1 00:00:00,400 --> 00:00:03,720 Going to say, you know when you like have to tell a joke on 2 00:00:03,720 --> 00:00:07,160 demand, Like yeah, what's your like, go to joke? 3 00:00:07,880 --> 00:00:11,080 Mate I'm terrible. I'm blanking mate, what's yours? 4 00:00:15,880 --> 00:00:18,120 I don't know. It's always why Parts, parts. 5 00:00:19,480 --> 00:00:21,040 Why? Because they are. 6 00:00:24,480 --> 00:00:27,840 It's dreadful. I think I'm almost better off 7 00:00:27,840 --> 00:00:31,440 having not having one. No one ever laughs. 8 00:00:33,440 --> 00:00:35,880 All righty. Should we RIP into it Travis 9 00:00:36,000 --> 00:00:38,600 Ricciardo? We've got an exciting episode in 10 00:00:38,600 --> 00:00:40,480 store today, mate. Some some big companies 11 00:00:40,480 --> 00:00:44,840 reporting, some interesting companies, capital raising and a 12 00:00:44,840 --> 00:00:48,520 prelude to one of the most exciting companies on the ASX. 13 00:00:48,520 --> 00:00:52,400 None other than Min Res. And you're looking very smart 14 00:00:52,400 --> 00:00:54,520 for the occasion mate. You're all dressed up. 15 00:00:54,680 --> 00:00:58,560 I I mate this is a a shirt I I bought when we were in in in 16 00:00:58,560 --> 00:01:02,560 Cape Town because I I didn't have nice enough shirts to to to 17 00:01:02,600 --> 00:01:04,160 wear. I thought I recognized that one. 18 00:01:04,400 --> 00:01:07,520 Yeah, exactly mate. Subsequently got worn 3 or 4 19 00:01:07,520 --> 00:01:10,200 days in a row. How's it feel to be back in the 20 00:01:10,480 --> 00:01:13,240 back in the hot seat mate? Mate, it feels, it feels pretty 21 00:01:13,240 --> 00:01:15,520 good. It was rather seamless today 22 00:01:15,520 --> 00:01:20,040 when you jump onto a couple good stories and we've got a few good 23 00:01:20,040 --> 00:01:21,240 ones. I think I was pretty excited 24 00:01:21,240 --> 00:01:23,280 getting into the weeds on Adriatic. 25 00:01:23,280 --> 00:01:26,520 We've sort of followed it in and out for a couple years now. 26 00:01:26,560 --> 00:01:29,360 What's going on there? And we've kind of keenly been 27 00:01:29,920 --> 00:01:33,960 following the the evolution of the company from a, you know, 28 00:01:34,560 --> 00:01:37,120 construction story, development story in no. 29 00:01:37,120 --> 00:01:40,160 No, no, it was construction into fully funded developer, fully 30 00:01:40,160 --> 00:01:42,160 funded developer, fully funded developer, fully funded 31 00:01:42,160 --> 00:01:45,160 producer, fully funded producer. The subtitle ramp up, ramp up, 32 00:01:45,160 --> 00:01:47,960 ramp up and. Gosh, anyway, they're raising 33 00:01:47,960 --> 00:01:50,280 money again today. They are, which we'll cover in 34 00:01:50,280 --> 00:01:52,920 good detail, BHP as well. A few interesting things. 35 00:01:52,920 --> 00:01:56,880 Slash the interim divvy to the lowest level since the real, the 36 00:01:56,880 --> 00:01:59,240 real depths of the commodity cycle. 37 00:01:59,440 --> 00:02:03,120 Yeah, which, you know, there's a number of reasons why that's 38 00:02:03,120 --> 00:02:04,600 kind of happening, which we'll talk about and. 39 00:02:04,600 --> 00:02:07,160 I'm keen to revisit their acquisition of Oz Minerals and 40 00:02:07,840 --> 00:02:11,320 probably probably give them a fail for now, yeah. 41 00:02:11,640 --> 00:02:14,640 I think that's that's worthy and more unpack that one. 42 00:02:14,640 --> 00:02:16,800 Why why don't we start there? Because they're the the big 43 00:02:16,800 --> 00:02:19,640 fella, the big Australian, a lot of eyes, you know, all the 44 00:02:19,640 --> 00:02:22,280 generalists look at them for a kind of bellwether of how the 45 00:02:22,280 --> 00:02:25,960 resource sector is doing, mainly iron ore, increasingly copper, 46 00:02:25,960 --> 00:02:27,680 good chunk of their earnings coming from copper. 47 00:02:27,840 --> 00:02:29,840 No surprises. They've spent a massive amount 48 00:02:29,840 --> 00:02:34,680 on acquisitions and what doesn't get quite the same attention as 49 00:02:34,680 --> 00:02:37,560 the amount of CapEx that they've spent on all of those projects 50 00:02:37,560 --> 00:02:38,680 as well. Totally mate. 51 00:02:39,400 --> 00:02:41,360 There's always a bit the truth read with BHP's results. 52 00:02:41,360 --> 00:02:44,320 So the only way you can really do it justice is just to focus 53 00:02:44,320 --> 00:02:46,840 on a very small slither of that company. 54 00:02:46,840 --> 00:02:49,480 And I'm, I'm choosing the part of the company that's a bit 55 00:02:49,480 --> 00:02:53,320 close to home within the, within the big Australian, not the West 56 00:02:53,320 --> 00:02:55,480 Australian iron ore business, but instead the South Australian 57 00:02:55,480 --> 00:02:57,760 copper business. Because I actually think it'll 58 00:02:57,760 --> 00:02:59,600 be an important part of Mike Henry's legacy. 59 00:02:59,600 --> 00:03:02,920 And the revelation recently, you know, is, is that is that, you 60 00:03:02,920 --> 00:03:05,480 know, he, his successor is going to be determined in the near 61 00:03:05,480 --> 00:03:08,680 future as well. So in the tail end of Mark's 62 00:03:08,680 --> 00:03:13,080 kind of reign, I just wanted to revisit the, the $10 billion 63 00:03:13,080 --> 00:03:15,720 acquisition of Oz Minerals because that was, that was, you 64 00:03:15,720 --> 00:03:18,280 know, just a tad over two years ago that that kind of all, all 65 00:03:18,280 --> 00:03:21,720 happened. And to kick things off, I want 66 00:03:21,720 --> 00:03:24,360 to bring up this chart. This was a chart on slide 20 of 67 00:03:24,360 --> 00:03:26,920 their earnings deck released today. 68 00:03:26,920 --> 00:03:29,240 Where? Talk through it for the the 69 00:03:29,240 --> 00:03:30,840 people on the podcast. What are we kind of saying? 70 00:03:31,200 --> 00:03:34,440 Basically kind of articulating where the the growth in in 71 00:03:34,440 --> 00:03:37,560 copper tons or copper production from the South Australian copper 72 00:03:37,560 --> 00:03:40,880 business is going to come, you know, particularly over the the 73 00:03:40,880 --> 00:03:43,560 next five years. And then beyond that into the 74 00:03:43,560 --> 00:03:45,520 mid twenty 30s. They're sort of saying that the 75 00:03:45,520 --> 00:03:48,520 copper production could go from 300, you know, 1000 tons per 76 00:03:48,520 --> 00:03:52,640 annum all the way up to, you know, potentially 700,000 tons 77 00:03:52,640 --> 00:03:55,120 per annum without stepping it up along the way. 78 00:03:55,440 --> 00:03:57,040 And. Got to have a growth story. 79 00:03:57,080 --> 00:03:59,520 Got to have a growth story. It's kind of interesting though. 80 00:03:59,560 --> 00:04:01,920 You look at, just look at the title of the chart as well, 81 00:04:02,080 --> 00:04:05,600 Copper SA growth pathway capturing US 1.5 billion in 82 00:04:05,600 --> 00:04:08,240 potential synergies. So the narrative's already 83 00:04:08,240 --> 00:04:09,120 there. They're trying to kind of 84 00:04:09,120 --> 00:04:11,520 substantiate the, the acquisition of Oz Minerals. 85 00:04:11,520 --> 00:04:14,560 We're talking about synergies within the, the, the title 86 00:04:14,560 --> 00:04:16,720 there. And but like if you just look at 87 00:04:16,720 --> 00:04:20,360 the chart, they've laid out the volume growth and you'll notice 88 00:04:20,360 --> 00:04:23,120 the heavy lifting to be done by Olympic dam and eventually Oak 89 00:04:23,120 --> 00:04:25,920 Dam on the in the mid twenty 30s there. 90 00:04:26,560 --> 00:04:30,000 What what you'll notice is that it's not really Carapatina 91 00:04:30,000 --> 00:04:33,840 that's moving the dial or or Promhill, especially Promhill. 92 00:04:33,840 --> 00:04:37,560 It's it's all pretty marginal growth to come come from the Oz 93 00:04:37,560 --> 00:04:41,960 minerals mines there. And and here's here's another 94 00:04:41,960 --> 00:04:44,400 chart which I pulled up from the half year results. 95 00:04:44,400 --> 00:04:48,800 This is one of the usual charts you'll see in in BH PS results 96 00:04:48,800 --> 00:04:50,320 when they report it. I love the chart. 97 00:04:50,320 --> 00:04:54,880 It's return on capital employed by asset and of course, always W 98 00:04:54,880 --> 00:04:59,400 Australian iron ore business leads the way because any, any 99 00:05:00,120 --> 00:05:03,240 marginal expansion you can do there delivers just a phenomenal 100 00:05:03,560 --> 00:05:06,280 IRR as a result of the fact that it's such a high margin 101 00:05:06,440 --> 00:05:10,120 business. So it's always such a a dominant 102 00:05:10,120 --> 00:05:12,840 part of this chart. But, but follow this chart all 103 00:05:12,840 --> 00:05:16,480 the way down the tail end and what you'll, what you'll notice 104 00:05:16,480 --> 00:05:19,560 is that the return on cap employed at the South Australian 105 00:05:19,560 --> 00:05:22,880 copper business is lower than they even get for, for, for the 106 00:05:22,880 --> 00:05:25,040 BMA business. And you'll remember they refuse 107 00:05:25,040 --> 00:05:28,680 to invest any more in Queensland coal business. 108 00:05:28,720 --> 00:05:30,320 Well, it's like a hardline stance they've got thanks to the 109 00:05:30,320 --> 00:05:33,120 royalty regime now, but kind of just. 110 00:05:33,120 --> 00:05:35,440 Interesting. Yeah, they, they do really love 111 00:05:35,440 --> 00:05:38,240 this, this chart. I mean, it shows you so much 112 00:05:38,240 --> 00:05:40,880 about their business. It shows you how awesome a cash 113 00:05:40,880 --> 00:05:42,480 generator that iron ore business is. 114 00:05:42,480 --> 00:05:45,960 Just you get the sense from there where it sits on the cost 115 00:05:45,960 --> 00:05:51,520 curve and you sort of invert that you get you get some big 116 00:05:51,600 --> 00:05:54,040 sort of thoughts on copper South Australia. 117 00:05:54,320 --> 00:05:58,000 Keep in mind on the X axis there is, there is the cumulative 118 00:05:58,000 --> 00:06:00,280 capital employed. So the amount of capital 119 00:06:00,280 --> 00:06:02,800 employed at the South Australian copper business, it's like I'm 120 00:06:02,800 --> 00:06:05,320 eyeballing it here, but it's kind of comparable to the final 121 00:06:05,320 --> 00:06:07,040 business. But the return on that capital 122 00:06:07,400 --> 00:06:11,920 is so de minimis in comparison, it kind of looks like on the 123 00:06:11,920 --> 00:06:15,080 numbers here, it's like a 2 to 3% return on capital employed 124 00:06:15,080 --> 00:06:18,600 for the South Australian copper business in, in the reporting 125 00:06:18,600 --> 00:06:19,280 period. He asked. 126 00:06:19,880 --> 00:06:24,400 And if I, I kind of dial it back to Promhill again, there was, 127 00:06:24,440 --> 00:06:27,000 there was this disclosure within BH PS reporting today where, 128 00:06:27,280 --> 00:06:29,560 where they basically revealed that the capital budget for the 129 00:06:29,560 --> 00:06:32,800 expansion, there's a, a prominent hill operation 130 00:06:32,800 --> 00:06:35,320 expansion that's been kind of underway for a period now. 131 00:06:35,720 --> 00:06:39,760 The, the, the CapEx for that has now blown out to US 912 million. 132 00:06:40,200 --> 00:06:43,320 Now this, this project or expansion project, it's 133 00:06:43,400 --> 00:06:47,360 basically the sinking of a of the Weira shaft at the, at the 134 00:06:47,360 --> 00:06:49,680 mine. This was approved by Oz Minerals 135 00:06:49,680 --> 00:06:52,160 back in 2021. At the time it was approved, it 136 00:06:52,160 --> 00:06:57,120 was supposed to be Aussie $600 million kind of capital project. 137 00:06:57,800 --> 00:07:01,680 If you convert what BHP has revealed today into into Aussie 138 00:07:01,680 --> 00:07:07,240 dollars, it's equivalent to 1.4 billion Aussie or 2.4 times the 139 00:07:07,240 --> 00:07:09,720 original estimate when when OZ Minerals approved it. 140 00:07:10,000 --> 00:07:13,960 And on top of that, it was meant to be completed by 2024 when 141 00:07:14,160 --> 00:07:16,160 when OZ Minerals approved the the spend. 142 00:07:16,400 --> 00:07:20,320 Now, now in this detail today, we say that it's not going to be 143 00:07:20,320 --> 00:07:24,880 completed until second-half of of FY20 7 and. 144 00:07:25,360 --> 00:07:28,800 Shouldn't be a surprise it. Shouldn't, it shouldn't be, 145 00:07:28,800 --> 00:07:31,960 especially if you read the director special because I think 146 00:07:31,960 --> 00:07:34,720 we published last year were on the decline. 147 00:07:34,720 --> 00:07:38,280 It was around September that there was 130 metres worth of 148 00:07:38,280 --> 00:07:41,600 frozen material in the, in the glory hole of the the shaft 149 00:07:41,600 --> 00:07:45,200 being being sunk there of. Of course, you know, that's the 150 00:07:45,600 --> 00:07:49,880 relates to the Weir shaft, which is the the key part of this PHOX 151 00:07:50,120 --> 00:07:52,080 project that is being being underway. 152 00:07:52,080 --> 00:07:56,200 And and this project, the whole the point of it is you'll have 153 00:07:56,200 --> 00:08:00,480 this hoisting shaft which would then enable enable the, you 154 00:08:00,480 --> 00:08:03,880 know, the mind to to be able to reached tons of them in a 155 00:08:03,880 --> 00:08:06,000 resource which otherwise uneconomical to truck. 156 00:08:07,160 --> 00:08:10,280 It really kind of points to the style of mining that they're 157 00:08:10,280 --> 00:08:15,320 doing there being a bit outside the skill set, a very different 158 00:08:15,320 --> 00:08:18,480 to building a train line in a port and just running a 159 00:08:18,480 --> 00:08:21,000 logistics business super, super effectively. 160 00:08:21,000 --> 00:08:25,200 To their credit, in WA this is a completely different challenge 161 00:08:25,240 --> 00:08:27,400 and requires a very different technical game. 162 00:08:28,080 --> 00:08:29,640 I do. I just, I just get this sense 163 00:08:29,640 --> 00:08:32,159 that every time one of the big one of the big miners embarks on 164 00:08:32,159 --> 00:08:34,880 sinking a shaft, they just fuck it up like. 165 00:08:36,679 --> 00:08:38,440 It's tough. I mean, we saw the article the 166 00:08:38,440 --> 00:08:42,360 other day about Rio and the delays at OT and everything that 167 00:08:42,360 --> 00:08:45,560 kind of happened that the article was about from Kerry at 168 00:08:45,560 --> 00:08:47,600 the Fin about non disclosure. Yeah. 169 00:08:47,600 --> 00:08:51,920 And the the consequence was clocks, blowout time delays. 170 00:08:52,040 --> 00:08:56,160 And these things are super technically difficult and 171 00:08:56,600 --> 00:08:59,760 there's barely a handful of operators in the world that that 172 00:09:00,040 --> 00:09:02,440 actually do them. Yeah, yeah. 173 00:09:02,520 --> 00:09:06,200 I mean, BHP had huge issues with with Jansen as they were going 174 00:09:06,360 --> 00:09:10,120 going deep and of course, Anglo with wood Smith like the, you 175 00:09:10,120 --> 00:09:12,920 know, and this is a different scale entirely. 176 00:09:13,200 --> 00:09:19,240 But but the there's a pretty big implication for for the South 177 00:09:19,240 --> 00:09:22,520 Australian copper business when you encounter not just the the 178 00:09:22,520 --> 00:09:25,200 cost blow outside of things, but it's, it's the implication of 179 00:09:25,200 --> 00:09:29,120 that time extension from 2024 all the way out to 2027, likely 180 00:09:29,120 --> 00:09:30,400 to, you know, get pushed further. 181 00:09:31,280 --> 00:09:33,520 But yeah, we, we, we talked about this in director special 182 00:09:35,160 --> 00:09:37,560 to bring it back to the M and a kind of deal that was done by 183 00:09:37,560 --> 00:09:39,760 BHP in late 2022. They paid, they paid $10 184 00:09:39,760 --> 00:09:43,600 billion, you know, 10 billion Australian dollars for for Oz 185 00:09:43,600 --> 00:09:45,920 minerals. Now, now when they, when they 186 00:09:45,920 --> 00:09:49,120 did this, the independent expert agreed with the price tag and 187 00:09:49,120 --> 00:09:51,320 they, they broke down the value of each kind of part of the 188 00:09:51,320 --> 00:09:53,200 portfolio for us. So you can, you can basically 189 00:09:53,200 --> 00:09:58,080 infer effectively what BHP paid for each of the assets within OZ 190 00:09:58,080 --> 00:10:01,840 Minerals portfolio. At the time, Chrome Hill was 2.5 191 00:10:01,840 --> 00:10:05,760 billion, Karatina 5 billion, W Musgrave about two billion. 192 00:10:05,760 --> 00:10:08,920 I'm rounding there, but you get the picture with W Musgrave. 193 00:10:09,360 --> 00:10:13,040 After BHP acquired OZ Minerals, they they probably spent close 194 00:10:13,040 --> 00:10:15,400 to another billion dollars on the project before, you know, 195 00:10:15,400 --> 00:10:18,880 halting things entirely there and then you got to basically 196 00:10:18,880 --> 00:10:21,760 put a zero on that now. It sounds super brutal. 197 00:10:21,880 --> 00:10:27,720 Yeah, Christ, doing no favours. And yeah, yeah, it's on site. 198 00:10:27,720 --> 00:10:31,040 A horrible allocation of a capital. 199 00:10:31,480 --> 00:10:36,720 Prom Hill, we've got in in Aussie dollar terms, $1 billion 200 00:10:36,720 --> 00:10:40,240 kind of capital blowout already and God knows what the impact is 201 00:10:40,240 --> 00:10:42,240 on the on the schedule delay implications. 202 00:10:42,480 --> 00:10:46,200 Carapatina, you know, it's the the only thing doing all right 203 00:10:46,200 --> 00:10:48,080 in the portfolio of what they they kind of picked up 204 00:10:48,080 --> 00:10:51,320 notwithstanding the block cave is already way behind schedule 205 00:10:51,320 --> 00:10:53,760 though. So look, I think there's just a 206 00:10:53,760 --> 00:10:56,200 big question mark here on whether the South Australian Cup 207 00:10:56,200 --> 00:11:00,200 portfolio is, is really BHP appropriate or not. 208 00:11:00,240 --> 00:11:04,000 You can see by the return on capital employed in in in this 209 00:11:04,000 --> 00:11:06,960 earnings release and historic ones when they when they would 210 00:11:06,960 --> 00:11:10,800 categorize it as an Olympic dam only that it it historically 211 00:11:11,000 --> 00:11:15,080 isn't a BHP type asset. It just doesn't even yielded the 212 00:11:15,320 --> 00:11:18,280 returns on capital that you would expect if a BHP type 213 00:11:18,280 --> 00:11:20,120 asset. Of course, BHP are super bullish 214 00:11:20,120 --> 00:11:22,920 on copper and if copper price, you know, goes up, all of a 215 00:11:22,920 --> 00:11:25,320 sudden your return on capital looks marvellous. 216 00:11:25,320 --> 00:11:27,320 But to to date it just it just hasn't. 217 00:11:27,320 --> 00:11:31,040 So I think does the deal stack up for BHP yet buying odds? 218 00:11:31,040 --> 00:11:33,840 I think no, I think you know these those potential one point 219 00:11:34,040 --> 00:11:38,160 US 1.5 billion in synergies don't offset the four billion 220 00:11:38,160 --> 00:11:42,520 Aussie of write downs that I've just talked about in between US 221 00:11:42,520 --> 00:11:45,840 minerals and the and the blowout that at at Prom Hill since 222 00:11:45,840 --> 00:11:48,240 buying US minerals. And and when Mike Henry's kind 223 00:11:48,240 --> 00:11:52,200 of term comes to an end, I think, I think there's even a 224 00:11:52,200 --> 00:11:54,520 chance that these assets could make their way out of the 225 00:11:54,520 --> 00:11:57,680 portfolio again. New CEO comes in. 226 00:11:58,240 --> 00:12:00,000 Yeah. The board, yeah, it wouldn't 227 00:12:00,000 --> 00:12:03,600 happen, wouldn't happen straight away and there's probably like a 228 00:12:03,600 --> 00:12:07,080 low chance on it happening given the the DNA of of a copy Heather 229 00:12:07,400 --> 00:12:11,360 BHP. But yeah, can can a BHP which 230 00:12:11,360 --> 00:12:16,240 has, yeah, so much fat to that business, can it actually 231 00:12:16,240 --> 00:12:20,800 generate the returns required to to get good margin out of these 232 00:12:20,800 --> 00:12:24,840 assets or is it sort of better suited in a, in a right sized 233 00:12:25,680 --> 00:12:27,920 lean, lean operator that can that can do it? 234 00:12:28,120 --> 00:12:30,720 It's looking looking pretty tough at at the moment. 235 00:12:30,760 --> 00:12:32,760 We'll see. You know, the big swing factor, 236 00:12:32,760 --> 00:12:34,520 like you said, is the is the copper price. 237 00:12:34,640 --> 00:12:35,960 We'll see how that sort of performs. 238 00:12:36,480 --> 00:12:39,000 That may change the perception that people kind of have. 239 00:12:39,000 --> 00:12:41,400 But as it stands, you know, this is the big the big deal that 240 00:12:41,400 --> 00:12:44,400 Mike Henry did and it's yeah, it's not looking too great. 241 00:12:44,480 --> 00:12:47,600 I'm sure he'll be, you know, all too aware of that at at the 242 00:12:47,600 --> 00:12:51,640 moment and he'll be working hard to look at other deals, look at 243 00:12:51,640 --> 00:12:54,200 other propositions. Obviously the the Anglo deal, 244 00:12:54,200 --> 00:12:57,080 had that gone through would have completely changed his his 245 00:12:57,080 --> 00:13:00,800 legacy or everyone would have sort of put odds to the side and 246 00:13:00,800 --> 00:13:03,160 thought about however that deal might have gone down had it gone 247 00:13:03,160 --> 00:13:05,280 through. Needless to say, it didn't go 248 00:13:05,280 --> 00:13:06,840 through, so here we are. Yeah. 249 00:13:06,960 --> 00:13:09,680 And look, there was a lot of there was there was a whole 250 00:13:09,680 --> 00:13:12,640 separate slide in the in the deck today, which basically 251 00:13:12,640 --> 00:13:18,600 showed the the capital intensity of of of inorganic opportunities 252 00:13:18,600 --> 00:13:20,440 versus organic growth opportunities that they have 253 00:13:20,440 --> 00:13:21,720 within their Chilean copper business. 254 00:13:22,120 --> 00:13:25,720 And what the point of the slide was that they've got a lot more 255 00:13:25,920 --> 00:13:31,040 creative ways to add tons via their organic growth within, 256 00:13:31,720 --> 00:13:34,920 within Chile. Now it didn't show, it didn't 257 00:13:34,920 --> 00:13:37,320 show that same chart for their S Australian copper business. 258 00:13:37,320 --> 00:13:40,120 So I just use. The Prezzo to highlight the 259 00:13:40,120 --> 00:13:44,640 positive. Yeah, I think, I think it's been 260 00:13:44,640 --> 00:13:46,960 disappointing so far for the for the South Australian copper 261 00:13:46,960 --> 00:13:48,920 business. I think you're right, mate. 262 00:13:49,120 --> 00:13:50,760 All right, what do we got next start? 263 00:13:50,800 --> 00:13:54,880 Well, you know, what I always find interesting is, you know, 264 00:13:54,880 --> 00:13:58,920 we, we've just come back from Africa, notably went to in Darba 265 00:13:58,920 --> 00:14:01,400 conference And when we, when we traveled to, to corners of the, 266 00:14:01,560 --> 00:14:03,440 the planet. One thing that I've picked up on 267 00:14:03,440 --> 00:14:06,480 a couple of times, I'm always amazed at just the, the brand 268 00:14:06,480 --> 00:14:09,080 recognition you, you can sometimes get across the globe 269 00:14:09,080 --> 00:14:11,240 for, for a little Perth kind of company. 270 00:14:11,240 --> 00:14:13,360 And I'm not talking about money of mine, mate. 271 00:14:13,680 --> 00:14:15,440 I'm talking about K drill. K drill. 272 00:14:15,480 --> 00:14:19,200 We we were, we were talking about, I can't remember who the 273 00:14:19,200 --> 00:14:21,280 conversation was with, but I definitely distinctly remember 274 00:14:21,280 --> 00:14:22,320 it. Maybe you remember, but we're 275 00:14:22,320 --> 00:14:24,000 talking about the wicked partners that help us keep the 276 00:14:24,000 --> 00:14:28,600 podcast free for everyone in in a conversation with someone at 277 00:14:28,600 --> 00:14:30,160 one of the functions we were at at in Darba. 278 00:14:30,160 --> 00:14:33,320 I think that was South African and they said I bet those ads 279 00:14:33,440 --> 00:14:35,160 ads work. If if I needed drilling, I'd 280 00:14:35,160 --> 00:14:37,760 Google K drill unprompted. It was amazing. 281 00:14:38,600 --> 00:14:42,200 But see mate, K drills, home ground is, is WA, all these 282 00:14:42,200 --> 00:14:45,480 spots on this map, that is where their rigs have been lately, RC, 283 00:14:45,480 --> 00:14:48,840 Diamond, Olga and air core rigs. They traverse the West 284 00:14:48,840 --> 00:14:52,120 Australian Outback to get the core needed for exploration 285 00:14:52,120 --> 00:14:54,600 drilling, mate. And you know who gets the most 286 00:14:54,680 --> 00:14:57,080 metres per shift? You know the drilling partner 287 00:14:57,080 --> 00:15:00,600 that says we can do it? The K spelled with AK. 288 00:15:00,600 --> 00:15:04,200 We can tell me whatever. Your drilling needs mate K drill 289 00:15:04,200 --> 00:15:08,480 can hey drill call druba or rhino today call with AK. 290 00:15:09,200 --> 00:15:13,560 Go K drill all your RC diamond, any drilling needs you've got, 291 00:15:14,000 --> 00:15:15,920 give the big fellas a call you you remember. 292 00:15:15,920 --> 00:15:17,000 That chat it. Was I do? 293 00:15:17,000 --> 00:15:17,800 Was it Mike Henry? Oh. 294 00:15:20,840 --> 00:15:21,880 Gosh. All righty. 295 00:15:21,920 --> 00:15:24,720 Let's let's have a quick chin wag about M&A. 296 00:15:25,440 --> 00:15:27,400 This was just. A big end of town M&A. 297 00:15:27,480 --> 00:15:31,240 A bit of a brain fart I had, I had just thinking the other day, 298 00:15:32,800 --> 00:15:35,880 the US dollar, US Aussie dollar, I think it's back to 64 cents, 299 00:15:35,880 --> 00:15:38,000 but it, you know, went like as low as 60 cents there. 300 00:15:38,000 --> 00:15:43,160 It's still the US dollar is still, yeah, like really strong 301 00:15:43,160 --> 00:15:45,960 on a relative basis. And when you've got that 302 00:15:46,160 --> 00:15:49,960 dynamic, I think it makes that cross-border M&AA lot more 303 00:15:49,960 --> 00:15:53,240 interesting here for any New York listed miners to 304 00:15:53,240 --> 00:15:55,680 potentially, you know, buy Australian assets. 305 00:15:56,520 --> 00:15:58,800 You know, in the in the gold space, there's a there's a 306 00:15:59,120 --> 00:16:01,640 handful of New York listed companies. 307 00:16:01,880 --> 00:16:04,600 The inverse also applies. It's, you know, not at all 308 00:16:04,600 --> 00:16:10,480 compelling for for ASX listed miners to to go to the US, but I 309 00:16:10,480 --> 00:16:13,280 just think watch this space to see if there's any opportunism 310 00:16:13,280 --> 00:16:15,160 on, on this front. It's a kind of, you know, 311 00:16:15,440 --> 00:16:19,040 perfect set of, of macro scenarios that can can motivate, 312 00:16:19,120 --> 00:16:20,920 motivate that kind of M&A activity. 313 00:16:21,880 --> 00:16:24,520 When you have record gold price, animal spirits kick in and then 314 00:16:24,520 --> 00:16:28,200 you've got the, you know, the USAUD kind of in your favour to 315 00:16:28,200 --> 00:16:29,760 to embark on these sorts of ambitions. 316 00:16:29,960 --> 00:16:32,400 I'm on watch out for those, yeah, animal spirits that you 317 00:16:32,400 --> 00:16:35,560 speak of, mate. That is what the gold industry 318 00:16:35,560 --> 00:16:37,720 has been whipped for for the last decade. 319 00:16:37,920 --> 00:16:42,360 And you know, you listen to the likes of Jake Klein, he comes, 320 00:16:42,440 --> 00:16:47,080 he comes to mind, very, very cognizant of these animal 321 00:16:47,080 --> 00:16:52,120 spirits returning, very fixated on shareholder returns at the 322 00:16:52,120 --> 00:16:55,080 end of the day. And Agnico, another company I'm 323 00:16:55,080 --> 00:16:57,760 sure comes to your mind, you listen to their call, very 324 00:16:57,760 --> 00:17:02,640 fixated on what our shareholders getting for this gold price. 325 00:17:02,960 --> 00:17:05,640 Is it flowing through to the bottom line or are we just 326 00:17:05,640 --> 00:17:08,240 seeing cost inflation? It's managing those costs super, 327 00:17:08,240 --> 00:17:11,720 super tight. And yeah, not going and blowing 328 00:17:11,720 --> 00:17:14,280 it all if you don't make it on a, on a bad deal at the top of 329 00:17:14,280 --> 00:17:16,400 the cycle. So yeah, very, very keen to see 330 00:17:16,400 --> 00:17:16,800 how it. Plays out. 331 00:17:16,800 --> 00:17:19,520 I don't think you'll hear the word on a per share basis 332 00:17:19,520 --> 00:17:22,040 mentioned more than during an agnico call. 333 00:17:22,560 --> 00:17:25,680 It's everything's per share. No qualms with that on my end, 334 00:17:25,680 --> 00:17:26,599 Matt. Yeah, sorry. 335 00:17:26,960 --> 00:17:31,520 Something that there might be qualms on your end is Adriatic 336 00:17:31,680 --> 00:17:36,200 is raising today Australian 80 million or US $50 million. 337 00:17:37,160 --> 00:17:40,200 It's not the not the first time we've we've, we've woken up to a 338 00:17:40,200 --> 00:17:44,720 surprise Adriatic raise. Is it different this time mate? 339 00:17:45,800 --> 00:17:47,960 I won't answer that. I'll let the company answer 340 00:17:47,960 --> 00:17:48,440 that. Let's play. 341 00:17:48,600 --> 00:17:51,560 Let's play a snippet from about two weeks ago from the quarterly 342 00:17:51,960 --> 00:17:54,880 call. Finally, on liquidity, do you 343 00:17:54,880 --> 00:17:58,960 believe that you will have enough cash to get through 2025 344 00:17:59,440 --> 00:18:01,560 or will you need to look at other options in terms of 345 00:18:01,720 --> 00:18:03,440 capital raises? Yeah. 346 00:18:03,640 --> 00:18:07,800 So I should feel pretty decent and and to circle back to to 347 00:18:07,920 --> 00:18:11,680 some of the slides, 46 million of of cash today, you know, now 348 00:18:11,680 --> 00:18:14,200 that we've closed the traffic of prepayment and we have been 349 00:18:14,440 --> 00:18:16,520 basically cash flow neutral for for four months now. 350 00:18:16,520 --> 00:18:19,000 So I think that's kind of a good, you know, sort of track 351 00:18:19,000 --> 00:18:22,320 record even though the plant has only been again running at kind 352 00:18:22,320 --> 00:18:25,120 of like 25% capacity. And we had our, you know, sort 353 00:18:25,120 --> 00:18:27,200 of challenges in October and and December, you know, due to 354 00:18:27,200 --> 00:18:29,040 weather, which obviously you know came in with a bit of a 355 00:18:29,040 --> 00:18:31,200 lighter quarter. So if you think about that, I 356 00:18:31,200 --> 00:18:35,040 didn't say, OK, but now we're doing 75 to 80% capacity in the 357 00:18:35,040 --> 00:18:36,560 plant. The crushers back up to running 358 00:18:36,560 --> 00:18:39,800 1500, you know, plus a ton per day, that's about a 40,000 ton a 359 00:18:39,800 --> 00:18:42,680 month sort of run rate. So kind of 2/3 to 70% of 360 00:18:42,680 --> 00:18:45,120 production. On that basis, we should be well 361 00:18:45,120 --> 00:18:47,880 ahead of of just cash flow neutral or break even. 362 00:18:47,880 --> 00:18:49,480 We should be, you know, positive free cash flow. 363 00:18:49,480 --> 00:18:53,440 So you think 46 today, we've got to pay back about 18 to 20 364 00:18:53,440 --> 00:18:55,280 million a quarter for the next 4 quarters. 365 00:18:55,760 --> 00:18:57,720 But really it will be cash flow positive. 366 00:18:57,720 --> 00:18:59,800 So from here, everything we're paying for should be, should be 367 00:18:59,800 --> 00:19:02,560 out of cash flow and we don't see the need for additional 368 00:19:02,560 --> 00:19:04,680 liquidity. No chance of a raise just two 369 00:19:04,680 --> 00:19:07,680 brief weeks ago. That was the the ideal thing to 370 00:19:07,680 --> 00:19:10,960 say if you want to raise money in two weeks time at A at A at a 371 00:19:11,000 --> 00:19:14,160 pretty they're pretty close to all time high share price and a 372 00:19:14,160 --> 00:19:17,360 tight discount. It's, it's honestly, you know, 373 00:19:17,880 --> 00:19:21,280 impressive to get that, get a raise like this away under those 374 00:19:21,280 --> 00:19:25,600 circumstances when it was probably a relatively, you know, 375 00:19:26,000 --> 00:19:27,880 clear line of sight to a funding gap here too. 376 00:19:28,040 --> 00:19:31,080 Yeah, seriously impressive. And I think that's why it's 377 00:19:31,080 --> 00:19:34,520 worth giving a quick mention of the backers that they've got. 378 00:19:34,520 --> 00:19:35,520 I think a lot of people will know this. 379 00:19:35,520 --> 00:19:39,400 But to your point about a 7% discount, which is, you know, 380 00:19:39,480 --> 00:19:43,560 relatively tight and you've got L1 on the register owning a big 381 00:19:43,560 --> 00:19:46,160 chunk around that 15 sort of percent range. 382 00:19:46,800 --> 00:19:52,040 The same can be said for Helicon Fund out of London and then 383 00:19:52,120 --> 00:19:53,680 Orion, who had tied in with the debt. 384 00:19:53,680 --> 00:19:56,200 They're on the Equity 2. And have they tipped in more 385 00:19:56,200 --> 00:19:58,240 Orion in this race? They got named yet? 386 00:19:58,400 --> 00:19:59,640 Really. Because they were trimming in 387 00:19:59,640 --> 00:20:01,200 the the last place when they did. 388 00:20:01,920 --> 00:20:03,160 Interesting to say that, right? Yeah. 389 00:20:03,160 --> 00:20:08,080 And then former party guests in Old West and QRC are also on the 390 00:20:08,080 --> 00:20:10,520 on the register, nowhere near as substantial as the previously 391 00:20:10,520 --> 00:20:12,560 mentioned ones. And of course, you've got the, 392 00:20:12,560 --> 00:20:15,800 the board and significantly Paul Cronin, who was also named to be 393 00:20:16,080 --> 00:20:21,840 tipping into this raise. So US 50 million, like you said, 394 00:20:22,520 --> 00:20:26,520 ostensibly being raised to fast track, very expansion and 395 00:20:26,520 --> 00:20:28,400 enhanced balance sheet flexibility. 396 00:20:28,920 --> 00:20:31,480 Now this sounds as you were alluding to, awfully similar to 397 00:20:31,480 --> 00:20:35,040 the rise that they did during construction, which was in 398 00:20:35,040 --> 00:20:37,960 quotation marks for exploration or the rise they did last year 399 00:20:37,960 --> 00:20:41,600 to go on an operator. And I, I don't want to take away 400 00:20:41,600 --> 00:20:44,680 from the, the difficulty of ramping up a project, you know, 401 00:20:44,680 --> 00:20:45,960 we've, we've never done it before. 402 00:20:45,960 --> 00:20:48,680 I'm pretty aware of that. And it's hard work. 403 00:20:48,680 --> 00:20:53,160 You're always going to face challenges that you had no idea 404 00:20:53,640 --> 00:20:55,640 would be whacking you in the face before you start. 405 00:20:55,640 --> 00:20:58,680 So it is seriously hard, and I don't want to make light of 406 00:20:58,680 --> 00:21:03,600 that, but I think the amount of raises they've had to do just 407 00:21:03,600 --> 00:21:06,360 really speaks to the challenges in getting this particular 408 00:21:06,360 --> 00:21:09,120 operation up and running. There's been all sorts of 409 00:21:09,120 --> 00:21:13,080 problems. And with that in mind, I can't 410 00:21:13,080 --> 00:21:18,000 take the narrative sort of spin on the raise too seriously. 411 00:21:18,440 --> 00:21:21,040 Just a couple of weeks ago when we played that highlight and the 412 00:21:21,040 --> 00:21:24,280 quarterly came out we'll put up. Now you can sort of see a 413 00:21:24,280 --> 00:21:28,600 snippet from Laura Tyler the the MD talking about a delay to the 414 00:21:28,600 --> 00:21:31,320 start of commercial production, which had been pushed, which has 415 00:21:31,320 --> 00:21:35,840 been pushed numerous Times Now this time into Q1 of this 416 00:21:35,840 --> 00:21:39,440 calendar year because of weather and other related, which were 417 00:21:39,440 --> 00:21:42,680 only the, the most recent of the challenges that they kind of 418 00:21:42,680 --> 00:21:44,400 faced. So it's kind of hard to, to 419 00:21:44,400 --> 00:21:47,880 marry up going for an expansion when you're running the, the 420 00:21:47,880 --> 00:21:50,920 meal at 25% of capacity and you haven't really run it at any 421 00:21:50,920 --> 00:21:53,600 more than that like yet. There were times there were days 422 00:21:53,600 --> 00:21:56,840 where they were running it at sort of 60 or 70% the meal 423 00:21:56,840 --> 00:21:59,880 capacity of, you know, nameplate, which is 800,000 tons 424 00:21:59,880 --> 00:22:02,600 per annum. But it's, it's, it's hard to, 425 00:22:02,600 --> 00:22:04,720 you know, match those two up in my mind. 426 00:22:04,800 --> 00:22:09,920 Is the, I mean we see, we see expansion raises all the time, 427 00:22:09,920 --> 00:22:13,760 but the use of funds this time it was actually kind of 5050 428 00:22:13,760 --> 00:22:17,080 between balance sheet and and expansion and. 429 00:22:17,680 --> 00:22:20,640 Yeah. I mean, you have to do that from 430 00:22:20,640 --> 00:22:23,160 a legal perspective. I'm sure general counsel would 431 00:22:23,160 --> 00:22:26,480 be saying at least for their own incentive, their own job, that 432 00:22:26,720 --> 00:22:29,160 they'd want that jotted down under use of funds, like you 433 00:22:29,160 --> 00:22:32,560 said, divvied up half and half towards this expansion capital, 434 00:22:32,920 --> 00:22:36,480 which no, that that's only going to hit nameplate supposedly in 435 00:22:36,480 --> 00:22:38,440 2027. So that's quite a ways down the 436 00:22:38,440 --> 00:22:40,440 track. And the study showed that that 437 00:22:40,440 --> 00:22:44,360 was relatively cheap US 25,000,000 to take it from the 438 00:22:44,360 --> 00:22:48,920 800,000 to the 1.3 million tonne per annum operation. 439 00:22:48,920 --> 00:22:51,720 But this is showing up the balance sheet debt repayments 440 00:22:51,720 --> 00:22:55,720 start on the 31st of March. That had been pushed back three 441 00:22:55,720 --> 00:22:59,360 months, three months which had been pushed six months. 442 00:22:59,360 --> 00:23:02,240 So this was meant to start 3/4 of a year ago already. 443 00:23:02,240 --> 00:23:07,240 They've had pretty a pretty friendly relationship from the 444 00:23:07,320 --> 00:23:09,720 the debtors, I kind of say is. Orion on the OK. 445 00:23:09,880 --> 00:23:12,200 Yeah. And they got a prepaid with 446 00:23:12,200 --> 00:23:15,320 traffic late last year as well, right? 447 00:23:15,360 --> 00:23:17,360 They did. So they announced that at the 448 00:23:17,360 --> 00:23:21,160 beginning of December and they locked that prepayment up I 449 00:23:21,160 --> 00:23:23,640 think on the 17th of January from memory. 450 00:23:23,880 --> 00:23:26,840 So if you might remember, I think in about April of last 451 00:23:26,840 --> 00:23:29,960 year, they got an additional facility with Orion, but this 452 00:23:30,520 --> 00:23:32,480 swapped out for the traffic prepayment. 453 00:23:32,560 --> 00:23:36,560 Traffic prepayment was US $25 million, which these guys say is 454 00:23:36,560 --> 00:23:40,120 on much friendlier terms than that previously short term 455 00:23:40,280 --> 00:23:42,040 Orion. Which it very well may have 456 00:23:42,040 --> 00:23:45,560 been, but I, I always, because, because they'd done a raise 457 00:23:45,560 --> 00:23:48,960 before where they basically articulated that they, you know, 458 00:23:49,000 --> 00:23:52,400 the, the raise funds could be utilized instead of having to 459 00:23:52,400 --> 00:23:55,360 tip into that, that secondary Orion facility. 460 00:23:55,360 --> 00:23:58,600 And then they got the traffic, the traffic prepaid so that they 461 00:23:58,600 --> 00:24:01,040 didn't have to draw down the UI facility. 462 00:24:01,280 --> 00:24:03,960 In the back of my head, I always wondered like, what are the draw 463 00:24:03,960 --> 00:24:05,960 down conditions? What are the CPS to actually 464 00:24:05,960 --> 00:24:07,800 draw down there? And are there any that they, 465 00:24:07,920 --> 00:24:10,200 they can't actually meet? And that might be driving some 466 00:24:10,200 --> 00:24:11,640 of the funding arrangements as well. 467 00:24:11,640 --> 00:24:14,880 I never quite got to the bottom of that line of questioning, but 468 00:24:15,040 --> 00:24:18,280 yeah, erased today and prepaid's already drawn. 469 00:24:19,520 --> 00:24:22,240 At least it puts to bed some of the balance sheet fees in the 470 00:24:22,240 --> 00:24:24,280 short term. Yeah, I think, I think through 471 00:24:24,280 --> 00:24:26,920 2025 they're, they're fine. So like I said, repayment 472 00:24:26,920 --> 00:24:31,480 starting that's sort of circa US $20 million every quarter from 473 00:24:31,480 --> 00:24:34,160 March 31st. So that'll, that'll add up 474 00:24:34,880 --> 00:24:37,960 pretty, pretty quickly for as you heard in the snippet that I 475 00:24:37,960 --> 00:24:41,760 paid played before for an operation that was, you know, 476 00:24:42,200 --> 00:24:47,200 break even at best, at best. And there there are investments 477 00:24:47,200 --> 00:24:50,280 they need to make still, you know, talking about things like 478 00:24:50,640 --> 00:24:52,840 paste and other parts of the plant. 479 00:24:52,840 --> 00:24:54,720 You know, they've they've had to fix up the crusher. 480 00:24:55,240 --> 00:24:56,520 There'll be other challenges they'll face. 481 00:24:56,520 --> 00:25:01,000 But yeah, there's investments that need to go into, into the 482 00:25:01,000 --> 00:25:04,320 mill. We know that operations are much 483 00:25:04,320 --> 00:25:05,840 more expensive than what they were. 484 00:25:05,840 --> 00:25:08,240 You can sort of glean that from all in sustaining costs. 485 00:25:08,240 --> 00:25:11,920 When they do talk about it, they're up touching on 50% from 486 00:25:11,920 --> 00:25:13,440 the the DFSA number of years ago. 487 00:25:13,440 --> 00:25:16,240 Because of challenges like we spoke about, we can't additional 488 00:25:16,240 --> 00:25:18,360 ground support needed. Yeah, the sorts and the 489 00:25:18,600 --> 00:25:21,280 development meters are like half of what the, is that right? 490 00:25:21,520 --> 00:25:24,040 Yeah, exactly. And that that's just a couple of 491 00:25:24,040 --> 00:25:27,960 the issues that a whole other with consumables snow hindering 492 00:25:27,960 --> 00:25:30,400 access and all that. Yeah, Just to round out on the 493 00:25:30,400 --> 00:25:34,680 on the financing side of things as well, they've got that debt 494 00:25:34,800 --> 00:25:38,440 and while you won't see it in the the quarterly report, 495 00:25:38,440 --> 00:25:41,800 there's a good chunk of capitalized interest there as 496 00:25:41,800 --> 00:25:42,840 well. It's kind of hard to glean. 497 00:25:42,840 --> 00:25:44,640 There's different reporting standards because they 498 00:25:45,280 --> 00:25:47,320 prioritize that London part of their listing for the the 499 00:25:47,320 --> 00:25:50,440 financial reporting as I sort of understand it, but I'd be 500 00:25:50,440 --> 00:25:53,680 guessing in excess of US $30 million is capitalized in 501 00:25:53,680 --> 00:25:58,400 interest there as well. So on the positive side of 502 00:25:58,400 --> 00:26:04,320 financing, they are doing this raise at a, you know, at a 503 00:26:04,480 --> 00:26:07,920 pretty decent price. Like this isn't a very dilutive 504 00:26:07,920 --> 00:26:10,680 raise for the challenges that they've faced. 505 00:26:10,800 --> 00:26:14,360 I feel like we've spoken to that companies in a not and not too 506 00:26:14,360 --> 00:26:18,720 dissimilar position and they've had to do a way, way bigger 507 00:26:19,080 --> 00:26:22,800 discount whilst they're trading at A at a much lower, you know, 508 00:26:22,800 --> 00:26:24,960 P NAV or with it, whichever kind of multiple you use. 509 00:26:24,960 --> 00:26:29,880 So 80 million Aussie roughly when you're a billion odd dollar 510 00:26:29,880 --> 00:26:33,040 company isn't the the worst thing in the world from the 511 00:26:33,040 --> 00:26:36,240 company's perspective? You normally, yeah, you normally 512 00:26:37,000 --> 00:26:40,600 say a company priced to raise the they'll become raised, the 513 00:26:40,600 --> 00:26:43,840 market can can figure it out, they'll sell off in the lead up 514 00:26:43,840 --> 00:26:46,320 and then the ultimate ramp up raise is a lot more dilutive. 515 00:26:46,760 --> 00:26:48,960 Really speaks to some supportive shareholders I think. 516 00:26:49,400 --> 00:26:54,160 Yeah, supportive shareholders, Yeah, yeah, yeah, there's, 517 00:26:54,480 --> 00:26:56,880 they're having some like some wins on the recovery, everything 518 00:26:56,880 --> 00:26:59,280 like that. But I think it's still, it's 519 00:26:59,280 --> 00:27:04,160 still kind of hard to figure out how ramp up is really going to 520 00:27:04,160 --> 00:27:07,680 unfold and execute because you take some small wins, but then 521 00:27:07,680 --> 00:27:10,560 there's context to the wins that they've had as well. 522 00:27:11,680 --> 00:27:15,040 Like what they're mining right now is a lot higher grade than 523 00:27:15,720 --> 00:27:18,360 than you know, the reserve grade is, how long can that last? 524 00:27:18,360 --> 00:27:20,720 What does that do to the recoveries etcetera like that, 525 00:27:20,720 --> 00:27:23,760 right? Yeah, we know the the positive 526 00:27:23,760 --> 00:27:26,640 flow through from higher head grade feed red that's going 527 00:27:26,640 --> 00:27:30,160 through currently looking a lot more positive versus what the 528 00:27:30,160 --> 00:27:31,720 study was. How long can that last as a 529 00:27:31,720 --> 00:27:33,720 question? But right now that should be 530 00:27:33,720 --> 00:27:37,120 flowing on quite positively to recoveries. 531 00:27:37,480 --> 00:27:39,360 That goes sort of both ways. So there there's a sort of 532 00:27:39,800 --> 00:27:42,240 question on that front. Also the challenges with the 533 00:27:42,240 --> 00:27:44,160 mill, they've been at the front. You know the, the challenge was 534 00:27:44,560 --> 00:27:47,920 that they articulated in the call was regarding the crusher. 535 00:27:48,440 --> 00:27:52,000 And like I said, they're doing about 1/4 of the nameplate 536 00:27:52,000 --> 00:27:55,520 capacity as they sort of work through and really scale things 537 00:27:55,520 --> 00:27:57,960 up, maybe the bottleneck shifts and maybe they have other 538 00:27:57,960 --> 00:28:01,360 challenges in other plants, other parts of the plant. 539 00:28:01,360 --> 00:28:04,720 So we'll kind of see like these guys have their back against the 540 00:28:04,720 --> 00:28:08,880 wall and you know, to, to their credit, they've, I'm sure 541 00:28:08,880 --> 00:28:11,640 they've been working super hard. Like I can rattle off some of 542 00:28:11,640 --> 00:28:14,720 the challenges from the the weather they faced, snow that 543 00:28:14,720 --> 00:28:18,320 sort of had its flow and impacts on power to the mine. 544 00:28:18,680 --> 00:28:21,800 The rock competency challenges, which we started speaking about 545 00:28:21,800 --> 00:28:25,600 a couple years ago now, the shortage in consumables, legal 546 00:28:25,600 --> 00:28:28,280 challenges regarding the tailings, the crusher like I 547 00:28:28,280 --> 00:28:32,040 just mentioned, contract issues, water challenges and the railway 548 00:28:32,520 --> 00:28:35,200 about everything under the sun that could have hit these guys. 549 00:28:35,760 --> 00:28:38,360 Hannah has and haven't fallen apart. 550 00:28:38,360 --> 00:28:41,640 Things are still moving forward. So hopefully they can address 551 00:28:41,640 --> 00:28:43,200 them. And I'm sure that the internal 552 00:28:43,200 --> 00:28:45,720 learnings are just stacking up and up and up and hopefully they 553 00:28:45,720 --> 00:28:49,400 can straighten out the ship. But yeah, I think things are 554 00:28:49,400 --> 00:28:54,040 looking quite different from what the the DFS outlines four 555 00:28:54,040 --> 00:28:57,560 years ago and to what we were thinking a couple years ago. 556 00:28:58,400 --> 00:29:01,920 It's, it's a hard one to, I've always found Adriatic really 557 00:29:01,920 --> 00:29:06,160 hard to pick if it's a, you know, I'm optimistic or 558 00:29:06,160 --> 00:29:10,440 pessimistic on, on the outlook. And yeah, I look forward to the, 559 00:29:10,480 --> 00:29:14,640 the, the ramp up kind of being over and commercial production 560 00:29:15,600 --> 00:29:18,080 being executed. It's just like what you're what 561 00:29:18,080 --> 00:29:20,520 you're funding dynamics look like in the interim that that 562 00:29:20,520 --> 00:29:22,760 matter a lot, especially when there's debt, the cap structure. 563 00:29:23,120 --> 00:29:26,200 What do you think matters to the stock from here mate? 564 00:29:26,720 --> 00:29:27,800 I think you hit the nail on the head. 565 00:29:27,800 --> 00:29:29,800 Debt. Debt has just amplified 566 00:29:29,960 --> 00:29:31,960 everything like like it always does. 567 00:29:32,240 --> 00:29:37,280 But you know, you've just getting the mining side humming 568 00:29:37,280 --> 00:29:38,560 and then getting the plant humming. 569 00:29:38,680 --> 00:29:43,000 They're the biggest things. And then you can potentially see 570 00:29:43,000 --> 00:29:45,880 some sort of tailwinds if silver moves in their favor, if zinc 571 00:29:45,880 --> 00:29:48,560 moves in their favor, obviously they're polymetallic. 572 00:29:48,560 --> 00:29:50,560 So those are the kind of big ones. 573 00:29:52,600 --> 00:29:54,880 That's just what you kind of got to look out for. 574 00:29:54,880 --> 00:29:57,120 And hopefully, I think there's a lot that we don't actually know. 575 00:29:57,120 --> 00:30:00,080 I think there's a lot of challenges that it's very hard 576 00:30:00,080 --> 00:30:04,480 for a public equities investor to to get good insight on at the 577 00:30:04,480 --> 00:30:07,000 moment. Lots has changed from the DFS 578 00:30:07,000 --> 00:30:09,280 like we kind of touched on there. 579 00:30:09,280 --> 00:30:12,480 So if you're an investor, you kind of just got to cross your 580 00:30:12,480 --> 00:30:14,520 fingers a bit and hope the team that can work it out. 581 00:30:15,320 --> 00:30:19,080 And yeah, you're the company just just keep on pressing away. 582 00:30:19,080 --> 00:30:20,520 What do? You, What do you make of L1 583 00:30:20,520 --> 00:30:24,640 Capital? They've been pretty big here. 584 00:30:24,640 --> 00:30:27,480 I think, I think the biggest shareholder now, I think. 585 00:30:27,960 --> 00:30:32,880 But their commitment, yeah, came about a year ago and has has 586 00:30:33,760 --> 00:30:35,320 ramped up and they've been, yeah. 587 00:30:35,520 --> 00:30:36,720 Yeah. So they're about neck and neck 588 00:30:36,720 --> 00:30:41,720 with Helicon in and around 15% when I last looked shareholders 589 00:30:41,720 --> 00:30:45,400 in this one. We've obviously spoken a bunch 590 00:30:45,400 --> 00:30:49,520 about this off the record that the track record in, in the main 591 00:30:49,520 --> 00:30:52,440 fund is super impressive. These guys have smart and 592 00:30:52,440 --> 00:30:56,040 anecdotally the amount of smart people we've spoken to that rate 593 00:30:56,040 --> 00:30:59,720 their team very highly. I think you know that that 594 00:30:59,720 --> 00:31:03,120 reflects very well on them. Then you dive into the returns 595 00:31:03,120 --> 00:31:06,520 and again, like we've spoken about, a lot of them come from 596 00:31:06,560 --> 00:31:08,560 mining, which is interesting because these these guys are 597 00:31:08,840 --> 00:31:11,880 generalist investors. So it's it's intriguing to see 598 00:31:11,880 --> 00:31:15,120 that the sector in which the highest amount of their returns 599 00:31:15,120 --> 00:31:19,760 has been driven over a decade plus is the the materials space, 600 00:31:20,160 --> 00:31:21,880 so. The one, the one equity that 601 00:31:21,880 --> 00:31:25,880 they've obviously been pretty public on lately is is min 602 00:31:25,880 --> 00:31:27,640 raised. And I think the average price in 603 00:31:27,640 --> 00:31:33,120 mittens is like 5453 bucks. It's now 30 and yeah, earnings 604 00:31:33,120 --> 00:31:35,120 coming off the market today. Yeah. 605 00:31:35,360 --> 00:31:37,560 And and they, they keep kind of doubling down a bit. 606 00:31:38,800 --> 00:31:41,200 Yeah, yeah, absolutely right. They they play in a lot of the 607 00:31:41,200 --> 00:31:46,520 sort of bigger names, like I think you can't make a judgement 608 00:31:46,520 --> 00:31:48,840 on them as investors on, on one kind of company. 609 00:31:48,840 --> 00:31:52,160 You, you don't always get them right, you know, and we'll see 610 00:31:52,160 --> 00:31:53,920 how that one plays out. That's a that's a longer term 611 00:31:53,920 --> 00:31:55,880 bet. They're not like the quote UN 612 00:31:55,880 --> 00:31:57,800 quote fast money that we've spoken about in the past. 613 00:31:57,800 --> 00:32:00,520 They're not, they're not a pod shop or that they take a a long 614 00:32:00,520 --> 00:32:02,160 position. But other names, we've seen them 615 00:32:02,160 --> 00:32:04,880 being busy. And lately West Gold comes to 616 00:32:04,880 --> 00:32:06,480 mind. Next Gen. biggest shareholder, 617 00:32:06,480 --> 00:32:08,560 next Gen. Yeah, Next Gen. did quite well 618 00:32:09,120 --> 00:32:10,720 for a while. It's sort of backtracked a bit. 619 00:32:10,720 --> 00:32:13,360 I don't know the latest on their position in that one. 620 00:32:13,800 --> 00:32:16,080 I think their net debt, wow, could be wrong, yeah. 621 00:32:17,440 --> 00:32:20,280 It's interesting, yeah. Never spoken with them so can't 622 00:32:21,680 --> 00:32:23,800 can't speak to that side of it. Getting Dutch show on. 623 00:32:23,800 --> 00:32:25,160 We've tried to reach out to you a few times. 624 00:32:25,280 --> 00:32:27,720 We would like to, we would love to have them on the show and 625 00:32:27,840 --> 00:32:30,720 hear about their views. Rafi, get in touch, Mark. 626 00:32:31,880 --> 00:32:33,800 All right, there's another company I want to talk about, 627 00:32:33,800 --> 00:32:34,800 mate. Tell me mate. 628 00:32:35,840 --> 00:32:38,600 This is a company that can make a heap of challenges just 629 00:32:38,600 --> 00:32:42,280 disappear for a mining company. Got to talk about salt Bush 630 00:32:42,360 --> 00:32:45,240 contracting. These guys are the Champions of 631 00:32:45,240 --> 00:32:48,720 bulk haulage first and foremost. Get it in your minds. 632 00:32:49,400 --> 00:32:51,680 These guys are the mind to mill specialist. 633 00:32:51,880 --> 00:32:54,480 And it's not just bulk haulage, they also do earth moving, 634 00:32:54,480 --> 00:32:56,520 crushing and screening. I hate more. 635 00:32:56,520 --> 00:33:00,720 If you want to hit your tongue targets when the ore comes out 636 00:33:00,720 --> 00:33:03,680 of the ground, comes out of the pit, wherever it is, just cool 637 00:33:03,680 --> 00:33:05,640 salt Bush, they'll move it. I don't want to hit my tongue 638 00:33:05,640 --> 00:33:06,960 targets mate, I want to beat them. 639 00:33:06,960 --> 00:33:10,000 You want to exceed that? I want to exceed salt Bush 200% 640 00:33:10,000 --> 00:33:12,520 as their website says mate, win win, win, win. 641 00:33:12,600 --> 00:33:16,800 Not my words. Their words I win, you win, and 642 00:33:17,200 --> 00:33:19,800 everyone wins. Community wins, the customer 643 00:33:19,800 --> 00:33:22,920 wins, the client wins, your employees win, everyone wins. 644 00:33:22,920 --> 00:33:24,440 Mate. These guys have got hubs in 645 00:33:24,440 --> 00:33:29,560 Kalgoorlie, Makethara, Perth and none other than Perinjury. 646 00:33:29,640 --> 00:33:32,240 Perinjury. I had to look up, that's a 647 00:33:32,240 --> 00:33:33,200 Farmington. Mate. 648 00:33:33,320 --> 00:33:36,800 Yeah, I I was intrigued, but lo and behold, if you're around 649 00:33:36,800 --> 00:33:39,240 there, if you're in the area, get in touch with Salt Bush. 650 00:33:39,280 --> 00:33:41,400 And I don't think this has been stressed enough. 651 00:33:41,800 --> 00:33:44,200 Obviously everyone knows that they do bulk haulage, that's 652 00:33:44,200 --> 00:33:46,280 your bread and butter. But they're also in equipment. 653 00:33:46,280 --> 00:33:49,520 Hire Rd. maintenance from handling and management, mine 654 00:33:49,520 --> 00:33:52,120 site construction set up. You want to get a box cut? 655 00:33:52,120 --> 00:33:55,280 Excavated site rehab, tailings construction. 656 00:33:55,960 --> 00:33:59,240 As Maddie said, you want anything done on a mine site, 657 00:33:59,240 --> 00:34:02,840 just give salt Bush contracting a call and they will happily 658 00:34:02,840 --> 00:34:05,320 look after you. Salt Bush go salt Bush. 659 00:34:06,040 --> 00:34:07,920 Good on it mate. What GCS? 660 00:34:08,400 --> 00:34:11,400 They are family business mate. Absolute legends. 661 00:34:12,159 --> 00:34:17,560 All righty one last thing to touch on mate, because I'm yeah, 662 00:34:18,520 --> 00:34:21,719 by the time this episode goes up mid means have probably already 663 00:34:21,840 --> 00:34:25,040 already reported, and I'm sure we'll have a bit to to troll 664 00:34:25,040 --> 00:34:27,920 through tomorrow when when their call will be as well. 665 00:34:27,920 --> 00:34:29,840 And I'm sure we'll talk about it a bit more too. 666 00:34:29,840 --> 00:34:33,960 But, but I kind of just wanted to give a brief prelude to to in 667 00:34:33,960 --> 00:34:37,880 Rez's results, which which will probably be out by now. 668 00:34:39,440 --> 00:34:41,920 I don't think they'll be very good is my gut feel. 669 00:34:41,920 --> 00:34:44,159 But that could already be priced in, to be honest. 670 00:34:44,920 --> 00:34:47,199 Ding Ding Ding Valley GC, who still holds men, by the way. 671 00:34:47,800 --> 00:34:53,360 The thing, the thing I I wanted to mention before the results 672 00:34:53,360 --> 00:34:56,159 actually come out, though, is a certain report that was released 673 00:34:56,159 --> 00:34:59,480 over the weekend. In the two trading days since 674 00:34:59,480 --> 00:35:03,080 that report was released in share prices has fallen 5%. 675 00:35:03,080 --> 00:35:06,480 It's flirting already with that $30 mark, which has been its 676 00:35:06,480 --> 00:35:09,960 floor for the last, you know, six months amid all of the 677 00:35:09,960 --> 00:35:12,880 turmoil that's that's come the way the company and and the 678 00:35:12,880 --> 00:35:16,120 report that was released. It actually came out of album 679 00:35:16,120 --> 00:35:19,960 miles litany of reporting documents for their, you know, 680 00:35:20,000 --> 00:35:26,080 four year FY20 2024 calendar year 24 is there their reporting 681 00:35:26,080 --> 00:35:29,720 period. And it was a technical report in 682 00:35:29,720 --> 00:35:33,080 amongst all the docs, which was produced by RPM Global 683 00:35:33,720 --> 00:35:37,080 specifically on Wodgina. Because it was a whole technical 684 00:35:37,080 --> 00:35:40,720 report on, on Wodgina with a bunch of comprehensive detail 685 00:35:40,720 --> 00:35:42,960 that hasn't kind of been publicly released before, both 686 00:35:42,960 --> 00:35:46,200 about the, the resource, the performance of the asset today 687 00:35:46,200 --> 00:35:49,360 and forecast performance based on the the life of mine plan 688 00:35:49,360 --> 00:35:54,280 that exists within the JV. And without going into like the 689 00:35:54,280 --> 00:35:57,040 full detail of, of everything in this report, I think it's fair 690 00:35:57,040 --> 00:35:58,840 to say there'd be a few discrepancies between how the 691 00:35:58,840 --> 00:36:02,240 market has been valuing Wodgina versus what this report suggests 692 00:36:02,240 --> 00:36:06,280 the value of Wodgina is. Headline take away is it based 693 00:36:06,280 --> 00:36:10,600 on the Life of Mine plan detailed within this report. 50% 694 00:36:10,680 --> 00:36:18,840 of of Wodgina has an NPV of Aussie $1.3 billion at AUS $1300 695 00:36:18,960 --> 00:36:21,680 per time spot price. Bit below broker consensus, 696 00:36:21,680 --> 00:36:23,600 wasn't it? It's a fair bit below broker 697 00:36:23,600 --> 00:36:27,080 consensus for for men's 50% share of Wodgina is, you know, 698 00:36:28,000 --> 00:36:32,000 slightly north of 3 billion, which is which is nearly a 699 00:36:32,160 --> 00:36:36,080 difference of $10 per share when you think of it in min min share 700 00:36:36,080 --> 00:36:39,200 price. What's more is, is the life of 701 00:36:39,200 --> 00:36:43,880 mine plan that's in this, which creates the base case in this 702 00:36:43,880 --> 00:36:46,080 report. It assumes recoveries that 703 00:36:46,080 --> 00:36:49,760 wasn't actually, you know, increase like 80% over the next 704 00:36:49,760 --> 00:36:53,920 couple of years and it also assumes grade increases a fair 705 00:36:53,920 --> 00:36:58,040 bit from where it is now as well. 2025 was looking like a 706 00:36:58,040 --> 00:37:01,920 tough year in that. Report Max strip ratio 2025. 707 00:37:02,040 --> 00:37:05,680 Yeah, capital investment was, you know, elevated it. 708 00:37:06,320 --> 00:37:08,840 It was coming at the wrong time to say the least for mins. 709 00:37:09,040 --> 00:37:11,640 Yeah. So I just think there's some big 710 00:37:11,640 --> 00:37:14,760 clouds hanging over the asset and this is remember this, this 711 00:37:14,760 --> 00:37:16,840 is the the best of the the bunch in there. 712 00:37:16,880 --> 00:37:20,760 The the lithium portfolio and mins of course they have a 713 00:37:20,760 --> 00:37:24,320 favorable mining services contract at the the project, 714 00:37:24,320 --> 00:37:27,880 which you know helps them kind of offset some of the negative 715 00:37:27,880 --> 00:37:30,840 cash flows of being a 50% equity holder of the project. 716 00:37:31,640 --> 00:37:35,360 But you know, with the detail in, in this report, I, I don't 717 00:37:35,680 --> 00:37:39,600 believe that that that's offsetting the, you know, the 718 00:37:39,600 --> 00:37:42,240 cash outflow that you're, you're seeing at current lithium 719 00:37:42,240 --> 00:37:44,320 prices. I'd still I'd still be a 720 00:37:44,320 --> 00:37:48,880 believer that this this asset is is cash negative for mins at the 721 00:37:48,880 --> 00:37:50,440 moment. Yeah, it's such a funny one that 722 00:37:50,680 --> 00:37:54,360 that, yeah, when you're the the half owner of the business, 723 00:37:54,440 --> 00:37:58,640 yeah, if it's benefiting one side, it's it's taking at least 724 00:37:58,640 --> 00:38:00,520 half from the other. Yes, yeah. 725 00:38:00,520 --> 00:38:03,600 So, yeah, I think their contracts have these like, you 726 00:38:03,960 --> 00:38:06,280 know, various escalation terms etcetera, depending on I do 727 00:38:06,320 --> 00:38:09,560 yeah, certain. But I still can't believe a 728 00:38:09,600 --> 00:38:12,960 narrative that this asset would be cash positive for me. 729 00:38:12,960 --> 00:38:15,640 And that's my, my view based on everything that I've read in 730 00:38:15,640 --> 00:38:17,400 this report. Anyway, I'll have more to say 731 00:38:17,400 --> 00:38:19,840 about the whole, the whole business after their, their 732 00:38:19,840 --> 00:38:22,520 results I'm I'm sure and I look forward to, to reading them 733 00:38:23,160 --> 00:38:25,080 tonight. Yeah, lots of fascinating 734 00:38:25,080 --> 00:38:28,960 implications on what a potential sale of what you know could look 735 00:38:28,960 --> 00:38:32,080 like. And that contract would be a 736 00:38:32,080 --> 00:38:34,480 huge in impediment to anyone wanting to. 737 00:38:35,040 --> 00:38:38,000 I totally agree. I mean, they often talk about 738 00:38:38,120 --> 00:38:40,440 how if they were, you know, they've got a life of mine 739 00:38:40,920 --> 00:38:43,840 mining services contract over the overall of their assets. 740 00:38:43,840 --> 00:38:47,480 So they ever sold them, they'd say them, but I just don't see, 741 00:38:48,120 --> 00:38:51,920 I struggle to see someone who would buy it and and want to 742 00:38:51,920 --> 00:38:56,120 keep that contract in place. You'd want to retweet it or 743 00:38:56,120 --> 00:38:58,120 remove it entirely. Like would would Pilgrim 744 00:38:58,120 --> 00:39:01,080 Minerals buy what you know? Well, I don't know, but I doubt 745 00:39:01,160 --> 00:39:04,360 they'd buy it if it came with Inreza's contractor. 746 00:39:04,560 --> 00:39:08,280 Yeah, I could say that with a bit of confidence. 747 00:39:08,640 --> 00:39:11,400 I think, you know, you'd want to have a bit more control in your 748 00:39:11,400 --> 00:39:14,320 own destiny if you're going to buy the asset and maybe they'll 749 00:39:14,320 --> 00:39:17,120 get an opportunity in the the coming sort of period. 750 00:39:17,440 --> 00:39:20,040 We'll sort of see. Yeah, it's, it's an interesting 751 00:39:20,040 --> 00:39:23,000 one. Very excited to see how that 752 00:39:23,200 --> 00:39:24,600 earnings release goes and the call goes down. 753 00:39:24,600 --> 00:39:26,400 I'm sure to be fireworks as usual with. 754 00:39:27,400 --> 00:39:32,040 See if they hold 30 bucks mate. Let's see, all righty, we've got 755 00:39:32,040 --> 00:39:35,000 a couple awesome partners to thank as we wrap up, mate. 756 00:39:35,400 --> 00:39:38,200 Big thank you to Mineral Mining Services, Grounded Sandvik 757 00:39:38,200 --> 00:39:42,200 Ground Support, CRA Insurance, Kdrill, the Mighty Saltbush 758 00:39:42,200 --> 00:39:46,760 Contracting, SWIC, Quattro, Project Engineering and Cross 759 00:39:46,760 --> 00:39:50,640 Boundary Energy. And last but not least, if you 760 00:39:50,640 --> 00:39:53,240 want to go to the AUS IMM Underground Operators 761 00:39:53,240 --> 00:39:55,600 conference, get in touch, go on the show notes. 762 00:39:55,640 --> 00:39:57,520 There's a discount of 100 bucks waiting for you. 763 00:39:58,360 --> 00:40:08,360 Go Australia. Go Australia situation or needs 764 00:40:08,600 --> 00:40:11,400 of any particular person. Before making any investment 765 00:40:11,400 --> 00:40:14,440 decision, you should consult with your financial advisor and 766 00:40:14,440 --> 00:40:17,600 consider how appropriate the advice is to your objectives, 767 00:40:17,800 --> 00:40:19,800 financial situation and needs.