Friday running miners. The quarterly season's heating
up, and I'm yet to see an exploration company report
they've switched supplies to Axis Mining Technology, if they
weren't already. So I look forward to seeing at
least one talking about gyros and Corey's before the end of
the quarterly's boys. Low hanging fruit, isn't it?
Yeah, Jesus Christ, what more do we need to do here?
Axis Mining Tech, the trusted. You just trust them.
That's all you need to know, boys.
Director's special, mate. She's flying and the bloody,
even the ads are bloody. The banner ads are full up as
well for the next month or so, so get in quick if you want to
get in line. Is that how I was supposed to
say it? Yeah, it is supposed to sound a
lot too much like a dickhead, but like, fuck, you want to get
in? You better get in there.
She's going off. Yes.
And I think, I think that we're learning all this stuff about
email marketing, but just to, to make sure it guarantees it in
your inbox and it helps us as well.
If you just add, when you get the director special in your
inbox, search it and add it as a contact that tells whoever your
email server is that it's a safe thing.
And it maximises our deliverability, everyone.
Just reply and if you reply as well, just reply and say JD, I
like your haircut or something like that.
Then they're just the, it all just flies from there.
JD welcome back in the flesh, mate.
Thank you very much mate, happy to be here.
Good to see you mate. What have we got today, boys?
There's only one place to start, and that's uranium.
Of course, yeah. Going out to Namibia, aren't we?
God's country, Yes, what a what? A bit out of the bloody Trav's
bet that he didn't take might have actually come to fruition.
Sounds surprised. Well, no, it's it's separate to
the podcast. It was on Twitter, but I'm not
sure everything you do on Twitter is associated with the
podcast. But was it?
Would it? How long did it have to stay
below $3? No, no, it was six months from
then, so it's basically in 2 1/2 months time would have been the
the measurement date awesome there was below below three yeah
six months time. So it was basically that was the
the bet. Don't know if it'd happened, but
the the it's a huge story, mate. S 32 is a fucking $15 billion
company and it's down 13 odd percent today in today, which is
just like dosh. That's a that's a lot of a lot
of money. A lot of money vaporised, gone,
poof. Yeah, it's like a bloody gold
developer, fucking gold producer wiped out off the market cap.
Bloody unbelievable. Speaking of gold producers, ah
yes, outrageous. Yeah, DFS for Mcfillimy's kind
of have a chat about that one too and try to get a couple 33
strugglers. Maybe strugglers, Maybe, maybe.
Maybe survivors. Well, yeah.
But just three interesting stories I'm going to tell at the
end. Let's do it, Maddie all.
Right, I good old Paladin, you'd say.
What? One of the two producers on the
ISX, is that right? Yeah, yeah, yeah.
Yeah, it's only them and Boss producing pounds effectively.
BHP. Oh, BHP, of course, yes, but
they're, they're always on ATF flows, ATF flows.
So they've produced a bit over half, £1,000,000 up until 30th
of June. So they've got the the good old
langar Heinrich Mine in Namibia from the great fame of Johnny
Borshov back in the day. That's what this is.
This was what, Yeah, they're, they're living off the coat
tails of the great Johnny B. So there's only men I've seen
with people's Twitter handles, like with his photo and like one
guy, J BS long lost son. So you know you've made it if
you got Twitter profiles about you.
So first shipment 320,000. Sorry OP as well.
Paladin, I own 775% of this. It's 25% CNNC, the Chinese
nuclear company. So it's not 100% of this 1st.
So these are all 100% basis 1st shipment 320,000 lbs of yellow
cake is on the boat as of 12th of July.
So not included in these numbers for sale.
So they received a cash receipt of US Biplow 25 bucks as a
partial advance payment for the offtake in relation to this
shipment. So this assuming that payment
was for all of that shipment, that implies a uranium contract
price of around $77.68 a pound. So that's sort of spot sitting
around at 84. So that's sort of where that
term pricing is if you back out that I assume that's right.
So they're they're guiding for £4.25 million for FY25, going to
ramp up to £6 million eventually.
And that's the 100% boss. That's 100.
Percent basis, yeah. So they've they're guiding cost
of production, these are the midpoints.
So cost of production 29 bucks, 50 a pound for next year.
That's that's, that's they're only producing from the
stockpiles. Yeah, right.
So that that's basically cost of processing, not including cost
of mining because they're not doing.
That but what's going to happen is I like and they've also said
CapEx of 26 bucks. So if you add the that cost of
production, that CapEx together that comes out at around 3560 a
pound for next year if they hit the midpoint.
But then once they ramp up to looking at their from their
initial study and everything, once they ramp up to £6 million,
obviously your processing costs comes down.
You will add a mining cost in which looks around about, I
don't know, maybe 10 bucks a pound.
There's still stock stockpile reclamation and stuff at the
moment. So there is a cost attributed to
it. So it'll look like it'll go up.
No, it won't go up like shit loads because the processing
cost will come down a bit per pound because they are lifting
up to 6,000,000. So they will add a mining cost
on top of that when they actually start mining, which is
scheduled for pretty much start around the start of FY20 6.
And they're looking to reach that 6,000,000 LB mark at end of
calendar year 26th. They've indicated so pretty much
once that even once that mining cost gets added on, processing
come down a bit. If you're looking at they're
selling it at 78 bucks a pound, pretty much 50% margin on what
it's costing for them to get them out.
So when you look at 50% margin, this is where the great uranium
debate is at the moment, the Super Bowls verse the rest.
Best of Bulls. The Super Bowls verse, yeah.
And it was funny to like Warren Irwin was the I guess probably
the first one we've talked to that's actually said look of
sort of on the other end of it, other end of the narrative at
the moment. But remember the Super Bowls all
own uranium stocks and probably physical.
The people that aren't the Super Bowls have probably made their
money already and are out of it. So just keep that in mind when
we go through all these reasonings.
So if you talk about what's incentive pricing for uranium,
like if they're say like a hot like Namibia is not the highest
grade, highest quality more uranium mines in the world, like
they're no, not a they're not an Adabaska Basin thing to reach
much simpler open pit and it's existing infrastructure.
And everything. But they're not a tier one.
It's not a tier one thing. And they're to.
Restart project for a reason, yeah.
Exactly. They're making, they're looking,
they're like they're going to make 50% margin.
So same as a gold producer producing not all in but close
to all in of 1800 bucks an ounce at these prices.
So like you'd say the price of uranium right now is what it
needs to be to incentivize new mines to come on.
I think we, I don't say the idea that uranium must going to go to
bloody 130 or whatever. Lot more, lot more things at
play. So we'll go through, I'll go,
I'll go through what I've interpreted it as both sides of
the argument. So even though, OK, the uranium
term price right now that they're selling for that's an
incentive price. But does that mean that all
these uranium mines are going to come on like that function of as
great Mike Olken says, function of getting permitted and
developed. Is that going to be quick enough
to bloody negate this bloody so called supply shortage?
So will will they? Will they come online faster
than these new reactor builds? So remember, A1 GW reactor can
take six to 10 plus years to build, depending on who builds a
China pump amount six years or less.
So there's currently 62 reactors under construction around the
world. As of now, 28 of them are in
China. So China's bloody flying, but on
the other side, will there be some of the later life reactors
that are currently in operation start shutting down while those
new ones are getting built. So it doesn't mean that there's
going to be a bit bit more requirement for supply, but a
bit of drop in demand as well with those shutting down.
So that's there's a big bloody balance and act there.
And it makes, it makes perfect sense that the first cab off the
rank is all the restart projects.
So Honeymoon, Lange, Heinrich, Alta Mesa, all these, all these
projects that have been in operation in the past, they just
come on naturally much quicker, don't they?
Yeah, and God, I'd hate to say fucking global uranium supply
chain model, because there is so many moving parts between these,
all these reactor builds, the conversion, the enrichment and
the builds of all those facilities plus the supply.
Jesus Christ, that'd be like like old mate, that picture that
keeps coming up with the fucking, the beautiful boy and
the bloody off. What was that off?
Just the one with how every company in Australia.
The the meme I'll get keep getting my head put on for the
thumbnail. That's that's Pepe Sylvia.
It's a meme from from It's Always Sunny in Philadelphia.
That's the one. Yeah, yeah, yeah.
It's one of those one of those sort of setups then look then
the then the political. So then the political side.
Big Trump looking to be back in power soon.
It'd be interesting to see what effect that'll have on uranium
because you can predict that he'll want to make America great
again. So he could really enforce hard
the detachment from Russia and make it difficult for utilities
to get these waivers. But we did say last week that US
utility centrist, they were granted away before low enriched
uranium from Russia for the remainder of this year in 2025.
I think I think one of the most compelling arguments on the the
US political side of things is that he'd be supportive of, you
know, a lot of energy and that just getting energy from every
source possible, whether that be oil and gas, nuclear, just so
that US manufacturing, one of the things that is caught in his
heart, you know, can be done at a cheaper rate.
You lower the cost of energy across the country.
It benefits next to everything. Yeah.
And I think for how much nuclear that US uses, it's build has
obviously been very it's growth of the nuclear industry has been
very small in race at times. It's a lot of it's like existing
from a lot of years ago. So there's, but it could, it
could ramp up renewables there as well and like natural like
LNG and as well, as you said as part of a holistic power energy
solution. So who who knows the, the whole
Kazakhstan thing. That's another very interesting
thing as we've seen with the increased Takra tax rates, what
news will we see out of chemical because that a prom which is due
to start in August. So will this increased tax for
the Kazakhstan JVS take some pounds out of the market because
they've essentially taken away the incentive to expand and hit
the high end of subsoil use agreements to sort of play a bit
of creative accounting with these tax brackets.
So that's we're yet to see what the effect of that's going to
be. Will Chemico, will cigar like a
MacArthur River actually bring in the chocolates?
Will they be be producing at these 18,000,000 LB rates?
Then the big WNI conference at the start of September where all
the bigwigs get together to talk uranium and contracting and
everything else because they've attributed that the uncertainty
around these waivers. He is sort of one factor why
everything's a bit quiet at the moment.
There's not much going on in spot there.
There's not much colour on what's going on about new
contracts getting done at the moment.
Surely you'll be given the keynote, mate.
Oh yeah, surprise. Where's me fucking plane ticket?
Anyone that wants me over there. But if the likes of the great
Mike Hulkin are correct and he's like as he, he's a uranium bull,
he's bloody entrenched in it. So he's saying that real deficit
will come around that 2030 and and in as he said, uranium
contracting world pounds contractor today could be four,
5-6 years down the road. So it's like the question is,
will, will utility start loading up on the pounds to secure
supply for that 2030 period now or yeah, why haven't they
already that? And that's the thing, like
everyone's like, there's all this big thesis developing for
this to take off, but it hasn't. And you always think is that for
a reason. So there's the questions you
need to ask. And it's, it's one of those
things you've, I end up in this spot where I have no answers,
but there's a lot of questions. But there's two, there's just
two, there's obviously two sides.
There's one side that doesn't see it as going any other way
but up and ballistic, but it hasn't yet and you always have
to be cautious as an investor to not to get bloody sucked into
that. Totally, Yeah.
And in simple terms, I think the way you started out of segments
like spot on, it's like the most simplistic way to view commodity
markets is at some price, you have incentive for new supply to
come online and new supply is the cure for high prices.
Yeah, that's it. I think watching that supply
dynamic is, is is like, you know, the most meaningful thing
you can you can do then, then you've got the whole, the whole
contracting landscape. And yeah, maybe that's the bit
that hasn't matched expectations at the moment.
Yeah, and I'll think and as you got to and you with all this
bloody looking into it so much, you just you got to figure out
if it is it going up, down or staying the same?
Who bloody knows? But yeah, I, I, I'd like to know
an example of a commodity in terms of looking at the vertical
integration of it that would be so complicated in the supply
demand dynamics. I would like to know if there's
one more with as much moving parts as this and as much
variation. Whereas when when you talk about
difference in tile assay that they use through the centrifuges
to then change how much uranium goes in and the enrichment
supply new site like as I said, the the amount of reactor builds
going around globally plus and with such concentrated areas of
enrichment and conversion. It's it.
It just fascinates me, as you said, Jada.
It's one of the reasons you get funds with a specific mandate
just to to study this part of the world.
You know, there's not many other commodities where we see a fund.
You know, you don't see pure copper funds.
Yeah, and that's one of the reasons.
Obviously there's a couple of other reasons as well, but.
Yeah, we're actually copper would have to be easier to model
than this side, I reckon. I'll be interested to know.
I think alum, the aluminium complex complex, which is one
we're going to talk about next, is nowhere near as complex as
uranium and the the whole nuclear chain, but it has some
complexities with the various stages of of integration along
the way. In some ways, at least the
demand for uranium, everyone knows what the only reason you
use it for. Yeah, it's not like there's
multiple use cases from that. So you can work backwards from,
from energy modelling, which is some way simpler than other
other commodities. But the it's the processing
stages, which is, you know, a bit more complex.
And figuring out what those bottlenecks are is like a an
interesting thing. And and with the contracting as
well, knowing that, I suppose whether that takes some
complexity out of it because everything's contracted so far
down the line. It's hasn't got as, it's not as
I don't know if it's as sensitive to fluctuations
because it's all planned out 5-6 years ahead.
I'm not sure. I'd love a bit of feedback from
the gurus from a very coming from a very simplistic base
here. So it's bloody interesting
stuff. I had a fucking migraine early,
so I probably cocked up the whole thing, but I was going to
do the Ray Charles with me son. He's on.
I'm doing it for the team anyway.
That's what's called bloody, say, just turning something very
basic into a bloody filler uranium filibuster.
So, but it's just it's coming. It's coming to an interesting
time. The fall.
Once we go into the fall, the fall.
We'll see what comes out WNA mate.
Yeah, what's right, editors are buddy, S 32.
Well, they're S 12 today, but it could be S 32 tomorrow, so.
Yeah, yeah, just about for the on the way.
They're making good progress for the month to be S 32 mate.
So they had the quarterly come out as well as an update from
Worsley Illumina. So let's get started with
Worsley because I think that's the the focus of the market.
They're they're writing down Worsley by US $554,000,000.
So that's naturally the, the headline that grabs people's
attention. And I think we should just get
everyone on the on the same page to start with Worsley Illumina
accounts for that. The bauxite operations out near
Boddington and then the the Illumina refinery near Collie
that is 86% owned by South 32 with a couple Japanese partners.
So they started their environmental approvals process.
This has obviously been in operation for many, many decades
now, but environmental approvals processes to essentially start
start the next stage and continue what they're doing with
their operations down there. But they've sort of felt that
the approval that they got given by the WA Government was so
restrictive that it would challenge the long term
viability of the operations. That was, that was an approval,
a conditional approval given to them on the 8th of July.
That's right, earlier this month.
That was pretty onerous in, in, in one of them.
They've come out with something today saying long term viability
is challenged. Yeah.
And I think that that particular wording is what the markets kind
of grabbed onto. So the reason behind the write
down is essentially increased uncertainty ultimately around
the the future cash flows of that part of the business and
the sort of associated challenges in operating down
there. So obviously an impairment, a
non cash expense, it'll show up in the the full year results
that we see in August and should see a tax benefit given the the
higher deductible expenses on the back of that.
But this, this operation is pretty, pretty crucial to a lot
of different parts of the business, right?
Like it's not, it's not like a stand alone and doesn't feed
everything else. There's there's layers to this,
this operation. Yeah, absolutely.
So as a quick reminder, you know bulk site to alumina to
aluminium, they mine the bulk site and in the southwest here
they turn it in a quite energy intensive process into alumina,
which from that particular operation they send part to the
market and part to their smelters in Southern Africa.
So Hillside and Mozel in South Africa and Mozambique, one of
them being 100% owned and the other 64% owned.
Yeah, right. You know, you know why they
build them over there. JD Mozel and that.
Energy, mate. Power.
Cheap hydropower, so bloody and well, you see you, you see more
of them getting more stuff like this about to be built in
Australia. And you know why?
That is why things have changed. I've got a guess there's there's
one company I think of with Power Mate.
If you they wait offset hydro power costs, is Silverstone
installing it for you to give 110% long term reliability?
I'm surprised that power that isn't hydro.
Surprised S 32 didn't mention that they're going to get in
touch with Silverstone adjustment today.
Cross don't they after dropping like that they need some
Silverstone in their life. So mate they could probably
bloody those S. Well, South Africa, the ones
there, they pretty much live on blackouts, so God, they need
some friggin Silverstone in their life too.
They do. Jeez, they could go bloody.
Have a field day over there. Get rid of escom.
Get and. Mate, get them in.
There, Silverstone. They'll even serve over the
ground where the power's going on do they'll even sort the
water out to feed the bloody the plant once the power's powering
it like fucking that is what a bloody turnkey of a mining mob
guys. Silverstone thank you very much.
Anyway, we bloody back to. That's why they need Silverstone
continue. Yeah.
So, so just putting the importance of the aluminium
complex for South 32 front and centre.
This makes up looking at a few broker reports about 10 billion
plus, you know 11 billion on some broker reports of the NAV
of the whole business of a company that these guys put in
the in the mid 20s. So about half the business
pretty substantial. Now of course I.
Would not have known that until you said that.
Now they've got an aluminium huge complex like an integrated
set up in Brazil as well, mines alumina aluminium.
So there's kind of two parts to it.
But yeah, it makes up a very substantial amount of of their
business. And like we sort of said that
long term viability I think is what's kind of spooked investors
today. And hence like you said at the
top of the show, Maddie, a 12 or 13% off is very substantial.
But I think you got to take it with a bit of a pinch of salt
because there is the the political aspect to this as
well. They're a big employer.
They want to, you know, get off on the right foot with these
negotiations. And this is kind of part and
parcel of throwing their weight around and letting the state
government know that, yes, they are a big employer.
They want this operation to go ahead.
They've been employing people and doing work in the state for
decades and they want to keep it going that way.
And they don't want to be threatened and they don't want
to have the profitability, profitability of their
operations put under too much pressure.
So it's a bit of that going on at the moment.
And this, like they said, it sort of started in 2019.
This particular process, it takes a while to play out.
And this is one step in that in that sort of journey.
Is the read through that that some of the conditions put on
put on them in the conditional approval would mean, you know,
basically mining from lower grade areas and then the their
base case and and effectively that's that's kind of like, you
know. Yeah, whether it's, I mean at
the end of the day just higher costs or whether that's mining
from lower is I mean it's pretty light on.
It's a 11 sort of page announcement, whether that's
mining from lower grade parts or you know, everything else that
can make the your sort of costs higher.
I've just just read the the commentary from JPM.
They go there is no detail yet, but we assume at this stage that
these conditions impact the mine plan further limiting access to
high grade ore which increases costs, lowers production as
experienced by AWAC. There may be CapEx involved to
move to new areas. The impairment is large relative
to the remaining carrying value of 2 billion highlighting the
impact. So, yeah, but like you say, and
sometimes you kind of you put this kind of bearish outlook to
the market as leverage in order to get the, you know, reduced
conditionality from the from the regulator and and maybe that
that's the way to resolve things too.
Yeah, I think that's part and parcel of how bigger, bigger
companies operate. You know, they they see what
they can extract from state and federal governments.
Yeah, it's all right. So should we?
Is there any coincidence that it's been timed for this
quarterly? No way man.
This announcement. Do you remember?
I don't. Believe in coincidence?
I don't know well, they didn't get their conditional approval
until until 8th of July, but I, I was always just thinking that
there might be some negative surprises to come out this, this
period of reporting for South 32 because you remember the
measurement date for Grand Casbury payday, big payday was
the 30th of June 2024. On this chart.
I've I've marked the date clearly that S 32 kind of they
got there pretty easily in the end out performing both the MSEI
World Index and Ms and be metals and mining index over the prior
four year period, which would mean care got the full LTR
bonus, which at the time was, you know, nearly $10 million in
South 32 shares. And but since then, since 30
June they've they've sold off, you know, nearly 20%, about 18%
in particular today, like you said, 12% alone.
So things would be touch and go now if it was kind of measured
over the next few days, but yeah.
I think, I think it was my understanding that this thing
goes to this ten, 10 million bucks goes to the the board in
charge of R.E.M. And they've still got a decision
to make and they might not give him every portion or every every
dollar of that. Well get how about bloody go
from again my low base JD, why don't you educate me on the the
bauxite and aluminium market broadly mate?
Mr Money Mine Macro. It's, it's getting pretty
interesting. We saw a couple little flies in
and around the, the ASX metro mining and the, the bauxite end
of things doing well. They're they're coming back
online, expanding and they've got a tailwind of the bauxite
price doing quite well. But Long story short, you've got
China having mind the the best sources of bauxite for a long
time. They're getting now to the the
lower quality sources, which are sort of higher silica, higher,
higher cost at the end of the day.
And on the back of that, their imports are rising.
You've also got Indonesia playing games.
They're trying to do something similar to what they did with
nickel, copper and these sorts of things that they banned from
sort of mid to late 2023. The export of bauxite ores.
That obviously has pressure on the price as well.
And then you've got Guinea, a big exporter of bauxite as well.
They were sort of plateauing a bit.
They also had some strikes a few months back as well, which all,
you know, plays a role on. On the prices now given the
logistics involved, there are sort of it's not just one price
across the world. Obviously you've got prices
depending on where where the oil is coming from and what the
shipping rates are included in all of that.
But ultimately you've got the the whole sort of complex book
site, alumina and aluminium moving upward through the first
half of the year. So aluminium hit roughly 2700
U.S. dollars a tonne a couple months back.
It's peeled right off. So it's sort of in and around
2300 dollars per tonne these days.
So that's since the the end of May it's it's peeled back.
But this is all kind of reflective in South 32's
earnings. So if you look at the prices
received comparing the first half of the financial year to
the second half, you know Worsley and Brazil Illumina was
up 9% and Brazil Moselle and Hillside aluminium was all up
six to 10%. So the, the, the tailwinds in
the space sort of served them quite well.
And a couple of the commentators out there have kind of been
saying maybe they see a bit more support around a price level
where aluminium struggled to breakthrough for a long time
through 2023. And now that might be the the
sort of lower end of support. But again, like we're going to
say with these macro outlooks and these commodity price
assumptions, you can take them with a pinch of salt because
they're quite hard to actually, you know, see eventuate.
But I mean, one of the big things you have to look for is
Indonesia, whether they actually do on reviewing that ban decide
that they're not going to put it in place or they are going to
put it in place, that is going to have a big impact on price.
And then like we talked about with pretty much every metal out
there, Chinese construction, what they end up doing will have
a big sort of ramifications on aluminium pricing, so.
Is that that spot price you quote there, JD?
Is that what they sell it at? Does it operate in similar to
gold or are they contracted? Or how does aluminium sales work
do you know? That's a that's a great
question. I'd I'd imagine they have off
takes with with partners in in in China.
Like I said, the guys will send some of their alumina to their
smelters in South 82's case to southern Africa and some they'll
sell straight up to smelters in China I imagine.
There'd be a treatment charge on the stuff they send to China,
but their stuff that'd be, yeah, probably getting.
Close to the buck for the spot. Yeah, yeah.
Yeah, interesting. Yeah, I really want to do a deep
dive on this whole complex in the market dynamics.
And I've kind of heard that, yeah, sort of some, some
inventories are are really, really low.
The whole kind of complex is pretty fragile to supply
disruptions. Chinese production, which they
brought on domestically kind of in the late 2000s, is depleting
and that's why they can't bring it on stuff from Guinea and even
that's kind of tape it off now, so.
And you can see that quarter and quarter, the imports, yeah, have
been rising in, in recent times in China.
Yeah, so I, I think it's, it's, it's a, it's an area we should
we should, yeah, go deep on and take some expertise for a future
episode, I reckon. What's?
The what was the bloody? Was there mania?
Was it around 2010 or something? The whole Rio Alcan thing like
was that when? 2008 bit.
Of an aluminium bull market. There there was in some ways
unlike it depends what you talk to about that, because obviously
the value of Alcan kind of all got written off in in the end,
but you know, BHP had interest in Alcan, Rio ended up with it.
Depending who you, who you talk to, some people even reckon
that, you know, Rio acquired acquired Alcan has a bit of a
poison pill to prevent, you know, BHP from actually taking
out Rio back then because it, you know, was filled with a
bunch of liabilities and it was a, was a, was a price tag BHP
could never get comfortable with.
But yeah, one day we one day we'll, we'll, we'll go deep on
that story, ID and JD. Hell of a poison hell.
Never thought I'd be so all these commodities of would never
have been interested in. They're all.
Every commodity has an interesting place in the world.
They do even aluminium God love it right Regis the mcfilmies DFS
the growth story. That's it.
Well. Future growth.
The the sort of you know, too long didn't read of this one is
that nothing is really happening, but let's have a chat
about it anyway, so. That what TLDR is.
Is yeah. So a couple of the details, 1.89
million ounces, they're going to mine at 1.1 grammes to tonnes, 7
million tonnes per annum plant, 9.4 year operation averaging
187,000 oz, all in sustaining cost a bit above 1500 an ounce
NPV using a 5.5% discount rate of $850 million.
And here's the big one, which was sort of seen in the past
already, $1 billion CapEx. So guys, thoughts?
Yeah, just look at odd, you just go straight to the 1.1 is, you
know, obviously low, but just looking at the Met, like once I
get into the fresh rock like it's, you know, average gold
recovery of 85 to 89% looks bloody hard.
Look at that bomb ball work index of like 15 to 18.
So yeah, so a bomb ball 12 to 16.
So that's like 16 that's like up at Bellevue levels.
So I don't know if it's bloody hard if it's if there's like a a
semi refractory nature. I couldn't really find anything.
I'll just, I, I did look back at the the Newmont Mcfillimy's
flotation test work back from like 2010 and it shows here like
the presence of copper in couldn't couldn't find any
mention of copper or anything in the Regis one today.
But just looking it, it looks like it's there is copper there.
And I don't know if there's a semi refractory bit of copper.
And I just think why would you build a 7 million tonne plant
and spend a billion dollar billion isn't all the plant when
why would you build all that for 10 year project when Katie is 40
KS away, which treats semi refractory copper sort of
mineralisation. Don't I can't say it, can't say
it. Yeah, getting over the lawn and
happening when there'd be a bloody when you just truck up 40
guys. And I don't know how amenable
new monitor be to that. Does it even displace Katia like
there or is it high grade and? Well, Katie is like crazy.
Yeah, I think. I think Katie is pretty light.
It's a yeah. It's a big fucking porphyry gold
copper mine, so I'm not sure how it all blends in, but it's not a
yeah, Katie is not a high grade bloody mine.
It's just bucket huge. I think it's like 30 million
tonnes something they pump through it, so I don't know I.
Don't think the company in next steps have kind of said
everything that needs to be said.
The board will consider, you know, FID in FY20 6.
Yeah, it's. An expensive option.
Like you think of in these beautiful farm regions near
Blaney where it is, which is sort of, you know, South of
Orange Shield on the map there. You'd think that the easiest way
to get this mining would be processing it somewhere else and
not putting a TSF in and not having to get permits to use
Bloody Sign or just blow the thing up and track it somewhere
else. The lowest barrier to entry for
something like this. They they they ran a scenario
with with gold at spot sort of 3500 and obviously the economics
would like way better. So there's like talk there great
option value if gold really just like like roars, but you don't
see it kind of getting built unless you have just, you know,
the whole kind of gold market sort of just sustainably stay
super elevated and keep growing. I think not for a while.
It'll get bit one day. It's just like, you know, is it,
is it meaningful today from an MPV perspective?
Not really. Probably not, no.
But and it looks like there's potential for a lot of potential
for it to go beyond that. That's the initial case, the
initial pit and everything. I'm sure there's underground
potential. Be great for, you know, great
for the communities there. More mines, more money, but
yeah, not sure. Can't, yeah.
Don't know if it'll land somewhere else.
Sure, they'll be exploring other, other, other options.
I mean, they've got a growth, a growth issue now because it's,
it's going to be hard to persuade shareholders to say
that, yeah, we want to allocate a billion bucks to this.
And but yeah, I think that's why they're they're a prime
candidate for for for a deal announcement in the in the not
too distant future. Yeah, yeah, I'm not.
And I'm not sure if something like this like you can't see
like a new monitor all about the their tier one projects, what
they class as tier one projects and having just that in the
portfolio. So you can't see them being
interested in a project like this and trucking at 40 KS.
Like that's just not a new month thing to do.
And God, I don't know if they do bloody toll trading arrangements
or something on a big friggin operation like that.
I think maybe not, I'm not sure. So yeah.
And you'll be on hold for a while now.
Yeah, she's looking tight. Oh God.
Especially considering how long it took for him to get through
that native title part of the project.
Imagine then going to full permit environmental approvals
for like the whole thing. Still waiting on something for
the approval for the 90 kilometre pipeline, I think at
the moment. So yeah.
Yeah, yeah. Well, God, if you were going to
pick here's a guy, if you were going to pick one of our bloody
great friends that needs to go out there, who would you pick?
Question without notice. Who is most needed out there?
Big, big operation like that, you need a lot of water.
I'm thinking that 90 kilometre pipeline.
Why don't you negate that by finding some closer?
Very interesting, Matthew. Or reckon Gerard James will be
Blaney James. He'll bloody he'll.
He'll have enough work to go there and it'll be Wan NSW water
boars 'cause he could, he could have a bloody, he could probably
put 10% on that IRR. Gerald James with some water
exploration out near Mcphillimy's.
Drop a WAV Australia waterboards.
Australian waterboards. What a bloody put a trademark on
that ISIPJD. Gerald James is going Australia
wide. Right.
I, I think so 'cause like there's only so much work he can
get in WA and with us catapulting him to the top of W
of water exploration in Australia, that's what's going
to happen. 7 million tonnes per annum, that's a big operation.
Ray, just get in touch ISIP before he starts.
Obviously the uranium paleo channels are going to take a bit
of his time up. As I said, he's a man in demand.
He's he's he's in more demand than a batter out on the
director's special look to his schedule's filling up way
longer, way more out than. Us you need water.
Get in touch. Love your work, Gerard, right?
What's trap? Three companies under the
microscope. Sort of, yeah, one of them.
It could be lights out. In the pressure cooker.
For another one, it seems they avoided lights out earlier in
the year and it's all systems go and the last one it was lights
out a while ago but they're stuck in purgatory.
You know, I've just seen the first one and we're trying to
guess the other two. So the one that is it is it
lights out is Javoir the cobalt catastrophe.
The company is in trading halt pending an announcement in
relation to their they got these ICO bonds for their ICO project.
It was like a Nordic Nordic bonds to the tune of USA $100
million in relation to the yeah, to the ICO asset guaranteed by
the head company Javoir. But there's a bit of a
predicament for Javoir because they got a, you know, a waiver
on some of the covenants in relation to this until the 20th
of July. So that way unless it's
extended, is probably likely in breach as of two days ago.
So unless they can extend this waiver, you know what, I don't
know what happens there. The halt announcement
specifically talks about extending the waiver and
deferring an interest payment that is supposed to be made
today on the 22nd of July to holders of that bond.
It's like a semi annual interest payment.
So if they're trying to defer that, it probably means they
can't stump up the money to pay it at this point in time, which
isn't good news. So a question I have is how
supportive of the bondholders actually going to be?
Yeah, it's been been a challenging environment for
Cobalt, to say the least. Javoir bit off way more than
they could chew. Heaps of debt assets in three
continents, some point they had like expansion or restart or
developmental construction plans across all three of them at the
same freaking time, which make mining companies don't do that
since we're mining companies go one at a time.
I think, I think in the future there will be a control H
replace Javoir with Hastings. I think that is like the way
you've explained. That sounds like the predicament
they might find themselves in with their wire convertible.
Maybe, Yeah, I think Hastings have an issue, but it's a
different it's it's a different issue in some respects, but it's
not. Yeah, they could.
I mean it's. Yeah, they're.
Still an issue. Still an issue I mean.
Having ICO been secured over the US 100 million is kind of
interesting because that's not worth 100 million.
No, but the there's a guarantee from the the head company.
So which? Is not a not a good sign for the
the head company. Exactly, and they've got one of
the ugliest balance sheets you'll ever see for a mining
company. Drawn debt of USA 169 million at
31st of March when their cash was a mere 26,000,000 operations
lost $18 million in that quarter by the way.
So they they'd need to clean up the balance sheet massively.
When I looked, I think their market cap on ASX was like 50
million bucks. So not very attractive from a
gearing perspective, to say the least.
And I think that the trouble is they need to clean up the
balance sheet. But there's not, I can't think
of a, you know, a sensible. I can't imagine how a sensible
investor could, you know, reasonably put equity into that.
That's just such a yeah, like, you know, it's just it's so hard
to to clean that balance sheet up that looks, it's just looks
really ugly. Can.
You get a negative market cap like considering the debt like
you'd still have a. Positive E you just go into
suspension and you and you never come out and then you know
equity gets zero and you know it'd be.
The go people pay you to take the shares.
Surely every investor that had any interest would have been
touched up in the last 15 capital raisings that they've
done. 98% down since I think mid 20220 Yeah.
So in, in like 2 years to time, that's that's a lot of a lot of
value distraction in my opinion. But heck, maybe they can buy
more time and pull a rabbit out of the hat.
Aussie super to the rescue. Nice night.
But it doesn't, it doesn't look like it's going to end pretty
for the current shareholders. I'll, I'll put it that way,
yeah. Right #2.
Mate see a rutile. So they were kind of, they were
actually in bit trouble earlier in the year when they know the
government sort of looked like the government with Buddy Rod
pulling them. And anyway, it's apparently not
in trouble anymore because the bid from Lien Oil has translated
into an agreed cash offer recommended by the board at
$0.18 per share. Remember Gemcorp had agreed a
bid with the board just a couple of weeks ago.
It was $0.16 per share and now, now this.
So the stock is it's kind of trading at exactly $0.18 today.
So despite the many parties with kind of a hefty shareholding,
you got Gemcorp, PRM, Mano, Lien Oil, all on the register of all
have come on recently and all have a chunky size.
The market isn't really pricing in too much of AA probability of
a higher bid from here and I think I think that's probably
fair. Remember Jan, your bear who's?
I was about to say, what's he up to at the moment?
The big file. He's I think well he he like
Meno were the ones that wanted him on the board So like he's
yeah I I don't know if don't have Meno going to put it bit in
on I wouldn't wouldn't be betting on it.
Mining at area one has recommenced the project look
like it's going to make its way into the hands of a Leonian kind
of company being Leon oil. So like, imagine the tax regime
kind of issue that we're having with the government, kind of
there'll be a resolution there 'cause it's, you know, they,
they, the government basically like by all accounts did not get
along very well with CR retail layer management there.
But they might get along with Leoning and company better and
Gemcorp who, who had that agreed bid a couple weeks ago.
So there's, there's special sits guys, right?
And they they'll be happy to bank at the return they made
buying stock from Stan at $0.15 and three months ago, now
getting $0.18 a share. That's like a 20% return in
three months. Maybe they've got to wait a bit
longer for it to complete or whatever, but it's a pretty tidy
return. And Mano, like I said, they'll
know what they'll do. PRM, the entity related to Craig
Dean, the commodity trader, they'd have bid it at 9.5 cents
on market, but haven't seen or heard much of them later other
than just asking a few questions at the AGM.
So don't know. Don't know what happens to them
or where they go either. But it could also be one where
you have some some minority shareholders band together and
hold out and get a little bit of an uplift collectively.
But I don't know, it's just so hard to have insight into how
how many behind the scenes conversations have been had
between these parties that no one really fucking knows much
about. Oh mate, I'd love to Gladdy, you
don't want all your new bed up and the hammer on you.
God yeah buddy, how good's that? It's like annoying.
Company number. Three, the third one mate, the
one stuck in purgatory is Galena.
So, I mean, they're, they're still in suspension and the
concentrate production was 54% higher quarter on quarter, which
is not really good news for them, but they're still in
suspension. They've still got the voluntary
administrators appointed there. There's no indication if they're
making cash yet. CF OS departed recently.
They said they're reviewing recap options at the moment
still. So let's, let's hope the, the
operational kind of cash flow trends the right way to enable
them to actually kind of recap in a way that's sustainable for
the, for the company as well. But yeah, TBA, just keep
watching. Still in purgatory.
Yeah, right. So no.
So do they cause because they don't have to give a?
It was just an operation. They don't have to give a
financial statement now while they're in.
I don't think they do suspension.
There'll be a recompliance thing when they relist and if they
relist. But yeah, at the moment I think
they're obliged to do anything like that, yeah.
Yeah, yeah, that'd be interesting to know.
Yeah. It's weird when you have
something in admin that might be making money.
Yeah, don't know. Yeah, Yeah, TBA.
You reckon the RJD? You're a man in the knife.
I mean, are you talking about after debt repayments?
After debt repayments, I don't think there will be no.
Operationally. Well, not enough to service the
debt. I don't think they're they're
getting close to. That I got to under an odd.
Ballpark. Yeah, it'll be, you know, that's
pretty, pretty onerous. If I build them on, I reckon,
especially with debt. Well, one company operations run
the risk. Yes, right out bloody.
You know he's not running the risk.
Anyone use an axis? Anyone use an axis and axis
themselves? Pretty much a bloody sure bet.
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