What is the last mind sale that you've seen being bought by an
individual? On this scale, I can't think of
1. On this scale, yeah.
Right on buddy morning as I've ever observed this public
holiday spectacular. Another one tomorrow.
Go it, buddy. Go the Anzacs.
It just keeps on giving. Isn't it just a a great week
when it when it starts on a Tuesday and it ends on a
Thursday? Yeah, kinda does each week for
me. Just a casual edit off.
Right, right. What do we got?
We've got a bit of quarters on what?
Longtown Paladin, Yesti, I think it was Jada.
You got a big gold mine sale for the majors.
A barrack sale to a couple of interesting characters that I'm
going to talk about. Massive mate from the Big Short
you've watched. About to say you never think
this relates to the Big Short. It does, but it sort of does.
Big gold ball from the Big Short buying a big gold mine.
And Trav, you're putting your your beak into a bit of
government policy. Indeed, indeed.
Yeah, mate. Hence the shirt.
Strategic stockpiles, Yeah, you're gonna have a gonna give
that a whale for the few people out there that care about
policy. A week away.
Travel went and had some cornflakes with the outlier this
morning for breaking yes. It did.
A week to our election. So pretty topical, that one.
Oh, is that it? Oh, I better go get me bloody
Democratic sausage sizzle in a week's time.
All right, take us away, mate. Lontown Quarterly coming out
today. So as we've seen they've been
on, they've been on the lithium journey, but they're still
bloody fighting and I reckon I could sense it.
Tony, the Tony O from he was he's back.
I could sense in the call there was the OG Tony OS voice
enthusiasm so. Energy.
Yeah. And look, we'll go through the
quarterly. I think it's there's a lot of
promising things in the quarterly for how they're
performing in a depressed lithium market, but we'll get
into it. So as you can see here that
they're still hovering around that 5060 cent mark.
So they're they're not there. So they actually declared
commercial production as of 1st of January for the processing.
So revenue was up 104 bucks in the door.
So that they said positive cash flow generation from operating
activities of 14,000,000, but I'll we'll get into that it's.
Always positive operating cash flows, Yeah, yeah.
Yeah. Well, yeah, yeah.
Don't say many that aren't so 94 bit over 95,000 of spot con
produced so and 64% average Lithia recovery which is up.
And remember this is primarily from open pit dirt at the
moment. So yeah, they've cash is sort
of, I'll get into the waterfall chart.
Cash went backwards about 20 mil.
So first stop was blasted at the start of April.
So that's a good achievement for the for the underground.
So you can see the they shipped grade 5.2% for the spod console.
That's I think we said earlier that's sort of what they're
going to be. That's sort of the new norm that
5.25 point three, I think it said they produced 5.1 for the
quarter, but they've shipped 5.2 average realised price US 815.
And so the open pit, so if you look at the grades, the grades
is sort of where it you know where it looks promising with
the underground coming on soon. So the all grade delivered to
the rum this quarter for the open pit was 1% lithium.
They've said for the under. And you look at the underground
development for the quarter that was mined at 1.5.
So the and you look the you see photos up in the presentations.
I'm not sure if this is everywhere, but I'm assuming it
is because it is such a big ore body.
Your development ore grade will probably be not too much
different to your stoke grade because it's just a big fucking
pigment type. So it's like they're mining a
big type. Yeah.
So you're not going to have like an Aravan goldmine.
Yeah, pretty much that development grade will be close
to what the the stopping grade is.
So the fact and they've talked about they did some periods in
the processing plan of putting the underground all through the
1 1/2%. That's when they said they were
achieving over 70% Lithia recovery in the plant so.
Excuse my ignorance, I haven't. I'm not across the detail like
you, but is there anything to do with all sorting?
That's part of that too. And that, yeah.
Yeah, yeah, they've so when it says, it says open pit mining
continued, they moved two and a half million ton.
Some of that was clean or just obviously pure or some of it was
they call it OSP the OR sorting products.
So that's gotcha where the I think they say the Gabro, it
gets mixed in. So Gabro is the sort of the host
waste rock which contains the iron, which is what they need to
sort out. So they've doing all sorting and
that that was waste as well. So and it said they added the
OSP material in with the clean or as well to the processing
plan and they were able to still get the recoveries with the low
iron content. So they're pretty bullish about
the plant performance dealing with the sorted or as well so
that the open pit it says it remains on track for completion
Q3 FY20 6. So essentially this time next
year on the calendar year basis. And that will see, and they've
talked about they're targeting that 70% recovery by essentially
the same period, which means that's when they'll be
transitioning to full underground or so it's going to
be the fact that like looking at as a look, very simply cash in,
cash out, they've gone back 20 million, but they're progressing
towards the point where the underground oil will become the
primary also. So if they're, you know, I
assume they're targeting the high grade first as you would in
this pricing environment. And so when that sort of 1 1/2%
oil starts coming in and it's said to have shown better
recovery as well, like I think that'll all sort of work in
their favour. As I said, they're just basing
everything on the lithium pros staying the same at the moment.
They're not anticipate. They're not hoping for the I'm
sure they're hoping for a turn around, but they've looks like
they've batten down the hatches of the business to bloody
anticipate that this process stays the same.
So which is probably, probably what everyone wanted to say
because they've come from a very, you couldn't have a more
bullish environment for where they built this project and it
wouldn't have got built unless the environment was so bullish.
So. But this is where they are now.
So digging into the question, Maddie, that everyone wants to,
to sort of hear answered, are we any closer to finding out what
costs might be once they go to the toward being a full
underground miner because they're starting to make that
transition now. Yeah, yeah.
And this is where the I guess the 5B gets a bit, yeah, a bit
confusing because at the moment you look at they've got for cash
flow from operating activities, they've got zero and it's just
production costs for what is being produced in the open pit
because they're still they're still capitalizing all their
underground development even though So you look at other non
current assets 27,000,000 for the quarter as part of investing
cash flows. But like they're the all drives
they're putting in will be once that underground is properly
producing which is just commenced, those all drives are
operating development. So they're they're being
capitalized at the moment, which is not the case.
It's obviously the way you can account for it at the moment,
but it is literally the, they will be literally flipped to the
top part of that cash flow statement once once they start
producing. But remember the production
costs, once the open pit finishes, those production costs
will translate from open pit equipment to underground
equipment. And yeah, so they'll benefit
from higher grade, higher recoveries, but feel it on the
unit costs obviously. A tonne are are are vastly
different. Yeah.
And what look of oh God, you can read in the bloody try and back
calculate numbers and everything.
I'll just, I'll just try to look at it very simply in terms of at
the moment they're not really, they haven't really hit the 2.8
million ton that they're going to be at.
So when they do get to that, there's obviously a common
enemies of scale for the increased tonnage.
It's going to be all underground.
So there's going to be a great uplift.
It might offset that you got to offset that a bit with higher
cost to mine underground compared to the open pit.
So you you sort of piece that all together and you're
thinking, well, the fact that they went backwards 20 mil the
they don't the the five year point started in 1st of January
for when that Ford facility will have to be repaid.
So that's like 20-30. So they've still got, you know,
700 million of debt. They got a bit of a lot of it's
getting capitalized on the interest at the moment.
So it's like, yeah, like you like they could probably make
this work at these prices. Just it just feels when they go
fully underground, so it's not like they're gone hemorrhaging
money and going backwards because they're like, you know,
they've developed the underground with two jumbos.
They haven't lot different to Bellevue, which have gone like 6
jumbos. They're lot right.
We have to like we've got to get all this developed.
A lot more rabbit warranty, a lot more costs, a lot more
pressure. Whereas this has just ticked
along. They're hitting over 300 meters
a month. They've got the first start, a
lot of the ore development, like much bigger.
They talked about the first start being I think it was all
shouted in the calling. It was like 12,000 tonne or
something or maybe less. And they're talking about the
future. So it's going to be 80,000 ton,
which a lot. So it's like for that order of
development, you're getting a big fight, you're getting good
bang for buck for when you get there because it's a bulk mining
scenario. So yeah, I don't know if I've
just unanswered the question of giving myself, but it just like
it just feels like they're, they're in a position to, you
know, survive this depressed period.
What Joe Joe say, even Big Joe Larry said 2025, even he doesn't
think there's might be a spike. They're predicting a spike at
some point. But looking at this quarterly, I
feel like they've got everything in place to get through this
period. And if lithium price does go up,
they're the first beneficiaries for it, just like PLS, because
they're producing and growing bushes.
Very interesting. How how about if we look at the
the plant now because they are so announced commercial
production for the processing plant, Yeah and I think from
quickly skimming it, they did a bit under 600,000 tons through
the plant this quarter. Yep.
And given the the raging, they were now targeted.
I think they were going for, weren't they?
Yeah. So they're they're under
nameplate on that front. Was there any sort of stand outs
from the the call that spoke to that or production in general?
No, look they've, they've said they've got 91% plant
availability. Like they've still got, well
they got half a well, 1.3 million tonne of clean ore and
OSP stockpile. So it looks like, and it looks
like between the underground ore trial, then adding the OSP
material in, like looks like there was a bit of trialing
going on to see what they can get away with in the future.
So yeah. And the, yeah, I don't, I can't.
I reckon if you Add all those together, that will probably
contribute to, anyway you'd probably want to build a bit of
a stockpile as well. So yeah, I think and recovery is
always the was the biggest thing.
So the fact that they're nearly approaching that 70%, which is,
you know, 70% in a flotation plan is what you'd take any day
of the week. So yeah, I think it's all
probably looking pretty positive.
There's a bit of money that's going in to make it that good as
they're they didn't really spare any sense on building this
project. So I think everything's pretty
rigid itch. So all heading in the right
direction. I'll play a comment, which this
was a narrative going around that I'll just play and then
I'll get in. There.
Morning, Tony and team. Just firstly, could you make any
comments around how the blast went in your first stoke?
I mean, there's obviously been lots of concerns around how it
may go, whether it'll fracture. You obviously talked to us about
having the the thin. Layer around the outside which
will give you some benefits. So just how does that actually
physically gone? That's a very good question.
Glenn and both Adam and myself spent the weekend, last weekend
on site so that we could go and have a look at the first stop
and the blast. And we were very, very happy
with clean breaks, exactly how we predicted it.
The team's got some more fine tuning and optimization, but the
fragmentation, I'll let Adam speak out, but it was, it was
almost like. I think we're calling it sugar.
Sugar, yeah, look really, really, really good
fragmentation, very clean breaks.
They're they're looking at revising some of the way they
they drill underground in terms of the overdrill, they're
looking at how they how much of A skin they leave.
But certainly recovery from the stoke was excellent and there's
a lot of learnings from that stoke.
So that's initial stoke was about 12,000 tonnes to put it in
perspective, was fairly small one from what what we're going
to see going forwards. But yeah, very, very
encouraging. And the other point that we
would make is again, this is the differentiation between narrow
vein mining of gold to versus what we're doing.
That one stoke, that 12,000 tonnes, that's two days of
production just from one stoke and that's as baby stoke.
We've got Stokes coming up in the next financial year where
they're close to 80,000 tonnes. So it this is, you know, an
opportunity for this mine to really get economies of scale.
Yeah, so that I remember that going around before, like when
they're leading up, everyone's like, oh, lithium's never been
mined underground before, is it? Got a blast out.
I was just, I don't know. I was I'm like fuck, am I
missing something here? Like it is AI think it's
different. It's because it looks like a
quartz. From what I hear.
It does take a bit to blast out the development, but if you can
get the development heading to fire out, which is the hardest
thing to fire because it's very confined and you got bugger all
void to start with, like the bloody Stokes are they're just
big friggin. Once you get the slot open, She
just so I talked about it went up to sight and she was like
sugar. It's looking, but I, I just
sensed a bit of a bit of bullishness in their voice
about. I reckon they're pretty happy
with how it's gone operationally considering.
Second quarter on the trot, last one was, you know, a bit more
positive people feeling quite good.
There was a, it was a good tick up on the last quarterly.
So we're one step closer to finding out what the what the
final piece looks like. And I reckon they're probably
like shit with we're still alive in this, we've ramp, we're
ramping up a project in a frigging an environment where
lithium mines are going, potentially shutting down.
So if they can survive this and get themselves in a position or
I can, obviously I'm feeling pretty bullish for the
performance of everyone as well. So paste plant is getting
commissioned in May. So that's going to be the
integral part of that underground 'cause it is a a
bulk thing. So I 'cause look, after
personally witnessing A paced line being blocked on the first
pour like that, Degruso just didn't come out and we spent two
weeks, didn't come out with my hands because I think I was
doing my underground time. Then I was doing shift boss and
time or something with a sledgehammer like hitting the
fucking thing trying to loosen up all the paste and having to
flush it out to unblock this line.
Was it the system at fault or was it the?
Just the initial pace that was just went down was wasn't
supposed to obviously wasn't the right thing, but it could have
been avoided with a Quattro QD 2 valve because with the
automation up to the pace, ice planet would have detected the
pressure spark and before it got to the point of like, holy shit,
what's happened? It would have automatically
dumped it into a sump and I wouldn't have had to have used
my bare hands to unblock this pipe for two weeks, 2 weeks, 2
weeks, 2 weeks. It took to bloody unblock the
pipe because you had to. You had to do it in like 20
meter sections that friggin that drills with these metal things
on it to rattle it to and then you had to send a flush down to
flush it. Then you had to hook another
chunk back up. Then you had to.
It was a freaking. So the cost of not using Quattro
is 2 weeks down. Well, I don't think, I don't
know. If the QD twos were as big of a
thing then they weren't rated to the 1500 that they're rated to
now. I can tell you that cause any
minds today though? Oh mate, you you may as well
hand if you want to run your pace line without a QD twos in
all the critical points. Hand in your resignation and
'cause you're just not worth being on site.
You need quattro QD twos to protect your retake or.
Keep you up at night. Oh, mate, go work.
Yeah, yeah. You won't be working in the
mining industry if you don't put them in.
Some bits of infrastructure you take for granted, but mate,
Quattro's got you covered because this is their specialty.
Mandatory. Yep, mandatory.
It's just like blonde zeros in the morning.
It's a mandatory requirement, just like having QD twos in your
system. So.
Thank you, Quattro. Oh, there we go.
So yeah, good on on. As I said, it's been heavily
covered line down, but back in any ramp up if they're hitting
targets and something that's as complex as that pat on the back,
good stuff. Helps when they said fucking two
jumbos instead of 6. It all helps.
Right now JD Barracks sale of the Donlin.
Donlin Stake, we're going to North America, lads.
We're going to Alaska specifically.
So I'm not sure if you guys have heard of Donlin before.
But I've never heard of this project.
Massive, massive, massive undeveloped gold project in in
Alaska. Like I said, been around for a
long time. Probable reserves of 33 million
oz. Wow at over 2G a ton.
So how has? It not been built. 33 million oz
at over 2G, Yeah. Is it a big price tag to turn
that into an actual mine? So the the plan that they came
out with in the latest numbers in a 2021 study was for 1.1
million oz per annum for 27 years.
So big scale production. Granted, those numbers have
obviously not been refreshed for a few years now.
My God. And it got close in the the bull
run leading into 2012. The the numbers came out as sort
of technical report 22,009 and then 11:00 and then 12 again.
But like we've spoken about in the past, the market got away
from them. The the gold price just crashed
and here we are still undeveloped.
At face value, doesn't seem like the sort of like just off that
doesn't seem like the sort of asset that Barrick would want to
part ways with if it's got enormous production.
Your scale. What's the catch?
It's, it is an interesting one. I was, I was sort of trying to
answer the same question because you know what, what makes a tier
one these sorts of assets that companies like, like Barrick,
one of the biggest gold producers on the planet want to
produce? And it tends to be, you know,
costs in the lower half, preferably lower quartile
500,000 oz plus Tier 1 jurisdiction.
So it meets a lot of those those criteria points, but it's the.
Cost. It's the, I think it's the
massive CapEx and the fact that barracks seem to be pretty
content with Rico Dick going down that road and they've sort
of got their eyes on being a copper producer as well.
I think for sort of confluence of those factors, they have
elected to sort of part ways with this one.
And I take it they're pretty com comfortable given this bull
market we're in gold now just to take their chips off the table
like they they sort of inherited the the asset as I kind of
understand it, they're through acquisitions and those sorts of
things. So that's how we find ourselves
here. Maybe Alaska, maybe they're like
look at how long on a much smaller scale Northern Star with
Pogo. No, there's plenty of other
assets. They might be like, oh Jesus,
could take a bit after the CapEx socially to get this up to this
level we want to get it to. That's a that's a really good
point, Maddie. I'll, I'll put a pin in that for
now and I'll talk about that later and beautiful and try and
understand what, what the buyers of the asset think about the
jurisdiction. So I'll run through the deal to
start with. Donlin was formerly held 50% by
Barrick, 50% by Nova Gold, so a much smaller North American
Goldie with this being their their flagship asset.
Now Barrick have agreed to sell their 50% and the buyers of that
is mostly John Paulson, famously the manager of Paulson and Co
who made a couple of dollars in the financial crisis and Nova
Gold taking up another portion. So the outcome is that Paulson,
on his or through his family office, will own 40% of the
asset, and Nova Gold will own 60%.
What is the last mine sale that you've seen being bought by an
individual? On this scale, I can't think of
1. On this scale, yeah.
Yeah, I like the the deal itself just reminded me of that, that
that hedge fund guy who owns that or N group, the gold mine
in in Mount Ida here in WA that's kind of like mysterious
one. But this is like completely
different. This is this is it's a hedge
fund guy like big gold ball just getting Max leverage, Max
exposure to gold. Yeah.
And to talk to the scale, while we say we haven't seen one this
big is because this 50% has sold for US $1 billion and there's a
potential another 100 million that Nova Gold can can Chuck in
relating to debt that Barrick chucked into the subsidiary that
held the asset. But the reaction to Nova God's
share price has been phenomenal. So they have surged, they've
doubled in the last couple weeks.
I mean, they'd come off into that sort of tariff lip that we
kind of saw, but they're now kept at US 1.6 billion with a
couple shares that they're raising to fund their $200
million portion not having settled just yet.
They're a really interesting company in and of themselves.
So they've got this chairperson in Thomas Kaplan, who is
reported to be a billionaire in his own right.
He owns 25% of the company. People might have heard of
Electrum, That's the investment unit that he invests through.
He's been in the natural resources space for quite some
time, made money, like I told you lads earlier in in silver
through the the 90s and 2000s. You've also got Copernic Global
now. I spoke about these guys a
couple weeks ago. They were topping up their
stakes in some of the uranium miners, specifically Paladin.
They were early to the the uranium trade that sort of sold
out. Now they've bought back in.
Given everything we've seen, they've been sort of getting
more and more bullish gold. Their value guys, they look at
PGM, I mean the whole Subania and other sorts of companies
like that. They manage a fair bit of money.
You know, we're talking 5:00-ish from what I could kind of gather
billion U.S. dollars under management and they're deep
value investors. We've actually included a couple
of their really interesting white papers on why they're like
mining and how they invest in mining in our in our newsletter.
So the capital raising that Nova Gold did to fund their portion
of the acquisition was for US $170 million.
Now three parties took this up, the three I've just mentioned
Paulson. So he's investing into Nova Gold
as well as buying the asset Thomas Kaplan and his unit.
So the chair of the company as well as Kapernick.
Now that was a a tight, tight capital raise.
Just those 3 getting it. The stock has surged 60% since
they tipped in. They all got themselves some
some five year long dated warrants as well for their
trouble. So are.
They in the money already. Very hard to find info on on
what those warrants were I mean. There's a good chance they will
be if they're going up 60%, yeah.
Is there So would question without notice based on what
Paulson put in a Nova, is that giving him more than half of
beneficial ownership of the asset?
I I don't think so. So he was an 8% shareholder in
Nova Gold for this capital raise and whilst they said those 3
tipped in for the 170 million, they didn't say who who got
what. Proportionately, I I wouldn't
think so. Right.
So as we've alluded to an individual or a family office
buying a stake in a gold mine would have been like bloody
Willie Packer taken Jabaluka like.
He's got LP's I guess, but I don't know if.
I don't know if John. Wilson has LP.
'S family, I suppose family offices very tight knit unit
isn't? It it's his money, Yeah.
So he's shut down, so Paulson and Co and essentially booted
out general investors in in the funds.
So it's just his money now, which is fascinating.
So over. You one day, JD.
Might be all of us. Let's see fingers crossed on
that front, Maddie, but I I think it's fascinating.
So like you guys said, people might know him.
He he made money through the financial crisis.
It you know, it's very interesting how he how he
structured his bets and everything.
If you are kind of wondering about that, he's not too heavily
featured in the movie The Big Short, but there's a book called
The Greatest Trade Ever, I think.
And that's specifically about his angle.
So it's a, it's another perspective on the financial
crisis to Michael Lewis's retelling of it.
And he subsequently became very bullish gold and he's been
bullish sort of gold for a while.
You might have also seen his name in the media because he was
rumoured to be in the running for Treasury Secretary, which
Scott Besson is of course, now. But he's been a yeah, he's been
a backer of Trump for some time as well.
But anyway. He's not related to Hank
Paulson. Not related.
A lot of people asked that question back in 2005.
Six. No, can confirm he's not.
So the gold trade from his perspective is really
interesting. He set up a gold fund back in
2010 after the financial crisis and started buying massive
stakes because obviously he did very well out of the financial
crisis and his funds just grew enormously, like over 30 billion
U.S. dollars. He was managing closer to 40 and
he bought stakes in like Anglo Gold Ashanti, over 10% stakes
for over a billion dollars US like closer to 2 billion
Aussies. So he just went in really,
really hard. And it's, it's interesting to
reflect on those times and read some of the comments from some
of the people involved. So I plucked out one from Mark
Crudafani of all people who was running Anglo Gold at the time.
And he said hard currency is coming to the fore as evidenced
by the investment choices of some of the world's most
seasoned investors. Now you might have heard that
today or yesterday, but that was said, you know, over over 15
years ago. I just had a flashback.
Yeah, from underground operators.
Sorry to interrupt. No, please, but Mark Cordefani
was floating around. Hey.
Did you have a chat? I might have had a skin full at
the casino and he was like, God, I'm like, hey Mark, I'm like
make sure next time you come on money of mine, I'm there.
Sorry, I was a bit under the weather that day.
He's like, who the Hell's this bloke?
I. Remember that podcast?
Oh, anyway. We digress.
So, yeah, the, the gold trade moved very much in his favour in
2010, 11-12. And then it started peeling back
and, you know, people were sort of bullish gold for all the same
reasons, but the the timing wasn't quite right.
And then, you know, we came into an era of massively, you know,
massive fiscal easing across the planet and here we are.
But despite this, he's sort of been bullish throughout.
And you know, you can go back to 2018 did a massive investment in
Detour Gold over $500 million. And this is when his funds got a
lot, lot smaller. So that's a, a massive check to
write. I mean, he owns stakes in a
couple other companies. I'm not sure if you guys have
heard of the Petura Resources. They are kept at about 1.3
billion. He earns 35% of that one.
He's, he's got quite a bit of cash in Agnico as well, of
course, Nova Gold. So yeah, I just, I just find
this fascinating. He was on Bloomberg just last
week talking about gold, the narrative that central banks
would just keep on buying and buying gold.
So I think he's deservedly called a gold bull or a gold bug
on Wall Street. Yeah, and this is the best
leverage you can get to gold is owning a Gold Bond.
Absolutely. It's it's talk about.
Leverage like the the scale of potential production here and if
it was high cost and as prices rise, that's a tremendous
difference to the valuation of this asset.
Yeah. And it's also an asset that had
a handbrake on it because Eric weren't doing much with it, like
they were going through the motions.
So consolidating the asset, you've seen it in the reaction
of Nova Gold's share price. It's just put a lighter on them.
They've gone sort of flying so. And it's not it's not like a
huge number really. Like for high 30 million oz 2G
at for what, a 2 billion US project valuation?
Like it's not huge dollars no considering Spartan went for 2
1/2 Aussie. Yeah.
So the I mean the the key distinction there is that the
CapEx, right, which is 7 1/2 billion US 2021, so bit of
inflation on on that one. But yeah, the, the, the high
tide of gold prices is really changing the economics.
So they're going to refresh the feasibility study of this one
over the next two years. And then they're talking about a
four or five year engineering and construction time frame, so
early 30s talking about production, which is, yeah, of
course it's going to be around sooner than we think.
And like I said, the numbers have been run through this
already. The reserves are virtually the
same as what they were in 2009. They've got stacks of data like
350 odd 1000 meters have been drilled in this thing.
They, they know a lot about it. But the 2021 numbers, like I
said, big CapEx, MPV at 5% was US $3 billion, which left it
with an IRR of just over 9%. So that's enough to put most
people off even BHB, you know, so that was using AUS $1500 gold
price, which is not the world we're living in today.
And the oil and sustaining cost was a touch under US $700.00.
Although again, inflation and just all these things, but 20
million tonne per annum plant pretty much big, big, big scale
leverage to the gold price. And you can start to run
different numbers in different scenarios.
We'll flash out what different gold prices would do to those
numbers at the time. And you can see the economics
change quite substantially. And in any case, these guys are
gold bulls. So that's not the thing they're
worried about. They're just thinking about the
best way to play it. They want leverage to that gold
price. So they're fixated on
eliminating the risk here, right.
And to your point, before Maddie on jurisdiction, you want to
pick the bet and make sure you're going to get paid for it,
just like Paulson was thinking back in the day how he
structured his, his housing bet. You don't want to do it in let's
say Mali or news year, you know where you're worried about
getting paid. You want to eliminate the risks.
And to that point, Alaska is an interesting choice because it
wouldn't be the, the first point on everyone's list, but maybe
they've got a way of navigating the, the, the social parts of
this, the the permitting parts, because that is undoubtedly a
huge part of unlocking the value here and bringing those people
in the local communities along the journey with you, I mean.
Especially for a big pit like surface disturbance.
Exactly the hardest thing to permit.
So you, you want to bring the people along with you, you want
them to be involved, you want jobs for the for the local
communities, you want them to be compensated and see some of the
upside as well. And if you think it's going to
be a big payout like I suspect they do, then might just have to
break a bit off and share it around.
But I'm sure that's all the stuff at the forefront of their
mind that they're actually thinking about refreshing the
numbers. So for all those kind of
reasons, I just think this is a like a fascinating deal.
Yeah, really fascinating. Is it?
It'd be about is it 1,000,000 / 1,000,000 oz.
About a million oz a year. 1.1 Yeah yeah 20.
Million tonne of 2G, that's yeah.
Yeah, and they're gonna, they're gonna front weight that as you'd
suspect. So the first 10 years were about
1.4 million oz. Wow.
So. So what?
Bigger than Paul Grub. Enormous.
It's phenomenal, up there with the biggest in the planet.
I know it's a 20 million tonne like plant, but that CapEx is
enormous heaps that must be pretty strip right like.
I mean, this is in a very remote part of the world.
I think you need to develop a bit better access than what
they've got at the moment. Strip as well as tailings and
all, and all those sorts of things are pretty, pretty
substantial. Talking another schematic in
there so you can get a feel for what the operation might look
like. It'd be interesting to say about
what the type, because I know I'm pretty sure Pogo they all
all their tilings have to go back underground like there's no
surface. So these guys positing of
tilings. These guys do have surface from
what I could see at the time. I don't know if that was a hold
up on, on permitting and that's something they're gonna try and
address. But there was also backfield
taking place in certain parts as well through the through the
cycle. So yeah, yeah, remains to be.
Seen like more just alerting they are strict the permitting
for just like you just can't just Chuck a tailings damn in
that easily. Like you can't track it easily
in Australia, let alone Alaska. Yeah, and think of.
Serbia, apparently. Yeah, Serbia.
The rise of Serbia. So Bosnia.
Bosnia. Yeah, I've got it wrong now.
neighboring. Someone's going to kill me in
Serbia though. Maybe in Bosnia too.
Especially with your links to yeah.
I think the other the other point would be like Pebble Creek
is not far that's been in in permitting.
Hold up for Yeah, God, how many, many decades now?
So water bodies, rivers, these sorts of things need to be very
carefully studied. And I'd imagine they've done a
lot of the work since this thing was discovered over 20 years ago
on those aspects as well. But I'll just leave it with a,
with a chart that they chucked in first time I've seen this
that I can remember at least. And they're, they're flexing the
numbers with a discount rate of 0% just to just to show you the,
the cash flow that this thing could potentially generate.
But maybe that's a a gold bug mindset.
You asked me if I remember this project.
I didn't, but I do remember that slide.
I've definitely seen that slide posted on Twitter.
Yeah. That's hilarious.
Yeah. Yeah.
Good one. Yeah.
It's you. You think from a Barrick
perspective when you put the permitting and the the time
frame of it, you're like fuck, we could probably deploy our
capital a lot better to get a sooner return because this could
go for a very long time to get this developed.
It's got to take him in probably an equal long time for the the
fruits of Rico Dick, but that that's the horse that they're
they're betting on instead. Yeah, and you can't you've only
got so much free cash flow to actually reinvest.
So. Yeah, yeah.
No snow at Pakistan. That's the benefits of Rico
Dick, I don't think. I think.
It's a bit colder than you think.
It's up in the mountains there. Oh yeah, Maybe, maybe.
Maybe. No.
Snow. They got me face there.
Does it snow in Pakistan? Let me know.
Right. Let's go out Paladin.
I think it was out yesterday. They've had a bit of a run.
So all EU stocks are having a bit of a run.
It's whether the people are thinking, oh, is the $65 spot
price the bottom out who knows, but there are there's a bit of a
bit of volatility on EU stocks at the moment.
So all and they pelled and went up yesterday on the back of
this. So there looks like their
production wise their quarter improved a lot.
They did have the what was it the too much rain event.
They had not enough water previous quarter.
Now they've had bloody too much. There was a one in 50 year rain
event, but even with that they still they processed 900,000
tonne feed grade improved 419 PPM up from four O 4 recovery's
going good. So they produced 3/4 of
1,000,000 lbs of uranium realise price 6990.
So I think they'll because they got a lot more contracting in
place. They're not chucking it in the
spot as much in the spot. So cost of production went down.
So you look at the waterfall chart.
I'm just trying to again my bloody me dumb thinking.
They're they're processing stockpiles only They've just
fired the first part of and open pit, not the original open pit
they were planning to go into because that one got flooded.
So they're into another one now. But they've if you take if you
take away that money from the Fission acquisition, the 81 US
that came in from that deal, it sort of means on a six month
basis they still would have gone backwards about what's that 8
million that right, Yeah, about 8 million US going backwards.
And it's and it's like, OK, what does this mean for one Paladin
and the rest of the Namibian hopefuls?
Because they've just been processing stockpiles.
Yes, it's in ramp up. It is a, you know, a brownfields
project that's being restarted. They're processing 400 odd PPM
from existing stockpiles. So there's no mining costs.
They're just just re handle and throw it in.
And they've sort of gone backwards at these at these
prices. And I'm just thinking overall,
I'll skip to the end. I'm like, OK, well, if Deep
Yellow are proposing 340 PPM mining and Bannerman are
proposing 240 PPM out of their open pits in Namibia again,
while we're at these prices, and it's been reaffirmed by Deep
Yellow postponing their FID, Like these projects are just not
even going to be considered to be developed if Paladin aren't
making money reprocessing stockpiles at 400 PPM.
So that that's essentially my overall conclusion.
So like there's not when we're talking about what is the
incentive pricing for those projects.
Like it'd have to be pretty close to 100 I would imagine to
consider deploying a shit load of capital to build these
projects and process low grade open pits.
So that was that was sort of where I got to.
Yeah, just to say what was said, Maddie, what was the grade of
the reserves that they're going to mine?
For Paladin, yeah, about 505 hundred.
So they've talked about there's like 800 pockets that they can
go to to start with. But I think they they said in
the call that they're targeting to try and maintain that 500.
Yeah, you go to those high pockets and you go lower later
down the track, right? Yeah, Rob and Peter to pay Paul
later on. So they're so I think once and
once the tonnage sort of increases and they're in
production, it'd be interesting to see how this goes.
But it's not like, yeah, it's, it's another one of those
situations. It's like the purpose of mining
these stockpiles was to generate cash flow to help set themselves
up that they've ended up losing money by doing it, but they've
lost money. But they've, it's a, it's a
commissioning process as well. So it has to be done at some
point. So you may as well, you may as
well lose money while you're processing lower grade and make
more money when you're processing the higher grade.
Nevertheless, the stock jumped 18%, yes.
Yeah, yeah. So it.
Was even higher, I think it. Might have been that soon, yeah.
25 But it was funny, you go on on a one month time frame, it
was still down like 21%. But yeah, the daily, the daily
volatility is, yeah, I guess it goes to show how a volatile
things can be when you've got the the high short interest and
a bit of short covering, you can squeeze a bit.
Yeah, well, and yeah, I think the short, the short, and while
these stocks have been down at these levels like well the
Aussie based ones anyway, boss, Paladin, DPL, I think the bloody
short interest has kept on climbing.
So they're continuing to pile into it, whatever the mechanism
or trading mechanics behind that is.
But we'll, it can, I think, as you said before, it goes both
ways. When the price is going down,
there's more bloody, more shorts piling in and then prices going
up. She's just, it's one of those,
it's just such a concentrated set of companies you can do it
to. Hence why all the the narrative
goes into a small amount of stocks because there's not many
bloody mobs that are producing or that have a big enough market
cap that are indexed to do it. So looking at this bloody water,
you can see how that, so that appeared to be I think the
bottom left photo or I reckon that might be the pit that
they're going to mine. So you can see how much freaking
rain they had. So they've got to pump that out.
There's this is probably the one place on earth that doesn't need
Gerald James at the moment to find water because they've got a
shit load to deal with it. Like there's no shortage of
water this quarter. That's why they once it dries
out and they start relying on near water again.
Maybe Jarrow James and the WA water boards if people don't
know the best mud Rotary drillers in the world maybe
might be a bit useful over there.
Take the reliance off near water.
That will The best thing the Aussie mining companies could do
right now is get Gerald James working for them so he's not
forced to go to Namibia because once he's over there it's a big
flight back to. Get the beer back big flight
back and in the they need buddy did desal plant there mate James
James helps you avoid the need for desalinated water because he
he. Finds you fresh water.
He finds the fresh stuff. Yeah, it didn't.
You didn't even know it was there.
He found it. He's got revolutionary
proprietary salt detection technology on his mud Rotary
equipment. So you just not drill another
one to sailon so. You don't want the water?
He'll get rid of it as well. Yeah, I once asked him for the
tricks of the trade and he said, can't tell you, but you, you
learned it growing up in Geraldton.
That's what they teach you in Geraldton.
It is how to find water. All about water considered WA
water boars, water hedging. Like yeah, just thanks Jared
James. It's good to have him.
Been great to have him back for a couple of months.
The bloody legend called. WA water boars.
Right. What do we got?
So Trav, you're this is a bit of a bipartisan.
Segment is it? Yeah, yeah, yeah.
How was breakfast? I, I yeah, I'll get to that.
I noticed that you tried to force this on to JD and when
you're out of the room he like respective respectfully declined
it to Ali. Yeah, like, yeah, he.
Didn't do it in front of you. Yeah, yeah, I.
Don't think I went out of my way to.
It was it was cool, it was cool, it was cool to go that that's
for sure. So, you know, I'm appreciative
of that. But the the yeah, not sure if
you guys call this policy news surfaced last night.
Grab some headlines again this morning moved a few stocks in
its process. But the the Australian election
literally just a week away. And so the you know, the policy
announcements from the Albanese and Dutton kind of yeah, and
keep rolling in. And last I checked, the
incumbent Prime Minister Anthony Albanese is the heavy favorite.
Polymarket odds are 83% for a return of a Labour government
that has implications on on our industry that we care about and
the miners that operate within it.
And it and to this policy announcement matters because it
came from the Labour government, which means it's likely to
become an actual policy based on the current betting odds.
The the announcement I'm referring to is that under a re
elected government, Australia will create a critical minerals
strategic reserve. What does that mean?
It means they're going to increase the existing critical
minerals facility by another $1 billion.
They're going to spend initially $250 million literally building
a stockpile of of critical minerals, not sure which ones.
Here's here's where things get even more spicy.
Through national off take agreements, the government will
acquire agreed volumes of the minerals from commercial
projects and there's also going to be selective stockpiling
process involving specific critical minerals deemed
necessary for national security. As you might imagine, I have
other few thoughts about all of this and big thank you to the
the AMEC team who who invited me to sit on their table at a
breakfast this morning, which was put on big song and dance
put on by the West Australian under this thing called
leadership matters things. And anyways.
It's a bit of a right newspaper, isn't it?
Which is. They are a newspaper, yeah.
But they're a right winged 1. The West.
They're a bit, they're a bit centre right, aren't they?
They're not. Or are they more left?
This, this isn't supposed to be like a partisan event.
It's just the fact that it's like, you know, they they did
one a month ago and they, they somehow got Twiggy to speak at
it. And, and you would have noticed
because Twiggy spoke at it. The West kind of toned back the
anti Twiggy hydrogen stuff that sorry rocked up.
Yeah, so there's you know, that's just the the way that the
media works here with Carrie Stokes, his influence in it all.
And anyway, so so there's this big event put on it's breakfast.
Thanks to yeah, like the, you know, Warren Neil Ryan at AMEC
who let me sit on the table at the brekkie elbow goes up and he
he talks about his black policy settings to this, you know, room
full of of people at the Crown Ballroom all having breakfast.
And and yeah, you made it because I'm a dance, especially
about this policy. But before I share my thoughts
about it, I thought I'd get your your initial views.
Well, yeah, I'd love to. You're obviously way more in the
weeds than me on this. I'm just thinking, OK, what
don't you usually have a critical minerals reserve for if
you've got a big downstream component in the country to feed
it into, which we don't. What the fuck's it for?
Yeah, but got similar kind of concerns, like it makes sense if
it's oil that you need for your country so you shelter yourself
from from shocks. But initial concerns are just
fear that government starts picking winners.
But you know, I think we've also got to understand that the the
world is moving to a more geopolitically fragile sort of
space and it makes sense to sort of protect, protect ourselves
and look out for our interests and partners that align with us.
But I I tend to be filled with concern about the the decisions
that made on how we actually get there.
Big time. If you have a quick, quick scan
of the the share price movements of the local rare earth stocks
that I look is up 5% today line is up 1% are fewer surprisingly
flat Northern Minerals up 13%. But it gives you a rough idea of
of you know what the market thinks today will be the big
beneficiaries of this policy, right?
I look to me is the elephant in the room because remember there
any Abbott refinery is by miles the dominant use of any funds
from Australias critical minerals facility.
Already that critical minerals facility was created recently
only in 2021 and it was created with with with $2 billion to to
to allocate any other got announced and that that alone
accounted for 1.25 billion of the two of the 2 billion
committed just for Iluka. Never fear though, the Albanese
government doubled its size to 4 billion in 2023 and now it's set
to reach 5 billion after the election.
Clearly all all the while Iluka has been very transparent about
the fact they need even more money from the government to
push ahead with any other. What was initially supposed to
cost 1.2 billion has already risen to 1.8 billion by Iluka's
latest admission, and the government increased their non
recourse loan to 1.7 billion. So we're, you know, we're, we're
good for it. Don't worry.
Just just for a moment, though, let's disregard the you know,
I've talked about my concerns on the very optimistic ramp up
assumptions underpinning a phenomenally complex operation
there, but we'll put that to the side for a moment.
There's there's a commercial flaw in in this entire refinery
proposition, right? Who is going to buy the product?
Who's going to buy the product? You're producing something,
who's going to buy it? And Japan doesn't need any more
like they, they, they get their feel.
China is the only buyer. Any, any ABBA needs Chinese
buyers of their product because they're the only buyer.
No, no buyer exists, right? So, so if you're building this
for your supply chain independence, yada, yada, yada.
One of the conditions of the Australian government money is
that it's, it's got to be to, you know, he's like, you know,
certified buyers or friendly buyers, especially he's not, not
Chinese buyers, right? But they're the only buyer.
And so if you've got this big commercial roadblock, if you're
going to build a thing to produce something that there is
no buyer for in your version of the world, well, guess, guess
what? That's where the government
comes in, because they're going to solve the problem by buying
the product themselves. That's what the offtake is, the
government commitment to buy the product out of all the volume at
a specific price. What do you say?
You mentioned the other day that what America won't even be able
to buy all of mountain passes. What they they can do more
mountain even mountain pass has got leftover rare earths.
That's not like it's going to go over there.
Well, that's what they're banking on.
They're banking on this being the bargaining chip as Trump
induces downstream demand in America.
But doesn't green light minds that we're going to be the ones
that can facilitate and send our product there so that they can
build their magnets. But it's not, you're not setting
up the incentives in the most straightforward way.
You're you're trying to get to the outcome kind of first, you
know, and encourage these guys to build.
You're hoping that they do the same over that end.
But there's a lot of pieces that need to fall into place for this
to work successfully. But this is part of the tariff
war. If if you yeah.
And like, sure, if you have if all of a sudden you have your
own, your own supply, you don't need China for XYZ, then that
gives you more leverage in negotiating the bigger picture
trade stuff. But in terms of like the actual
allocation of funds here, like you need me, like you need me
spell, spell it out. The government is funding the
development of this. So it's the government's money
that's going to build this refinery, right.
And as the cost keep blowing out, we now have precedent that
the government will keep writing the check for the cost blowouts
as they have happened so far and in my opinion will continue to
happen. And when they produce something
that there is no buyer for, which will happen, the
government will be the one to buy it.
They're going to buy the mixed rare earth oxides that come out
of any other. If they come out of any other,
there is no productive use of any of that money.
There is no product that consumers or industry are buying
to manufacture something. That is the government's lending
them, like providing the money to build the thing, to produce
the thing, and they're going to buy the product for that.
It's not going to get used for anything.
It may be 10 years time they'll sell it to America.
Who knows, Like I, I can't be cynical.
Yeah, it's, it's a, it's a public sector circular reference
dressed up as kind of probusiness policy.
And it, it, I find it, yeah, incredibly disappointing that
this is the, the level of, of, of policy kind of ingenuity that
we've got in our, in our country.
It's a headline grabber, right? That's that's all it's designed
for. As you know, I think you
mentioned before JD Lot, why aren't they leading into our
strengths of mining dirt and shipping it?
That is what we do best in Australia.
Perhaps This is why we don't like talking about politics so
much. It's, it can be, it can be a bit
frustrating, right? Especially the week before an
election when you're trying to, when you're trying to take the
take the initiative and grab the headlines for your party.
Ends up, you know, kind of being being a bit frustrating to talk
about. Because I think some of the
policies are short sided. Some of them are sort of baked
up with not a whole lot of thought out structure on what
this actually means and what this is going to mean for the
for the companies and and the market and the country.
That's cool. Oh, very well timed this
announcement, the WA launch. Yeah, it's all a big lobby for
the WA vote. Yeah, it's just a typical
election trail kind of thing. And I think there's like there's
legitimate, there's a lot of low hanging fruit policy stuff that
could be had that benefit, you know, the the industry in a very
meaningful way. Things, things like permitting
timelines, things like yeah, like like removing a bunch of
the the red tape involved in yeah.
The common building infrastructure.
Things to encourage investment that actually, you know,
provide, you know, provide ways for protected, you know,
external capital to, to build and invest and all that sort of
stuff. There's real low hanging fruit
that makes a world of difference to to, you know, the equations
for a lot of mining companies and investors out there.
But this, this is just a a, yeah, an eye roller in my
opinion. Was there anything in the
breakfast about streamline permitting and project
development in Australia? No, that and that's the like,
yeah, if if the money miners are are interested in knowing more
about that, then let us know because yeah, there's there's,
there's a bit to be said about all of all of the the dismal
state of of of over regulation of our industry.
There's, there's a like if, if permitting or or native title or
or heritage or whatever, all of these things all combined, if
they all of a sudden increase your timelines by by three years
to four years, what does that do to the IRR of any project?
Nothing is financeable, right? Like it, it, it squashes capital
investment and the ability like you don't get capital, then you
don't have an industry. Like if new capital's not
willing to write a check because the timelines are not sufficient
to get a reasonable return on the risk, the risk you're
taking, like it just kills, kills investment or capital.
The industry suffers massively. I think there's a big issue
there and a lot of deregulation that could be had.
But but the big trend on both sides of of government is to to
add more regulation to our industry, not less.
Yeah, I, I don't think any of us will will stop being on the side
of this debate that we are that we're on and, and thinking and
and doing what we think is kind of right.
But I, I often think back to sort of comments I heard from
from the late Ken Talbot and he sort of left Australia for an
investment perspective 20 years ago because it's just getting
too hard. And that is the way that Western
country is moving. And I think there was a bit of a
bit of realism in his decision making there that's worth kind
of pondering on. Not that that should stop us
from sort of sticking up in what we think is right and that sort
of responsible mine development. The the one of the electoral
announcement, the election announcements that I did here
last night, that was whoever the Prime Minister is going to be
will be attending the JRX conference that was announced
last night. There you go mate.
Twenty 22nd of May, the election will be done.
Whoever gets elected will be at JRX in Brisbane.
So I come go say good day to the Prime Minister with me.
If meeting you wasn't incentive enough, then that surely tips
him over the line. Jeez, but that could be another
signed T-shirt. Me and the Prime Minister.
We've already got me and Gov. So get your ticket, choose the
discount code in the show notes. JRX, the centre of tech and
innovation and the prime minister's going to be there.
We've also got our partners Mineral Mining Services, great
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