1 00:00:00,160 --> 00:00:03,480 My bigger take away was how unsynchronized the global 2 00:00:03,480 --> 00:00:06,000 economy seems to be now in terms of where we are in the cycle. 3 00:00:06,000 --> 00:00:08,920 Usually it's, you know, US catches the cold, the rest of 4 00:00:08,920 --> 00:00:11,000 the hill gets the flu, maybe with a lag. 5 00:00:11,040 --> 00:00:13,840 I don't know if that's true this time because Hong Kong and China 6 00:00:13,840 --> 00:00:15,840 seem to be reflecting off the lows. 7 00:00:18,960 --> 00:00:22,040 Alan Macro, thank you so much for for joining us again mate. 8 00:00:22,040 --> 00:00:25,360 It's been a while since we last spoke and there has been heaps 9 00:00:25,360 --> 00:00:29,320 happening in the world of, of metals and mining and markets 10 00:00:29,320 --> 00:00:31,400 more broadly. One of the, one of the big 11 00:00:31,400 --> 00:00:35,280 themes that I'm keen to jump into first is your idea of the, 12 00:00:35,280 --> 00:00:38,440 the present super cycle we're in and how that kind of contrasts 13 00:00:38,440 --> 00:00:42,040 with the China bull market that we saw in the 2000s where you 14 00:00:42,040 --> 00:00:43,800 really sort of cut your teeth in. 15 00:00:43,800 --> 00:00:46,960 So I'd love to kind of start right there and, and hear your, 16 00:00:46,960 --> 00:00:50,520 your evolution on thinking in this, this super cycle, the the 17 00:00:50,520 --> 00:00:53,040 rolling crack up thesis that you have and, and everything 18 00:00:53,040 --> 00:00:56,880 related. Oh wow, well, First off, thanks 19 00:00:56,880 --> 00:01:00,480 fellas for having me back. I guess it's, I can't believe a 20 00:01:00,480 --> 00:01:03,080 year has gone by. If I think it's been a year and 21 00:01:04,080 --> 00:01:06,560 I, I, I, I'm sorry. I know you guys have been 22 00:01:06,560 --> 00:01:10,960 reaching out for for a while now to, to have me back and it's 23 00:01:11,320 --> 00:01:14,840 I've just been completely snowed as I think you'd always like to 24 00:01:14,840 --> 00:01:16,920 say, although it never snows in Australia. 25 00:01:16,920 --> 00:01:21,120 So I don't know why you guys say it, but you're taking me way 26 00:01:21,120 --> 00:01:23,240 back. This is kind of one of my first 27 00:01:23,240 --> 00:01:25,240 framework notes when I first moved to Substack. 28 00:01:25,240 --> 00:01:28,200 So it's it's like really big picture how I think about the 29 00:01:28,200 --> 00:01:31,040 world and comparing today or more like comparing and 30 00:01:31,040 --> 00:01:33,120 contrasting today versus the 2000s. 31 00:01:34,160 --> 00:01:37,960 So happy to jump in right there. I think for me and starting out 32 00:01:37,960 --> 00:01:41,800 in the 2000s, especially with a commodity bent as a kind of a 33 00:01:41,800 --> 00:01:44,840 young bloke starting in the business and actually one of my 34 00:01:44,840 --> 00:01:46,840 first assignments was Australian equity. 35 00:01:46,840 --> 00:01:51,040 So I've got a very soft sweet spot in my heart for you boys 36 00:01:51,040 --> 00:01:53,280 down under and been there many times. 37 00:01:53,280 --> 00:01:56,880 And in my 20s starting out, the cycle was just getting going. 38 00:01:56,880 --> 00:01:59,360 But there were a couple of key points that were different than 39 00:01:59,360 --> 00:02:03,040 versus today. For one, you had a very clear 40 00:02:03,040 --> 00:02:05,360 demand pull from the emerging China. 41 00:02:05,360 --> 00:02:09,120 We all know that story. But that kind of measure of a 42 00:02:09,120 --> 00:02:14,240 rise, a rising tide lifting all boats did some interesting 43 00:02:14,240 --> 00:02:18,160 things to a space that had been mostly cast aside for, you know, 44 00:02:18,160 --> 00:02:22,440 the better part of 20 plus years going back all the way to the 45 00:02:22,440 --> 00:02:25,920 70s, which was kind of our last big commodity secular bull. 46 00:02:26,840 --> 00:02:30,680 In this case with China's coming out party after the WTO and the 47 00:02:30,680 --> 00:02:34,160 rise of China and Chinese demand hitting that kind of S curve of 48 00:02:34,440 --> 00:02:37,040 GDP per capita that a lot of people talk about when they 49 00:02:37,040 --> 00:02:39,920 think about global South India and Southeast Asia today. 50 00:02:40,680 --> 00:02:44,160 You had a situation where two things happened at once. 51 00:02:44,160 --> 00:02:48,520 You had that kind of general demand pull where the entire 52 00:02:48,520 --> 00:02:51,080 demand curve pushes out into the right. 53 00:02:51,600 --> 00:02:54,680 And you also had an interesting exercise come out I believe 54 00:02:54,680 --> 00:03:00,160 around 2004 where McKinsey dropped a a a research note 55 00:03:00,800 --> 00:03:05,480 report arguing that if you took your typical equity in bond, 56 00:03:06,280 --> 00:03:11,200 fixed out fixed income allocation and added a passive 57 00:03:11,200 --> 00:03:16,440 commodity exposure via futures to those two, even around the 58 00:03:16,440 --> 00:03:19,840 edges, what they found was 2 amazing things. 59 00:03:19,840 --> 00:03:22,880 One, the returns from commodities historically were 60 00:03:22,880 --> 00:03:27,160 uncorrelated near 0 to either of those asset classes. 61 00:03:27,160 --> 00:03:31,920 So it made sense as a bolt on to 6040 and more importantly that 62 00:03:31,920 --> 00:03:34,680 as all of these curves which naturally want to sit in 63 00:03:34,680 --> 00:03:36,880 contango. If you want to store a 64 00:03:36,880 --> 00:03:40,360 commodity, you need a contango where the near term price is 65 00:03:40,360 --> 00:03:44,280 cheaper to the farther dated price to pay for shipping, 66 00:03:44,280 --> 00:03:46,880 storage in particular storage and insurance. 67 00:03:47,440 --> 00:03:51,200 Then as you backwardate, which is the curves way of punishing 68 00:03:51,200 --> 00:03:56,040 stores and calling supplies out to the market, you passively 69 00:03:56,040 --> 00:03:59,040 begin to collect the yield. So you were basically ringing 70 00:03:59,040 --> 00:04:02,080 the dinner bell for pension fund allocators who are looking for 71 00:04:02,080 --> 00:04:03,680 other options. And remember, this is in the 72 00:04:03,680 --> 00:04:07,000 early mid 2000s when hedge funds and alternatives were just 73 00:04:07,000 --> 00:04:09,600 starting to get going. So, you know, hedge funds were 74 00:04:09,600 --> 00:04:12,920 in an allocatable asset class the way private equity and 75 00:04:12,920 --> 00:04:16,040 credit is today among universities where 40% of their 76 00:04:16,399 --> 00:04:19,600 their billion dollar endowments are in in privates. 77 00:04:19,959 --> 00:04:22,520 Back then, it was really stocks and bonds and a little around 78 00:04:22,520 --> 00:04:26,320 the edges and the David Swenson Yale University CI OS of the 79 00:04:26,320 --> 00:04:30,520 world were playing with alternatives around the edges. 80 00:04:30,840 --> 00:04:34,800 But the mass market kind of long dated saver insurance companies, 81 00:04:34,800 --> 00:04:37,200 pensions, what have you were only starting to wake up to 82 00:04:37,200 --> 00:04:38,800 this. And this McKenzie report woke 83 00:04:38,800 --> 00:04:42,720 people up to the fact that you had non correlated A and 84 00:04:42,880 --> 00:04:46,240 positive ruled yield B. And if you basically tell 85 00:04:46,240 --> 00:04:48,600 somebody that you have an uncorrelated asset class that 86 00:04:48,600 --> 00:04:51,720 generates a positive yield in an environment like the early mid 87 00:04:51,720 --> 00:04:55,320 2000s when the Fed had cut to 1% and basically kicked off the 88 00:04:55,320 --> 00:04:58,480 real estate bubble in the US, that was like ringing the dinner 89 00:04:58,480 --> 00:05:01,920 bell for large allocators. And so commodities arose as an 90 00:05:01,920 --> 00:05:05,240 asset class and we saw $300 billion of AUM flood into the 91 00:05:05,240 --> 00:05:09,600 space during that boom in the 2000s, which all of course was, 92 00:05:09,920 --> 00:05:12,960 you know, miraculously crowned and ended with the demise of 93 00:05:12,960 --> 00:05:14,960 Lehman Brothers and the financial crisis in O8. 94 00:05:15,480 --> 00:05:17,600 There was a an echo boom coming out of that. 95 00:05:17,600 --> 00:05:21,760 But by 2011, that was the ultimate top of commodities in 96 00:05:21,760 --> 00:05:23,320 emerging markets and we were done. 97 00:05:23,880 --> 00:05:27,680 The difference this time kind of setting the table with that is 98 00:05:28,000 --> 00:05:33,040 you don't have a very clear demand pull in one particular 99 00:05:33,040 --> 00:05:35,840 place per SE. The dollar has been gradually 100 00:05:35,840 --> 00:05:37,880 strengthening for 10 years, which has kind of been a boot on 101 00:05:37,880 --> 00:05:40,400 the neck of EM since 2011. As we know. 102 00:05:41,160 --> 00:05:43,280 More recently, Trump seems to want to change that. 103 00:05:43,400 --> 00:05:45,120 The debasement trade is underway. 104 00:05:45,400 --> 00:05:47,880 It's starting to catch fire as a longer term narrative. 105 00:05:47,880 --> 00:05:50,800 Weaker dollar will, you know, be a kick in the butt for emerging 106 00:05:50,800 --> 00:05:53,080 market demand. That's all great. 107 00:05:53,280 --> 00:05:56,520 And maybe India owns the second-half of the Twenty 20s or 108 00:05:56,520 --> 00:05:59,600 the Twenty 30s. And some of these economies very 109 00:05:59,600 --> 00:06:01,920 large, are hitting their S curves now, you know, as they 110 00:06:01,920 --> 00:06:06,000 kick through 2500. Three, $1000 GDP per capita. 111 00:06:06,520 --> 00:06:11,640 But the real driver so far of commodities has been the supply 112 00:06:11,640 --> 00:06:16,080 constraint that followed the boom where basically the tide 113 00:06:16,080 --> 00:06:20,000 went out for 10 plus years via underinvestment. 114 00:06:20,360 --> 00:06:23,920 And that underinvestment shifts the supply curve in as opposed 115 00:06:23,920 --> 00:06:26,120 to the China story which pushed the demand curve out. 116 00:06:26,320 --> 00:06:28,920 The outcome is the same. You get a general appreciation 117 00:06:28,920 --> 00:06:33,000 starting in the price level, but it reflects in the market in a 118 00:06:33,000 --> 00:06:35,560 different way. Whereas the backward dating 119 00:06:35,560 --> 00:06:39,080 curves driven by China is a rising tide that lifts pretty 120 00:06:39,080 --> 00:06:41,800 much all commodity boats at around the same time. 121 00:06:42,160 --> 00:06:46,280 Here what we're seeing is different commodities run into 122 00:06:46,280 --> 00:06:50,480 the wall of shortage or, you know, a production crack up or a 123 00:06:50,480 --> 00:06:55,000 slip up at different points in time, which actually is 124 00:06:55,000 --> 00:06:59,480 Christmas for an active commodity manager or someone who 125 00:07:00,520 --> 00:07:03,240 wants to take a longer short, you know, active approach. 126 00:07:03,640 --> 00:07:06,760 And I, I call this also the forcing function in commodities. 127 00:07:06,760 --> 00:07:09,560 They seem to do nothing for a long time and then suddenly 128 00:07:09,560 --> 00:07:12,680 they'll work 50% out of nowhere over a few weeks or months. 129 00:07:13,080 --> 00:07:16,720 And that forcing function in commodities is expressed because 130 00:07:16,720 --> 00:07:19,600 someone has a problem somewhere or needs delivery tomorrow. 131 00:07:20,240 --> 00:07:22,760 They're pricing sensitive and they need to pay that price. 132 00:07:23,360 --> 00:07:25,880 It's the opposite effect of what's happening in fixed income 133 00:07:25,880 --> 00:07:28,240 inequities where the forcing function for fixed income, for 134 00:07:28,240 --> 00:07:31,160 example, you know, nobody does fundamental work on rates 135 00:07:31,160 --> 00:07:32,160 anymore. I mean, they do, but they're 136 00:07:32,160 --> 00:07:34,160 wasting their time. You talk to a rates guy or a 137 00:07:34,160 --> 00:07:38,800 credit guy who used to do this 20 years ago, he'll tell you he 138 00:07:38,840 --> 00:07:41,480 used to build fundamental models around rates, you know, growth, 139 00:07:41,480 --> 00:07:44,440 inflation, what have you. Today he spends almost all of 140 00:07:44,440 --> 00:07:46,480 his time wondering, what's the Fed going to do? 141 00:07:46,640 --> 00:07:49,600 What's the Treasury going to do with the TGA, the RRP at the 142 00:07:49,600 --> 00:07:51,840 Fed? The interplay of liquidity up, 143 00:07:51,840 --> 00:07:53,880 liquidity down. What does that do to bond 144 00:07:53,880 --> 00:07:56,800 prices? The, the changing mix in coupons 145 00:07:56,800 --> 00:08:00,120 versus T-bills, how that changes bond prices. 146 00:08:00,120 --> 00:08:03,840 It's all flow in equities. You guys are well aware of the 147 00:08:03,840 --> 00:08:07,720 drive of passive, the buybacks that chew through the float and 148 00:08:07,720 --> 00:08:10,680 the more that you can quickly buy back stock, the more that 149 00:08:10,680 --> 00:08:13,720 momentum kicks in, puts you in the mega cap territory. 150 00:08:14,080 --> 00:08:17,720 The inelasticity as these companies get bigger in terms 151 00:08:17,720 --> 00:08:21,960 of, you know, $1.00 moving their market caps, ten 20-30 bucks 152 00:08:21,960 --> 00:08:24,720 only makes them more big, which means that passive needs to buy 153 00:08:24,720 --> 00:08:26,560 more. Around and around we go in that 154 00:08:26,560 --> 00:08:31,560 kind of positive reflexivity of momentum and size that all 155 00:08:31,560 --> 00:08:35,440 argues in equities and fixed income for a passive approach 156 00:08:35,440 --> 00:08:38,679 because alpha or value just does not work in commodities. 157 00:08:38,679 --> 00:08:41,679 It's the exact opposite. The forcing function that I 158 00:08:41,679 --> 00:08:43,840 described where this stuff goes nowhere and then suddenly it 159 00:08:43,840 --> 00:08:48,520 pops or it starts to trend and move, argues for the return of a 160 00:08:48,520 --> 00:08:52,560 commodity active manager as opposed to blindly allocating 161 00:08:52,560 --> 00:08:55,920 $300 billion to the space. Because the space in general, if 162 00:08:55,920 --> 00:08:58,680 you look at the Bloomberg Commodity Index, the Bcom or 163 00:08:58,680 --> 00:09:00,520 what have you, hasn't really done anything. 164 00:09:00,760 --> 00:09:03,760 But individual commodities have been rock'n'roll over the last 165 00:09:03,760 --> 00:09:06,920 few years, including during this bear market and several things. 166 00:09:07,520 --> 00:09:09,680 By way of example, when the light bulb went off on these 167 00:09:09,680 --> 00:09:11,600 rolling crack UPS remain commodities. 168 00:09:11,960 --> 00:09:15,560 We saw European natural gas, the TTF contracts go nuts in the 169 00:09:15,560 --> 00:09:17,760 fall of 21 along with thermal coal. 170 00:09:18,080 --> 00:09:22,640 Then in February of 22 we saw that wildest shit Chinese guy 171 00:09:22,640 --> 00:09:25,680 get caught short on the LME in the nickel contract and nickel 172 00:09:25,680 --> 00:09:27,560 went to 80,000. They had to bust trade so you 173 00:09:27,560 --> 00:09:28,840 don't even see some of the prints. 174 00:09:29,640 --> 00:09:33,040 And then within two weeks, oil moons because Russia invaded 175 00:09:33,040 --> 00:09:35,600 Ukraine. We went to 120 in 23. 176 00:09:35,600 --> 00:09:38,920 You saw uranium go nuts from, you know, the 50s up to north of 177 00:09:38,920 --> 00:09:43,240 100 in 24. We've started to see, you know, 178 00:09:43,280 --> 00:09:45,000 kind of copper with fits and starts. 179 00:09:45,000 --> 00:09:47,320 Like there's there are things to do. 180 00:09:47,720 --> 00:09:51,760 And I think part of it is that as we run into a temporary or 181 00:09:51,760 --> 00:09:55,880 structural supply constraint that manifests from, you know, 182 00:09:55,920 --> 00:09:59,200 several years of deficit finally showing up in price discovery, 183 00:10:00,000 --> 00:10:05,080 you see moves happen really big or trend for far longer than you 184 00:10:05,080 --> 00:10:08,000 can think possible. But the compression until it 185 00:10:08,000 --> 00:10:10,280 happens is very difficult to predict. 186 00:10:10,280 --> 00:10:12,280 You just kind of have to hold your nose and be there on some 187 00:10:12,280 --> 00:10:14,400 of this stuff. Like I know guys were pitching 188 00:10:14,400 --> 00:10:16,920 platinum early last year. They had to wait over a year. 189 00:10:17,240 --> 00:10:21,080 And then when they got paid, they got paid 60% in the last 190 00:10:21,120 --> 00:10:22,600 three months, right? Four months. 191 00:10:22,840 --> 00:10:28,520 So it's it's Christmas for an, an active approach as opposed to 192 00:10:28,520 --> 00:10:31,320 what we see in fixed income inequities where the passive 193 00:10:31,320 --> 00:10:35,200 approach just does not seem to want to relent and doesn't stop 194 00:10:35,200 --> 00:10:38,160 rewarding the lazy or the lack of analysis. 195 00:10:38,400 --> 00:10:41,840 So that's kind of the light bulb going off for me on how this 196 00:10:41,840 --> 00:10:44,640 super cycle is different. What's going to really be 197 00:10:44,640 --> 00:10:46,920 interesting and what I've been wrestling with more recently I 198 00:10:46,920 --> 00:10:48,960 haven't even written about yet because it's been hard for me to 199 00:10:48,960 --> 00:10:52,440 articulate all this is I'm starting to see signs that all 200 00:10:52,440 --> 00:10:55,320 commodities are starting to move together again, like the 2000s. 201 00:10:55,320 --> 00:10:58,720 I'm sure you noticed as well. You know, oil and tankers will 202 00:10:58,720 --> 00:11:01,360 work on the same day. That's not what the experience 203 00:11:01,360 --> 00:11:02,640 has been over the last few years. 204 00:11:02,640 --> 00:11:05,440 But Nat gas is working too. Uranium is off the mat. 205 00:11:05,720 --> 00:11:07,040 You know, metals are starting to work. 206 00:11:07,040 --> 00:11:10,920 It kind of feels like on some days everything is going, you 207 00:11:10,920 --> 00:11:14,040 know, and then we chop wood in different kind of corners of the 208 00:11:14,040 --> 00:11:18,960 commodity space. I wonder if the rolling crack up 209 00:11:18,960 --> 00:11:22,200 story is kind of marrying and having a bastard child with 210 00:11:22,200 --> 00:11:25,160 India and these other places in the demand statement also coming 211 00:11:25,160 --> 00:11:27,960 into its own here. Maybe it's a little early to say 212 00:11:27,960 --> 00:11:32,640 that, but now that I'm seeing on a more consistent basis where 213 00:11:32,640 --> 00:11:35,440 the entire asset class will move together, it's hard to parse 214 00:11:35,440 --> 00:11:38,480 whether what I'm seeing is a demand pull statement where that 215 00:11:38,480 --> 00:11:42,840 curve is moving on to the right in conjunction with the supply 216 00:11:42,840 --> 00:11:46,080 curve removing up and to the left, or if it's really just as 217 00:11:46,080 --> 00:11:48,000 simple as meh. Like it's debasement, bro. 218 00:11:48,000 --> 00:11:50,760 Like, you know, Trump is, you know, annihilating the dollar. 219 00:11:51,080 --> 00:11:52,400 You know, we're speaking Portuguese. 220 00:11:52,400 --> 00:11:55,200 We look like, you know, I like to say this is Africa, you know, 221 00:11:55,200 --> 00:11:57,200 like the Leo DiCaprio gift from Blood Diamond. 222 00:11:58,520 --> 00:12:02,040 You know, maybe it's all three, you know, as Forrest Gump says, 223 00:12:02,040 --> 00:12:05,880 like maybe it's both. But it, it's a fascinating time 224 00:12:05,880 --> 00:12:08,400 to be involved in commodities, but you got to stay on your toes 225 00:12:08,400 --> 00:12:11,800 as well. It, it's a lot to track for me 226 00:12:11,920 --> 00:12:14,480 who was around in the 2000s where you, you know, especially 227 00:12:14,480 --> 00:12:17,400 because I was, I, I was passive back then like you. 228 00:12:17,400 --> 00:12:19,360 You can make money buying almost anything. 229 00:12:20,160 --> 00:12:22,440 Being more active in your research and in your trading 230 00:12:22,440 --> 00:12:25,760 has, can yield a lot of results. But it's, it's not accessible 231 00:12:25,760 --> 00:12:28,320 for most people because you really got to commit time and 232 00:12:28,320 --> 00:12:31,160 energy to, to staying on top of everything, you know, Plus then 233 00:12:31,160 --> 00:12:34,000 you throw geopolitics in the mix and what to fade, what to go 234 00:12:34,000 --> 00:12:36,240 with. It's a, it's, it's a wild time. 235 00:12:36,240 --> 00:12:39,600 But yeah, that's the framework of how this time is different. 236 00:12:39,880 --> 00:12:41,720 It's a, it's a similar super cycle. 237 00:12:42,000 --> 00:12:45,120 It'll eventually all work. But a more active approach I 238 00:12:45,120 --> 00:12:48,080 think is yielding much more interesting results and more 239 00:12:48,080 --> 00:12:51,520 alpha than the typical kind of blindly allocated to commodities 240 00:12:51,520 --> 00:12:53,720 as an asset class. And if anything, commodities are 241 00:12:53,720 --> 00:12:57,400 so small in relation to S&P and global fixed income markets, 242 00:12:57,920 --> 00:13:00,280 it's almost like there's no room in the space to handle. 243 00:13:00,440 --> 00:13:03,040 Like if somebody wanted to send $300 billion the way they did 244 00:13:03,040 --> 00:13:07,520 into the S&P GSCI index in the early 2000s, the space can't 245 00:13:07,520 --> 00:13:09,520 accommodate it. It's like elephants through a 246 00:13:09,520 --> 00:13:13,720 keyhole. Inshallah that money comes, you 247 00:13:13,720 --> 00:13:16,200 know, then we can all retire together. 248 00:13:16,280 --> 00:13:18,880 But for now, that's kind of how I see it. 249 00:13:20,560 --> 00:13:22,760 Yeah, that that's, that's a wicked framework, Paolo. 250 00:13:23,120 --> 00:13:26,440 I'm not sure I see like the, the, yeah, all the commodities 251 00:13:26,440 --> 00:13:29,360 moving together just yet. I think, I think like my, my 252 00:13:29,360 --> 00:13:32,080 observation so far is, is there's, there's a lot of 253 00:13:32,080 --> 00:13:33,840 fragmentation. There's there's froth which is 254 00:13:33,840 --> 00:13:35,720 correlated. And then there's other parts of 255 00:13:35,720 --> 00:13:39,240 the, of commodities markets which are, are getting no love. 256 00:13:39,320 --> 00:13:41,720 But I totally, totally kind of agree with the characterization 257 00:13:41,720 --> 00:13:46,440 of their, their pockets of, of these of, of certain commodities 258 00:13:46,440 --> 00:13:49,520 where, where supply is the story and that supply looks incredibly 259 00:13:49,520 --> 00:13:53,240 tight and it doesn't take too much to really move the needle. 260 00:13:53,800 --> 00:13:58,280 Let's start with copper because this is this is this is a, a 261 00:13:58,520 --> 00:14:03,400 copper supply story right now. Sure. 262 00:14:03,400 --> 00:14:08,560 So copper I'm I'm very excited about I have been bullish for 263 00:14:08,560 --> 00:14:11,520 the last few years. It's felt like just chopping 264 00:14:11,520 --> 00:14:17,400 wood in a wide range, but we've been we I I had the front row 265 00:14:17,400 --> 00:14:20,960 seat in the 2000s for when we re racked the copper price stack 266 00:14:20,960 --> 00:14:25,720 from you know kind of $0.40 on the bottom to $1.50 on the top 267 00:14:25,720 --> 00:14:29,680 for two decades. And then we moved, I believe it 268 00:14:29,680 --> 00:14:35,240 was in 2005 or 6 into that new range where we finally took out 269 00:14:35,240 --> 00:14:40,520 kind of 13150 and we reset a new range of kind of $1.50 to 4 270 00:14:40,520 --> 00:14:42,800 bucks. And we've been working that 271 00:14:42,800 --> 00:14:45,760 range now for 20 years pretty much. 272 00:14:47,000 --> 00:14:51,360 We've tested this kind of 11, you know, ten $11,000 level on 273 00:14:51,360 --> 00:14:57,200 the LME, you know, $5 a pound equivalent several times over 274 00:14:57,200 --> 00:15:00,360 the last few years. It has been kind of a fight. 275 00:15:00,720 --> 00:15:04,160 You know, you get excited. We're finally going to go. 276 00:15:04,400 --> 00:15:08,480 The industry all agrees if we're going to incentivize Greenfield 277 00:15:08,480 --> 00:15:12,320 investment, we need to see north of 10,000 bucks a ton and it 278 00:15:12,320 --> 00:15:16,000 needs to stick right That that importantly is what guys want to 279 00:15:16,000 --> 00:15:19,320 see. And we've never quite gotten 280 00:15:19,320 --> 00:15:24,360 that sort of come to Jesus shortage moment where the curve 281 00:15:24,360 --> 00:15:27,360 firmly backward dates all the way through. 282 00:15:27,360 --> 00:15:32,360 We've had the farther dated curve sitting backwardation for 283 00:15:32,360 --> 00:15:35,360 a little while, but there's always a little hump in the 284 00:15:35,360 --> 00:15:37,320 front which tells you like it. It's almost like that. 285 00:15:37,720 --> 00:15:40,120 I guess it I think it's Thomas Aquinas, you know, like give me, 286 00:15:40,640 --> 00:15:45,080 you know, chastity or whatever and but not yet the curve is 287 00:15:45,080 --> 00:15:47,600 playing with there is a structural issue, but in the 288 00:15:47,600 --> 00:15:49,600 fronts, you've always had a couple of months of contango 289 00:15:49,600 --> 00:15:51,400 where it's like, but there's no shortage right here. 290 00:15:51,400 --> 00:15:54,120 So we're not going to price in a backwardation and and like 291 00:15:54,120 --> 00:15:57,480 really show the market that we need metal out of storage 292 00:15:57,520 --> 00:16:01,560 wherever it is. What's interesting is the drama 293 00:16:01,880 --> 00:16:07,120 and the kind of bifurcation, I guess is the word or the this 294 00:16:07,200 --> 00:16:11,720 the carving up of the world and this sort of supply chain crack 295 00:16:11,720 --> 00:16:17,120 up that started with COVID now rolling into a multi polar, you 296 00:16:17,120 --> 00:16:20,880 know, we hear that word a lot, multi polar kind of regime that 297 00:16:20,880 --> 00:16:23,440 Trump's kicked into high gear with, you know, the return of 298 00:16:23,440 --> 00:16:26,160 this Monroe Doctrine. Like these are the Americas, 299 00:16:26,360 --> 00:16:28,840 Latin and North America, that's ours. 300 00:16:29,320 --> 00:16:33,680 China, you worry and you do you, you know, Europe, whatever. 301 00:16:33,680 --> 00:16:37,040 You guys are a museum anyway. But like, don't come into our 302 00:16:37,040 --> 00:16:38,800 backyard. Now we're flexing on Venezuela 303 00:16:38,800 --> 00:16:40,360 and just send aircraft carriers, right? 304 00:16:40,360 --> 00:16:43,480 Like just to make sure that everybody else in Latin gets the 305 00:16:43,480 --> 00:16:46,040 message. Like, you know, we don't play. 306 00:16:46,360 --> 00:16:48,760 This is our yard. You're just sitting in it. 307 00:16:49,360 --> 00:16:52,480 And, you know, we'll fuss less about Taiwan and what have you 308 00:16:53,000 --> 00:16:54,960 while trying to keep Australia in the fold. 309 00:16:56,120 --> 00:16:59,640 It's interesting because this is having like real effects, like 310 00:16:59,640 --> 00:17:02,800 not all supply is created equal anymore and jurisdiction is 311 00:17:02,800 --> 00:17:06,599 mattering more than ever. And you're seeing even in the 312 00:17:06,599 --> 00:17:10,359 case of comics versus LME, where the premium on comics blew out 313 00:17:10,359 --> 00:17:12,400 in a huge way. And then Trump came out and 314 00:17:12,800 --> 00:17:15,680 backtracked on his tariffs and comics crashed and had its 315 00:17:15,680 --> 00:17:19,119 biggest down day ever. Felt like, I guess like a buck 316 00:17:19,119 --> 00:17:23,920 in a session back this summer. But the premium is still there 317 00:17:23,920 --> 00:17:26,160 and it's still wide. And it makes you wonder like if 318 00:17:26,160 --> 00:17:28,880 tariffs are off the table, why is COMEX still trading at a 319 00:17:28,880 --> 00:17:33,120 premium, Especially when there's an ocean of metal now, like 2/3 320 00:17:33,120 --> 00:17:36,920 of exchange metal for copper now sits on the COMEX. 321 00:17:37,480 --> 00:17:40,240 And the comics used to be just a backwater rounding gear to LME 322 00:17:40,240 --> 00:17:45,040 in Shanghai, and yet 2/3 of visible inventory is sitting in 323 00:17:45,040 --> 00:17:48,240 the US. Like how is the COMEX not 324 00:17:48,240 --> 00:17:50,320 trading at a discount to LME? Right? 325 00:17:50,920 --> 00:17:55,000 And you know, I I wish I had easy answers. 326 00:17:55,000 --> 00:17:58,400 I'm sure metal guys do. Maybe it's just the optionality 327 00:17:58,400 --> 00:18:00,960 that Trump, you know, pivots again and says no tariffs are 328 00:18:00,960 --> 00:18:04,800 back on Like, I don't know. But it it's showing you that 329 00:18:05,120 --> 00:18:08,200 there are mechanics at play. It's Christmas for physical 330 00:18:08,200 --> 00:18:10,400 traders, right, The Glencorbros of the world. 331 00:18:10,400 --> 00:18:13,080 They're, you know, they're minting it, but they're also, 332 00:18:13,400 --> 00:18:15,560 you know, they're also taking losses when they get it wrong in 333 00:18:15,560 --> 00:18:17,240 a big way. Like mistakes cost a lot of 334 00:18:17,240 --> 00:18:20,920 money in in metals trading now. But I don't know, man. 335 00:18:20,920 --> 00:18:26,200 Like for me, we're living in a new regime where not all 336 00:18:26,200 --> 00:18:28,320 jurisdictions are created equal. And it's not as simple as 337 00:18:28,320 --> 00:18:31,040 saying, oh, it's in Africa so it should trade it four times. 338 00:18:32,160 --> 00:18:34,040 You know, Canada should trade in a premium. 339 00:18:34,040 --> 00:18:36,000 Like there are other things now in the mix. 340 00:18:36,320 --> 00:18:38,560 When you look at the equities, you look at what should be 341 00:18:38,560 --> 00:18:42,040 developed, what could become a mine versus like where the 342 00:18:42,040 --> 00:18:45,680 premiums are. And more interestingly, you guys 343 00:18:45,680 --> 00:18:49,480 asked me before we we started about my recent trip to Asia. 344 00:18:49,840 --> 00:18:52,720 The one thing that struck me that many things struck me going 345 00:18:52,720 --> 00:18:57,200 to Hong Kong and Shenzhen. But my bigger take away was how 346 00:18:57,200 --> 00:18:59,960 unsynchronized the global economy seems to be now in terms 347 00:18:59,960 --> 00:19:03,520 of where we are in the cycle. Usually it's, you know, US 348 00:19:03,520 --> 00:19:06,480 catches a cold, the rest of the world gets the flu, right? 349 00:19:06,480 --> 00:19:09,040 Like maybe with a lag. I don't know if that's true this 350 00:19:09,040 --> 00:19:12,320 time because Hong Kong and China seem to be inflecting off the 351 00:19:12,320 --> 00:19:15,480 lows, even just at the margin. When I talk to the expats in 352 00:19:15,480 --> 00:19:18,240 Hong Kong, for instance, a lot of them haven't come back yet. 353 00:19:18,520 --> 00:19:21,920 But the ones who are there seem to suggest to me that like the 354 00:19:21,920 --> 00:19:26,120 vibes are getting better, things are improving, they're off the 355 00:19:26,120 --> 00:19:29,640 lows, business has momentum. It feels like they're just kind 356 00:19:29,640 --> 00:19:32,840 of getting going into a cycle like kind of early ish mid 357 00:19:32,920 --> 00:19:35,240 cycle. Whereas in the US it feels 358 00:19:35,240 --> 00:19:37,760 really long in the tooth, right? And all hinges on fiscal and 359 00:19:37,760 --> 00:19:41,840 stimming and what have you. So we're on synchronized in Asia 360 00:19:41,840 --> 00:19:44,600 versus the West and who knows where Europe is. 361 00:19:44,600 --> 00:19:46,520 They just seem to be stuck in the mud forever. 362 00:19:47,200 --> 00:19:53,520 But that's also playing into how metals demand flows through 363 00:19:54,200 --> 00:19:58,520 where if you think about post COVID, the dollar strengthened 364 00:19:58,520 --> 00:20:00,400 and a lot of commodities rallied with it. 365 00:20:00,920 --> 00:20:04,600 It was clear that it was a Western demand story driving the 366 00:20:04,600 --> 00:20:09,040 narrative around US consumption, goods consumption, some 367 00:20:09,040 --> 00:20:11,240 infrastructure investment, chips act, what have you. 368 00:20:11,680 --> 00:20:14,200 Now all the metal is here and the prices still trade in the 369 00:20:14,200 --> 00:20:16,760 premium. But something else is going on. 370 00:20:16,760 --> 00:20:19,160 Like the rest of the world is starting to feel a little 371 00:20:19,160 --> 00:20:20,840 tighter. When I look at time spreads on 372 00:20:20,840 --> 00:20:25,080 LME, when I look at stocks remaining low on Shanghai and 373 00:20:25,080 --> 00:20:29,160 LME, this medal on comics is not going back out. 374 00:20:29,160 --> 00:20:31,560 So there's exciting stuff I think happening in copper that 375 00:20:31,560 --> 00:20:34,720 suggests to me we've we've tested this $5 a pound level 376 00:20:34,720 --> 00:20:40,240 enough or should I say LME, you know, ten, $11,000 mid 10s, 377 00:20:40,560 --> 00:20:43,640 thousands a ton. You know, an old buddy of mine 378 00:20:43,640 --> 00:20:45,880 used to say if you knock on a door enough times, eventually it 379 00:20:45,880 --> 00:20:47,200 opens. Like we've been knocking on this 380 00:20:47,200 --> 00:20:49,080 level a lot over the last few years. 381 00:20:49,440 --> 00:20:51,960 And I think we go, and I think when we go, we're going to re 382 00:20:51,960 --> 00:20:55,760 rack to a new price tag in the same way that we re racked that 383 00:20:55,760 --> 00:20:58,680 price tag in the mid 2000s and never looked back. 384 00:20:58,680 --> 00:21:02,760 So what if, you know, a $4.00 ceiling for so many years now 385 00:21:02,760 --> 00:21:07,080 becomes like a $354 floor with A7 or $8 ceiling. 386 00:21:07,720 --> 00:21:10,760 You know, guys on Wall Street are already working with $5 long 387 00:21:10,760 --> 00:21:13,120 term copper, you know, $10,000 long term copper. 388 00:21:13,520 --> 00:21:16,360 And the economics for a lot of projects, especially advanced 389 00:21:16,360 --> 00:21:22,480 exploration look OK at 4:00. They look really attractive at 390 00:21:22,480 --> 00:21:25,600 five. And Oh my God, they I mean, you 391 00:21:25,600 --> 00:21:30,480 start running five and a half six, like it's really exciting 392 00:21:30,480 --> 00:21:33,640 for a lot of stuff on the Comm. And there are shortage of 393 00:21:33,640 --> 00:21:37,520 projects out there as well that like are large scale, you know, 394 00:21:37,560 --> 00:21:40,680 higher, higher IRR. Sorry guys, it's late here. 395 00:21:40,680 --> 00:21:45,320 I've been drinking it it, you know, things that the majors who 396 00:21:45,320 --> 00:21:48,040 have been sitting on their hands for 10 plus years doing buybacks 397 00:21:48,040 --> 00:21:50,680 and dividends and focused on capital returns can really sink 398 00:21:50,800 --> 00:21:53,720 sink their teeth into. So it's an exciting time. 399 00:21:53,720 --> 00:21:56,360 And that kind of dovetails into another note I wrote recently 400 00:21:56,360 --> 00:22:02,280 when the tech Anglo tie up came out, I wrote a a note called the 401 00:22:02,280 --> 00:22:05,040 ultimate mining Contra. For me, Anglo is the ultimate 402 00:22:05,040 --> 00:22:08,240 mining Contra. And you know, I can point to 403 00:22:08,520 --> 00:22:12,760 buying Achy Batista's, achy Batista's iron ore assets in 404 00:22:12,760 --> 00:22:18,760 Brazil literally a month before Lehman, buying the beers in 2012 405 00:22:18,760 --> 00:22:22,320 or 13 right when lab made diamonds were becoming a thing. 406 00:22:22,320 --> 00:22:26,040 And you know, what a disaster that's been, you know, selling 407 00:22:26,040 --> 00:22:29,240 out of their Thungela, you know, South African coal assets 408 00:22:29,520 --> 00:22:32,040 literally right at the lows coming out of COVID. 409 00:22:32,520 --> 00:22:35,800 And now more recently selling out of, you know, platinum. 410 00:22:36,000 --> 00:22:40,240 We're spinning it off with platinum having coiled, you 411 00:22:40,240 --> 00:22:43,600 know, around 1000 bucks an ounce for, you know, got 15 years. 412 00:22:43,600 --> 00:22:46,280 It's the longest basing I've ever seen on on any commodity, I 413 00:22:46,280 --> 00:22:49,000 think. So these guys, their timing is 414 00:22:49,000 --> 00:22:55,120 impeccable. And the fact that this deal is 415 00:22:55,120 --> 00:22:57,760 happening now would normally give me pause. 416 00:22:57,760 --> 00:23:00,200 Like, is that a top? And it's actually quite the 417 00:23:00,200 --> 00:23:02,160 opposite. It's the end of chapter one in 418 00:23:02,160 --> 00:23:04,960 the cycle. Usually you see the bigs try to 419 00:23:04,960 --> 00:23:08,840 rationalize in stage one of a mining cycle. 420 00:23:09,160 --> 00:23:13,400 Stage 2 is defined as guys starting to do targeted MNA of 421 00:23:13,400 --> 00:23:17,160 junior producers or even some advanced exploration plays that 422 00:23:17,160 --> 00:23:22,360 are ready to go with a view towards replenishing reserve 423 00:23:22,360 --> 00:23:24,320 life. Because the price deck will 424 00:23:24,320 --> 00:23:26,360 eventually answer the reserve life question, right? 425 00:23:26,360 --> 00:23:29,800 If you're BHP and you're sitting on X number of years of reserve 426 00:23:29,800 --> 00:23:32,800 life at 4 bucks a pound and you take copper to 5 bucks a pound, 427 00:23:32,840 --> 00:23:36,040 voila, reserve life got extended just because the copper price 428 00:23:36,040 --> 00:23:37,800 went up because there's more copper in the ground. 429 00:23:37,800 --> 00:23:39,240 That's economic at that price point. 430 00:23:39,720 --> 00:23:42,440 But as long as the price tag hasn't firmly re racked into a 431 00:23:42,440 --> 00:23:45,480 new range yet. Then once you kind of tapping 432 00:23:45,480 --> 00:23:48,200 into the edge of the range and you're starting to show signs of 433 00:23:48,200 --> 00:23:50,600 breaking out. You will see major start to bid 434 00:23:50,600 --> 00:23:53,960 on junior producers in the space so that they can just add 435 00:23:53,960 --> 00:23:58,640 production quickly at what's still perceived low multiple and 436 00:23:58,640 --> 00:24:00,720 accretive for these guys because they tend to trade at higher 437 00:24:00,720 --> 00:24:02,440 multiples than the junior producers anyway. 438 00:24:02,920 --> 00:24:06,120 We're just starting to see fits and starts of this. 439 00:24:06,120 --> 00:24:08,920 I mean, there was the big the Kunia district deal where BHP 440 00:24:08,920 --> 00:24:11,400 and Lundeen teamed up to buy Jose Maria and Filo. 441 00:24:12,040 --> 00:24:14,600 Obviously, that's a blockbuster project kind of in its own 442 00:24:14,600 --> 00:24:19,400 category, but there's signs that these guys are starting to move 443 00:24:19,440 --> 00:24:21,080 on. Junior producers. 444 00:24:21,080 --> 00:24:25,560 And I think what we saw in 2005 and 6 was that cleaning out of 445 00:24:25,560 --> 00:24:27,360 the middle. There's almost no middle to 446 00:24:27,360 --> 00:24:30,400 speak up because very few people have risen into that stage. 447 00:24:30,720 --> 00:24:33,680 But back then it was Falcon Bridge, Inco, Phelps Dodge. 448 00:24:33,720 --> 00:24:35,440 You know, those three names actually tried to get together 449 00:24:35,440 --> 00:24:38,280 in a three-way at one point. But there's like a whole nine 450 00:24:38,280 --> 00:24:41,040 month saga where, you know, it was bid, counter bid. 451 00:24:41,040 --> 00:24:43,800 Eventually Falcon Bridge went to Extrada, which is now Glencore 452 00:24:44,840 --> 00:24:51,320 Volley took Inco and the Boise Bay assets, Sudbury and I 453 00:24:51,320 --> 00:24:53,760 believe the last one, Phelps Dodge went to Freeport. 454 00:24:54,360 --> 00:24:57,880 And you don't really have these kind of large cap, you know, 455 00:24:57,880 --> 00:25:00,280 mid, large cap mids getting cleaned out. 456 00:25:00,800 --> 00:25:04,280 So you're left with an Anglo trying to do their thing, but 457 00:25:04,280 --> 00:25:08,240 Anglo always the end. What the smart guys do in the 458 00:25:08,240 --> 00:25:13,720 beginning and doing a large cap merger is precisely the 459 00:25:13,720 --> 00:25:16,080 definition of the end of phase one for me. 460 00:25:16,080 --> 00:25:19,040 Like this is the sign that we're moving into Phase 2 and that's 461 00:25:19,320 --> 00:25:22,760 the cleaning out of whatever middle is left and dipping into 462 00:25:22,760 --> 00:25:27,280 advanced exploration plays where it's large long life, high 463 00:25:27,280 --> 00:25:31,120 CapEx, 50 year, you know, potential mine life, you know, 464 00:25:31,120 --> 00:25:32,920 the grandkids will be mining this stuff. 465 00:25:33,760 --> 00:25:38,200 That's I think what is we're about to see over the next year 466 00:25:38,200 --> 00:25:42,080 is a wave of M&A and the names. You know, I'm not making 467 00:25:42,080 --> 00:25:45,880 recommendations, but I would be surprised if Taseko is still 468 00:25:45,880 --> 00:25:49,520 independent in 18 months. I'd be surprised if HUD Bay is 469 00:25:49,520 --> 00:25:52,320 still independent in 18 months. Like I'm talking about these 470 00:25:52,320 --> 00:25:57,040 kind of, you know, 1 to 8 billion market cap names that 471 00:25:57,040 --> 00:26:01,000 are already producing. Capstone, rally capstone. 472 00:26:01,080 --> 00:26:08,200 I mean, yeah, there's exactly. And it's just get me the pounds, 473 00:26:08,480 --> 00:26:10,480 you know, they're already producing. 474 00:26:10,720 --> 00:26:13,640 I'll pay what's optically a premium, but it's going to look 475 00:26:14,000 --> 00:26:17,320 really smart if copper, you know, goes to five and a half 476 00:26:17,320 --> 00:26:20,720 six, you know what I'm saying? So I, I think that's what comes 477 00:26:20,720 --> 00:26:23,680 next now. And, and with that, I'm, I have 478 00:26:23,680 --> 00:26:26,120 a very high level of conviction that that's what we're looking 479 00:26:26,120 --> 00:26:27,800 at over the next kind of 18 months. 480 00:26:27,800 --> 00:26:31,320 So, you know, call it, you know, it'll be fits and starts, but 481 00:26:31,320 --> 00:26:33,720 then there'll be a headline deal and you'll see like two or three 482 00:26:33,720 --> 00:26:36,760 all tip over within a year and they'll be names that we all 483 00:26:36,760 --> 00:26:39,920 know. To to wrap on on copper with a 484 00:26:39,920 --> 00:26:43,320 real specific one. Paolo, you have written and been 485 00:26:43,320 --> 00:26:45,640 thinking a lot about what's happened at Grasberg Free 486 00:26:45,880 --> 00:26:48,280 reports, you know, half odd owned Grasberg. 487 00:26:48,280 --> 00:26:49,440 How's your thinking evolved there? 488 00:26:51,160 --> 00:26:58,080 So the moment that happened, I sat up because it's not every 489 00:26:58,080 --> 00:27:01,760 day that a block cave creates an underwater flood and kills 490 00:27:01,760 --> 00:27:04,480 miners. And it, you know, one of my 491 00:27:04,480 --> 00:27:08,840 favorite gifts to use on Twitter is that built that Biff Tannon 492 00:27:08,840 --> 00:27:12,440 back to the future to 1 where he's the old man in 2020, 493 00:27:12,440 --> 00:27:14,280 whatever. And he says there's something 494 00:27:14,280 --> 00:27:17,840 very familiar about all this. The thing that was familiar for 495 00:27:17,840 --> 00:27:21,720 me was, you know, I, I worked in Latin markets for a while when 496 00:27:21,720 --> 00:27:25,360 Valley had the disaster at Mariana and then the really bad 497 00:27:25,360 --> 00:27:28,920 one at Brumaginho. The two, you know, mountains 498 00:27:28,920 --> 00:27:33,040 that collapse their tailings dams and, you know, volley is 499 00:27:33,040 --> 00:27:36,520 still billions and billions of fines on the hook and they'll be 500 00:27:36,520 --> 00:27:41,320 paying these fines forever. What was interesting then was, 501 00:27:42,240 --> 00:27:45,200 you know, tailings dams didn't regularly fail. 502 00:27:45,200 --> 00:27:49,240 And suddenly you had two of them at scale fail in catastrophic 503 00:27:49,240 --> 00:27:52,360 fashion, including caught on video where you're seeing, you 504 00:27:52,360 --> 00:27:57,560 know, people driving those, you know, huge, you know, open pit 505 00:27:57,560 --> 00:28:00,640 sized mining trucks for their lives, like ahead of a, a, you 506 00:28:00,680 --> 00:28:04,520 know, a mountain just tumbling into a, you know, a river. 507 00:28:05,000 --> 00:28:10,520 And it's terrible to watch. And you, you realize like, OK, 508 00:28:10,520 --> 00:28:13,840 these guys are going to spend years just rehabilitating every 509 00:28:13,840 --> 00:28:15,960 tailing dam going back to the science. 510 00:28:15,960 --> 00:28:20,800 Like, how did this happen? And nobody really cared when the 511 00:28:20,800 --> 00:28:23,440 first one happened. Not, not a lot of people died. 512 00:28:23,440 --> 00:28:27,240 With Mariana, it caused a lot of damage, but you know, people got 513 00:28:27,240 --> 00:28:29,480 over it quickly. Burma Junior was like a real bad 514 00:28:29,480 --> 00:28:33,360 one. And with Grasberg, you know, I, 515 00:28:33,360 --> 00:28:37,440 I, I can't say like, I have every blockade collapse tallied 516 00:28:37,440 --> 00:28:40,320 on a piece of paper, but I don't remember when I heard the last 517 00:28:40,320 --> 00:28:43,800 one happening. And when it happened, the amount 518 00:28:43,800 --> 00:28:46,720 of silence in the immediate aftermath was very disconcerting 519 00:28:46,720 --> 00:28:50,320 because it suggests to you that they don't even have a handle on 520 00:28:50,320 --> 00:28:53,560 the scope of the problem. And then a few weeks later they 521 00:28:53,560 --> 00:28:57,640 dropped the presser before the open where they, you know, gave 522 00:28:57,640 --> 00:29:01,200 their official kind of first pass and they were still looking 523 00:29:01,200 --> 00:29:05,120 for seven disappeared and now presumed dead miners. 524 00:29:05,120 --> 00:29:09,160 I believe they found their bodies and, and basically said, 525 00:29:09,280 --> 00:29:14,160 you know, 2026, we're hoping to start ramping back up and by 27, 526 00:29:14,200 --> 00:29:18,680 yeah, we'll be up and at them. Look, I'm, I'm not a block cave 527 00:29:18,680 --> 00:29:21,240 expert by any means. I'm a generalist that has, you 528 00:29:21,240 --> 00:29:25,040 know, just a background in commodities, but I've seen what 529 00:29:25,040 --> 00:29:26,680 this thing looks like underground. 530 00:29:27,480 --> 00:29:32,040 Imagine like, you know, the movie Resident, you know, the 531 00:29:32,080 --> 00:29:35,240 video game Resident Evil and the Hive underground where like the 532 00:29:35,240 --> 00:29:38,000 tunnels go in every direction. Like this thing is a city 533 00:29:38,000 --> 00:29:41,600 underground with thousands of workers running for miles. 534 00:29:42,040 --> 00:29:45,720 And this is a wet climate. You know, a lot of us have read 535 00:29:45,720 --> 00:29:48,200 up on this, that people have commented on Twitter on this who 536 00:29:48,200 --> 00:29:53,120 are way smarter than I am. But that presser hit and the 537 00:29:53,120 --> 00:29:55,920 copper price was flat. And it kind of makes you wonder, 538 00:29:55,920 --> 00:30:00,040 like, is anybody doing any work in commodities anymore? 539 00:30:00,040 --> 00:30:03,440 Are we all just passive? You know, NVIDIA rules the 540 00:30:03,440 --> 00:30:06,520 world, you know, in this marketplace where there's nobody 541 00:30:06,520 --> 00:30:10,160 left with any level of brain or expertise, you know, no one is 542 00:30:10,160 --> 00:30:14,880 paying attention. You have an 800,000 ton a year 543 00:30:15,120 --> 00:30:21,080 in call it 25,000,000 ton a year market, so 3% of global 544 00:30:21,080 --> 00:30:23,520 production. It's not all offline grant you, 545 00:30:23,840 --> 00:30:27,680 you know they're looking at two 250,000 still to produce, but 546 00:30:27,680 --> 00:30:30,640 you've just knocked call it half a million tons, 2% of global 547 00:30:30,640 --> 00:30:33,160 production off in one wallop. You couldn't say that about 548 00:30:33,160 --> 00:30:35,320 Burma Junior Mariana with iron ore. 549 00:30:35,360 --> 00:30:37,640 You know these things were nowhere near as big of a 550 00:30:37,640 --> 00:30:39,560 percentage of global production as this is. 551 00:30:39,840 --> 00:30:42,400 This is also the largest gold mine in the world, by the way, 552 00:30:42,800 --> 00:30:45,200 in addition to being the second largest copper mine after 553 00:30:45,200 --> 00:30:48,520 Escondida. And they just told you that 554 00:30:48,600 --> 00:30:53,760 they're hoping to start ramping back up late in 26 to be back to 555 00:30:53,760 --> 00:30:56,640 full production in 27. But how do they know? 556 00:30:56,800 --> 00:31:00,000 You know, like, a couple of weeks is nowhere near the amount 557 00:31:00,000 --> 00:31:03,080 of time to get in there. And then you also have 558 00:31:03,720 --> 00:31:06,880 significant risk around Indonesia. 559 00:31:07,200 --> 00:31:10,280 The fact that they had protests, there were several killings, 560 00:31:10,440 --> 00:31:13,560 deaths during the protests. The government has been shaky. 561 00:31:13,880 --> 00:31:18,240 Prabowo is Subianto. The president had to shuffle out 562 00:31:18,240 --> 00:31:21,360 his security minister, his finance minister, because in 563 00:31:21,360 --> 00:31:24,640 August the the Congress, the parliament decided to give 564 00:31:24,640 --> 00:31:28,440 themselves a raise and people went crazy and a taxi driver was 565 00:31:28,440 --> 00:31:30,240 run over by a police car and was killed. 566 00:31:30,480 --> 00:31:32,520 And so there were mass protests across the country. 567 00:31:32,760 --> 00:31:35,360 Nobody cared, obviously, like nobody, nobody watches this 568 00:31:35,360 --> 00:31:37,320 stuff. But this was a thing in August. 569 00:31:37,320 --> 00:31:39,080 It kind of quieted it down by October. 570 00:31:39,560 --> 00:31:42,040 But now you have this and then you start to read between the 571 00:31:42,040 --> 00:31:45,240 lines, right? And for for one, specifically to 572 00:31:45,240 --> 00:31:49,640 Grasberg, look again, I can't, I don't speak for the company. 573 00:31:49,680 --> 00:31:51,840 I'm not short the stock. If anything, it's kind of like 574 00:31:51,840 --> 00:31:54,200 Kamiko when Cigar Lake flooded in the 2000's. 575 00:31:54,400 --> 00:31:56,360 The stock's going to work anyway, even though it's their 576 00:31:56,360 --> 00:31:58,920 problem because this is going to tighten the market and they'll 577 00:31:58,920 --> 00:32:01,640 make more money on the rest of their production than they do 578 00:32:02,000 --> 00:32:03,880 leaving money on the table through lack thereof. 579 00:32:04,400 --> 00:32:06,240 But there's a point of vulnerability here where like 580 00:32:06,240 --> 00:32:08,600 this is, this is an emerging market, man. 581 00:32:08,600 --> 00:32:11,320 Like Volley's lucky that some of these assets were nationalized 582 00:32:11,320 --> 00:32:12,560 in Brazil. They're just going to tax the 583 00:32:12,560 --> 00:32:15,720 hell out of them and find them. But Indonesia has a history, 584 00:32:16,600 --> 00:32:20,200 especially recently of keeping production in country. 585 00:32:20,200 --> 00:32:23,120 So they, you know, have prohibited Freeport from 586 00:32:23,120 --> 00:32:26,000 exporting concentrate in the past, encouraged them and forced 587 00:32:26,000 --> 00:32:28,040 them to build, you know, treatment and refining in 588 00:32:28,040 --> 00:32:30,680 country so that they're shipping finished metal. 589 00:32:31,080 --> 00:32:34,960 They started cracking down big time on illegal tin mining this 590 00:32:34,960 --> 00:32:36,400 year. In fact, they outright 591 00:32:36,400 --> 00:32:41,320 confiscated several smelters and tin elite like 1000 illegal tin 592 00:32:41,320 --> 00:32:44,440 mines and threw those assets to PT Tema, the national company. 593 00:32:44,680 --> 00:32:47,280 Like nationalization is a non 0 risk here. 594 00:32:47,280 --> 00:32:49,240 I'm not saying it's a base case for me, far from it. 595 00:32:49,440 --> 00:32:51,680 But like it's a left tail affair, right where the, the 596 00:32:51,680 --> 00:32:55,080 country like, you know, just gets out of control or something 597 00:32:55,080 --> 00:33:00,080 comes out about this. Like what if, right Freeport cut 598 00:33:00,080 --> 00:33:03,240 corners on gravity testing 'cause this thing is soaked in 599 00:33:03,240 --> 00:33:04,600 water, right? It's in the tropics. 600 00:33:04,920 --> 00:33:08,720 You got to test the ore body for for water. 601 00:33:09,200 --> 00:33:14,320 What if they missed something and the block cave collapsed and 602 00:33:14,320 --> 00:33:17,680 flooded everything and killed some locals and the country? 603 00:33:17,760 --> 00:33:20,320 The company's at fault. There's an independent 604 00:33:20,320 --> 00:33:22,240 investigation. The unions are asking to be 605 00:33:22,240 --> 00:33:25,000 involved in that. What if something untoward comes 606 00:33:25,000 --> 00:33:28,040 out and these guys are shown to be at fault and it wasn't just 607 00:33:28,040 --> 00:33:30,440 an accident? They, you know, they're, they're 608 00:33:30,440 --> 00:33:33,200 liable. You know, what if that leads to 609 00:33:33,400 --> 00:33:36,840 in the context of them going after the tin industry, you 610 00:33:36,840 --> 00:33:40,680 know, they decide to just tax the hell out of this entity or, 611 00:33:40,920 --> 00:33:44,960 you know, force a 30% ownership stake for the, you know, 612 00:33:44,960 --> 00:33:49,080 additional stake for the state at Freeport's expense to pay 613 00:33:49,080 --> 00:33:52,400 for, you know, the, the environmental clean up. 614 00:33:52,400 --> 00:33:53,800 And, you know, as a fine or what? 615 00:33:53,800 --> 00:33:56,320 I, I have no idea. I just know that this is, this 616 00:33:56,320 --> 00:33:59,280 isn't a developed market. You know, this is an 617 00:33:59,280 --> 00:34:01,600 unpredictable emerging market where things change. 618 00:34:02,040 --> 00:34:06,800 And I don't know, man, I, it's just for me, it's, it's, it was 619 00:34:06,800 --> 00:34:08,360 invisible. Nobody cared. 620 00:34:08,360 --> 00:34:10,560 Even on the day off after I read the press room, like, how's 621 00:34:10,560 --> 00:34:12,440 copper flat? I immediately bought futures 622 00:34:12,639 --> 00:34:14,840 started to rally and we haven't looked back from there. 623 00:34:14,840 --> 00:34:17,320 You know, we kind of gradually tightening the market and the 624 00:34:17,320 --> 00:34:19,600 sell side then goes on a conference call with management 625 00:34:19,600 --> 00:34:23,040 recently and just buys this hook, line and sinker guidance 626 00:34:23,040 --> 00:34:25,400 for management that this is all going to come back online, that 627 00:34:25,400 --> 00:34:26,639 they've got their arms around the problem. 628 00:34:26,679 --> 00:34:30,639 I'm sorry, like I, I just, I just don't believe it's going to 629 00:34:30,639 --> 00:34:33,360 be that easy. I would be skeptical and nobody 630 00:34:33,360 --> 00:34:36,719 is right. That leads me to other trades as 631 00:34:36,719 --> 00:34:38,159 well, some of which I haven't written about. 632 00:34:38,159 --> 00:34:39,520 So I'll kind of keep them to myself. 633 00:34:39,520 --> 00:34:45,719 But this is a this is a potential problem that is now 634 00:34:46,320 --> 00:34:50,760 tightening the market in the way that even Cobra Panama and and 635 00:34:50,840 --> 00:34:53,040 it it's it's it almost seems like 1 after another, right? 636 00:34:53,040 --> 00:34:56,719 Like this is kind of maybe the Cigar Lake equivalent, not in 637 00:34:56,719 --> 00:35:02,520 scale, obviously, but in sort of shock value eventually for this 638 00:35:02,520 --> 00:35:07,160 cycle in copper. You know, you had Kumo, Kukula, 639 00:35:07,160 --> 00:35:11,440 had that earthquake, they were offline for months, The Cobra 640 00:35:11,440 --> 00:35:15,800 Panama issue last year. There are a lot of misses and 641 00:35:15,800 --> 00:35:18,840 significant assets in a market that's already kind of tight. 642 00:35:19,560 --> 00:35:22,680 I don't know, like it. It feels like to me like if ever 643 00:35:22,680 --> 00:35:25,600 there was a moment where we finally say goodbye to a $4.00 644 00:35:25,600 --> 00:35:28,400 copper, the stars are kind of aligned and I just want to be 645 00:35:28,400 --> 00:35:31,800 there. And the way I express it mostly 646 00:35:31,800 --> 00:35:34,880 is in that junior producer in advanced exploration area 647 00:35:34,880 --> 00:35:39,800 because the reaction function of the majors will be to add pounds 648 00:35:39,800 --> 00:35:45,560 quickly through M&A as that price tag finally reacts. 649 00:35:47,800 --> 00:35:51,000 By the time we air this, it might actually be another update 650 00:35:51,000 --> 00:35:55,240 out by, by Freeport. My, my, my Intel. 651 00:35:55,240 --> 00:35:57,720 I've been asking around, just trying to introduce what what 652 00:35:57,720 --> 00:35:59,440 reality looks like with, with Grasberg. 653 00:35:59,440 --> 00:36:02,920 And what I've heard is Freeport's likely to come out 654 00:36:03,160 --> 00:36:06,080 saying that they can ramp volumes from the non block cave 655 00:36:06,080 --> 00:36:08,400 areas. But the actual, yeah, the the 656 00:36:08,400 --> 00:36:12,080 block cave area itself, there's like between 7:00 and 9:00 657 00:36:12,080 --> 00:36:14,080 kilometers of rehab that needs to be done. 658 00:36:15,760 --> 00:36:18,760 Yeah, I think risk is certainly to the downside on your ability 659 00:36:18,800 --> 00:36:21,720 to to, to, to ramp volumes from the block cave. 660 00:36:23,160 --> 00:36:26,200 This will that's a really good point. 661 00:36:26,200 --> 00:36:32,640 They will pull levers wherever they can to try to manage the 662 00:36:32,640 --> 00:36:37,840 guidance because the last thing they want is, you know, 663 00:36:37,840 --> 00:36:40,920 Freeport's the only copper producer in the S&P 500 that 664 00:36:40,920 --> 00:36:43,200 suits them, right? In the same way in uranium, like 665 00:36:43,200 --> 00:36:45,320 Chemico's the only super liquid name. 666 00:36:45,320 --> 00:36:47,640 And no matter what the multiple is, if people are hot for 667 00:36:47,640 --> 00:36:51,200 uranium, that's where the pod shops and hedge funds and real 668 00:36:51,200 --> 00:36:53,040 money will go to buy first because that's where the 669 00:36:53,040 --> 00:36:56,800 liquidity is. But it's it's kind of a not 670 00:36:56,800 --> 00:36:59,000 dissimilar case with what's happening with Camaco and 671 00:36:59,000 --> 00:37:01,080 MacArthur River cutting their guidance. 672 00:37:01,120 --> 00:37:03,800 You know, they've been slow walking this problem since the 673 00:37:03,800 --> 00:37:06,520 second quarter result where they first whispered that mining is 674 00:37:06,520 --> 00:37:08,920 hard. MacArthur River, you know, clay 675 00:37:08,920 --> 00:37:11,600 in this new zones. This might take some time. 676 00:37:11,760 --> 00:37:13,920 And then a month later in August, I guess it was they 677 00:37:13,920 --> 00:37:16,600 dropped the bomb that it's not going to be 18,000,000 lbs. 678 00:37:16,600 --> 00:37:20,080 It's 14 to 15. But just like you said, you 679 00:37:20,080 --> 00:37:23,480 know, we're going to try to flex Cigar Lake and we can do 680 00:37:23,480 --> 00:37:26,720 £1,000,000 from that. So there's no crisis here. 681 00:37:26,720 --> 00:37:30,440 And it's like this isn't like when the uranium mill broke two 682 00:37:30,440 --> 00:37:32,880 years ago and you needed parts and some labor in a few months. 683 00:37:32,880 --> 00:37:35,440 It was back up. Like this sounds, this sounds 684 00:37:35,440 --> 00:37:37,760 like geology to me. Like this sounds like there's an 685 00:37:37,760 --> 00:37:39,920 issue here that may take longer to play. 686 00:37:40,400 --> 00:37:43,760 And what it like what is the guidance for 26? 687 00:37:43,760 --> 00:37:46,280 Oh, you know that we always release that in February. 688 00:37:46,600 --> 00:37:52,120 OK, but so you know, the the cigar Lake like we can flex here 689 00:37:52,120 --> 00:37:55,320 thing. I I get it a lot like it's you 690 00:37:55,320 --> 00:37:57,480 know, it makes sense to me that Freeport's going to do what they 691 00:37:57,480 --> 00:38:03,000 can around the different ore bodies there to they don't want 692 00:38:03,000 --> 00:38:05,320 to be in force majeure for years, right like the these guys 693 00:38:05,320 --> 00:38:06,680 are in the business of mining copper. 694 00:38:06,680 --> 00:38:11,080 I'm just saying that like this story is just getting started. 695 00:38:11,120 --> 00:38:14,040 There were rumors also recently within the last week that there 696 00:38:14,040 --> 00:38:16,960 are kind of press reports or articles on the Comm that the 697 00:38:16,960 --> 00:38:20,680 situation there is a lot more serious than Freeport so far as 698 00:38:20,680 --> 00:38:22,160 let on. But hey, it's just smoke for 699 00:38:22,160 --> 00:38:23,600 now. We'll see what they actually say 700 00:38:23,600 --> 00:38:26,520 and what happens. I just, this is a point of 701 00:38:26,520 --> 00:38:30,240 vulnerability that the market can't can't just dismiss and it 702 00:38:30,440 --> 00:38:34,640 like geopolitics and fading Iran and Israel and all this other 703 00:38:34,640 --> 00:38:38,560 stuff in the oil market. We're so immune now to supply 704 00:38:38,560 --> 00:38:42,040 disruptions that the market didn't even react when they 705 00:38:42,040 --> 00:38:44,960 issued a press report saying this thing might be offline for 706 00:38:45,000 --> 00:38:48,800 a year. You know, because Komo Kukula 707 00:38:48,800 --> 00:38:51,640 had their issue didn't seem to affect the market. 708 00:38:52,000 --> 00:38:54,520 Calgary, Panama had their issue, didn't seem to affect the 709 00:38:54,520 --> 00:38:57,760 market. Cheese tech guiding down at, you 710 00:38:57,760 --> 00:39:00,280 know, QB 2 like that was a big one. 711 00:39:00,800 --> 00:39:04,320 Didn't seem to tighten the but like, again, like nobody's 712 00:39:04,320 --> 00:39:07,040 paying attention. And yeah, I guess like what 713 00:39:07,040 --> 00:39:08,560 we're going to need is the forcing function. 714 00:39:08,560 --> 00:39:11,280 And suddenly somebody's going to miss a big shipment and go into 715 00:39:11,280 --> 00:39:15,320 the spot market or like, you know, take 200,000 tons out of 716 00:39:15,320 --> 00:39:19,040 LME and not be able to get it. And then people realize, oh 717 00:39:19,040 --> 00:39:21,920 shit, the market's tight and you know, here we go. 718 00:39:23,320 --> 00:39:25,640 It's, it's often the smallest thing that's you know, it's a 719 00:39:25,640 --> 00:39:27,200 snowflake that sets off the avalanche. 720 00:39:27,360 --> 00:39:31,200 This was a big snowflake. I'm waiting for the little one 721 00:39:31,200 --> 00:39:33,440 that nobody sees coming. And then we know we got it. 722 00:39:35,080 --> 00:39:37,960 It's such a, it's such an enticing market, the, the copper 723 00:39:37,960 --> 00:39:39,920 market. And yeah, it does feel like 724 00:39:39,920 --> 00:39:41,480 we're, we're kind of closer than ever. 725 00:39:41,720 --> 00:39:44,280 I'm, I'm keen to touch on a few other commodities as well, 726 00:39:44,280 --> 00:39:47,200 Paulo, uranium being one of them that you've spoken a bunch 727 00:39:47,200 --> 00:39:50,040 about. And I know you've got a, a, a 728 00:39:50,040 --> 00:39:52,880 long history with, with uranium and you've thought about it 729 00:39:52,880 --> 00:39:55,480 pretty deeply. You wrote a piece three or four 730 00:39:55,480 --> 00:39:58,680 months ago, I think it was titled Uranium in the 20s is 731 00:39:58,680 --> 00:40:03,360 what silver was in. In the 2000s and you know, that 732 00:40:03,360 --> 00:40:05,360 kind of sets the scene. But I, I actually want to ask 733 00:40:05,360 --> 00:40:08,720 quite a specific one about how you're thinking around next Gen. 734 00:40:08,720 --> 00:40:12,160 has changed to start, because when we did last speak, you 735 00:40:12,160 --> 00:40:15,560 were, you were more on the bearish end that that arrow gets 736 00:40:15,720 --> 00:40:18,520 gets developed or gets developed in any kind of orderly time 737 00:40:18,520 --> 00:40:21,160 frame. But lately you've written more 738 00:40:21,160 --> 00:40:24,120 to the point that you've been accumulating and, and building 739 00:40:24,120 --> 00:40:26,640 that position again. So how, how has your your 740 00:40:26,640 --> 00:40:29,080 thinking changed in, you know, what is the most meaningful 741 00:40:29,080 --> 00:40:31,600 asset in the development space in uranium right now? 742 00:40:33,160 --> 00:40:36,920 Yeah, that's a a bit of a loaded question for me because I got I 743 00:40:36,920 --> 00:40:41,240 view next Gen. on paper. You know, if I were a broker, I 744 00:40:41,240 --> 00:40:44,720 could pitch this all day. You know, it's a liquid name in 745 00:40:44,720 --> 00:40:48,760 terms of investability from a liquidity perspective. 746 00:40:48,800 --> 00:40:51,240 You know, I mentioned Camico's like Freeport. 747 00:40:51,240 --> 00:40:53,040 That's where the big money will go to play first. 748 00:40:53,520 --> 00:40:57,040 But if big money needs a second name to rotate into that can 749 00:40:57,040 --> 00:41:01,600 torque and has a narrative to it, next Gen. is it. 750 00:41:01,600 --> 00:41:05,920 You know, next Gen. reminds me a lot of Twiggy and Fortescue in 751 00:41:05,920 --> 00:41:08,640 the early 2000s. I met Twiggy before he had a 752 00:41:08,640 --> 00:41:11,120 mine. He, you know, he was years 753 00:41:11,120 --> 00:41:16,280 removed from Anaconda Nickel and he was pitching his project in 754 00:41:16,280 --> 00:41:21,320 New York and the name of the presentation deck was the 4th 755 00:41:21,320 --> 00:41:24,360 force in iron ore. And I loved it 'cause it was, 756 00:41:24,400 --> 00:41:26,720 you know, iron ore was volley BHP in Rio. 757 00:41:26,720 --> 00:41:30,080 It they had just switched over from annual contract 758 00:41:30,080 --> 00:41:33,720 negotiations to a spot market and Japan was, you know, 759 00:41:33,720 --> 00:41:36,800 flipping to the Chinese in terms of the demand driver and who was 760 00:41:36,800 --> 00:41:40,160 driving the negotiations. And uranium kind of reminds me a 761 00:41:40,160 --> 00:41:42,360 little bit of that now, not in the sense that it'll go from 762 00:41:42,360 --> 00:41:44,880 term to spot. That's not going to happen 763 00:41:44,880 --> 00:41:48,000 because as much as we would love that kind of level of price 764 00:41:48,000 --> 00:41:51,440 discovery in action simply because of the, the lead time on 765 00:41:51,440 --> 00:41:54,640 the product for the natural commercial end buyer, the 766 00:41:54,640 --> 00:41:58,800 decisions to take a core loading start years before, you know, 767 00:41:59,080 --> 00:42:01,840 the, the uranium that goes into the core loading is mined 768 00:42:01,840 --> 00:42:04,320 several years before the fuel is loaded. 769 00:42:04,360 --> 00:42:08,080 So because of that just lag in the cycle of of production, 770 00:42:08,920 --> 00:42:12,120 you're you're always going to be predominantly a turn market. 771 00:42:12,480 --> 00:42:16,160 But yeah, as opposed to, you know, iron ore, put it on mine 772 00:42:16,160 --> 00:42:20,000 it, put it on a boat, put it in a blast furnace, ship steel, 773 00:42:20,280 --> 00:42:22,920 couple of months, right. It's a short cycle product. 774 00:42:23,640 --> 00:42:28,200 In this case though, like NextGen is sitting on a deposit 775 00:42:28,200 --> 00:42:32,040 that will wildly move the needle and they're kind of he's kind. 776 00:42:32,640 --> 00:42:34,640 He is a little bit of scorpion versus the frog too. 777 00:42:34,640 --> 00:42:37,080 Like Twiggy, you know, he's like the disruptor in the space. 778 00:42:37,080 --> 00:42:40,560 Here's like Stodgy Tim and Grand over at Kamiko. 779 00:42:41,000 --> 00:42:44,880 Like nobody wants to admit we over contracted and got eager in 780 00:42:44,880 --> 00:42:49,000 21 and 22 and we look stupid when uranium goes north of 100 781 00:42:49,000 --> 00:42:51,160 because we're realizing prices at 60. 782 00:42:51,320 --> 00:42:54,240 But we've been conservative bringing, you know, production 783 00:42:54,240 --> 00:42:57,800 back online and our contracting strategy, yadda, yadda, yadda. 784 00:42:57,800 --> 00:43:01,520 It's like, OK, at least you survived without going bankrupt. 785 00:43:01,520 --> 00:43:03,800 Like I'll give you that over the last 10 years. 786 00:43:04,120 --> 00:43:07,400 But on the flip side, you know, Lee is the kind of Twiggy, sharp 787 00:43:07,400 --> 00:43:09,200 elbows, you know, sort of character. 788 00:43:09,520 --> 00:43:13,760 You know, he's out there like, oh, yeah, I'm sponsoring Formula 789 00:43:13,760 --> 00:43:16,560 One in the Canucks because, like, that's what the Saudis 790 00:43:16,560 --> 00:43:19,120 want to see, you know, and like, I want them to buy the pounds. 791 00:43:19,120 --> 00:43:21,640 They were like, you know, anchor my next raise. 792 00:43:21,640 --> 00:43:24,520 Like whatever, you know, he's he's living. 793 00:43:24,600 --> 00:43:28,320 He's living the life. But the more I've kind of honed 794 00:43:28,320 --> 00:43:31,440 in on this guy and it is it is loaded for me as well because I 795 00:43:31,440 --> 00:43:36,600 wrote this kind of comparison to Fortescue last April or or so. 796 00:43:36,600 --> 00:43:39,920 And that was right when uranium was coming off the boil north of 797 00:43:39,920 --> 00:43:42,960 100 on spot. And then he popped that convert 798 00:43:42,960 --> 00:43:45,520 and that raise where he, you know, with MMM cap where he took 799 00:43:45,520 --> 00:43:48,520 a couple £1,000,000 and just, but like, kudos to him. 800 00:43:48,520 --> 00:43:50,160 Like he raised like right there at the top. 801 00:43:50,160 --> 00:43:53,800 And that was the end of the uranium cycle for a while, 802 00:43:53,800 --> 00:43:56,240 right? So his timing was impeccable. 803 00:43:57,080 --> 00:44:00,120 The more I kind of looked at the asset look, I the asset still 804 00:44:00,120 --> 00:44:02,120 has problems. It is nowhere as easy. 805 00:44:02,480 --> 00:44:05,600 It's like 25,000,000 lbs is not a shoe in. 806 00:44:05,600 --> 00:44:08,120 I, I get the pitch. This is an ISR, it's not as 807 00:44:08,120 --> 00:44:10,360 complicated. A lot of this is still under a 808 00:44:10,360 --> 00:44:12,880 lake. Like, it's not going to be easy, 809 00:44:13,280 --> 00:44:17,080 but I'm starting to see hints that there's like some madness 810 00:44:17,080 --> 00:44:20,160 to the seeming throwing money about. 811 00:44:20,840 --> 00:44:23,440 I like the fact that he's been trying to keep a low profile 812 00:44:23,440 --> 00:44:26,360 recently because he wants the federal permits to go through 813 00:44:26,360 --> 00:44:28,840 without an issue. I I questioned, for example, 814 00:44:28,840 --> 00:44:31,520 when he popped the $600 million raise he did two months ago. 815 00:44:31,840 --> 00:44:34,160 It was like, God damn it, Lee, again, like you just did this 816 00:44:34,160 --> 00:44:35,760 last May. You don't need the money now. 817 00:44:36,000 --> 00:44:39,200 Wait for 120 bucks a pound with the stock at 12. 818 00:44:39,440 --> 00:44:41,800 Then pop the raising. Like make one raising higher 819 00:44:41,800 --> 00:44:42,880 than the last. You know what I mean? 820 00:44:42,920 --> 00:44:45,120 Like do it the right way and stair step that thing up over 821 00:44:45,120 --> 00:44:46,600 the cycle. But. 822 00:44:48,280 --> 00:44:52,440 I think it came close to a billion Australian, yeah. 823 00:44:52,720 --> 00:44:54,600 Over. I was, I was saying 600 US. 824 00:44:54,640 --> 00:44:58,800 Yeah, yeah, yeah. So it's 300 there and 300 in 825 00:44:58,800 --> 00:45:01,960 Canada. US and anchors in both. 826 00:45:02,720 --> 00:45:05,040 I mean, it's kind of an open secret who anchored the 827 00:45:05,720 --> 00:45:09,120 Australia line, but let's just say yeah. 828 00:45:09,600 --> 00:45:15,240 Hancock Prospecting. So supposedly of the 300, she 829 00:45:15,240 --> 00:45:18,640 put her hand up for two more than. 830 00:45:18,720 --> 00:45:21,040 Half 150. It was like it was, I heard it 831 00:45:21,040 --> 00:45:29,120 was 200 and another super man, I got to check my notes. 832 00:45:29,720 --> 00:45:33,120 A major super also put their hand up for 100 and the book was 833 00:45:33,120 --> 00:45:36,480 basically spoken for. So they had to upsize to kind of 834 00:45:36,560 --> 00:45:39,360 fit people in. There was an anchor also on the 835 00:45:39,400 --> 00:45:42,240 US side who I don't know who it is. 836 00:45:43,160 --> 00:45:48,560 It's a very big, very real name. So what that suggests to me is 837 00:45:48,560 --> 00:45:52,640 that the Canadians who are all holders of this thing, all the 838 00:45:52,640 --> 00:45:55,760 top guys in Kamico and you know, there's crossover with next Gen. 839 00:45:55,760 --> 00:46:00,320 holders got barely a starter and there's more buying to do in the 840 00:46:00,320 --> 00:46:02,440 coming weeks and months for them to actually get a position. 841 00:46:02,440 --> 00:46:07,240 But also Kamico has done so well over the last nine months. 842 00:46:07,800 --> 00:46:11,640 Imagine being a Toronto based asset manager with $100 million 843 00:46:11,640 --> 00:46:13,720 position in Kamico that went to 300. 844 00:46:14,400 --> 00:46:18,240 Like the case is pretty easy to then say, let me take 50 or 100 845 00:46:18,240 --> 00:46:20,760 million out of Kamiko and throw it to NextGen just to kind of 846 00:46:20,760 --> 00:46:24,040 spread the bet, especially since Nextgen's the one with actual 847 00:46:24,040 --> 00:46:27,320 production growth. Meanwhile, like Kamiko, to their 848 00:46:27,320 --> 00:46:29,720 credit, despite the fact that they're, you know, kind of over 849 00:46:29,720 --> 00:46:33,720 contracted on the on the look back and having problems with 850 00:46:33,720 --> 00:46:37,440 MacArthur River and knock on wood, like I, I, I don't know 851 00:46:37,680 --> 00:46:40,080 this for any kind of there's a points of vulnerability at Cigar 852 00:46:40,080 --> 00:46:43,000 Lake and I'll leave it at that. But production there's been 853 00:46:43,000 --> 00:46:48,240 fine, their pivot. And and I underplayed this at 854 00:46:48,240 --> 00:46:50,400 the time because I thought the acquisition was kind of silly, 855 00:46:50,840 --> 00:46:53,800 but the Westinghouse thing clearly paid dividends. 856 00:46:53,800 --> 00:46:57,360 And now what I think you're going to see very successfully 857 00:46:57,720 --> 00:47:01,800 is Kamiko pivots from being a mining company to being a 858 00:47:01,880 --> 00:47:05,440 vertically integrated company that's actually an engineering 859 00:47:05,440 --> 00:47:07,880 construction firm and a developer of nukes. 860 00:47:08,200 --> 00:47:10,520 That's Trump adjacent, yada yada, yada, through 861 00:47:10,520 --> 00:47:12,960 Westinghouse. When you run unit economics on 862 00:47:12,960 --> 00:47:19,480 what an AP1000 is, you know, numbers 1.2 billion revenue, you 863 00:47:19,480 --> 00:47:23,440 know, 2 to 50 million EBITDA per, you know, put ten of these 864 00:47:23,440 --> 00:47:27,240 together, you're talking, I don't know, 2 1/2 three billion 865 00:47:27,240 --> 00:47:30,840 of EBITDA obviously stretched over time, but and that's 866 00:47:30,840 --> 00:47:36,440 attributable to them. Man, like you slap like a, you 867 00:47:36,440 --> 00:47:40,720 know, 15 EBITDA multiple, like like a top end engineering 868 00:47:40,880 --> 00:47:44,680 multiple on something like that. Suddenly you're at thirty $35 869 00:47:44,680 --> 00:47:46,160 billion. Like that's almost the market 870 00:47:46,160 --> 00:47:50,680 cap of Cameco like so they can pivot their story away from low 871 00:47:50,680 --> 00:47:54,760 multiple mining is hard. We missed again or like we 872 00:47:54,760 --> 00:47:58,120 screwed up, you know, to actually being a downstream 873 00:47:58,120 --> 00:48:00,160 company. And and mind you, the more 874 00:48:00,160 --> 00:48:05,680 successful there ENC is right there AP 1000 is the more their 875 00:48:05,680 --> 00:48:09,640 mining company looks better, right, Because their production 876 00:48:09,640 --> 00:48:13,320 needs to feed those things. So they can also, you know, have 877 00:48:13,320 --> 00:48:16,160 line of sight from this construction in this development 878 00:48:16,160 --> 00:48:21,400 track to filling that pipeline with, you know, MacArthur River 879 00:48:21,400 --> 00:48:25,160 expansion, Rabbit Lake coming out of care and maintenance and 880 00:48:25,160 --> 00:48:26,400 other things that they need to track. 881 00:48:26,480 --> 00:48:30,760 Eventually, the deal that needs to happen here over time is 882 00:48:30,760 --> 00:48:33,840 going to be Kamiko Byangaro, right? 883 00:48:33,840 --> 00:48:37,520 Because Lee doesn't have a track record of actual mind 884 00:48:37,520 --> 00:48:40,800 development in production. It makes sense for this thing to 885 00:48:40,800 --> 00:48:45,600 be developed by Kamiko Orano. But Kamiko and Next Gen. like, 886 00:48:45,600 --> 00:48:48,480 there's no love lost there. You know, the guys at Kamiko, 887 00:48:48,480 --> 00:48:50,920 they can't even be on the same panel at a conference as Lee. 888 00:48:50,960 --> 00:48:55,840 You know, it's old school versus, you know, hot action 889 00:48:56,440 --> 00:48:59,360 these two. I mean, they'll make an offer 890 00:48:59,360 --> 00:49:02,880 for next Gen. if Lee stubs his toe and his stock is on his 891 00:49:02,880 --> 00:49:06,200 knees, but like it won't happen otherwise. 892 00:49:06,640 --> 00:49:09,120 What's fascinating for me is I still think next gen's asset has 893 00:49:09,120 --> 00:49:12,200 problems, but I see another strategy taking hold here also 894 00:49:12,200 --> 00:49:14,760 because it started drone on about this. 895 00:49:14,760 --> 00:49:15,880 But there's so much to think about. 896 00:49:16,480 --> 00:49:20,480 You know, Lee is actually pretty sharp guy as his conference call 897 00:49:20,480 --> 00:49:22,320 also this week was pretty interesting to listen to. 898 00:49:22,320 --> 00:49:25,400 I encourage people to to have a listen because it's clear that 899 00:49:25,400 --> 00:49:28,760 he's kind of one O 1 ING what next Gen. is and kind of 900 00:49:28,760 --> 00:49:30,960 simplifying it for people to understand. 901 00:49:31,640 --> 00:49:33,920 But there's so many interesting directions this thing can go. 902 00:49:33,920 --> 00:49:37,640 For example, he could decide to do the 1st 10,000,000 lbs first, 903 00:49:37,640 --> 00:49:39,080 right? For a few years. 904 00:49:39,560 --> 00:49:42,720 You know, everybody's got 25,000,000 lbs penciled in for 905 00:49:42,720 --> 00:49:45,840 2031, but you know, he could make it OK. 906 00:49:45,840 --> 00:49:48,360 So he's got £5,000,000 or whatever of offtake 6,000,000 907 00:49:48,360 --> 00:49:51,640 lbs, something like that. He can bring on £10,000,000 in 908 00:49:51,640 --> 00:49:54,800 the first few years and just squeeze the market, or you can 909 00:49:54,800 --> 00:49:58,240 say I'm going to do £15,000,000 to start but I'm going to 910 00:49:58,240 --> 00:50:01,320 sequester 5. I've got access to Saudi money. 911 00:50:01,720 --> 00:50:03,280 You know. Sprott clearly doesn't. 912 00:50:03,280 --> 00:50:07,520 Do you know the best job And yellow cake in the UK is 913 00:50:07,760 --> 00:50:10,960 completely grossly incompetent and destroys value. 914 00:50:11,160 --> 00:50:15,000 Why they're not buying back stock with the premium down 10%, 915 00:50:15,320 --> 00:50:19,480 the discount of 10% today after dilutively adding 50 million 916 00:50:19,480 --> 00:50:22,800 bucks to the last race to pay for the Kaz Adam Brown pounds is 917 00:50:22,840 --> 00:50:24,680 beyond me. Sorry to be passionate, but like 918 00:50:24,920 --> 00:50:29,400 I've multiple guys into YC as management like use the excess 919 00:50:29,400 --> 00:50:32,480 money to go buy back stock and show that you can manage this 920 00:50:32,480 --> 00:50:34,120 discount because Sprott can't do that. 921 00:50:34,320 --> 00:50:36,800 You can actually make a name for yourself as a real product in 922 00:50:36,800 --> 00:50:38,960 the space. So that guys are an orphan on an 923 00:50:38,960 --> 00:50:41,680 exit. Down 10% in a uranium price 924 00:50:41,680 --> 00:50:44,000 that's actually showing signs of starting to like with fits and 925 00:50:44,000 --> 00:50:46,520 starts to work. Anyway, back to next Gen., like 926 00:50:46,800 --> 00:50:49,120 Leah's talked about over the last two years about doing a 927 00:50:49,120 --> 00:50:52,200 sequester vehicle himself. You know he lives in Adelaide, 928 00:50:52,200 --> 00:50:54,640 right? What if he were to do one in 929 00:50:54,640 --> 00:50:59,560 Australia now the locals down where you are and superfunds 930 00:51:00,080 --> 00:51:04,360 could buy uranium yellow cake a la Spat without having going to 931 00:51:04,360 --> 00:51:07,720 Canada or the UK. What if he seeds that and then 932 00:51:07,720 --> 00:51:11,400 spins that out, right? Like, I don't have any Intel on 933 00:51:11,400 --> 00:51:14,400 this, I'm just speculating, but I've read some of his public 934 00:51:14,400 --> 00:51:17,680 statements and I hear how he talks kind of bottom line. 935 00:51:18,280 --> 00:51:22,120 I could see many ways where he uses this kind of, yeah, I said 936 00:51:22,120 --> 00:51:25,520 fourth force and iron ore, the third force in uranium right 937 00:51:25,520 --> 00:51:34,160 after Cap and Kamico where he says, listen, if I don't get 125 938 00:51:34,160 --> 00:51:39,280 or 150 bucks a pound for Arrow production, I'll sequester it. 939 00:51:39,760 --> 00:51:42,640 And you know, he's got the dual listing for the stock in 940 00:51:42,640 --> 00:51:44,040 Australia as well. But you always bugged me like, 941 00:51:44,040 --> 00:51:45,560 why are you raising in Australia? 942 00:51:45,560 --> 00:51:47,320 Like who cares? Like it trades by appointment 943 00:51:47,320 --> 00:51:49,040 anyway. It's not like institutional 944 00:51:49,040 --> 00:51:50,480 Aussie money's really trading there, right? 945 00:51:51,040 --> 00:51:53,840 It's kind of a it's a planted flag, right? 946 00:51:53,960 --> 00:51:57,440 Like it never made sense from a capital efficiency and 947 00:51:57,440 --> 00:52:00,680 allocation perspective. But like, you know, he has 948 00:52:00,680 --> 00:52:03,040 talked about launching a sequester in the past and nobody 949 00:52:03,040 --> 00:52:06,840 has one in ounces. So what if he were to do 1 and 950 00:52:06,840 --> 00:52:10,360 spin that out and like, you know, next Gen. has a stake in 951 00:52:10,360 --> 00:52:13,760 the spun out sequester, right? And if he doesn't like the 952 00:52:13,760 --> 00:52:17,600 pricing and the term contracting he's getting from utilities, he 953 00:52:17,600 --> 00:52:20,960 just sells to the sequester and says, OK, like, you know, I'll 954 00:52:20,960 --> 00:52:24,080 wait, right? But he's doing it in a, in a, in 955 00:52:24,080 --> 00:52:28,640 a way that I, I didn't give him enough credit for his like 956 00:52:28,760 --> 00:52:32,920 ability to read how to piece this market together and squeeze 957 00:52:32,920 --> 00:52:39,000 it to motivate utilities to see the problem that Brownfield's 958 00:52:39,000 --> 00:52:41,200 overcommitted. Mining is hard. 959 00:52:41,600 --> 00:52:45,480 The guys who, you know, restarted, contracted at the 960 00:52:45,480 --> 00:52:48,200 wrong price. Utilities don't want to pay up. 961 00:52:48,520 --> 00:52:51,480 What's worse is they didn't want to do anything last year because 962 00:52:51,480 --> 00:52:53,800 of the election. Now they haven't wanted to do 963 00:52:53,800 --> 00:52:56,000 anything this year. And that we're well below 964 00:52:56,000 --> 00:53:00,200 replacement rate contracting for 25 because they're waiting for 965 00:53:00,200 --> 00:53:05,640 Trump to do his thing. And if they screw up and there's 966 00:53:05,640 --> 00:53:09,000 not enough uranium and or it's late and, you know, we have a 967 00:53:09,000 --> 00:53:13,640 problem, we'll just point the finger at evil speculators and 968 00:53:13,880 --> 00:53:17,400 plead with Trump for, you know, for salvation or something, you 969 00:53:17,400 --> 00:53:18,960 know, like just go to the government and make it their 970 00:53:18,960 --> 00:53:22,400 problem. Utility should be moving. 971 00:53:22,840 --> 00:53:26,600 There only seem to be one or two guys in at least in the US who 972 00:53:26,600 --> 00:53:29,360 have their own independent research that all pointed in the 973 00:53:29,360 --> 00:53:35,560 same direction that we need higher pricing in uranium to 974 00:53:35,560 --> 00:53:39,480 incentivize Greenfield, nevermind future brownfield or 975 00:53:39,560 --> 00:53:41,160 bring stuff out of care maintenance. 976 00:53:41,600 --> 00:53:44,880 And as with everything, I think it just comes in waves. 977 00:53:44,880 --> 00:53:48,680 And we've chewed through the rat and mice production over the 978 00:53:48,680 --> 00:53:51,800 last two years of consolidation after we had that first big run 979 00:53:51,800 --> 00:53:56,400 in kind of 21 and then 23. And the third wave is now upon 980 00:53:56,400 --> 00:54:00,680 us. Volume and contracting will be 981 00:54:00,680 --> 00:54:03,680 get price discovery on the top side. 982 00:54:03,720 --> 00:54:06,960 It's not going to discover to the downside, the noise and spot 983 00:54:07,200 --> 00:54:10,520 where traders bank it down like this move just recently in the 984 00:54:10,520 --> 00:54:14,680 last two weeks from 82 down to 77, almost no pounds traded. 985 00:54:14,920 --> 00:54:18,440 This is a highly opaque market that's just clamoring for price 986 00:54:18,440 --> 00:54:20,560 discovery. And unfortunately, unlike iron 987 00:54:20,560 --> 00:54:23,080 ore in the early 2000s, it's not going to get it with some 988 00:54:23,080 --> 00:54:25,160 transformation from term to spot. 989 00:54:25,440 --> 00:54:31,440 It's going to take, you know, adults in the room or my kind of 990 00:54:31,640 --> 00:54:35,400 conspiracy theory getting into the beauty that is Trump. 991 00:54:36,920 --> 00:54:39,920 You probably heard me talking right about like stay Trump 992 00:54:39,920 --> 00:54:41,800 adjacent. The guy is clearly pointing the 993 00:54:41,800 --> 00:54:43,960 fire hose at critical minerals. We all know this. 994 00:54:44,320 --> 00:54:47,160 I got this joke early in July, August after he did the mountain 995 00:54:47,160 --> 00:54:48,760 pass deal. He was just like, who's next, 996 00:54:48,760 --> 00:54:51,160 who's next, who's next? And it's all started to roof 997 00:54:51,440 --> 00:54:54,040 come off the boil recently. Big crashes and a lot of names 998 00:54:54,280 --> 00:54:57,880 doesn't matter. There are points of contact here 999 00:54:58,120 --> 00:55:00,000 where Trump is clearly going to throw money. 1000 00:55:00,320 --> 00:55:03,240 Chris Wright in Vienna six weeks ago. 1001 00:55:03,480 --> 00:55:06,120 We are going to do a strategic uranium reserve. 1002 00:55:06,640 --> 00:55:10,760 Amir Adnani from UEC teams up with Goldman Sachs. 1003 00:55:10,880 --> 00:55:12,640 They initiate on his stock in August. 1004 00:55:12,840 --> 00:55:16,760 He pops the following, does his first real conference call after 1005 00:55:16,760 --> 00:55:21,440 the result a month ago. The guy sounded on the 1006 00:55:21,440 --> 00:55:24,880 conference call like he had the cat had just eaten the Canary, 1007 00:55:25,560 --> 00:55:28,160 talking about how things are imminent with the government. 1008 00:55:28,160 --> 00:55:29,640 And then we got the federal shutdown. 1009 00:55:30,480 --> 00:55:31,840 Commerce Department's been closed. 1010 00:55:31,840 --> 00:55:35,080 They've been doing deals, but it's all been DoD, right? 1011 00:55:35,080 --> 00:55:37,960 Like awards to critical minerals from Department of Defense 1012 00:55:37,960 --> 00:55:39,280 because they're open for business. 1013 00:55:39,840 --> 00:55:43,200 As soon as Lutnick is back in the chair and the DOC is open, 1014 00:55:44,040 --> 00:55:46,880 we will see a plethora of deals. Guess what? 1015 00:55:47,080 --> 00:55:49,760 The federal shutdown is set to end either tomorrow or Thursday, 1016 00:55:49,760 --> 00:55:53,400 according to Polymarket. So I think we've got a lot of 1017 00:55:53,400 --> 00:55:57,320 pent up action in the Department of Commerce handing out and 1018 00:55:57,320 --> 00:56:00,520 signing contracts. I think we're about to hear 1019 00:56:00,920 --> 00:56:04,280 either the announcement of a strategic uranium reserve, which 1020 00:56:04,280 --> 00:56:08,880 will is basically the announcement of 1/3 sequester on 1021 00:56:08,880 --> 00:56:15,640 the playing field, only one who has unlimited ammo or I should 1022 00:56:15,640 --> 00:56:20,400 say and or a minimum floor price like they did with Mountain Pass 1023 00:56:20,400 --> 00:56:23,120 and Niodymium and some of the rare earths in the first deal 1024 00:56:23,480 --> 00:56:27,080 where they say we want to incentivize US based uranium 1025 00:56:27,080 --> 00:56:29,360 production. We used to do 10s of millions of 1026 00:56:29,360 --> 00:56:33,040 pounds a year 50 years ago. Now we do like a couple of 1027 00:56:33,040 --> 00:56:36,680 £1,000,000. We are a £50 million a year 1028 00:56:36,680 --> 00:56:38,400 market. We are wholly dependent on 1029 00:56:38,400 --> 00:56:40,640 foreign supply. We need to 10X production. 1030 00:56:40,640 --> 00:56:44,200 Now there are a handful of players that can do this and 1031 00:56:44,640 --> 00:56:48,320 they need, they tell us that they need, I don't know, 100 and 1032 00:56:48,320 --> 00:56:52,320 10120, a $130.00 a pound, let's call it 125 a pound. 1033 00:56:53,400 --> 00:56:57,360 We will buy unlimited if you produce in the US at 125 a 1034 00:56:57,360 --> 00:57:02,280 pound. I am high delta that either of 1035 00:57:02,280 --> 00:57:05,000 those announcements are coming in the next few months and it 1036 00:57:05,000 --> 00:57:07,320 feels to me with the federal shutdown ending that it could be 1037 00:57:07,320 --> 00:57:10,080 weeks rather than months. I don't want to say days because 1038 00:57:10,080 --> 00:57:12,040 who the hell knows. I'm not in the business of 1039 00:57:12,040 --> 00:57:16,920 trading 0 DTE options, but weeks, months, definitely the 1040 00:57:16,920 --> 00:57:21,360 stuff is in the crosshairs. And if it's a focus on US 1041 00:57:21,360 --> 00:57:23,000 production, will that help the Canadians? 1042 00:57:23,640 --> 00:57:26,600 Can't hurt. I mean, Gina already owns Next 1043 00:57:26,600 --> 00:57:28,640 Gen. We know she anchored the Rays. 1044 00:57:29,120 --> 00:57:32,480 Gina got a membership to the Mar A Lago resort so that she can 1045 00:57:32,480 --> 00:57:34,440 hang out there and try to get an audience with Trump. 1046 00:57:34,440 --> 00:57:38,080 And she's down there like all the time from what I did, right? 1047 00:57:38,360 --> 00:57:42,640 And she she's, you know, very right wing leaning. 1048 00:57:42,960 --> 00:57:45,440 So she's simpatico to the message. 1049 00:57:46,480 --> 00:57:49,320 And Next Gen. is the horse that she's chosen to back. 1050 00:57:49,320 --> 00:57:51,360 And we know that she loves to have a seat at the table when it 1051 00:57:51,360 --> 00:57:56,440 comes to talking M&A. You know, once Carney and Trump 1052 00:57:56,440 --> 00:57:59,040 finally figured their end out and Trump stops beating up on 1053 00:57:59,280 --> 00:58:02,360 the 51st state and decides to do the deal, I think he's waiting 1054 00:58:02,440 --> 00:58:04,840 for Canada to do them last, right? 1055 00:58:05,000 --> 00:58:07,040 Because they're the easiest to do with because, you know, 1056 00:58:07,040 --> 00:58:10,000 they're they're our neighbor. But we need everything they they 1057 00:58:10,000 --> 00:58:11,920 have, right? Like, you know, what are we 1058 00:58:11,920 --> 00:58:13,840 beating them up for? Like, we need heavy crudes. 1059 00:58:14,160 --> 00:58:16,360 We really going to get it from Venezuela, I guess like we're 1060 00:58:16,360 --> 00:58:20,040 going to try now, you know, and knock out Maduro and get into 1061 00:58:20,400 --> 00:58:23,040 jungle guerrilla warfare for 10 freaking years. 1062 00:58:23,040 --> 00:58:24,920 I'm sure it'll all work out with the Orinoco. 1063 00:58:24,920 --> 00:58:29,600 But Canada's easy, you know, he's just waiting to do them 1064 00:58:29,600 --> 00:58:33,320 last. So yeah, I see a a special spot 1065 00:58:33,320 --> 00:58:36,720 for next Gen. and all of this. You know, it's got it's got room 1066 00:58:37,080 --> 00:58:41,880 and with $120.00 price deck, Yeah, I know it's not cheap and 1067 00:58:41,880 --> 00:58:45,160 it's a big asset, you know, that's five plus years away from 1068 00:58:45,160 --> 00:58:49,440 production. But I mean, UEC at 7 1/2 billion 1069 00:58:49,440 --> 00:58:51,360 market cap. Jesus. 1070 00:58:51,400 --> 00:58:53,240 Yeah. That, that doesn't quite make 1071 00:58:53,240 --> 00:58:54,800 sense to me. But that starts to make sense 1072 00:58:54,800 --> 00:58:59,320 too, with a triple digit price tag and A and a floor price from 1073 00:58:59,440 --> 00:59:03,480 the US and maybe like a sprinkling of, you know, 1074 00:59:03,800 --> 00:59:06,080 strategic uranium reserve. Like, why don't we have one? 1075 00:59:06,080 --> 00:59:08,320 It doesn't make sense. Like, as with everything Trump, 1076 00:59:08,320 --> 00:59:10,840 there's a kernel of truth wrapped in the giant cartoon of 1077 00:59:10,840 --> 00:59:13,080 noise. And you know what? 1078 00:59:13,160 --> 00:59:15,400 What is it called? A flooding the zone but like the 1079 00:59:15,400 --> 00:59:17,880 kernel of truth is like we need a strategic uranium reserve. 1080 00:59:17,880 --> 00:59:20,440 We need a floor price above the market to incentivize domestic 1081 00:59:20,440 --> 00:59:22,120 production. Like why aren't we doing this? 1082 00:59:23,160 --> 00:59:26,040 So I'm here for it. And yeah, uranium, I'm I'm size. 1083 00:59:26,320 --> 00:59:29,560 Yeah, yeah, time to do homework on a lot of those American based 1084 00:59:29,680 --> 00:59:33,560 names was was many months ago and you know, no time like the 1085 00:59:33,560 --> 00:59:36,160 present to to get underway. I'll close another one I've got 1086 00:59:36,160 --> 00:59:40,360 to ask you about though, Paolo, Like just just crazy what what 1087 00:59:40,360 --> 00:59:42,960 has happened. And I think in the last month 1088 00:59:43,000 --> 00:59:48,040 it's off 40 odd percent. But it's, it's so interesting in 1089 00:59:48,040 --> 00:59:51,200 the uranium world because it it's a big part of a few of 1090 00:59:51,200 --> 00:59:54,760 those Atfs that a lot of people kind of play in, which is it 1091 00:59:54,760 --> 00:59:57,840 says, you know, something that just makes, makes me think about 1092 00:59:58,480 --> 01:00:01,240 what correlation turns to when when people run away from these 1093 01:00:01,240 --> 01:00:03,480 things. But yeah, there's, there's, 1094 01:00:03,560 --> 01:00:06,040 there's a lot of kind of moving parts to it, isn't there? 1095 01:00:07,320 --> 01:00:10,400 I'm sure with OCLO for one, because I, you know, I wasn't 1096 01:00:10,400 --> 01:00:13,160 involved in, hey, if it's going to go up 10X like I want to be 1097 01:00:13,160 --> 01:00:14,400 there, I don't care if it's a Ponzi. 1098 01:00:14,880 --> 01:00:19,920 But yeah, it's also hard because it is in the URA, which is 1099 01:00:19,920 --> 01:00:22,960 largest ETF. You know that OCLO is, you're 1100 01:00:22,960 --> 01:00:24,800 going to crap when you hear this. 1101 01:00:25,680 --> 01:00:31,440 OCLO is the largest weight in the Russell 2000 value index 1102 01:00:33,800 --> 01:00:37,760 value. It's also it's it's a top, you 1103 01:00:38,240 --> 01:00:42,280 know, it's a key weight top ten, I think in the Russell 2000 full 1104 01:00:42,280 --> 01:00:45,880 stop, top 20. I have to double check there. 1105 01:00:46,600 --> 01:00:49,720 But in the Russell 2000 value, it's the largest constituent 1106 01:00:49,720 --> 01:00:52,480 like we really need that, you know these, you know, it's like 1107 01:00:52,480 --> 01:00:54,760 when you talk about broadening out and getting in the small cap 1108 01:00:54,760 --> 01:00:57,880 like you just can't take this this stuff seriously anymore. 1109 01:00:57,880 --> 01:00:59,280 It. Was half a size of. 1110 01:01:00,720 --> 01:01:04,200 Yeah, And, and this isn't going to be a product for years, if at 1111 01:01:04,200 --> 01:01:06,640 all, but I guess we're going to throw billions at it and we're 1112 01:01:06,640 --> 01:01:08,600 going to make it work. You know, where there's a where 1113 01:01:08,600 --> 01:01:10,280 there's a will, there's a way, especially when you throw 1114 01:01:10,280 --> 01:01:12,520 billions at it. But the problem is that like 1115 01:01:12,520 --> 01:01:18,400 this pollutes this space needs money, but it needs money like 1116 01:01:18,480 --> 01:01:22,560 where it matters, right, Enrichment, conversion and 1117 01:01:22,760 --> 01:01:29,840 especially U3O8 that matters, pie in the sky technology that 1118 01:01:30,120 --> 01:01:32,040 maybe works. And listen, I don't want to 1119 01:01:32,040 --> 01:01:35,840 speak bad and like really crap all over it because there are 1120 01:01:35,840 --> 01:01:39,560 hitters there and, you know, the management team like they're no 1121 01:01:39,560 --> 01:01:42,320 dummies. Like this stuff could work. 1122 01:01:42,760 --> 01:01:45,280 It's just like it feels like we're skipping a step, you know, 1123 01:01:45,280 --> 01:01:49,960 and AP1000 works just fine. And the Chinese equivalent, they 1124 01:01:49,960 --> 01:01:51,640 build these things for $2 billion. 1125 01:01:51,640 --> 01:01:55,920 Like our, you know, Votel in Georgia cost 15 plus billion 1126 01:01:56,480 --> 01:01:59,880 because we spent 1520 years building it and every two years 1127 01:01:59,880 --> 01:02:02,600 they had to go back for new permits and redesign stuff and 1128 01:02:02,600 --> 01:02:04,600 oh, the cement is wrong. We need to do that again. 1129 01:02:04,600 --> 01:02:07,560 Like, you know, if you cookie cutter this and you say, and 1130 01:02:07,560 --> 01:02:09,640 this is kind of why I like the Brookfield deal as well. 1131 01:02:10,320 --> 01:02:11,960 The first few are going to be really expensive. 1132 01:02:12,360 --> 01:02:15,600 But once the supply chain and the labor is retrained and set 1133 01:02:15,600 --> 01:02:18,520 up like the first five to 10 are hard. 1134 01:02:19,160 --> 01:02:21,040 The economy, it's not even economies of scale. 1135 01:02:21,040 --> 01:02:24,160 It's the experience of doing more than a few of these. 1136 01:02:25,080 --> 01:02:28,160 You know, Georgia can't do 2 and then, you know, it all works 1137 01:02:28,160 --> 01:02:29,000 out. But then you stop. 1138 01:02:29,000 --> 01:02:32,240 Like you there, this needs a Marshall Plan where, you know, 1139 01:02:32,240 --> 01:02:35,680 the first few are going to be carried by the government as a 1140 01:02:35,680 --> 01:02:38,560 public loss because it's going to take a few of these to do 1141 01:02:38,560 --> 01:02:41,720 economically. Then why? 1142 01:02:41,720 --> 01:02:45,880 Like just expect that, you know, the latest tech is going to be 1143 01:02:45,880 --> 01:02:49,040 the answer, you know, like or. Yeah, I mean, it'd be even crazy 1144 01:02:49,040 --> 01:02:51,480 if we were like, oh, we're going to make molten salt thorium work 1145 01:02:51,480 --> 01:02:52,840 and then we're going to do it in three years. 1146 01:02:52,840 --> 01:02:56,000 OK, I guess. But like, isn't it just so much 1147 01:02:56,000 --> 01:02:58,800 easier to take 50 year technology that's been wildly 1148 01:02:58,800 --> 01:03:01,120 improved on the margin from a perspective of safety and 1149 01:03:01,120 --> 01:03:04,560 efficiency and just learn how to do that all over again while you 1150 01:03:04,560 --> 01:03:06,760 work on that other stuff for the next 10 years? 1151 01:03:06,760 --> 01:03:10,280 Like it almost feels like it's kind of like what they're, you 1152 01:03:10,280 --> 01:03:13,600 know, like in Africa where guys said, let's skip this step of 1153 01:03:13,600 --> 01:03:17,320 building fixed line telephones because cell phones are so much 1154 01:03:17,320 --> 01:03:20,560 easier and more efficient. Like that I get, but like SMRS 1155 01:03:20,560 --> 01:03:23,760 have aren't even a thing yet. You know, like let's let's focus 1156 01:03:23,760 --> 01:03:26,240 on SMRS if they exist and they're cheaper and more 1157 01:03:26,240 --> 01:03:31,120 efficient, have a proven case. But the problem is like it 1158 01:03:31,120 --> 01:03:34,000 memed. It's now the largest constituent 1159 01:03:34,000 --> 01:03:40,160 in the Russell 2000 value index. It is a top holding in URA, the 1160 01:03:40,160 --> 01:03:43,200 largest uranium index. So it's like the fire hose of 1161 01:03:43,200 --> 01:03:47,560 passive as well as government money got pointed in a direction 1162 01:03:48,360 --> 01:03:51,760 where the payback is going to be a lot harder and take longer. 1163 01:03:51,800 --> 01:03:55,840 I'm like willing to be surprised, but like the payback 1164 01:03:55,840 --> 01:03:59,200 is so much more immediate on the stuff that's proven. 1165 01:04:00,560 --> 01:04:02,440 But I guess like it's kind of spaghetti against the wall. 1166 01:04:02,440 --> 01:04:03,520 Like they're throwing it at everything. 1167 01:04:03,520 --> 01:04:05,040 The Brookfield deal that made sense. 1168 01:04:05,040 --> 01:04:09,000 That sounds smart. A strategic uranium reserve and 1169 01:04:09,320 --> 01:04:12,640 subsidizing or guaranteed pricing on US production. 1170 01:04:12,640 --> 01:04:15,240 Like that makes sense to me. I I don't love the fact that 1171 01:04:15,240 --> 01:04:18,000 government's getting involved in, you know, the economy like 1172 01:04:18,000 --> 01:04:20,760 this, but you know, there are no atheists in foxholes. 1173 01:04:20,840 --> 01:04:23,080 You know, where else are we going to get this stuff from? 1174 01:04:23,760 --> 01:04:28,320 So sorry to drone on about it, but the OCLO cases pollute. 1175 01:04:28,320 --> 01:04:32,640 You know, they have OCLO single name 2X ETFs now. 1176 01:04:33,080 --> 01:04:35,240 So like they have Leverty ETFs just on OCLO. 1177 01:04:35,840 --> 01:04:40,520 They, you know, like NVIDIA, they, they have, you know, heavy 1178 01:04:40,520 --> 01:04:43,600 weights and all these ETFs. The fire hose is pointed in the 1179 01:04:43,600 --> 01:04:44,960 wrong direction. Like that's a point of 1180 01:04:44,960 --> 01:04:48,400 frustration for me, compounded by the fact that, like, I should 1181 01:04:48,400 --> 01:04:51,440 have known better. It's tech, it's AI adjacent. 1182 01:04:51,600 --> 01:04:53,960 A lot of the guys own it who are in that AI world. 1183 01:04:54,120 --> 01:04:56,440 So it's going to mean and retail's going to love it. 1184 01:04:56,560 --> 01:04:58,800 And then the leverage is going to pour in and the ETFs are 1185 01:04:58,840 --> 01:05:01,640 going to buy it blindly and take it up waiting wise, blah, blah, 1186 01:05:01,640 --> 01:05:03,880 blah, blah, blah. You know, could have, would 1187 01:05:03,880 --> 01:05:05,880 have, should have. But it's, it's frustrating 1188 01:05:05,880 --> 01:05:08,320 because it doesn't address the more acute issue at hand over 1189 01:05:08,320 --> 01:05:11,920 the next five years, which is we need to invest in supply chain, 1190 01:05:12,200 --> 01:05:14,720 we need enrichment. You know, we we certainly could 1191 01:05:14,720 --> 01:05:18,760 use some more conversion and you know, we need more yellow cake. 1192 01:05:19,920 --> 01:05:22,880 Yeah, absolutely. And I think those, you know, the 1193 01:05:22,880 --> 01:05:25,760 double and the triple levered products that you you mentioned 1194 01:05:25,760 --> 01:05:30,040 there, I'm curious to see how they viewed upon 10 years, 20 1195 01:05:30,040 --> 01:05:33,640 years down, down the road. There's, there's one more 1196 01:05:33,640 --> 01:05:36,320 commodity I've got to ask you about, Paolo. 1197 01:05:36,560 --> 01:05:39,360 There's, you know, the, the copper narrative, uranium, what 1198 01:05:39,360 --> 01:05:41,480 you've spoken to, they're all pretty tantalizing. 1199 01:05:41,480 --> 01:05:44,920 But you made the comment a little while ago that oil is to 1200 01:05:44,920 --> 01:05:48,640 2026 what gold has been to to 2025. 1201 01:05:49,000 --> 01:05:52,200 I'm keen to to hear as much or as as little as you want to talk 1202 01:05:52,200 --> 01:05:55,520 about this one because I I find it a super enticing space to 1203 01:05:55,520 --> 01:05:59,280 play in. Yeah, I remember I went on a 1204 01:05:59,280 --> 01:06:02,200 long diatribe about oil a year ago with you guys talking about 1205 01:06:02,200 --> 01:06:04,800 like long oil sands, short Permian. 1206 01:06:05,560 --> 01:06:08,200 And then of course, Trump beat the shit out of Canada. 1207 01:06:08,200 --> 01:06:10,680 And, you know, kind of, well, sands have been coming off the 1208 01:06:10,680 --> 01:06:17,920 mat, I guess. But I I like the fact that oil 1209 01:06:17,920 --> 01:06:20,880 has been so relentlessly kind of beat up every time a Prairie 1210 01:06:20,880 --> 01:06:26,280 Dyson pokes its head up out of the ground that it's just, it's, 1211 01:06:26,280 --> 01:06:30,040 it's not quite left for dead. It's just it can't possibly work 1212 01:06:30,040 --> 01:06:31,520 because Trump doesn't want it to work. 1213 01:06:31,520 --> 01:06:33,520 So if it rallies, he's just going to beat the hell out of 1214 01:06:33,520 --> 01:06:35,680 it. And, you know, he wants lower 1215 01:06:35,680 --> 01:06:40,440 oil prices by hook or crook. OK, I guess like the future of 1216 01:06:40,440 --> 01:06:42,120 the world is totally in his hands. 1217 01:06:42,120 --> 01:06:47,080 But there there is a quote spring issue going on in the oil 1218 01:06:47,120 --> 01:06:50,280 that I'll try to distill down in as few minutes as possible. 1219 01:06:50,280 --> 01:06:58,680 And basically it's that with the Saudi or the OPEC cuts being 1220 01:06:58,760 --> 01:07:05,480 unwound, a buddy of mine over at HFR Research who's a real barrel 1221 01:07:05,480 --> 01:07:09,600 counter driven by the data, he always called it the Saudi cut 1222 01:07:09,960 --> 01:07:13,480 as the Saudis unwounded. The first kind of couple 100,000 1223 01:07:13,480 --> 01:07:15,960 barrels earlier this year were easy because they were doing it 1224 01:07:15,960 --> 01:07:18,320 in advance of the, you know, the cooling season in the summer 1225 01:07:18,320 --> 01:07:21,640 where it's 100 plus degrees. They, you know, have oil fired 1226 01:07:23,120 --> 01:07:24,920 electricity for AC, what have you. 1227 01:07:25,440 --> 01:07:28,320 And the rubber was always going to meet the road after the 1228 01:07:28,320 --> 01:07:32,640 summer passes. And we are seeing builds. 1229 01:07:32,840 --> 01:07:37,200 Generally speaking, how much of that has to do with demand not 1230 01:07:37,200 --> 01:07:42,760 keeping up in the West versus Ukraine just bombing the hell 1231 01:07:42,760 --> 01:07:46,480 out of Russian refinery capacity and products not getting to 1232 01:07:46,480 --> 01:07:49,120 where they need to go? You're seeing crack spreads 1233 01:07:49,120 --> 01:07:52,000 moon, right? Like we're at 30 refining stocks 1234 01:07:52,000 --> 01:07:56,280 are on a tear. The refining is actually, if you 1235 01:07:56,280 --> 01:08:00,480 look at products right, diesel, gasoline, like crack spreads 1236 01:08:00,560 --> 01:08:05,640 right now, just the spread looks like it's doing what it did in 1237 01:08:05,640 --> 01:08:08,240 the lead up to the invasion in 22. 1238 01:08:08,800 --> 01:08:12,120 Like those guys are have are reliving the same cycle where 1239 01:08:12,120 --> 01:08:14,200 they're just mooning and it's never been more profitable. 1240 01:08:14,400 --> 01:08:19,600 But oil can't get off the mat. And we're in a window here where 1241 01:08:19,600 --> 01:08:22,040 the equities have already started to sniff out of recovery 1242 01:08:22,600 --> 01:08:26,240 and guys were selling oilfield services stocks like Weatherford 1243 01:08:26,279 --> 01:08:33,160 that got to 135 two years ago, a year ago in the 30s, just six 1244 01:08:33,160 --> 01:08:38,560 months ago, we're back at 7275. Schlumberger, same thing. 1245 01:08:38,560 --> 01:08:41,800 Like we've seen even the offshore guys, you know, like 1246 01:08:41,800 --> 01:08:45,319 Valeris was I think 20 handle now it's in the 50s. 1247 01:08:46,160 --> 01:08:47,640 A lot of the stuff has already bounced. 1248 01:08:47,640 --> 01:08:51,359 Tidewater went to north of 100. So I don't know, 30s now in the 1249 01:08:51,359 --> 01:08:54,600 50s, equities always kind of smell at first because there's 1250 01:08:54,600 --> 01:08:57,200 the optionality of a turn that's kind of being sniffed out. 1251 01:08:59,120 --> 01:09:04,080 But what I think is interesting here is we are in kind of the 1252 01:09:04,080 --> 01:09:10,720 last bringing on the available surplus capacity as exhibited by 1253 01:09:10,720 --> 01:09:15,160 OPEC like we're down to I, I personally have believed and 1254 01:09:15,160 --> 01:09:17,920 continue to believe that the Saudis don't have the 1255 01:09:17,920 --> 01:09:20,640 wherewithal to take production above 10 and a half million 1256 01:09:20,640 --> 01:09:23,040 barrels a day. This is evidenced by the fact 1257 01:09:23,040 --> 01:09:26,120 that they did it during COVID and the moment they got above 1258 01:09:26,120 --> 01:09:29,880 that number 10 and a quarter 10 1/2, they started to draw above 1259 01:09:29,880 --> 01:09:32,680 ground inventory. They have to, they, they're 1260 01:09:32,680 --> 01:09:35,399 capable of doing more, but they have to invest for it. 1261 01:09:35,960 --> 01:09:39,800 Funny enough, they've started to send up players about bringing 1262 01:09:40,160 --> 01:09:44,880 shallow Jack UPS back on. They're starting to tiptoe 1263 01:09:44,880 --> 01:09:49,840 towards some CapEx in laying the groundwork for what I think they 1264 01:09:49,840 --> 01:09:52,960 see two to three years out, which is we don't have a lot of 1265 01:09:52,960 --> 01:09:55,520 runway left. You know, they've got, I think 1266 01:09:55,520 --> 01:09:58,120 they're kind of mid nines now. So they have less than, you 1267 01:09:58,120 --> 01:10:01,600 know, call it a million barrels of capacity to go. 1268 01:10:02,840 --> 01:10:06,720 UAE has a bit of spare. Iraq is almost there. 1269 01:10:06,960 --> 01:10:08,360 Key players are pretty much there. 1270 01:10:08,680 --> 01:10:13,120 Non OPEC, you know, Brazil, Guyana, there's not actually a 1271 01:10:13,120 --> 01:10:14,960 surprising amount of room there. That's where the growth has 1272 01:10:14,960 --> 01:10:16,880 been. There's not a ton of room there. 1273 01:10:17,800 --> 01:10:21,720 I kind of shake out into like the maybe two to two and a half 1274 01:10:21,720 --> 01:10:26,440 million barrels left, not even. And that's not a lot of room in 1275 01:10:26,440 --> 01:10:30,760 the market doing 100 and 405 million barrels a day. 1276 01:10:30,760 --> 01:10:32,920 And according to others, like we're doing more than that. 1277 01:10:32,920 --> 01:10:36,800 We just don't see it. And the biggest thought to me is 1278 01:10:37,000 --> 01:10:40,600 China is the the best physical oil trader in the world because 1279 01:10:40,600 --> 01:10:43,440 they have to be right. They've been building out new 1280 01:10:43,440 --> 01:10:45,680 tanks and they've been filling them with oil. 1281 01:10:45,680 --> 01:10:48,200 In the 60s. If they thought that we were 1282 01:10:48,200 --> 01:10:50,760 going to see 40 or 50, they wouldn't be buying. 1283 01:10:50,760 --> 01:10:54,000 And they've been waving it in. I don't know. 1284 01:10:54,000 --> 01:10:57,040 For me, I'm finally kind of seeing us get to a point where 1285 01:10:57,560 --> 01:11:00,120 especially with a weak dollar debasement, Trump, what have 1286 01:11:00,120 --> 01:11:02,880 you, the dollar rolls over again, you're going to have one 1287 01:11:02,880 --> 01:11:07,040 hell of a demand push in emerging markets, which is where 1288 01:11:07,040 --> 01:11:14,480 that S curve of 3030 five, $100 per capita GDP, you know, GDP 1289 01:11:14,480 --> 01:11:20,960 per capita kicks in and the kick definitely shows in OpEx 1290 01:11:20,960 --> 01:11:24,120 commodities like energy because the guy goes from taking a 1291 01:11:24,120 --> 01:11:26,040 bicycle to buying a scooter, right? 1292 01:11:26,040 --> 01:11:30,000 Like that whole kind of step function where the intensity of 1293 01:11:30,000 --> 01:11:34,760 energy consumption stairs stair steps higher. 1294 01:11:34,960 --> 01:11:38,160 So to put a bow on it, the equities are clearly sniffing a 1295 01:11:38,160 --> 01:11:41,920 turn. There's we're transitioning to a 1296 01:11:41,920 --> 01:11:45,480 world where for decades OPEC always had millions of barrels 1297 01:11:45,480 --> 01:11:49,560 of spare market would rally, you know they bring on production 1298 01:11:49,560 --> 01:11:52,800 market would fall. We're kind of getting to a world 1299 01:11:52,880 --> 01:11:59,640 where there's got to be a lot of expenditure to bring on supply 1300 01:11:59,640 --> 01:12:02,320 growth at a time where demand could go from that kind of 1301 01:12:02,320 --> 01:12:10,400 steady Eddy million barrels of growth per year to a pop as you 1302 01:12:10,400 --> 01:12:15,080 run into this S curve in the global South in the next two 1303 01:12:15,080 --> 01:12:20,200 years, precipitated or helped along by a weak dollar that, you 1304 01:12:20,200 --> 01:12:22,840 know, like the US doesn't really grow on the products front. 1305 01:12:22,840 --> 01:12:26,760 Like we, we're, you know, GDP per capita here, like we're past 1306 01:12:26,760 --> 01:12:28,760 the S curve. The developed market is already 1307 01:12:28,760 --> 01:12:33,040 consuming. It's, you know, 10121320 barrels 1308 01:12:33,040 --> 01:12:38,360 per per capita annually. You know, China's doing 4. 1309 01:12:38,880 --> 01:12:45,960 You know, we're, I think Korea does 13 US, Australia's at 20. 1310 01:12:45,960 --> 01:12:48,600 I have to refresh my notes and again I'm a bottle of wine in, 1311 01:12:48,600 --> 01:12:53,960 but there you know, India's at 1 1/2 a billion people. 1312 01:12:53,960 --> 01:12:58,320 Like let's do maths. If India goes from 1 1/2 to 2 1313 01:12:58,320 --> 01:13:02,440 barrels of per capita consumption annually, just a 1314 01:13:02,440 --> 01:13:13,880 half a barrel per capita, that's 5700 million barrels in a year 1315 01:13:13,960 --> 01:13:19,240 of growth dude. Divided by 365, that's 2 million 1316 01:13:19,240 --> 01:13:21,800 barrels of incremental on one O 5 million barrels a day. 1317 01:13:22,120 --> 01:13:23,600 So you go from one O 5 to one O 7. 1318 01:13:23,600 --> 01:13:25,600 Maybe that happens over two or three years, but like India's 1319 01:13:25,600 --> 01:13:29,880 growing man. So there's not an awful lot of 1320 01:13:29,880 --> 01:13:35,600 spare to basically what I'm saying is we've got Hacienda 1321 01:13:35,600 --> 01:13:38,640 hedge in Mexico to do here. You know, between Thanksgiving 1322 01:13:38,640 --> 01:13:42,160 and Christmas. We've got builds which nobody 1323 01:13:42,160 --> 01:13:44,920 likes to see because we should, you know, you know, refineries 1324 01:13:44,920 --> 01:13:46,280 have come out of turn around, right? 1325 01:13:47,160 --> 01:13:49,880 We we should be seeing I guess we should, you know, we're going 1326 01:13:49,880 --> 01:13:51,520 to be building into the winter months. 1327 01:13:52,120 --> 01:13:56,880 That's fine. But there we better build a lot 1328 01:13:57,640 --> 01:14:04,840 because if EM comes out in 26 with some punch and the Saudis 1329 01:14:04,920 --> 01:14:08,200 unwind the rest of their cuts, like mid next year or later next 1330 01:14:08,200 --> 01:14:13,720 year, oil is going to run into a situation where, you know, 1331 01:14:13,800 --> 01:14:16,520 incremental 20,000 barrels, 50,000 barrels from private 1332 01:14:16,520 --> 01:14:18,040 players is not going to move the needle. 1333 01:14:18,600 --> 01:14:22,160 And the key players are not going to have the spare. 1334 01:14:23,040 --> 01:14:26,520 Yeah. Plus, like, you know, Russia's. 1335 01:14:27,480 --> 01:14:29,760 Yeah, I I tend to think that people overdid it on the whole 1336 01:14:29,760 --> 01:14:33,040 fear of the CapEx is all going to flee and their production is 1337 01:14:33,040 --> 01:14:34,320 going to immediately tank. It didn't. 1338 01:14:34,720 --> 01:14:38,040 But they're now three years into this, you know, five years of 1339 01:14:38,040 --> 01:14:40,880 underinvestment in these fields. Like, yeah, you start to see it. 1340 01:14:40,880 --> 01:14:44,440 So the equities are smelling a turn. 1341 01:14:44,440 --> 01:14:47,480 The way I'm playing it personally, I'm in December 1342 01:14:47,480 --> 01:14:49,560 27th. So I've got like 2 years left on 1343 01:14:49,560 --> 01:14:54,680 this stuff, $100 calls on WTI futures. 1344 01:14:55,360 --> 01:15:01,080 You know, for a buck, dude, like can oil and the curve is flat 1345 01:15:01,080 --> 01:15:04,440 basically, right? Like in the 60s, can oil rally 1346 01:15:04,840 --> 01:15:09,200 50% to 100% in two years? Of course, like in the situation 1347 01:15:09,200 --> 01:15:12,880 where we start to bump up against global capacity, Yeah, I 1348 01:15:12,880 --> 01:15:14,400 could. I'm not saying it'll moon like 1349 01:15:14,400 --> 01:15:16,640 'cause you get demand destruction above like 1/25, 1350 01:15:16,640 --> 01:15:19,160 1:50. But dude, for a buck, like, 1351 01:15:19,160 --> 01:15:22,560 yeah, I'll take let's let's skate to where the puck is going 1352 01:15:22,560 --> 01:15:24,240 to be. The curve starts, the backward 8 1353 01:15:24,760 --> 01:15:27,760 gets tighter and tighter as we work through 26 in the 27 1354 01:15:27,760 --> 01:15:29,760 world's growing. They're running it hot. 1355 01:15:29,760 --> 01:15:32,560 Everybody's running it hot. Everybody's in the fiscal, EMS 1356 01:15:32,560 --> 01:15:35,360 are on fire. And now oil's 1:30. 1357 01:15:35,440 --> 01:15:37,360 That's 30 to one man. It'd be in the money. 1358 01:15:38,520 --> 01:15:40,040 And like, would that be so crazy? 1359 01:15:40,040 --> 01:15:42,160 Like we were just at 125 three years ago. 1360 01:15:42,880 --> 01:15:45,520 It, it just, it seems like longer dated options are 1361 01:15:45,520 --> 01:15:48,120 mispriced. But the way to do it for you, 1362 01:15:48,200 --> 01:15:51,680 you know, for most people is some of these equities like you 1363 01:15:51,680 --> 01:15:54,800 can two or three bag, right? Like for me, I just I like to 1364 01:15:55,280 --> 01:15:57,160 tuck stuff in the back of the book that won't bleed on me 1365 01:15:57,160 --> 01:16:00,640 because I've got so much time. But the equities right now like 1366 01:16:01,360 --> 01:16:05,200 have already smelled the turn and are telling you that we 1367 01:16:05,200 --> 01:16:08,360 either like need a real serious globally synchronized recession 1368 01:16:08,360 --> 01:16:13,960 to, you know, kind of preserve that buffer in in supply or, you 1369 01:16:13,960 --> 01:16:15,920 know, the price tag is going to have to move as well. 1370 01:16:16,360 --> 01:16:21,960 And I guess like for me, gold worked this year. 1371 01:16:21,960 --> 01:16:24,680 The miners like felt like they should have worked a long time 1372 01:16:24,680 --> 01:16:26,640 ago. They've re rated with the gold 1373 01:16:26,640 --> 01:16:28,840 price, but they're still kind of trading similar multiples like 1374 01:16:28,840 --> 01:16:32,200 they're gushing cash free cash flow yields are high at 4000 an 1375 01:16:32,200 --> 01:16:34,080 ounce. Like nothing's really changed 1376 01:16:34,080 --> 01:16:35,880 except that they just kind of tracked and somewhat 1377 01:16:35,880 --> 01:16:38,880 outperformed the gold price, but they had margin expansion 1378 01:16:38,880 --> 01:16:42,240 because of cheap oil. But gold was invisible a year 1379 01:16:42,240 --> 01:16:44,480 ago, despite the fact that the price was already running, you 1380 01:16:44,480 --> 01:16:47,600 know, with post Israel, Hamas and and all that stuff. 1381 01:16:47,600 --> 01:16:51,640 Like we were already knocking on 2000 a year ago. 1382 01:16:53,240 --> 01:16:55,400 Then suddenly the gold miners woke up in 25. 1383 01:16:55,400 --> 01:16:56,880 I don't know what made people wake up. 1384 01:16:56,880 --> 01:16:58,800 Like I guess people just saw that they were cheap. 1385 01:16:59,600 --> 01:17:00,800 You know, oil equities are cheap. 1386 01:17:00,800 --> 01:17:02,680 Like they're invisible. Like oil is invisible. 1387 01:17:02,680 --> 01:17:04,160 Like it's not even contentious anymore. 1388 01:17:04,160 --> 01:17:06,280 Just nobody gives a crap because it never works. 1389 01:17:06,360 --> 01:17:08,480 You know, it's been in a slow bleed forever. 1390 01:17:08,480 --> 01:17:11,080 At some point it'll start to work and then the equities will 1391 01:17:11,080 --> 01:17:14,120 look really cheap and suddenly like, I don't know. 1392 01:17:14,120 --> 01:17:18,200 That's why I say like for me, the meme is oil is to 26 what 1393 01:17:18,200 --> 01:17:21,880 gold was to 25. You know, you know, oily MP in 1394 01:17:21,880 --> 01:17:23,960 oil in 26 is what gold was in 25. 1395 01:17:23,960 --> 01:17:26,560 Changed my mind like that silly guy, like sitting on the campus 1396 01:17:26,560 --> 01:17:31,160 with his little sign. So I I think that's not to 1397 01:17:31,160 --> 01:17:35,160 impugn gold, but like doesn't it also fit like the gold oil ratio 1398 01:17:35,160 --> 01:17:39,520 is really something right now, right, Kind of like. 60 or 65 1399 01:17:39,560 --> 01:17:40,920 or. Yeah, Like are we really going 1400 01:17:40,920 --> 01:17:42,280 to live in a world where it's 100? 1401 01:17:43,120 --> 01:17:46,320 Like did we really get that good at drilling for oil? 1402 01:17:46,400 --> 01:17:49,400 Like bravo to the industry. I get it longer laterals, bro. 1403 01:17:49,400 --> 01:17:53,400 But like and that's the other thing also there is this debate, 1404 01:17:53,480 --> 01:17:56,320 it shouldn't even be a debate that a lot of the Permian 1405 01:17:56,320 --> 01:18:01,080 production which is plateaued, we had a pop guys are clearly 1406 01:18:01,360 --> 01:18:04,840 harvesting a lot on the Iran hedges since June. 1407 01:18:05,200 --> 01:18:08,200 But now we're coming back down and we went from suddenly 1408 01:18:08,400 --> 01:18:13,320 spiking about 14,000,000 barrels a day and IEA data for August 1409 01:18:13,320 --> 01:18:16,960 and September to like now back to like mid thirteens on the 1410 01:18:16,960 --> 01:18:20,120 weekly. And what's interesting about all 1411 01:18:20,120 --> 01:18:24,440 this is like this was very clear in June on the Iran pop when 1412 01:18:24,440 --> 01:18:28,360 when they bombed Iran that commercials were hedging like 1413 01:18:28,360 --> 01:18:30,960 crazy. It's natural for them to do 1414 01:18:30,960 --> 01:18:32,760 this. But those hedges are now like 1415 01:18:32,760 --> 01:18:36,680 they're they're playing through and it's something that we see 1416 01:18:36,680 --> 01:18:40,240 in natural gas drilling as well. Like it's a free option to hedge 1417 01:18:40,240 --> 01:18:45,520 for these guys in the Permian because and equivalently in the 1418 01:18:45,520 --> 01:18:48,840 Haynesville for that gas. Think like let's say you do 1419 01:18:50,120 --> 01:18:55,720 100,000 barrels a day, you get a pop in the price, you go out and 1420 01:18:55,720 --> 01:18:58,800 you hedge 100,000 barrels 6 months out. 1421 01:18:59,680 --> 01:19:03,840 If the oil price is rallied, you go out because this is short 1422 01:19:03,840 --> 01:19:07,400 cycle stuff. You spud, you frack pad a ton of 1423 01:19:07,400 --> 01:19:11,080 stuff real fast and you now do 200,000 barrels a day and you 1424 01:19:11,080 --> 01:19:14,840 deliver 100,000 into the hedge and you sell your original 1425 01:19:14,840 --> 01:19:18,440 100,000 at the higher spot and your income statement looks 1426 01:19:18,440 --> 01:19:21,800 amazing. If the price collapses and you 1427 01:19:21,800 --> 01:19:25,280 hedged properly, you just deliver into the hedge, but you 1428 01:19:25,280 --> 01:19:27,480 don't grow your production from 1 to 200,000. 1429 01:19:27,680 --> 01:19:32,040 So hedging actually introduces optionality for the commercial 1430 01:19:32,040 --> 01:19:34,840 to flex. And that's clearly what happened 1431 01:19:34,840 --> 01:19:38,360 after Iran in June. But like suddenly the numbers 1432 01:19:38,360 --> 01:19:41,240 are reversing pretty fast. So it shows you that the hedges 1433 01:19:41,240 --> 01:19:44,720 are, are running off and guys are not reinvesting in the 1434 01:19:44,720 --> 01:19:47,720 patch. On top of that, you know, 1435 01:19:48,560 --> 01:19:52,680 there's a lot of baking soda in the nose candy guys like the 1436 01:19:53,000 --> 01:19:57,440 natural gas liquids that, you know, keep getting talked about. 1437 01:19:57,800 --> 01:20:01,280 The I, the EIA is, is totally silent on this stuff. 1438 01:20:01,280 --> 01:20:05,960 They've been passed point blank. You are you misclassifying Ng LS 1439 01:20:05,960 --> 01:20:10,720 as crude like I don't understand why they just won't come out and 1440 01:20:10,720 --> 01:20:14,120 clear this up. But when I talk to guys who 1441 01:20:14,120 --> 01:20:16,960 operate pipelines, they're seeing this content. 1442 01:20:17,240 --> 01:20:20,400 They're seeing paraffin in a lot of the grades that they ship as 1443 01:20:20,400 --> 01:20:21,880 well. You got to heat those pipelines 1444 01:20:21,880 --> 01:20:25,520 to keep the oil moving. Their games being played to 1445 01:20:25,960 --> 01:20:28,640 quote UN quote maximize volumes around the edges because tier 1446 01:20:28,640 --> 01:20:30,280 one has been largely drilled out. 1447 01:20:30,320 --> 01:20:32,520 It's not just longer laterals and more efficiency. 1448 01:20:32,520 --> 01:20:36,280 That was a lot of it. But now they're they're cutting 1449 01:20:36,280 --> 01:20:41,400 the crack cocaine with crap to keep the product volume up. 1450 01:20:42,000 --> 01:20:44,760 And that's a game that you can only play temporarily before 1451 01:20:44,760 --> 01:20:48,480 refiners push back and you see the Ng LS come out of the 1452 01:20:48,480 --> 01:20:50,320 process on the other side and they're not usable. 1453 01:20:50,320 --> 01:20:54,960 So the, I see enough here to suggest that the Permian is 1454 01:20:54,960 --> 01:20:59,400 tapped out and we're going to need a higher price stack to 1455 01:20:59,880 --> 01:21:04,960 make Tier 2 acreage, you know, gush the way Tier 1 acreage has 1456 01:21:04,960 --> 01:21:07,440 gushed for the last, you know, eight years. 1457 01:21:08,680 --> 01:21:11,400 But like in the context of the global supply picture, we talked 1458 01:21:11,400 --> 01:21:14,360 about OPEC and how much spare they might have and the Permian 1459 01:21:14,360 --> 01:21:18,720 and how much they can flex. I just don't see us going into 1460 01:21:18,720 --> 01:21:21,640 the 40s. And if demand gets a kick, 1461 01:21:22,480 --> 01:21:27,080 there's not a lot of low hanging fruit to bring on to, to 1462 01:21:27,200 --> 01:21:31,320 restrain a trend in a market that's been getting beat up for 1463 01:21:31,320 --> 01:21:33,320 three years running now. So. 1464 01:21:33,960 --> 01:21:35,880 Yeah, yeah, I'm, I'm with you there, pal. 1465 01:21:35,880 --> 01:21:38,760 It's such a, it's such a hated space and that and that's why 1466 01:21:38,760 --> 01:21:41,360 it's your hated oil, in your words, invisible. 1467 01:21:41,440 --> 01:21:42,640 And that's why. It's invisible. 1468 01:21:43,040 --> 01:21:46,000 I prefer invisible to hate it because hate it is contentious. 1469 01:21:46,520 --> 01:21:48,120 Invisible like just nobody cares. 1470 01:21:48,120 --> 01:21:50,400 Nobody cares, Yeah. Nobody cares. 1471 01:21:50,400 --> 01:21:53,280 I, I, I So nobody cared about gold a year ago. 1472 01:21:53,280 --> 01:21:57,000 And Iran and Israel were already kind of kicking the shit out of 1473 01:21:57,000 --> 01:21:59,400 each other and, and nobody cared. 1474 01:21:59,400 --> 01:22:00,920 And you're sitting there and you're like, how's gold not 1475 01:22:00,920 --> 01:22:04,600 mooning? And then we woke up to 2025 and 1476 01:22:04,600 --> 01:22:06,880 here we are at 4000. Like suddenly it works. 1477 01:22:07,000 --> 01:22:11,600 I can't explain it. I'm, I'm totally, totally with 1478 01:22:11,600 --> 01:22:13,920 you there, Paulo. It's been, it's been great to, 1479 01:22:14,000 --> 01:22:17,000 to chat again, to hear your thoughts and, and get up to date 1480 01:22:17,000 --> 01:22:20,040 with everything you're thinking. I'd, I'd highly encourage 1481 01:22:20,040 --> 01:22:22,040 everyone listening to to check out your sub stack. 1482 01:22:22,040 --> 01:22:24,960 We'll include it in the show notes that people can find it 1483 01:22:25,280 --> 01:22:27,160 nice and easy. And yeah, thanks. 1484 01:22:27,160 --> 01:22:30,720 Thanks once more for making time so late at night over your ways 1485 01:22:30,720 --> 01:22:32,080 on the East Coast of America there. 1486 01:22:32,920 --> 01:22:35,480 Yeah, I'm I I'm sorry to drone on. 1487 01:22:35,720 --> 01:22:39,040 You know, I'm already guilty of talking too much, but you catch 1488 01:22:39,040 --> 01:22:43,200 me at 9:30 at night, you know, a bottle of wine deep and an hour 1489 01:22:43,200 --> 01:22:45,320 turns into an hour and a half. And I apologize to your 1490 01:22:45,320 --> 01:22:48,160 listeners for that, but that's just, that's just me. 1491 01:22:48,240 --> 01:22:50,120 That's that's why we like having you on the show, Paolo. 1492 01:22:50,120 --> 01:22:52,000 Much appreciated. Mate, thank you so much. 1493 01:22:52,000 --> 01:22:54,480 Paolo, my pleasure. Good being with you guys again. 1494 01:22:54,480 --> 01:22:56,840 We'll talk. Oh, it's great to get Paolo back 1495 01:22:56,840 --> 01:22:59,120 on the show, mate. Flesh out in in sort of long 1496 01:22:59,120 --> 01:23:01,920 form some some pretty big ideas, some things that you need to 1497 01:23:01,920 --> 01:23:03,040 kind of think through in our space. 1498 01:23:04,320 --> 01:23:05,920 Big stuff informs the little stuff, mate. 1499 01:23:05,960 --> 01:23:09,360 And Speaking of big stuff, we've got some big partners that we 1500 01:23:09,360 --> 01:23:11,360 could not do this without. Sure do mate. 1501 01:23:11,400 --> 01:23:13,040 Sandvik Ground support the legends. 1502 01:23:13,040 --> 01:23:14,560 Check them out details in the show notes. 1503 01:23:14,800 --> 01:23:16,560 Focus the platform by market tech. 1504 01:23:16,560 --> 01:23:19,680 Check out the Wicked platform that they have put together. 1505 01:23:19,800 --> 01:23:21,840 A local Aussie team doing God's work. 1506 01:23:22,280 --> 01:23:26,920 Mate, it is a great place to to trade, to dissect, to analyse. 1507 01:23:27,400 --> 01:23:30,240 It is, yeah, it's a it's a institutional platform at a 1508 01:23:30,240 --> 01:23:31,200 retail price. Thank you. 1509 01:23:31,480 --> 01:23:34,280 It sure is, and there's a free trial in the show notes as well. 1510 01:23:35,080 --> 01:23:36,960 And last but not least, Intralinks. 1511 01:23:36,960 --> 01:23:38,920 Check out those legends as well. Hoodoo mate. 1512 01:23:39,080 --> 01:23:42,200 Hoodoo. Now remember, I'm an idiot. 1513 01:23:42,440 --> 01:23:44,920 JD is an idiot. If you thought any of this was 1514 01:23:44,920 --> 01:23:47,440 anything other than entertainment, you're an idiot 1515 01:23:47,800 --> 01:23:49,000 and you need to read out a disclaimer.