Righto money miners. Half the content in the episode
today is because of MMS move in the dirt.
We got, we got, we're going to have a big yarn about all things
happening, category processing facilities and like categories,
a bunch of money. Sandfires put out a quarterly.
I'm going to spin some shit about the Anglo coal sale
investment process and jade is going into diamonds.
Diamonds. Diamonds and Vault reported.
To where we where we starting today?
Guys, MMS, they're a diamond of a company, I can tell you that
much. The diamond of open pits go in
there. Oh, right where we start.
GC. Bit of bloody Sandfire.
Sandfire Dip. A company close to my heart.
Glad they recovered after I left.
No, they're doing just fine. So no, they they've put their
quarterly report out today. So, so this quarter they had
group copper equivalent production of around sort of
38,000 tonnes. They reiterated guidance and
that production result was very much largely in line with
expectations. So that was 27,000 tonnes of
copper, 21 1/2 thousand tonnes of zinc.
So fairly similar to last quarter.
We'll just splash up the chart. You can say what they've done
this quarter sort of compared against other quarters
production and costs and things like that.
So they did just shy of 24,000 oz copper equivalent at MATSA,
which is a a slight increase on the previous quarter and
maintain their annualised processing right there at 3.6
million tonnes per annum. And there was an improvement in
in copper and zinc recoveries, which saw that copper equivalent
production go a little bit higher.
Why is Mateo down quarter on quarter?
Just looking at that chart out there, I thought that was
ramping up. They did have a plan shut down
there. Right, Yeah.
So there was a plan shut down and then they also had some
slightly lower head grades for that quarter as well.
So they they did 14.3, 1000 tonnes of copper equivalent at
Matthea as well. And just at Matsa, they also
received an environmental approval for a new tailings
facility there. So construction of that is sort
of scheduled to commence Q4 FI 25.
So that that's obviously driven by the 'cause they still said
they maintained their annual processing, right, but the grade
obviously smashed them there. Yeah, Yeah, that's right.
So then cost performance was mixed.
So MATSA was a lot of these numbers, I'm speaking here AUS,
so $1.88 per pound versus $1.54 last quarter.
They sort of attribute that to sort of lower by product volumes
and prices. But then sort of looking forward
beyond that sort of those treatment and refining charges
component of cost is likely to decline in the sort of second
half of the financial year is sort of benchmark rates reset
with sort of what's happening in the market at the minute.
Is that does the costs there for copper and zinc mines work the
same as gold and copper? A lot of the zinc gets taken off
the cost like an. All of the product credit, yeah.
Is that so that OK? Yeah.
So that's not the, that's not the.
IT works the same as someone that's selling a copper con for
a gold project. I think so, it's sort of quite
similar. Let's run with that.
And then Mattheo slightly a slight improvement of the
previous quarter down to $1.42 a pound.
But probably more importantly, you know, the the net debt has
reduced again by you know, US $51 million down to US
345,000,000. You know that was, you know,
largely attributable to, you know, operating cash from mats
of US 73 and Mattheo US 65 mil and they had group CapEx of US
55. So you know, they're continuing,
you know, quarter on quarter to sort of daily lever this balance
sheet and you know, they could be in, you know, net cash pretty
soon if they continue at this rate.
This is actually has to be one of our favourite waterfall
charts. Look at this just sort of
explaining from the start to the end of the quarter and then
providing that extra bit of detail even on the the the CapEx
components there. So no good work on the.
Waterfall. I like chucking the dead in.
I like that. Yeah, no, it's just you can see
like where, where things are, you know, from start to finish
not rather than just an aggregated, you know, net debt
number or net cash number, whatever it might be.
Go, Sam. Fine, go.
Sam, I do find I. Told them to do that one, yeah.
They're quite, really interesting, like like look at,
look at the relative contributions of both Mateo and
Matsa now. One of them they paid a lot of
money for, the other one they did not pay very much money for
at all. Like Even Stevens episode on
Jerry on Seinfeld. Yeah, yeah, bit of it.
I think Mataos turned out to be a Ripper acquisition.
I think, you know, like that's a, you know, in time, you know,
it requires the elevated cup of price to sort of backfield the
what they actually paid for that.
Yeah. And it you know and that is
reflecting in the in the PNL as well.
So they generated USA 121 million of of underlying group
EBITDA for this quarter. So just for reference, FY24
group EBITDA was US 362. So there's about a, you know,
1/3 of that, you know, sand fire currently kept about Aussie 4.8
billion. So adding on that net net debt
US 350 roughly is AV of about say 5.3 billion.
If you were to, I know this is very back of the envelope mass,
but if you annualise that Q1 EBITDA, it's sort of is trading
on an AV to FY25 a but I'm multiple for of about 11 times.
So it's still a little bit EXE, but we'll get to it in a minute.
But you know what else has happened for for Sapphire during
sort of past quarter, not a whole heap.
I mean they've they updated the Mattheo resource and reserve
they put out like a a Portugal expiration update on this Alva
Lade joint venture apology for pronounced that completely
wrong. Now I reckon that spot.
I like it. But interestingly they were
added to the ASICS 100 during the quarter.
So that was effective from the 23rd of September.
So they're up 15% since they've been added to the index.
But they are year to date. I think at least last time I
looked at least sort of 4445% which it's far you know
outperformed. It's sort of other a sixes copy
peers, not that there's much anyway, but yeah, no, that's
pretty much the the update on sand Farm.
You look at that, that, that, yeah, trading mode that you
mentioned the LA 1111 times EBITDA, it's pretty, pretty
full, right. That's pretty full like you
would. I imagine management is going to
be pretty damn motivated to use their script while it's got a
got a bit of a bit of full value in it as a result of going into
the index, blah blah blah. Especially before a couple of
prices go up if they do. Yeah, yeah.
Yeah, Aqua, you got the best of both sides there.
Yeah, the the, the so they'll be, they'll be wanting to do a
deal. I'm, I'm almost certain of that.
The challenge is just like. Everyone.
Everyone wants to do a couple of deals, but, you know, this is
this is the time when creative deal doers can come.
Like, can really. Yeah, have a big impact.
You've got, you've got funding capability, you've got capital
market support like the, the deal makers need to get creative
and, and find out where they can maybe carve out even just like a
minority interest in an established asset, things like
that, that just, you know, the other, the rest of the market
might not really say as as an option, like do funky deals like
that and, and, and you'll get rewarded, especially with a
script like this. With something in lot the Kalari
copper belt make the most sense, like, you know, getting
something else because I've already got obviously same for
America, like they're obviously spread over vast across the
world at the moment and even coming back into Australia's
like you know, that's 4 jurisdictions they're operating
in, but it sounds like pureplay copper companies have to.
Yeah, yeah. I think you don't want to be
stretched across too many time zones and I think even heard
Brendan Harris speak words for that effect and I called before,
but yeah, that's right, 11 sale process is documented at the
moment. That's right.
In their backyard is the port, those Portuguese assets, JD.
Nevas Cuvo, yeah, that's the, that's the one I've sort of got
my eyes on in, in Portugal saying that Siberian pyrite belt
there. There was sort of talk about Mac
having a look at it. So we're not sort of breaking
ground on that conversation. The assets owned by the London
Mining Group. So I think that is 1, you know,
they'll have, they'll have run the ruler over in the past.
No idea where they're kind of at with that.
But yeah, Brendan Harris of all people will know the, the value
of his company's script right now.
So very keen to see the other opportunities they're kind of
looking at. Dumb question with probably
smart answers coming. Are there any copper Atfs?
Yes. I'm sure they would be.
Which ones? What ticket for one of them is
wire I think. Do you think we will say more of
them in the future if the thematic gets a bit of momentum
behind it? Probably.
I think you see the way you get the best multiples is if you're
the pure black copper listed on there NYSE all I guess like free
no one can get multiple like Freeport.
It's just amazing. You know, southern copper's sort
of similar so there's others too.
The. The ETF on the ASX is ticker Y.
It's one of those global X ones. AUM right now is 265 odd million
Aussie dollars. But what you'd really want to
see to conversations we've had in the past, Maddie is like AUS
one or a lot of US kind of money goes and that attracts capital
from from all over. But I do agree with what what
Trev said report being one of those sort of stand out
examples. The pure plays have attracted a
lot of capital in the past. The generalists, those big the
big companies just pull in the money from the funds that look
at the first name on the list when they turn to mining.
Yeah, interesting. It'd be interesting to say if we
say that'll get a bit of bloody mongrel behind copper.
Speaking of copper, but not copper for this mob, Anglo coal
asset divestment. Ding Ding Ding for me on this
one. Yeah.
Not technically a shareholder, but I have exposure.
Yeah. So there's, there's been a bit
of a bit of a straight talk conjecture about the sale
process of Anglo's Queensland coal portfolio, which is, yeah,
anchored by the Moran Bar and Governor mines.
Yeah, I probably just want to mention we're going to talk
about Anglo American and Yankel, which Maddie and I are Ding,
Ding, Ding respectively on that one.
The the crux of the article in the Fin is that the bidders in
the in the sale process of of these assets have very little
information in relation to the status of Grosvenor where a fire
earlier in the year saw that operation got shut down.
A bunch of CapEx is going to be required to remediate and get
that back online. It's going to take a long time.
It couldn't be the worst bloody time for a fire at a coal mine
in terms of when this happens in BHP deal and like.
Super, super average timing. Yeah.
I'll, I'll read this bit out
here, it says. Sources said Anglo's data room
contains reams of documents on Grovner's geology and how coal
can be extracted. However, it's all theoretical,
and Anglo has carefully sidestep making any implicit legal
guarantees to buyers. Since it could be years away
before the mine is again up and running.
I think that that revelation in itself sort of, it's not the end
of it, like a, you know, a sale process like this.
Anglo's a pretty motivated seller given the circumstances.
And I think the, the practicality of, of bidding in a
sale process like this is it's a pretty simple solution.
You, you just structure contingent consideration around
the, the, the, the, into your deal mix that you, you provide
to Angler. You, you'll have some contingent
consideration in relation to the time it takes to get governor
back online and what the ultimate budget is.
And, and then you can have kind of kind of a scale accordingly.
And everyone wins in those circumstances.
And you have a alignment on the seller and the buyer as a result
of that. Similar, similar to Woodlawn in
a way in terms of first production is payment.
Yeah, well, that's a. Deferred consideration, I'm
talking contingent like you. You tied again, deferred, yeah.
On an outcome happening. Yeah, contingent on first
production. Like, yeah, I mean, I would, I
would, you know, I don't have like a sliding scale and some
the variables on both the time it takes to get it back online
because that's a big impact on value.
Yeah, yeah. And also the amount it costs you
to to get it back online too. Yeah, yeah.
But yeah, I mean, bankers can structure stuff around like
things like this all the time. It's not out of out of the
wheelhouse just from a sale process.
But you know, I, I, I think I want to talk about like the the
bidders that are in the mix here, because not all the
bidders in the mix are, are made equal.
The bidders remaining according to a street talk are Yankel
Peabody. I'm going to group the next
three together because they're kind of all affiliated and
resources Stanmore and Indonesia's with Jar Jar family.
Not saying that wrong. Then there's an Indian
consortium led by Avid Sys Group and of course Glencore.
So when I group the some of them together, there's basic 5
independent bidders left, right. The most motivated to pay top
dollar, I agree with Street Talk is Yankel.
They've got a whopping $2 billion in cash, no debt.
They've signalled that they want to bid on these assets and the
parent company of Yankel be supportive of that.
They even turned off their dividend to be able to bid as
much as possible in this sale process.
But there's just one catch Ferb approval.
Bingo. Recently, like we've seen Ferb
just just dragged their feet with approvals on, on minerals
projects that are, you know, sign boasted to be sold to, to
majority kind of Chinese entities.
And, and what you know, what they, what Ferb has done in
these situations is they just keep, they simply keep extending
by a month, they extend by another month, they extend by
another month. They don't definitively say we
don't approve, but it's just the death by 1000 cuts off extending
another month. It's it's in effect what they've
they've done in the past when you know, it's stalemate and it
looks like they've done that again in relation to CZR
resources. It's been 10 months now and no,
no determination from Ferb yet, although other deals get Ferb
determination pretty quickly when there's no Chinese entities
involved. And I think it's that timing
uncertainty which kills deals. And personally, I think it'd be
a pretty brave thing for an advisor to do to, to recommend
Angler actually engage with the angle as as the preferred bidder
in a sale process when without having certain clarity on how
fair will determine the acquisition and how long it will
actually take to make that determination.
So absent that certainty, I think for now we've got to put a
line through. Yeah.
And Cole and look at the rest of the field there.
Is can can you get any clarity on Ferb prior to going with you
and Carl? I don't know.
I think you you engage with Ferb early and you can get some kind
of in principle guidance. But I think the reality of it,
yeah, I'm not an expert, but I think the reality of it is you
don't actually get any determination and it's all
subject to change and blah, blah, blah, blah, blah.
So, yeah, as a result, I, I just kind of think, you know, unless,
unless you had certainty on what Fed would do, you can't, you
can't, like you can't advise that.
Yeah, they should be your preferred bidder, even if
they're willing to pay a billion dollars more than the next
bidder. Yeah, yeah.
So I've heard that on the street a bit that that is the obstacle.
That is the thing with Gann Carl, after it got hammered, it
has has recovered a bit since then, but it's like, yeah, that
overhang and like because the cash hasn't gone anywhere.
Cash hasn't gone and there's other, there's other assets for
sale like you got olive Downs, which is, yeah, like they could
bid on as well. But like for all intents and
purposes, Kestrel now too, by the way.
So yeah, then then I want to talk about Glencore, right?
They stand out in the rest of the field because I do hear that
they're pretty motivated to pick out these mines, but they'll be
disciplined on on price. They're not.
They're Glencore after all. They're, you know, they're going
to be pretty sensible. Word on the decline is that they
won't pay any more than US $3 billion for, for the mines
given, you know, Glencoe's own trading multiple isn't sort of
reflecting their, their intrinsic valuation.
So, you know, they, they or their shareholders believe that,
you know, it might be more creative for them to simply just
buy back their own stock instead of actually spending 3 billion
bucks getting these. These new mines would otherwise
be a higher multiple if they paid more.
Because there's there's ordinarily back to the stage
they're trading a bit above before when lot Tribeca went
activist on them. Are they that a bit of a RIP
after that, but they're, you know, back down at 4-4 bucks
now. Yeah, yeah, yeah.
And Metcall prices have come down, they've get on the balance
sheet to acquire Oak Valley, which in time I think will be a
roofing acquisition. That one.
The, the, the rest of the field I don't really have a tonne of
insight on other than to say the acquisition price is, is a
pretty big bite size relative to, you know, the market caps of
those other kind of listed entities in the field.
So like, you know, funding an acquisition is going to be a
tough task without a lot of debt or, or using Anglo's balance
sheet or bringing in a partner into the mix to sort of, you
know, have some sort of consortium funding.
All of those are possible outcomes by the way.
But you know, I think for now there's one more thing in this
IFR article I wanted to to bring up.
Firstly, the, the, the opening sentence in the article is it's
two weeks until Anglo American collects binding offers for its
Queensland called assets. And then the second last
paragraph says the auction was a direct result of BH PS
unsuccessful hostile takeover approaches earlier this year.
Of note, British takeover laws permit the big Australian to hit
back with a fresh bid at the end of November.
So just just contemplate this for a moment.
Final bids for this sale process are due in two weeks and BHP is
allowed to bid for Anglo again in four weeks.
Combine that with the FTS big scoop 2 weeks ago that Mike
Henry and his Chief Development Officer was spotted in South
Africa and even met with Anglo's second largest shareholder, the
South African state owned manager.
PIC like as you can see here. Call me stupid, but if I if I
was running Anglo and I and I wanted to be as sensible as
possible and value creation or optimization.
Like are you really in a rush to wrap up the sale process on the
Queensland coal assets before BHP is statutorily allowed to
bid again for the entire company?
Given the fact that they appear to be, you know, getting ready
to make another bid? It looks looks like that's what
they're doing by going South Africa to me.
Remember, BHP wanted Angler to keep the coal assets where, you
know, they have pretty attractive synergies.
BHP, they've got a bunch of rail and port infrastructure and they
can, you know, certainly kind of achieve some like very real
synergies via acquiring Anglos Queensland call assets.
However, BHP at every opportunity has told the market
they're not participating in the sale process, they're not going
to bid for these call assets and they're not named to sort of,
you know, still being in the data room or anything like that.
But what if the sale process drags out for a few extra weeks
to the point where BHP is allowed to bid for Anglo again?
So that's November 29th then do you really sell those call
assets to any of those, you know, parties in the in the list
if you get an NB I/O from BHP on November 29th and November 30th
and it's a fair value and one of the conditions is you keep the
call because they're going to get synergies from.
Are they trying to do this to for whatever reason to get BHP
away? I think there's a well, a lot of
what Anglo strategy has been, has actually been like all of
the things that BHP wanted them to do other than sell the coal.
So they're, you know, they are, they are, you know, divesting
the platinum. They're looking for a strategic
option for the diamonds that like, you know, the halted CapEx
on wood Smith, which you know, like all of the other parts, all
the other things that you know, Anglo is doing is kind of in
line with the things that BHP wanted them to do conditionally
on getting a deal over the line. I just think like.
Yeah, I think BHP is going to pay more for Anglo if those coal
assets are still in the portfolio versus divested.
I don't think you're maximising value if your ultimate end game
is selling to BHP by divesting them, you know, after a fire at
Grosvenor. Like I just think you keep in
the BHP will pay more. But how much?
Why do you put in towards the coal assets for BHP in contrast
to the copper of Anglo? It's a it's a, it's 100% like
like secondary. This is, it's about like, you
know, big juicy long life coal assets, but sorry, cop assets.
But don't discount the phenomenal cash flow generation
that is these like, you know, unbelievable coal mines as well.
And yeah, the like BHP is a funny one because everyone talks
about our BHP once, you know, cut like cut more copper in its
portfolio, blah, blah, blah. Yeah, I know.
And the Met call are going to be it's like cash printers for a
long time. Yeah, yeah.
I guess taking it as a set back, you know, how strongly do you
feel or rather how likely do you think it is that BHP will on the
29th or or 30th of November make another, you know have another
crack at Anglo And but at a level that does say that that
better value sort of attributed to the coal versus it being
divested to sort of someone else.
I'm not sure I think like if you read the FT article, they try
and suggest that sources close to BHP say that, you know, BHP
won't actually make another move until like Anglo has further
simplified its portfolio. So it may be divested.
It's it's, it's platinum business.
BHP took issue with with Kumba as well, which is the the iron
ore business there too. So like, there are parts that
are attracted to BHP, parts that aren't based on what Anglo is
doing. But yeah, it looks like they're
coming back. You don't go to you don't fly to
South Africa with your chief development officer, meet with
government officials and you know, the the state money
manager unless you're pretty motivated to find a sensible
path forward and do it the right way this time.
But but wouldn't they? They could literally put forward
all the same previous conditions, just on a better
ratio, couldn't they? For for an improved.
Bid yeah. And I think it's like it's a
combination of both things because they're going to have to
convince Angler shareholders as well.
And part of that's like definitely valued.
The other thing too is like Angler shareholders might get
pretty disgruntled with the lack of value uplift from a share
price perspective since their kind of gold a loan strategy.
And it's like for Duncan, we've given you like six months.
Like how long do we have to give you before you like create some
value here? Like we're net down since BH,
since before BHP bid like bid like what's going on?
Copper prices up like. Yeah.
So. I sort of agree with with most
of what you said there Trevor, think it it all kind of makes
makes sense. The one thing I just sort of add
as kind of info for for money miners is Anglo sort of they're
down 10% on you know looking back the last six months now
kept at US 33 billion. Remember that in includes
everything the stakes and the other businesses and all £33
billion. So that is 65 billion Aussie and
if you're taking the US 3 billion value of the coal
assets, 4 1/2 billion sort of puts into context the the stake
of what the market's valuing that at I guess post the the
growth and fire and whatnot, but just interesting to kind of
think about. Yeah, it's, I'd assume
Australia's coal expert for this sale process, Adam Batista's
being consulted so far regarding this sales process.
Is there anything about CR insurance being engaged?
I'd assume. I'd assume so.
I think it's quite a sensible thing to do.
Yeah, Yeah. I mean, yeah, like I imagine any
potential bidder in this sale process is going to want to
ensure that they have adequate coverage for business
interruption on any of these mines because we've already seen
how bad things can be when there is business interruption at
Grosvenor. Yeah.
Yeah, and like, because like, and that probably goes to the
point, you know, why Adam loves coal insurance so much, breaking
those policies. It's a big coal man.
Fucking hard work. He goes for runs with a coal hat
he loves. It he loves it.
They, they like CRE, operate like a Millennium or a citadel
in a way. They're in pods.
Yeah, well, Adam's your coal pod.
Dave Harrison's your bloody construction engineer and
manufacturer and probably renewables.
So that's his pod. Yeah.
Steve Tarr. Hardware pod.
Australian, African, rest of the world Hard Rock mining insurance
pod. Yeah, right.
Yeah, you know CRE is the first 3 letters in creative, credible
and cremate 'cause that's what they do to the insurance
competition. Create them.
Not that good. We call 5 lbs.
We. Call 5.
Guys CRE well right? Ally JC Black cat, yeah it's
raised a good chunk of dosh. 80 bucks at $0.52 and considering
what they were trading that pre gold being awesome, she's a
bloody good chunky rise at a pretty good price.
Yeah, no, like you said Maddie, you know, huge raise $80
millionbucks.52. So why have they you know raised
all this money for. So I'll just flash up the the
sources and use of funds here. So in a nutshell, they want to
accelerate the construction, acquisition or refurbishment of
an enlarged processing facility at one of their projects, Cal
East and sort of bringing that forward by 12 months and they
want and. They can only do that because
MMS ripped The Dirty outside quick.
At Murray, Yeah, that's right. Exactly.
And so they want to increase, they initially designed that at
point 8 million tonnes per and they want to increase that to,
you know, over 1.2. So as part of this race, they've
set aside $35 million as they've labelled it as the equity
contribution of a calise plant installation acquisition.
It sounds like they're currently own some major mill components.
So we'll revisit that in a bit and they're sort of currently
envisaging mining operations with this sort of acceleration
in mind. You know commencing mid 2026,
there's another 20 million that they've attributed to the sort
of the remaining Paulson's restart costs.
They want to drill $10 million across sort of all their
operations and then there's around $33 million left in sort
of working capital and and balance sheet sort of
restructuring. So it's sort of by doing this,
Rose, it sort of removes the need for their, you know,
previously play and secured debt with Nabari and the associated
warrants with that. And it also enables them to
repay their existing convertible notes with Sunday, which are
worth just shy of $10 million of principal and interest.
And they're apparently permitted to, you know, make an early
repayment without penalty. I think this is like the
branding in the gold sector at the moment, debt free and
unhedged. Oh no.
They're the two big words. Right, like the balance sheet
like not much fragility in it like that's I think that's.
Why balance sheet strength? That's what the money's looking
for at the moment. No, very much so.
And so by the time you wash all of that, you know, through what
does this pro forma cash kind of look like now?
So that $18 million at at 30 September, if you had the gross
proceeds of the cap raise of say $80 million, take away the 10
million that they're intending to repay to Sunday for those
convertible notes, that leaves around $88 million in, in cash
in the bank. This is obviously before capital
raising costs and things like that.
There's no more debt, no more convertible notes.
And going forward, like what are they actually planning to do?
There's there's still mining and producing it at Myri and
boundary at at Cal East. They're expecting first gold at
Paulson's later this year. They want to start doing more
drilling at Calise to help, you know, sort of backfill this, you
know, expanded processing capacity.
They're they're looking at sort of having and also drilling and
studies at one of the other projects, Coyote to accelerate,
accelerate its restart by another one or two years.
That's a tonne of my one. Yeah, yeah, that's the one.
And so you know in the next year they want to be producing around
100,000 ounces pranum, so I guess.
Between the two. Between Paulson, Kelly.
So that's right, yeah. It's funny, I know remember like
I remember we talked about black cat in the early money of mine
days, such different gold price. But like talking about, you
know, very like very, I know it's a small part of the mine
plan, but like, you know, the riskiness of the Gabrovane areas
and everything, but it's like when it's freaking unhedged and
selling it over 4000 bucks an ounce, Holy shit, there's a lot
of wiggle room now. And like stringers in dry, like
people talk about all the reserves and all that sort of
stuff. Like places like Paulsons,
They're just there's, you know, potential stringers everywhere
you could go and Chuck a jumbo drive in like you there's so
it's so forgiving and it's like you can't put all that shit in
reserves. You like your mind.
It's sort of reactively and as you go.
And it's just the landscape has changed so much since the start
of this year for places like this with a freaking mill and a
existing brownfields operation. So.
And that's why you'd say it all in the friggin share prices of
these companies. Yeah, it's yeah, yeah.
It's go gold. Yeah.
And, and even just, you know, getting rid of the debt from
the, from the balance sheet. Like I, I always feel really,
really just nervous when you've got a like a marginal producer
that has sort of like even a modest debt quantum as they're
going through what is a, you know, a tricky phase of ramping
up. And, you know, a lot of
unexpected things come your way having no debt.
Like I think in the long run, you know, is the right risk
adjusted thing thing to do because, yeah, you know, you
don't have to then, you know, pay out your debt by raising
your equity. If you, if you encounter one of
those hiccups, you kind of you've got the yeah, the, the,
the equity only kind of balance sheet, which makes me more
comfortable. And yeah, and you're so
protected against if the gold price goes down.
Yeah, yeah, yeah, yeah. You'll still be operating at a
loss if the gold price went down, and then, you know, I
don't have to pay debt as well. Exactly.
Yeah, exactly. You don't copy it both ways.
Yeah, yeah, yeah. So, yeah, just on on those
points really about that sort of switch from, you know, having a
debt component and you know sort of and other or wrap the
convertible notes in there too, you know a more equity funded
strategy. I mean, so they, they actually
entered into a credit approved term shape with Nabari on the on
the 5th of August for US 20 and a half million dollars, three
years sort of senior secured debt facility had an interest
rate essentially of a, a base plus a 8.75% margin and, and a
bunch of warrants as well. That facility was actually like
all the docks and everything like that was due to close this
month's. But you know, like we said,
what's changed since since then? Higher share price.
I mean, look at the spark chart, you know, early August, the
black, it was trading in the early 30s and since then, as you
know, practically doubled in a few months.
It's currently trading in the mid 50s.
Aussie gold prices going up 10% in that time as well.
And so they've obviously gone through some sort of assessment
process and gone OK, what's the cost of equity?
OK. I mean, you know, dilution
versus debt and you know and the much you know higher share
price, gold price, all the rest of it and they've obviously gone
well. No, let's take advantage of the
the current environment and and equity fund.
Well, it's good to even after like what, a couple of months
later you I'm sure there's a bit bit of work that goes into that,
but acknowledging like right, even though we've put all in the
work, share price is good. Let's just fucking clear it now.
So that's that's a good move. And so as a, as a reminder for
the money miners, so that the Cal E feasibility study update
which bucket released early this year shows around a 50,000 oz
per annum production profile over an initial mine life of
around 7 years at all a sustaining of around 1700 bucks
an ounce for pre production capital of 98,000,000.
There's also an additional 123 million of of future development
capital. I'm not sure at what point in
the the mine life this occurs, if it's sort of spread out of a.
Couple of that. But either way, Calise will
still need some more funding to get completely up and away.
But today's raise, you know, the 35,000,000 that they've set
aside for the meal side of things is certainly a good
start. And you know, future cash flow
from Paulsen's and, and the current operations at Murray
could help contribute to, to at least some of that balance of
the remaining, you know, funding pace too.
I did actually notice in the Calais study update they they
noted that all the firefight personnel are are likely to be
accommodated in an existing mining camp located at Mount
Munger Pastoral Station, 15 KS of one of their deposits.
Majestic. Don't you don't want to drive
that far each day, do you JC? No.
I mean, do you think they've considered just getting a
grounded camp right there on site?
They should now, after you've said that, yeah.
So I mean, look, we've shown everyone a lot what these
grounded camps look like from the outside, but check out the
inside. Look at this.
Double beds, blackout blinds, better acoustics and security,
larger showers and TV's. I mean, how good is this?
You might even catch Paul Natoli and the team they're serving
your fresh Sicilian pasta and cannolis on arrival.
But. You see the you see the soap at
the front of the bed there? There's gonna be some bloody
custard cannolis sitting there as well.
Just right there for you. You know the best thing about a
double bed on a mine site? What's that?
You can sleep a different side each night.
That's the best. That is the best thing.
It's funny you say they should build a new 115 days away mate
ground. They also upgrade existing
facilities so that they're more luxurious.
They could upgrade the Bloody Mount Manga Pastoral station
though. You got.
There's two options available. You got all the options you
need. To a Sicilian quality.
Yeah, with the Sicilian service cannolis.
Seven star mining camps love it with cannolis.
This is all very interesting, Ali.
The thing I think about always like the like, so there's a
little bit of equity side post of processing like solution like
at least which throws into the question, well, where are they
gonna process the callers? Cause at the moment MMS are
doing they're, they're sending it, I think to Paddington.
Addington. I hear Paddington is kind of
chock a block at the moment with a bunch of different talk.
In fact, all of the kind of, you know, milling infrastructure
that is, you know, you can you're able to talk stuff doing
in in around the goldfields. He's like chockablock at the
moment. So it.
Costs more to do it. Yeah.
Like, yeah, yeah. And even Norton Goldfields are
making money out of it. Yeah, on a processing front.
Even even like Piggy Butler's effort, like I'm pretty sure
that Middle East is chockablock with Northern Star like demand
for the next like 12 months too, which is what's that that's.
The Greenstone 1, is that right? I think Greenfields, Greenfields
or whatever it is, I think greenstones another.
Yeah, yeah, it's like, 'cause and they, as I said, talking
about acquisition of a mill, it is interesting because another
one I've heard is, you know, if you say that one's chockablock,
I've heard Lakewood is being underfed.
OK, Beta hunt. So it sounds like, it sounds
like at the moment, like a lot of that could go to
Higginsville. So I'm not sure if West Gold
would ever flog off Lakewood because I think it is.
I think Higginsville is the better mill than Lakewood.
Blackwood's only got 7 years of of tail, like there's racing
down one more tails lift and seven years left that you know,
capacity there and that's it. There's no more.
You can't do another lift after
that. That is the maximum.
You can't get seven years. Worth out of that.
All right, So what? Why is that permitting?
Yeah. So if you wanted to sell the.
Opportunity to. No, that's it.
That's so if you wanted to get value for, for that
infrastructure and you did want to sell that, I think you, you
know, you, you do it while there's still like capacity in
that. Yeah, yeah, So that'll be and
because if for the West Gold 1 is that's if they did just send
everything to Higginsville. The other, the other thought, if
my little astral prediction comes through like that,
probably like what's not big enough to probably take there's
you wouldn't be trucking open pit dirt up there anyway.
So it's like it might become redundant if they bought that
and added 2,000,000 tonne base food coming from pits there.
Probably build an enlarged facility there and take and take
beta hunt there. That's one option there.
Well, the other one there's plenty of mills in the friggin
district, but it's size. If they want to go to one half
1.2 to one half million tonne, you need the size.
Like I think the the Northern Stars are Jubilee processing
plant. That's not care of maintenance
one. Point 2,000,000 tonne, but I
think that's what probably 50 mil reefer but least or circuit
plucking numbers out there. That's interesting because they
said they wanted to go up to 1.2.
Didn't they 1.2? At least 1.2.
That fits the. That fits the description.
Yeah, well, but it's all I guess it's on the other side
interesting ones. KB, Kanana Bell, Yep, for
Northern Star. So because it's 2,000,000 tonne
still pumping the they're still got it looks full based on the
last quarterly. But you would assume when KC
KCGM expansion is done buddy, Kanada Bell, South Cal
operations, everything will go to KCGM.
You would, I would assume, I'd assume that just turn everything
off and just Chuck everything to feed 27,000,000 tonne through
KCGM. So do you reckon will KB come
onto the table? Tonight there's.
Have they talked about that, Maddie?
Have they? Have they said it like that?
No, ChatGPT said there was comments but.
I couldn't find it. KB has such.
A. But they have talked about like
sending everything. I.
Swear I've talked about centralising everything just
straight into KCGM lot. Fuck if you got 27,000,000 tonne
why wouldn't I now? Ever remember him saying S Cal
stuff would probably go there? I don't know if that was in an
announcement or at a pub. And that's 27 by 2029, is that
right? Yeah, I think.
It's gone off memory from a good while ago.
Yeah, I think it, I think it gets to 24 or 25 before that and
then yeah, it is obviously staged.
But yeah, don't, I don't know if that had ever come onto the
table, but it's probably not short term enough.
I wouldn't imagine, but he had to be.
I'm sure it's been sure it's been looked option.
I reckon because you get all these efficiencies from sending
like, you know, deposits here and there depending on how far
you're trucking it and all that sort of stuff would come in and
you've got to track it a bit further from from like, you
know, KB to the, to Finniston. Yeah, but.
Depending on where you're from. Manning as well, yeah.
Bigger mill, less like. You've got to have a whole extra
bloody whole level of management, you know, operating
that processing plant where you can like centralised it in one.
I think there's there'd be a lot it's I think every day of the
week you'd save cash trucking it to a big massive meal with less
personnel work in there. I.
Think I'd be a tonne can be the lot like the last roaster in WA.
They're still operating too. That the gidgy.
The Gidgy. It's not, it's not GIDGY.
Yeah, it's Canal. Barrel's got a roaster.
Yeah, I know. I know they were.
But that I think as part of this expansion, I remember a comment
1/4 or two ago that was trying to get it to the stage sooner
where all the roasting, all all the, you know, use of the
refractory was going to be done at the KCJM and not at the I
think GG one or something. I don't know, I should research
more. But yeah, my point is just that
that roaster in and of itself, it is a pretty interesting kind
of has a fair bit of value because that is a processing
solution for a fair few old bodies in and around the region
which don't have a processing solution.
Think of Ephradi which is in Genesis portfolio beautiful or
body underneath the road but needs needs a roaster.
Yeah. What was the, what was the other
one? Now that's the main one.
What's our Zoroastrian? That's the non refractory one,
yeah. And then that's, I mean,
bringing it back to, you know, sort of black Cat and Callie's
and try and sort of address this in the next, you know, year or
two, whether. And you know, some of those
options might be too long, long dated to to to suit them.
And, you know, will they have to perhaps construct something.
And then, you know, what's the timing and the permitting and,
you know, everything, you know, associated with with going down
that path as well. So just something else to have
in the back of the mind. But then yeah.
And then separately, I mean they they've got some options
expiring sort of within the next year, which are which are pretty
in the money at the moment. So they might have some other
cash potentially coming in the door just to help towards that,
you know that funding pace as well.
So that's. About 6,000,000 bucks.
Yeah, sort of that expiring, you know, in the next year and
there's sort of a bunch of other unlisted ones at various
exercise prices expiring in the next few years as well.
Yeah, no, great to see, you know, mine's mine's getting
built and, you know, accelerated and all of that.
So I'll. Suppose to touch with the saying
the saying it's been accelerated till the bloody government gets
involved. Yeah, we shall say.
Yeah, it's right. Next up, Vault.
First time we've flashed up the Vault logo I think.
Yeah, look at that. Looks slick, doesn't it?
And I'm a Ding Ding on Vault as well.
They're and they're a Ding, Ding, Ding of a lot of cash.
So vault the old Red 5 Silverlight thingamajig you'd
say. So I sold a bit over 100,000 oz
for the quarter, 102 1/2 at an average sale price of 3162.
We'll get into their hedging a bit later.
So yeah, lot the open pits are sort of ramping up at Mount
Monger. It looks like the underground
for side of things at Daisy and that's starting to drop off as
they said they got like six years of base load mill feed
coming out of the pits there. You know, deflector, deflector
out a Ripper of a bloody thing. But over 30,000 ounces of gold
producers are pretty 1820 all and sustainable.
Remember they got the copper that comes off that as well.
So Leonora, so king of the hills and so that's Leonora refers to
King of the hills and Dallas. So a bit below 50,000 oz for
their so it looks like they're in a bit of a big pre stripping
mode for King of the Hills. So they're limited.
I think that limited mining fronts lot of you see the amount
of extra waste moves. So like they be total BCM moved
of the Orem waste was, you know, significantly a good chunk ahead
of what had been done in the previous quarter.
So it says, I don't think till about second half FY25 they get
to sort of access the the new newer mining areas once a lot of
that the next stage expansions done.
So and hence you say the mine grade dropped from .7 down to
.54 for King of the Hills. But they're obviously going well
with the the throughput and everything.
God, I lost me bloody thing. Here we go, I'm back.
But yeah, operating about, you know, the 4.3 million tonne run
rate for that mill. So she's all taken along talking
about expanding it to 6,000,000 tonne per annum.
Wow, that's big, yeah, just go big.
Just go big. Go to 88's good, 8 million's
good cash and bullion on hand, 523 million buckaroos.
So underlying free cash flow for the quarter of 35 mil.
So it actually went, it increased 70 mil, but that the
sold the shares in themselves and and all that sort of stuff.
So there's a bit of post merger stuff.
Out of Treasury shares, yeah, yeah.
Yeah, so, but yeah, so the so the hedge book, which is
obviously the the legacy stuff that come from, you know, King
of the Hills being debt funded, it's one of the ones where it
was debt funded, get hyper hedging.
Then you had to do a hyper capital raises and it's all
being cleared. But you have to keep the hedging
unfortunately, which they just got, which they're like you're
debt free. We'll just we'll get rid of the
hedging for you. They, they said, they said when
they did the old like, OK, we've got access to Silver Lakes cash
opportunity synergies include paying out the hedge, closing
out the hedge book without cash or, or accelerating growth of
cost. And it looks like they've chosen
accelerating growth of cost with the cash instead of closing out
the hedge book, but with gold price running.
Yeah, yeah, it's like, it's like maybe two months ago, but but
you don't know, you close it out now and the bloody gold price
goes down. Like you.
As I said, you need to get about 5% lift in it just to negate the
interest you would have earned on that money in the gold price.
So because they got pretty much 40% of their forecast of
production for FY25 hedged 122,000 oz at 2734.
Remember gold price is sitting in over 4000 FY20 622,000 oz
again at 20802882 per oz. That's about 31% of their
production beyond FY20 6, pretty much unhedged.
I think they got 10,000 oz hedged at 2797.
So it's getting them which looks like it will line up to no.
So when do they get, they get into the high grade areas FY25
end of FY25. So yeah.
So they'll have a, it's one of them ones.
Do you close it out now or they just ride the wave and get to
FY20 6 when she was start start raining a bit end of FY20 6
which starts raining a bit more. So yeah, bit.
Of a tricky 1 because yeah, you're trying to take a bet on
the commodity price rather, you know do you believe it's going
to continue going as high as it has you know, in the last year
or if you. Because you know, you could take
it out like you say, Maddie, and then if the gold price doesn't
move or it goes lower, well then, you know, what was the
sort of point thing? And you know, perhaps is there a
better use of capital to, I mean, they're obviously, you
know, looking at expanding cost further.
You know, they're due to put out their, you know, their capital
sort of management, you know, programme or sort of a plan
imminently as far as you know, you know, maybe that'll be, you
know, returns to shareholders like a buyback or a dividend or,
you know, things like that as well.
So is they've got, I guess the fortunate position is they've
got, you know, a fair bit of cash and and at present no debt.
Yeah, to to sort of service and work through those hedges.
Yeah, yeah. I think the best way to minimise
the amount of the percentage of production that is hedged get
more Oz merge with Genesis already.
They don't have. They don't have to keep frigging
talking about it. It's going to happen sooner
rather than later. Easy.
Yeah, that'll just yeah. Then it'd be like 20% of their
production piece of piece. There you.
Go God. Diamonds, JD.
Let's talk a bit about diamonds. On man you're the biggest
diamond in Washington mining commentary that is sub 30.
JD tell you that, Matt. Mcblash mate, have have we
spoken about diamonds? I was trying to think before.
I'm not sure if we actually have in any sort of great detail
besides Burgundy. To beers with Anglo.
Yeah, really. Yeah, Yeah.
That was the one that briefly came to mind.
So Burgundy, you know, bar Rio like is the the only way you can
get it's the only way you can get direct exposure on the ASX
and there's a bit of a new vehicle.
So I'll sort of preface what I'm going to say here that I've got
Pretty Little knowledge of the diamond space.
I'm keen to learn more keen to get an expert in the field on.
But I thought the the quarterly that came out today was worth a
peek for a few reasons. So first and foremost,
Burgundy's got some, you know, a decent management team with some
big names sort of in their ranks.
So first up you've got Michael O'Keefe, he's of Riversdale and
Champion Iron fame, sort of made a lot of money for himself and
shareholders. Previous to that, he was the the
boss of Glencore Australia. He's the non exec chair at the
company owns about 5% of the the stock.
These guys bought the eccarty mine 15 months ago and on 23
numbers, it's the sixth biggest diamond mined globally.
And it's the only one that kind of sits in the hands of a, you
know, a small cap. BDM is capped at 150 million net
debt of that's Aussie dollars here, net debt of Aussie 34.
But they've got diamond inventories.
These are carried at cost at Aussie $108 million.
So the balance sheet has changed quite a bit since these guys
took control of the company. All the while the stock is
actually halved. So the the chart isn't pretty
and that's sort of in the face of a a diamond industry that's
struggling. Make my interest, JD.
Yeah. And you know, I was thinking the
exact same. It's it's a hated space.
There's complexities to it, but it's enough to sort of get
interested. So diving into the actual
quarterly result today, the the outcome is kind of so, so
they're doing a lot of mine life extension work.
A lot of this work did disrupt the actual mining.
They also transitioned from the Sable open pit to the Point Lake
open pit. Recoveries were a bit lower than
expected. That was sort of on the back of
the grades process being a bit lower as well.
But on the cash front, I'll Chuck up the waterfall charts so
you guys can have a bit of a look.
Now they did US 23 million in operational cash flow before
working capital comes into account, whilst the revenue per
carat dropped 20%. So you've got the commodity
price not not going in your favour.
You're at the the sort of lows, if you like, in a commodity
price whilst you're still making money on an operational front.
They did pay back a condo. So like I said, cleaning up the
the cap structure to the tune of US $23 million.
They also spent US 36,000,000 bucks on CapEx, 2/3 of that
going towards waste stripping. So overall EBITDA it was down a
couple million to US $22 million.
And yeah, just just pull up the waterfall chart.
There's a lot of numbers are sort of slung out just then.
But bearing in mind that the commodity hasn't done so well,
it doesn't look all that kind of bad.
And we're expecting a strong finish to the year because these
guys actually give revenue and EBITDA guidance.
Now that guidance was revised lower, but given where we are
and where they said they'll still get to, the numbers should
finish quite strongly. So all our cash flow side of
things, very interesting from my perspective to see operationally
a bit of cash coming in the door while things have been pretty
beaten up. And this this next chart I'll
show you here. It's quite an interesting one
for those listening in and not looking at the chart.
It breaks out over, I think, the last sort of five quarters or
so, a few different balance sheet items, and you can just
sort of get a feel for the trend.
So firstly, it's a good sign to see that the company's focused
on what's kind of important, and it's good to see how they're
kind of working towards them. So I'll give a couple of
examples. One of them is diamond
inventory. These guys have had a lot of
money tied up in inventory, and they're aiming to reduce that.
Another pretty straightforward 1 is reducing your debt
obligations. So again, working well to clean
up these sorts of things. They also said that in the
quarter that we're now in, they're going to put aside US
$22 million for an environmental trust.
This is a a pretty common thing we've kind of seen with the the
Canadian miners. It's your cash, but it's not
your cash. You know, you've got to have it
tied up in a trust and there's some tax benefits to that.
The company said as well. So.
Really interesting mate. The, the, when I think of the,
you know, the whole diamond industry, it's like the, the
price has been under pressure because lab grown diamonds
coming way lower on the cost curve and people have been, you
know, willing to accept them as it's literally the same thing.
It's just. It's not the same.
It's like. It's like Bush weed and hard
drive basically. It's not the same.
What would you have done if if Paul proposed with a with a lab
grown rock? Oh.
Take it back. Take it back.
No, Yeah. Oh, no.
It's. I don't know.
There's something romantic about a real diamond.
That's interesting. See I've I've had the.
Just the engaged. Woman I've had.
The chat with all my mates, granted all my mates, you know,
knuckleheads, but lab grown rocks like everyone's a lab
grown rock. I've had the chat with brides.
She's happy with the lab grown rock like.
I mean, like chemically, it's like it's basically the same
thing. It's just formed, you know, in a
lab. Yeah, Go to the last picture
I've got here, guys. We'll flash it up now for those
listening. And you can see obviously the
company addresses this head on and obviously the company talks
about growing demand for mined diamonds as opposed to lab grown
market, lab grown diamonds. And you can sort of see they
talk about a bifurcation in the diamond market and you obviously
they have put their own numbers to it.
It's from the sort of analysts that they kind of use, but it's
interesting to see the size of the mined diamond market
relative to the diamonds that are grown in labs.
So again for those listening, I will say the 2023 numbers is $43
billion of demand for those that are mined versus a lab grown
market of seven. So mind is still bigger and you
know, it ties in with what you're saying, Trev, we're at
that kind of Inflexion point now, which makes it a very
interesting debate because you know that the debate wasn't a
really fair one to have 10 years ago, five years ago, because the
costs were so different. So that outweighed anyone's sort
of feelings to the emissions or anything else that's sort of
tied up in the the purchase of, you know, what's been a pretty
big purchase for a lot of people.
So that is one of the big knocks on the company.
And there's another couple that we should kind of address as
well, short mine life that, you know, wakes you in the face when
you kind of look at it. And again, the company's doing
heaps to kind of address that. Lots of drilling.
Like I said, it sort of disrupted their, their quarter
just gone. But that's also on the flip
side, a big catalyst, Misery, the the Kimberlat pipe pipe at
Misery is the, the big one, the high grade one.
If they can extend that beyond 2026, that's a bit of a
catalyst. And they've got a bunch of other
deposits that you'll have seen in the map before.
If they can extend the mine life beyond where it kind of sits
right now trailing off in 2029, then that's a sort of big bone
for the company. And the other kind of knock is
single asset miner in a relatively remote part of the
world does come with it's fair share of risk.
But on the positive side of things, like I said, management
team that looks the goods on paper, cap structure that's
being cleaned up, an asset that's being optimised for
varying sort of degrees. So they're, they're a bunch of
the, the positive boxes that these guys are checking.
And yeah, I mean, that's all in a sort of hour of digging into
the company. I think there's more than enough
for us to kind of get interested and speak with some experts in
the in the space and learn a bit more about it and.
I was under the like, yeah, I think I've made the comment
before. I think the diamond mark is
fucked. But I think like, you know,
heck, Alex V. There in itself is evidence that
there is like demand for plenty. Plenty of people have different
consumer preferences, right? And, and there's a subset of
consumers that are going to want buying diamonds and they're
willing to pay a lot more for them as a result, because more,
more like, you know, more sexy, more prestigious, more romantic,
but. Buy shares in friggin family
lawyers because bloody those homegrown diamonds might result
in a shit load of divorces in the future.
Yeah, mate, that's bloody. Where the coins going to come
in? Yeah.
I mean, I think the the other part of the debate with De Beers
back when we spoke about them is like the they're kind of a
luxury retailer as well. So it goes in De Beers case,
that is. It's not the exact same case for
Burgundy, but there's definitely nuances to it.
We need to get a Dominic spit on.
We do. I've reached out to 1 so it's
going to happen soon. Love it.
Beautiful. Oh, very good.
Well, we better mention all our homegrown, our sorry natural
diamond partners, not homegrown, we only have natural diamond
partners from the Earth Mineral Mining services.
Grounded at the top of the show and CRE at the top of the show
as well. Oh.
God, I feel like I feel like getting engaged now, talking
about all these people. Cross boundary energy.
Sandy ground support, freelands, equipment, K drill, MMTS,
Australian earthworks and haulage and get a spark drop.
Yeah, Huda. Root that's good.
Information contained in this episode of Money of Mine is of
general nature only and does not take into account the
objectives, financial situation, or needs of any particular
person. Before making any investment
decision, you should consult with your financial advisor and
consider how appropriate the advice is to your objectives,
financial situation and needs.