And mate, they're drilling, they've listened to me because I
said there's gold everywhere up there, get the bloody rigs
spinning. But they've got this eastern
stock work corridor which 14 half metres and 11 half grams,
18 metres and 6g. So it looks like there's some
pretty big potential. Righto money miners dilly back.
Mate, that voice is is miles better than it was yesterday and
I imagine miles better than it was the day before.
I'd give you 95% back. Yeah, mate, I'll tell you what.
On the 23rd of May, it's going to be back to what it was
because on the 20 to 22nd of May, I'm going to be at the JRX
conference. You've got another.
Conference, it's going to be another voice destroyer, mate,
the industry LED conference that is the centre for tech
innovation. The future mine is going to be
on display from 150 exhibitors, mate, tell you what.
And we're talking mining companies, OEMs, mining tech
companies, but and the exclusive discount code buy money of mine
'cause we're just exclusive. 190 bucks off for members MOM, 160
bucks off MOMNM for non member. And mate, the links are in the
show notes. It's on LinkedIn, mate.
You're mad if you don't take the free cash and you're mad if you
don't go. You're going to be there again
'cause. I'm gone, and apparently that
holds some weight these days. So whatever the world we live
in, go GRX partnered with between Osman and Oz, IMM can't
can't wait, boys. What do we got today?
We've got. We've got a line up that's going
to be as good as the GRX conference, Manny, but not quite
as good, you know? Yeah.
Your love for First Quantum continues.
They're having a punt. Yeah, they are.
They're they've, they've put $15 million into a company called
Prospect Resources. I'm going to go into that, what
it means, why they need it, and if there's going to be
competitive tension in the long run.
JD is going into rare earths and we're talking about in.
Honor of the great Stuart Hines. Telfa.
While he's chilling on in. Spain, I think he's in Spain.
He's. Got a yacht, doesn't he?
Yeah, I think he. Could have got mate.
I'll show you the stock price chart.
If it keeps going back up, he can buy a bigger one.
Let's go. Let's go to Zambia to start Trev
Prospect Resources and 1st Quantum.
I'm, I'm, I'm going down the value chain for a change and I
do want to talk about, yeah, Zambian copper developer
Prospect Resources today they they revealed that First Quantum
is tipping in $15 million at $0.15.
And and to end up with a 15% shareholding in the company,
that's that's a lot of fifteens gents.
Do you know that discovered that project in 2015?
I did not know that. Because it's not true I.
Was about. To say that importantly the the
share price that that first quantum is paying for for that
15% stake is reflects A36 premium to prospects last traded
price and the share price today is trading at 13.5 cents.
So not quite what what first quantums paying.
All right. Remind us about Prospect, how
the the assets sort of came into the company and what sold
happened because there's a little interesting history in
this one, isn't it? We've, we've touched on them in
the past and prospect they acquired the Mumbaisy project in
early 2024. Before that it was, it was a
fascinating company because two years earlier they sold their
Arcadia lithium project in Zimbabwe to a Chinese company
for US, $378 million in cash. What did they do with the money?
They distributed the overwhelming majority of it to
shareholders, 95% of the cash they they distributed via
dividend and a capital return. They only serve of the in Aussie
dollar terms, there was like net proceeds of 466 million.
The company only kept 34 million of that in prospect, but that
was enough for the team to get their hands on the Mombasi
copper project in due course, while staying funded enough to
for, for exploration work once they kind of got hold of it.
And the project is interesting because it's, it's in the
Central African Cup about kind of straddling the border of, of
Zambia and the DRC. But on the Zambian side, as you
can see on on this map, just look at the vicinity of, of what
is, is neighboring this, this project, right?
First Quantum's Sentinel operation is just 25 kilometres
away to the West. There now Sentinel has
processing capacity for 62,000,000 tonnes per annum
material and it produces 225,000 tonnes of copper per annum.
It is a monster. Six, that that's phenomenal
thinking of that amount of tonnes for that amount of
copper. It's, it's low grade, right.
But yeah, I mean, I mean, everything's 2,000,000 tonnes.
Yeah, it's, it's a big, it's a, it's a big, big, big operation.
I think. I do think when we interviewed,
yeah, Mike Christie, he, he referred to 1st Quantum's
acquisition of the project in 2010 for US $230 million.
I think he, I think he referred to that as Deal of the Century.
Do you remember that quote? I feel like he did anyway.
No it doesn't. Let's.
Run with you. He's he's clearly biased, but
undoubtedly like Sentinel has been a tremendous asset that has
transformed kind of first quantum and and then to the to
the east, you can see on this map a bit more than 30
kilometers away, you've got barracks Lumwana copper
operation. Now Lumwana is currently
27,000,000 tons per annum and that produces 120,000 tons of
copper per year. But Barrick is planning to turn
Lumwana into a super pit. They want to, you know, make it
a tier one asset, which it currently isn't.
And that means scale. So they're planning on on
doubling the processing capacity to 64,000,000 tonnes per annum
and they hope to also double copper production to 240,000
tonnes per annum. Just to think back, the gross
was 1.6 million tonne for 65,000 tonne in copper.
Different scale, is it it? Is it is It is absolutely is.
So how does prospect fit into this then with the with the
majors around it mate? This this year prospect they
dropped their their maiden resource plus they secured 2
large scale mining license from the Zambian government.
The the maiden mineral resource estimate 107 million tonnes at
0.5% copper for 514,000 tonnes of contained copper.
And in the latest trend that's just everywhere you look.
There was also an expiration target another, another 420
million to to, you know, 1050 million extra tons of of
material at at a similarish grade is in the exploration
target. So there's, there's line of
sight to a fair bit of all there at at modest grade.
You know, that's 0.5%, right? The question is that you have to
figure out, does first Quantum or Barrack need that feed?
And if they do, when do they need it on Barrack, their
Lumwana super pit ambitions? I think it's they say the
expansion's going to be about $2 billion, but doing what they're
what they're gonna gonna embark on at Lumuana, we'll kind of
establish my life there out until 2060 by super, super
pitting it perhaps yeah prospects or could displace some
of some of the mine plant earlier or provide blending
benefits. I'm not not entirely sure, but
let's let's move on from now to to 1st Quantum.
First Quantum Sentinel is a massive 62 million tons per
annum and the current feed grade is around that 0.5% copper mark
right now too, maybe kind of slightly lower than that.
But there's also this technical report on Sentinel that came out
in 2020 and what it showed was the mill could be fed at 60, you
know, 62 million tons per annum up until 2032.
However, the grade really falls off substantially between 2029
and 2033. Look at this, this chart and you
can just see like that, you know, between 2028 and 2029
there, it just falls from 0.49% to 0.34% where it where it
unfortunately stays for quite a quite a number of years.
And and that's a very substantial drop off in grade,
which of course would mean no much lower production.
So you can you can pretty easily see now why first quantum is, is
going to be interested in, you know, putting its claim on
prospect resources right now. There's there's feed that could
clearly displace the low grade ore there and, and have a have a
substantial impact on, on the incremental value that that
first quantum get out of Sentinel.
Yeah, wow. Once you convince yourself that
first quantum need this and that they they, they need it before
2029, then you just have to do the math on like what the
incremental value to 1st quantum is.
The, the market cap of, of, of prospect resources is under $100
million Australian at the moment.
I read Hoffy's analysis sort of suggesting incremental value to
1st quantum could be between US 450 million and US 600 million.
If you know, if if that were that were feeding us through
through Sentinel in time, but I don't think like a a deal gets
done at full MPV here. You a deal like if if a deal
happens, there's gotta be something on the table for first
quantum to to to still get benefit out of it as well, you
know, so. Yeah, they've got their foot on
them. They've got their foot on them
and that's important because you've got you've got barrack in
the region who like the, you know, the all could, could have
reasonably also gone towards if, if it, if it suited the mind
plan too. But you know, first quantum's
there, they've got their foot on that.
There's rights that come with the the investment too,
including board representation and and the like.
So yeah, it's, it is, it's, it's an interesting one, but I'll
watch it. You know, I'd expect in due
course, no, no, no sense of urgency now because I've got the
foot on them. But in due course, like I
wouldn't be surprised to see this kind of wrapped up by first
quarter. Yeah, right.
So what? Anything else interesting about
this? In addition to 1st Quantum's
investment here prospect, they have this existing 15%
shareholder called Eagle Eye Asset Holdings.
They are also tipping in $3,000,000 at $0.15 to retain
their own 15% shareholding in the company.
Equal eye is interesting. I, I had to look into them
because I was like, I think I got another strategic, but it's
not a strategic investor on the, on the register.
It's, it's the mining investment division of a family office
called Fortuna Holdings SFO. And if you're trying to figure
out a family office, which family, good luck finding kind
of public disclosure of which family it is.
It's not it's not available in the kind of the public domain
of, of Fortuna. All all it refers to in in all
of their docs is the the promoter family.
However, one of the other companies that that Eagle Eye is
a substantial shareholder of on the ASX is Canyon Resources and
you can see the signatory on the recent change in substantial
notice for them on Canyon is is Gaurav Gupta now.
Aussie fella. Aussie fella, Yeah, you won't
find any kind of public details that link Gaurav Gupta.
I'm probably saying his first name wrong to the Gupta that is
very controversial in South Australia right now.
Sanjeev Gupta Gaurav is the CEO of Adani Capital.
Adani of course is you know, there's lots of links to
different sort of set of Guptas, but they all there is a lot of
connection. There's connection between
Guptas. But anyway.
It's simply not the same Adani that was doing the.
Coal Board and. Well, it's land.
Or a different Adani? That's Adani Group.
And then there was these financial divisions and then you
had kind of, you know, because the whole Greensill drama, it
kind of got chopped up. And anyway, this is just like
one of the the financial bits that was chopped up.
It's the way I read it. Yeah, right.
Anyway, but but eagle eye isn't isn't Adani.
That's just somehow Grave is signatory and Grave is also CEO
of Adani Capital. For simplicity, it appears to be
Gupta money. I'm just not sure which Gupta's.
But anyway, I found I found all that fascinating.
Yeah, cool. Right.
Looking at that region, you know what I'm thinking.
What are you thinking, Maddie? What would be the most out there
thing that you think could pop into my head after your
discussion? It's it's you've, you've known
me for two years. Could you imagine a mega merger
between Barrick and 1st? Quantum.
It's it's. It's I was about to say that
they've tried and it makes perfect sense.
Quite literally 2 years ago they Barrick.
Bid for First Quantum. Yeah, no, no joy.
But but yeah, it's, it's, it's, it's certainly, I mean, there's
massive synergies there, right? And I think LA Minor has been a
fair bit harder for Barrack than Barrack envisaged.
And yeah, Sentinel was, was, was maybe kind of would would help
unlock it in a way that that was more straightforward.
And yeah, First Quantum had, you know, I think they've got a big
shareholder on the register which helped them knock it back,
but I can't remember. Best quantum of a very big
Chinese shareholder. Yeah.
Do you see Barrick also dropped gold from or they're trying to
drop gold from their name right now because they want to become
a copper miner. Too bad that ticker is GOLD.
Like to work on that one. That's a bit.
Yeah. But yeah, with Rico Dick and
everything, they are moving more and more toward being a copper
miner. And I, I, I don't think First
Quantum would ever want that, by the way, even even though maybe
they could get a premium all that sort of stuff.
But the, the, the culture, the culture of, of First Quantum,
like we've talked about is, is nothing like the culture in a
place like barrack and that place would, you know, the, the,
the thing that really drives it and, and why it's efficient and
why it's lean and why they can do so much, yada, yada.
That would be, that would be completely eroded if it was, you
know, engulfed by a barrack. Yeah, because Barrack can't
lean. Not they're not lean, they're
not entrepreneurial, they don't kind of take bold risks in a
nimble and fast way in the same way that that First Quantum is
empowered to do. I think it would be a lot harder
for Barrack to deploy capital to get a lot of lot of change to go
through to get that happening. For sure, yeah.
Right, buddy, sit back Stewie Hines most famous great 1 gold
shareholder. And if anyone can become a more
famous one, I'll buy you a cart and a piece.
Most famous retail shareholder. Yeah, most definitely.
So at least we've got a free up a free link coming up on Twitter
because he always gives us a share.
Have a look at Greatland up she was he's up what 120% in the
past year up to 14 lbs. And I think they like after the
rise and stuff they'll back down at six.
So it's had a good, good bloody rise since they've it's all gone
through after the after the capital rise.
If you look at the long term chart here.
It's a pounds or Pence, Pence, Pence, Pence.
Sorry. Yeah.
What's What's the difference between a pound and a pence?
So pence, Pence is like 0.60 cents.
Yeah, yeah, yeah. Cents in dollars.
Oh yeah, that's why bloody Glencoe is like fucking 284.
Yeah, yeah, yeah, yeah. Yeah, it's like 2 bucks, 80 or
280 pence. It is confusing with that.
I put the decimal though and yeah and it says GBP but it's
fucking. Got it, Got it now.
Yeah, Lord saved the coin. Yeah, bloody now.
God saved the coin. God save the queen, the king,
right? Oh yeah, true.
Go, Charles. He's the king.
Yeah. Lose track of all these, right.
Great. Look at the bloody long term.
It's like Stewie, you might get the bloody.
It's it's coming back. It is coming back.
Look at the ultimate high. I think what was the high about
38. So right it is.
It is on the rise again. Plenty of happening at Telfa.
Plenty happening at bloody have her on.
With that much going on they definitely need to bloody call
KCI. That is like just pretty mate.
They probably need 38 I TS on site up there, probably more Oh
mate and no one else in Australia has 38 I TS other than
KCI. And if they need more KCI got
more coming in the next 6 months mate.
That road between Telford and Haveron needs to be maintained.
AKCA grader arrived this month. Perfect bloody home for that.
And they'll probably need people too.
Maddie. Mate and KCA can deliver them in
all shapes and forms on a variety of arrangements and I'll
tell you like we're talking ITSITSITS, machinery, machinery,
people, people, people, people. And you just have to pick up the
phone and call KCA. It's a.
Pretty simple message. Oh bloody hell, what a bloody oh
and oh. Cheers guys.
Yeah. Alrighty, tell us about the.
Cording so the the the highlights 250 these are in
Aussie dollars 253 mil of free cash flow debt free closing cash
balance of nearly 400 Aussie. So there's about been three and
a bit months, three, nearly four months of great land production
because they released their those partial December numbers.
Now this is their first you'd say full quarter side, 90,000
ounces of gold produced all in sustaining costs 2100 Aussie.
Remember they've got copper associated well, so 3 1/2
thousand tonne of copper as well.
I assume they'd have a little bit of like impet, what would
you call it rehandling under the all in sustaining 'cause there's
some stockpiles they produced as well.
So gold recoveries, there was a big, big improvement, 86.7%.
So previously I think they were modelling 78%.
So recovery was really good. And they've just approved and
commenced mining in the stage 7 cutback for the new West Ham
open pit. So they've released a guidance
which they hadn't previously. So gold production for FY25 S
essentially 6 and a bit months, 196 to 210,000 ounces and
looking to pump about 100 mil of growth capital in it.
So that's gonna be around seven months of great land ownership.
So, and mate, they're drilling. They've listened to me 'cause I
said there's gold everywhere up there.
Get the bloody rig spinning and they are they're I think they're
gonna well they say they're gonna have 6 by by June quarter
they're adding another two and they're gonna have 6 drill rigs
up there, which is the most they've had up there since 2020.
I'll go over some of the results later.
So, so you can see here the the beauty of the gold price, their
average realised price for the quarter four and a half 4585 and
just look at how much bloody better this is environment is
compared to new Crest. So the new Crest days and that's
so 4585 and then you can imagine this quarter.
So it is. It's pretty awesome that that
the yeah, that gold price dynamic is also just let them I
completely clean up the balance sheet to you know, there's no
yada yada. And the reinvested into the
growth of, of Telfer as well at the same time as they bring in
everyone online because that, that can, that can, you know,
buy you more, more time as well in terms of replenishing your
stockpiles and, and the locks. Yeah, yeah.
And and like in terms so for you know, 250 free cash this
quarter, so up the gold price and I think there's going to be
a bit less lower recovery in the coming quarter.
But like that's, you know, what was Havron's, I think the latest
CapEx was 480 US predicted in the 2021 numbers.
So like it's gonna be, it's gonna be a billion plus.
But they they've got a good opportunity here to generate a
lot of free cash to take the pressure off that that CapEx and
not have to tap the market or the debt facility maybe maybe.
But the IPO on ASX is, I think scheduled for June.
Scheduled for June, Yeah. I think they're just going
through the process of the the admission from the AIM that all
the votes that go, the scheme votes and all that to go with
it, so scheduled for June. And look at this, an AIM company
and everything's reported in Aussie dollars.
Yeah, yeah, it's 'cause they're looking after Oh no, Stewie Ions
is over there. I think it's probably Stewie
might have asked that can we have it all in Aussie dollars?
So good on you. So all milled so for nearly 4.6
million tonne milled .68g gold. So from that there was 4.2 point
6 of actual ore mine from open pits, 278,000 tonne from
underground. So it looks like they they went
through about 1.9 million tonne of stockpiles for so remember
they got and the 2/3 of that stockpile you got 20 million
tonne at very low grade at .33 and they got 9.2 million tonne
at .64 which is around what they're doing.
So they've they're not just running that whole stockpile
through the dual trains. They've buddy just chipping away
as they need it courtesy of the Newmont folk that left him
there. So that's giving him a good
runway. But so they're, yeah, not, not
just sitting there 'cause that, that that's what would have
killed him because they just bloody sat there and processed
stockpiles. But they're, they're hammering
the underground, it's bloody and the open pits, it's good.
And you see the recovery 86.7% compared to historically ranging
from 78 to 82. But they've actually they've
flagged at the June 2025 quarters, probably gonna be back
around 82 saying the Stage 7 area of the West Dome was
historically. A lot lower recovery due to the
oxidation state. So they I don't think you'd get
used to the 86%. So you can see in this picture
here they've got the stage 7 and the stage 2 five and eight.
I think it is they're mining in the West time.
Then they're down the bottom of the mine in the A reef, the rye
and then doing some mining up in the M reefer, which is a bit
higher up. So that's where all the ores
coming from at the moment. So, and you look at the, the
drilling they're doing. So this looks like pretty close
to the bottom, the a reef and you know, 5 metres at 6 grams,
8.3 at 4.6. So as I said, there's bloody
gold and it's look like it's only from like 16 metres from 85
metres. So they've like must be just
these parallel structures they've punching off an existing
or drive or a drill drive to find those new lights.
So based on those distances, it's not that far to develop out
to those areas. Then they got this, this looked
bloody pretty cool. The up in the MRF.
So the MRF is higher up sort of halfway down effectively like
the caves at bottom of The Cave was about thousand 1100 MRF was
sort of top bitten down to halfway.
So they've got this eastern stock work corridor, which 14
half metres at 11 half grams, 18 metres at 6g.
So it looks like there's some pretty big potential and that's
a looks like 1000 metre strike target, 100 metres wide, 40
metres high. So that's like that's, that's
what I said. Just got to get those friggin
drills pumping. So there's looks like and as you
mentioned before, ASX listening in June 2025.
I think what they're so they market cap I think is I think it
works out at the moment. Aussie 3.8 billion.
So it's actually a couple 100 million less than Genesis.
But how you compare that look at what they're producing, look at
the infrastructure they've got Haveron is that's the the best
thing about the this Haveron job is for them.
It's going to be a freaking big job and it and it will have
challenges with the water, but they've got Telford ticking
along. So not like, it's not like it's
all going to have this bloody primary focus like a single
asset company on what Haveron's doing because you've got Telford
ticking away and you're still going to be producing and you're
hopefully going to be making money.
So because it's, I think the last one was, I think what are
they talking about 2.8 million tonne?
I think that was their last study.
No doubt they're probably going to want to get more out of it.
That was for US 46476 CapEx. So, but I would imagine probably
going to need at least a billion like because they're going to
have to Chuck. Aussie, yeah.
Oh yeah, because that number's 7/7/58 hundred.
Oz They're they're going to like the haulage system or because
they won't be just hauling it up a bloody single decline.
So there'd be either a haulage shaft or a another decline going
in which will be a conveyor system.
Could be well over a billion. Oh well, over.
Yeah, yeah, it's going to be a big job.
And then that's Primary Crusher underground, you've got all the
ventilation shafts And remember, every piece of shaft decline,
everything has to go through that water table.
And I don't think they're actually at the big water yet.
So there's a lot of and I know they've probably done it, done
it before. They know what's coming up.
So they'll, they'll know how to get through it, but it doesn't
still make it quicker to get through.
It's gonna it's gonna be a big a big job.
It's not just gonna be a let's RIP in and get 3,000,000 tonne
out of the joint. So size the price a lot of and a
lot of infrastructure to deal with that water.
I assume you gotta you gotta put it somewhere.
I just Gerard James needs to run his eye over that joint mate
that the team at WA water balls have seen more water than the
Titanic. They've like mate, and you know
how long the Titanic's been dealing with water, mate.
It's a 3 hour long movie. It's a long time mate.
Just. Titanic looks at it all day,
just like Gerard James and the WI.
And they're not just the best drillers in the best mud Rotary
drillers in the world. They're just the best water
people in the world. They know how to find it.
They know the methods, how to get rid of it, to store it, to
put the ball fields in, to put the dewatering balls.
Like mate, you just need him up there as an expert water
consultant to run his eye over this.
I'll get one further Not just the best water people in the
world, the best, one of the best people in the world.
Just best, definitely the best people in Jarrah, yeah.
Yeah. That's it I heard, probably got
good people probably in Australia.
So right, just get him up there. He's the only man in Australia
that can do it. I reckon if it's the aquifers,
tricky water board then, then Jerry James will help you.
Hey, to get him up there. So yeah, no exciting done.
Bloody good job. Good, good numbers, good cash
under the transition crew on site.
So I look forward to seeing more of it.
Yeah, I think they're on the RSX then.
The presentations are just easier to get to I think.
I think the last comment on that one would be it's very
interesting. It'd be interesting to see how
they go about their their Aussie raising.
They're not. They're not raising money.
Well, they, they said that in in the past, obviously.
So I don't think they're raising.
I mean they, they, they. Shouldn't need to.
It's it's a compliance list, Yeah, I think.
Yeah. It was just interesting that
that had three brokers for it. Sort of thought that was a bit
curious, yeah. They say they're not raising
money, but the. Companies have said that before.
Yeah, that's true. I I.
It's just, it's just a way to get like an invest like funds as
well. Love buying in a in a whack like
that. Not that it's great for existing
shareholders and that's kind of why they did the previous raise.
It might be, it might be a big shareholder that can like sell
kind of like when Capstone came over, they didn't didn't raise
money, but that the Ryan sold down and then obviously brokers
placed that stock and yeah, depend on that.
There we go. Right, let's get on to rarest
JD. The bloody bit going on, the
rarest bit against today. Yeah, quite, quite a bit going
on. And I'll start up with Santa
feel pretty, pretty unqualified to speak about this because
it's, you know, it's. Been doing this for two years,
you are quite fine. There are big forces at play
here in in the rarest market and I think what we're seeing right
now is one of the most influential stories in the
commodities market and it will be for for the year and for
quite some time to come. So let's give it a bit of a go
and and chat about it. I think the the eye-catching
part of this story is what we've seen in stocks like MP
materials. So they jumped over 20% last
night. Obviously MP materials is
America's golden child when it comes to rare earths.
They are the owner of the sole operating rare earth mine in in
the USA. It's in California Mountain
Pass. Wasn't always the golden child,
but it was Molly Corp. It certainly wasn't it had a it
had a tough time, but the the new owners have done a bit
better out of it than previous owners have.
Now that positivity is being seen on the ASX as well.
Not so much in Linus, although they've gone sort of from
strength to strength. But you've seen big jumps at the
the smaller end of town from the likes of Meteoric and others,
and. Great data release of mineral
resource upgrade. A good a good day indeed.
Yeah, we're seeing sort of plus 20% moves.
And I just want to make a quick comment.
I think with how mainstream this kind of debate about rare earths
and and critical minerals has gone, I think you need to kind
of be careful. There's pretty kind of liberal
use of the words critical minerals, rare earths and
everything. And you know, it's, it's a bit
confusing at times because I think people use it very
interchangeably. You know, rare earths, critical
minerals, they're all getting tied in.
And I think the perspective we all kind of have is like, if you
need it, if you can't produce it, it is critical.
You know, rarest is something completely different, obviously,
but the US is learning pretty quickly that a lot of these
minerals are quite critical for them because they don't have the
capacity to produce them. That's why they're at the crux
of this trade war, and that's why we've seen these pretty
dramatic moves. There's been an evolution in the
trade war and to be honest, I think people were kind of
actually sleeping on it a little bit like what we saw with how
China reacted to the tariffs coming on was over a week ago
now. And yeah, the US has started to
do bits and pieces, but people didn't quite perhaps
acknowledge, and I put myself in that camp as well, how kind of
positive this would be for national champions being MP
materials, being lioness here in Australia and the other kind of
main players. And yeah, I mean, it's no
surprise to ask like China refines 85% of, of rare earths,
even the operation in in the States, like the US is actually
the second biggest producer of, of rare earths, but 2/3 of their
stuff gets sent to China for processing.
So these are all challenges that the West needs to tackle.
And rare earths are one of, you know, the best, maybe the the
kind of perfect market for China to put the squeeze on, right?
Because if you're Chinese and you look at the railroads
market, it's really not a massive part of your economy,
but it's crucial to a whole heap of things downstream in the US.
So it's it's something they can really pinch and really hurt
their, you know, enemies overseas.
And yeah, I think this is nothing new to to most of the
people who listen to to the party.
So we can kind of get in, get into get into it in a bit more
detail, but I think the wider world outside the very small
audience that that knows about commodities is learning about
this very quickly. So what was the actual news that
made the stocks soar overnight? So Trump came out and, and spoke
about creating sort of a critical metals stockpile.
And it was kind of interesting how it all came about.
He it was reports that he would sign an executive order that
will allow the US to create this stockpile from minerals that
would be mined from the floor of the Pacific Ocean, but kind of
ignore that that last bit about mining from the the bottom of
the ocean. And I think that's what most
investors did, piling into MP materials because the US does
have projects and deposits in its country.
It just hasn't been interested in developing them because the
Chinese have flooded the market for the last 20 or 30 years.
We spoke about Trevor and I last week what the Chinese had done
and they were very specific. They hand picked a certain
number of, of elements, particularly the heavy rare
earth elements. And what they did was more or
less put export controls on without kind of saying that.
And we've seen it in the numbers already.
Shipments and exports of these minerals have slowed right down.
So people are feeling the the pinch already.
And you can see that there's sort of quotes in some articles
going around from chemical supplies in places like Los
Angeles saying that it's going to take 45 days for them to get
an export license. And, you know, in that interim,
they're not getting anything shipped over from China.
So if they don't have the inventory, they're caught pretty
short at the moment. And as well as that, you've got
the Chinese adding a lot of American companies, specifically
military related companies to their kind of naughty list,
which means Chinese companies can't deal with them whatsoever,
can't do any sort of business with them.
So it's getting pretty, pretty sort of cagey in in that realm.
And if you look around the world, go to say, Japan, for
instance, they felt the brunt of rare earths specifically, you
know, it's a trade war when they send some of their ships into
Chinese water. And they, because of that
lesson, some of them keep over a year's worth of inventory on
hand. Now, American companies don't do
that. That is, that is dead capital.
That's a drag on your returns. They're holding maybe a few
months at most in inventory of these these magnets and other
bits and pieces that you might need.
Exactly. It's it's the world we live in.
Just in time manufacturing and the Japanese who went through
that painful experience and at the back of that we saw lioness
and everything sort of emerged. They they learnt their lesson
and they, they keep a lot of inventory on hand.
So, yeah, I mean, if we if we go around and and look back in the
states at a company like MP Materials, they still have
Chinese ties, right? Like Shanghai, the the Chinese
rare earth player was a big backer of them getting their
feet off the ground from being a spec in the late twenty 10s to
to where we are today. And they still send 2/3 of their
concentrate to China. So it's really the implicit
backing that the the US government would be behind them
that is sent a fair bit of capital, you know, chasing them.
They're up I think 40% on the year now in, in the face of a
pretty tough broader market as we all know.
And yeah, closer to home, Linus is trading very strongly, pretty
far away from any kind of basic valuations that we we kind of
like to employ. I could say why you were talking
to your computer today, JD. You've gone deep and
philosophical on rare earths today, like a real global
understanding of this. Trying to.
I'm trying to because. You're trying, you're trying to
make sense of like, what does the politics actually mean to
that the, the free cash flow of these of these companies?
Because if you have a hefty valuation, it's got to be kind
of substantiated by some, some free cash flow at the end of the
day. And just trying to piece all
that together is the the question mark, is it, are they
trading? When it changes every night.
Yeah. Are they, are they, is it
thematic? Is it just like a thematic move
and then kind of that will fall off and nothing really changes
or is there actually a meaningful difference into free
cash flow? Yeah, I mean, we spoke about it
maybe two months ago now and thought like, when's Linus going
to do a capital raising? And I I don't feel that
differently about that. You know, their, their cash pile
is kind of dwindling. We haven't seen rare earth
prices tick up massively. It's obviously a very kind of
opaque market. So take that with a pinch of
salt. But you're not getting there on
on valuation grounds right now. But with the the backing of
Western governments around the world, maybe you do kind of get
there. It's a, it's a different way of
kind of looking at it. Because you don't know.
You don't know if the price ticks up.
You don't know what the payability is doing in China.
Like, who knows? Yeah, yeah, absolutely to to add
a few more comments to US and Western policy because there
there has been some more comments made to to what we
heard about Trump just before. I actually don't think what
we're seeing right now is a massive change in the states
from the previous administration.
The the previous Biden administration, they spoke about
this a fair bit. They, they allocated money to
sort of certain similar buckets, rare earths and these types of
projects being one of them. There are certainly varying
opinions and how effective they were with spraying that cash
around. That's that's fair enough.
But you can't accuse them of sort of not putting the capital
up. We saw it with a lot of ASX
listed companies. They were recipients of of this
sort of money. There was still a lot of delays,
regulatory, environmental, all these sort of hold UPS.
They were an impediment even if the money was dealt out.
And I think Lioness is the perfect example of this.
They were awarded nearly US $260 million in 2023 to build a
processing facility at Sea Drift in Texas.
And as of today, construction hasn't started.
We're two years later and that comes down to environmental and
wastewater management delays, so.
On those delays, it's part of the new administration is like a
promise to fast track. Yeah, yeah, yeah.
And the same goes for for resolution copper mine or all
these, you know, there is Trilogy Metals is another one.
Those stock ticked up massively because of the the understanding
that these the sort of red tape around projects is going to get
pulled back. So we'll we'll wait and see what
kind of happens on that. I was also listening to an
interview at lunch today when I was just eating before an
interview with Treasure. What you do at lunch?
It's true. This is an interview with
Treasury Secretary Scott Besson, who I'm sure most listeners will
be pretty familiar with now. And something he said in this
interview, I wasn't listening to this for any sort of take on on
minerals or anything mining related, but he said something
that really sort of stood out to me, so I'll play it now.
There's been an early focus on Latin America writ large from
the Trump administration in the 1st 100 days.
Is Latin America policy also in a sense China policy for this
administration? Well, I, I think that might be a
good description because what we are trying to keep from
happening is what has happened on the African continent where
China has signed a number of these kind of rapacious deals
marked as aid where they are really, they take, they've taken
mineral rights, they've added huge amounts of debt on to these
countries balance sheets. It's undisclosed to any of the
other international organizations.
They've got tolling arrangements.
So they're they're guaranteeing that future generations are
going to be, they are poor and without resources and we don't
want that to happen any more than already has in Latin
America. I, I find that super
fascinating. And that is much wider than rare
earths, obviously. But for one, I think Latin
America is going to be a winner in the, in the years ahead.
We saw with all these tariffs that came out, Latin America to
an extent was carved out of a lot of them.
They didn't cop the, the brunt of it because America is
realizing how important that is. So I, I think, you know, maybe
we see some Aussie juniors be winners, you know, the ones
maybe with Brazilian rare earth projects and these sorts of
things be winners. I think first and foremost,
you're a winner if you're in America.
But that is a, that is a notable different tone from, from the US
than it has been for the last 20 or 30 years.
I'm not sure if you guys had a different take on that.
Yeah, I agree. I agree.
I am, I am curious. I mean, this is, this is talk of
a of a stockpile or strategic reserve.
You've been, you've been thinking a bit more about the
rationale for stockpiles versus versus downstream.
Yeah. I mean, we, we heard about this,
we spoke about it when we were in Africa.
And you have the kind of debate of should a country that doesn't
know how to do this, say in rare earths in Australia, just build
the downstream processing or should they build up a strategic
reserve? And then if a particularly
prickly moment happens in future, then you have to kind of
hit the ground running and build your downstream capability.
Are those stockpiles going to be like just mixed rare earth
concentrate stockpiles or finished rare earth stockpiles
I. Would be stockpiling if I was
going to build a stockpile, the product that your manufacturing
needs or you need because there's no point having a yeah,
there's no point having a stockpile, right.
If if there's a gap between that what that stockpile is and what
you actually need it for, you know, IE if you're in America
and you've got car makers, there's no point having
stockpiles of rare earth concentrate.
You know, you want stockpile of magnets or something like that
much further downstream. And this is very kind of early
discussion. Madeleine King, our resource
minister, was actually speaking about this yesterday.
There was a few articles circling about.
I'm not sure how far Australia gets along in the process
because we don't have the manufacturing and there isn't a
massive interest around Australia to build that
manufacturing capacity. So what what exactly what we be
stockpiling it for send it back to China so they can build the
stuff for us. I don't quite know.
But I think it is something with America's kind of made in
America policy that they're going to be considering pretty
heavily over the over the coming decades and particularly over
the next year or two. So certainly sort of 1 to watch.
I don't think there's any kind of.
Easy, easy answers out there, but I think, but what's most
relevant to to listeners of this podcast, I think there are
projects like in in America specifically that are maybe
going to get favourable treatment and going to do quite
well. And MP Materials is the best
example of that. But there's other players that I
think might have a good run of it too.
Very good, good buddy. I'm going to, I'm going to
really listen to that. Very good.
Hopefully it made sense, yeah. No, it didn't.
That's why I'm going. To many peaks, Trev.
Yeah, I just, I just thought it was funny.
I've got nothing to say about this other than the fact that
the many Peaks share price now looks like it's logo.
There you go, many. Peaks.
I love to plug. Oh beautiful good work boys.
Alright, thanks to the partners GRX tickets as talked about at
the start of the show going to the show nights.
Get your discount Get there Brisbane Twenty 22nd of May Our
great other partners the Star Mates General mining services,
grounded Samba ground support, CR insurance, K drill WA
waterboards, Quattro KCA black diamond drilling services cross
boundary. Energy.
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 in need.