Righto money miners. The deal that's been talked
about for bloody ever since money of mine was called Money
of mine. Spartan and Remilius.
It's finally happening, most likely announced today.
And mate, with any bloody M&A and expansions that they're
talking about, that means Quattro Project engineering,
that freaking Dalgar Anger pace plant has got Quattro written
all over it. Like who else builds a pace
plant? I don't know, but there's one
going in at Dalgar Anger I reckon, and Quattro are the team
to do it. And any other EPC shit that
Remelius need to do as part of this Go Quattro.
Is it a mega merger? It's a mega merger.
Let's just. A mega merger in the Murchison.
A mega merchison. I like what you do.
I like it. What's the Murchison ratio on
the deal? 100% Murchison.
Oh, go Jeremy Palmer and go Quattro.
Oh love, it's right bloody you'll drop me, mate.
Hold. On if we haven't.
If we haven't given it away just yet.
I think we're only talking about one thing today.
I mean, we'll weave this one into a broader gold chat.
Yeah, at the end. But this one is all about
Remelius and Spartan. And I reckon we've waited years
for this, Maddie. We were chatting about it
earlier, I reckon as a plural on that year.
Well, I. Reckon I reckon we could have
ripped AI through everything we've said for the last two
years and just created an episode based on what's been
said and what should be said. So anyway, we're gonna do it
manual 'cause we're freaking old school.
I love that. Good to have you back on the
show, JC. It's been a while.
Nothing like a gold deal to bring me back to the table.
Actually. Nothing like a Ding Ding Ding to
get us started from JC as well. I.
I'm Remilia cannot believe that there is a deal between two
goldies and you only hold one of them just.
The one yes, and we've got JD is a Ding Ding on on Spartan.
So yes, it sounds like it's finally.
Happened so just delivering the good balanced outlook and not
holding either. So good on you, Maddie.
Oh I remember I bought Spartan at 22, sold at 40.
Profit's a profit. Jesus Christ.
Anyway, let's bloody RIP in the transformational combinations
I'd actually got. There was the murmurs about it
in Straight Talk on Friday that this was they were inking out
the deal. I think it was Friday.
It might have. Been yesterday.
It was the talk at Rottnest apparently, that this was this.
Yeah, this was buddy getting close and well, and to be
honest, even like like the start of last week before I changed my
mind. Like I honestly didn't think it
well, I thought it was just gonna be too big of a swing for
a Remelius to do and they would have looked at other things.
But yeah, look at it become I think as you've written JD
become abundantly clear that I guess cleansing the market on
that mount magnet long term plan was integral to this deal
happening. And Remilius obviously pulled
share price, pulled off a shit load and without the 340 mil
cash that's Remelius are tipping in for this deal, it'd be pretty
bloody close to a equal merger. It would have been Remelius
would have had low 50s, but it's end up they got a still have got
a bit over 60%. So JD, why don't you, being the
financial guru, take us through the deal and the key numbers
here, mate? Well, we've got, we've got Ali
on the show. So we're, we're blessed on the
on the finance part with, with much more expertise than myself,
but I'll run through the, the headline numbers just to get us
started in case people didn't see the, the deal.
So you talked about there, Maddie, being that, that cash
kicker, that's $0.25 for every share that you hold as a Spartan
shareholder. And you're also getting .6957
Remelius shares. So at the at the 220 close price
that we saw on Friday, we're talking about an 11 percent
premium to the last close on the Spartan price or $1.78.
It's trading like a bit a bit below that.
And if you zoom out and look at the last month, it's about a 27%
premium. And like you say, Maddie
massively altered by last week of trading.
So we'll, we'll flash up on the screen now the last five days of
each of the respective stocks and how they looked.
So over the week Remelius came off 18% and obviously they had
that big material bit of news with the updated mine plan at
Matt Magnet coming out. And then if you look at Spartan
they they ran hard at a a bit of a down day earlier in the week,
but then ended up 7% for the week closing at $1.60.
So very interesting to to piece that all together and you know,
think about all the other bits and pieces that go to a deal
coming together. Obviously you spoke about that,
that article coming out over the weekend that gave a bit of an
inside lane and gave the heads up to everyone that it was, it
was finally happening. But yeah, there's, there's a lot
to chew on there and we'll, we'll get into that more in, in
the details in a moment. I'll just round off on a couple
other details. You've got the top three
shareholders other than Remelius in Spartan saying they're going
to vote in favor of the deal, but a superior offer coming in
so that they speak for about 19% of Spartans register.
You've got Tembo who were there back when the the recap happened
that you touched on Maddie 1832 who came in throughout 2023 and
then Fourth Sale who've also been there for quite some time.
It's a scheme of arrangement to start with and we'll get into
the deal structure as well. And the pro forma is creating a
business that is capped at 4.2 billion.
So had this deal happened a couple years ago, Maddie, we
wouldn't be talking about a number anywhere near that big.
And you've still got 500 bucks in cash post the payout that you
mentioned, the $0.25 kicker per share.
So the last bit of detail, which I think is pretty cool is that
Ramili said they would cancel their 19.9% shareholding in
Spartan. So the alternative would have
been for them to sort of hold them on, on treasury and kind of
spin them out in a kind of quasi capital raise, which we have
seen in in deals gone by. But they said they won't do that
given the strength of the balance sheet.
So. Yeah.
And I think I think the best, best way to get your head around
that, which I had to get my head around it earlier, like it's
they've effectively bought 20% of Spartan at, you know, lower
prices. Spartan shares are going to end
up being Remelia shares. So it's like a like a buyback.
They've, they've essentially bought the shares a while back.
The shares are cancelled and they're bought back and
cancelled them is the way. Even even if you.
They haven't lost the money, it just means that their this
takeover offer is effectively for 80% and they've bought back
20% in a. While for the money miners that
listen to the episode on on Soul Gold last week, you remember
they did the deal with Cornerstone and for three years
they just held those shares that Cornerstone owed in them.
Soul Gold just on treasury. They ended up selling them out
to to Jiang Chi Copper last week and that netted the company 18
odd 1,000,000 bucks. And yeah, no new shares being
issued, but shares that the company held in themselves.
Yeah, that and I suppose they could have like, are you saying
like effectively Remelius could have held on to the shares in
treasury, then if the share price ripped up, they could have
block traded them to someone else and it would sort of be a
profit. Could you read it that way?
Yeah, it'd be, it'd be in effect a, a raising of money for, for
the company, kind of like, you know, Red 5 and and Silverlake
was the other one we saw this in that was sort of alluded to in
the in the call earlier. And there's no new shares being
issued, but the company is netting, you know, 20%.
They're netting potentially hundreds of millions of dollars
if they were to sell them. But you nailed it.
It's like it's like a buy back in a way and just just cancel
them, lower the the shares outstanding.
Given you've got the balance sheet strength and you can fund
all your other things still with what you've got and the free
cash flow that's going to come over this half year and into
next year, then why not? Is that is that 500 million the
pro forma based on today's? Now 31 December Cash.
Cash and bullion, they're probably going to make frigging
200 mil this quarter. Like based on like.
Zetna said 250 free cash this half.
Yeah, I was, I was surprised. I thought that was Anders
because based on the gold price and what they made last quarter,
it's like in the yeah, I'll I'll be interested to see.
I think it I wouldn't be surprised if they make more just
because they printing a lot of freaking cash.
And this is all in the all happening in the context of, you
know, a, a gold price that you know, just touched over US 3000
an ounce as well over the last few days too.
Yeah, Yeah. I think 4650 at the moment
today, yes. But I think I did say that in a
in a LinkedIn post from from someone.
A a pending Remelius employee. We'll, we'll go.
It's all right. Speaking.
Speaking of that, get in, get into the board, Maddie.
Oh, so it is. We'll have a look.
Here it is. Two people coming over from
Spartan Deanna Carpenter coming on as Ned and Simon Lawson, non
executive deputy Chairman. So and there because there
already is a non executive chairman Bob Vassey and Zeppe's
going to retain the MD and CEO role.
But I, I think it's probably also a function.
It said in the in the scheme doc that Mister Lawson's shares that
he gets in Remelius following this if it all goes through, 50%
of them will be escrowed. It didn't detail how long they
will be escrowed for that. That's going to come out in the
transaction booklet. So you could predicted he would
remain at a minimum on the board while those shares are escrowed
and then if he chooses to do something else later on.
But he is obviously going to be a part of this next phase.
If he's getting a shit lighter Amelia's shares, he probably
it's in his best interest to get the best out of Remelia.
And you know that talks about lifting the exploration budget.
He said in the call that he wants to really look into the
exploration potential of Mount Magnet around there and was also
pushed back on one of the comments about Penny finishing
early, like essentially saying, look probably thinks there's a
bit more potential there. So he's already bringing his
bloody optimism into Remelius, it's called.
Love to see it. It's.
Good to see so. But at this stage, yeah, he's
coming in to be a part of Remelius, so.
Yeah. I mean non, non exec, you can
kind of read into that as as you sort of like.
But yeah, he did. He did sort of speak to the the
expiration angle which was which was interesting.
Right, Jodie, take us into the mechanism of this two stage
deal. You'd say what do we call these
deals? It's just.
The dual dual transaction structure is is the words I
wrote down that came to mind. I'm sure there's a more
aesthetic kind of way of putting it, but.
The the the the fuck off the interloper deal.
Steel structure, because I've sort of seen this before, JD,
haven't we? In a totally different commodity
admittedly as well, but seems to be a bit of a yeah, like Maddie
said, a bit of a a new style sort of approach to the
structure to sort of minimise interloper risk.
These yeah, 100. Percent.
The Azure structure inspired by by Gina Rinehart.
So yeah, SQM and Azure was the first time we saw it when
Maddie, you've fantastically called it at 3 bucks 52 to the
cent. Yeah, you nailed it.
They, they came in with that. They came in that structure
where they they'd pay in the scheme 3 bucks 52.
And if that fell through, they'd have a backup 3 bucks 50
takeover, which in their instance was an on market
takeover. So very similar here, except
that the backup is off market. In that scenario.
I think it's interesting to to think about what happened
afterwards. So you had Gina start buying a
heap of shares on market like straight away.
She got to 15% really quickly. In a matter of no time, she was
up to 18 kind of percent. And then over two months, they
were clearly working in the background.
She teamed up with SQM. They came in in 5050 and
launched another bid at 3 bucks 70.
So there was there was a few signals and that people might
remember came off the back of Gina coming into the Lion Town
deal. So that was the context that had
happened before and that kind of butchered Albemarle's takeover
of of Lion Town. So SQM didn't want that
happening to their deal. They did what they could, but it
was a, it was a tough one. If you guys remember, there was
a lot of shareholders in that sort of 10 to 20% range that had
a bit of a say in, in how things proceeded.
So there was a few signals from, from SQM in, in doing that.
Firstly, they, they anticipated interlopers.
Secondly, that they had a, a willingness or maybe a
realization that they would have to work with partners, whether
that be in the the ultimate 5050 structure.
I'm not sure what exactly they were thinking that would look
like in due course, but I think they were, they were kind of
happy with with the outcome and they, they had a lot of strength
because they had almost 20% shareholding before and they had
something like 25% off take rights and and a few other bits
and pieces. So they were they were sort of
talking from a position of power, as is the case with
Remelius here, right, 19.9% shareholders coming into it.
So, yeah, you've, you've got those kind of dual, dual
transaction structure for, for a reason.
And that's with the idea that an interloper is probably
interested in coming in and you just want to get as much and
you're happy to get as much, even if that might not be 100%
of the of the company. So yeah, I mean, in this
instance, if this sort of goes through and I think the the
outcome that Remilius want is that the, the scheme just goes
through without a hitch. They get the votes they need,
they wrap it up cleanly, they have 100% of the company and
then they become the big fish in that Murchison kind of pond with
a another sort of long away to deal potentially push down the
the road a little bit. And I think the, the trigger for
this JD appears to be if, if anyone, if a third party comes
in and gains 15% or over of Spartan, that's the the main
trigger which flicks it from this scheme of arrangement to an
off market takeover. So a. 100% you got the, the rest
are just like those, those standard kind of conditions.
But if that 1 happens and someone takes up or a a company
takes over 15% it, it flips over to the other one, right?
Yeah. And so it, it means Spartans
like, it's not saying that they can't be there won't be
interlopers like, but it there could be, but they will have to
pay up for it. So I guess Spartan have still
got the upside to potentially have someone come in over the
top with this mechanism. And if that happened, that off
market takeover would sit there. But if there's a much superior
proposal, people will won't accept the OP market takeover.
So there there's still upside if there is someone come in.
I just don't yeah, it doesn't look like there is guarantee.
I might see how myself look stupid if I they if someone does
come in look like a real Dick. Yeah but $2.4 billion implied
price for Spartan. That's a pretty big swing for
someone to come in and offer 2.7 or three to get it over the
line. So.
Yeah, so I, I mean, West Gold is the the one that people will
have on their mind. They're the only one really in
in the area that could also get some sort of potential
synergies. Before we kind of expand on
that, it's worth just mentioning that you've got the standard no
shop, no torque, no DD obligations on, on Spartan,
which makes it a bit harder for a potential interloper.
They're they're doing that kind of blind in a way.
You've got the break fee which. Was 24,000,000 bucks.
They can't do DD effectively. Yeah, no, they've got to put an
offer in without DD. Yeah, effectively that's how
that's how it's sort of read you've got a you've got a break
fee as well Maddie, which is relatively low.
So standard is anywhere kind of between 1 and 4% of the, the,
the value of the, the deal, the market caps of the companies.
And here we're talking like near that 1% kind of range, $24
million. Yeah.
Which I think was from memory was like Corolla or West Gold.
And that that was like, was that like 40 million or?
That that, that was 40 and each and each company was half the
size pretty much. So that was 4% of their
respective market caps going into that deal.
Yeah, so and like what, what's the time frame like it
hypothetically, if it did flick to an off market takeover,
what's the like this? This scheme looks to be
implemented mid-july. What would an what could an off
market takeover possibly take? What fucking ages?
Well, it's yeah, it, it, it often gets, it's extended in, in
reality, in the, the docs you can see they've written open, I
think 2020 days is the what they kind of peg it at.
But you often see that get get pushed as they want to, they
want to get those numbers up right.
And they want to, you know, they're not say somebody comes
in, they're not going to get to compulsory because you need 90
plus. That's that's a real piece of
work. But you can push that up by
extending it, extending it and encouraging people to, to, to
take you up on that, right? Yeah.
So anyway, it's looking like it's Yeah, they have to be.
Something pretty crazy happened for an interloper to come in and
offer stupid money. But hey, gold prices are at
stupid levels. You'd never know.
Yeah, jeez. It about things interesting.
And it about my our lives interesting to talk about it.
Say, look, if you want to throw in an offer, I'd appreciate it.
I'm not. Just just looking at the looking
at the share price, you know when the the market gets pretty
excited about someone coming in over the top as well.
Yeah, it often trades above the the beard.
We haven't really seen that he sort of Ramili's share price
came off a few cents and where Spartan sort of therefore
trading is almost bang on, just a touch below par.
About par, isn't it? Yeah.
Yeah, 'cause I think Ramilius is implied for them at based on
them at 2:20 and now at 2:17 and Spartan is trading at dollar 74.
So it's yeah, she's pretty bang on at the moment.
Yeah, and and like in in that deal I spoke about with with
Gina, she started buying straight straight away.
We've only seen like 35 last time I looked million shares
traded near the end of trading today.
So that that's well below 3% of the company's paper.
You'd have to be going for a fair while to to to make
something kind of happen bar the the other three big shareholders
that I said holding about 19% come to your your side if you do
have a sort of superior proposal for them.
Yeah, got it's. I suppose we don't know what's
going to happen with never, never yet.
It's early, early days. It's not developed yet.
They've just sort of getting close to I think mid year
they're gonna be approaching like in line with never Never.
So there's a, there's a lot to play out, but like how this has
ended up so different to what could have been considering last
year Westgold, well, Remilius were having a swing at Korora.
They were then also talking about merging with Westgold.
Not not that time merging with Westcott would have discounted
this happening anyway. But I would say if they ended up
with Corora and focusing on getting beta hunt going like
this wouldn't have I couldn't have seen this happening as
well. So it's all panned out very
differently and on 1st pass. This is probably the best thing
outcome for Emilius getting this asset in their portfolio.
Whether, you know, whether there was a bit of bit of like, oh,
look over here. So you start looking over here
while I look over here. And this was the grand plan in
the end. But yeah, it could have, could
have ended up being a lot different.
Yeah, I mean, they've they've had to give up a fair bit for
it. It's.
Well, not as like, yeah, not not as much as I think I'd in the
end it was going to be 5545 can or close to even a bit less.
If it's going to be all the shares, cash components sort of
swung a bit more in there and Ramilius's favour as far as the
pro forma ownership. Yeah, and they'll, they'll make
that cash before the deals done anyway.
Oh. They're right.
They're going, yeah. Yeah.
So it's and it, but it significantly lowered increase
their ownership of the the pro forma.
So synergies we talk about synergies this one actually and
we we will compare some what this means for the value of
other goldies in the region by based on or in in Australia
based on answers and projections and all this.
But you can you look at this and you're like there is some
genuine bloody synergies like geographically infrastructure
like it is just it does make a lot of sense and like, hey, as
you said, JD, they're given a bit away for it.
But with that is coming the fill in a big gap in that mount
magnet outlook that they probably need and just delaying
like not really having the pressure to put any capital into
Dalgaranga processing plant because they've got their own.
Yeah. I mean this is probably correct
me if I'm wrong, but it's probably the the first deal, a
gold deal in a little while in in WA of this scale where we've
actually seen these sort of geographical synergies.
The last one that springs to mind was the Genesis with the
Saint Brava sort of Gwalia assets.
But then even yeah, like you said, Maddie, you know, I think
Sparta was originally mid. You're going to put out a study
on on Dalgrenko. Never, never.
Now it looks like they're going to do worked with Remelius on
like an integrated, you know, mount magnet, you know, study
just because it just changes the the landscape so much and what
that actually looks like and the and be interesting to see
quantified what those geographical synergies could
represent. Yeah, yeah.
It's it's so essentially if you were saying it's the first gold
deal that's made sense since we started the show Genesis.
Not necessarily made sense. I guess some geographical sense,
yeah, Yeah, geographical, yeah. Because some have been more
acquiring. I think we were talking about it
early today, like some we've seen have been acquiring more
new hubs. Yeah.
And yeah, this is yeah. As far as a, you know, in the
same neighborhood, yeah, it's been been a little while
especially of of of this scale too.
So, which is very, very cool. Yeah, right.
Let's go. I guess look at what this what
they're saying this pro forma is going to look like.
Yeah, I mean, how cool is it to see a deal with with genuine
synergies? It's it's awesome.
And they haven't put numbers to it to your point, Ali yet, but I
would bet these numbers would be materially better than some of
the other ludicrous kind of synergistic numbers we saw on,
on other deals. So very keen to see what that,
that integrated study that you you spoke to there looks like it
also takes the the pressure off Rebecca Rowe.
So we spoke about it last week, Maddie, with that big drop off
in production, the sort of production gap that everyone
kind of speaks to with Remelius coming after next year, it's
probably a bit too soon to fix FY20 6 materially.
But between then an FY30 there, there was a bit of a lull in, in
the numbers on Remelius's front. And this will, this will fill
the gap. They're pretty handily.
And they're, I mean, they're speaking by the end of the year
wanting to start sending Oz up the road.
That sort of spoke to the conditions of that road.
It's sort of 65 odd kilometers that I think in time they'll
probably, they'll probably seal up.
He, he spoke to that Zetna on the call.
Right now it's just a gravel road and they've actually
trucked on it in, in the past going going beyond it.
So yeah, a bit to be done. But that integrated study should
come out by December or that final quarter of this calendar
year, which should be pretty cool to see and to to see what
kind of scale they go with each plant.
Like you said, they're Maddie. They came up with this plan
going 2 1/2 to 3 million tons at Mount Magnet.
You've got 2 1/2 at, at Dalgaranga, 70 million bucks had
been earmarked in the latest Spartan Rays and I think a few
long lead items would have already been ordered there.
But they're going to pull the foot right off that CapEx on
that front and reassess things which is which is pretty
appropriate. And in due course, by FY30, they
want to be doing 500,000 oz, which is, that's a, that's a
pretty big year, you know, and that kind of implies that we're
getting beyond 200,000 oz from from never, never slash pepper,
which is, which is chunky. I mean, that year had only a bit
over 100,000 oz coming from the mount magnet area.
So that's a, that's a lot of upside.
And then obviously that the, the piece being fitted in there as
well was Rebecca Row for 150. So Maddie, what, what do you,
what do you kind of reckon? I know you looked kind of deeply
at the actual production side of things where they're going to
send oz. You know what?
What do you think that that looks like in the in the nearer
term? Yeah, it was it was on your
comment about the 200,000. You don't you don't get T Mac on
the investigators too often. But he he pretty much said, oh,
I just want to hear you say it. You're effectively saying you're
going to get over 200,000 oz out and never never and pepper
because it's it's exactly what you what you said it's if
they're going to have 350 out of the hub.
The only thing that's been added in at the moment is down to
Ranga into the study they put out last week.
So like to get 200,000 oz, you know, that's that's about that's
1.4 million tonne of 4 1/2 grams.
That's that's 200,000 oz. So looking at and I'll get on to
where where they're going to send it.
How good was it straight away? Sorry to interrupt scans, just
saying can can you pull that forward or can you, can you kind
of go overs on on the 500 the first time they've mentioned it?
Yeah, yeah, yeah. They're advising them how good.
But yeah, that's it's all a function of and I'll bring up
the the picture of the ore body here.
Like and they said they're not going to it's going to be about
two years before they get to this the the the honeypot where
you got the increased strike length of the top of top of
pepper and never, never together.
And that's going to be that's when they will need to be in
that area. And I would anticipate a lot of
other areas to really get to get 1.4 or around that sort of those
tonnages out of out of dagger angle.
Like, you know, they've got they've got plenty of options,
Like you got you got W West winds, you've got potentially
the freak area. You got.
What's the bloody one way? I probably should actually sly
fox, sly fox and four pillars and all that.
But that that stuff might come out earlier.
Who knows? But that's, that's sort of what
they're what they're heading to like because at the up the top
there where it's only like the first bit they get into that
they'll start tracking this year.
That's probably only like it's about 100 meter strike length.
So like rough mass, 100 meter strike length, 15 meter wide
stops because it is a bit thicker, the 25 meter level
spacing, that's only 100,000 tonne of ore per level.
So it's not like they're not going to be getting heaps out of
that initially. So, but who knows by FY30 lot
what the else they're going to pick up in the region lot there.
There's so much frigging drilling and stuff going on up
in the Murchison at the moment. And I would imagine on an
expanded processing hub that'll be who knows what's going to be
in the portfolio by them. But they they've got ample
options and that and they've clearly started in the call.
They've got to run a shit load of scenarios to see what the
best paying for buck for the shareholders are for the capital
spend. So you could, your basic options
are expand the living shit out of Mount Magnet Lion, like to go
from 3 to 4 million tonne, like you got a it's a big step change
because you're probably going to need it's not not the matter of
like probably needing bigger piece of equipment.
You might need multiple pieces of equipment like you might need
multiple ball mills and and things like that.
So is that like a bit of an inflection point where you like
you hit a certain level and it's not like linear, it's like, OK,
now you got to step up X amount like it's not proportionate.
Yeah, you can buy ball mills so big is my understanding.
So you might need multiple pieces of kit.
So like they can either make mount magnet as big as possible,
like expand that to say 4 million tonne.
They look and they've got you've got the existing infrastructure
at Dagarango. And when they talk about the two
and a half million tonne capacity there, that's a
function of the mostly the crusher size and the big sag
mill they've got, but trading harder all which they're going
to do though I would say they would have to put in a ball mill
as well. And like they were talking about
putting a thickener in and all that, so.
Well, that's what I was going to ask you actually.
I was just curious like, you know, that that meal, the the
purpose that meal was originally established for, I guess, which
was, you know, all these sort of open hits, right?
You know, now you know that you've got this never, never.
And those sort of other areas that are underground hard or I
guess it's, I was wondering like that trade off between, you
know, optimizing an existing mill that maybe for that new
type of ore versus trucking it to somewhere else that's not too
far away, but expanding that capacity.
I imagine that would all be part of their scenario analysis for
that, right? Yeah.
And then when that was first built like it was there was
always the plan to put a ball meal in later for when they it
was just initially designed to trade all the open pit material.
Then once they got deeper and went underground, they would
have added added to the plant to treat the to grind the harder
all so it would have was always in the plan.
It just, it just never got to that point because.
At that time, yeah. Because of the unfortunate
downfall of gas coin, So advantage of maybe potentially
not expanding mount magnet as much and then also and refurbing
Dalgaranga. It means it means you've got 2,
you've got 2 separate mills. You don't have to truck the
Spartan dirt. It means when you got to shut
down at mount magnet, you could truck all your dirt to
Dalgaranga and vice versa. And like keep you got you're
always processing. You don't have those down
periods, but then you need two processing crews like you got
extra, extra manpower to run 2 mills because I assume with like
all the the services that support a meal like you don't to
go from say 2 million to 4 million tonne in a mill.
You don't need double the people there because it's like a lot of
that. It just means you got bigger
more capital outlay, but you just got bigger equipment doing
a lot more work. So there's, that's going to be
part of the scenario a lot the trade off between extra capital
at Mount Magnet and trucking the ore at a lower processing cost
versus not tracking the Dagger Angur ore.
And because you know, 60 like 1 / 1,000,000 tonne at 65 K is
like it, it freaking costs a lot of money.
Like could be like 1520 cents at TKM.
So that's gonna be well. And then like break a day.
I don't know if there's a road going from break a day.
They could probably if it's quicker to easier to get that to
Dalgaranga instead of checkers just sort of optimising.
Where to go? I guess the other scenario to
throw in the mix there, and I'm not sure how feasible this is,
is would you keep the existing magnet infrastructure that
Remelius has and repurpose the and you know, optimise it for a
combined production profile with the Dalgarenga or and repurpose
the Dalgarenga meal for Rebecca, right?
Could like, is it as easy to actually move it?
Like, is that actually, am I talking out of my arse or is
that a feasible thing to actually do?
Yeah, yeah. Well, they can I.
Know you can you can you can move your your grinding
circuits, I think relatively not easily, but like I think you can
like I don't know if the if they could move the sag mill like I
think I don't know if you can dismantle crush it.
I think I think leach tanks and stuff are a bit hard 'cause
they're like full on concrete booted into the.
Ground like I. Think it it can be done and like
moving it and unbolting and things like they can get
deformed and stuff like I think it all can be done but by the
time you truck it and everything sometimes it like the cost of
that and the dismantling like it's the trade off of being.
Between. Putting a new one in.
But there's there is opportunity.
I'm sure there is some bits of kit you can take.
But when you're building a whole friggin mill, like there's still
gonna be the outlay. So of course, yeah.
So and as I said there, it's knowing what future bits of dirt
are gonna go where go in, in the future in the in the region.
Like they're not gonna really, if there's some, you know, a few
100,000 tonne of oxide material they can get a hold of in the
region, I'm sure they're going to take it and they open
themselves up to all purchase agreements and everything.
I think they, I think this deal we'll talk about in a lot.
You mentioned W Guild. Like I think now that they've
got, if they're going to have Dalgar anger in the portfolio
and the infrastructure there. So it's really taken away a lot
of synergies with W Guild that they would have been looking at
as part of a merger last year. I don't.
I just like essentially Tucker Bianna is not needed now if
they've got Dalgaranga there that if they could spend a bit
of capital to create a hub there.
So like Tucker, Bianna, Big Bell, not really needed for them
now. Like they they would get the
Bluebird mill, put it like great Fingal, then Starlights
Fortnum's on its own. So yeah, I don't don't see them.
Yeah, I think West Gold are on their own now.
And this is the whole Remelius and West Gold thing won't ever
be a thing now. Yeah, and on.
Moving the mill like there's a lot of tons to to get through in
in mount magnet sort of broader area like Eridanus stage 3 alone
is 24,000,000 tons. You've got another 11 at Q and
they're sort of broader other magnet.
What they sort of grouped together is 40 million plus
tons. So I think there's a lot of use
from having the meal there and I wouldn't anticipate that being
moved. No, no, I think, I think it's.
I think it's pretty clear cut. It would either be unless I
picked up a fucking shit load of ground in the region, it's
either going to be a 3,000,000 tonne or 2 1/2 to 3,000,000
tonne mill at Mount Magnet, which was part of their original
expansion and reefer Dalgaranga and sort of trade them both,
optimise them, yeah. And like I said.
They can still get all the tonnes from the mount magnet.
The aerodynas cut back through or just upsize mount magnet to 4
million tonne. Do the instead of just
completely disregard Dalgaranga and just send everything there.
So I think that's going to be what the decision, what the
decision pending would be. I don't see many other scenarios
or or or though or they won't expand mount magnet at all and
create a, you know, 1 1/2 mil or one and a half million tonne mil
at Dalgaranga. So yeah, three options I think.
So we will wait and see. Bloody exciting, love it.
What else is Oh, the interesting, interesting
underground mining thing that no one else would care about unless
you're an underground miner. Is the the contract up there?
So bar Minkow currently at Dalgaranga, they're doing the
juniper decline. They just got extended for
another 1000 metres after like the initial, I think it was
1200. They got initially something
like that. Anyway, they got given another
thousand and that's scheduled to finish about pretty much around
the same time that this scheme would be implemented mid-july.
So and you look at the actual scheme docs, it says like
Spartan's obligations with Remelius during this period
before it's implemented is that they must consult Remelius in
regards to the contract award processes for the underground
mining services for a contract that exceeds 12 months.
So bar Minko went in extremely cheap for this exploration
decline on the once you're there, hopefully on the proviso
you get the first look in and you're already there for the the
ultimate production and development contract.
But Burncard have the contract with Remilius at Mount Magnet
and they just signed that recently for another 3 1/2
years. And part of that contract, I
don't think it's definite is the potential break of day
underground. So are there contractors
synergies? So now that this deal's
happening, will Remilius look to secure the same contractor for
all operations? There's probably not like
considering it's what 65 K's away I think from Mount Magnet.
It's not, it's, it's hard to, you can sort of swap gear around
if you needed to in emergencies or people and send them to
different operations. But considering the size of it
in the separation distance, they probably are standalone
contracts. So there's probably not like if
there is contractor synergies and you could say maybe have one
project manager for two of it, like or less management to cover
both. Like Remelius would save money
that way. But I think they'd probably
still be standalone contracts, but you as a, you as a.
Yeah. And you as a bigger company as
well, you know, naturally have more sway over your, your
contractors and your suppliers, whatever they might be
supplying, you know, when you're a bigger entity.
Yeah. So I think it just got a.
Bit more competitive for Barminco anyway on the contract
I definitely agree with you. There, mate, Yeah, and that and
that'll be. Probably.
I would assume that it'd have to be and because I'll be wondering
if they've signed, they're going to be at the ore bringing out
all by the end of the year out and never, never.
That means that contract will have to be sorted out soon
because they're not going to leave a low period between when
Bar Minko's one finishes. So right now that's the next big
contract and the best thing about when contract tenders are
going around, they're all like Nah, Oh yeah, Bar Minko's got
it. And then you're another like Nah
mate, oil burn cuts got it, Nah, they've got it.
I reckon they've got it. Oh I love it, love it, love it.
Great pub talk. Oh mate, didn't think of the
bloody thing of the pub talk about when they're seeing
frigging Sambic grand sport trucks flying up the Murchison.
They're Sambic are making the Murchison great again.
They're just going to be feeding bolts into this underground
might that they it's. Oh, I've just, I I cannot wait
to see it. Anyone sees the Sandvik ground
sports truck driving up the merch?
So I assume they've swapped the DSI logo for Sandvik logos
probably by now. Yeah, Yeah.
You'd think so. Buddy, get a get a photo of us
there bloody that mount magnet Mill's just gonna be there's
gonna be Sandvik split sets and mesh and everything just flying
through that. The magnets are gonna be picking
them all up after they've done their job of making the ground
safe. And if, mate, if you want to get
rid of the friggin the mesh and the friggin bolts before it goes
in there and just make the awe nice and pretty, you know Mozzy
up there Mozzy's contract miles contracting.
They they can remove your once Sandvik have done their job.
Mozzy can make it look pretty for you as well.
The bloody, the the awe cleaner, making the merchants and great
again. I love it.
Couple other notes, a couple of other notes from the calls,
buddy, What did we get? Oh, tax losses.
Apparently they're now the benefit to Remelius is a lot of
the tax losses that are contained within Spartan that
were brought in by the gas coin dice.
So Remelius because they're making money, heaps of money now
they're paying tax which would which would piss them off.
So it sounds like a lot of the, the infrastructure at Dalgaranga
can be used as depreciation for Remelius.
So that'll that'll come in. So there's a bit of bit of
offsetting to do there. So, Matty.
What? What?
I think you've gone. On the you've mentioned that two
coat seal. They've got a Chuck on Chuck on
that road. Whatever bloody 2 coat 2 coat
seal. Does that mean it's bitchman?
Nah, must be just they can ask me in raise.
Yeah, that's about it. What?
What else? JD mate, You, you, you.
Did a bit of digging on how this deal and the valuation of this
deal reflects on the rest of the the goldies.
So I think it's worth kind of flicking through, you know, the
the more or less stand alone groups, the Bellevue's of the
world kind of Pantoro catalysts sort of come to mind.
A lot of them have had, you know, Bellevue excluded pretty
good runs of late given given the gold price movement.
What did you sort of what did you sort of come to in in that
analysis you did? Yeah.
And like we're we're. Thinking of, OK, this is we're
inferring that OK, they're pretty much saying Dalgarang is
going to add at least 200,000 ounces to FY30 and they've paid
2.4 billion implied price for it.
So we're like right, what is that?
What does that mean for everyone else?
And that as I said, I'll caveat that with that point, $2.4
billion is backed by some genuine geographical and
infrastructure synergies. So that's like whether what what
they're valued at, I don't know. But and we're doing, we're doing
pretty. Rough analysis not not just
focusing too much. And they're.
Bringing in they're bringing in
some exploration now as well. Like I think the fact that
they're gonna really amp up the exploration spend and bring in
that, you know, technical you can say like God, you can't you
got a compliment Spartan in the job they've done.
They've 17X that share price in a couple of years, like less
than a couple of years done it. And so that's getting a bit of
that expertise in Ramilius. That's just adds to it as well.
So. But look, it's been a hell of a
run. Yeah.
And like, yeah. I, I think it is making bloody
Bellevue look interesting at at these prices cause like their,
their market cap is 1.7 bill. So remember that we're, we're
valuing this Spartan that they're valued at 2.4,
Bellevue's 1.7. They've got 100 mil of debt, 80
mil cash and a head. But the hedge book is 390 mil
out of the money. So that gives them an EV of 2.1
billion. They're based on their, what
they're saying is what they're predicting.
They're two quarters away from hitting the 200,000 oz run rate
is what they're what they're predicting if they execute.
But the ground, ground is pretty hard at Spartan from what I
hear. Not it doesn't sound like it's
Bellevue hard. So, but it is hard.
It's not like cream digging and they're gonna fly through it.
And look, I didn't anticipate the capital and operating costs
for the underground development at Spartan will be a lot lower
than Bellevue. Just just as a function of the
layout of the ore bodies and you know, be a be a lot of jockeying
of power vent and pumping and everything like that.
It's not as spread out. So probably a bit back better
bang for buck per meter. But look, the Bellevue are
already like this is 200,000 ounces is still years away at at
this operation and 200,000 ounces of Talgaranga will be a
bit of a stretch in, in my opinion.
But you know Bellevue, well, they're currently producing.
It's all. Yeah, they're they're.
Nearly there right now and all the infrastructure, the a lot of
the capital's being sunk to get there and they're cheaper than
cheaper than Spartan. So like this quarter, I think
coming up, which like say next month or they're they're they're
back quarter weighted. I think they're saying Bellevue,
but like they're so the next quarter if they hit the low
30,000 oz, that's probably a cash flow break even for them.
Maybe maybe a bit negative. Hopefully, you know, like 4600
odd buck gold price is really freaking helping them.
They'd be, you know, a lot of bloody hurt there, but they
don't have to truck their dirt. They're they're sort of
approaching that inflection point possibly if they execute.
So yeah, that's when you put them side by side.
It's like well is have they ever paid for Spartan or is Bellevue
cheap at 2.1 billion? I guess on the trucking side of.
Things that's assuming that it get it.
They truck to this is Spartan or Remilius, you know, decides to
truck that Dale Garang off from Dalgaringa to mount Magnet as
opposed to using the nearby mill.
That's Yeah, but yeah, but you still have to put.
The capital, but yeah, yeah. So it's.
Either the trucking or the sort of the money you're putting into
the refurbishment of that and and two years of.
All the capital underground leadingment into that 200,000 oz
which is a lot a lot of money. So yeah, I think them side by
side is very interesting. But they're these answers
they're getting out of Spartan. They're unhedged like they're
they're not got full upside of the gold to the gold price.
Pantoro is another one. Yep, everyone's going for
200,000 oz. It's easy.
It's good round Number, so it's an easy one to compare.
They're they're talking about getting a 200,000 oz by Fr 28.
They're over. Just they're they're over 1
billion market cap, bang on around 1 billion again, probably
a lot higher costs than Dalgar angle a lot, a lot of narrow
vine and and everything but existing plant.
They're in the process of replacing the open pit feed with
underground feed. Got 120 mil cash only got that
US 12 and a half million con note, but you know, EV of 900
mil. So I think they're looking
interesting side by side catalysts, as you mentioned, JD,
but they've nearly 6X in a year, but like still they're it's
probably a function of shares on issue.
They're still what are they just below a bill or they're no,
they've just cracked a bill market cap debt free unhedged
FY20 7. They're forecasting 200,000 oz.
So all these 200,000 oz numbers are coming well before Spartan
they're gonna release the Dalgaranga's gonna release
potentially get 200,000 oz there and their mill is underfilled.
So for the 1.8 million tonne per annum mill at Platonic, it's
only getting 1.2 through it at the moment.
So they've just hit first door at Platonic.
EI think they got that it's AK 2 or something they've just
started developing yeah down into that so and yeah again
under half the half the implied price of what they're paying for
Spartans the answers so yeah I think when you put them side by
side it's yeah you don't know you don't have a pain or are
they the other ones cheap yeah I think I'd add a.
Couple of things, Matty. Firstly, on the on the value
that Remilius is paying for. Spartan.
Pretty much 20% of that, they didn't.
They're not paying. They've paid for in the past,
but that was sort of at half the share price of today in in a
way. So you could say 2 point.
Two like effectively because they're nearly.
I can't really know what they're.
Exactly. Paid, yeah.
And then you've also got the the cost side of it, which is like
the the big one we haven't mentioned.
But just looking at those kind of forecasts on for instance,
catalyst FY25 sort of 2400 bucks an ounce all in sustaining cost
FY20 6, 2200 and that kind of maintains or they try to pull
that down over the years ahead. So cash flows all that matters
at the end of the day. And we'll kind of see what what
it comes out at for, for Spartan hoping that that higher grade
obviously that that grade is kind of comparable in a way with
with Bellevue. And you would expect those two
because of that to have pretty competitive costs.
But yeah, we'll see them. We'll see them get there first.
What do you what do you think about?
The gold space in general, JD, of Where are we approaching
daily? I'll get started on the genius
later, but. Where do you think we're?
Sitting at the moment with, you know, the valuations multiples
and has everything risen to where it needs to rise to in
accordance with the gold price or not mate, it's.
It's a super, super interesting part of the the commodities
market right now, right. And yeah, let let's definitely
bring it down to the the juniors in a second, because it's
interesting comparing juniors to your mids to your, your sort of
mega cap goldies. But I, I reckon the, the space
in my mind has been getting more and more attention lately, but
I, I don't reckon the value, the valuations are what they kind of
could be. And I think everyone just throws
around the, the old comparison of the, the GDX, that's the, the
miners index versus the physical metal since say 2010 roughly.
And GDX has been an underperformer, especially since
sort of 20/12/13 when things fell away that, that cycle
really unwound. But even if you look back 5 odd
years to the beginning of COVID, we've seen pretty awesome margin
expansion. We're hopefully starting to see
that and we have with some companies start to see that come
through, say Evolution last quarter was an awesome cash
print and hopefully we see that more and more across the board
as the gold price runs away and costs, you know, they are up a
good bit. We had that really inflationary
kind of spell, but they're not up to the same extent.
So those margins have had a real step change to them.
Balance sheets are improving like the net debt positions
across the border are pretty healthy and the ones that do
have substantial can can hopefully pay that down.
M&A been pretty, pretty sensible across the board in my mind.
Capital allocation has been pretty good, but the, the
physical versus the miners has, you know, it's just gone in One
Direction that that physical metal has just outshone the the
miners themselves. And that's mainly to do with
central banks and what they've done and everything that sort of
came about following Russia's invasion in Ukraine.
But I reckon there's a serious potential tailwind for these
miners. And this will push all the
companies we just mentioned in the right direction.
If you start to see the multiples kind of match what
they were a few years ago or even, you know, God forbid,
expand on what they were a few years ago to really compensate
for the the added kind of Moat and margin that they're now
making. And I think that's super
interesting. And we've we've started to see
more funds wrap up these dedicated gold funds or you
know, open gold funds, they may have closed previously to new
investment, those sorts of things, which is an interesting
anecdote in my mind. Yeah, just to add to.
That I think even you've seen a lot of the gold producers where
they've just you know finished delivering into their hedge
books or they're sort of working through them and working down in
them. But then as their hedge books
are decreasing, they realise gold price for you know say the
next quarter is maybe a few $100.00 an ounce more so then.
You know that's. Still it's sort of been washing
its way through, but it, I feel like it's still continuing to do
so for, for some of those producers that do have hedge
books in place or finishing them off or just finish them.
So, you know, immediately, yeah, next quarter you're already
you're getting the the realised price increasing from that, but
then also the gold prices increased as well.
On top of that. There's that, that the whole,
you know, PNEV thing, you know, usually with, you know, in these
real bull markets we've seen, you know, the pay Navs for gold
producers sort of above above that one one times PNEV being
priced to net asset value for those who don't know.
And you know, a lot of them are still sort of sub one or barely
breaching one just at the minute.
But yeah, that that comment about not just necessarily gold
funds starting to being, you know, opened up or reopened and
things like that, but that whole shift of, you know, if you're
taking away the the technical fundamentals away from the
story, just the fact that the the, the flows from generalists
into gold, just that that in its own right, you know, could be a
seismic shift in in this space. Even if you Chuck all the
fundamentals out the window, that'll be without.
Doubt the biggest shift if it if it does happen and yeah, on on
the P NAV multiples, you know, you, you see a lot of these
companies trading at sort of point 7.8 times consensus and
that's sort of flashing through a gold price that that's sort of
hundreds of bucks below where we are.
So you, you think about that in the sense of a Spot gold price
being being flushed through and you, you can make the, the case
for these a lot of these names being, you know, the whole
basket of names being pretty bloody cheap.
But yeah, there, there's a lot of concerns that are at a macro
level around the world right now.
And I think people tying in with that understand the importance
of having a bit of gold in in the portfolio, whatever they
think of the the miners, you know, But I think sooner or
later if if things persist, people do start to look at the
miners, I think I don't think. We've yet seen the retail really
flow into small caps. There's sort of been glimmers.
But it hasn't, it's not reminiscent of a full, you know,
gold bull retail market just yet.
It doesn't feel Nah Nah like. No, nobody.
Nobody. Cares, do they?
Nah, but you look. At what?
Like the lithium, Lithium retail mania when we like a couple of
years ago, like, yeah, I don't we haven't really seen that for
gold yet. And look, oh, I wouldn't be
surprised if that's that's on the way the stair goods.
I'll be right there in that time.
Oh, I think the. The the outlook for for sort of
society and and what's going on if the the gold price goes in
that direction. It's quite concerning to think
about that. I think we've got yeah, bigger
problems, but right, but it'd be great for gold juniors, but but
even. If it, if it's stayed at this
level right now and sustained here like that is still a shit
load of, you know, value for bigger companies picking up
juniors to increase their Oz profile 'cause you know, they're
making such good margin on the dirt.
So I they, they, they will. Struggle to find the good
projects to put the the cash into it, because if these gold
prices maintain and and they keep costs down, they'll be
making such healthy money. It'll be, it'll be a very
interesting sort of shift in in how how the companies have to
act with with their sort of cash balance and how they have to
allocate capital. Yeah, I.
Think you know things don't tend to stay?
Still for for too long, so I think.
Just things that are occurring to me, you, you look at this
deal and geographical synergies and the, the, the theory behind
it. I think if West gold are out of
the race with these two now and they're not really thinking
right, what's our next play? I think that talk of West Gold
Pantoro really, really might start heating up.
I think because it's, it's a bit of a carbon copy of this on a on
a different scale, because them getting that, that noseman dirt
to feed into an upsized Higginsville mill actually sort
of makes a lot of sense whether they go down that road or not
there. Because W Carle's back up near 3
bucks now, like after it, it's sort of had a RIP in the last
couple of weeks. So 2.7 billion market.
Cap yeah, so when they're. Whether their script starts,
they'll consider using that to maybe look at something.
Yeah, I think you'd want to. Say at least a couple quarters
of demonstrated improvement on those sort of matters that
they're addressing, you know, sort of post that guidance cut
just to give a little bit more confidence in that script.
I would have thought, which it seems like that's, you know,
what they're working on and and and, you know, working towards.
But I think you'd want to, you know, see that fleshed out in
some hard numbers and results in the next little while or two.
Yeah, because they won't have the ability.
To put the cash kicker in like Remelius have had, you wouldn't
anticipate, but they do have the facility they could they could
raise. Money, you know, but you know,
you'd you'd probably want to do that out of your cash balance or
cash flow. I'd imagine that's something
that they decided to pursue. So yeah, no, it's fascinating in
the mid goal in the. Midst of in the midst of this
deal, we're like, right, what's the fucking next one?
You could enjoy this one. I think the great thing as well,
which you know, we've sort of heard anecdotally around the
grounds, which I think, you know, super positive is just
sort of a bit of renewed optimism for in these sort of
gold fields areas around, you know, I would say WA in
particular. And the flow on that has to
contractors and businesses and all that, that service the
mining industry, which we all know gold is, drives a lot of
that work. So that's really great to see
too. Yeah, and now they're making
more. Money.
If you want to make more money, get us to sponsor us and we'll
tell everyone our goods are that too.
Talk about. Talk about the best use.
Of your capital, that is one way I can guarantee you will make
more capital mate. Roll them out right.
Now heater give me a. Rig.
Give us a rig. Oh, better.
No one else does it. I love it.
Yeah. So.
Funny, how good is it? I'm so happy all my stocks are
going up. I'm fucking loving it.
Never been up here. I love the correlation.
Between share price movements and your mood, it's great.
Accept me Uranium 1. That that hasn't gone up, but
soon, hopefully. Knock on wood, right?
Oh. Sensational thanks for joining
us Ali J. So a pleasure.
I'd be backwards. Just go gold, see if it's.
A lithium or. Uranium deal, you wouldn't have
come in, but a gold yeah, yeah, gotta gotta.
Show my. Face.
That's it right now. Thanks, Jodie.
And thanks to all the bloody partners as always, 100 bucks
off your underground operators tickets get them while they're
still there. They're running out because
they're we've sold so many, but they're still there.
Bloody bargain of a lifetime. Yeah, Great Partners Mineral
Mining Services, Grounded Sandy Ground Sports, our insurance, K
drill, WA water balls, Sweat Quattro, project engineer and
Cross Boundary Energy Hooteroo Hooteroo.
Hooteroo guys, nothing like green on screen.
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