Righto buddy miners. Sorry lads, those bloody drive
at the porcelain bus yesterday for 24 hours.
I thought I was done with gastro but since daycare finished but
it appears not. Gastro's not done with you,
Maddie. It's just been a prick of a
fortnight. Wow.
Oh yeah mate, the big old. As much as I was spewing
yesterday, the biggest thing I was spewing about was not
getting to mention Axis mining technology.
Yeah, like that just. That's nearly worse than the
gastro itself. My daily fix of talking about
the trusted advisor for survey instrumentation.
Oh God, it's like a bloody part of me didn't exist yesterday.
Trying. To do ads without yesterday was
a bit like a, you know, a Geo and a driller out on a rig with
that's not using a champ jar or a champ already.
That's it, that is. I couldn't have put that better
myself. Travis, those well said.
Perfect mate. You'll see them and the bloody
every other driller. I forgot to end drill 24.
Get your tickets for that as well.
We're all going to be there. I missed plugging them yesterday
too. Ah boys, what do we got?
We got a bit of a uranium deal, that of bloody battles through
stomach cramps to analyse in some way, shape or form.
But it's a good deal. I think it is for the value,
yeah, for what they're getting and on a dollar per pound basis
and a plant is a pretty good bloody bang for buck, I think.
And JD, you have you've gone deep into a little short report
Sunshine. Very, very exciting mate.
We're gonna be venture over to Newfoundland in Canada for a for
a short report. So sit tight for that one.
Travis, what do you got, Sunshine?
Mate, the company I'm talking about was also the recipient of
a short report earlier in the year.
Adriatic bet it was the short report was probably a bit bit
weak on, but they faced a lot of adversity and they hosted this
investor webinar yesterday afternoon Perth time.
And I'm keen to keen to talk about what the update is because
there's yeah, there's so much happened there and it's it's a
riveting period of time for them.
Don't know which way it's it's going to go yet, but if you just
oh. Big between the personnel
charges like the there's a reset happening, it appears.
Yeah, yeah. Yeah, lots, lots.
Of change what you got there. All right, let's RIP in.
UEC buys Rio Tinto's uranium assets in Wyoming.
So as always, since we haven't talked about them before, give a
bit of UAC overview before we get into what the deal is.
So before today they had go and just remember North America, US
and Canada, there ain't shortage of M and I deals in uranium.
When you go through the history, yeah, these companies are formed
and this is one of them. So before today they had about
£230 million in measured and indicated you throw out resource
across US and Canada. So they just recommence
production at their Wyoming ISR hub and spoke project and
looking to commence their second production area in Texas, not
yet known when that's going to happen.
Both have got permitted processing facilities.
The the Texas operation was I guess the original UAC where the
Palangana mine produced about a bit over half £1,000,000 in 2010
to 2016. It's not very much over a an
annual. No, but it's, it's like
permitted for frigging £4 million a year.
OK, they can, they can do there. So there I guess the, the
Wyoming portfolio that, that came about at the end of 2021.
So UAC bought the Uranium 1 America's portfolio for US 112
million back in the end of 2021. That included the processing
plant. So Uranium 1 is part of Russia's
Rosatom. So that's the same Uranium One
that sold Honeymoon to Boss Energy.
So first shipping a yellow card out of there is anticipated for
November or December this year. So and like for how much they're
only looking to produce according to the Canaccord note,
about £400,000 for FY25, maxing out at about £1,000,000 for this
Christensen Ranch. And then they've got the other
satellite deposits they're intending to bring online to
hopefully ramp up to £4 million a year for the Wyoming bit, for
that Hobbensburg part of the Wyoming bit.
And I think they've got a, they're licenced to process two
and a half million pounds for the plant, but then they're
anticipating to increase that to 4,000,000 lbs.
So uncontracted as well, intending to sell everything
into the spot market, which is interesting.
Well, and what they call unhedged in, yeah, I know we say
unhedged gold odds probably say uncontracted, but yeah,
unhedged, same thing but. That is my, is my understanding
of like the US producers, right? I've got this like preconception
that US uranium producers and the restart projects, they're
all kind, there's a bunch of scattered like quite small scale
stuff that yeah, that doesn't like move the needle too much on
a per project basis. No, no.
And I think once these guys combine, like combine
everything, so like, you know, £4 million there probably maybe
another potentially 4 in Texas, what extra they're going to get
out of this acquisition today, plus any future stuff in the
Attabasket Basin that I'll go through, like they might creep
up towards a double, double digit producer, but long, long
way away, yeah. Not not small on the the market
cap front, 2 1/2 billion US. Oh yeah, huge like and lot of
lot of M&A to to get there and like there because in 2022 they
acquired that Rough Rider project from Rio Tinto.
Oh yeah, yeah. So that's the, that was for
146,000,064 of it was in USA stock.
That's in the Eastern Adabasket Basin.
That's about £63 million total resource grading above 3%.
So it's just West of that McLean Lake Mill, which is 22 1/2%
Denison, the restaurant. So there that's like a tall
trait. There's plenty.
I think there's multiple meals around there.
That's one of them because MacLean, like they told traded
18,000,000 lbs for cigar like back in 2022.
So there's there's an option there as well.
And so that's then then 2022 like the rest of their out of
basket base and stuff. They've, they took over UAX in
pretty much the same similar time that they did the Rio Tinto
deal as well. Then they did another bloody
deal with a smaller one with Rio Tinto as well.
So that's how they sort of accumulated this bloody shit
loads of # resource. Common theme here?
Buying assets from Rio. Yeah, exactly.
And I'll, I'll comment on that, which probably indicates what
Rio Tinto's thoughts on uranium are.
So the deal today USA are purchasing 100% of Rio Tinto's
Wyoming assets. So this is creating like a third
hub and spoke operation. So adding to the Irigara, How do
you fucking say that Irigara, right or something?
That's the existing Wyoming one they got from Uranium One.
They got the Hobson plant in Texas.
This is going to be a a third one.
So and they're it, it doesn't say if they're paying all cash
or shares or anything. It just says the 175,000,000
paid from they're available liquidity.
So I'm not sure if it's going to be they're going to be rising or
paying cash or offering some shares.
Or I read it as cash. Yeah, Cash, Cash payment, yeah.
Yeah, I think cash. Yeah, I couldn't say the word
cash, but anyway we'll wait and see if it is.
So they're because they've got like the last reported cash and
liquid assets was US 303 million.
So 95 cash still got a bit under one and half 1,000,000 lbs of
uranium physical. So that's worth about 112 mil
spot. They got 90 million equity
investments. So they, I think they, they've
raised capital each year by the looks, but then then they did,
they were acquiring physical uranium from about 2021 I think.
And then they sold £3.15 million last year into the spot market.
So sold an average price of 52 bucks a pound.
But I think it ended up being about a 40 mil profit for him.
So that's obviously helped a bit of the cash they've got.
So for this 175,000,000 US, so they're getting the Sweetwater
plant, which is lost its capacity of £4.1 million.
It's been on care and maintenance since 1983.
Wow. Yeah, they operate for two
years. There's some refurb that might
be. Yeah, but they don't, they said
it's been maintained. My real standard, it's
maintained for 41 years. So and it's so there's there's
gonna be a bit of refurb there. No doubt because the licencing
is is is the. That's it.
You just pay for that, wouldn't it?
Yeah, so, but it's a it's a conventional meal, so and so it
will be if they chew. So it looks like what they've
picked up from this rare deals about half ISR, half
conventional mining. So I think they'll have to do a
bit of they've got to adapt that plant to, you know, recover
uranium from loaded resins for an ISR method.
So a bit of work to do there. So, and probably that'll require
probably additional changes to the licences and permits.
So the they said it could take one to two years or so to get
all that shit sorted. So, and they're all so they're
and within that they're also getting 175,000,000 lbs of
uranium resource between the Red Desert and Green Mountain
projects. So as I said, half of half of it
looks ISR amenable, half open pit.
You can see on the, oh, I don't know, it might be underground
actually I'm not sure. It just says conventional
mining. So you can see on the tenement
map here that what USA had before this acquisition all from
the that that'll come in from the Uranium 1 America's
acquisition in 2021. So this deal today solves the
whole issue of not having a permitted processing facility.
So that's, that's that sorted. So they've got a pretty big,
pretty big holding there. So waiting for a so you'll be
waiting for a restart decision for this acquisition, which
will, you know, probably go through in November or so.
But before that, we'll likely hear a restart decision for the
Texas operation by the year end. So that that's licenced for £4
million that Canaccord night said it realistically only
produced about £2,000,000 for the first two to three years.
And yeah, so, yeah, good to good to see some uranium M&A that
makes the geographical sense you'd say.
This is the first one to make a lot of.
But like if you look at, I think they're pretty much paid a
dollar a pound for the resource. And then the processing facility
is as well the per you're paying for the permit, obviously.
Yeah. So yeah, it looks pretty bloody
real. Like take it, catch you later.
So I think it's, yeah. What did they sort of say about
a a restart decision mate? What's the what's the kind of
plan on when they want to press go?
Oh no, it just I think they what did they say?
They got to obviously delineate and reconfirm a lot of the the
resource do the studies and everything for the for the
restart. So I think yeah, it wouldn't be
not not a year or two away I'd say, especially if they got to
convert the plan or or anything like that.
So yes, but they're just growing by bloody acquisition as you
say. What did you say to and a half
billion dollar cap are they? Yeah, jumped to a 12% on this
one. So the market kind of liked it.
I think everything, everything uranium jumped last night, still
got a bit of a bit of a bloody Three Mile Island, bloody boost
up the backside. I think had two good nights on
it. So that's going to be yeah,
going to be going to be interesting though.
That's right, mild thing. I was just we were talking to
Trev about it. It was it was interesting to say
that you know, the whole everyone's been talking about
the structural supply deficit for so long.
So no, there's not going to be enough pounds to go in and all
this, but nothing sort of really moved the needle yet on a big
take off for uranium. But it look, look at the
reaction that the market had on the three mile Island thing.
One just saying like probably a bit more imminent nuclear
capacity coming online. So that's all right.
They, they will need pounds Big, big tick for the whole data
centre thing. The fact that Microsoft are
putting the cock on the block to say now we want to secure this
plant to supply a data centre that sort of validated a bit of
that thesis a bit. So it looks like, yeah, it was.
It's got to be interesting to see what comes out with you, the
rest of your your Amazons and your Meta and everyone else is
going to be in this whole data centre thing because Microsoft
is just one of them. Yeah.
Well, we saw, we saw Amazon a good few months ago already say
they were keen on it and there was a bit of a, a tick up across
all the U stocks, right. And then this one's, you know, a
bit more concrete. So you can see that the real
kind of kick up. And like you say, it'd be
interesting to see what the others start doing and whether
whether there's any sort of capacity within the US for them
to you know, fast track permits or anything like this as the the
tick up in power demand is pretty substantial over the sort
of coming five years, right? Yeah, exactly, I think.
And we're still yet to see the the contracting cycle begin for
this 5-6 years down the road. So Mike, it could be a big back
end of the year. Oh no, like this USA thing,
we're obviously our network is in North America is obviously
not what it is in Australia. So it's probably not in the
weeds as as a hoped. But I do want the American
listeners to tell us who is the American equivalent to MMS in
regards to open pick contracting because like this is when
they're talking about the conventional Hard Rock mining
and the race start and everything.
I'm thinking MMS, but I'm like who's the American equivalent?
It that's a really hard question.
No one comes to mind. Well.
Because if we don't find out who it is, we are going to be pretty
much forced to get MMS to expand into North America to fulfil the
potential for this nuclear renaissance.
So. If they have, I think.
They're pretty, pretty unparalleled, Maddie.
I think so. I don't think yeah.
I don't think there's a direct comparison for a group like
that. Their competitive advantage is
being like nimble, flexible, just getting on with it.
So, you know, if if there isn't a contender in the United States
and it kind of just makes sense for them.
Logical job, logical growth, expansion.
Yeah, yeah. You think the likes of like, you
know, your black cat, your red 5 Corinthian, mine and Legacy on
or Carora before they got taken over like they've all, they've
all had the early contracts with MMS.
They're going to be at the pub in future saying we had the
first ever open pick contracts with MMS.
It'll be like a a badge of honour for them and that's when
MMS become an absolute multibillion dollar
international mining services provider.
That's where we're going, that's where they're heading.
I would recommend getting on the journey with them money miners
out there. I'm excited to be on the
journey. I love it.
Righto JD the buddy. It's a bit of real North
American feel today. Love it.
We're heading to the Far East of Canada.
Oh, newfound land. Yeah, this one, this ones really
up our alley. So late last week, I think it
was Thursday, but Friday our time in Australia, a, a short
report surfaced for this, this company new found gold.
So on, on the day on the Thursday in North America, they
sort of peeled off 5%. They sort of recovered a bit on,
on Friday and then they, they peeled off another couple
percent yesterday. But I'm, I'm pretty excited to,
to talk about this one guys, just sort of sifting through
the, the short report. I think there's a a good bit for
us to kind of tuck into. But who?
Who is new found gold? Mate, I've had to, I've had to
do a bit of reading myself, but they're, they're not a tiny
company market cap over 700 million.
They they own the Queensway Gold project, like you said, Maddie
Atton, Newfoundland with a, a market cap that was well over a
billion bucks in, in the past year.
So as you can see in the in the chart there, it's been up and
down a bit, but they've got some sort of A listers, if you like
on the, on the registry. Eric Sprott holds 19%, as the
company's pretty keen to point in, point out rather.
And he sort of tipped in 260 million bucks over 5 different
rounds over a number of years. Yeah.
And then you've also got Palisades Gold.
So they own about 27% of the company.
They they're sort of largest shareholder owning 28% of them
is Colin Kettle and he is the CEO of this group.
So a bit to a bit to kind of work out there.
But you know between the two of them, they're speaking for about
50% of the registry. And like, yeah, kind of hinted
at before Maddie, these guys are Canada listed on the the TSXV as
well as on the NYSE, the. Palisades Gold is that is that a
fund or is that what is Palisades?
So Palisades is itself a listed entity and they hold stakes in.
Yeah, obviously their their biggest stake is in, in this one
here, but they got stakes and a whole portfolio of of warrants
and other sort of Knick knacks in Canadian juniors.
Gotcha actually. Gotcha.
You only see it on YouTube, the Palisades Gold Radio or
whatever. Is that the same?
Yeah. Is that the same?
Yeah, they've got a, they've got a podcast and A and a YouTube
sort of channel as well. Gotcha.
Kind of like us. We, we, we just don't own 25% of
any companies other than our. Own no bit of a difference.
So let's get into the the report now there's you know that the
key critique here is that this is a super sort of nuggety gold
project that lacks continuity in its mineralization.
These guys have drilled over 500 kilometres and they haven't
chucked up a resource. So that is the yeah, that's the,
that's the stand out take away you get in the first few dot
points of that short report. I think it's 5. 100 kilometres
is that is so much drilling. That's like it, yeah.
That is so much drilling. Do not do not provide a
resource. It is indeed.
It takes years to do that much drilling like.
Well, they, they picked up the asset in sort of 2016 and over
time added tenements and a few other bits and pieces around it.
But 2016 is when it kind of started.
And then they've got, you know what, what they kind of call
discoveries sprinkling in every every other year, starting sort
of the 2019-2020 in 2020. From then to the next year, they
jumped 10X on some of these, you know, discoveries as they call
it. Obviously the, the short report
is pretty critical of these discoveries as you can kind of
go and read, it's pretty easy to find.
But yeah, they, they really just highlight the, the lack of
continuity, the the fact that previous owners had kind of
drilled in these areas and it was to be expected on some of
the the hits that they were getting.
Interestingly, on the, on the more corporate side, you've got
4 sell side analysts covering the stock.
So BMO Paradigm, Roth and National Bank of Canada and
their target prices, you know, haven't been updated in a little
while, but they're all sort of 2 1/2 to 3 1/2 times the the
current price and that just sort of crank one open.
I found this pretty hilarious. So the, the name of the research
entity that has written the report is called Iceberg
Research. And the most recent title, which
came out over a month ago, so well before this report, is
called just the tip of the iceberg.
That is unfortunate. See how good's that?
Right? But who's who's actually shorten
it, JD? Yeah, so, so disclosed upfront,
these guys Iceberg Research, they've they've written the
report. They are short the stock
naturally like you get with a lot of these short sellers, you
know, specialist short sellers, not hedge funds that run a, you
know, a short book as a part of a broader portfolio.
But these guys are pretty, pretty undercover.
It's hard to find too much colour about them.
There's a. You know that that is one of the
big criticisms of groups like this.
But you know, historically groups like this have kind of
copped it quite a bit as well. So there are kind of good
reasons for them to be pretty private about things.
But first and foremost, they have a financial interest in
saying that the stock go down. The one bit of info you can get
is this sort of pseudonym of the founder guy called Arnold
Wagner. And he's he's actually got a bit
of a history. This is really interesting.
So he wrote a series of short reports about Noble Group.
I don't know if that rings a bell for you guys, but they were
a a huge commodity trader and he started writing these reports in
2015. They at the time were a big
publicly listed company led by this billionaire founder who'd
started the company in the 80s. There was a giant of the
industry listed in Singapore, and he accused them of
accounting fraud. Noble then accused him of being
just a disgruntled former junior employee.
But you know, history sort of showed it ended pretty, pretty
nasty for Noble. They ultimately delisted.
The stock dropped 99%. They had to do a massive
restructuring with obviously the the equity kind of getting wiped
out in the process. So the piece Arnold might be
might have been right. But it does look that way.
See, the, the, the crux of this report is they've done heaps of
drilling and never provided a resource over all this time.
Plus, you know, you've, you've got like real doubts about the
continuity of the the ore body that maybe the market's
factoring in there is that is that like as far as the report
went? Yeah, so the, I mean, the title
of the report is lies, misinterpretations and a
professional stock promoter. So that, that kind of tells you
a bit, mate. It goes a bit beyond the lack of
continuity. As we said, they've done a heap
of drilling. They're on their way to 650
kilometres still with no, no real plan to whack a resource
around that. You've also got the fact that
the British Columbia Securities Commission pulled them up in
2022 for smearing. So these guys then had to go and
correct a number of the reports that they put out, though the
short report says they didn't even go and correct all of their
statements. A lot of them are still pretty
misleading. And you can sort of work that
out by marrying up the more detailed technical reports with,
you know, shorter announcements that they'd put out.
And for those sort of wondering, smearing is essentially trying
to make those high grade hits look like they spread over a
kind of wider area to make the continuity look better than it
might actually be in in reality. They're also kind of accused
them of presenting the cross sections really poorly,
presenting data very poorly. So it's very hard for analysts
to go and actually see what's going on.
And of course, like I said in the title, being led by a Korea
stock promoter. So this point is super, super
interesting and I won't go into the whole history of the, the
managing director, the CEO like the report does.
You can just easily go in and read that one.
But the, the interesting point is that both the chairman and
the CEO play pretty important roles in the mining news sort of
world in, in Canada. So they are ownersofceo.ca, the
Northern Miner, mining.com and a few other groups.
So to be fair to them, I did read an article in in mining.com
about this exact story. How to disclaimer at the bottom,
they weren't trying to defend anyone.
They just sort of represented the facts.
So you can see a good bit of independence in the reporting
there. But it it does kind of show a
bit of a conflict of interest in, in my opinion, the fact that
these guys have those stakes in those those media companies and
that kind of ties in well with one of the key accusations that
they are, you know, a kind of slick marketing machine.
If if you like, I'm not sure if you guys had kind of thoughts on
that. I think if you're talking led by
a career stock for a promoter, think of Ivanhoe.
Good on Robert Friedland. Yeah, stock promotion isn't sort
of, you know, by by itself a bad thing.
And it's in part pretty necessary in the industry,
right? You, you need to make a name for
yourself. It, it becomes blurry if you're,
you know, if you're misrepresenting the facts, not
accusing them of doing that here, but it's a, you know, it's
an interesting sort of line to to balance and sort of walk.
Yeah, well, maybe 22 comments. 1 is that to do that much drilling
and not put out a resource, it's just absurd.
I can't, I can't, I can't, I can't fathom it.
If it was an ASX company, we'd have called it out yonks ago
like. And then the other point is
often see this a lot, particularly with the Canadian
companies is like, you know, when you hear you hear a lot of
the promotion of certain stocks go something along the lines of
this Eric Sprott's invested in it or Rick Rules invested in it
or you know, XYZ kind of Ross Beatty's invested in it.
There's a lot of like this this kind of like trying to convince
retail or the public by leveraging on someone else's
reputation who is an investor in it.
I think like, I just think like overweighting that sort of
signalling is, is really like a, a, a yeah, a kind of a bad
strategy if you base your personal investments off of it
because you know, it, it devoids yourself of making your own
investment decision based off your own due diligence.
And reality is like, I can remember another thing where
Eric Sprott was a big shareholder in and it lack
continuity. Anyone else remember Novo
resources, the nuggety watermelon seeds?
Like, you know, so I just yeah, like I, I've got no idea how
this will all unfold, but you know, there's I just, I just
hope that people don't get kind of sucked into investment
theses. But the big selling point being,
you know, one of these big name people is a is a back rather.
Yeah, I, I think people probably automatically think they say
those names and that they make an assumption they're thinking,
right, that big name has done their due diligence and thinks
it's their next big thing. So that's like whether that's
the case or not is the unknown thing.
And I think they how much weight that you put to that.
And then but then realistically, like you get that friggin market
flow behind it. They're like, oh, sprouts in and
oh buddy, and then everyone starts going and just make sure
you get out. Yeah, I think, I think that's a
great point, Maddie. You see that all the way
through. You see that with people
pointing to debt investors say, oh, they, they did the work,
they've got, you know, the availability of way more data.
Let's just piggyback on that. And on the point that you raised
travel, so a really good one, but you don't know the, the
price that some of these guys bought in at.
You know, they, they know the, the weight of their name and you
know, not not accusing any of them of anything, but they might
have picked up warrants, they might have come in on a
placement or something like that.
So you need to be pretty cognizant of all of those
things. So to kind of round out on, on
the company, they haven't put out any response, which is also
somewhat bizarre to me. It's been a number of days now.
And it's not like they don't know about it.
Obviously they came out and posted new drilling results
without, you know, not even a, a kind of cursory acknowledgement
of the, the short report floating around, which I find,
you know, interesting to, to kind of say the least.
So what, JD, have you got any what, what, what these
intersections are like, what grades we're talking about or
thicknesses? Absolutely.
So to, to give an example of the, the kind of smearing
accusation before they're sort of .4 metres by 400 grammes per
tonne and they've been represented as two or three
metres by 50 grammes per tonne. You know, that's the kind of
thing it's, it's super high grade.
You know, they, they speak about it as being a quite a, a nuggety
project, but perhaps that isn't kind of weighted, but there are
supposed notes out there you can go and see.
Yeah, I suppose. I suppose technically that is
that would be the reserve grade of it because you'd have to,
that's what you have to mine to get it out.
So it's sort of technically correct.
Like if you got .4 / 400, you got to take it out at a three
metre start. That's probably what it would
be. Yeah.
I mean that the onus is kind of on them, right to, to put out
the to put out a, a resource in a bit of a, a shape, right that.
Yeah, yeah. And that and that doesn't like
that's that's a reserve that's not a resource should be the
most accurate description of combined.
Yeah, Yeah. What's in there?
And to, to the point of the, the resource, again, there was
technical experts that these guys hired that said they can do
one for 300 grand. These guys have spent 10s of
millions of dollars on drilling and they themselves said it'll
cost $300,000 to do a resource. You know, they're not, they're
not without the, the, you know, the, the resources, pardon the
pun, to do a, a resource estimate.
They will have the grade and tonnage that they'll know all of
this. They'll want to know whether the
additional drilling that they are they are doing is adding
value overall to the project. And you as a shareholder, you'd
want to make sure your capital being invested every time these
guys do a raise is being adequately and appropriately
allocated to the different sort of projects that they have
there. So I mean, you, you've got other
red flags as well, which kind of stand out, the fact that they
were pulled up by the regulator, the fact that they're making the
data pretty hard to collate. They've got a big at the money
facility, which is, you know, something I'm just not, not kind
of a fan of. So there's a few kind of hairy
things about this one. Sort of, I would kind of steer
clear. But if you're a shareholder,
you've got a clear set of questions just to go and ask
management and hopefully they can address them one by one and
just listen to listen to what they have to say.
I'd be very keen to hear how they, you know, pull apart this
report and what they say to it. Best practise is to yeah be
iterating your internal resource model as your new hits kind of
come in you're you're not it's not like these discrete kind of
things where you go, you know got to do my 5500 kilometres of
drilling and then do my resource model.
You kind of like you put it, you put it, you know you do it all
at the same time You got AG is on the rig, you're putting in
your yeah, your data and all that sort of stuff it's.
What would you think about the exploration?
Thought the buddy try and fail or whatever.
What what was your what was the saying?
Bloody OH. Fail fast.
Yeah, there doesn't appear that
they've taken that approach if if it is a there is questions on
the continuity. But yeah, we don't know until we
see a resource if it yeah, if it proves proves to be nothing,
which I'm sure there's something there, but bloody K drill could
have told him after 50 kilometres of drill and if
probably go elsewhere. 50 kilometres.
Instead of 500 that'd be like mate this doesn't look like it's
stacking up. They have integrity as a
drilling business. They do in bloody Australia or
North America where they end up. They drilled some bloody Arsene
dominoes over the years, those boys, They could, you know, they
talk about your leapfrog and ore body.
Yeah, you can K drill an ore body because they're watching
the bloody chip, the RC chips and the core come out.
They've got a mental map of what that ore body looks like before
it even gets aside those plugs, right?
Years and years of experience they and ripping blocks.
They wouldn't make things like this just wouldn't happen on
their watch. Now they wouldn't.
I'm sure they'd love the extra 450 kilometres of drilling, but
the biggest thing about K Drill is their reputation.
They don't want anything to bloody into that.
Give all Drewber an email. He's in the show nights.
You might get some exploration holes out of him.
You've got him a record thing, yeah.
Record matters. Record bloody record say.
I don't know if there can be a record for sample management
process, but these guys that have it.
Record safety and record for just good yarns with over a
beer. Walking away feeling good about
yourself? Yeah, Yeah, I've never walked
away feeling bad about myself after talking to Ryan or Druba.
Thank you, lads, said Maddy. Travis Adriatic, a bit of an
operational update for the Bosnian mining producer.
Yeah. This is it's.
I'll be following Adriatic closely and.
Haven't yelled about him for a bit, have we?
No, no, yeah, but but still following.
So, you know, yesterday afternoon they they provided
this operational update webinar to shareholders.
So of course, I tuned into the webinar because, you know, I
think we have, we've covered a bit why Adriatic is in, in that
fascinating phase of its life cycle, right ramp up.
And they've, they've had some real obstacles to navigate in
this phase. I'm probably missing a bunch of
these obstacles, but I'll, you know, in, in quick kind of
summary, the obstacles that I can remember are, well, they're
developing a mind in a country that hasn't had a mind
developing God knows how long ground support challenges
getting through the early development works, minor
contracted challenges resulting in Adriatic bringing in house
instead. Tragic death of a of a, you
know, a, a local contractor on site.
They've been the the recipient of their own short report.
They rejigged the kind of, you know, mine reserves plan, but
generally like like lower grade. And you know, there was
previously there was a ruling by the Constitutional Court of
Bosnia which effectively suspended the felling of trees,
which which impacted Adiotic permanent tailing storage
facility at Veresh, the the waste rock storage at Rufus and
the location of the planned pace plant.
So and then in the last five months, Adiotic, CFOCOO and CEO
have all resigned from the company.
Now there's an interim CEO, an interim CFO at the helm.
Interim CEO is this ex BHP bigwig Laura Tyler.
She was a non executive director at Adriatic for only six weeks
before becoming interim CEO. Meanwhile, the interim CFO is
Michael Horner, who was previously heading up Adriatics
business development function. Unlike Laura Tyler Michael
Horner, he he he'd at least been an Adriatic for a few years
beforehand, and he forked up $100,000 of cash to buy more
shares in Adriatic yesterday. Oh.
That's good, good sign of confidence.
It's. It's probably also worth
highlighting that even with all of that Adriatic share price,
it, it isn't all that far off from its all time highs.
Like it's somewhat it's been somewhat resilient in in sort of
recent history. You see in the Spark chart in
Australian dollars $3.58 today. That's versus an all time high
of $4.90. And and kind of that gives the
company a fully diluted market cap today of about 1.2 billion
Australian. And that's after the stock
actually bounced today up 9% and the short interest has climbed
to 7% of the of the CD is alone. You can just see that kind of
short interest chart kind of flying.
Particularly interesting is the the shareholder on the register
that appears to be buying into the fear, L1 Capital, an Aussie
hedge fund. I feel like we mentioned L1
Capital always and he's like, yeah, really interesting points
of time. I kind of just bet against the
fear. They go against the grind.
We'll I'll do it with next Gen too I think.
That we're kind of doing that sort of, I remember them being
kind of, yeah, near the top sort of being laid about next Gen and
then when they've had some powerless as well, but
especially mining, but you know, inaugurate their returns are
pretty good. So L1 capital, they appeared to
have been buying in February, but they ratcheted up pretty
consistently. They now have 36.6 million
shares or about 11% of the fully diluted share capital of
Adriatic. So that's the title, not just
the Cdr, exactly the total. Yeah, yeah.
Meanwhile, Orion, who, who has the the debt facility with the
Adriatic, keep in mind they've been trimming their, their
equity position of apparently it was around 8.3% around a year
ago, but but today per sort of Adriatics website, it says their
stake is 3.7%. So you've got the, the debt
finance here sort of sort of trimming.
Although apparently Orion, I, I'd heard, I'd heard previously
they were, you know, trying they were starting a new fund.
So they were realising kind. Of.
Stuff, so don't know if there's a read through there or not, but
pull that out of the way you can, you can kind of see why
Adriatic is, is really bloody interesting right now, can't
you? Very much so.
They're at, they're at a very, yes, they're at a very like a
reset point in a in a way with all, with all that happening.
And because it wasn't like like brilliant grades there.
Like they're the best thing they got on their side is the grades
of the the ore body. But the challenges they went
through getting the capital development in for the ground
conditions, obviously pretty odd and all those other things you
mentioned. And then, you know, tough for
you've got expat people were living over there to run this
company in Bosnia, which presents its own challenges on a
personal level, which I'm not sure if that's the case of
what's happened. So it's yeah, it's, it's a tough
one to maintain long term consistency with.
I think it's a big ask. Yeah, I don't even know.
Like it's has there been a single, you know, mine developed
in the past, like, you know, two to three years it hasn't like
that has been smooth. It's like I can't remember one
that's in recent history that's been smooth.
It's been a long time since 1's been smooth.
Right, Carla Winder. That was that was 20/20/29 like
so then so you got to go back a fair while and and then, you
know, if, if a typical company kind of building a mine and
developing faces just one of these issues, it's a pretty
fucking like, you know, it can be pretty, pretty tumultuous
that they're just is a lot to sort of, you know, juggle as a
as a single asset developer and hence.
Fascinating how yeah, how how resilient the the stock has been
in amongst all those sorts of challenges.
Obviously they they really ticked up when when Bayes metals
performed really strongly in sort of may ish period in the in
the sort of three months in and around then.
But with all, all the challenges that faced that, like you said,
still, you know, within touching distance of all time highs
performing really strongly. So what what did you sort of
make from tuning into that operational update that they
kind of provided? What were the the takeaways you
had? I, I was expecting like a, a, a
bit of a detailed kind of operational update to to, you
know, come out in the press releases, but it was, it was
actually like a slide deck with three real, real pages in it.
And the webinar was largely AQ and a where sort of substance
came from the answers. But I'll play this opening from,
from Laura. This is what she opened, yes.
I've spent the time working through all of this and I see no
fatal flaws. No fatal flaws.
It's a it's a relieving message to get no fatal flaws.
Yeah. It's like a Yeah, an independent
technical experts like no fatal flaws report that you get to
sign off on. But like, I think in a nutshell,
to summarise all the all the stuff that came out, Adriatic,
they finally started stopping. Hence you can see this big leap
in, you know, the ore tonnes in, in, in the month of August
there. Apparently the the first stop
had a few issues, to quote Laura, she said a few issues
pulling through the slot against the fault boundary of the ore
body. Apparently the design has been
tweaked to prevent that issue from the second stop.
But Maddie, what does that actually mean?
Well, the slot is the it's your first voyage you create.
So I like to start firing everything into.
So they'll Chuck a box hole up like A1 metre, usually A1 metre
bloody void, circular void, or they'll drill a long hole rods
with Ravens and all that. But if you if you sort of got a
fault, a fault running through the if, if that is the case
against the fault boundary of the ore body there unless
there's a fault running through where they're pulling it through
that that fault is like a. Can discontinue things so when
you when the explosives go off, the energy might dissipate out
through the fault and not actually blast the rock fully so
they might have like bridged it. Usually if there's an issue with
the stope, it's always it's being bridged, which means that
instead of bloody 20 metres came out, only 15 come out or
something, then you got to do a lot of work to try and get the
rest out. So that's, I'd say that's what's
something like that has happened.
But if they've had issues it just means it hasn't pulled to
hide or something like that. Such a yeah, faults and friggin
contacts and stuff through the middle of not fun.
Exact bit of a pain in the ass, yeah.
So on the guidance, so the all tonnes of production, all tonnes
kind of guidance for Cy 24 is now lower than previously
flagged. They now say it's going to be
180,000 tonnes versus the previous range lower bound,
which was 240,000 tonnes. And and while like last time
they got it grade as you can see in this this slide here, the
guidance update that they they put out sort of yesterday didn't
include guidance of grade. The other bit I found that I
can't quite piece together on on the guidance is, you know, you
can see in the in the slide deck they put out yesterday, Adriatic
explicitly says that guidance for Cy 25 is unchanged, but they
say it's unchanged at 750,000 to 800,000 tonnes.
But if I flashback up the, the prior guidance, which I'm, I'm,
I'm snipping from the equity raise presentation, the upper
bound is actually lower by 50,000 tonnes.
So unless I've missed something, Cy 25 guidance is in fact a bit
lower too to the, to the TSF issue, right?
Because this is a been a big spanner in the works to have to
deal with this constitutional ruling.
So Adriatic Day, they, they say they have this alternative
location for the TSF now, which will be two kilometres away.
So they expect construction approval in October.
Keep in mind that's going to be after there's these municipal
elections I've googled and they're on the 6th of October.
So I suppose they're expecting the newly elected officials to
be speedy quick into the into, to sort of get these, these
approvals sort of done. And then when I say the
construction will be completed, like going to aim to complete
that by the end of the year, If they can execute that, that'll
be a pretty remarkable kind of time frame to, to, to do all of
that. You know, meanwhile, the, the
temporary TSF, which they're using at the moment, it's near
the plant that hits capacity in Q 12025, which I imagine is a
pretty, pretty big motivator for that speedy timeline to get, you
know, approvals and construction all sort of done by the end of
this year. So I hope, you know, hopefully
they can achieve that without the any interruption to
production, right. Adriatic, they, they addressed
the, the TSF like I talked about, but like I said that the
location of the pace plant is also an issue.
And you know, this work stream, Laura said it's actually on, on
hold for the time being, like work at least construction and
see why 25 is on hold with the, with the constitutional ruling.
They say they're looking at alternative locations for the
pace plant And but they, this is the, the interim solution.
I'll, I'll, I'll play. I'll play for you.
What you said there. We always had plans to use calf
or cemented aggregate fill in our Stopes.
So the processes are in place to do that.
We you know we'll use obviously some of our own, some of our
waste rock as as aggregate as well as import some quality
aggregate. We've got all those contracts in
place that work has already is already commencing for the first
stop. This was always in the plan.
We just now have to extend the calf placement for an additional
few months, but we don't see it as being a long term solution
and we will move to having a paste plant as the long term
solution fulfilling all of the Stokes.
I was keen to to leverage your expertise again, Maddie.
You you boys should have enough after the last year, right?
He's got a sub Did he? What it like what are what are
some of the challenges like using calf over the long run
instead of paste and like you know, what are the issues if
they can't, you know, get a pace plan up in a medium term
timeframe. Yeah.
So it depends on where it's being deposited into the stove.
So like CAF is cemented aggregate fill, so it's like
crushed rock down, whereas CRF is just like they'll just blast
any waste heading, tip it in a stockpile, mix it with cement
and water and tip it in. So CAF is like if you're
importing aggregate that obviously costs a bit yeah, you
need another you need extra loaders to tip it into the
Stopes. And then if you're like tipping
it in from the front of the stope, you can only get it to a
certain point for the real angle.
Then you got to advance the tip head forward to sort of fill the
whole thing because you're in a you're going to be and depends
if the grounds assuming all the ground is still supported above
you. So there's challenges there.
So it takes, it's takes longer to put it in, tipping it in with
a loader compared to a like pace just pumping it down because
pace you're just using the old tailings.
There's obviously the capital for, there's capital for the
pace plan and then the reticulation to put in.
But you do, it's the quickest way to get it, to get it in
there. And it's a a lot easier product
to develop back through. So whenever your pace fill is
stoked, there's always a chunk that you have to develop back
through usually to go and access the next one, usually on the
sides of it. So that's and trying to trying
to bloody develop back through calf and CRF as a nightmare.
Oh, trying to you can't throw owls in or you're just trying.
Yeah, because it all just falls back in.
It's a fricking not. It is a friggin nightmare.
Yeah, just got to put stoke Proms in there and blow the
living fuck out of it. Pretty much yeah.
But then if they, it depends if they set like funnel enough
Olympic dam, what the fucking how big that joint is.
All those stoves to to my knowledge, there's no pace plant
there. All those stoves are filled with
there's just friggin ball holes from the surface and they have a
big quarry on top. And that quarry just mines
waste, produces aggregate and there's just edges that tip calf
down those ball holes to fill the stuff.
It's just this big massive surface operation that just
keeps tip and calf down these ball holes.
So that's how Olympic dams actually feels.
It's not filled by paste. So it depends on, not sure that
they're depending on how the all bodies are set up, if that'll be
an option here. But usually if you got to do it,
you got to tip it from underground.
So it's just a bit of a, it's just slower, which means it
slows your production profile down a bit.
You can't get to the next step as quick as paste.
You can, you're jamming in over 1000 cubes a day.
Whereas Kathy Martin when I get 500 in or something.
Gotcha. So.
Yeah, yeah. God I'm starting to forget all
me, underground mine and shit on the bloody washed up husband.
So half, half of it's probably wrong these days.
Yeah. And we're like when, when she
when they described the three things that were impacted by the
court ruling. Yeah, 1 was the the tailings
facility, the other one was the location, the pace plant.
But it was also mentioned that the the long term waste rock
storage near Rupus would was impacted.
But on the webinar I didn't, I didn't hear anything about what
the workaround was for that in the webinar.
But yeah, maybe, maybe something else has been guided separately.
I don't know. Well, that's the one benefit of
doing CRF is that you don't have to take as much rock to the
surface because you get to use it to backfill the types.
OK. So, yeah, and Betty in, in the
past when we talked about this, you, you've drilled down on the,
on the development, right. So they were kind of getting in
a, in a, in a tough ground. It sounds like the, the rates
that they had in the DFS, which were 600 metres, sounds like
those numbers are kind of null and void.
And they've got sort of, yeah, they've readjusted to a, a new,
a new normal. I'll, I'll play what Laura says
about that. So with the development,
originally the schedule for development to bring production
in required a much higher rate than was achieved, like a
significantly higher rate than was being achieved.
So that development has been now basically achieved over a longer
time period. What it does mean though is we
need to be at 300 plus going forwards the rest of 24 and then
into 25 and beyond. In some instances where we're
opening, opening up brand new kind of access it through the,
through the decline. We might have, you know, slight
variability from one month to the next, but that 600 metres
is, is no longer required. That was the initial requirement
that we needed in order to to start the date the, the stopping
up. We've now got stopping in place
and we we're looking at the schedule.
We believe a 303 hundred plus is going to be what we require
going forward to 24, the rest of 24 and into 25.
I don't have the fine detail in front of me right now on, on a
kind of like the monthly rates as we go forwards, but looking
at an average of 300 to 350 through 25 is, is what we are
expecting to see and to require to to maintain production.
It's avid obviously their comment about opening up the
additional decline levels and accesses because from what from
what we know we are, we did speak to the company about it,
is that all the shit ground is in the capital and the waste
area outside the ore body. Where is the ore body itself?
Sounds like pretty standard bolt bolts and mesh.
So the, your development rights when you get in the ore will
jump up a lot higher. They, they naturally do anyway
because it's a, it's a smaller excavation.
There's usually multiple of them together.
But then the extra, the better ground conditions as well.
So I think that variability they're talking about is if they
have to do anything in those capital areas, that's where it
really slows down 'cause that's where they got to put the
bloody, all the shit loads of ground support the concrete sets
in the in the sections and and things like that.
So that's a way our knowledge the actual ground is a lot
better in the ore. So it should be a day.
The capital is the bottleneck there, capital development.
Yeah, Yeah. And like with all that sort of
sort of said, you know, that they're still stating that that
they they're going to achieve sort of statutory commercial
production by year end, but sort of think Q1 onwards doing that
800,000 tonnes per annum is, is what they're sort of signalling
to the market. I think like the next chapter
for Adriatic is, is unwritten and many different views make a
market. And, and I'm so curious because,
yeah, like I say, it's in that it's in that ramp up phase grade
is forgiving. They got great on their side,
but there's a so many like there's so many like, you know,
obstacles that they have faced and and, you know, still
continue to face, you know, I don't know, in a country that
doesn't have like, you know, a really thorough kind of mining
economy like Australia. Yeah, no, they and this, but
this sensitivity do like you know, grade is forgiving, but
you think of when you're running a, you know, 800,000 tonne per
annum really high grade. Like imagine if like your grade
doesn't reconcile to what it should be and recoveries,
recoveries and there fuck it can it can swing so quickly.
Totally could go the other way too.
And on the recoveries, like they're aiming to increase them
to 70% in Q4 and they haven't been out, they're still running
the plan on campaign mode. They haven't sort of they're
hoping to kind of tweak that over time.
But Laura even made the comment that they never did a pilot plan
kind of thing. So a lot of the stuff they're
doing now is kind of pilot plan task.
So, you know, I think there's, there's reason to be kind of to
have question marks on what, what is the long term recovery
going to be as well, because it's it might still be uncertain
if how much the plan can be optimised.
Yeah, yeah. Bloody good stuff.
Yeah. Just put up a preso from about a
year and a half ago and you can see 2024, this was meant to be a
year of 284 millions in post tax free cash flow.
So it's amazing how quick things have kind of turned.
But you know, they're, they're still going pretty decently
strong and here's kind of hoping that they can, they can pull
through with the, with the grades and everything there is
still the the opportunity for pretty strong cash flow in the
in the near term if they can get it right.
Yeah, repetition as well. When you're dealing with that
shit around and everything like the fact that they've done it
before now they now it's there, they know what to do.
That's should be on their side. The big risk that I see is just
any blowout in the timeline of that TSF, right?
Because it to me felt pretty ambitious to have that kind of
solution solved by the end of the year.
But but saying it would be done by the end of the year, allow
them to say there'll be no interruption to production,
which, yeah, is like would be a relieving thing for shareholders
to hear. I can't help but think it is.
It would still be, you know, kind of an ambitious job to
happen. And, and there might still be
some uncertainty around the, you know, the, the ability to to
build it in the way that they want and all that sort of stuff.
So. Their God, they might have to
revert to what, like your Pogo and that have to do where
they're all tailings have to be deposited underground, which not
feasible in an early stage mine. I think it's when you got a
historic mine, you can just start filling up levels and
yeah, and shit, I think that's doable, but it wouldn't be
plausible here, I don't think. Yeah, yeah.
Debt repayments start at the end of at the end of this year,
December 31. So, yeah, and they've still got
a $25 million undrawn facility with a, with a Ryan that sort
of, yes, depending how things go, they might they might have
to dip into that too. But yeah, we'll wait and watch.
There there, God. Fingers crossed.
As I said, always ramp up like this.
Bloody rooting for you, I hope it works.
Oh, very easy, hey? Jesus cross these bloody stomach
cramps. You know the the metaphor for
the stomach cramps? Like like there's a jaw crusher
with a shit load of mesh and bolts stuck in it and I need old
miles contracting to come and RIP it out.
You'll love that shout out Mossy killing me.
Righto. Oh, thanks to the bloody
partners. Bloody sorry, sorry.
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