1 00:00:00,320 --> 00:00:04,720 Over 5 billion in physical gold bars on the balance sheet, 2 00:00:05,120 --> 00:00:08,680 Tether has been pouring their profits into gold. 3 00:00:08,880 --> 00:00:11,520 Like a small country. Yeah, and enormous they are. 4 00:00:11,760 --> 00:00:14,360 They're buying a lot of gold. These guys are gold bulls. 5 00:00:18,480 --> 00:00:22,040 JD, you thought that Franco Nevada had the most beautiful 6 00:00:22,240 --> 00:00:24,120 business model in the world. And it is. 7 00:00:24,120 --> 00:00:26,400 It is up there, I assure you. I'm going to tell you why 8 00:00:26,400 --> 00:00:28,880 There's an even better one than that and it's Tether. 9 00:00:29,840 --> 00:00:31,840 Stay with me here. And they've just done a deal to 10 00:00:31,840 --> 00:00:34,960 buy a mining royalties business. I'm going to talk all about it 11 00:00:35,320 --> 00:00:37,560 today. Mate, we're also going to talk 12 00:00:37,560 --> 00:00:41,920 about coal, one of the most fascinating names in the game at 13 00:00:41,920 --> 00:00:44,200 the moment, Coronado. They're getting battered from 14 00:00:44,280 --> 00:00:46,360 all ends. They need a saviour though, and 15 00:00:46,360 --> 00:00:48,440 we're going to dive into whether they will find that. 16 00:00:48,440 --> 00:00:51,080 Saviour talking about coal and crypto. 17 00:00:51,080 --> 00:00:54,440 I don't know if our yeah, the people that that love Bunny mum 18 00:00:54,440 --> 00:00:56,280 will be paying attention to this journey, but they're they're 19 00:00:56,280 --> 00:00:57,520 riveting stories. I can't wait. 20 00:00:57,520 --> 00:00:58,840 You know what else I can't wait for? 21 00:00:59,280 --> 00:01:01,960 Before we talk about the latest and the greatest in the mining 22 00:01:01,960 --> 00:01:04,319 world, we need to talk about a certain GC grounded 23 00:01:04,319 --> 00:01:06,840 construction. I know you're a you're a keen 24 00:01:06,840 --> 00:01:09,120 reader of the Financial Review AFR. 25 00:01:09,200 --> 00:01:11,560 I am indeed. And you might have caught this. 26 00:01:11,560 --> 00:01:13,880 I saw this headline just this week. 27 00:01:14,480 --> 00:01:17,560 Lavish food and luxury FIFO workers just want a good night's 28 00:01:17,560 --> 00:01:18,840 sleep. That's the finding of the most 29 00:01:18,840 --> 00:01:22,080 comprehensive study of workers in mining camps, which 30 00:01:22,080 --> 00:01:25,280 researchers hope will help resource giants keep staff. 31 00:01:25,360 --> 00:01:26,560 Happy. Do you know what that sounds 32 00:01:26,560 --> 00:01:28,600 like to me mate? That is more confirmation for 33 00:01:28,600 --> 00:01:30,760 anyone out there that if you're going to build a mining camp, 34 00:01:30,760 --> 00:01:32,840 you need grounded. That should be your first call. 35 00:01:32,840 --> 00:01:38,000 Make 170 projects completed, $1800 delivered and work across 36 00:01:38,000 --> 00:01:40,320 nearly 300 assets. Enormous. 37 00:01:41,040 --> 00:01:43,160 Goes beyond that as well, mate. They've worked with FMG, they've 38 00:01:43,160 --> 00:01:45,760 worked with Rio, they've worked with Goldfields, just to name a 39 00:01:45,760 --> 00:01:47,440 couple of their great partners out there. 40 00:01:47,440 --> 00:01:49,800 Look. Here's the thing, the FIN survey 41 00:01:50,040 --> 00:01:53,000 is probably the best insight we've seen into what workers 42 00:01:53,000 --> 00:01:55,240 actually value. And we know if workers are 43 00:01:55,240 --> 00:01:58,160 happy, they're more productive, but what are those top points 44 00:01:58,160 --> 00:02:00,280 that they care about, mate? These are the points that your 45 00:02:00,280 --> 00:02:02,760 miners really care about. They care about noise 46 00:02:02,760 --> 00:02:04,840 insulation, they care about room size. 47 00:02:04,840 --> 00:02:08,000 They care about the ability to personalise their room, room 48 00:02:08,000 --> 00:02:10,000 aesthetics as well as the overall camp design. 49 00:02:10,600 --> 00:02:14,120 That just to me, it's like I know the solution, you've ratted 50 00:02:14,120 --> 00:02:15,520 off the problem, but I already know the solution. 51 00:02:15,520 --> 00:02:17,680 So but it's kind of it all makes sense, right? 52 00:02:17,680 --> 00:02:20,280 You kind of insulation. Yeah, well, you don't want to be 53 00:02:20,280 --> 00:02:23,760 awake from the noise near the camp like you need sleep. 100% 54 00:02:23,760 --> 00:02:26,800 mate if you want to keep the campers doing the hard yards out 55 00:02:26,800 --> 00:02:30,760 there, the guys and girls working in the mine happy, just 56 00:02:30,760 --> 00:02:32,520 give grounded construction a call mate. 57 00:02:33,160 --> 00:02:34,920 I will indeed. I look forward to calling Paul 58 00:02:34,920 --> 00:02:37,160 Natalie. OK, you probably didn't see this 59 00:02:37,160 --> 00:02:40,760 coming because the world's largest stable coin issuer, 60 00:02:40,920 --> 00:02:45,360 Tether, yes, the same Tether behind USDT has taken a 61 00:02:45,360 --> 00:02:48,840 meaningful stake in a in a gold and copper mining royalty 62 00:02:48,840 --> 00:02:51,360 company, elemental Altus royalties. 63 00:02:51,360 --> 00:02:53,520 And I don't think it's a side bet. 64 00:02:53,640 --> 00:02:56,640 I think this is a signal. Yeah, I I wanted to like, 65 00:02:56,960 --> 00:02:58,640 underline and highlight what you said there. 66 00:02:58,640 --> 00:03:01,560 Like this is so fascinating. It's it's so interesting. 67 00:03:01,560 --> 00:03:04,800 So why don't you start us off by just saying first who tether, 68 00:03:04,800 --> 00:03:08,400 tether investments are and then secondly about elemental out as 69 00:03:08,400 --> 00:03:11,880 the the royalty group? Yeah, well, Tether investments 70 00:03:11,880 --> 00:03:14,000 like think of them as a assistant entity of of Tether. 71 00:03:14,000 --> 00:03:18,080 The stable coin issue up. They've acquired this 34% stake 72 00:03:18,160 --> 00:03:21,560 in Elemental Otis Royalties. That stake came by paying 73 00:03:21,840 --> 00:03:24,200 122,000,000 Canadian dollars to Lamancha. 74 00:03:24,560 --> 00:03:26,920 You remember Lamancha? JD had him on the show. 75 00:03:26,960 --> 00:03:29,400 Mate had had, Yeah, we did. We had groom groom on the Greek. 76 00:03:29,880 --> 00:03:32,880 A lot of time. To be on the show, yeah, but but 77 00:03:32,920 --> 00:03:35,560 that's of course the the resource fund of the Egyptian 78 00:03:35,560 --> 00:03:38,960 billionaire, the grip size. But Tether didn't stop with the 79 00:03:38,960 --> 00:03:42,360 34% stake and now simultaneously with the deal, they got this 80 00:03:42,360 --> 00:03:47,200 option to buy another 14% of Elemental from A1 for another 81 00:03:47,480 --> 00:03:50,080 53,000,000 Canadian dollars, which if they exercise the 82 00:03:50,080 --> 00:03:54,080 option that would leave Tether with a 48% stake in in Elemental 83 00:03:54,080 --> 00:03:56,440 alters. And on Elementals side, they're 84 00:03:56,440 --> 00:03:59,320 one of the smaller listed royalty companies out there with 85 00:03:59,320 --> 00:04:02,680 just a a couple of producing royalties and and a lot of 86 00:04:02,680 --> 00:04:04,600 development ones in their portfolio. 87 00:04:04,640 --> 00:04:09,400 A couple in our backyard mate. Yeah, indeed, their, their like 88 00:04:09,400 --> 00:04:14,280 portfolio is, is gold dominant and, and the flagship royalty 89 00:04:14,320 --> 00:04:18,040 there is, is Karla Window. That's a 2% NSR over Capricorn's 90 00:04:18,040 --> 00:04:20,160 color window. But they've also got this 0.5% 91 00:04:20,160 --> 00:04:23,480 NSR over Lundin's Casarones. And yeah, but a very gold 92 00:04:23,480 --> 00:04:27,080 dominant portfolio. OK, so so dive into what what 93 00:04:27,080 --> 00:04:29,400 makes you so interested about this deal and what things could 94 00:04:29,400 --> 00:04:33,360 look like going forward. This is Tether, like a lot of 95 00:04:33,360 --> 00:04:36,880 people have probably heard of Tether and a lot of people are 96 00:04:36,880 --> 00:04:42,080 suspicious of Tether and a lot of people, you know, like there 97 00:04:42,080 --> 00:04:45,320 was a lot of a lot of a lot of kind of like negative thoughts 98 00:04:45,320 --> 00:04:46,880 and views out there about, about Tether. 99 00:04:46,880 --> 00:04:49,320 But I just want to pause all of that for a moment. 100 00:04:49,320 --> 00:04:51,960 And so I don't think many people are actually aware of just how 101 00:04:51,960 --> 00:04:54,760 phenomenal the business model of, of Tether is. 102 00:04:54,760 --> 00:04:58,200 It's utterly insane how good of a business this is. 103 00:04:58,400 --> 00:05:01,800 And it's so simple. Tether popularized the tokenized 104 00:05:01,800 --> 00:05:07,080 stable coin U.S. dollars is of course the the flagship product 105 00:05:07,080 --> 00:05:10,000 there, which they wrap into USD T And it turns out there's a 106 00:05:10,000 --> 00:05:14,280 huge amount of demand for crypto native U.S. dollar, mainly 107 00:05:14,280 --> 00:05:17,600 because people want to use that in the many online casinos that 108 00:05:17,600 --> 00:05:20,800 are crypto exchanges and associated products of that 109 00:05:20,800 --> 00:05:23,120 ecosystem. You give Tether $1.00, you 110 00:05:23,120 --> 00:05:27,320 receive 1 USD T just Tether stable coin in return, right? 111 00:05:27,760 --> 00:05:32,200 You can use that USD T in crypto markets, think DFI apps, 112 00:05:32,200 --> 00:05:34,160 etcetera. Now Tether, what they do is they 113 00:05:34,160 --> 00:05:37,840 keep your $1.00 instead of putting it in a vault. 114 00:05:37,960 --> 00:05:41,760 They invested mostly in short term U.S. 115 00:05:41,840 --> 00:05:45,360 Treasuries which are yielding like 5% plus per year. 116 00:05:45,960 --> 00:05:48,560 Tether earns interest on your dollar JD. 117 00:05:48,920 --> 00:05:50,240 They don't pay you any interest though. 118 00:05:51,440 --> 00:05:56,480 So you hold a digital IOU which is a USDT not a deposit. 119 00:05:56,680 --> 00:06:00,200 Tether keeps 100% of that yield, which is attractive at the 120 00:06:00,200 --> 00:06:03,400 moment. They have issued over 150 121 00:06:03,400 --> 00:06:08,440 billion USD T That is a staggering number to sort of 122 00:06:08,600 --> 00:06:12,440 conceptualize. Now even if only 80% of that is 123 00:06:12,440 --> 00:06:17,240 backed by treasuries, that's 120 billion U.S. dollars earning 5% 124 00:06:17,480 --> 00:06:20,720 annually. That's over 6 billion in annual 125 00:06:20,720 --> 00:06:26,400 profit from the treasury interest alone, with a tiny team 126 00:06:26,680 --> 00:06:32,000 to the House of like 125 staff and like effectively negligible 127 00:06:32,000 --> 00:06:35,800 operating costs. Phenomenal. 128 00:06:36,720 --> 00:06:39,240 There's not too much more to be to be set on it. 129 00:06:39,240 --> 00:06:41,280 It's just it's incredible. It's it's good business if you 130 00:06:41,320 --> 00:06:42,640 can get it. Crazy. 131 00:06:42,640 --> 00:06:46,160 It's yeah. Like they print digital dollars, 132 00:06:46,160 --> 00:06:49,080 they earn interest on real dollars, and they give holders 133 00:06:49,320 --> 00:06:50,880 none of it. That's like why it's the most 134 00:06:50,920 --> 00:06:54,200 kind of profitable company you've never heard of and never 135 00:06:54,200 --> 00:06:56,400 seen audited. But you know, irrespective, you 136 00:06:56,400 --> 00:06:58,800 kind of have to just respect the operational efficiency of that 137 00:06:58,800 --> 00:07:00,920 business model, which is experience like tremendous 138 00:07:00,920 --> 00:07:02,760 tailwinds, but just tremendous like market dominance, 139 00:07:02,760 --> 00:07:04,800 tremendous growth in all, in all aspects. 140 00:07:04,800 --> 00:07:06,160 It's a truly phenomenal business. 141 00:07:06,520 --> 00:07:09,680 And in the mining industry, we have our own truly glorious 142 00:07:09,680 --> 00:07:11,440 business models being the royalty companies. 143 00:07:11,880 --> 00:07:14,520 You only need a handful of of staff, right? 144 00:07:14,560 --> 00:07:17,360 You collect a check every month from your royalties and it 145 00:07:17,360 --> 00:07:20,200 scales so well. You never need a big team as 146 00:07:20,200 --> 00:07:22,080 your revenue grows in theory, right? 147 00:07:22,080 --> 00:07:25,240 So Franco Nevada being kind of the industry leader for for a 148 00:07:25,240 --> 00:07:29,400 very long time and I always find it astonishing to learn the, the 149 00:07:29,400 --> 00:07:33,000 profit of that business for, for so few employees. 150 00:07:33,000 --> 00:07:37,560 Like take the 2024 numbers of Franco, their net income is 151 00:07:38,120 --> 00:07:41,440 $552,000,000 and a head count of 45 people. 152 00:07:42,000 --> 00:07:46,320 That's $12.3 million in profit per employee at Franco Nevada. 153 00:07:46,320 --> 00:07:48,040 Like there is not a mining company in the world that could, 154 00:07:48,440 --> 00:07:51,400 could achieve that, but a royalty company can because of 155 00:07:51,400 --> 00:07:53,720 the beautiful, the beautiful model that a royalty is. 156 00:07:53,720 --> 00:07:56,640 It's a staggering number, and you would have a tremendously 157 00:07:56,640 --> 00:07:59,320 hard time finding a business that comes kind of close to that 158 00:07:59,320 --> 00:08:02,360 in any industry, except I happened to know one, JD. 159 00:08:03,680 --> 00:08:07,720 Let. Me guess in 2024, get this 160 00:08:07,720 --> 00:08:11,080 profit, an astonishing 13 billion U.S. dollars on an 161 00:08:11,080 --> 00:08:15,360 employee headcount of like 125, right, That's 104 million profit 162 00:08:15,360 --> 00:08:18,800 per employee that yeah, the operational efficiency is just, 163 00:08:19,000 --> 00:08:22,040 yeah, unparalleled. That's eight times Franco Nevada 164 00:08:22,040 --> 00:08:24,760 is profit per employee who I thought would be impossible to 165 00:08:24,760 --> 00:08:26,800 be. So whatever your opinion of of 166 00:08:26,800 --> 00:08:30,000 crypto is, Tether is just a truly tremendous business and 167 00:08:30,320 --> 00:08:33,520 both Tether and royalty companies operate with lean 168 00:08:33,520 --> 00:08:35,919 teams and high margin business models. 169 00:08:36,200 --> 00:08:38,120 All right, pulling it back to the deal now. 170 00:08:39,400 --> 00:08:41,640 I I really want to point out a couple of lines from the 171 00:08:41,640 --> 00:08:43,960 announcement out of out of tether right now. 172 00:08:44,000 --> 00:08:47,920 I'll read these quotes Out says. The acquisition was made as part 173 00:08:47,920 --> 00:08:50,800 of Tether investments growing commitment, tangible assets and 174 00:08:50,800 --> 00:08:53,520 precious metals as part of its broader vision to enhance the 175 00:08:53,520 --> 00:08:57,000 transparency, utility and accessibility of digital assets 176 00:08:57,040 --> 00:09:00,600 backed by real world value. This investment reflects our 177 00:09:00,600 --> 00:09:03,560 long term confidence in the fundamentals of gold and its 178 00:09:03,560 --> 00:09:05,640 critical role in financial markets. 179 00:09:05,960 --> 00:09:09,200 Elementals royalty model provides diversified exposure to 180 00:09:09,200 --> 00:09:11,720 gold production around the world, aligning strategically 181 00:09:11,720 --> 00:09:15,280 with our vision or Tether gold and future commodity backed 182 00:09:15,400 --> 00:09:18,800 digital asset infrastructure. It's a bit to take in there, 183 00:09:18,800 --> 00:09:20,040 right? But to start with, I want to 184 00:09:20,040 --> 00:09:24,080 hone in on that last sentence where Tether's CEO mentions 185 00:09:24,080 --> 00:09:27,600 Tether Gold specifically. And you know that glorious 186 00:09:27,600 --> 00:09:31,880 business model I described of Tethers as it related to USD T? 187 00:09:32,400 --> 00:09:35,760 Well, Tether has another product, a much more nascent one 188 00:09:35,760 --> 00:09:40,080 called XAUT or to the Gold and the concept is similar. 189 00:09:40,320 --> 00:09:43,240 You know, it's this gold backed digital tokenized asset. 190 00:09:43,520 --> 00:09:48,120 At the moment there's 150 billion USDT in circulation yet 191 00:09:48,400 --> 00:09:53,800 to the gold or XAUT only has about 0.5% the the the size in 192 00:09:53,800 --> 00:09:58,000 in circulation of 246,000 ounces of gold you can think of that's 193 00:09:58,000 --> 00:10:01,040 like U.S. Dollar terms like just less than 194 00:10:01,080 --> 00:10:03,480 600 million at our current market value. 195 00:10:03,520 --> 00:10:05,120 But there's a big difference with the business model. 196 00:10:05,520 --> 00:10:07,640 There is like the economics aren't the same at all. 197 00:10:08,120 --> 00:10:12,280 This is an asset backed token, so the gold that's backing that 198 00:10:12,280 --> 00:10:13,560 asset is stored in a Swiss vault. 199 00:10:13,560 --> 00:10:16,680 And unlike U.S. Treasuries, that gold earns no 200 00:10:16,880 --> 00:10:17,720 yield. Right? 201 00:10:17,720 --> 00:10:23,320 So XAUT is a far less lucrative product for Tether than USDT. 202 00:10:23,840 --> 00:10:25,520 Yeah, there's demand for this product, right? 203 00:10:25,520 --> 00:10:28,960 Because many crypto natives would would rather their spare 204 00:10:28,960 --> 00:10:31,880 capital be sitting in the thing that tracks the gold price, not 205 00:10:31,880 --> 00:10:35,840 the US dollar, right? So is Tether investing in mining 206 00:10:35,840 --> 00:10:38,640 royalties as a means of backing their product then? 207 00:10:38,640 --> 00:10:41,240 Tether gold I was. Trying to figure this out JD, 208 00:10:41,240 --> 00:10:44,160 because they mentioned Tether Gold explicitly in that that 209 00:10:44,160 --> 00:10:46,240 announcement. But here's a few other things 210 00:10:46,240 --> 00:10:49,320 you need to know about Tether. That company, like private, 211 00:10:49,440 --> 00:10:52,040 still still a private company. They have not paid many 212 00:10:52,040 --> 00:10:54,400 dividends historically. So they reinvest. 213 00:10:54,400 --> 00:10:56,640 They reinvest the profits. And I already told you like how 214 00:10:56,640 --> 00:10:58,920 phenomenal the profits are in recent history. 215 00:10:59,880 --> 00:11:02,440 And if you look at the they do release like a balance sheet as 216 00:11:02,440 --> 00:11:06,200 a thirty 30th of of October, I could find one. 217 00:11:06,760 --> 00:11:10,040 And on that balance sheet, what you can see sitting on there 218 00:11:10,720 --> 00:11:15,120 over 5 billion in physical gold bars on the balance sheet. 219 00:11:15,120 --> 00:11:20,400 That's that at the time 10 times the value of the the tether 220 00:11:20,400 --> 00:11:22,640 gold, you know, gold tether on on on on issue. 221 00:11:22,640 --> 00:11:27,600 So it's best I can tell Tether has been pouring their profits 222 00:11:28,200 --> 00:11:31,080 that I get from their cash printer into gold. 223 00:11:31,240 --> 00:11:34,040 Like a small country. Yeah, it's, it's right and and 224 00:11:34,040 --> 00:11:38,080 enormous they are they're buying a lot of gold even when it's not 225 00:11:38,080 --> 00:11:40,640 needed to back their gold Tether product. 226 00:11:40,720 --> 00:11:44,120 These guys are gold bulls and Bitcoin bulls because on that 227 00:11:44,120 --> 00:11:48,040 balance sheet, there's also over $5 billion in Bitcoin, not 228 00:11:48,040 --> 00:11:50,760 altcoins, not Ethereum, not any crypto note, not NFTS. 229 00:11:51,080 --> 00:11:53,880 This is it's Bitcoin and gold and U.S. 230 00:11:53,880 --> 00:11:57,320 Treasuries like is there's, there's none of the other crap, 231 00:11:57,320 --> 00:11:58,840 right? This, this is a hard money 232 00:11:58,920 --> 00:12:00,520 crowd. Whatever you, whether you agree 233 00:12:00,520 --> 00:12:03,080 with their definition of hard money or not, that's what's 234 00:12:03,360 --> 00:12:06,320 like, that's the the view of the the people behind Teller. 235 00:12:07,360 --> 00:12:09,160 Fascinating mate. So what does it all mean? 236 00:12:10,160 --> 00:12:13,200 There's a few things here like #1 if you just think of 237 00:12:13,760 --> 00:12:16,200 Elemental Altus as a, as a royalty company, like if you're 238 00:12:16,200 --> 00:12:18,840 willing to pay 48, if you're willing to buy 48% of the 239 00:12:18,840 --> 00:12:22,200 company, you could ensure a bet they'd be willing to buy 100%. 240 00:12:22,560 --> 00:12:26,640 Now, the way the initial deal is structured here, it bypassed in 241 00:12:26,720 --> 00:12:30,320 Canada's like annoying laws. So if, if, if they embarked on a 242 00:12:30,320 --> 00:12:32,480 full change of control, like, it could be a different story for 243 00:12:32,960 --> 00:12:36,160 actually getting a deal done. But yeah, I dare say they'd 244 00:12:36,160 --> 00:12:40,320 they'd want to wrap the whole thing up #2 Tether's business 245 00:12:40,320 --> 00:12:44,480 model at its core is profiting off the devaluation of the 246 00:12:44,600 --> 00:12:46,920 dollar. Like that 5% yield, thanks to 247 00:12:47,440 --> 00:12:49,640 like that, that interest rate is there thanks to inflation. 248 00:12:50,080 --> 00:12:53,800 That's profit for for Tether. And paradoxically, even though 249 00:12:53,800 --> 00:12:56,520 they're profiting from dollar devaluation, they're 250 00:12:56,520 --> 00:12:59,400 phenomenally important in the context of the US financial 251 00:12:59,400 --> 00:13:02,320 system because they've become one of the largest buyers of 252 00:13:02,440 --> 00:13:03,320 U.S. Treasuries. 253 00:13:03,760 --> 00:13:05,800 You know, like when people are depositing dollars at Tether, 254 00:13:05,800 --> 00:13:07,320 what is Tether doing? They're buying U.S. 255 00:13:07,320 --> 00:13:11,280 Treasuries to ensure that that that USD TS is is at least 256 00:13:11,280 --> 00:13:13,680 backed. Now they're not. 257 00:13:13,760 --> 00:13:14,920 And what are they doing? Their profits. 258 00:13:14,920 --> 00:13:16,440 They're not. They're not putting them into 259 00:13:16,440 --> 00:13:17,960 more treasuries. Their profits. 260 00:13:17,960 --> 00:13:21,080 They're putting into Bitcoin, into gold and now into gold 261 00:13:21,120 --> 00:13:23,880 royalties. This is yeah, like, like I said, 262 00:13:23,880 --> 00:13:26,640 this is a really, a really hard money crowd and they've got more 263 00:13:26,640 --> 00:13:30,360 weight than most central banks and they know that royalties are 264 00:13:30,360 --> 00:13:33,200 like, I suppose the superior hard asset when it comes to 265 00:13:33,520 --> 00:13:36,240 exposure to the, to the, you know, to gold equities. 266 00:13:36,320 --> 00:13:40,640 You you much prefer the royalty company, you know, over the long 267 00:13:40,640 --> 00:13:43,440 term as opposed to being exposed to the capital allocation 268 00:13:43,760 --> 00:13:46,680 dilemmas of of of most of the miners over over the duration. 269 00:13:47,040 --> 00:13:52,000 And if you just think of Tether, right, the available powder that 270 00:13:52,000 --> 00:13:56,000 that entity has to deploy here is next level. 271 00:13:56,200 --> 00:13:58,680 They if, if they're motivated enough to do this deal with 272 00:13:58,680 --> 00:14:00,680 Elemental, you've got to ask what's next. 273 00:14:01,240 --> 00:14:04,960 Like Elemental was a neat deal where they could get 48% 274 00:14:05,240 --> 00:14:07,640 exposure in a single announcement or a single deal. 275 00:14:07,640 --> 00:14:10,800 Like there's not too many royalty companies where you 276 00:14:10,800 --> 00:14:12,960 could do that. Like, in fact, I can only think 277 00:14:12,960 --> 00:14:16,280 of one other one where you could get a meaningful stake in one 278 00:14:16,280 --> 00:14:18,320 announcement. And that's like triple flag, 279 00:14:18,320 --> 00:14:20,960 right? You've got Elliott owning 67% of 280 00:14:20,960 --> 00:14:23,200 that company, a $6.6 billion company. 281 00:14:23,200 --> 00:14:26,760 And it might seem crazy, but I genuinely could envisage a world 282 00:14:26,760 --> 00:14:28,880 where Taylor bought Elliott steak and triple flag. 283 00:14:28,880 --> 00:14:32,480 Like that's just the amount of profit that this, this company 284 00:14:32,480 --> 00:14:34,960 kind of produces annually. It could, it could, it could 285 00:14:34,960 --> 00:14:37,400 reasonably be be distributed to something crazy like that. 286 00:14:37,400 --> 00:14:41,800 You know, I would, I'd love to see, I'd love to see like how 287 00:14:41,800 --> 00:14:44,400 much of Franco Taylor already owns or how much of Wheaton or 288 00:14:44,400 --> 00:14:47,560 Royal Gold or Cisco royalties that Taylor already owns. 289 00:14:47,560 --> 00:14:50,920 Because I imagine they've got investments and stakes in these 290 00:14:50,920 --> 00:14:52,760 royalty companies already if they're pretty familiar with the 291 00:14:52,760 --> 00:14:54,960 asset class. Yeah, you have to think that 292 00:14:54,960 --> 00:14:57,720 they've picked up stakes across a raft of them. 293 00:14:57,920 --> 00:15:00,520 Anything else would have come to mind diving into this one. 294 00:15:00,600 --> 00:15:04,560 I've seen like some some people talking about this deal and kind 295 00:15:04,560 --> 00:15:07,280 of reflecting and thinking that maybe it's a prelude to a 296 00:15:07,280 --> 00:15:09,400 potential launch of a tokenized royalty stream. 297 00:15:10,080 --> 00:15:13,960 That's kind of interesting. And if you can acquire a decent 298 00:15:13,960 --> 00:15:17,320 enough like portfolio of royalties, which Tether can 299 00:15:17,320 --> 00:15:20,760 because they've got the cash to, to do that, that is a much 300 00:15:20,760 --> 00:15:24,880 faster way to get a product to market than like the myriad of 301 00:15:24,880 --> 00:15:27,440 sort of start-ups that are are trying to do a similar thing. 302 00:15:27,440 --> 00:15:29,560 Like a lot of there are start-ups out there trying to 303 00:15:29,600 --> 00:15:32,120 tokenize royalties and they kind of have to finance them into 304 00:15:32,120 --> 00:15:34,240 existence sometimes or do some quirky thing. 305 00:15:34,240 --> 00:15:37,560 And you've got to wait 20 years for hopefully that royalty to 306 00:15:37,560 --> 00:15:39,040 now be producing to be worth something. 307 00:15:39,760 --> 00:15:41,400 And you face a lot of liquidity constraints. 308 00:15:41,400 --> 00:15:45,200 But Tether can just buy decent royalties and maybe build, yeah, 309 00:15:45,200 --> 00:15:47,480 some some infrastructure or product around a tokenized role 310 00:15:47,480 --> 00:15:49,080 with your stream. I think it's a bit to play out 311 00:15:49,080 --> 00:15:51,600 there, but. To sling one more question on 312 00:15:51,600 --> 00:15:53,960 you mate, can you envisage your world? 313 00:15:54,360 --> 00:15:57,320 I'd imagine some money miners want to hear this question where 314 00:15:57,920 --> 00:16:01,120 these players would finance some of the bigger gold mining 315 00:16:01,120 --> 00:16:08,160 companies directly. I don't think so, yeah. 316 00:16:08,160 --> 00:16:10,120 I don't like. I just don't like. 317 00:16:10,280 --> 00:16:13,800 I think there's like a lot of expertise that comes with, with 318 00:16:13,800 --> 00:16:18,760 writing royalties and I don't think like an industry outsider 319 00:16:18,760 --> 00:16:22,280 could, could actually acquire like 100% stake in like a in one 320 00:16:22,280 --> 00:16:25,160 of those companies and, and, and replicate that, that discipline 321 00:16:25,160 --> 00:16:26,920 and that skill and that knowledge you have to. 322 00:16:27,440 --> 00:16:29,400 Money goes a long way to to solving those problems. 323 00:16:29,400 --> 00:16:30,840 But who? Cares if you get the royalties 324 00:16:30,840 --> 00:16:32,960 at like the world's best royalties, then you know, but. 325 00:16:33,400 --> 00:16:35,240 When you when you've got the people running those companies 326 00:16:35,240 --> 00:16:37,360 that aren't the ones that put those royalties in place anymore 327 00:16:38,200 --> 00:16:41,120 and they don't have all the upside from from what the 328 00:16:41,120 --> 00:16:44,560 earlier people at the companies did in doing those deals, then 329 00:16:44,560 --> 00:16:47,760 perhaps as Wiggle Run to incentivize them, yeah, who 330 00:16:47,760 --> 00:16:50,240 knows. Yeah, you probably, Yeah, that 331 00:16:50,240 --> 00:16:52,800 is an an interesting point like I could see Ted to be. 332 00:16:52,800 --> 00:16:56,480 Without a team of just like a list royalty riding. 333 00:16:56,600 --> 00:16:58,320 Yeah. I could see, I could see where 334 00:16:58,320 --> 00:17:01,080 we're like, yeah, Tethers cash was capital that could be tapped 335 00:17:01,080 --> 00:17:05,640 into by, you know, a partially tethered owned royalty Co and 336 00:17:05,640 --> 00:17:09,040 used to used to finance like I could see that yeah. 337 00:17:09,480 --> 00:17:11,440 And Taylor was a company that was really on the fringes of 338 00:17:11,440 --> 00:17:15,839 like acceptable, but has been like completely endorsed from a 339 00:17:15,839 --> 00:17:17,160 credibility perspective in and a few. 340 00:17:17,160 --> 00:17:19,359 Wobbles along the way, but yeah. Yeah. 341 00:17:20,119 --> 00:17:20,920 Yeah. Oh, awesome, mate. 342 00:17:20,920 --> 00:17:24,200 Before we jump into Coronado, I want to share a snippet from a 343 00:17:24,200 --> 00:17:27,400 recent conversation we had with none other than Derek Heard 344 00:17:27,520 --> 00:17:30,800 Sandwich Ground Sport boss. So this is a man who knows more 345 00:17:30,800 --> 00:17:33,880 about ground support than almost anyone in the business. 346 00:17:34,160 --> 00:17:36,640 Hear it from him now. What's the biggest misconception 347 00:17:36,640 --> 00:17:39,680 about ground support? But it is that simple. 348 00:17:39,760 --> 00:17:41,760 It's a consumable. That's the biggest thing, that 349 00:17:41,760 --> 00:17:44,840 it's a simple, simple thing. I could just buy from anyone, 350 00:17:46,000 --> 00:17:48,800 you know, and it's, you know, traded product at the end of the 351 00:17:48,800 --> 00:17:50,520 day. What's the risk of thinking that 352 00:17:50,520 --> 00:17:52,920 way? That's the the quality and 353 00:17:52,920 --> 00:17:55,040 safety aspects. You know, it's it's a safety 354 00:17:55,040 --> 00:17:57,840 product. Yes, we're consumable in nature. 355 00:17:58,320 --> 00:18:02,320 We're a volume business and we do get put into the consumable 356 00:18:02,320 --> 00:18:05,640 category, but we're a safety product and that's why that 357 00:18:06,200 --> 00:18:09,480 quality assurance and the the after sales backup is so 358 00:18:09,480 --> 00:18:12,000 critical and that's what we really focus on. 359 00:18:12,960 --> 00:18:14,880 Thanks, Derek. Go Samic ground support. 360 00:18:15,360 --> 00:18:17,200 All right, mate. What is going on with Coronado? 361 00:18:17,680 --> 00:18:20,200 All right Coronado, there's a there's a few questions to try 362 00:18:20,200 --> 00:18:22,880 and answer here Firstly, is New Hope going to come and try and 363 00:18:22,920 --> 00:18:27,760 save the day? Is 7 that kind of elusive family 364 00:18:27,760 --> 00:18:31,360 office of a Czech billionaire lurking in the background, who 365 00:18:31,360 --> 00:18:33,320 mind you would be counting their lucky stars they didn't buy 366 00:18:33,320 --> 00:18:38,160 these massive stake some 12 months to 18 months ago. 367 00:18:38,760 --> 00:18:42,560 You've also got distressed debt players out there swirling 368 00:18:42,560 --> 00:18:44,880 around. And to make the story even more 369 00:18:44,880 --> 00:18:47,800 fascinating, you've got a stock that's down 90%. 370 00:18:47,800 --> 00:18:50,720 So this might be a bit better for a lot of equity holders. 371 00:18:50,720 --> 00:18:54,000 But we are going to try and flesh out some potential Silver 372 00:18:54,000 --> 00:18:57,400 Linings in this story as well and see if there is anything 373 00:18:57,760 --> 00:19:01,000 left or in any case if there's any learnings from other people 374 00:19:01,000 --> 00:19:04,440 who are keen on the coal space. I'm tremendously interested. 375 00:19:04,600 --> 00:19:06,720 I mean, when you see volatility like that in a share price and 376 00:19:07,040 --> 00:19:09,040 liquidity concerns, you've got me interested. 377 00:19:09,040 --> 00:19:12,400 Why are you interested, Janie? I am interested for a bunch of 378 00:19:12,400 --> 00:19:15,600 reasons mate, probably lining up with why you're interested as 379 00:19:15,600 --> 00:19:19,920 well, but it falls in that area of like a a potentially 380 00:19:19,920 --> 00:19:23,400 interesting opportunity for some of the obvious reasons. 381 00:19:23,400 --> 00:19:27,480 Massively depressed commodity price potential recapitalisation 382 00:19:27,560 --> 00:19:32,200 event, a a equity where the market hasn't given it too much 383 00:19:32,200 --> 00:19:35,080 hope of survival. You know, see the, the share 384 00:19:35,080 --> 00:19:38,000 price for that one. And I thought regardless, given 385 00:19:38,000 --> 00:19:40,760 the state of where coal markets are at, given the state of how 386 00:19:41,240 --> 00:19:44,240 some of the other players are trading, it'd be worthwhile just 387 00:19:44,240 --> 00:19:47,720 refreshing ourselves on on the space to to see what we can kind 388 00:19:47,720 --> 00:19:51,640 of do here going forward. What is like, yeah, like, I 389 00:19:51,680 --> 00:19:53,640 don't know if I've ever done a deep dive on Coronado, and I 390 00:19:53,720 --> 00:19:56,000 probably should have, but like, what's the 101? 391 00:19:56,960 --> 00:19:59,520 I think funnily enough, I'm in the same boat as you and it's 392 00:19:59,520 --> 00:20:02,320 because of the, the problems now facing them. 393 00:20:02,320 --> 00:20:04,760 They were just too much of A turn off to do the deep dive. 394 00:20:04,760 --> 00:20:08,880 But the, the one-on-one is that Coronado is a predominantly met 395 00:20:08,880 --> 00:20:14,200 coal producer operations in Australia and USA sort of 2/3 396 00:20:14,200 --> 00:20:17,240 Aussie, 1/3 USA split by revenue. 397 00:20:17,240 --> 00:20:22,080 Cara is the the asset we we talk about here in Australia, 90% of 398 00:20:22,080 --> 00:20:25,480 the revenue is is met coal, but that kind of comes on the back 399 00:20:25,480 --> 00:20:28,400 of this deal. They signed with the Queensland 400 00:20:28,400 --> 00:20:31,240 government, well it was related to the tenements and then signed 401 00:20:31,240 --> 00:20:33,720 with the the Queensland government, which I only 402 00:20:33,720 --> 00:20:35,880 mentioned because it becomes relevant to some of their 403 00:20:35,880 --> 00:20:39,840 financing discussions now. But that that is the thermal 404 00:20:39,840 --> 00:20:42,280 coal that gets sold to the Queensland Government to fire 405 00:20:42,280 --> 00:20:44,520 the coal-fired power plants there. 406 00:20:45,400 --> 00:20:47,600 So there's a strategic importance of supply. 407 00:20:47,680 --> 00:20:52,280 There is because an agreement is coming or is changing in 2027 408 00:20:52,280 --> 00:20:55,160 and it gives them new material to market and they've just 409 00:20:55,160 --> 00:20:58,040 signed an agreement to to sell it to the Queensland government 410 00:20:58,080 --> 00:21:00,600 again. So that that is in a nutshell. 411 00:21:00,600 --> 00:21:02,720 A couple of points on Coronado mate. 412 00:21:02,920 --> 00:21:05,800 What's and what's going on with the the latest sheet? 413 00:21:06,120 --> 00:21:08,840 So to, to capture it in like 1 line, you've got high cost 414 00:21:08,840 --> 00:21:11,520 operations, you've got plummeting commodity price and 415 00:21:11,520 --> 00:21:16,440 you've got debt and that equals a very troubled outlook and the 416 00:21:16,440 --> 00:21:19,040 company's sell. The recipe first disaster in our 417 00:21:19,040 --> 00:21:21,520 world yeah, exactly. Financial leverage operational 418 00:21:21,520 --> 00:21:22,320 leverage. Yeah. 419 00:21:22,320 --> 00:21:23,640 Back body prosper. Oh, but it's beautiful. 420 00:21:23,640 --> 00:21:24,560 There's nothing going for you. It's. 421 00:21:25,080 --> 00:21:27,520 Beautiful when it goes well, but it doesn't always go well. 422 00:21:27,520 --> 00:21:30,640 So these guys have been actually investing heaps in their assets, 423 00:21:30,640 --> 00:21:36,520 which is interesting given 2223 was a you know, a really rich 424 00:21:36,720 --> 00:21:38,960 vein of profit years for the coal miners. 425 00:21:39,520 --> 00:21:42,200 They've now been investing a lot of cash in their assets, but 426 00:21:42,200 --> 00:21:44,240 they've remained indebted through throughout. 427 00:21:44,240 --> 00:21:48,760 So they, you know, having had that combination of being 428 00:21:48,760 --> 00:21:52,400 unprofitable and all that debt are are now coming unstuck 429 00:21:52,400 --> 00:21:54,920 because coal prices have peeled off so much. 430 00:21:55,280 --> 00:21:57,960 And if you just look at the last quarter, the March quarter like 431 00:21:57,960 --> 00:22:00,640 these guys report on a calendar year basis, but March quarter 432 00:22:00,640 --> 00:22:05,080 saw cash drop US $110 million in quarter. 433 00:22:05,600 --> 00:22:09,040 Now a good chunk of that was investing cash flows, but that 434 00:22:09,200 --> 00:22:12,000 kind of tells you to an extent what you need to know. 435 00:22:12,360 --> 00:22:16,520 Yeah, and the debt? So the debt is, as of last 436 00:22:16,520 --> 00:22:20,240 reporting before these latest negotiations come into account, 437 00:22:20,720 --> 00:22:23,440 about 200 million U.S. dollars in net debt. 438 00:22:23,760 --> 00:22:25,520 Now. Yeah, it's likely a bit. 439 00:22:26,320 --> 00:22:28,480 There's been changes given they're bringing cash in the 440 00:22:28,480 --> 00:22:32,480 door, but it's given their loss making been expanding out the 441 00:22:32,480 --> 00:22:34,760 other way as well. That's greater than their market 442 00:22:34,760 --> 00:22:38,160 cap now, which in Aussie dollar terms is below 300 million 443 00:22:38,640 --> 00:22:40,520 dollars. So the the key piece of debt 444 00:22:40,520 --> 00:22:44,680 they've got $400 million bond, which is a tradable bond pays a 445 00:22:44,680 --> 00:22:49,080 bit over 9%. Now that costs them on a yearly 446 00:22:49,080 --> 00:22:53,560 basis about US $40 million. So just making that payment 447 00:22:53,560 --> 00:22:56,520 alone is is a bit hard Yaki, given they're not making any 448 00:22:56,520 --> 00:23:01,080 profit and the bond cents have traded off to $0.70 on the 449 00:23:01,080 --> 00:23:03,760 dollar, which means they're yielding like 18%. 450 00:23:03,760 --> 00:23:05,600 And I'm sure there'll be a bunch of people out there who aren't 451 00:23:05,600 --> 00:23:09,200 so financially inclined and, and don't care about how bonds trade 452 00:23:09,200 --> 00:23:11,640 and all that stuff. So what it means in a nutshell 453 00:23:11,640 --> 00:23:15,400 is that lenders or people that play in the, the bond market, 454 00:23:15,760 --> 00:23:18,880 I'm not certain they're going to get back every dollar that has 455 00:23:18,880 --> 00:23:23,920 been lent to the company. And given that debt comes before 456 00:23:23,920 --> 00:23:27,720 equity in, in the stack, it's a, it's a pretty ominous warning or 457 00:23:27,720 --> 00:23:32,080 sign for shareholders out there. And it's no surprise that you've 458 00:23:32,080 --> 00:23:35,800 seen the stock right massively down as well as you know on the 459 00:23:35,800 --> 00:23:38,600 back of seeing that the bonds trade down massively in the past 460 00:23:38,600 --> 00:23:42,120 couple months. Yeah, man, $0.70 on the dollar 461 00:23:42,120 --> 00:23:44,040 fee bonds, not a not a good sign, no. 462 00:23:44,040 --> 00:23:45,960 No, it's not at all. So what can they do in this 463 00:23:45,960 --> 00:23:47,720 situation so. They've got, they've got a 464 00:23:47,720 --> 00:23:51,480 couple levers to pull and you know, I trust they are looking 465 00:23:51,480 --> 00:23:53,960 at every single one of them. But firstly they're negotiating 466 00:23:53,960 --> 00:23:55,040 with the the Queensland Government. 467 00:23:55,040 --> 00:23:58,840 So this is their agreement with Stanwell coal-fired power 468 00:23:58,840 --> 00:24:01,520 stations as I sort of mentioned. So who's behind Stanwell? 469 00:24:01,520 --> 00:24:02,520 That's the that's the government. 470 00:24:02,520 --> 00:24:03,560 That's the Queensland government. 471 00:24:03,560 --> 00:24:05,920 So these guys have been selling a bit over 3,000,000 tons per 472 00:24:05,920 --> 00:24:09,120 annum thermal coal. And firstly they've been paying 473 00:24:09,120 --> 00:24:12,920 these massive rebates, which ties into the tenements, goes 474 00:24:12,920 --> 00:24:15,480 back to the the asset, the history there. 475 00:24:16,480 --> 00:24:18,280 And secondly, they've been selling that at essentially 476 00:24:18,400 --> 00:24:23,160 massively discounted prices, but that was going down to 2.2 477 00:24:23,160 --> 00:24:27,040 million tons being forced to be sold to the government in 2027 478 00:24:27,320 --> 00:24:31,160 onwards, which essentially means they are negotiating a, a 479 00:24:31,160 --> 00:24:35,520 prepayment for those tons that they're going to produce from 480 00:24:35,520 --> 00:24:38,160 those years onwards. So what they're saying to the 481 00:24:38,160 --> 00:24:41,240 Queensland government is we'll continue to give you the amount 482 00:24:41,240 --> 00:24:44,800 that we've been giving you today, but we need cash upfront, 483 00:24:44,800 --> 00:24:47,240 we need it now. And you're incentivized because 484 00:24:47,240 --> 00:24:49,760 you want us to be around to deliver the tons to you. 485 00:24:50,120 --> 00:24:54,920 So that explains the US $150.00 agreement with the, the state 486 00:24:54,920 --> 00:24:58,640 government there. It's a, it's a kind of split 75 487 00:24:58,640 --> 00:25:03,920 of that is a temporary waiver on this rebate, which is not 488 00:25:04,000 --> 00:25:05,920 insignificant. That rebates cost them over $100 489 00:25:05,920 --> 00:25:10,920 million in in a given year and then 75 is prepayment for coal 490 00:25:10,920 --> 00:25:14,400 that they're going to deliver. So if you step back and try and 491 00:25:14,400 --> 00:25:18,800 value the business, this is not good for the overall like NPV of 492 00:25:18,800 --> 00:25:21,800 the the project or the sort of DCF for the business like your 493 00:25:21,880 --> 00:25:25,080 your foregoing future profits to get cash in the door right now, 494 00:25:25,080 --> 00:25:27,880 but you have to do it. They can solve a liquidity 495 00:25:28,200 --> 00:25:29,240 issue. Then exactly. 496 00:25:29,240 --> 00:25:31,160 Yeah, if it keeps you in the game, you've just got to do 497 00:25:31,160 --> 00:25:32,600 these. Things and sometimes your share 498 00:25:32,600 --> 00:25:35,200 price like falls off because the market's pricing in a cap raise. 499 00:25:35,560 --> 00:25:37,640 You can solve that with a prepayment instead. 500 00:25:37,640 --> 00:25:40,720 Then you might get some short term repriv on that front which 501 00:25:41,320 --> 00:25:42,680 you know might make an eventual cap raise. 502 00:25:43,000 --> 00:25:46,200 Yeah, exactly. And cap raise and Speaking of 503 00:25:46,200 --> 00:25:48,800 other negotiations that there are a few on the table. 504 00:25:49,160 --> 00:25:51,840 So firstly, you've got this deal with oak tree. 505 00:25:51,840 --> 00:25:56,160 They came out with a great deal with oak tree binding, they 506 00:25:56,160 --> 00:25:59,040 called it. Although both parties can still 507 00:25:59,040 --> 00:26:01,480 back out the deal. So it's not completely binding I 508 00:26:01,480 --> 00:26:02,600 mean. Oak trees. 509 00:26:02,960 --> 00:26:04,320 These are distressed debt experts, right? 510 00:26:04,320 --> 00:26:06,720 Yeah, yeah, they, they absolutely are. 511 00:26:06,720 --> 00:26:10,120 The stock ripped 50% on the news that they'd signed this deal. 512 00:26:10,400 --> 00:26:14,000 So it was an asset backed lending facility, 150 million 513 00:26:14,160 --> 00:26:18,080 U.S. dollars to keep the lights on essentially that's on the 514 00:26:18,080 --> 00:26:21,120 table now. Then you've got rumors that New 515 00:26:21,120 --> 00:26:25,360 Hope, the thermal coal producer who plays in both NSW and 516 00:26:25,360 --> 00:26:29,240 Queensland, is potentially going to come in with refinancing or 517 00:26:29,240 --> 00:26:31,880 to acquire Coronado. It's super interesting. 518 00:26:32,840 --> 00:26:36,080 And I mean it gets more interesting for New Hope as 519 00:26:36,080 --> 00:26:37,920 well. I think because they've been 520 00:26:37,920 --> 00:26:41,320 held back to an extent by potential M and AA lot of people 521 00:26:41,320 --> 00:26:44,160 thought they were going to take over Maliba, which they own 22 522 00:26:44,160 --> 00:26:47,680 ish percent in. And you know, for for a number 523 00:26:47,680 --> 00:26:49,600 of reasons, this has held them out because that was going to be 524 00:26:49,600 --> 00:26:51,160 a rumoured billion dollar transaction. 525 00:26:51,160 --> 00:26:52,960 Yeah, you compare it with this now. 526 00:26:53,400 --> 00:26:56,680 And if they were to take over Coronado, yeah, they would be 527 00:26:56,680 --> 00:27:00,520 getting 3X the amount of volume and they would be paying a much 528 00:27:00,520 --> 00:27:03,280 smaller price tag. But a lot of asterisks is there. 529 00:27:03,520 --> 00:27:05,400 Shooting the debt, Yeah, They've also got a. 530 00:27:06,000 --> 00:27:07,160 Yeah. And that doesn't even take unit 531 00:27:07,160 --> 00:27:08,920 costs into account and everything and the CapEx? 532 00:27:08,920 --> 00:27:10,400 It might still have to be dark, yeah. 533 00:27:10,720 --> 00:27:13,880 But New Hope have a much healthier balance sheet and 534 00:27:13,880 --> 00:27:15,600 they're backed by Sol Pats as well. 535 00:27:15,680 --> 00:27:19,440 So if we're going to dive in deeper into potential 536 00:27:19,440 --> 00:27:22,200 acquisitions, we've got to talk about EMG. 537 00:27:22,720 --> 00:27:25,400 These are the private equity. This is the private equity group 538 00:27:25,720 --> 00:27:31,360 that listed Coronado in 2017 at a 3 1/2 billion dollar 539 00:27:31,360 --> 00:27:34,240 valuation. They still own 51% of the 540 00:27:34,240 --> 00:27:35,840 company. So no deal gets done without 541 00:27:35,840 --> 00:27:38,480 their say. So super hard to get a read into 542 00:27:38,480 --> 00:27:41,520 them. They're an American group, do a 543 00:27:41,520 --> 00:27:43,560 lot in the oil kind of space as well. 544 00:27:44,000 --> 00:27:45,200 Yeah. We don't know how much sort of 545 00:27:45,320 --> 00:27:47,680 cash they have, how much they would want to tip in, but they 546 00:27:47,680 --> 00:27:50,240 have final say off essentially. They they certainly wanted 547 00:27:50,320 --> 00:27:54,880 wanted an exit like 18 months ago when that was supposedly a 548 00:27:54,880 --> 00:27:58,680 done deal with 7, but never that, you know, that never 549 00:27:58,680 --> 00:28:00,600 actually eventuated. Yeah, it it. 550 00:28:00,640 --> 00:28:03,440 It would be tough not to to ponder that one every time you 551 00:28:03,440 --> 00:28:05,960 wake up and you look at what Coronado is currently trading 552 00:28:05,960 --> 00:28:08,200 at. But times have changed quite a 553 00:28:08,200 --> 00:28:12,160 bit. And given where natural resource 554 00:28:12,160 --> 00:28:15,720 PE has been in that, the sort of state they've been in lately, 555 00:28:15,720 --> 00:28:19,520 it's hard to get a gauge on how much liquid cash these guys 556 00:28:19,520 --> 00:28:21,480 would actually have, what they can actually do. 557 00:28:22,160 --> 00:28:24,560 So we'll, we'll, we'll talk about a few other options. 558 00:28:24,560 --> 00:28:26,840 You've also got 7 like you mentioned there. 559 00:28:26,840 --> 00:28:31,720 They were rumored to be buying the debt of Coronado just 560 00:28:31,720 --> 00:28:33,280 recently buying buying a Porsche. 561 00:28:33,280 --> 00:28:35,840 On market, yeah. On market $40 million was the 562 00:28:35,920 --> 00:28:37,200 the rumor there. Yeah. 563 00:28:38,040 --> 00:28:40,560 Now we know they're interested. They're trying to buy a big 564 00:28:40,560 --> 00:28:43,200 stake in the company not too long ago. 565 00:28:43,200 --> 00:28:46,960 They have bought numerous assets in in Australia in the past. 566 00:28:47,760 --> 00:28:49,240 That's a that's a big question mark. 567 00:28:49,240 --> 00:28:53,560 Like you, you need deep pockets to take on this operation in 568 00:28:53,920 --> 00:28:58,160 Coronado because you are buying loss making mines. 569 00:28:58,160 --> 00:29:01,520 So even if you can stump up the money to buy the company out, 570 00:29:01,760 --> 00:29:05,280 you need to be able to stomach potential losses for a number of 571 00:29:05,280 --> 00:29:07,840 years to come as CapEx is being spent. 572 00:29:07,840 --> 00:29:10,960 Like CapEx has been pulled all the way down to just critical 573 00:29:10,960 --> 00:29:12,960 stuff. Yeah, So they've got big 574 00:29:12,960 --> 00:29:18,360 expansions, Buchanan and here here in Australia as well, going 575 00:29:18,360 --> 00:29:21,160 underground at Cara. It's been winding down, but you 576 00:29:21,160 --> 00:29:22,720 still need to spend a lot of money on the assets. 577 00:29:22,720 --> 00:29:25,120 So you need to be pretty deep pocketed to do a deal here. 578 00:29:25,280 --> 00:29:29,320 Well, if they're buying the, the, the listed bonds on market 579 00:29:29,320 --> 00:29:34,520 at whatever $0.70, then like the bigger risk when you get a 580 00:29:34,520 --> 00:29:36,720 distressed situation like this and you've got stressed that 581 00:29:36,720 --> 00:29:39,400 guys like floating around is that you get primed and there's 582 00:29:39,400 --> 00:29:43,080 some new debt that enters the cap structure, which is, you 583 00:29:43,080 --> 00:29:46,200 know, seeing you secured and ranks high than you and yours 584 00:29:46,920 --> 00:29:49,240 like you rank even lower than that because you bought the 585 00:29:49,240 --> 00:29:51,120 listed bonds, which may be unsecured. 586 00:29:51,120 --> 00:29:52,480 Are they unsecured or? Secured. 587 00:29:52,840 --> 00:29:56,080 I believe they are secured. Well, yeah, regardless. 588 00:29:56,080 --> 00:30:00,080 Like you could still theoretically get primed, but 589 00:30:00,480 --> 00:30:02,840 maybe they just want like they want to sit at the table. 590 00:30:02,840 --> 00:30:05,040 Maybe they're buying secure deck because they want to sit at the 591 00:30:05,040 --> 00:30:06,280 table. Maybe they have interest in 592 00:30:06,480 --> 00:30:10,040 Australian asset, so all the US ones but not both. 593 00:30:10,040 --> 00:30:13,880 Like I'd be very curious what the ambitions of Seven Group 594 00:30:14,120 --> 00:30:15,640 are. Yeah, You'd have to be doing 595 00:30:15,640 --> 00:30:17,960 your homework and potentially like you say there, you could 596 00:30:17,960 --> 00:30:19,760 buy it. If you do want to buy it, split 597 00:30:19,760 --> 00:30:22,160 it out and try and sell. I mean, even in this 598 00:30:22,160 --> 00:30:24,040 environment, you're not going to get a great price for the US 599 00:30:24,040 --> 00:30:25,760 assets. But if it goes under like and 600 00:30:25,760 --> 00:30:28,840 you've got secured debt, even if you do get primed, you've got a 601 00:30:28,840 --> 00:30:31,200 pretty meaningful like seat at that table as opposed to it. 602 00:30:31,720 --> 00:30:34,360 Things get messy. And that oak tree facility, 603 00:30:34,360 --> 00:30:40,400 there is a refinancing of an, an already existing facility. 604 00:30:40,400 --> 00:30:44,080 So they're in and around there. And these guys, yeah, they 605 00:30:44,080 --> 00:30:46,360 breached covenants already and they didn't report that for a 606 00:30:46,360 --> 00:30:47,720 number of months after it happened. 607 00:30:47,720 --> 00:30:50,040 So there's a, there's a fair bit going on. 608 00:30:50,040 --> 00:30:54,040 And then, you know, an equity raising is also potential on the 609 00:30:54,040 --> 00:30:55,520 table. I mean, it's essentially A 610 00:30:55,520 --> 00:30:59,120 recapitalization at this price. And then we know there's other 611 00:30:59,120 --> 00:31:02,720 groups that like financing coal players, Farallon is the name 612 00:31:02,720 --> 00:31:04,200 that comes to mind areas as well. 613 00:31:05,040 --> 00:31:09,120 Given the the profitability again of the assets, I'm not 614 00:31:09,120 --> 00:31:10,680 sure how much more they could actually stomach. 615 00:31:10,800 --> 00:31:14,640 So it's it's a tough question to answer, but potential that 616 00:31:14,640 --> 00:31:16,680 they're floating around too. It doesn't. 617 00:31:16,680 --> 00:31:21,280 It kind of all come down to can can the assets turn around or 618 00:31:21,280 --> 00:31:23,600 not? Well, here's the thing going 619 00:31:23,600 --> 00:31:26,680 back to the point that I made earlier mate on them investing 620 00:31:26,680 --> 00:31:29,760 in in the assets so that they have been putting a lot of money 621 00:31:29,760 --> 00:31:31,640 in. They are expanding the profile. 622 00:31:32,360 --> 00:31:34,640 Overall output is going to be 3,000,000 tons higher. 623 00:31:34,840 --> 00:31:37,040 As you said, Cara. This is a cross. 624 00:31:37,080 --> 00:31:40,440 So they have been Buchanan is the is the expansion in the 625 00:31:40,440 --> 00:31:42,760 States and Mammoth is the underground at Cara. 626 00:31:43,360 --> 00:31:46,880 So unit cost across both operations should be coming down 627 00:31:47,520 --> 00:31:50,800 that they will come down. It's just what shape Coronado is 628 00:31:50,800 --> 00:31:54,080 in by that course those rebates they are coming off. 629 00:31:54,200 --> 00:31:58,680 So you know that that agreement with Stanwell will happen and 630 00:31:58,680 --> 00:32:02,240 the you know, come 2027 unit costs will be lower. 631 00:32:02,240 --> 00:32:04,600 It just depends what state the company is in. 632 00:32:04,880 --> 00:32:06,720 CapEx is coming down, although it's still pretty hefty. 633 00:32:06,720 --> 00:32:12,120 It's going to be about 70 ish, $1,000,000 going forward and 634 00:32:12,360 --> 00:32:15,040 you've got others, you know potential levers you could pull. 635 00:32:15,040 --> 00:32:18,480 There is marketing rights they could sell again, kind of 636 00:32:19,160 --> 00:32:22,640 selling a bit of your future upside for cash in the door 637 00:32:22,800 --> 00:32:26,280 today. So there there's a few options 638 00:32:26,280 --> 00:32:29,800 on the table and I mean we need to talk a bit about the coal 639 00:32:29,800 --> 00:32:33,240 price, right, because there's not many players in the market 640 00:32:33,240 --> 00:32:36,480 that are so unbelievably talked to the coal price right now like 641 00:32:36,480 --> 00:32:40,920 this stock is so beaten up. If there were to be some sort of 642 00:32:40,960 --> 00:32:44,240 incident or disruption, supply disruption or something like met 643 00:32:44,240 --> 00:32:46,880 coal prices is very weak. Demand has been weak at the 644 00:32:46,880 --> 00:32:50,480 moment for a number of factors. But if there was to be an uptick 645 00:32:50,480 --> 00:32:54,200 in that, the thing would thing would RIP higher because the the 646 00:32:54,200 --> 00:32:56,160 dynamic would completely change. Yeah. 647 00:32:56,320 --> 00:33:00,080 Now you, you can't sit around hoping that'll happen, but it's 648 00:33:00,080 --> 00:33:01,320 something you got to keep in mind. 649 00:33:01,480 --> 00:33:03,480 Yeah. Whether we see a capital raise 650 00:33:03,480 --> 00:33:06,880 as well is another potential catalyst. 651 00:33:06,880 --> 00:33:10,240 If you're someone on the outside looking in, if you're, if you're 652 00:33:10,240 --> 00:33:13,280 there right now, it's maybe not what you're you're hoping for, 653 00:33:13,280 --> 00:33:16,360 but everything needs to kind of be on the table to to save the 654 00:33:16,800 --> 00:33:20,680 business. Yeah, and you're also making an 655 00:33:20,680 --> 00:33:25,240 equation or an estimate on the like the the state government's 656 00:33:25,240 --> 00:33:29,920 like propensity to actually, yeah, provide more generosity as 657 00:33:29,920 --> 00:33:32,280 things like could, could look worse more and more diet you 658 00:33:32,280 --> 00:33:34,480 have you have the state government putting their hand 659 00:33:34,480 --> 00:33:36,840 out more. It's kind of interesting that 660 00:33:36,840 --> 00:33:40,680 they they had asked for royalty relief again and they were sort 661 00:33:40,680 --> 00:33:44,200 of rejected on that front. But maybe if the thing the 662 00:33:44,200 --> 00:33:47,360 situation gets even worse, the the state government changes 663 00:33:47,360 --> 00:33:48,640 their tune a bit more on that one. 664 00:33:49,320 --> 00:33:51,160 I wouldn't hold my breath because. 665 00:33:51,640 --> 00:33:54,440 Well. Yeah, Carl, you need to see that 666 00:33:54,440 --> 00:33:56,600 happen before you're turning the lights off. 667 00:33:56,600 --> 00:33:58,840 You know, you need the line of sight on that. 668 00:33:58,840 --> 00:34:02,360 So yeah, yeah, there's there's there's a bit to to Stew on 669 00:34:02,360 --> 00:34:09,360 there, but there's certainly players interested in giving 670 00:34:09,360 --> 00:34:11,480 cash and making sure this this operation, this company 671 00:34:11,480 --> 00:34:14,120 survives. So yeah, we'll see if it's too 672 00:34:14,120 --> 00:34:16,639 little too late or if a few parties can come together and 673 00:34:16,639 --> 00:34:17,360 make something happen. You. 674 00:34:17,760 --> 00:34:21,480 Can make and lose a lot of money by like yeah, doubling in these 675 00:34:21,480 --> 00:34:25,880 sort of situations like just as easily have like a double as you 676 00:34:25,880 --> 00:34:27,639 could lose all your money I'm taking. 677 00:34:27,920 --> 00:34:29,639 Yeah. But I mean imagine there is the 678 00:34:29,639 --> 00:34:34,199 recapitalization and you get a bit more clarity on on on unit 679 00:34:34,199 --> 00:34:35,600 costs and all those sorts of things. 680 00:34:37,000 --> 00:34:40,080 You could be in a interesting position if you've you've got a 681 00:34:40,080 --> 00:34:43,080 three or four year time horizon looking forward because coal 682 00:34:43,080 --> 00:34:47,400 prices at a low ebb talk like we mentioned, but you need to kind 683 00:34:47,400 --> 00:34:50,400 of get there first. Any other takeaways, JD? 684 00:34:50,920 --> 00:34:53,080 Mate, there, there. There's a sort of couple, right? 685 00:34:53,239 --> 00:34:58,960 The, the like way in which we're seeing commodity cycles and 686 00:34:58,960 --> 00:35:00,840 capital cycles play out. I find fascinating because we've 687 00:35:00,840 --> 00:35:04,080 spoken heaps about it over the, the, the past couple years, but 688 00:35:04,080 --> 00:35:06,160 I feel like we're actually seeing it in, in real time now. 689 00:35:06,200 --> 00:35:08,480 It's, it's pretty exciting. Like it's unfortunate here in 690 00:35:08,480 --> 00:35:11,480 Coronado situation, but if you look around the market at this 691 00:35:11,480 --> 00:35:14,240 point in time, like Platinum's another one in the PGM space, 692 00:35:14,240 --> 00:35:17,160 we've seen it like these things take years to sort of play out. 693 00:35:17,640 --> 00:35:19,560 Coal was booming when we started the potty, right? 694 00:35:19,560 --> 00:35:21,960 Like the guys were making money hand over fist. 695 00:35:22,360 --> 00:35:28,400 And how the companies invest that money in the good times is 696 00:35:28,400 --> 00:35:30,960 like an indicator of how they're going to perform in the long 697 00:35:30,960 --> 00:35:33,440 term. If they are, you know, building 698 00:35:33,440 --> 00:35:37,120 a solid cash ball and going to take advantage of the the weak 699 00:35:37,760 --> 00:35:41,240 and lower sort of cost environment times is a super, 700 00:35:41,240 --> 00:35:42,680 super, super important indicator. 701 00:35:43,400 --> 00:35:45,760 And these guys didn't necessarily do the wrong thing. 702 00:35:45,760 --> 00:35:49,640 They're like in they've invested in their assets, but they still 703 00:35:49,640 --> 00:35:52,480 held debt. And maybe they did a little bit 704 00:35:52,480 --> 00:35:54,760 too late if you're going to be cynical, but that that is 705 00:35:54,760 --> 00:35:57,760 something that really kind of comes to mind here. 706 00:35:57,880 --> 00:36:00,320 And yeah, I'm just thinking about that heap lately. 707 00:36:00,760 --> 00:36:02,520 I've got one more for you actually as well. 708 00:36:03,120 --> 00:36:06,080 These guys had their AGM just recently and it was a completely 709 00:36:06,080 --> 00:36:10,000 virtual AGM. Don't like it, don't like it. 710 00:36:10,000 --> 00:36:11,440 Also like. I remember looking at their 711 00:36:11,440 --> 00:36:16,160 notice of meeting by the way and giant board across yeah, 712 00:36:16,360 --> 00:36:19,880 multiple jurisdictions with an absolutely bizarre peer comp for 713 00:36:19,880 --> 00:36:23,320 the for the R.E.M. Benchmarking and unfathomable 714 00:36:23,320 --> 00:36:29,560 amount of GNA going towards yeah the yeah, the overheads 715 00:36:29,560 --> 00:36:33,600 department to to the board which couldn't fathom for the size of 716 00:36:33,600 --> 00:36:35,480 the company. Yeah, there's, there's a few 717 00:36:35,480 --> 00:36:38,480 sort of question marks there. I think with with virtual Agms 718 00:36:38,640 --> 00:36:41,960 like the preferences, it's got to be virtual and in person. 719 00:36:42,200 --> 00:36:44,640 Yeah, it's just, yeah, it's got to be in this day and age and 720 00:36:45,120 --> 00:36:48,160 like, yeah, you can't just silence shareholders like that. 721 00:36:48,160 --> 00:36:51,600 But anyway, I think that's enough on on Coronado and a good 722 00:36:51,600 --> 00:36:54,720 bit to to think about there for the punters out there. 723 00:36:55,600 --> 00:36:57,040 Absolutely mate, we've got some partners to thank. 724 00:36:57,080 --> 00:36:58,600 We do have a couple partners to thank mate. 725 00:36:58,720 --> 00:37:01,240 A massive thank you to Mineral Mining Services, grounded 726 00:37:01,240 --> 00:37:03,600 sandwich ground support, cage rule and cross boundary energy. 727 00:37:04,280 --> 00:37:11,040 Now remember, I'm an idiot. JD is an idiot. 728 00:37:11,560 --> 00:37:13,960 Thought any of this was anything other than entertainment. 729 00:37:14,440 --> 00:37:16,600 You're an idiot and you need to read out a disclaimer.