fucking straight cut would be
nice. I'd be doing you'd get good at
doing turns. So yeah.
So I think ventilation keep maintaining that ventilation.
I think they said with the conveyor it sounds like it was a
crusher, so there was a hoist. There's winds, they call it a
winds, but that's a hoist. So it sounds like there's a
crusher with a shaft at some point that goes up from the
bottom levels, hoist it up to where then the conveyor starts.
So I think the conveyor is like a fixed starting point.
They crush it underground further down up to the conveyor,
which it might be halfway up the mine or.
Something I think I saw that in old pressure.
And then it goes up the conveyor.
So I think it sounds like they did a lot of work to.
So then once I go below that, they would then track up to the
crusher, crush it hoisted up to the conveyor.
At least they're not tracking it out frigging from shit loads
underground. And cause let me get this right
now. Even though even though it's
plunging, it'd be still the same vertical distance up one in
seven. Even if it's plunging, it's just
a different direction. So yes, it's just the joys of a
shot. But as I said, shallow plunging
ore bodies, you've got a you don't have to do as much
vertical development to get as much level development done
because you because it's there's it looks like there's over a
kilometre or so bloody or more of strike of all there.
So you get a shit load more level development done.
You don't have to go as deep as quick, but it's very hard to
define your body. I'll say they are assuming that
it's just going to keep fucking going that way.
I think Olympic Games the same. I think it's like, I reckon it's
like a big friggin shape of a saucepan.
It's just this handle and then this big thing and it's just
flat and just goes for whatever. I think you're dead, right.
I think they're poked in a couple holes that sort of show
strike could continue 3 kilometres.
But again, it's a sort of cost thing of proving that out and
they'll do that in in time, won't they?
Yeah. So don't don't get too deterred
by reserves with these gold ore bodies, especially a bloody
shallow plunging 1. I think that'll tie in perfectly
with a bit of valuation chat later on and what what the
management team is kind of thinking with a A6 year reserve
and how they kind of think about that.
Another thing I I watched a snippet from a presentation, It
was done last year and it was about muscle white from
obviously when Newmont owned it before today.
Yeah, it's just, I'll, I'll play the whole snippet and it's just
something you can see how different underground mining
methods, culture advancements are in North America to what we
know in Australia. I'll play it all for you.
Let's do it. So some of those improvements we
implement the jumbo bolting at Muscle White, that's been a big
transition for us. We're in the process right now,
but we've got we're getting a rid of the McLean bolters and
we're using one tool, the jumbo to allow us to drill and bolt
and advance the mine. That's unlocking a lot of
potential for us and it eliminates pieces of equipment
going in and out of the in and out of the headings.
We moved our blasting, we moved blasting to shift change.
So we were doing a lot of blasting on shift, not very
efficient. So we move that to to shift
change. We're much more efficient and
safer in our blasting processes. We're not having to move people
in and out of the operation. And then we implemented early
mine entry. We were losing probably 2 1/2
hours at every shift change. And so we implemented longer
shifts, but we implemented early mine entry so we could get the
mine ventilated out faster and get people working and get
people the working face quicker. On the production side, we
implemented Tele remote mucking. So no longer are we using line
of sight mucking to to extract or out of the stoves.
We're using Tele remote and we're looking to advance that to
potentially some automation. That now remember this is this
is the world's biggest gold miner, Newmont and this was from
the stuff they were doing from 2019 onwards.
So they only just started balding and meshing with the
twin boob jumbo. They were using the McClain Bolt
rigs, I think they said McClain and I'll assume then a twin boom
jumbo to separately bore with. So that's obviously never how
it's been done in Australia. Like it's always just been
balding and meshing with the twin boom jumbo and then that
bore and you're just getting more out of the one machine.
So they've already just started sort of transitioning that in
the past few years. Sounds like they were mid shift
blasting, which for the development.
So it's and for if that's happening and remember you got a
deep spread out mind. So it takes ages for people to
get to work. So they'd probably knock off, go
to like a crew broom, they'd blast everyone would have a
feed, play cards and fuck around mid shift while they blast, wait
for re entries to complete, then go back to work and then
probably a few hours later knock off, go to the surface, do a
handover on the surface, get the other shift down, then that mid
shift blast and it's just a lot of time doing nothing.
So they finally got it to the stage where it sounds like the
end of shift blasting, working through the whole shift and
effectively probably double on the time down the hole.
Because the only the only reason you would mid shift blast for
development is if you have absolutely minimal headings in a
mine and you've got one jumbo effective like and you just need
to fire those heading straight away so you can get bogging so
you can keep the development cycle going.
It's and you need to have a sometimes they do it in
production mines when you've got you're trying to push an area
down the bottom. You have an independent firing
zone. So you'll have say your
productions up here. Then you go down the decline,
there'll be A tag board. And so to be down that bottom of
the mine where all the developments going on, your tag
on, there's a second tag you put on.
You boys don't remember tagging on.
Yeah, mate. So you'd have two tags you tag
on to that. And then if they want to fire
that everyone has to tag off. So they can still be doing
mining the Stopes and everything up here.
But then you can independently fired down there.
So you take a couple, but they're like mid shift blasting
is what you do on portal jobs. So I like it.
Spartan, for instance, they're punching those 3.
The expiration declines at the moment.
Soon as that finished charging one, they're like, well, we can
wait till end of shift or we go far right now, start bogging and
that's when mid shift. So the fact you'd never do it in
a in a big mine unless you've got it fully.
So unless you've got no headings.
So I would imagine a mine this big, you would have a, you
should have a lot of headings because otherwise the mine just
has to stop work. So.
It's like it's these productivity kind of losses
relative to the Australian mining way, which was like the
appeal for like the Northern Stars and the the evolutions to
to to acquire assets over there, thinking they could just just
easily kind of replicate the methods in Australia over there,
right? But it just proved harder.
Easy to replicate the methods, but to workforce to go and tell
mining culture that, oh, we're doing it this way now, we know
you've been doing it this way for 30 years, You're wrong.
We're right, doesn't that takes years and years to transition
that and delicately to get them to come on board with that
method that they think is oh fuck that we do it this way.
And unions you're dealing with in places as well.
Yeah, yeah. And so it's, and it's not that
when you're on the other side of the fence, it's like it's very
hard to acknowledge that, oh shit, we are wrong.
You guys are heaps better at this than us.
It just doesn't work that way. So it takes years and years and
years to get to change that culture.
Another one was like that because I was talking about they
were losing 2 1/2 hours every shift change.
So I assume they're firing at ender shift 2 probably the
production stuff. And it says though they started
early mine entry so it sounds like they weren't even getting
lot the re entry crews to go down.
Like usually you go you fire, then you'll go down half an hour
after that and start checking all the gas levels and as soon
as the gas levels are below the acceptable limits for the I
think it's COI think it was Jesus, I forgot my gases carbon
monoxide. I think they then you open that
area, then you go deeper make sure and you gradually do it.
So like 2 and it like 2 1/2 hours plus mid shift blasting
lot sounds like it wasn't much. The productivity was very low
and that only sounds like I only recently introduced telly remote
bogging. So they were using line of sight
bogger race like before that. So line of sights effectively
you're looking at the bogger from a distance on the drive
sitting on like a Turkey's nest or and you got a little hidey
hole you can get into with a remote control watching it
listening to it and then bogging it visually from could be bloody
a long way away. So it's like it's bloody it's a
fine art for people to do it. But that I don't even know if
that's even done in Australia anymore because there's been
fatal incidents where people have been squashed by boggers
because they're like there and might have been standing
somewhere they didn't bogger might have got out of control or
malfunction. I'm not sure.
But there has been so pretty I don't even think it happens in
Australia anymore. Telly line of sight bogging my
own small operations. I'm not sure so and the the
telly remote, because telly remote bargains where you're in
a Hut either underground or on the surface watching a bloody TV
screen and you essentially got a little bogger simulator there
and operating from there. And the the technology with that
now is like I'll bring I'll show you the video here of the one of
the it's the that's the same big order I'm on.
It's one of one of the systems like you can map the path of the
bogger. So like they pretty much get the
bucket, turn it, click a button and it automatically goes back
to the stock pile based on the map that you've shown.
So it doesn't hit the wall, just flies along in second gear and
the operator just has to get the bucket and tip the bucket.
I think you can even order do that now and then they can
operate multiple boggers in. Using one operator or they can
have like, and then you can operate over shift change
because when you're far and you can keep the remote boggers
down. Yeah, so all that technology's
been pretty common over here, but it sounds like it's just
even at a Newmont mine in North America, it's only just started
really coming in. So just shows how different the
mining cultures are underground from here and over there.
So there is some. Don't mean to sound like a Dick,
but just highlighting the obvious.
Room for room for improvement everywhere where and that'll in
the long run make them a bit more money if they can sort of
capitalise on those things. Hey, yeah.
Just just do it our way, it's quicker.
So let's talk about how they are paying for the deal.
It's a pretty interesting financing, Trev.
We sort of dug into this one. So like I said, US 810 upfront
plus 20 million each if gold averages over 2900 over the the
first year afterwards and over 3000 bucks an ounce over that
second year after Closings up to 850.
But we're now flash the sources of cash.
So how they're going to fund the transaction First up is 350
million, all US I'm talking about here a three year term
gold prepayment. So essentially every month they
will deliver gold to the facilitators of this gold
prepayment, IE you're paying your principal down in gold, not
cash. They call it roughly 150,000 oz
or to go down and it's based upon the prevailing gold forward
curve at the date. So imagine this is locked in
when the transaction is agreed needs to be voted upon.
They want to execute this by Q1 of next year, next calendar year
that is so the the prevailing forward price It will you know
it's always sort of where the gold price is now and then goes
up a couple 100 bucks right now it's sort of approaches kind of
steadily 3000 ish dollars come three years time.
So they call that about 16% of their annual production over the
next three years. You've then got a con note that
makes up to $100 million of the financing that is convertible at
Canadian 7 bucks 90. Their stock closed after that
bump on the announcement at $6. This has a five year term 4 1/2%
+ a a bit of an attaching warrant.
You've also then got a revolver for $150 million and a term loan
for 100 million, both actually paying, you know, relatively
little compared to some of the other smaller, riskier mining
companies we've seen. They're paying Sofa plus a
margin which is about 3% depending on the leverage ratio
at the time. Actually, I actually quite like
how they they financed the deal. There's no, no equity collusion
here, OK, maybe maybe the converts convert in an upside
scenario, but yeah, no upfront equity dilution that's, you
know, positive. So if we're if we assume they're
kind of paying fair value for the asset, right, Look at the
look at the instrument doing the bulk of the heavy lifting and
the financing, it's that gold prepaid where they're going to
be locking in an implied kind of gold price for future deliveries
based on the forward curve at that time.
Like you said, JD, the forward curve is sort of, you know, it's
sitting above spot, it's well above consensus and and they're
effectively locking in those prices with this instrument for
the quantity of gold to be delivered into that prepaid.
And I like that because none of the gold mining equities all are
included here. You know, the market's not
paying Spot gold price for them. They're paying kind of consensus
gold price or, or you know, or maybe a little bit above that.
But it's a bit over 2000. Yeah, ish.
They're not, they're not, you know, these the equities aren't
reflecting Spot gold, they're reflecting a, a curve which
trends sort of lower over time from a gold price perspective.
But the financing arrangement here gets to lock in closer to,
you know, higher prices spot future forward curve.
So they, they get, they get, they get the benefit of locking
in high prices despite the fact that, you know, the, the
market's not paying back for the equities.
So I just, I quite like it. I'll play this, this snip to
elaborate a bit from the M&A call.
NPV on reserves only is $760 million at 2150 per oz gold and
almost $1 billion at $2500 per oz gold.
So if you if you take their word for it, they're paying $850
million including the contingents, which is probably
about 0.8 times naval on their own kind of reserves.
Only scenario at Spot gold price of US 2600 ish today, the
prepaid, you know they get to lock in some of the value upside
from paying less than spot NAV and and they also get the
benefit from Oz not in reserves like you talk about Maddie, if
it just kind of keeps on continuing which you sort of
expect your body to do. Fuck it up so.
We should probably check in there is financing costs, it's
not purely. By all accounts, the prepaid
looks expensive like from the financing cost perspective.
It's just that, yeah, the utilisation of the instrument I
quite like given what gold price has done in a short period of
time and and what what kind of now you're always caught
apprehensive in are doing pro cyclical M and AI think by kind
of, you know, locking in the forward price via the prepaid
instrument They're yeah protecting themselves from
looking silly doing pro cyclical M&A, Yeah and not issuing a
bunch of equity too. So the gold price is sort of
run, you think about what you can kind of utilise.
The first thing you kind of think about is your equity if
that's also run on the back of the gold price run.
But this is a bit of a a creative way to to tap into that
without diluting, yeah. We'll have to say, what do you
think about the is it a bloody? Is it a good bang for buck?
What sort of valuation they're putting on it?
So it depends what you flash. Like Trev said .8 times NAV if
you use 2600, if you use which is the prices that Chuck down
the model 2150 U.S. dollars, you're paying a bit over one
times NAV. So you're paying pretty full
value. Although the upside is that that
is only on reserves and that is on a gold price 500 bucks ish
lower than than where we are today.
So if if you're confident that and I'm sure the management team
is confident that this mine is not going to stop in 20-30, it's
going to it's going to keep going for a good while longer.
And you're also, I mean, why would you be managing a gold
company if you're not thinking the gold price is going to tick
along? Then if those things hold and
importantly if those things, if that, you know, gold price holds
true over the next few years, importantly as it sort of ties
in with your financing, then you will see a bit of value.
And then cream on top of that is all the other flows of being one
of the standout bunch of names in in your jurisdiction and all
those other things that you get. Yeah, jumping ahead a bit,
Maddie, this is to that exact question.
I asked a a North American correspondent what what he
thought and he told me these points.
Definitely very full price at 1.1 times NPV at 5% discount
rate at 2150 per oz. Is that the right number to use?
I don't know, but he reckons that was expected because
Newmont apparently had over 100 CAS signed for this sale
process. So it was, you know, an
attractive sale process. Yeah, all there is a midcap
dialling here. Given how well they delivered
low cost Camino Rojo and asset they picked up for peanuts from
Gold Corp. He reckons that all the guys
will likely push for that. You know, my life out from a six
years to 10 years in the in the next year or so.
And he reckons, you know, full price paid.
But if if they can manage the grade decline and the sustaining
CapEx, he reckons, you know they'll do, they'll do well out
of it. The grade decline is an
interesting one because I looked back 20 years to see what the
reserve was back then and the the grade was a bit lower.
It was 5.5 ish grammes per tonne, very, very hard to to
find what the cut off grade being used.
But today like I said before, 6.2 roughly grammes per tonne
using a 3.8 grammes per tonne cut off grade going going deeper
and you know all that. But that has over 28 years
remained pretty, pretty consistent. 96% recovery I
think. I think if you look at like my
Bush maths and looking at it like you look at the, IT looks
like Newmont's put a bit of capital in it with the the
crushing hoisting conveyor system.
So looks like in the, you know, one and half million tonne plan,
existing infrastructure, 200,000 oz mine, potentially a bit over
2000 bucks Aussie all in sustaining and then paid what
one point if we converted to Aussie to try and compare it to
Aussie things paying paying what 1.3 billion, not all upfront
effectively, that's all you compare that to a that's what
Spartan that's going to probably need to be taken out for 2
billion. On it's push mass.
Push mass, Yeah. Yeah, it looks, it doesn't look
too bad, no. It but it does look full value
when you compare it to like the Tel Havron deal for example.
But the difference is obviously the the dynamics of that sale
process which gave heaps of leverage to to Greyland Gold.
It looks, it looks full valued versus that, right?
So that they talk about 150 million bucks free cash flow per
annum at a 2150 gold price, everything remaining constant.
And you know, you've got other potential.
You know, they, they talk a lot about optimising all those sorts
of things. Definitely not meal constrained,
you know, like, like most underground minds mine
constrained. But there is the capacity given
they can go up to 1.5 million tonnes per annum if they can do
anything over the next few years to try and make that work a bit
better. That's a bit more your your
area, Maddie, but there is potential for them to push
through more answers and get a bit more upside on on that front
too. So they're all those other
little goals that they can sort of strike out for.
Yeah, no, they and when I probably comparing it to Spartan
might be the right thing in terms of Spartan, it's probably
a lot going to be a lot shallower simpler because it's
not 28 years, not as deep, not as not as hot.
There's obviously the the North American aspect to it, trying to
keep the cost down and keep the the delivery of those answers.
But if they can, you know when you got the grade in your
recovery on your side like that. Yeah, I suppose looking as you
said, they paid a bit more than Telfer and all that.
But I think when we did the Telfer Avront deal, we're like,
fuck, that's actually for what they're getting is a pretty good
deal. Totally.
Yeah, I mean. This is you can get a good deal
off Newmont. They're going out.
They're flying out the door. That's that's it's usually a
good strategy to acquire assets that come out of majors, right?
Like that Northern Star, It's gonna look at what built then.
Totally, you know, there's there there are exceptions to the
rule, but in general it's a pretty good rule.
And I I also heard that kind of compared to evolution buying Red
Lake, you've got a much more de risked and and simple minor here
and also a place where the unions are less entrenched than
than you have in sort of Red Lake area too do.
You know who else was on the CR? Oh, who?
Who else had been in the process?
Yeah. Signed ACA confidential.
Man, I don't know. Yeah, they're fine.
That's why. That's why there was that.
Why can't you be like magnetic and tell you everyone who's in
the data room? They're more people like them.
They had a bit of a a cheeky slide on value accretion.
They. Did.
I it's a bit of a funny one, given that the financing.
Yeah, complimenting them on buddy, you know, maybe maybe
picking up an asset out of the major and you know with wishing
him good luck, but I gotta gotta grill him on this slide.
Not a fan of this slide showing how a creative the deal is on a
per share basis. You fund your deal with debt.
Everything's a creative on a per share basis because you got
extra earnings, extra production, extra everything
without issuing a new share. Of course it's a creative you
debt funded it. So I just I should?
Slide in next to that like your net debt day, but or something
like that just to show that it's not all one way.
Exactly. Good M&A isn't, isn't about per
share accretion, it's about sound, you know, weighing up the
risk verse reward capital allocating accordingly for, for
where you have no good, good, good risk for, for the good
reward for the risk you're taking.
I think this slide does nothing to appreciate the additional
business risk that you, you know it comes with adding leverage to
your cap structure. It's just pointing a rosy
picture. We expect nothing else from it
bankers, right, That will always post the rosy thing.
But but you know, I think we're you know, we're keen to see how
it all comes along. I think it'll be an interesting
one to fall in nonetheless. The straight like the like the
deal and the yeah, the stock was up like 9% or something.
Yeah, something like that. What did I trade on again, Ola?
The market, yeah, I think NYC as well as in Canada, yeah.
Yeah, yeah. Interesting.
Let's talk a bit about. Dick and boys.
Metallurgy. Oh, that's.
Right, Spartan chucked out some Met results.
Ding, Ding, Ding to start. Oh yeah, true.
So further, it's sort of most of it was from the top 450 metres.
So bring up the pitches and everything.
Averaged 92.3% recovery for the over 15 Tests for the top 450.
So 91.6% predicted recovery based on the grade of those
regions and the predicted plant conditions.
So they gave a lot of the MET test results and then I guess
the predicted recovery based on the the way I interpreted the
average grade of those areas and how the plan will operate.
So which the predicted recoveries will lower than the
test recoveries. So it was that's a passes the
sniff test you'd say. So gravity recovery sitting
around 25 to 30% you can and you can see from the stages and the
recoveries for each of those stages, the recovery did decline
as they went deeper with so stage 4 recovery drops slightly
below 90% and but I'll go into that later.
It's these results are based on I guess stage 1 and 2 with 48
hour leach at 100 Micron grind and stage 3 and four with 48
hour leach with 75 milk Micron grind.
So we'll get in the grind as well because we're going below
75. Now remember Dale Garanga has an
existing two and it's got existing infrastructure two and
a half million tonne per annum mil.
So which is run by the the jaw two big jaw crusher and a big
sag mill. Yep, so they're going to have to
do some mods to that which will get into what we think might
that might be Yep look, the the fact I'm going into these met
results in such detail. Spartan.
You can repay me by calling Steve Tarr from CRE insurance
because and getting CRE to just make sure that existing
infrastructure there right now is insured properly.
Because on I'm basing a lot of a lot of what I'm about to say is
based on that existing infrastructure that is in place
now. If something happens to it from
either acts of Mother Nature or human nature and they're not
bloody properly insured for it and they didn't take action with
CRE, I'm going to be pissed off because all my assumptions of
for nothing. So I don't want, I want that
mill protected. It's a layup, Maddie.
Yeah, I want CRE to protect it. So mate, don't piss me off.
Call CRE Insurance. Maybe it's easy for me.
I've got maybe your fair story for you involving involving
insurance and gas coin. Not not Spartan, but the
previous yeah, I'll tell you that one off here, but CRE could
have fixed that. CRE can fix anything.
Gas corn would still be gone probably if CRE were.
Off I could make a case that that would be possible.
But are you taking into account how good Steve Tarr is when you
make that case anyway? No, the positive thing for
potential recovery improvements based on these MET results, and
I'll bring up the graph here is this.
You can see there's a linear relationship between the ground
size and the 48 hour tiles grade for the preliminaries,
preliminary results I got for stage five and six, which is the
deepest stuff, the honeypot, never, never.
So yeah, So the overall recovery, it's and you can do it
from the tables, you, you subtract that tile grade from
the head grade and divide all that by the head grade.
That gives you the overall recovery.
Essentially what's getting pissed, the shit they get
compared to what's getting pissed out to tiles.
So you can see for stage 4, so 7.2 -, .74 / 7.2 gives only
9.8%. So that was done at 75 Micron
grand size. Now you can see on this graph
based on these two preliminary tests on the deep stuff, the
tile grade keeps decreasing as they grind it finer.
So at 63 Micron, which isn't we don't usually talk about 60,
usually it goes 75 and then they start talking about like high
pressure grinding roles and things like that.
But I. Remember, Stewart is saying 75
was a bit of a. Yeah, jeez, I think it's the the
rule of thumb where you sort of what you go down to.
But at 63 Micron, the average recoveries were 92.2 and 92 1/2
percent. So they've, you know, added it
looks like if they do grind at finer, they can get another
couple of percent recovery. So, you know, extra 2% recovery
of 150,000 oz. There's 3000 oz, Yeah.
More power though. There is more power.
It does require more power, but it's after that power is
consumed like. What's the benefit?
Pouring an extra gold bar fucking doesn't cost anything
more if you're pissing it out the tails.
So it's a, it's a cost, it's a power to bloody revenue
comparison that they'll need to make.
Because marginally more grind media as well, hey?
Yeah. So you would need, well, it's a,
it's a, it's a power thing, but it's a CapEx thing because to,
to grind it down to 63, they're talking about doing test work to
grind it down to 53. So if they can increase the
cover recovery even more, so they effectively need a bigger
ball mill. So you need a bigger, bigger
ball mill which has more balls in it.
And because it's bigger, it requires more power.
So it's all all going to be based, it's all going to be
based off a kilowatt calculation at the start.
It's like right, Are we going to grind to 63 or are we going to
grind to 53? How big of a ball mill do we
need to install with? I think ball mills run it.
I think it's 30 to 35% ball charge.
But if you got a bigger ball mill, there's more balls bloody
in it to bloody grind the apps living piss out of it.
So now, considering what they've got already, and now I've talked
about it before, is so that that ball meal has to go in that that
need. They need that ball meal to
grind it down to 53 or 63. That's a given.
But considering they got the massive jaw crusher and the
massive sag mill already, they've they've obviously got
the two options to either so they can go jaw to the big sag,
then into the ball mill. From that there will there's
scats that come out of the ball the the sag mill that have to be
either chucked back into the sag mill or like a you need like a
tertiary cone crusher. I think it is like to actually
crush those scats down to then feedback into the sag.
Otherwise you just got these fucking shop puts everywhere
that you that are good fuck all. Or they can, you know, install
to like a three stage crushing system to go into the ball mill.
So the existing jaw then to cone crushes Jowdry like cone
crushes. That'll get it down to the 8 to
10 mil that is needed to then feed into the ball mill.
So it'll be wiring up right, Because I'm pretty sure the the
big sag mill they got would use a lot more a lot of power.
So it's like, but it's there, it's already there.
So it's like, well, is that the best option or?
Is installing 2 cone crushes and having the three stage crushing
system to go in the better option?
22 cone crushes first one SAG mill you got 2 bits of kit to
maintain rather than 1. So it's going to be the that's
going to be the way up. It's like you you would.
I think I said it the opposite way in previous episode, but
you'd think if they can go jaw to existing SAG, manage scats
into a new ball mill, considering that existing
infrastructure think that's probably the way they'd go.
So I think 3 stage crushing in the ball was the norm, but I
think places like from what I've heard, Thunderbox, Mangari,
they're going jaw to sag to ball.
So interesting. Yeah.
So considering it's already there, Spartan or whoever the
fuck are going to mind this, whoever's going to own it,
they'll make that decision in due course.
Could have gone if they they raise 300 bucks when they're up
at $1.50 they would have bloody helped them.
They could have had all the money for it.
Then back of the back 20, up 10%.
Today they went back to 2010. Yeah, yeah.
And gold price ripped up so. Yeah, the more cash you raised,
the less likely you are to get acquired to.
But yeah, maybe, yeah, depends if someone wants cash.
Yeah, most of them. Mine is a cashed up, aren't
they? You just got a deal in there.
And they shouldn't even be thinking about getting a quad or
should be thinking about mining it Go mine right.
Say owner Piedmont set to tie the knot the most it's is it a
bit of a oh fuck all those well the two of an AVL was it
Australian Vanadium and TM TMT? Yeah.
Logical merger, yeah.
It's one we were expecting, that's for sure.
Totally. Yeah, I'm impressed by your
metallurgy knowledge just gets better and better.
Thank you. Thank you, Travis.
Nathan Stordis is like a proud father.
Yeah, this is so say owner Piedmont, they're they're tied.
They're not. And the, the, the details of the
deal kind of emerged about about 30 minutes before we hit hit
record. So, you know, we got to see
what, what it all looked like. So they're, they're the deal is
basically both of them, both companies are going to emerge
with 50% each of of the merge Co, which is technically the
head Co. We say owner, but like they're
called on a merge Co, which means they're going to rename
the company I reckon. And it will be run by say
owner's CEO at the moment, all all up, there's 150 million
bucks of new equity in Australian dollars that is going
to make its way into that pro forma entity in a, in a somewhat
kind of complicated manner. Sale sale is launching like a
well, they launched a $40 million capital raise kind of
today. Piedmont is expected to to do
similar sort of when you know the markets in the US open.
And then once the merger is effective with both with you
know about 40 million Australian each of their respective things
that the two companies going to merge.
And at that point, RCF has this conditional placement where
they're going to tip in about 69 million Australian as a
conditional on that. Into the pro forma.
Have you ever seen anything like
this? Then another capital raise for
another 22. Exactly.
Follow on. Yeah, potential follow on
raising for another 22 1/2 to come where after that too.
So yeah, have you ever seen that where both sides of a merger,
both raising money to make a merger happen?
I haven't. Seen both sides do it yet and
but I have seen the conditional raises do do happen a bit
especially with like you know private equity you'll see Aussie
super do it from time to time in in mining companies, things like
that, but. Whatever the North American
equivalent of 601 One is, colours light they would be so
the brokers would be so happy over there.
What is the 601 One equivalent in Canada?
Don't know. There, there'll be something in
Vancouver there. Love it.
Yeah. So you got all this new equity
coming into it. And there's some obvious
benefits here, not least of which is just the simplification
of of the North American lithium ownership dynamic, you know,
100% owned by the same entity. You don't have that weird off
taking place which you know, it's just a a big drag on the
complexity and and the way that investors sort of had any
appetite for either of the companies really was this quite
onerous off take depending on what the, you know, lithium
price was at any point in time. This deal just tidies all of
that up. So it just makes sense.
It's overdue. What do you guys think of of
that component? Yeah, I mean, just to, to add a
couple more points, Maddie, you mentioned Canada, but it's a bit
funky, very North American focused.
Headquarters going to be breezy. They're going to have.
The primary at the moment, yeah. The primary listing will be ASX.
That makes sense from a from a capital markets perspective with
a secondary listing on the NASDAQ.
So not actually the NASDAQ. Yeah, well, that's where
Piedmont has a listing. So not actually Canadian listed,
but obviously a very. Tech fucking on the the.
Tech exchange? Well is it hunting exchange?
Lithium has a sort of Ave into EV's.
Get creative. I mean, I think that sort of
came about from a sort of Carolina.
They've got an asset in, in the States there as well.
So and then there's that a warrior interest as well that
they they said about in in Africa, the pro.
Forma looks kind of more interesting with the yeah,
you've got the other like Carolina got its approvals
recently, you've got the yeah, the Ghanaian asset, which is
again, there's some, there's momentum there and you've tied
it up now. So the pro forma actually kind
of looks interesting ish. Importantly though, there's
going to be a bunch of kind of cash in there which buys them
time, right? In a depressed lithium market
that buys them more time and also importantly introduces RCF
as like a kind of 10% shareholder of the pro forma who
is writing a big check, but also has the ability to write another
big check if they need to buy more time in the future as well.
Yeah, that that's important. What do you what do you take of
their role in this, their involvement?
RCF. Super interesting.
Like yeah, honestly I find it really interesting.
I mean, like one of the really big wins RCF has had in recent
history was, was when Altura was distressed and Pilgrim Minerals
kind of snivelled it up right before the right before the
lithium market turned. It was like a month before
lithium market turned and RCF kind of cornerstoned big equity.
Like, you know, big equity kind of cornerstone position there to
help facilitate the acquisition of voucher.
So everyone really remembers and, and in like no time, it was
like a three times money on money and like like 10 months
from memory. It was just a huge win for for
RCF and so everyone remembers that in the head.
Big win for RCF that was like counter cyclical depressed
lithium market. Big, big, you know,
consolidation kind of equity like play for them.
This looks similarish lithium markets beaten up the you know,
there's two logical companies kind of coming together helps
them sort of buy more time. Hopefully the cycle picks up and
makes the equity kind of look, you know, attractive over time.
No one can really time when the market turns perfectly.
But, you know, I'm sure, I'm sure everyone who's been a part
of that deal is sort of thinking, I hope this is like
the, you know, Pillbra gobbling up Altura sort of play.
Yeah, and it's it's whoever can survive if there is a turn, it's
like you start getting paid for Strider.
Why? And specifically on North
American lithium, the asset, it was hindered by the by the
structure it was in with the, the economics there and the sort
of skewed off take and ownership.
So yeah, hopefully this can, this will clear that all up and
they can just focus on getting those recoveries out, getting
yeah, getting the asset. They're still going to be losing
free cash flow on it at the current lithium prices.
But yeah, you know, they've got greater capability to last
longer in the cycle. Now what's happening with
Mublin? Development asset, I mean, yeah,
I. Mean on us Pardon.
Definitely is, yeah. Permitting will be the the
challenge. I mean, financing won't be a
walk in the park in this market either, but permitting's been
the big impediment. It's actually an attractive
asset, but yeah, permitting's the big challenge there.
Grade is much, much better than North American Lithium, though.
Once in production, once not, obviously, yeah.
So, yeah, I mean they just need to get the costs down at North
American Lithium to in the ballpark of the DFS that came
out in I think April 2023 is right now they're nowhere near
that. And also get the the revenue up.
There's been a period of sort of qualifying the product and all
those things. So just to make it, you know, go
from a cash bleeding asset to something that's closer to break
even, that'll be that'll be, you know, first item on the shopping
list. Very.
Good, that's it. That's a wrap.
It's funny that. What did you say yesterday,
Trevor? Oh I'm so not interested in
lithium anymore. The the the.
Market. Yeah.
The the future and oh, we've got a lithium deal.
We'll see what comes to it. You know, it's a better time to
do a deal than it was a year ago.
I mean, more particularly if you if you ask.
Yeah. Mate, I reckon I'll know who was
behind that. Someone that moved over to North
America recently. Interesting.
We'll share that one off air. He's a JC, he's a JC.
He is indeed if. You're listening and you know
who I'm talking about. You're a JC, Mr Person.
Jay. Speaking of JC, he's been to a
mining services absolutely jam packed.
Every bloody truck and digger is full of a JCMMS grounded heading
to Canada Crossbair. This is in the name Crowded
construction, Yeah. Have we mentioned?
That yet I. Don't know.
Grounded control. There you go.
Oh cross boundary energy. See if it grant support, CR
insurance, Gaydrill, dice sat and hoodoo money mods.
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