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Jonas Sterling gave us an 
appetizer, which was Northern 

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Star. 
You've followed it up with a 

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wonderful main meal that was 
Fortescue. 

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And now you've come out with 
dessert Evolution Mining. 

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You've done the history on the 
mining companies that have 

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defined their last decade or two
decades, and what have they 

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done? 
They've gone from nothing to 

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something incredibly 
substantial. 

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Evolution is your focus today 
like. 

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A $22 billion business, Can you 
can you just wrap your head 

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around that number for a moment?
And the last sort of 6 to 12 

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months make that number look 
pretty astounding. 

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But this is a 15 year story, bit
by bit, trading their way out, 

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stepping stones, as they, they 
like to call it, going from 

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asset to asset from frankly, not
the best assets in the world, 

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just some pretty stunning 
assets. 

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And even more remarkable, it has
been a journey led by a guy 

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called an accidental miner by 
himself, Jake Klein, and a very 

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entrepreneurial team. 
So I've been itching to do this 

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episode for a long time. 
We've sort of heard along the 

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way about deals like the Ernest 
Henry deal that they did, which 

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was just remarkable, like 
awesome, awesome stuff. 

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And we, we analyze a lot of 
deals here. 

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We, we talk a lot about deal 
making in the mining space. 

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So why not learn? 
Learn from some of the best in 

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the business. 
I, I can't wait, mate. 

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I mean, the, the feedback that 
that we've had from the amount 

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of work and research that you've
put into studying both Northern 

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Star and, and Fortescue has been
extraordinary. 

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And I know that that today is no
exception. 

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In fact, I actually think you've
probably done more research into

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evolution than any of the two, 
but. 

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I'm keen to get it done. 
You're building, you're 

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building. 
And again, the characters are 

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important. 
Again, the the the company's 

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strategy is important. 
Fortescue a story that execution

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Northern Star a story of of, of 
of deals and and and execution. 

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But this one, a story of deals, 
right? 

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Totally, this is this is all 
about the the deals and to put 

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it in the context as well, 
right, because there are cycles,

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we're in a very cyclical 
business and there are multiple 

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cycles in the company we're 
going to analyse today. 

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We're clearly at one of the the 
higher ebbs of the gold cycle 

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today. 
And evolution is a company 

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that's had a draw down over 80% 
in its time. 

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So I think it's really important
as commodity investors as well 

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to to try and take this on board
and understand what can what can

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happen when, when the cycle kind
of turns. 

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And I think Jake Klein would be 
the first person to to say 

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something like that. 
There's a couple other reasons 

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to do an episode like this as 
well. 

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Speaking of Jake, he has just 
moved to non exec chair. 

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So it feels like a bit of a 
passing of the the the guard 

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there. 
And you remember in the Northern

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Star episode, we kind of brought
that one to a close kind of when

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when Bill moved on. 
So I think that changing in the 

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nature of the business makes 
sense. 

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And just to to touch on that 
point once more that that you 

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made, it's all about the deals 
here. 

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This is the ultimate investor 
slash capital allocator mining 

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company. 
And I think it's so fascinating.

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It's not just the deals that 
they did, it's the assets that 

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they sold along the way, not 
just the buyers as well as the 

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assets they, you know, passed on
and perhaps most important, the 

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timing of those deals. 
And you know, you can, you can 

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only kind of think back about it
years afterwards. 

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But when you, when you do look 
back on evolution, the timing's 

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been pretty good, hasn't it? 
It's been been been great to 

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have commodity tailwinds. 
It makes or breaks a mining 

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company, there's no doubt. 
I'm extremely excited for your 

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story on the evolution of 
evolution. 

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JD Where does the evolution of 
evolution begin? 

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That we're going to kick this 
one off in the 90s. 

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So I want to give you a brief 
bit of background on the on 2 

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individuals, firstly Jake Klein 
and then Nick Curtis. 

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So Jake Klein, South African 
born, joined Macquarie in late 

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1991. 
He was in his late 20s at that 

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point in time. 
Joins the internal audit 

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division and he moves through 
the bank gets a flavor for all 

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the all the divisions that a a 
much younger and smaller 

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Macquarie has at that point in 
time. 

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But he gets a bit of a flavour 
for gold working in the bullion 

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division. 
And they were, they were doing a

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whole bunch of fascinating 
things, which I'll, I'll sort of

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try not to digress into, but he 
meets Nick Curtis there. 

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Nick had first tried his hand as
an art dealer of of all things. 

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And he is running the most 
profitable division of the bank,

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the bullion division. 
And to flash forward a bit for 

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people that don't know, Nick 
would found Linus later on in 

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the, in the early to mid 2000s. 
And he would, he would lead that

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company as well as serving on 
the board with Evolution and 

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playing a big role in Sino gold,
which we're going to get into. 

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But they get their first taste 
for China pretty early on. 

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It's, it's the mid kind of 1990s
here. 

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And they are actually approached
by a Chinese SOA. 

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And Jake is tasked with showing 
this guy Zhu Hengjing around the

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bank for a couple weeks in 
Macquarie's office in, in 

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Sydney. 
Nick had already met this guy 

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and he, he spoke super, super 
highly of him. 

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He, he said he was one of the 
most interesting men he'd come 

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across in a long, long time. 
And Zhu becomes very influential

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in the Sino gold stories. 
We'll we'll touch on later on. 

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But he he helps open doors and 
give local insight to the 

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company and and helps them on 
their kind of way. 

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This is the mid 90s like, like 
what is the political yeah 

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atmosphere of China at the time?
Were they trying to incentivize 

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foreign investment into China? 
That they were in small parts. 

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I mean, the, the opening up had 
really started in the in the 

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late 70s with Deng Xiaoping and 
that had taken a long time 

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because China was extremely poor
and it's still very poor at this

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point in time in the 90s. 
But as these guys kind of show, 

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they are pretty adept at, at 
reading the tailies and they're 

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going to China 10 years before 
others are kind of doing that. 

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But more importantly, from 
China's perspective, they want 

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to learn. 
And that is why they sought out 

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Macquarie because they wanted to
learn about, about deal making 

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and, and all sorts of kind of 
things. 

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Hence sending Zhu over over to 
China and then inviting the 

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Aussie team back to China. 
And they get an experience going

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to a whole bunch of different 
mines in kind of in the 

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northwest of China and some 
provinces that back in in those 

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days took a long, long time to 
to get to and over the Sino 

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Gold. 
And firstly, the Macquarie 

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journey, they were seeing first 
hand how things were changing on

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the ground in China. 
Jake gave some some awesome sort

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of anecdotes about how long it 
would take to get to places and 

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roll forward a few years that 
the trip is, you know, dropped 

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2030 forty 50% in time because 
highways are being built across 

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valleys and all these sorts of 
things to just remarkable to 

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kind of think about. 
So Nick and Jake are invited to 

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to China. 
And what does that? 

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What does that experience evolve
into? 

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So eventually Macquarie learns 
that they're not going to get 

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the fees that they want to get 
from the Chinese. 

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00:07:02,800 --> 00:07:04,160
I'm laughing. 
Anyone that's working in 

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investment banking will have a 
good laugh at that. 

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No surprises there. 
So in that sort of second part 

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of the 90s they they leave 
Macquarie, a SOA essentially 

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puts money into an offshore 
vehicle, a came in vehicle 

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called Sino Mining International
and this is run from Sydney. 

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It starts with 30 million U.S. 
dollars and they look for a 

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whole bunch of different things.
They pick up Illumina assets, 

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they pick up undeveloped gold 
projects, they pick up developed

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gold projects. 
So they pick up a whole 

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collection of assets. 
And then around the year 2000, 

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the Chinese premier puts the 
foot down and says we are 

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reforming all the SOAS. 
A lot of these assets get pushed

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back out to the provinces, but 
it leaves Sino Mining 

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International in a bit of limbo.
Sino gets swooped up by a 

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company called Min Metals. 
Might be familiar to a lot of 

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people because they're the 
parent company of MMG today, one

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of the biggest businesses in in 
in China, mining businesses. 

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And Min Metals is an enormous 
commodity trader. 

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Right, yes, they're, they're a 
behemoth in in China still to 

155
00:08:07,560 --> 00:08:10,720
this day. 
But Long story short, for 18 

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00:08:10,720 --> 00:08:14,400
months, they don't have a a 
shareholder, so they get swooped

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00:08:14,400 --> 00:08:19,280
up and they end up negotiating 
to take on this unprofitable 

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00:08:19,280 --> 00:08:25,360
gold mine that's called Zhang 
Chaling, plus a few undeveloped 

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projects. 
Jin Feng was one of them, which 

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00:08:27,600 --> 00:08:31,360
would go on to become a mine and
the second biggest gold mine in 

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in China. 
The Chinese state still owns a 

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stake in that entity, Sino. 
And sooner or later, come 2002, 

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we get a public listing. 
So the company Sino Mining lists

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on the ASX, the Chinese interest
in that is, is way, way down. 

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They raise $100 million. 
This is sort of corner stoned by

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4 investors taking $10 million 
stakes. 

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And you got Jake, a CEO, Nick 
Curtis chair later on. 

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00:08:59,800 --> 00:09:03,800
Jim Askew becomes chair in 2005.
And if we Fast forward all the 

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00:09:03,800 --> 00:09:06,800
way to 2009, they're a company 
with two mines. 

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00:09:06,920 --> 00:09:09,520
A third one is on the way. 
One of them is, like I said, the

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00:09:09,520 --> 00:09:11,200
second biggest gold mine in in 
China. 

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These guys are the largest 
foreign gold miner in China. 

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Jewel listed Hong Kong and on 
the ASX and that is getting to 

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the end of their 15 odd year 
journey in China. 

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You fast forwarded 7 years of of
Sino Gold's life there mate. 

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But but those those seven years 
would have been filled with some

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pretty important lessons. 
There, there would have been a 

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bunch of important lessons, but 
the the one that sticks out to 

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me that they take forward and 
this is a lesson actually I 

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think they learned at Macquarie,
this was hammered into the guys 

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at Macquarie is that you need to
understand what your competitive

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advantage is. 
You need to know what your edge 

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00:09:49,840 --> 00:09:53,640
is. 
And in China that was abundantly

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clear for these guys, at least 
early on, costs were a fraction 

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of what they were in Australia. 
These guys brought in the 

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expertise of the Australian 
mining industry and they brought

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00:10:03,200 --> 00:10:06,320
that to an underexplored area 
like the the average gold mine 

188
00:10:06,320 --> 00:10:09,560
in China at the time was doing 
less than 20,000 oz. 

189
00:10:10,200 --> 00:10:13,200
And Despite that it was the 
biggest gold producer in the 

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00:10:13,200 --> 00:10:16,520
world. 
It, it, it, there was so much 

191
00:10:16,520 --> 00:10:19,480
for the Chinese to learn and the
Chinese did a great job learning

192
00:10:19,480 --> 00:10:21,440
that. 
Everything is done in a joint 

193
00:10:21,440 --> 00:10:24,000
venture. 
The Chinese, they would never 

194
00:10:24,000 --> 00:10:27,880
give Sino or any other foreigner
access to their tier one mines 

195
00:10:27,880 --> 00:10:30,360
that they're working with the 
the lower kind of quality mines.

196
00:10:30,720 --> 00:10:33,800
And a lot of what these guys 
brought to China is still 

197
00:10:33,800 --> 00:10:36,960
embedded, as I've sort of read 
it to this day, in the Chinese 

198
00:10:36,960 --> 00:10:40,880
mining culture, if you like. 
I remember Jake sharing an 

199
00:10:40,880 --> 00:10:45,480
anecdote, I think it was when we
had him on the podcast about 

200
00:10:45,480 --> 00:10:48,040
like, you know, one of the 
operations. 

201
00:10:48,240 --> 00:10:53,360
It wasn't ingrained into the the
operators to to effectively like

202
00:10:53,360 --> 00:10:55,920
just do your development level 
by by level. 

203
00:10:56,120 --> 00:10:57,960
That would do all of the 
development and then start 

204
00:10:57,960 --> 00:11:00,520
stopping. 
And they're like, we're we're 12

205
00:11:00,520 --> 00:11:02,120
years ahead or something. 
Like that. 

206
00:11:02,160 --> 00:11:05,520
Yeah. 
Which which it's kind of, you 

207
00:11:05,520 --> 00:11:08,360
know, we, we chuckle about it 
now because your, your latter 

208
00:11:08,360 --> 00:11:10,880
point is so important. 
The Chinese did a phenomenal job

209
00:11:10,880 --> 00:11:13,600
at learning. 
In fact, like the innovations, 

210
00:11:13,600 --> 00:11:16,440
the technology advancements and 
everything in the mining 

211
00:11:16,440 --> 00:11:19,720
industry today, we're, we're, 
we're learning from China now. 

212
00:11:19,920 --> 00:11:22,400
Yeah, it, it, it's remarkable. 
I mean, what what you first say 

213
00:11:22,400 --> 00:11:25,960
there that's, that's straight 
out of the the USSR, like it's 

214
00:11:25,960 --> 00:11:28,640
a, a complete shift in, in how 
they think about these things. 

215
00:11:28,640 --> 00:11:32,200
And yeah, where we are today is,
is worlds away from that. 

216
00:11:32,800 --> 00:11:36,760
But 2009, these guys knew the 
opportunity wouldn't remain 

217
00:11:36,760 --> 00:11:39,200
forever. 
And, and the writing was kind of

218
00:11:39,520 --> 00:11:41,600
on the wall. 
Specifically, I'm talking about 

219
00:11:41,600 --> 00:11:44,720
how the Chinese viewed foreign 
ownership of mines and there was

220
00:11:44,760 --> 00:11:47,160
a few kind of hair raising 
incidents that that start to 

221
00:11:47,160 --> 00:11:50,400
happen. 
And they they make a call. 

222
00:11:50,400 --> 00:11:53,760
And this is where Zhu Hongjing, 
who'd who'd been, you know, 

223
00:11:53,760 --> 00:11:56,000
running BD and done a bunch of 
things for the company. 

224
00:11:56,440 --> 00:12:00,800
He really gave the advice to to 
Jake who, who did well in in 

225
00:12:00,800 --> 00:12:03,200
heating it, saying things are 
changing here on the ground in, 

226
00:12:03,200 --> 00:12:06,800
in China and it's time to go. 
And for that you need to find 

227
00:12:06,800 --> 00:12:10,120
someone to buy you. 
And for that they found 

228
00:12:10,240 --> 00:12:13,640
Eldorado. 
So Goldfields had been a big 

229
00:12:13,640 --> 00:12:18,640
shareholder in Sino Gold, but 
for a bunch of kind of reasons, 

230
00:12:18,840 --> 00:12:21,400
South African companies weren't 
trading at rich multiples. 

231
00:12:22,080 --> 00:12:24,360
Aussies were kind of middle of 
the pack and at that time the 

232
00:12:24,360 --> 00:12:26,800
North Americans were trading at 
much richer valuations. 

233
00:12:27,040 --> 00:12:31,320
So Eldorado buys that 20% stake 
in the company from gold fields 

234
00:12:31,720 --> 00:12:36,360
and a month after we have a deal
Aussie $2.2 billion to buy out 

235
00:12:36,360 --> 00:12:38,160
Sino Gold at. 
This point Sino Gold. 

236
00:12:38,160 --> 00:12:41,440
They were an ASX 100 company, or
201 hundred. 

237
00:12:41,960 --> 00:12:43,640
They were an ASX 100 company. 
It's. 

238
00:12:43,640 --> 00:12:46,640
Kind of remarkable that yeah, 
Sonic Gold had grown from, 

239
00:12:46,880 --> 00:12:50,560
again, very, very humble 
beginnings into an ASX 100 

240
00:12:50,560 --> 00:12:53,480
company at the time was taken 
out by Eldorado. 

241
00:12:53,840 --> 00:12:57,080
From what from what like I'd 
heard about that deal around the

242
00:12:57,080 --> 00:13:00,640
fringes was Eldorado with a type
of company that thought that 

243
00:13:00,640 --> 00:13:04,880
they had specializations working
in, you know, exotic locations 

244
00:13:04,960 --> 00:13:08,960
and and as as evolution. 
Read the writing on the wall to 

245
00:13:08,960 --> 00:13:12,200
get out of China. 
Eldorado foolishly went in. 

246
00:13:13,400 --> 00:13:15,880
Maybe maybe a bit too exotic. 
Yeah, you're dead right. 

247
00:13:15,880 --> 00:13:18,760
That operated in in Turkey and, 
you know, a bunch of countries 

248
00:13:19,320 --> 00:13:24,160
of of that sort of similar ilk. 
But yeah, by 2018, they don't 

249
00:13:24,160 --> 00:13:26,200
own any of the assets anymore. 
I mean, they've got a bit of 

250
00:13:26,200 --> 00:13:28,520
money for it, but not what they 
paid for. 

251
00:13:28,520 --> 00:13:30,800
To think about it all. 
Like there's not too many 

252
00:13:30,800 --> 00:13:35,400
foreigners that go to China and 
make a bunch of money and sort 

253
00:13:35,400 --> 00:13:37,760
of just walk away kind of like 
that there. 

254
00:13:38,240 --> 00:13:39,880
You know, it's, it's fascinating
to think about. 

255
00:13:39,880 --> 00:13:45,480
And more broadly, the 1995 
period to the 2010 period, I 

256
00:13:45,480 --> 00:13:47,000
mean, that captures the whole 
Fortescue story. 

257
00:13:47,400 --> 00:13:51,120
That would have been like 
outstanding to just witness what

258
00:13:51,120 --> 00:13:52,960
was happening in in China. 
That would have been one of the 

259
00:13:52,960 --> 00:13:55,640
most fascinating times in modern
history that I can kind of think

260
00:13:55,640 --> 00:13:59,320
of to see the development of a 
country and see the hundreds of 

261
00:13:59,320 --> 00:14:01,160
millions of people that have 
come out of poverty. 

262
00:14:01,160 --> 00:14:04,000
But that's a bit of a digression
from the the evolution story 

263
00:14:04,000 --> 00:14:07,520
we're going to get into. 
Which brings us to the evolution

264
00:14:08,400 --> 00:14:10,120
chapter, the beginning of 
evolution. 

265
00:14:10,120 --> 00:14:12,080
I mean, you wrap up the sinus 
story. 

266
00:14:12,760 --> 00:14:14,160
Jake's looking for a new job. 
He is. 

267
00:14:14,160 --> 00:14:15,480
They've sold themselves out of a
job now. 

268
00:14:15,480 --> 00:14:17,240
This is 2010. 
We're in. 

269
00:14:17,240 --> 00:14:19,680
Jake is 45 years old and 
hunting. 

270
00:14:19,680 --> 00:14:22,240
Look, it does he? 
Good. 

271
00:14:22,680 --> 00:14:24,920
He is hunting for the next, next
challenge. 

272
00:14:24,960 --> 00:14:27,200
And as the story kind of goes, I
think this one's pretty well 

273
00:14:27,200 --> 00:14:29,760
told. 
There's a Sydney broker, Richard

274
00:14:29,760 --> 00:14:31,760
Granger. 
He's sort of yells at Jake from 

275
00:14:31,760 --> 00:14:33,920
over the street and tells him 
he's got this, this great 

276
00:14:33,920 --> 00:14:36,160
opportunity to show him. 
That opportunity is called 

277
00:14:36,160 --> 00:14:38,320
Conquest. 
Project wise, they've got the 

278
00:14:38,320 --> 00:14:42,520
Mount Carlton project up in 
North Queensland and that had 

279
00:14:42,560 --> 00:14:46,240
ADFS on the way or arguably 
already kind of done. 

280
00:14:46,240 --> 00:14:50,800
So Jake took it on to to review 
the project with with his sort 

281
00:14:50,800 --> 00:14:54,920
of connections, Aaron Culler and
Tommy Mckeith, Ross Jenkins, a 

282
00:14:55,080 --> 00:14:58,040
few other individuals that sort 
of pop up consistently 

283
00:14:58,040 --> 00:15:00,360
throughout the story and and a 
kind of pivotal in it. 

284
00:15:00,560 --> 00:15:03,720
Some of those characters had 
been involved with Jake and the 

285
00:15:03,720 --> 00:15:04,880
sign. 
I got story as well, right? 

286
00:15:04,880 --> 00:15:07,440
Yeah, exactly. 
And after this period of 

287
00:15:07,800 --> 00:15:12,120
diligence, Aaron gives the 
advice that, you know, he, he 

288
00:15:12,120 --> 00:15:14,800
wasn't totally convinced by the 
project, but they sort of 

289
00:15:15,160 --> 00:15:18,840
differed sort of slightly on the
opportunity that was at hand 

290
00:15:18,840 --> 00:15:22,560
because Jake saw the cashbox 
that the company was 58,000,000 

291
00:15:22,560 --> 00:15:26,080
bucks in cash is a key asset 
that the company did have. 

292
00:15:26,440 --> 00:15:29,080
Regardless of what you thought 
of Mount Carlton at the time. 

293
00:15:29,080 --> 00:15:32,480
And at its sort of lower ebb, 
that was an enterprise value of 

294
00:15:32,680 --> 00:15:36,120
25 ish $1,000,000. 
So the company's cashed up, but 

295
00:15:36,120 --> 00:15:37,760
it's got non economic study on 
it. 

296
00:15:37,760 --> 00:15:42,680
Why was it uneconomic? 
So the project is a refractory 

297
00:15:42,680 --> 00:15:46,920
gold, silver, copper project. 
It's a a high sulfidation 

298
00:15:46,920 --> 00:15:50,280
epithermal deposit as a lot of 
those ones tend tend to be in in

299
00:15:50,280 --> 00:15:52,960
that neck of the woods a bit 
different to the the gold mines 

300
00:15:52,960 --> 00:15:58,240
that we have out here in, in WA.
But what appealed to them if 

301
00:15:58,240 --> 00:16:01,440
anything was that the the 
similarities they saw with this 

302
00:16:01,440 --> 00:16:07,240
asset and that first mine that I
mentioned in in China and as 

303
00:16:07,240 --> 00:16:10,160
that sort of relates to why the 
the feasibility could be 

304
00:16:10,160 --> 00:16:12,720
improved upon. 
They thought they could cut a 

305
00:16:12,720 --> 00:16:14,720
portion of the CapEx and sell a 
concentrate. 

306
00:16:16,240 --> 00:16:18,120
So if you simple it down that 
that is what they were looking 

307
00:16:18,120 --> 00:16:20,560
to do and they thought they 
could sell that concentrate to 

308
00:16:20,560 --> 00:16:24,240
the context that they built in 
their in their time in China. 

309
00:16:24,480 --> 00:16:27,200
So the study says that 
concentrate's not saleable. 

310
00:16:27,320 --> 00:16:32,160
You need to build extra CapEx to
actually refine this con. 

311
00:16:32,160 --> 00:16:34,760
Yeah, I mean that, that is what 
the the the study had just 

312
00:16:35,400 --> 00:16:38,000
assume they were going to go all
the way down and then later they

313
00:16:38,000 --> 00:16:40,400
backtracking that they start 
looking at that but. 

314
00:16:40,400 --> 00:16:42,960
These guys know that the con is 
saleable because of their 

315
00:16:42,960 --> 00:16:46,000
experience in China dealing with
these smelters. 

316
00:16:46,240 --> 00:16:51,200
Exactly selling sort of 2% 
arsenic concentrates in in parts

317
00:16:51,200 --> 00:16:54,680
of China there. 
So Jake is actually mentioned 

318
00:16:54,680 --> 00:16:57,720
before he comes into the company
in one of the releases and the 

319
00:16:57,720 --> 00:17:00,320
board commissions him to to run 
this review. 

320
00:17:01,040 --> 00:17:03,280
And hang on. 
So the company puts out a 

321
00:17:03,280 --> 00:17:05,440
release saying Jake Klein is 
running a review. 

322
00:17:05,480 --> 00:17:10,359
Yes, So we're in Feb 2010, Jake 
has come in to to do this 

323
00:17:10,359 --> 00:17:13,480
review. 
The stock has halved on the back

324
00:17:13,480 --> 00:17:18,079
of this and Jake is using the 
expertise of him and his team to

325
00:17:18,160 --> 00:17:20,000
to look at what they can do with
this. 

326
00:17:20,000 --> 00:17:22,839
And in March, another 
announcement comes out also 

327
00:17:23,079 --> 00:17:26,560
worth noting as well that 
Goldfields was on the Register 

328
00:17:26,599 --> 00:17:31,880
here to through a kind of weird 
confluence of events, they were 

329
00:17:31,880 --> 00:17:36,200
the major shareholder and AJV 
partner in the land surrounding 

330
00:17:36,440 --> 00:17:39,440
Mount Carlton. 
The CEO of Conquest had 

331
00:17:39,440 --> 00:17:42,560
reportedly held sort of stock 
through Opus Prime, which was a 

332
00:17:42,840 --> 00:17:46,320
kind of awful bankruptcy that 
happened here in Australia in 

333
00:17:46,440 --> 00:17:49,960
2008. 
One way or another, the the 

334
00:17:49,960 --> 00:17:54,640
stock gets put up for for tender
and Goldfields get their hands 

335
00:17:54,640 --> 00:17:56,920
on roughly 20% of the company. 
By the time Jake's there, it's 

336
00:17:56,920 --> 00:18:01,560
15% of the company and the 
Conquest Goldfields relationship

337
00:18:01,560 --> 00:18:04,400
had soured quite a bit as well. 
Isn't that interesting? 

338
00:18:04,400 --> 00:18:08,400
But Tommy Mckeith is a common 
link there as well, because he'd

339
00:18:08,400 --> 00:18:13,640
worked at Goldfields and he 
would be a yeah, Jake had got to

340
00:18:13,640 --> 00:18:15,480
know him from that time, Sino 
Goldfields. 

341
00:18:15,480 --> 00:18:18,720
And he joins the board and has a
long relationship with with 

342
00:18:18,720 --> 00:18:21,280
evolution, so. 
So. 

343
00:18:21,600 --> 00:18:25,600
So at this point, Jake, looking 
into the economics, but the 

344
00:18:25,600 --> 00:18:27,720
market thinks this is a Dodd 
because they've told the market 

345
00:18:27,760 --> 00:18:31,560
it's a Dodd. 
Meanwhile, the stocks now 

346
00:18:31,560 --> 00:18:33,440
trading What is it about about 
cash backing? 

347
00:18:34,200 --> 00:18:35,760
It's, it's a bit over cash 
backing, right? 

348
00:18:35,800 --> 00:18:37,800
But it's, it's a long way down 
from what it was. 

349
00:18:37,800 --> 00:18:40,760
And essentially the team from 
Sydney flies over to Perth to, 

350
00:18:40,760 --> 00:18:42,480
to tell them the facts, what 
they think. 

351
00:18:42,480 --> 00:18:46,040
And when I say the team, I'm 
talking about Jake as well as 

352
00:18:46,240 --> 00:18:49,240
Nick Curtis and, and and Jim 
Askew, who were brought onto the

353
00:18:49,240 --> 00:18:53,280
board in March of 2010. 
And shortly after that as well. 

354
00:18:53,280 --> 00:18:56,520
You've got Aaron Coleraine, Ross
Jenkins, Dave Hewitt and Charles

355
00:18:56,520 --> 00:19:01,240
Wang, three of whom had worked 
at Sino, joining the the team in

356
00:19:01,240 --> 00:19:03,840
in quick succession. 
And to the board's credit, they 

357
00:19:03,840 --> 00:19:07,520
didn't fight it massively. 
They knew it was flawed in in 

358
00:19:07,520 --> 00:19:10,760
it's current sort of shape and 
form and the company was going 

359
00:19:10,760 --> 00:19:12,720
nowhere. 
And this was ultimately better 

360
00:19:12,720 --> 00:19:14,400
for shareholders. 
So what did they what did they 

361
00:19:14,480 --> 00:19:18,040
they convince the board to just 
effectively change management. 

362
00:19:18,280 --> 00:19:20,920
Let let Jake and the crew run 
this company. 

363
00:19:21,280 --> 00:19:23,560
Honestly, I know it's like West 
Perth, I just scratched my head 

364
00:19:23,640 --> 00:19:26,200
a bunch of times to to wrap my 
head around the fact they would 

365
00:19:26,200 --> 00:19:29,120
just walk away, but having 
spoken with a number of people 

366
00:19:29,280 --> 00:19:31,680
that that is more or less how 
things played out. 

367
00:19:31,840 --> 00:19:33,080
Isn't that, isn't that 
fascinating? 

368
00:19:33,200 --> 00:19:35,960
You just, Yeah. 
A win for shareholders. 

369
00:19:36,240 --> 00:19:39,600
You don't, you don't you don't 
get such a polite a polite yeah,

370
00:19:39,600 --> 00:19:41,080
I'd be happy to hand over the 
keys. 

371
00:19:41,400 --> 00:19:44,600
Yeah, these days, but it's there
was also an opportunity in doing

372
00:19:44,600 --> 00:19:45,920
that, I mean. 
Totally. 

373
00:19:45,920 --> 00:19:48,520
And the, the stock rebounds a 
little bit. 

374
00:19:48,520 --> 00:19:51,680
It sort of trades in that $0.30 
kind of range for a while. 

375
00:19:52,080 --> 00:19:55,520
It's a, it's a bit of a far cry 
from 10 years later where you'd 

376
00:19:55,560 --> 00:19:58,880
see the likes of Bill and Rao 
jump into a company and the 

377
00:19:58,880 --> 00:20:00,960
stock price would more than 
double the next day. 

378
00:20:00,960 --> 00:20:05,360
But the company had a lot to 
kind of work through here. 

379
00:20:05,400 --> 00:20:09,200
But they they get get, they get 
to it pretty quickly and we 

380
00:20:09,200 --> 00:20:13,280
start to see the strategy. 
Which becomes the the evolution 

381
00:20:13,280 --> 00:20:16,480
strategy in time, which never 
really wavers from its sort of 

382
00:20:16,480 --> 00:20:20,400
core roots before that. 
Interesting you mentioned team 

383
00:20:20,400 --> 00:20:24,280
from Sino coming with Jake like 
that's a that's a a difference 

384
00:20:24,280 --> 00:20:27,680
to the story of of Twiggy 
Anaconda. 

385
00:20:27,720 --> 00:20:29,680
I mean, it's kind of gold to 
gold. 

386
00:20:29,680 --> 00:20:31,720
So I can't understand the 
parallels. 

387
00:20:31,800 --> 00:20:34,680
Whereas before you go on from 
complex met, which was Anaconda 

388
00:20:34,680 --> 00:20:37,240
to to simple logistics for 
excuse and maybe there's those 

389
00:20:37,240 --> 00:20:40,760
parallels, but I do think it 
speaks volumes to type of 

390
00:20:40,760 --> 00:20:43,920
individual when people that 
they'd worked with previously 

391
00:20:43,920 --> 00:20:46,760
will, will will go along for the
for the next ride. 

392
00:20:47,280 --> 00:20:49,080
Couldn't agree more. 
And it's something we're seeing 

393
00:20:49,080 --> 00:20:51,800
again with federation slash 
endura. 

394
00:20:52,120 --> 00:20:53,800
It's a trend that just 
continues. 

395
00:20:53,960 --> 00:20:56,280
Are there, are they carry over 
people at at federation? 

396
00:20:56,760 --> 00:20:58,320
At least five that I can count 
already. 

397
00:20:58,560 --> 00:21:02,320
Wow, yeah. 
No, it's a, it's a, it's a 

398
00:21:02,320 --> 00:21:05,520
pretty glowing kind of 
statement. 

399
00:21:05,600 --> 00:21:09,120
You know, if you like that, you 
would do it not once, not twice,

400
00:21:09,120 --> 00:21:12,000
but maybe in three times in some
cases with with someone. 

401
00:21:12,000 --> 00:21:15,360
So, yeah, but that that rings 
loud and clear in this story. 

402
00:21:15,760 --> 00:21:20,400
And the strategy is something 
else that is super important 

403
00:21:20,400 --> 00:21:24,280
and, and crystal clear from from
pretty early on, they outline 

404
00:21:24,400 --> 00:21:27,840
that there is a dearth of Aussie
midcap companies with 75% of 

405
00:21:27,840 --> 00:21:30,640
Australian gold production being
owned by foreign companies and 

406
00:21:30,640 --> 00:21:35,080
that they want to build a midcap
with a portfolio of Australian 

407
00:21:35,080 --> 00:21:38,960
assets at this point in time. 
And the reason they say like 

408
00:21:38,960 --> 00:21:42,240
midcap or mid tier quite 
specifically is that the mid 

409
00:21:42,240 --> 00:21:44,360
tiers are the ones that 
outperform, they outperform 

410
00:21:44,360 --> 00:21:46,800
juniors and they outperform the 
major mining companies. 

411
00:21:46,800 --> 00:21:50,000
And we're going to continue to 
speak through this this strategy

412
00:21:50,400 --> 00:21:55,640
during the story. 
The strategy is this is again, 

413
00:21:55,640 --> 00:21:57,400
another reflection I feel like 
we'll get to at the end. 

414
00:21:57,400 --> 00:22:00,280
But evolution, just one of those
companies, they said what they 

415
00:22:00,280 --> 00:22:01,360
were going to do from the 
beginning. 

416
00:22:01,360 --> 00:22:04,440
They articulated it and the 
strategy was consistent. 

417
00:22:04,440 --> 00:22:06,360
They achieved it right. 
Totally, totally. 

418
00:22:06,760 --> 00:22:08,960
Before we get there, mate, we've
got a, we've got a deal to talk 

419
00:22:08,960 --> 00:22:13,520
about in less than 8 weeks from 
that takeover of of the company.

420
00:22:14,480 --> 00:22:18,120
You've got a very, very juicy 
deal, a $58 million deal to buy 

421
00:22:18,120 --> 00:22:20,960
North QLD Metals. 
So 20 million in cash, the rest 

422
00:22:20,960 --> 00:22:24,400
in paper. 
Now NQM, they were the 60% 

423
00:22:24,440 --> 00:22:27,720
owners and the operators of the 
Pigingo Gold mine, a pretty old 

424
00:22:28,080 --> 00:22:31,920
mine up near Charters Towers. 
It was doing about 50,000 ounces

425
00:22:32,280 --> 00:22:35,160
at the time. 
And for context, the gold price 

426
00:22:35,160 --> 00:22:40,240
is 1400. 
So they have one over the major 

427
00:22:40,240 --> 00:22:43,040
shareholder, a guy called Don 
Walker here who's also a 

428
00:22:43,040 --> 00:22:44,680
director. 
So it's a three person board. 

429
00:22:44,680 --> 00:22:48,080
They've won over one director 
and a 20% shareholder of the 

430
00:22:48,080 --> 00:22:51,760
company. 
Now North QLD Metals has also 

431
00:22:51,920 --> 00:22:54,280
purchased the old Twin Hills 
mine in the area. 

432
00:22:54,280 --> 00:22:56,800
So they're talking up this being
a satellite operation, but 

433
00:22:56,800 --> 00:22:59,320
really that they're running this
as a, as a bit of a cash cow. 

434
00:23:00,120 --> 00:23:03,960
And Despite that, despite 
having, you know, a third of the

435
00:23:03,960 --> 00:23:08,760
board on side the, the North 
Queensland board say no thank 

436
00:23:08,760 --> 00:23:10,320
you, your, your offers 
inadequate. 

437
00:23:10,720 --> 00:23:14,680
And by July, so a month after 
these guys have a fight in their

438
00:23:14,680 --> 00:23:16,960
hands because this other little 
company called Hemskirk, who 

439
00:23:16,960 --> 00:23:20,720
owns the other 40% of the mine, 
have come in with a competing 

440
00:23:20,720 --> 00:23:24,160
offer, which was colorfully 
described as a toilet paper bid 

441
00:23:24,600 --> 00:23:27,640
to us. 
So conquest come out and say, 

442
00:23:28,000 --> 00:23:29,240
you know, that's clearly 
inferior. 

443
00:23:29,240 --> 00:23:32,040
It's got no cash. 
The the buyer has con notes in 

444
00:23:32,040 --> 00:23:34,320
its structure. 
The premium is not really what 

445
00:23:34,320 --> 00:23:37,000
it seems if you if you back out 
the actual numbers and you don't

446
00:23:37,000 --> 00:23:38,720
even have major shareholder 
support. 

447
00:23:39,240 --> 00:23:41,720
But in any case, they upped 
their offer and they sort of 

448
00:23:41,800 --> 00:23:44,080
amend the the conditionality of 
their offer. 

449
00:23:44,320 --> 00:23:47,240
Pesky Interlopus getting pesky, 
getting in the way. 

450
00:23:47,240 --> 00:23:51,240
But you know, I think it's it 
shows the the, the difference 

451
00:23:51,240 --> 00:23:53,560
when you do a friendly deal 
versus a hostile one, your 

452
00:23:53,560 --> 00:23:56,920
probability of success is so 
much more enhanced. 

453
00:23:56,920 --> 00:24:00,560
These guys had the major 
shareholder on side and and then

454
00:24:00,560 --> 00:24:02,760
you get the pesky into low bar 
getting in the mix. 

455
00:24:02,760 --> 00:24:04,640
Well, you don't really want to 
do a deal with the pesky person,

456
00:24:04,640 --> 00:24:07,160
do you? 
Well, it it takes a while, so 

457
00:24:07,600 --> 00:24:10,440
Hemsgot, you know, as they would
continue to maintain that their 

458
00:24:10,440 --> 00:24:14,560
offer is superior and North 
Queensland agree they encourage 

459
00:24:14,560 --> 00:24:16,280
shareholders to reject the 
Conquest offer. 

460
00:24:16,480 --> 00:24:20,200
So lo and behold, the takeovers 
panel gets involved. 

461
00:24:20,520 --> 00:24:23,600
Conquest just sort of calling 
out a bunch of the the 

462
00:24:23,600 --> 00:24:27,200
strategies that Hemskirk were 
using. 

463
00:24:28,040 --> 00:24:30,280
But by September Conquest have 
solved it. 

464
00:24:30,760 --> 00:24:35,080
They go on by Hemskirk and then 
shortly after that they gobble 

465
00:24:35,080 --> 00:24:39,040
up North Queensland with the 
major shareholders caving kind 

466
00:24:39,040 --> 00:24:41,960
of in quick succession there. 
People like Acorn and Line 

467
00:24:41,960 --> 00:24:43,280
Selection were involved in this 
one. 

468
00:24:43,280 --> 00:24:47,320
They had to buy Hemskirk in 
order to. $37,000,000 to buy 

469
00:24:47,320 --> 00:24:50,360
Hemsgirt 27 in cash. 
That's juicy. 

470
00:24:50,680 --> 00:24:54,720
Yeah, so hard fought M and a 
battle that took a good few 

471
00:24:54,720 --> 00:24:57,120
months to to chew through is 
done and dusted. 

472
00:24:57,760 --> 00:25:01,960
And they're a mining company now
like they they have a producing 

473
00:25:01,960 --> 00:25:04,960
asset. 
The I think internally the the 

474
00:25:04,960 --> 00:25:07,160
team would debate whether it was
all worth it for for Pagingo. 

475
00:25:07,160 --> 00:25:10,120
Not the greatest mine in the 
world, but they're well on their

476
00:25:10,120 --> 00:25:11,800
way. 
You know, they've got Mount 

477
00:25:11,800 --> 00:25:13,600
Carlton that they're, they're 
working through doing the 

478
00:25:13,600 --> 00:25:18,480
optimizations and whatnot and 
this 50,000 oz producing asset 

479
00:25:18,480 --> 00:25:20,840
is on its way to do 70,000 oz 
next year. 

480
00:25:21,800 --> 00:25:25,120
Jingo while it might not have 
been the world's best asset, it 

481
00:25:25,120 --> 00:25:30,480
maybe gave them sufficient scale
to do subsequent deals right. 

482
00:25:30,560 --> 00:25:35,600
Yeah, yeah, totally. 
And this is a, a kind of frothy 

483
00:25:35,880 --> 00:25:39,680
environment in the gold in the 
gold space 20, you know, back 

484
00:25:39,680 --> 00:25:42,200
end of 2010 into 2011 that we're
talking about now. 

485
00:25:42,720 --> 00:25:45,600
So deals, you know, cheap 
dealers aren't throwing 

486
00:25:45,600 --> 00:25:47,400
themselves at you. 
You have to kind of get creative

487
00:25:47,400 --> 00:25:50,600
and you have to keep developing 
the, the development project you

488
00:25:50,600 --> 00:25:53,840
have Mount Carlton. 
So whilst this deal is going on,

489
00:25:53,840 --> 00:25:57,080
they secure this concentrate off
cake and I, I love this. 

490
00:25:57,080 --> 00:26:00,320
So they get this, they get 
interest from a bunch of Chinese

491
00:26:00,320 --> 00:26:03,480
smelters, as we sort of hinted 
at before, given the team's 

492
00:26:03,480 --> 00:26:07,520
previous experience. 
And Ross Jenkins, who's that? 

493
00:26:07,520 --> 00:26:09,440
The met and Charles Wang, I 
think are the people that 

494
00:26:09,440 --> 00:26:11,600
deserve a bunch of credit for 
their their expertise and the 

495
00:26:11,600 --> 00:26:14,400
can do attitude here. 
So the story is that Charles 

496
00:26:14,400 --> 00:26:18,400
just flew with a bunch of 
buckets with him on the airline 

497
00:26:18,520 --> 00:26:20,680
full of concentrate to try and 
sell. 

498
00:26:20,680 --> 00:26:24,560
It just goes to a bunch of of 
the smelters in in the area in 

499
00:26:24,560 --> 00:26:28,320
China and one way or another 
comes back with a deal 

500
00:26:28,440 --> 00:26:31,040
phenomenally. 
And this is firmed up in time to

501
00:26:31,040 --> 00:26:34,120
A1, you know, quote UN quote $1 
billion off take agreement with 

502
00:26:34,480 --> 00:26:38,120
Shandong Guoda. 
They are a large smelter, gold 

503
00:26:38,120 --> 00:26:42,600
smelter in in China and it's for
the life of mine offtake for the

504
00:26:42,600 --> 00:26:46,320
V2 deposit, one of the two key 
deposits at at Mount Carlton. 

505
00:26:46,320 --> 00:26:50,280
And yeah, decent payment terms 
kind of you know, yet 90% of the

506
00:26:50,280 --> 00:26:54,200
payments being made prior to the
shipment going over which is, 

507
00:26:54,680 --> 00:26:57,400
you know in terms of working 
capital where a decent thing the

508
00:26:57,400 --> 00:27:01,360
alternative can be can be pretty
gnarly and. 

509
00:27:02,000 --> 00:27:05,520
Can't understand just how wild 
this is, by the way, like, like 

510
00:27:05,800 --> 00:27:11,240
the this was in a in a period of
time when all you could really 

511
00:27:11,240 --> 00:27:14,920
get out of China was a, a non 
binding Mou of some description.

512
00:27:14,920 --> 00:27:17,680
And you know, that's intertwined
in the Fortescue story that you 

513
00:27:17,840 --> 00:27:20,280
told. 
But Charles goes over there 

514
00:27:20,760 --> 00:27:25,920
armed with a an an effective. 
It was a it was, it was a, it 

515
00:27:25,920 --> 00:27:28,320
was the type of off take 
agreement that I think Rio Tinto

516
00:27:28,320 --> 00:27:29,920
used. 
They had like some lawyer who it

517
00:27:29,920 --> 00:27:32,880
was, you know, the same kind of 
same template thing and managed 

518
00:27:32,880 --> 00:27:36,440
to get signatures on it from 
from Chinese smelter like yeah, 

519
00:27:36,480 --> 00:27:39,480
just phenomenal, remarkable a 
binding off take comes back with

520
00:27:39,480 --> 00:27:41,640
company. 
Yeah, after taking on the plane,

521
00:27:42,360 --> 00:27:45,360
some, some concentrated, you 
know, I don't know about the the

522
00:27:45,360 --> 00:27:47,520
disclosure of the of the 
material. 

523
00:27:47,560 --> 00:27:48,840
Don't worry about it, Don't 
worry about it. 

524
00:27:49,040 --> 00:27:50,640
It's it's truly, yeah, it's 
wicked. 

525
00:27:50,880 --> 00:27:53,360
Yeah, that that's sort of 
entrepreneurialism I just love 

526
00:27:53,400 --> 00:27:56,600
and you know, simultaneous to 
that, they keep working on the 

527
00:27:56,800 --> 00:27:59,120
the optimization studies. 
They're sort of focusing on the,

528
00:27:59,160 --> 00:28:02,040
the recovery, the grind size, 
trying to assess whether they 

529
00:28:02,040 --> 00:28:05,080
can use a, a course, a grind, 
the sort of thinking maybe not 

530
00:28:05,160 --> 00:28:08,400
75 microns, maybe 106 microns 
will still do the job. 

531
00:28:08,400 --> 00:28:12,200
So reducing OpEx and CapEx at 
the same time. 

532
00:28:12,200 --> 00:28:15,360
They also buy a, a meal second 
hand from Hill Grove Canmantu 

533
00:28:15,360 --> 00:28:20,840
in, in SA about 7:00-ish million
dollars for, for that one. 

534
00:28:20,840 --> 00:28:23,560
So things are things are 
happening for the company and 

535
00:28:23,560 --> 00:28:27,320
it's it's late 2010 and I'll 
just give a bit of a recap to, 

536
00:28:27,840 --> 00:28:29,640
to make sure we're all on the 
same page about what this kind 

537
00:28:29,640 --> 00:28:31,400
of company looks like. 
So they have a run up in the 

538
00:28:31,400 --> 00:28:33,400
share price near the back end of
that year. 

539
00:28:33,560 --> 00:28:34,680
Still called conquest, by the 
way. 

540
00:28:34,720 --> 00:28:35,680
Not even evolution. 
Yep. 

541
00:28:35,720 --> 00:28:38,400
Still called Conquest, they do a
$45 million placement. 

542
00:28:38,840 --> 00:28:43,640
So after that the market cap is 
about 270,000,230 AV. 

543
00:28:44,520 --> 00:28:46,840
They've all but confirmed 
ownership of Pojingo, the sort 

544
00:28:46,840 --> 00:28:49,640
of mining these very, very 
narrow veins down there. 

545
00:28:50,080 --> 00:28:53,880
And the stock is trading in the 
mid kind of $0.30 range. 

546
00:28:55,000 --> 00:28:58,040
A year ago, all this team had 
still been in China. 

547
00:28:58,120 --> 00:29:01,160
It's all still been well, not 
all, but the majority of them 

548
00:29:01,160 --> 00:29:05,360
had still been running a 
predominantly Chinese mining 

549
00:29:05,360 --> 00:29:07,600
company. 
So they've now done this tough 

550
00:29:07,600 --> 00:29:09,840
takeover battle. 
They got their work cut out for 

551
00:29:09,840 --> 00:29:13,720
them in an asset in in Mount 
Carlton and they're they're 

552
00:29:13,720 --> 00:29:17,200
running this junior in a kind of
frothy Aussie gold environment. 

553
00:29:17,320 --> 00:29:20,440
So a big change in a year. 
Huge, huge change that that 

554
00:29:20,440 --> 00:29:21,920
placement, that 45,000,000 
bucks. 

555
00:29:22,800 --> 00:29:26,000
Was that to fund the development
of Mount Carlton? 

556
00:29:26,000 --> 00:29:28,840
When did that come later? 
It was just a staged, staged 

557
00:29:28,840 --> 00:29:31,040
race. 
So not too far down the road 

558
00:29:31,040 --> 00:29:33,720
that would raise another bunch 
of money in the next deal that 

559
00:29:33,720 --> 00:29:36,080
we're going to talk about. 
And that deal would be 

560
00:29:36,080 --> 00:29:39,520
ultimately 18 odd months, a bit 
more than 18 months before Mount

561
00:29:39,520 --> 00:29:42,200
Carton starts producing. 
At that time the debt financing 

562
00:29:42,200 --> 00:29:45,720
is coming together as well. 
So it's it's not quite fully 

563
00:29:45,720 --> 00:29:47,720
funded to to do Mount Carlton 
just yet. 

564
00:29:48,360 --> 00:29:50,880
I follow. 
I follow what are the what? 

565
00:29:50,960 --> 00:29:54,600
What is the actual like 
landscape of of gold producers 

566
00:29:54,600 --> 00:29:56,680
like on the ASX at this point in
time? 

567
00:29:57,040 --> 00:29:59,000
It's a good question actually, 
because that that plays into the

568
00:29:59,000 --> 00:30:01,360
strategy. 
The the strategy that they spoke

569
00:30:01,360 --> 00:30:04,320
to so often is that like you've 
got new Crest on the one hand, a

570
00:30:04,320 --> 00:30:07,520
big, big, big company and then 
you've kind of got this, this 

571
00:30:07,520 --> 00:30:11,040
dearth. 
So they, they circle out the 750

572
00:30:11,040 --> 00:30:14,240
million to a bit over a billion 
dollar range. 

573
00:30:14,240 --> 00:30:17,080
And I mean, it's fascinating to 
read about the companies at this

574
00:30:17,080 --> 00:30:19,480
point in time. 
You've got Perseus, Medusa, 

575
00:30:19,480 --> 00:30:24,640
Kingsgate, CGA, Avoca, St. 
Barbara, Oceana, so some kind of

576
00:30:24,640 --> 00:30:26,600
familiar names there. 
But a lot has changed kind of 

577
00:30:26,640 --> 00:30:29,440
since that point in time. 
But there is a bit of a, a 

578
00:30:29,440 --> 00:30:31,880
dearth in that midcap space. 
Now, granted, some of these 

579
00:30:31,880 --> 00:30:33,880
companies are still big. 
What we're coming to the tail 

580
00:30:33,880 --> 00:30:38,000
end of a 10 year bull market in 
the gold price and things are 

581
00:30:38,000 --> 00:30:40,040
going to change quite, quite 
soon here. 

582
00:30:41,560 --> 00:30:44,360
I am intrigued looking at that 
list of peers. 

583
00:30:44,360 --> 00:30:47,320
Hey, it's it's fascinating. 
I mean, some of them disappear 

584
00:30:47,320 --> 00:30:51,920
from deals, some of them merge, 
some of them implode from poor 

585
00:30:51,920 --> 00:30:54,200
operations. 
Some implode and come back. 

586
00:30:54,200 --> 00:30:56,240
That's. 
That's that's a staggering, 

587
00:30:56,320 --> 00:30:57,800
staggering slide. 
It is. 

588
00:30:57,800 --> 00:30:59,320
It is what? 
Happens to me at Carlton. 

589
00:30:59,640 --> 00:31:02,880
So the, the refined numbers that
they come up with when they 

590
00:31:03,040 --> 00:31:06,320
rework the, the CapEx and all 
these sorts of things is about 

591
00:31:06,320 --> 00:31:10,640
1:30 CapEx and the MPV is only a
bit higher than that for 12 year

592
00:31:11,080 --> 00:31:14,520
mine life. 
The the cash flows if you sort 

593
00:31:14,520 --> 00:31:17,360
of flush through the, the spot 
price are, you know, they give 

594
00:31:17,360 --> 00:31:19,000
you a bit more room for, for 
encouragement. 

595
00:31:19,000 --> 00:31:22,520
But the company's got $40 
million and like I sort of said,

596
00:31:22,800 --> 00:31:25,840
it's sorting out the debt, 
finding funding at this point in

597
00:31:25,840 --> 00:31:30,880
time, we're talking April, May 
into June of, of 2011. 

598
00:31:30,880 --> 00:31:33,440
But then we've got a big, big 
deal that preoccupies the 

599
00:31:33,440 --> 00:31:38,520
company for a little while. 
This this deal needs context, 

600
00:31:38,880 --> 00:31:40,480
right? 
Because when I think of like, 

601
00:31:41,200 --> 00:31:44,320
yeah, a deal that epitomizes the
formation of evolution, I don't 

602
00:31:44,320 --> 00:31:45,880
even think of the back story 
you've told today. 

603
00:31:45,880 --> 00:31:49,720
I think of this deal, just the 
the absurdity of this coming 

604
00:31:49,720 --> 00:31:51,800
together. 
Yeah, you've taken a a good 

605
00:31:51,800 --> 00:31:53,720
while to actually get to 
evolution, but this is the 

606
00:31:53,800 --> 00:31:58,400
creation of evolution itself and
it is a fascinating deal, right?

607
00:31:58,400 --> 00:32:03,000
So June 2011, Conquest agreed 
this all script deal with 

608
00:32:03,200 --> 00:32:08,160
Katawpa whilst concurrently 
buying Krakow and Mount Rorden 

609
00:32:08,200 --> 00:32:12,040
from New Crest. 
So if you can wrap your head all

610
00:32:12,040 --> 00:32:16,080
around that, they're also going 
to do a capital raising, a $150 

611
00:32:16,080 --> 00:32:19,800
million capital raising at the 
same point in time, so 2. 

612
00:32:19,800 --> 00:32:25,320
Companies merging with each 
other to acquire these non core 

613
00:32:25,320 --> 00:32:27,840
assets from new Crest. 
Everything pay for. 

614
00:32:27,920 --> 00:32:31,040
In with a with a. 
Yeah, and and a placement. 

615
00:32:31,240 --> 00:32:34,160
Yeah, Snarly. 
So New Crest is going to become 

616
00:32:34,160 --> 00:32:38,200
the roughly 1/3 owner of this 
joint company, which they dub 

617
00:32:38,560 --> 00:32:40,560
Evolution. 
Now the pro forma market cap 

618
00:32:40,560 --> 00:32:45,080
$1.2 billion EV is about about a
billion dollars. 

619
00:32:45,640 --> 00:32:48,480
And you know, like you've kind 
of said that these guys pride 

620
00:32:48,480 --> 00:32:51,560
themselves on, on handling deal 
complexity, but it almost feels 

621
00:32:51,560 --> 00:32:54,240
as if you've gone out of your 
way to to make this one more 

622
00:32:54,240 --> 00:32:57,280
complicated than it needs to be.
But as we get into this pretty 

623
00:32:57,280 --> 00:33:01,120
good reason for for this, if we 
look at the assets very quickly,

624
00:33:01,880 --> 00:33:06,680
Kataupa are bringing in Edna 
May, so nine year mine life, 

625
00:33:06,680 --> 00:33:11,440
100,000 oz per annum roughly. 
They're also bringing in a 30% 

626
00:33:11,440 --> 00:33:15,280
interest in Krakow. 
I know I said Krakow before 

627
00:33:15,280 --> 00:33:18,560
coming in from Eucharist. 
They are the other 70% owners of

628
00:33:18,560 --> 00:33:21,600
this one that's doing about 
100,000 oz as well. 

629
00:33:21,800 --> 00:33:23,560
But it's only got five years 
proven out. 

630
00:33:23,920 --> 00:33:26,640
Then you've got Mount Rorden, as
I mentioned, that's going to do 

631
00:33:26,640 --> 00:33:31,120
90,000 ounces in, in due course,
single kind of open pit mine, 

632
00:33:31,520 --> 00:33:33,880
eight years left there. 
And then rounding out the 

633
00:33:33,880 --> 00:33:36,200
assets, you've got Bajingo and 
Mount Carlton. 

634
00:33:36,520 --> 00:33:39,920
Now Mount Carton is due to come 
online in about 18 months at 

635
00:33:39,920 --> 00:33:43,040
this point in time. 
So for producing assets and a 

636
00:33:43,040 --> 00:33:46,560
development project, if you look
back a year, what the Proform 

637
00:33:46,560 --> 00:33:49,520
entity would have done, it would
have been a bit under 300,000 

638
00:33:49,520 --> 00:33:54,600
oz, but on the way up. 
I feel like the I've heard Jake 

639
00:33:54,720 --> 00:33:59,680
tell the story of this deal and 
it doesn't kind of come together

640
00:33:59,680 --> 00:34:02,360
necessarily just by pure desire 
to put the two companies 

641
00:34:02,360 --> 00:34:05,760
together. 
It it comes from the pre emptive

642
00:34:05,760 --> 00:34:10,880
right that could help had over 
the other 70% of Krakow. 

643
00:34:11,280 --> 00:34:12,639
Yeah. 
You, you got to make this deal 

644
00:34:12,639 --> 00:34:13,760
happen. 
It's not going to fall on your 

645
00:34:13,760 --> 00:34:17,000
lap. 
So Catalpa, were they, they 

646
00:34:17,040 --> 00:34:19,679
weren't even single, you know, 
at the time they had to break 

647
00:34:19,679 --> 00:34:22,040
off talks with St. 
Barbara, who they were 

648
00:34:22,040 --> 00:34:25,440
reluctantly in in talks with who
just, you know, in the month 

649
00:34:25,440 --> 00:34:29,360
prior proposed A merger with 
Catalpa that wasn't really 

650
00:34:29,360 --> 00:34:33,360
friendly at all. 
But that pre emptive right is, 

651
00:34:33,400 --> 00:34:35,639
is super, super important that 
you you talk about. 

652
00:34:35,639 --> 00:34:40,320
So the Conquest team had seen 
that new Crest led by Greg 

653
00:34:40,440 --> 00:34:43,080
Robinson had just acquired 
Lahir, which we've spoken about 

654
00:34:43,080 --> 00:34:46,280
in in a previous podcast. 
And they concluded that Krakow 

655
00:34:46,280 --> 00:34:48,280
and Mount Rawdon couldn't be 
central to the plans of new 

656
00:34:48,280 --> 00:34:51,600
Crest going forward. 
So they make an approach new 

657
00:34:51,600 --> 00:34:53,080
Crest actually quite receptive 
to this. 

658
00:34:53,080 --> 00:34:55,320
Now you have that pre emptive 
right. 

659
00:34:55,440 --> 00:34:58,360
New Crest had actually 
previously tried to sell Krakow.

660
00:34:58,480 --> 00:35:00,280
So Evo's approach new Crest 
directly. 

661
00:35:00,600 --> 00:35:03,160
That's right, right. 
Yeah, Conquest. 

662
00:35:03,480 --> 00:35:09,000
So to the CEO Greg's 
frustration, CEO of new Crest, 

663
00:35:09,520 --> 00:35:13,000
this group called KET Helper had
a, a pre emptive right? 

664
00:35:13,000 --> 00:35:14,200
And they wouldn't let this one 
go. 

665
00:35:14,200 --> 00:35:18,480
So he just pretty much said that
you go create some sort of 

666
00:35:18,480 --> 00:35:22,520
arrangement with them and we'll 
be happy to kind of do a deal. 

667
00:35:22,520 --> 00:35:27,520
And as was relayed in other 
channels to us, the Evolution BD

668
00:35:27,520 --> 00:35:31,400
team gets in touch with the New 
Crest team got this great idea. 

669
00:35:32,160 --> 00:35:34,280
New Crest is sort of nodding, 
nodding along. 

670
00:35:34,280 --> 00:35:36,120
They're, you know, receptive. 
They're thinking, yeah, yeah, 

671
00:35:36,120 --> 00:35:38,200
yeah, this is great. 
This, you know, we've already 

672
00:35:38,200 --> 00:35:40,120
thought of this. 
You know, they're given the 

673
00:35:40,120 --> 00:35:43,120
whole pitch evolution on why it 
makes sense for you to offload 

674
00:35:43,120 --> 00:35:46,080
these assets to us. 
And then they kind of get to the

675
00:35:46,080 --> 00:35:49,560
point we've got a problem 
though, you know, you've got 

676
00:35:49,560 --> 00:35:53,160
this, this pre emptive, right? 
And and new crests say, hang on,

677
00:35:53,840 --> 00:35:56,200
you've got a problem, you need 
to sort this out. 

678
00:35:57,200 --> 00:35:59,600
And then it dawns on them, ah, 
we do have a problem. 

679
00:35:59,640 --> 00:36:02,440
So hence the complex deal they 
need to. 

680
00:36:02,440 --> 00:36:06,440
Spell that out right. 
So so why, why, why? 

681
00:36:06,440 --> 00:36:09,320
If I say you, you've got a 
problem that's pre emptive, 

682
00:36:09,320 --> 00:36:11,240
right? 
Because they they're actually 

683
00:36:11,240 --> 00:36:14,840
pitching to buy new Crest steak 
in Krakow 1st and then EUCRIS 

684
00:36:14,840 --> 00:36:18,320
flips it on them and says sort 
out, sort out the other side of 

685
00:36:18,320 --> 00:36:19,600
the equation. 
Exactly. 

686
00:36:19,600 --> 00:36:21,400
And then it all solves itself. 
Yeah, pre emptive. 

687
00:36:21,400 --> 00:36:23,800
Right. 
So Conquest get in touch with 

688
00:36:23,800 --> 00:36:27,600
Kitapa and lo and behold, we 
have the the deal that we have. 

689
00:36:27,600 --> 00:36:30,800
So yeah, it, yeah, it, it took a
while to get there. 

690
00:36:31,080 --> 00:36:35,080
As for the merger itself, that's
a 5050 merger that the two 

691
00:36:35,080 --> 00:36:37,760
companies are doing. 
Conquest get a, a bit of a bump 

692
00:36:37,760 --> 00:36:41,720
on on their last clothes and you
have this eight person board as 

693
00:36:41,720 --> 00:36:43,800
you tend to when these sort of 
companies come together. 

694
00:36:44,640 --> 00:36:48,000
Lori Conway joins the board 
because he's one of two new 

695
00:36:48,000 --> 00:36:51,120
Crest nominees. 
So, you know, it'd be still a 

696
00:36:51,120 --> 00:36:54,400
few years before Laurie becomes 
a full time employee at 

697
00:36:54,680 --> 00:36:57,760
Evolution. 
And that raising that I 

698
00:36:57,760 --> 00:37:00,560
mentioned $150 million, that was
a bit of a spanner in the works 

699
00:37:00,560 --> 00:37:03,800
and they needed a commitment 
from from BlackRock and Baker 

700
00:37:03,800 --> 00:37:06,640
Steel to get that one over the 
line. 

701
00:37:06,880 --> 00:37:11,000
This, this comes from the fact 
that, yeah, it's a new Crest is 

702
00:37:11,000 --> 00:37:15,080
feeling, feeling a bit of a 
squeeze after fumbling the footy

703
00:37:15,080 --> 00:37:17,320
with Lahia. 
So they're, they're needing to 

704
00:37:17,320 --> 00:37:19,720
shore up their own balance sheet
and they didn't want to become a

705
00:37:19,720 --> 00:37:24,360
big shareholder in a pro forma 
evolution that was underfunded. 

706
00:37:24,360 --> 00:37:27,800
So they like they as I 
understand it was pressure from 

707
00:37:27,960 --> 00:37:32,800
from new Crest in in the midst 
of this deal to actually ensure 

708
00:37:32,800 --> 00:37:35,360
a a placement happen 
concurrently with it all. 

709
00:37:35,960 --> 00:37:38,160
Yeah. 
They wanted confidence because 

710
00:37:38,160 --> 00:37:41,440
financing had been one of the 
problems to a deal getting done 

711
00:37:41,680 --> 00:37:44,280
previously to to a sale of of an
asset. 

712
00:37:44,280 --> 00:37:46,640
So they wanted confidence that 
there wasn't going to be any 

713
00:37:46,640 --> 00:37:48,640
problems on that front and that 
they weren't. 

714
00:37:48,640 --> 00:37:51,720
Funded so they didn't get a a 
call up for for a pro rata share

715
00:37:51,720 --> 00:37:53,400
of of capital down the track as 
well. 

716
00:37:53,400 --> 00:37:56,000
Yeah, they weren't having 
problems with Lahir just yet. 

717
00:37:56,000 --> 00:37:59,680
This is the, the gold price is 
still very strong in 2011, 

718
00:37:59,720 --> 00:38:01,360
right? 
So it's yet to sort of fall 

719
00:38:01,360 --> 00:38:05,320
through, right. 
But they have, you know, 

720
00:38:05,320 --> 00:38:10,640
refocused on, on Africa and, 
and, you know, PNG and and the 

721
00:38:10,640 --> 00:38:12,240
like. 
So they, they don't need these 

722
00:38:12,640 --> 00:38:17,160
assets that made-up 4% of of 
their kind of value. 

723
00:38:17,520 --> 00:38:20,520
So got you. 
Hence they came to get that one 

724
00:38:20,520 --> 00:38:23,200
done. 
But yeah, it it left a deal, you

725
00:38:23,200 --> 00:38:24,800
know, that was already 
complicated being even more 

726
00:38:24,800 --> 00:38:27,920
complicated for the evolution 
team to do. 

727
00:38:28,160 --> 00:38:31,920
This is this is this is a gnarly
deal still like you just don't 

728
00:38:31,920 --> 00:38:38,440
see deals like this today. 
It's the coordination like 

729
00:38:38,440 --> 00:38:41,400
required to bring all of these 
disparate parties together 

730
00:38:41,480 --> 00:38:46,480
aligned on on value and seeing 
the upside of what could be 

731
00:38:46,480 --> 00:38:49,600
created as opposed to getting 
kind of caught up in the in the 

732
00:38:49,600 --> 00:38:54,600
waves of of a bit ask spread in 
the moment, backing a, you know,

733
00:38:54,800 --> 00:38:57,280
a management team in to to to 
lead things forward from there. 

734
00:38:58,000 --> 00:39:00,800
It's it's pretty cool. 
It's a very cool deal like this.

735
00:39:00,800 --> 00:39:03,240
Just this is one of those deals 
that stands out when you study 

736
00:39:03,360 --> 00:39:08,840
mining deals that that a because
of what created more evolution, 

737
00:39:08,840 --> 00:39:13,320
and B it's just gnarly like. 
No better way to put it. 

738
00:39:13,320 --> 00:39:17,520
It's super, super gnarly. 
And yeah, I mean, they do a few 

739
00:39:17,520 --> 00:39:21,480
more creative deals, but nothing
is is kind of mind bending as as

740
00:39:21,480 --> 00:39:25,520
this one. 
But they are now a, you know, 

741
00:39:25,520 --> 00:39:29,120
once this deal is bedded down, a
multi asset mining company with 

742
00:39:29,120 --> 00:39:31,360
a pretty decent sized market 
cap. 

743
00:39:31,360 --> 00:39:34,200
They're a decent sized business 
coming out of this one in, in 

744
00:39:34,200 --> 00:39:37,680
2011, they sought out the 
financing for, for Mount 

745
00:39:37,680 --> 00:39:40,360
Carlton. 
They can in pretty short order 

746
00:39:40,360 --> 00:39:45,200
turn that one into more, you 
know, commercial type funding 

747
00:39:45,200 --> 00:39:48,520
rather than it being a project 
financing because they have the,

748
00:39:49,240 --> 00:39:51,160
the spread of assets to, to get 
that one done. 

749
00:39:51,160 --> 00:39:52,560
And the, the terms sort of come 
in. 

750
00:39:53,680 --> 00:39:58,200
They're guiding to 350,000 oz at
this point in time. 

751
00:39:58,240 --> 00:40:01,200
It's not long after the deal 
that the, the MD and exec share 

752
00:40:01,200 --> 00:40:05,800
role gets combined under Jake. 
They they March on into the ISEX

753
00:40:05,800 --> 00:40:11,480
200 and whilst everything sort 
of is seemingly going great the 

754
00:40:11,720 --> 00:40:13,160
the floor falls out of the gold 
price. 

755
00:40:13,200 --> 00:40:17,720
From mid 2012 it would be 4 
years until the share price 

756
00:40:17,720 --> 00:40:21,160
breaks even again. 
All years is a long time when 

757
00:40:21,160 --> 00:40:22,920
you're running a company. 
It's a long time when you've 

758
00:40:22,920 --> 00:40:27,920
just financed a new mine, you 
know we've got a AA10 year gold 

759
00:40:27,920 --> 00:40:30,560
bull market that has just fallen
through and you've just put 

760
00:40:30,560 --> 00:40:32,920
together this fantastic big kind
of deal. 

761
00:40:33,400 --> 00:40:35,760
But also on the positive side, 
it would create the 

762
00:40:35,760 --> 00:40:38,200
opportunities that built the 
company we know today. 

763
00:40:38,720 --> 00:40:40,960
Was there was there debt 
involved in their cap structure 

764
00:40:40,960 --> 00:40:42,920
at this point in time? 
There, there sure was. 

765
00:40:42,920 --> 00:40:46,160
Yeah. 
So for for a number of years 

766
00:40:46,200 --> 00:40:52,200
from this call at 2012 to 2015, 
early 2015, they're in a net 

767
00:40:52,200 --> 00:40:55,160
debt position of 100 to $150 
million. 

768
00:40:55,240 --> 00:40:57,400
And that was to fund Mount 
Carlton, yeah. 

769
00:40:57,640 --> 00:40:59,400
That was that was funding Mount 
Carlton. 

770
00:40:59,400 --> 00:41:02,960
Yeah. 
So like I said, the gold price 

771
00:41:02,960 --> 00:41:07,240
fell away, but you don't get 
these 4 sellers straight away. 

772
00:41:07,360 --> 00:41:10,840
It it takes time and a lot of 
patience is kind of required. 

773
00:41:11,080 --> 00:41:15,040
Evolutions have to do a $385 
million write down in 2013 

774
00:41:15,040 --> 00:41:19,240
first, which is never a a good 
thing for shareholders to to 

775
00:41:19,240 --> 00:41:20,560
swallow. 
They're never too eager to see 

776
00:41:20,560 --> 00:41:23,120
that. 
And they start stripping costs 

777
00:41:23,120 --> 00:41:25,440
out of the business at the 
corporate office, numerous 

778
00:41:25,440 --> 00:41:27,760
contracts close, they go owner 
operator at Krakow. 

779
00:41:28,000 --> 00:41:33,120
They flatten the org structure. 
The, you know, by 2013, by 2013,

780
00:41:33,120 --> 00:41:35,400
the merger's almost two years in
the rearview mirror. 

781
00:41:35,960 --> 00:41:39,120
And like you comment on the 
balance sheet just there, it's 

782
00:41:39,120 --> 00:41:41,360
not as healthy as it kind of 
could be. 

783
00:41:41,560 --> 00:41:44,400
A bit over $100 million in in, 
in net debt. 

784
00:41:44,920 --> 00:41:50,600
The share price looking back 
just 12 months is -57% and that 

785
00:41:50,600 --> 00:41:53,120
only puts the middle of the pack
when you look around the field 

786
00:41:53,120 --> 00:41:54,600
of what the other Goldies have 
done. 

787
00:41:55,400 --> 00:41:58,360
But they still actually pay a 
dividend at this point in time, 

788
00:41:58,720 --> 00:42:01,280
believe it or not, they pay a 1 
cent dividend, which, you know, 

789
00:42:01,280 --> 00:42:03,880
might not sound like the biggest
thing in the world, but they 

790
00:42:03,880 --> 00:42:06,880
have remained super dedicated 
and that, you know, instills 

791
00:42:06,880 --> 00:42:10,080
capital discipline, paying a 
dividend every half year. 

792
00:42:10,760 --> 00:42:14,200
I think they're going on 25 or 
26 dividends now paid that that 

793
00:42:14,200 --> 00:42:17,360
is kind of remarkable to do it 
at this point in time. 

794
00:42:17,360 --> 00:42:20,600
Yeah, production is. 
Is confronting when you just 

795
00:42:20,600 --> 00:42:25,640
look at it like 427,000 ounces 
in in FY14 like that is that is 

796
00:42:25,920 --> 00:42:28,040
that is a formidable production 
profile but they're. 

797
00:42:28,040 --> 00:42:31,200
And they don't make money. 
They're not washing their face. 

798
00:42:31,200 --> 00:42:33,920
They're no, I mean no one, no 
one's doing, no one's doing 

799
00:42:33,920 --> 00:42:36,440
well, but they've got the 
production and they just need 

800
00:42:36,440 --> 00:42:40,280
the commodity tailwinds. 
They do they, they're a leverage

801
00:42:40,280 --> 00:42:42,240
play without doubt at this point
in time. 

802
00:42:42,360 --> 00:42:46,400
The yeah, that's a big, big 
number for a company not to make

803
00:42:46,400 --> 00:42:48,400
money. 
And they, they know more than 

804
00:42:48,400 --> 00:42:51,200
most that the, the assets aren't
the best in the world that they 

805
00:42:51,200 --> 00:42:53,560
have. 
But it is been a very tough year

806
00:42:53,800 --> 00:42:56,040
going around. 
And I say not making money from 

807
00:42:56,040 --> 00:42:58,720
a kind of cash flow perspective.
They had been bringing on Mount 

808
00:42:58,720 --> 00:43:02,000
Carlton, you know, online 
through this period as well. 

809
00:43:02,360 --> 00:43:05,400
But the real concern is that 
reserves are depleting. 

810
00:43:05,920 --> 00:43:09,120
These assets don't have massive 
mine lives like Jake would later

811
00:43:09,120 --> 00:43:12,360
always talk about having an 8 
year plus mine life on on your 

812
00:43:12,360 --> 00:43:16,280
projects across the portfolio, 
Pagingo, you know, these sorts 

813
00:43:16,280 --> 00:43:19,480
of assets, they don't have that 
and they need to get on the 

814
00:43:19,480 --> 00:43:22,040
stepping stones to to get to the
better assets at this point in 

815
00:43:22,040 --> 00:43:24,400
time. 
On the positive side, again, the

816
00:43:24,440 --> 00:43:27,120
the four Stellars at this point 
in time are starting to emerge. 

817
00:43:27,520 --> 00:43:29,960
We're now mid 2014. 
You know, looking around the 

818
00:43:29,960 --> 00:43:33,480
field, Northern Stars done some 
of their deals, they've done 3 

819
00:43:33,520 --> 00:43:37,720
sort of around the, the new year
period coming into 2014. 

820
00:43:37,720 --> 00:43:40,600
So you're starting to see 
transactions that reshape the 

821
00:43:40,880 --> 00:43:44,120
Australian gold landscape for a 
for a long time to come. 

822
00:43:44,280 --> 00:43:49,640
One of those forced sellers 
becomes a new Crest of their 

823
00:43:49,840 --> 00:43:52,560
evolution stock over time. 
Or does that happen later? 

824
00:43:52,880 --> 00:43:57,640
That happens in 2015. 
So before we get there, you 

825
00:43:57,640 --> 00:44:00,320
know, as these things tend to be
the, the stock price continues 

826
00:44:00,320 --> 00:44:05,280
to to bomb out late 2014 shares 
trade below $0.50. 

827
00:44:05,320 --> 00:44:09,040
So the market cap is South of 
400 million and that merger was 

828
00:44:09,040 --> 00:44:13,080
down and said $1.2 billion. 
So the the company's fallen a 

829
00:44:13,080 --> 00:44:16,640
long way from that, and so was 
everyone else in in the arena 

830
00:44:16,640 --> 00:44:18,480
they. 
Probably raised more like nearly

831
00:44:18,480 --> 00:44:20,200
more capital than that at that 
point in time. 

832
00:44:20,200 --> 00:44:23,080
I know, right? 
So, you know, these things sort 

833
00:44:23,080 --> 00:44:25,320
of grip the markets and these 
these kind of trends and the 

834
00:44:25,320 --> 00:44:27,640
trend here is profitability and 
they don't have too much 

835
00:44:27,640 --> 00:44:31,360
profitability to show. 
So they're talking about reusing

836
00:44:31,600 --> 00:44:34,320
mill mill balls. 
They're talking about smarter 

837
00:44:34,320 --> 00:44:35,920
drilling blasting. 
They're talking about going 

838
00:44:35,920 --> 00:44:38,040
owner operator at every site 
they can. 

839
00:44:38,040 --> 00:44:40,400
They're talking about pulling in
employee turnover. 

840
00:44:41,160 --> 00:44:43,920
You go through the slide decks 
of companies at the time and 

841
00:44:44,320 --> 00:44:46,880
more than half is just cost 
saving initiatives like you're 

842
00:44:46,880 --> 00:44:50,280
really tightening the belt here 
and it starts to work in bits 

843
00:44:50,280 --> 00:44:52,040
and pieces at Evolution. 
They start to make a bit of 

844
00:44:52,040 --> 00:44:55,560
money quarter after quarter and 
then they get hit with, you 

845
00:44:55,560 --> 00:44:58,120
know, the QLD floods a lot of 
their assets up in Queensland. 

846
00:44:58,120 --> 00:45:00,520
So they're copying it from all 
sides. 

847
00:45:00,520 --> 00:45:04,080
And it's very, you know, quick 
and easy to say in retrospect. 

848
00:45:04,080 --> 00:45:06,480
But when you're living through 
it, I can only sort of imagine 

849
00:45:06,480 --> 00:45:09,280
when it's kind of year after 
year and you're copying it and 

850
00:45:09,280 --> 00:45:11,720
you're just waiting for the the 
times to turn. 

851
00:45:13,560 --> 00:45:17,040
But like you say, we have the 
the new Crest sell down. 

852
00:45:17,040 --> 00:45:19,960
They're 32% stake. 
They sell in two parts. 

853
00:45:20,400 --> 00:45:23,000
So they sell at the beginning of
2015 and then at the end of the 

854
00:45:23,440 --> 00:45:27,520
kind of at the end of ish of 
2015, in the second-half, they 

855
00:45:27,520 --> 00:45:30,520
take a big haircut on on that 
compared to what the value was 

856
00:45:30,680 --> 00:45:33,760
when the deal was done. 
And it's a very unhelpful time 

857
00:45:34,240 --> 00:45:35,760
for the company for this to 
happen. 

858
00:45:35,760 --> 00:45:39,680
And, you know, when something 
like that happens at the point 

859
00:45:39,680 --> 00:45:42,520
in time, you kind of might 
question evolution. 

860
00:45:42,600 --> 00:45:44,480
History shows that they were 
just trying to look after 

861
00:45:44,480 --> 00:45:46,520
themselves. 
And, you know, I don't think it 

862
00:45:46,520 --> 00:45:49,040
would have taken a genius at the
time to realize New Crest 

863
00:45:49,040 --> 00:45:52,640
themselves needed the cash. 
It wasn't a fundamental flaw in 

864
00:45:52,640 --> 00:45:55,720
evolution. 
Isn't it, isn't it a staggering 

865
00:45:55,720 --> 00:46:01,160
kind of reflection that a 32% 
shareholder at the formation of 

866
00:46:01,160 --> 00:46:06,440
what we know today to be 
evolution lost money like. 

867
00:46:07,760 --> 00:46:10,000
That's crazy. 
It really is crazy. 

868
00:46:10,000 --> 00:46:14,440
And like all, all the same, it's
a trend you see with some of 

869
00:46:14,440 --> 00:46:18,680
these phenomenal success stories
in any industry, there are multi

870
00:46:18,680 --> 00:46:20,920
year periods where the company 
doesn't go up. 

871
00:46:20,920 --> 00:46:22,560
The stock doesn't just go up 
linearly. 

872
00:46:22,920 --> 00:46:26,640
Like you need to bear through 
the bad times to enjoy the good 

873
00:46:26,640 --> 00:46:29,240
times. 
So, yeah, it, it is kind of 

874
00:46:29,240 --> 00:46:34,120
funny to, to take out a, you 
know, a four year piece in time 

875
00:46:34,400 --> 00:46:38,160
and they took a, a big haircut 
that it's kind of remarkable to,

876
00:46:38,160 --> 00:46:40,720
to round out on the personnel 
side of things. 

877
00:46:41,400 --> 00:46:43,360
You've got more familiar names. 
I know we spoke about this 

878
00:46:43,360 --> 00:46:46,680
before, but Cobb Johnson and 
Tommy Mckeith, they joined 

879
00:46:46,680 --> 00:46:50,320
through that 2014 period. 
And Jake has finally worn down. 

880
00:46:50,400 --> 00:46:55,160
Laurie, who joins the company 
full time, becomes the CFO in 

881
00:46:55,160 --> 00:46:58,320
2014. 
So again, familiar faces showing

882
00:46:58,320 --> 00:47:01,320
up throughout this story. 
This entire time Jake is exec 

883
00:47:01,320 --> 00:47:02,960
chair as well right? 
Like. 

884
00:47:03,200 --> 00:47:05,760
MD and exec. 
Chair MD and Exec Chair, Yeah, 

885
00:47:06,000 --> 00:47:06,840
yeah. 
Interesting. 

886
00:47:07,560 --> 00:47:08,920
Controls the company and the 
board. 

887
00:47:09,120 --> 00:47:10,800
Yeah, yeah. 
Interesting. 

888
00:47:10,800 --> 00:47:13,240
And no accident as well. 
Yeah. 

889
00:47:13,240 --> 00:47:17,480
So coming into 2015 there's a 
bit of health in the Aussie gold

890
00:47:17,640 --> 00:47:20,680
price, which is, which is good 
for evolution obviously. 

891
00:47:20,680 --> 00:47:23,600
And they they make a bit of a 
voluntary play, pay down of 

892
00:47:23,600 --> 00:47:27,720
debt. 
And then come April 2015, we 

893
00:47:27,720 --> 00:47:32,880
have the the first real kind of 
bear market deal, which is a a 

894
00:47:32,880 --> 00:47:35,720
cracker. 
This is this is the period where

895
00:47:36,040 --> 00:47:39,000
like Evo's assets actually start
making good money, right? 

896
00:47:39,000 --> 00:47:42,600
They've got like 3 core minds 
that all make about 100 million 

897
00:47:42,600 --> 00:47:47,320
bucks in that one year each. 
Yeah, that would be the next 

898
00:47:47,320 --> 00:47:51,840
year, more so like going from 
2015 to 16. 

899
00:47:52,160 --> 00:47:54,800
You think, hey, these projects 
can actually make a bit of money

900
00:47:54,800 --> 00:47:58,680
when the gold price ticks up a 
good few 100 bucks and sentiment

901
00:47:58,680 --> 00:48:03,120
changes like it always does, but
they they need to get through a 

902
00:48:03,120 --> 00:48:05,520
couple deals actually, but 
before they get there. 

903
00:48:05,600 --> 00:48:08,240
Gotcha. 
So the La Mancha deal juicy, 

904
00:48:09,800 --> 00:48:11,680
super juicy. 
I know you've, you've actually 

905
00:48:11,680 --> 00:48:15,720
studied this one a little bit. 
And we've spoken with La Mancha 

906
00:48:15,720 --> 00:48:19,440
in in the past a couple years 
ago now, but La Mancha is a 

907
00:48:19,440 --> 00:48:22,960
private mining investment 
vehicle for the the Super 

908
00:48:22,960 --> 00:48:26,360
wealthy Egyptian Sawari's 
family. 

909
00:48:26,360 --> 00:48:30,440
So Nagib predominantly and they 
owned frogs legs. 

910
00:48:30,440 --> 00:48:33,960
It's an underground mine, white 
foil open pit mine and the brand

911
00:48:33,960 --> 00:48:36,880
new Mangari mill. 1.5 million 
tonne per annum milk which had 

912
00:48:36,880 --> 00:48:41,360
just been built one year prior. 
Najib was a yeah, an Egyptian 

913
00:48:42,120 --> 00:48:45,480
billionaire who made his his 
fortune in the 

914
00:48:45,480 --> 00:48:48,560
telecommunications industry and.
Yeah, from a very wealthy 

915
00:48:48,560 --> 00:48:51,200
family. 
Somehow got the the gold bug and

916
00:48:51,200 --> 00:48:55,320
found himself yeah, like owning,
owning these these, yeah, these 

917
00:48:55,320 --> 00:48:58,760
mines in, in Kalrauli. 
Yeah, and and all through Africa

918
00:48:59,320 --> 00:49:02,520
as well, which would become a 
focus later on for him. 

919
00:49:02,520 --> 00:49:06,800
But he's got these assets in the
East Kalgoorlie region and they 

920
00:49:06,800 --> 00:49:09,840
want to find someone to really 
help them grow. 

921
00:49:10,000 --> 00:49:12,040
They want a vehicle to kind of 
put this in so that somebody can

922
00:49:12,040 --> 00:49:14,280
kind of do the growing for them 
in a way. 

923
00:49:14,280 --> 00:49:16,520
And that ends up being 
evolution. 

924
00:49:16,520 --> 00:49:19,440
So Evos pay for this deal in 
script. 

925
00:49:20,320 --> 00:49:25,120
La Mancha ends up being a 31% 
shareholder and at this point in

926
00:49:25,120 --> 00:49:28,480
time Mucrest has sold their 
first half of first half of 

927
00:49:28,480 --> 00:49:31,280
their their block doing the 
other half later. 

928
00:49:32,080 --> 00:49:35,640
Evos actually have to take on 
$115 million in in net debt at 

929
00:49:35,640 --> 00:49:38,160
this point in time. 
But we're back to a billion 

930
00:49:38,160 --> 00:49:41,440
dollar market camp market cap 
with this share issue. 

931
00:49:41,720 --> 00:49:47,320
And super importantly, La Mancha
Nagib commits $100 million to 

932
00:49:47,320 --> 00:49:50,080
future growth. 
The assets themselves had done 

933
00:49:50,080 --> 00:49:55,520
150,000 oz at a bit under $1000 
all in sustaining costs. 

934
00:49:55,520 --> 00:49:59,200
So that's, you know that's a 
more than 10% improvement on the

935
00:49:59,240 --> 00:50:02,640
all in sustaining cost of the 
asset portfolio that the company

936
00:50:02,640 --> 00:50:05,840
had at that point in time. 
Evolutions just had the overhang

937
00:50:05,840 --> 00:50:10,440
of a of a 30 ish percent 
shareholder who's reducing their

938
00:50:10,440 --> 00:50:12,040
stake and a bit of an overhang 
on the share price. 

939
00:50:12,680 --> 00:50:15,160
They finally, they finally see 
our new Crest and now they 

940
00:50:15,160 --> 00:50:19,600
welcome another 31% shareholder.
There's a bit of a bit of an 

941
00:50:19,600 --> 00:50:25,560
anecdote on how they agreed that
31% I because you're trying to, 

942
00:50:25,560 --> 00:50:28,400
you're trying to figure out like
how, what, what pro forma, like 

943
00:50:28,400 --> 00:50:30,440
what are they bringing to the 
table versus yours? 

944
00:50:30,520 --> 00:50:33,560
And isn't there an article in 
the AFR about how they exactly 

945
00:50:33,560 --> 00:50:35,920
landed on 31? 
There, there is. 

946
00:50:35,920 --> 00:50:42,080
So I mean, some of the stories 
are, are very funny, but one of 

947
00:50:42,080 --> 00:50:46,280
the details we heard is that a 
half a percentage point 

948
00:50:46,280 --> 00:50:50,760
difference is negotiated via 
sort of screaming matches in the

949
00:50:51,240 --> 00:50:54,680
in the office. 
And it's a kind of arbitrary 

950
00:50:54,680 --> 00:50:56,880
number. 
They, they, they're negotiating 

951
00:50:56,880 --> 00:51:00,120
it head to head on a kind of 
like for like basis where they 

952
00:51:00,120 --> 00:51:03,520
say, you know, you use reserves 
or this much, you know, 

953
00:51:03,520 --> 00:51:05,800
reserves, we'll use this much 
percentage of reserves. 

954
00:51:05,800 --> 00:51:08,200
You use a bit of resources, 
yada, yada, yada. 

955
00:51:08,680 --> 00:51:13,080
And at the end of the day, they,
they, they knuckle down and 

956
00:51:13,080 --> 00:51:16,440
they, they come to an agreement.
And like you do in Sydney, you 

957
00:51:16,440 --> 00:51:19,920
go to rock pool to, to celebrate
that one and, and drink it all 

958
00:51:19,920 --> 00:51:23,440
the way in inexpensive champagne
with the, the Frenchman from La 

959
00:51:23,440 --> 00:51:25,960
Mancha. 
But yeah, it was a, it was an 

960
00:51:25,960 --> 00:51:30,240
expensive kind of deal to get 
done, but a super important deal

961
00:51:30,240 --> 00:51:34,320
in, in the, the stepping stones 
of evolution and their kind of 

962
00:51:34,320 --> 00:51:36,480
journey. 
There's another detail actually,

963
00:51:36,480 --> 00:51:38,800
which I, I want to mention 
because I find so fascinating. 

964
00:51:38,800 --> 00:51:42,400
They didn't even evolution 
didn't even use investment 

965
00:51:42,400 --> 00:51:45,240
bankers for this deal at all LED
through, you know, Aaron 

966
00:51:45,240 --> 00:51:48,480
Colleron and and Kieran Schmidt 
there as well with the the BD 

967
00:51:48,480 --> 00:51:51,440
team that they had internally 
just sort of powered through 

968
00:51:51,440 --> 00:51:54,520
this one, which is a pretty cool
little, little detail. 

969
00:51:54,880 --> 00:51:58,800
Is that's a common theme and 
especially I think this year is,

970
00:51:59,280 --> 00:52:04,280
is chock a block with deals you 
don't like, You can't actually 

971
00:52:05,240 --> 00:52:08,080
get that many deals done if you 
have like teams and teams of 

972
00:52:08,080 --> 00:52:10,640
advisors because they slow you 
down, You're not nimble enough. 

973
00:52:10,640 --> 00:52:13,360
You, you add complexity, there's
more meetings in the calendar. 

974
00:52:13,800 --> 00:52:16,160
You're, you're talking about 
things that don't actually 

975
00:52:16,160 --> 00:52:17,800
matter. 
But if you back yourself your 

976
00:52:17,800 --> 00:52:21,480
own capability to to do what's 
required, like yeah it is 

977
00:52:21,480 --> 00:52:24,080
possible to do 3 deals in a 
month, which they did. 

978
00:52:24,320 --> 00:52:26,520
Totally, and that that comes 
down to the MO of the company, 

979
00:52:26,520 --> 00:52:28,360
you know, deal making. 
If that's your expertise, you 

980
00:52:28,480 --> 00:52:29,840
you got to be able to do it in 
house, don't you? 

981
00:52:30,520 --> 00:52:33,760
I say it's possible, but it's 
still like genuinely, truly 

982
00:52:34,000 --> 00:52:36,640
impressive. 
Like, yeah, like having, having 

983
00:52:36,640 --> 00:52:39,080
having worked in banking, mate, 
like I've been crushed from just

984
00:52:39,080 --> 00:52:41,600
one, like just, you know, one on
the plate, like absolutely 

985
00:52:41,600 --> 00:52:43,840
crushed. 
And the fact there were three 

986
00:52:43,840 --> 00:52:48,280
enormous ones simultaneously is 
is stupidly impressive. 

987
00:52:48,280 --> 00:52:51,200
Yeah, totally, totally. 
So if we, if we analyze this 

988
00:52:51,200 --> 00:52:55,000
deal for a moment before we jump
on to, to the next one, the 

989
00:52:55,000 --> 00:52:56,960
assets are better. 
You you're paying a big price 

990
00:52:56,960 --> 00:52:59,480
for it, but you're pulling down 
your, your all in sustaining 

991
00:52:59,480 --> 00:53:01,240
cost. 
You're providing more cash 

992
00:53:01,240 --> 00:53:04,840
generation, you're pushing out 
the average my life of your, 

993
00:53:04,960 --> 00:53:08,800
your portfolio doing it with 
cash that, that wasn't an option

994
00:53:08,800 --> 00:53:13,760
here given the, the strategy 
that NGIB and Lamancha had. 

995
00:53:15,440 --> 00:53:17,560
The gold price, like we've 
always sort of said rises 

996
00:53:17,560 --> 00:53:19,520
throughout. 
So you get kind of nitpicky 

997
00:53:19,880 --> 00:53:23,160
deciding who's a winner, but at 
the end of the day, both the 

998
00:53:23,160 --> 00:53:26,600
sides here are winners. 
They had equity upside in this 

999
00:53:26,600 --> 00:53:30,680
and both would do do very well 
in, in due course. 

1000
00:53:31,480 --> 00:53:36,480
I think the, the Evolution team 
at at the time and perhaps some 

1001
00:53:36,480 --> 00:53:39,760
of the the shareholders out 
there didn't wait how important 

1002
00:53:39,800 --> 00:53:42,880
that La Mancha alliance would be
that $100 million, which we're 

1003
00:53:42,880 --> 00:53:46,880
going to talk about. 
Because having that support you 

1004
00:53:46,880 --> 00:53:49,480
through the next deal kind of 
means you need to take both 

1005
00:53:49,480 --> 00:53:53,600
deals into account at the same 
time because you can't do like 

1006
00:53:53,600 --> 00:53:54,720
the other one wouldn't have got 
done. 

1007
00:53:54,720 --> 00:53:58,000
And the other deal we're talking
about is, is cow huge. 

1008
00:53:58,000 --> 00:54:03,160
And that is a phenomenal deal, a
a remarkable asset to to scoop 

1009
00:54:03,160 --> 00:54:08,120
up from from a major and yeah, 
in an environment where gold 

1010
00:54:08,120 --> 00:54:13,120
prices are down a long way from 
what they would have been many 

1011
00:54:13,120 --> 00:54:16,160
years ago. 
So let's talk about that deal, 

1012
00:54:16,160 --> 00:54:19,160
mate. 
Cal is Cal is the cash cow. 

1013
00:54:19,880 --> 00:54:22,480
It is. 
It is and it wasn't. 

1014
00:54:22,480 --> 00:54:25,400
It wasn't so apparently clear at
the time. 

1015
00:54:25,400 --> 00:54:28,080
Even shortly after the deal 
there was criticism about this 

1016
00:54:28,080 --> 00:54:31,840
deal, a lot of people saying oh,
you've overpaid for this one and

1017
00:54:31,840 --> 00:54:33,560
that is clearly not been the 
case. 

1018
00:54:34,000 --> 00:54:35,840
This was a this was a sale 
process, right? 

1019
00:54:36,160 --> 00:54:38,960
And only the actual like 
announcement of the deal only 

1020
00:54:39,320 --> 00:54:42,280
comes a month after La Muncha 
deals announced. 

1021
00:54:42,280 --> 00:54:44,320
But these things are kind of in 
the works. 

1022
00:54:44,320 --> 00:54:47,360
Like, yeah. 
Yeah, absolutely. 

1023
00:54:47,360 --> 00:54:51,960
And the same day that IGO bought
serious and wow the. 

1024
00:54:52,440 --> 00:54:54,880
Two big deals on the same day. 
Two big deals on the same day 

1025
00:54:54,880 --> 00:54:57,560
and IGO Independence Group, as 
they were called at the time, 

1026
00:54:57,880 --> 00:55:02,320
were rumoured to be hunting 
around looking at at cow as 

1027
00:55:02,320 --> 00:55:04,960
well. 
And they're a gold miner before 

1028
00:55:05,120 --> 00:55:08,240
before serious, so it totally 
makes sense that they were in 

1029
00:55:08,240 --> 00:55:11,800
and about that sale process. 
So they're buying COW for US, 

1030
00:55:12,240 --> 00:55:16,880
550 million from Barrick, 
undoubtedly better asset and 

1031
00:55:17,080 --> 00:55:19,360
bigger price tag. 
With stamp duty, we're talking 

1032
00:55:19,360 --> 00:55:23,560
about 750 million Aussie dollars
that is bigger than their market

1033
00:55:23,560 --> 00:55:25,480
cap. 
This is a big deal for the 

1034
00:55:25,480 --> 00:55:27,040
company. 
At the time Cow's doing about 

1035
00:55:27,040 --> 00:55:33,200
250,000 oz and all in sustaining
cost over 15% lower than the, 

1036
00:55:34,000 --> 00:55:37,040
the portfolio for those that 
aren't familiar with the assets 

1037
00:55:37,040 --> 00:55:40,320
sort of big at the time sort of 
open cut project in kind of 

1038
00:55:40,320 --> 00:55:44,800
central NSW, 7 and a half 
million tonne per annum meal. 

1039
00:55:45,400 --> 00:55:50,320
So it's a, it's a large scale 
lower grade goldmine. 

1040
00:55:50,320 --> 00:55:54,160
And the mine life of the project
at the time was only out till 

1041
00:55:54,160 --> 00:55:56,360
2024. 
We're in 2015. 

1042
00:55:56,600 --> 00:55:59,480
So it's, it's not a long mine 
life and there's I think about 

1043
00:55:59,480 --> 00:56:02,200
800,000 ounces sitting on the 
stockpiles. 

1044
00:56:02,200 --> 00:56:04,720
So mining was only actually 
going to stop in like 2020 

1045
00:56:04,720 --> 00:56:06,520
roughly. 
And they were just going to 

1046
00:56:06,840 --> 00:56:11,200
process the stockpiles for the 
few years after that, which is 

1047
00:56:11,200 --> 00:56:14,800
the downside of the massive 
upside if you can prove it out 

1048
00:56:14,800 --> 00:56:16,440
and prove that there is a longer
life here. 

1049
00:56:16,800 --> 00:56:18,720
Well, that's there's a 
difference between like limited 

1050
00:56:18,720 --> 00:56:22,040
mine life because yeah, 
mineralization actually ends. 

1051
00:56:22,080 --> 00:56:26,840
And then there's these type of 
assets which have much, much, 

1052
00:56:26,840 --> 00:56:30,680
much longer mine lives than then
you're paying for in reserves at

1053
00:56:30,680 --> 00:56:32,800
any point in time. 
Because yeah, you do another 

1054
00:56:32,800 --> 00:56:36,200
cutback or, or, or or the likes 
and you've got, you've got 

1055
00:56:36,320 --> 00:56:38,000
mineralisation extending a 
depth. 

1056
00:56:39,000 --> 00:56:41,400
Like let's, let's underline 
that, let's pull that forward 

1057
00:56:41,400 --> 00:56:43,640
right now from like one of the 
talking points later on. 

1058
00:56:44,440 --> 00:56:48,760
Optionality and mine life are 
underrated in in MPV studies. 

1059
00:56:49,600 --> 00:56:53,160
This asset is now going to live 
on to 2042. 

1060
00:56:53,160 --> 00:56:57,480
It is doing over 300,000 oz per 
annum and it's doing it at an 

1061
00:56:57,480 --> 00:57:00,760
all in sustaining cost of I 
think about 1400 Aussie. 

1062
00:57:01,600 --> 00:57:06,520
The optionality really rings 
true when commodity prices shoot

1063
00:57:06,520 --> 00:57:09,120
through the roof like they do 
every so often. 

1064
00:57:09,120 --> 00:57:11,240
It's not a common thing, but 
that is a point in time we're 

1065
00:57:11,240 --> 00:57:15,320
living at right now. 
And had you sort of modelled at 

1066
00:57:15,320 --> 00:57:19,080
the time 2024 you're not getting
that 2025 fantastic gold price. 

1067
00:57:19,560 --> 00:57:22,760
But now the the amount of money 
it's going to make this year is 

1068
00:57:22,760 --> 00:57:26,840
going to outdo many of many of 
those years put together, right.

1069
00:57:27,200 --> 00:57:29,480
And that is something that Jake 
would say, that is something 

1070
00:57:29,480 --> 00:57:31,600
that a lot of the smart 
investors in in our arena have 

1071
00:57:31,600 --> 00:57:35,520
sort of said for a while that 
optionality is underrated. 

1072
00:57:35,520 --> 00:57:38,800
And we see it more and more with
the people that think super long

1073
00:57:38,800 --> 00:57:40,720
term about deal making in the 
resource space. 

1074
00:57:41,280 --> 00:57:45,640
It's, it's a, it's a true like 
this is this is a, an asset that

1075
00:57:45,640 --> 00:57:47,720
really just transforms the 
company. 

1076
00:57:47,720 --> 00:57:50,640
This is like a corner. 
This is a, this is a tier, tier 

1077
00:57:50,640 --> 00:57:53,040
one asset. 
I know it's not 500,000 oz but 

1078
00:57:53,360 --> 00:57:56,680
you know, big reliable 
production profile, long life, 

1079
00:57:56,920 --> 00:57:59,440
low cost. 
Tier 1 jurisdiction. 

1080
00:57:59,480 --> 00:58:02,120
Far better than everything else 
in their portfolio up until this

1081
00:58:02,120 --> 00:58:05,640
point in time. 
And it moves evolution to be on 

1082
00:58:05,640 --> 00:58:07,880
Oz, which is not how they'd look
at it. 

1083
00:58:07,880 --> 00:58:11,000
But the second largest producer 
in Australia. 

1084
00:58:11,440 --> 00:58:14,320
Decent bit of debt they've 
brought on board to to get this 

1085
00:58:14,320 --> 00:58:16,560
deal done. 
How did this deal get done? 

1086
00:58:17,280 --> 00:58:20,320
Matt, this is a great story. 
So like you mentioned, 

1087
00:58:20,320 --> 00:58:23,400
competitive process, gold 
fields, Z gin, they were 

1088
00:58:23,400 --> 00:58:26,880
rumoured to be in and around it.
The Finn wrote after the deal 

1089
00:58:26,880 --> 00:58:30,800
that an insider told Jake it'd 
be a Bradbury if they won. 

1090
00:58:30,800 --> 00:58:33,040
So for for non Aussies, you have
to search that one up on on 

1091
00:58:33,040 --> 00:58:35,920
YouTube. 
But when straight talk came out 

1092
00:58:36,080 --> 00:58:39,120
and wrote about the deal in the 
months prior, you've also got 

1093
00:58:39,120 --> 00:58:42,760
Northern star independence, like
I mentioned, Regis Oz minerals 

1094
00:58:43,080 --> 00:58:45,600
in and around the hoop there, 
but the pieces fell into place 

1095
00:58:45,600 --> 00:58:49,080
very late here. 
So essentially before the Friday

1096
00:58:49,080 --> 00:58:52,080
when the bids are due, there is 
a board meeting and there's a 

1097
00:58:52,080 --> 00:58:56,640
lot of written about the price. 
Is it, you know, 485? 

1098
00:58:56,640 --> 00:58:58,880
Is it 500? 
Is it 525 that we're going to 

1099
00:58:58,880 --> 00:59:02,240
have to pay? 
And they're wanting a bit of 

1100
00:59:02,240 --> 00:59:05,960
guidance from, you know, perhaps
the senior people in the within 

1101
00:59:05,960 --> 00:59:08,400
the board. 
And as we kind of heard it was 

1102
00:59:08,400 --> 00:59:13,000
Jim Askew who inverted the 
question and a great, great 

1103
00:59:13,000 --> 00:59:17,160
insight here is how do you feel 
or what would be the outcome if 

1104
00:59:17,160 --> 00:59:20,680
we didn't win this? 
And that kind of sick feeling in

1105
00:59:20,680 --> 00:59:24,720
their in their stomach at the 
thought of losing out by fifteen

1106
00:59:24,720 --> 00:59:27,320
$20 million is what spurred them
on. 

1107
00:59:27,400 --> 00:59:30,920
And they actually bid an extra 
50 million U.S. dollars on what 

1108
00:59:30,920 --> 00:59:36,160
they'd previously planned. 
So they go from 500 to 550 

1109
00:59:36,160 --> 00:59:37,800
million. 
These numbers are 10 years old, 

1110
00:59:37,800 --> 00:59:39,560
but that's that's how it's sort 
of remembered. 

1111
00:59:40,040 --> 00:59:43,120
When, when you're confronted 
with what does My Portfolio look

1112
00:59:43,120 --> 00:59:46,480
like if I don't have this and 
there's some, there's some harsh

1113
00:59:46,480 --> 00:59:50,960
realities about that, then it 
actually encouraged them to to 

1114
00:59:50,960 --> 00:59:54,160
pay what was considered overs. 
Right. 

1115
00:59:54,160 --> 00:59:56,800
And what's what's 50 million 
bucks if it goes right? 

1116
00:59:57,040 --> 01:00:00,960
Hey, so on the Saturday, Barrett
give Evos the call, say let's 

1117
01:00:00,960 --> 01:00:03,720
catch up Sunday. 
And they're worried, Jake's 

1118
01:00:03,720 --> 01:00:06,120
worried, they're thinking they 
might get the treatment. 

1119
01:00:06,480 --> 01:00:09,080
The other guys are in the the 
room over there, the other ones 

1120
01:00:09,080 --> 01:00:12,120
are just over there. 
And this is an open auction. 

1121
01:00:12,120 --> 01:00:14,040
Now, what's your best, you know,
you're close, but what's your 

1122
01:00:14,040 --> 01:00:16,920
best offer? 
But lo and behold, the asset was

1123
01:00:16,920 --> 01:00:19,120
theirs, 550 million U.S. 
dollars. 

1124
01:00:19,520 --> 01:00:22,480
Got it done. 
And you know, we've, we've said 

1125
01:00:22,480 --> 01:00:26,280
it a bunch of times, but this is
a undoubted portfolio improver. 

1126
01:00:26,560 --> 01:00:30,680
The they would always sort of 
show this this great chart, 

1127
01:00:31,000 --> 01:00:34,320
simple but great that 
effectively shows the the margin

1128
01:00:34,320 --> 01:00:38,960
on your Y axis, the the mine 
life on your axis and you know 

1129
01:00:38,960 --> 01:00:41,560
things are going up and to the 
right, which is always a kind of

1130
01:00:41,560 --> 01:00:44,080
good sign. 
But in the months afterwards, 

1131
01:00:44,080 --> 01:00:48,120
Jake is seriously concerned that
he materially overpaid people 

1132
01:00:48,240 --> 01:00:50,000
are. 
There's criticism, There's Yep, 

1133
01:00:50,000 --> 01:00:52,880
the. 
Yeah, the analysts are, are, are

1134
01:00:52,880 --> 01:00:55,880
saying that they've overpaid. 
I mean you you run an NPV at 

1135
01:00:55,880 --> 01:00:58,200
consensus gold price. 
They overpaid. 

1136
01:00:58,280 --> 01:01:00,960
And to your point on the the 
analysts, we had a great quip 

1137
01:01:01,080 --> 01:01:03,600
the the analysts don't know what
to value the thing at you just 

1138
01:01:03,600 --> 01:01:06,120
tell them what the what the 
asset is worth it's. 

1139
01:01:06,680 --> 01:01:09,360
Worth what you paid? 
Made made me chuckle. 

1140
01:01:10,520 --> 01:01:12,840
You, you mentioned something 
earlier as well, Trev, which I 

1141
01:01:12,840 --> 01:01:17,520
think is super important with 
the, the context of the asset 

1142
01:01:17,520 --> 01:01:21,160
and how it kind of been treated.
There were quality ideas within 

1143
01:01:21,160 --> 01:01:25,000
the people on site, but Barrick 
hadn't been investing for 3/3 

1144
01:01:25,000 --> 01:01:26,480
long years. 
They hadn't really been 

1145
01:01:26,480 --> 01:01:31,880
investing in the asset. 
So the, the, the group that ran 

1146
01:01:31,880 --> 01:01:34,920
the asset there, which would be 
coming on to, to Evolution, they

1147
01:01:34,920 --> 01:01:37,520
had ideas, they, they had stuff 
they wanted to do, they had 

1148
01:01:37,520 --> 01:01:40,680
leads they wanted to chase up, 
you know, and on the back of 

1149
01:01:40,680 --> 01:01:44,280
that, the asset goes from having
1.6 million ounces to nearly 

1150
01:01:44,280 --> 01:01:46,240
doubling in, in less than a 
year. 

1151
01:01:46,280 --> 01:01:49,080
Like they're just given the 
capital to chase up these things

1152
01:01:49,440 --> 01:01:52,040
more recently, like I said, out 
to 2042. 

1153
01:01:52,040 --> 01:01:55,160
So they've been sort of kicking 
goal after goal there. 

1154
01:01:55,160 --> 01:01:57,080
And it's, it's kind of 
remarkable. 

1155
01:01:57,080 --> 01:02:01,840
If you'd gone into the $250 
million raise that they did to 

1156
01:02:01,840 --> 01:02:06,840
get this deal done, which the La
Mancha group took half of, you 

1157
01:02:06,840 --> 01:02:09,120
would have compounded your money
at 30% per annum. 

1158
01:02:09,120 --> 01:02:11,800
And I know that's, that's a bit 
skewed by the last 6 or so 

1159
01:02:11,800 --> 01:02:15,880
months, but that is a a great, 
great return on a long time 

1160
01:02:15,880 --> 01:02:18,760
period, 10 years since that deal
was done, more than 10 years 

1161
01:02:18,760 --> 01:02:23,560
since that deal was done. 
And this is also looking at all 

1162
01:02:23,560 --> 01:02:27,240
the deals that have done. 
This is the one that management 

1163
01:02:27,240 --> 01:02:30,840
most commonly sites, you know, 
this is the, the go to deal, the

1164
01:02:30,840 --> 01:02:34,120
asset that stood head and 
shoulders above the other ones. 

1165
01:02:34,120 --> 01:02:38,600
And yeah, I mean, we're, we're 
looking at a a mine that 

1166
01:02:38,600 --> 01:02:42,880
analysts call roughly $6 billion
of net asset value within the 

1167
01:02:42,880 --> 01:02:46,240
portfolio today. 
That's that's pretty remarkable.

1168
01:02:46,600 --> 01:02:50,440
But it yeah, it goes to net 
asset value of of 6 billion 

1169
01:02:50,440 --> 01:02:54,000
today versus what would have 
been would have been US 500 back

1170
01:02:54,000 --> 01:02:58,160
then thanks to my life 
extensions, but but also thanks 

1171
01:02:58,160 --> 01:03:03,480
to thanks to gold price bull 
market that that makes that 

1172
01:03:03,480 --> 01:03:05,760
makes these deals look look 
phenomenal. 

1173
01:03:05,960 --> 01:03:08,440
You know, you can't understand 
the fact that the the gold price

1174
01:03:08,440 --> 01:03:12,320
has has been a huge tailwind for
for evolutions growth. 100% it's

1175
01:03:12,320 --> 01:03:16,120
been a phenomenal tailwind and I
want to talk a little bit about 

1176
01:03:16,120 --> 01:03:18,400
this talk that that Jake gave. 
He gave it a a bit after the 

1177
01:03:18,400 --> 01:03:20,720
time period he gave it in 2016 
at the Melbourne Mining Club. 

1178
01:03:21,800 --> 01:03:24,800
A phenomenal talk to to listen 
to on the gold price. 

1179
01:03:24,800 --> 01:03:28,920
It's really interesting because 
that speech when he, you know, 

1180
01:03:28,920 --> 01:03:30,880
the snippets he talks about the 
gold price could have been given

1181
01:03:30,880 --> 01:03:33,360
today, talking about government 
debts around the world and all 

1182
01:03:33,360 --> 01:03:35,160
these sorts of things. 
It's very interesting. 

1183
01:03:35,160 --> 01:03:37,720
So it's not as if they didn't, 
you know, I don't think they 

1184
01:03:37,720 --> 01:03:39,760
would have forecast the gold 
price being where it is today, 

1185
01:03:40,160 --> 01:03:42,680
but they knew they the, the game
they were playing. 

1186
01:03:43,840 --> 01:03:48,480
Beyond that, he spoke about the 
five attributes that make a top 

1187
01:03:48,480 --> 01:03:50,160
gold miner. 
And I want to highlight these 

1188
01:03:50,160 --> 01:03:54,160
because I thought it was such a,
such a, a stellar talk and 

1189
01:03:54,680 --> 01:03:56,800
understanding of what makes a 
good gold miner. 

1190
01:03:56,800 --> 01:04:01,160
So point #1 efficient, high 
quality assets that operate at a

1191
01:04:01,160 --> 01:04:03,880
low cost with at least one 
cornerstone asset. 

1192
01:04:04,760 --> 01:04:07,520
That cornerstone asset has the 
lowest quartile costs in a long 

1193
01:04:07,520 --> 01:04:11,840
mine life. 2, Consistently 
discovering more answers at your

1194
01:04:11,840 --> 01:04:16,080
operations. 3, financially 
disciplined with strong, 

1195
01:04:16,120 --> 01:04:20,640
uncomplicated balance sheets. 4,
having resilience based upon a 

1196
01:04:20,640 --> 01:04:23,880
strong people culture. 
And five, investing smartly. 

1197
01:04:24,440 --> 01:04:26,520
And I like this for a bunch of 
reasons. 

1198
01:04:27,160 --> 01:04:30,600
Firstly, you know, he's, he's 
clearly studied the, the great 

1199
01:04:30,600 --> 01:04:34,720
gold mining companies that came 
before them like he would, he 

1200
01:04:34,720 --> 01:04:36,680
would reference Randgold in the 
talk. 

1201
01:04:37,200 --> 01:04:39,320
He's previously mentioned 
Normandy and others. 

1202
01:04:39,320 --> 01:04:42,040
But he he understands that the, 
the history, the cyclicality of 

1203
01:04:42,040 --> 01:04:44,920
the business and, and what makes
a company which I which I really

1204
01:04:44,920 --> 01:04:46,920
kind of like. 
Would have banked plenty of them

1205
01:04:46,920 --> 01:04:49,880
at at Macquarie in, in the 
bullion days. 

1206
01:04:49,880 --> 01:04:53,120
And yeah, I do think, I don't 
think that's a reflection of 

1207
01:04:53,120 --> 01:04:54,520
Jake. 
He's like he's, he's often been 

1208
01:04:54,520 --> 01:04:58,120
a big thinker about the yeah, 
what, what creates great gold 

1209
01:04:58,120 --> 01:05:01,440
miners. 
I've, I've, I've seen that in 

1210
01:05:01,440 --> 01:05:04,520
more recent times when he would,
when he would talk about, you 

1211
01:05:04,520 --> 01:05:06,000
know, again, tying it back to 
China. 

1212
01:05:06,000 --> 01:05:08,920
And he talks about he's, he's 
talked, he's talked thoroughly 

1213
01:05:08,920 --> 01:05:11,840
about it by that Nico. 
He's talked about Sejin many 

1214
01:05:11,840 --> 01:05:14,400
times in in the modern era. 
Absolutely. 

1215
01:05:15,320 --> 01:05:19,640
So Next up to round out 2015, 
we've got a bidding war with of 

1216
01:05:19,640 --> 01:05:22,600
all companies, Zizhen over 
Phoenix Gold. 

1217
01:05:22,760 --> 01:05:25,160
They end up paying 50 million 
bucks for the land around 

1218
01:05:25,160 --> 01:05:28,080
Mangari. 
And here's where the cash flow 

1219
01:05:28,080 --> 01:05:30,600
that you mentioned before kicks 
in, $400 million in net mine 

1220
01:05:30,600 --> 01:05:34,720
cash flow in FY16. 
They rapidly start paying down 

1221
01:05:35,000 --> 01:05:38,120
the debt. 
They had roughly $600 million 

1222
01:05:38,120 --> 01:05:40,800
and pay more than half down in 
one year. 

1223
01:05:41,400 --> 01:05:46,040
And if you look at the answers, 
they're doing that rate that 

1224
01:05:46,040 --> 01:05:48,120
they're going out there, they 
produce less oz today. 

1225
01:05:48,240 --> 01:05:52,000
So goes to show that they've 
actually lived up to the, the 

1226
01:05:52,000 --> 01:05:56,080
ounces of the margin kind of 
mantra and continue to to tweak 

1227
01:05:56,080 --> 01:05:58,280
the portfolio on the way 
through. 

1228
01:05:58,280 --> 01:06:02,280
And coming into 2016, sentiment 
really shifts all of a sudden 

1229
01:06:02,280 --> 01:06:04,120
very quickly. 
Goldie's are out of the Symbian 

1230
01:06:04,120 --> 01:06:06,080
and they're, they're in Fuego 
again. 

1231
01:06:06,160 --> 01:06:09,720
People are loving them the the 
stock prices jumping up 

1232
01:06:10,240 --> 01:06:14,200
Evolution stock price more than 
double s in in a year and 

1233
01:06:14,640 --> 01:06:15,880
they're they're well on their 
way. 

1234
01:06:15,880 --> 01:06:20,160
And that brings us to August of 
2016 where they divest their 

1235
01:06:20,160 --> 01:06:22,880
first asset for jingo that had 
it in the portfolio. 

1236
01:06:22,880 --> 01:06:27,920
We started the the story just 
about there for 5 odd years and 

1237
01:06:27,920 --> 01:06:31,320
it's time to offload the asset. 
They get 42,000,000 bucks for 

1238
01:06:31,320 --> 01:06:34,080
this one but it's. 
They sell it to Ninja. 

1239
01:06:34,320 --> 01:06:36,480
They sell it to Ninja. 
Yeah, I think it's really 

1240
01:06:36,480 --> 01:06:38,920
important to show because 
they've spoken about it for this

1241
01:06:39,840 --> 01:06:42,880
at this point in time for, for 
over 5 years, you improve the 

1242
01:06:42,880 --> 01:06:46,520
portfolio quality by both 
divesting as well as investing. 

1243
01:06:46,680 --> 01:06:49,320
And now they're finally walking 
the walk on that one. 

1244
01:06:49,320 --> 01:06:51,560
And they've divested their, 
their first asset. 

1245
01:06:53,360 --> 01:06:58,520
And then the Ernest Henry deal. 
This is the deal that made me 

1246
01:06:58,520 --> 01:07:01,000
want to do this episode. 
This is an unbelievable deal. 

1247
01:07:01,000 --> 01:07:03,280
It's interesting for so many 
reasons. 

1248
01:07:03,280 --> 01:07:06,160
And I'm I'm excited to to RIP 
into it just one week after the 

1249
01:07:06,160 --> 01:07:11,600
sale of Pijingo in between which
the full year results came out 

1250
01:07:11,600 --> 01:07:12,760
and there was an interesting 
sort of. 

1251
01:07:14,240 --> 01:07:16,520
Who's full year results, 
evolutions, evolutions, OK. 

1252
01:07:16,920 --> 01:07:20,520
There was an interesting 
interaction played through the 

1253
01:07:20,520 --> 01:07:25,240
media here where Jake said we 
are continuing to look at deals,

1254
01:07:25,240 --> 01:07:29,080
We are continually looking at 
deals and one of the big 

1255
01:07:29,080 --> 01:07:32,080
shareholders, Ellen Gray just 
said calm down, focus on your 

1256
01:07:32,080 --> 01:07:35,720
portfolio, you know, but they 
didn't listen to that. 

1257
01:07:36,200 --> 01:07:38,400
They were. 
They were, yeah, they were 

1258
01:07:38,400 --> 01:07:43,040
aggressive at the right times. 
$880 million purchase of an 

1259
01:07:43,040 --> 01:07:44,720
economic interest in Ernest 
Henry. 

1260
01:07:45,920 --> 01:07:49,440
This is economic interest. 
Economic interest. 

1261
01:07:49,440 --> 01:07:52,640
This is a fast. 
This is just like anyone that's 

1262
01:07:52,640 --> 01:07:56,800
ever looked at A at a an all in 
sustaining cost or cost curve 

1263
01:07:56,800 --> 01:07:59,760
chart for Australian gold 
producers would just be 

1264
01:07:59,760 --> 01:08:02,560
scratching their head. 
Why is there this big block at 

1265
01:08:02,560 --> 01:08:05,160
the beginning that goes steeply 
negative? 

1266
01:08:05,520 --> 01:08:07,520
And it's always earnest Henry 
and you're like, what the like 

1267
01:08:07,520 --> 01:08:09,840
something doesn't produce at a 
negative all in sustaining cost 

1268
01:08:09,840 --> 01:08:11,880
doesn't make any sense. 
Yeah, maybe we'll clear that one

1269
01:08:11,880 --> 01:08:15,760
up right now for for anyone 
that's gone this far that 

1270
01:08:15,760 --> 01:08:17,479
doesn't look at mining companies
like we do. 

1271
01:08:18,359 --> 01:08:23,319
When when you look at the the 
revenues of a mine that produces

1272
01:08:23,319 --> 01:08:26,720
multiple commodities, you take 
the the byproducts, the the 

1273
01:08:26,720 --> 01:08:31,080
lesser commodity if you like and
you subtract it from the costs. 

1274
01:08:31,319 --> 01:08:35,479
So the all in sustaining costs 
can look remarkable. 

1275
01:08:35,800 --> 01:08:39,960
And evolution understood this, 
no accident here. 

1276
01:08:40,560 --> 01:08:44,160
They understood what the 
marketing of gold miner looks 

1277
01:08:44,160 --> 01:08:47,520
like. 
They understood what generalist 

1278
01:08:47,520 --> 01:08:50,080
investors will look at when they
come into the space, you know, 

1279
01:08:51,040 --> 01:08:54,520
tier one assets, you know, in 
Australia, very low cost, all 

1280
01:08:54,520 --> 01:08:56,040
these things. 
They got it. 

1281
01:08:56,040 --> 01:08:59,720
And Ernest Henry just checked a 
lot of those boxes. 

1282
01:08:59,720 --> 01:09:02,960
But I had to pay $900 million if
you take into account the 

1283
01:09:02,960 --> 01:09:05,000
transaction costs. 
And obviously they're going to 

1284
01:09:05,000 --> 01:09:08,120
pay 30% of the future costs for 
this economic interest. 

1285
01:09:08,120 --> 01:09:12,439
They would be getting all of the
gold produced here and 30% of 

1286
01:09:12,800 --> 01:09:16,720
the copper and silver within 
that life of mine area, which 

1287
01:09:16,720 --> 01:09:21,080
was to a sort of certain RL. 
They would do a roughly $400 

1288
01:09:21,080 --> 01:09:24,560
million entitlement offer at 
over 2 bucks. 

1289
01:09:24,560 --> 01:09:28,479
So like I said, more than a 
doubling of the share price from

1290
01:09:28,479 --> 01:09:31,840
when they did the cow raise. 
Partially debt funding and 

1291
01:09:31,960 --> 01:09:34,920
equity then. 
Half a billion dollar term loan 

1292
01:09:35,080 --> 01:09:39,000
to get this one done as well and
a pre emptive right, Another pre

1293
01:09:39,000 --> 01:09:40,720
emptive right. 
They get the pre emptive right 

1294
01:09:40,920 --> 01:09:42,920
in this case. 
Nice, nice. 

1295
01:09:43,000 --> 01:09:46,880
The, The vendor made Glencore. 
Now, why is this? 

1296
01:09:47,000 --> 01:09:49,080
Why is this like an important 
and interesting point? 

1297
01:09:49,080 --> 01:09:52,520
Because Glencore's got a 
reputation for always having the

1298
01:09:52,520 --> 01:09:55,760
hooks in deals that they do. 
They kind of, you always have 

1299
01:09:55,920 --> 01:09:58,760
have one over or they, they, 
they sneak something in there. 

1300
01:09:58,760 --> 01:10:02,120
But you know, this is this is a 
tremendous deal because 

1301
01:10:02,960 --> 01:10:06,240
Evolution got the last laugh and
they've they've done, they've 

1302
01:10:06,240 --> 01:10:09,480
done a great deal and they did 
that deal with Glencore. 

1303
01:10:10,200 --> 01:10:14,360
Totally. 
So I mean, why, why do Evolution

1304
01:10:14,560 --> 01:10:16,360
want this? 
Obviously there's the marketing 

1305
01:10:16,680 --> 01:10:21,200
that we've we've spoken about, 
but Ernest Henry is also a 

1306
01:10:21,200 --> 01:10:25,880
decent scale long life copper 
gold project with plenty of 

1307
01:10:25,880 --> 01:10:28,640
growth potential. 
It's had plenty of capital 

1308
01:10:28,640 --> 01:10:30,240
invested in it. 
So it's not going to be super 

1309
01:10:30,240 --> 01:10:34,280
capital hungry. 
They also had Mark Lemegia, the,

1310
01:10:34,280 --> 01:10:37,720
the CEO at Evolution who knew 
the asset inside out. 

1311
01:10:37,720 --> 01:10:42,200
He'd he'd worked there and they 
knew with that pre emptive right

1312
01:10:42,200 --> 01:10:44,960
they'd be in the box seat to to 
collect it down the track. 

1313
01:10:45,800 --> 01:10:51,240
And they had a, a forced seller.
They knew, I mean Glencore had 

1314
01:10:51,240 --> 01:10:55,320
gone and said we are 
deleveraging, we are in a lot of

1315
01:10:55,320 --> 01:10:56,480
strife. 
Everyone knew it. 

1316
01:10:56,920 --> 01:11:01,960
And we are not wanting to sell 
copper units of production, but 

1317
01:11:02,280 --> 01:11:05,000
we want cash in the door. 
Hence, if you could come to them

1318
01:11:05,000 --> 01:11:08,800
with a a creative solution, 
they'd be willing to listen. 

1319
01:11:08,880 --> 01:11:11,520
They were, they were actively 
running sale processes in 

1320
01:11:11,520 --> 01:11:12,840
various parts of their 
portfolio. 

1321
01:11:12,920 --> 01:11:14,640
I mean, they're, they weren't a 
real pickle. 

1322
01:11:14,640 --> 01:11:16,840
People were writing articles 
about the demise of Clancor and 

1323
01:11:16,840 --> 01:11:18,560
the likes. 
There was a lot of debt there 

1324
01:11:18,560 --> 01:11:22,520
and they had to they had to 
deliver imminently ahead of 

1325
01:11:22,560 --> 01:11:24,920
their own reporting period 
dates. 

1326
01:11:25,160 --> 01:11:27,640
Yeah. 
So, so a quick sort of synopsis 

1327
01:11:27,640 --> 01:11:32,240
of the the sales process is that
in late 2015, they kick off a 

1328
01:11:32,240 --> 01:11:39,080
sales process for CSA in Cobar. 
They also start having a bit of 

1329
01:11:39,080 --> 01:11:43,080
interactions with evolution on, 
on Ernest Henry and they toy 

1330
01:11:43,080 --> 01:11:46,560
with the idea. 
But then it takes until about 

1331
01:11:46,560 --> 01:11:50,200
April until things start to look
a bit more serious because 

1332
01:11:50,200 --> 01:11:52,840
evolution is still chewing down 
cow at that point in time. 

1333
01:11:53,560 --> 01:11:56,720
They are still chewing down the,
the Mangari, you know, assets 

1334
01:11:56,760 --> 01:11:59,440
there and they've done that 
Phoenix takeover. 

1335
01:11:59,520 --> 01:12:04,000
But the bankers at RBC, they 
pitch this deal again in March, 

1336
01:12:04,000 --> 01:12:06,520
April 2016, this time as a joint
venture. 

1337
01:12:07,240 --> 01:12:10,000
And come April, they sort of 
formulate a plan. 

1338
01:12:10,720 --> 01:12:13,440
End of that month, they present 
this plan to to Glencore. 

1339
01:12:13,440 --> 01:12:15,680
And there's a bit of back and 
forth for some time, but it 

1340
01:12:15,680 --> 01:12:19,880
takes until July and August for 
things to really start to heat 

1341
01:12:19,920 --> 01:12:23,400
up because that CSA sales 
process has crashed out. 

1342
01:12:24,400 --> 01:12:28,600
Glencore needs the cash. 
And by this point, you know, 

1343
01:12:28,600 --> 01:12:34,440
late July Evo's table a take it 
or leave it type of offer. 

1344
01:12:34,640 --> 01:12:37,800
And they have met, they've met 
with the copper king Telus, Mr. 

1345
01:12:37,800 --> 01:12:41,160
Kiddies, the, you know, one of 
the, the billionaires that came 

1346
01:12:41,160 --> 01:12:46,200
out of, out of Glencore, very 
famous copper trader and he's 

1347
01:12:46,200 --> 01:12:51,160
sort of running copper there. 
And they have a, an agreement in

1348
01:12:51,160 --> 01:12:55,920
principle, essentially $880 
million is acceptable with a 

1349
01:12:55,920 --> 01:12:58,240
bunch of conditions. 
But we need this deal done by 

1350
01:12:58,320 --> 01:13:01,800
August 24, which is an 
outrageously quick turn around 

1351
01:13:01,800 --> 01:13:04,120
time for a deal of this kind of 
complexity. 

1352
01:13:04,120 --> 01:13:06,840
I mean, they need to, amongst a 
whole bunch of other things, 

1353
01:13:06,840 --> 01:13:10,000
locking bank financing. 
They need to get 5 banks to 

1354
01:13:10,000 --> 01:13:13,840
commit $100 million each for a 
deal they don't even have 

1355
01:13:13,840 --> 01:13:15,200
recourse over. 
They're not even going to own 

1356
01:13:15,200 --> 01:13:17,280
the asset that. 
Is an economic interest. 

1357
01:13:17,400 --> 01:13:20,440
An economic interest, yeah. 
And on the evolution side, 

1358
01:13:20,440 --> 01:13:22,360
they're also selling Pijingo at 
this point in time, they're 

1359
01:13:22,360 --> 01:13:24,680
doing their full year numbers as
well. 

1360
01:13:24,680 --> 01:13:28,880
So it's a busy, busy period 
Glencore to hate the stress on 

1361
01:13:29,240 --> 01:13:32,400
have the sale process for 
lawless bias fall through in 

1362
01:13:32,400 --> 01:13:35,240
early August as well. 
So they're becoming increasingly

1363
01:13:35,640 --> 01:13:39,680
needy and the deal starts to 
sort of happen. 

1364
01:13:39,680 --> 01:13:43,680
A lot of these, these processes 
in getting a deal done, which 

1365
01:13:43,680 --> 01:13:47,000
are meant to happen in a series,
have to happen in parallel to 

1366
01:13:47,000 --> 01:13:49,680
get a deal done. 
To, to sort of emphasize the 

1367
01:13:49,680 --> 01:13:55,800
point, Glencore's share price is
down nearly 70% from their IPO 5

1368
01:13:55,800 --> 01:13:58,600
odd years earlier. 
So they start caving on these 

1369
01:13:58,600 --> 01:14:01,240
conditions, like you say, that 
they're so famous for, for 

1370
01:14:01,240 --> 01:14:04,320
hooking into a deal. 
And lo and behold, on August 

1371
01:14:04,320 --> 01:14:07,760
24th, the deal is announced. 
They went from, you know, within

1372
01:14:07,760 --> 01:14:10,520
about four months from just a 
concept to having a final 

1373
01:14:10,520 --> 01:14:14,360
bidding deal with a company that
many in the industry would call 

1374
01:14:14,360 --> 01:14:17,000
the best negotiators there are 
just remarkable. 

1375
01:14:18,080 --> 01:14:20,440
I, I think, I think it's, it's 
wicked. 

1376
01:14:20,440 --> 01:14:23,920
I think there's like there's a 
lot of reflections to be had on 

1377
01:14:23,920 --> 01:14:26,680
the actual, you know, deal 
structure and how it got to 

1378
01:14:26,680 --> 01:14:31,600
where it did and what that 
actually like meant for the look

1379
01:14:31,600 --> 01:14:33,960
of evolution. 
Right, because because Evo's 

1380
01:14:34,160 --> 01:14:37,360
Evo's yeah, toy the idea of all,
well, you don't want to part 

1381
01:14:37,360 --> 01:14:39,720
with the, the copper. 
Can we get the gold? 

1382
01:14:39,720 --> 01:14:43,520
And so then some back and forth 
he's had with toying with with 

1383
01:14:43,520 --> 01:14:46,000
the gold interest. 
But what what actually ends up, 

1384
01:14:46,080 --> 01:14:48,040
you know, you have to you have 
to meet both parties interests. 

1385
01:14:48,040 --> 01:14:52,880
So it was it was clearly 
critical for Evo's to get they 

1386
01:14:52,880 --> 01:14:56,120
still got 30% of the the copper 
interest as well, right in a in 

1387
01:14:56,120 --> 01:15:00,280
a certain designated area that 
copper critically important to 

1388
01:15:00,280 --> 01:15:01,760
the all in sustaining cost 
dynamic. 

1389
01:15:01,840 --> 01:15:05,760
You know, you need to have a by 
product in order to offset your,

1390
01:15:06,080 --> 01:15:09,240
your like to, to be netted off 
of the, the, the, the gold price

1391
01:15:09,240 --> 01:15:12,080
so that you can actually have a,
a negative or in sustaining 

1392
01:15:12,080 --> 01:15:13,000
costs. 
I don't think they thought it 

1393
01:15:13,000 --> 01:15:14,760
was going to be negative. 
I think they, they 

1394
01:15:14,760 --> 01:15:17,480
underestimated how much the 
copper would contribute here. 

1395
01:15:17,480 --> 01:15:19,760
So that was a positive surprise 
that actually became a negative 

1396
01:15:19,760 --> 01:15:24,800
number, which seems absurd. 
But then on the yeah, on, on the

1397
01:15:24,800 --> 01:15:29,040
other hand, the way it was, the 
way it was accounted as well. 

1398
01:15:29,040 --> 01:15:31,440
So they, they structured the 
deal as an economic interest. 

1399
01:15:31,440 --> 01:15:35,200
It's equity accounted from day 
one now that that further has 

1400
01:15:35,200 --> 01:15:38,160
implications for your all in 
sustaining cost as well. 

1401
01:15:38,200 --> 01:15:41,720
It it wasn't a coincidence the 
way that that this deal was 

1402
01:15:41,720 --> 01:15:46,320
structured, it gave it gave 
evolution a completely unfair 

1403
01:15:46,320 --> 01:15:48,560
advantage in marketing 
themselves as a low cost 

1404
01:15:48,560 --> 01:15:52,600
producer. 
Albeit it was a facade, but. 

1405
01:15:52,840 --> 01:15:57,240
It totally the I mean to to go 
on with the complexities you're 

1406
01:15:57,240 --> 01:15:59,880
talking about, you're going to 
share the numbers of a Glencore 

1407
01:15:59,880 --> 01:16:02,200
mine with the the Ato? 
Hell no you're not. 

1408
01:16:02,440 --> 01:16:06,480
Like all that negotiation needs 
to take place in such a confined

1409
01:16:06,840 --> 01:16:08,200
period of time. 
It was. 

1410
01:16:08,200 --> 01:16:10,400
Conditional on Ferb, it was 
conditional on there's, yeah, a 

1411
01:16:10,400 --> 01:16:12,840
whole bunch of stuff going on. 
Here, Yeah, they needed to raise

1412
01:16:13,320 --> 01:16:15,280
a lot of money to get this deal 
done. 

1413
01:16:15,560 --> 01:16:19,440
And yeah, just just remarkable. 
What's your competitive 

1414
01:16:19,440 --> 01:16:20,840
advantage? 
Like we mentioned before, 

1415
01:16:21,000 --> 01:16:23,840
handling deal complexity check 
and check they've they've done 

1416
01:16:23,840 --> 01:16:27,560
that phenomenally here. 
And this was also interesting 

1417
01:16:27,560 --> 01:16:29,720
because a lot of the gold assets
in Australia had started to 

1418
01:16:29,720 --> 01:16:32,360
trade, you know, at higher 
values. 

1419
01:16:32,360 --> 01:16:37,240
So finding a seller who the 
timing worked for, they had to 

1420
01:16:37,240 --> 01:16:39,040
be creative. 
Like we just said, super, super 

1421
01:16:39,040 --> 01:16:43,840
creative in in doing a deal here
to go back to your your 

1422
01:16:43,840 --> 01:16:46,640
marketing point all in 
sustaining cost by the next 

1423
01:16:46,640 --> 01:16:50,320
year. 
Evolution call themselves the 

1424
01:16:50,320 --> 01:16:55,440
lowest cost global mid and major
mining company, gold mining 

1425
01:16:55,440 --> 01:16:59,320
company the lowest cost and 
Ernest Henry is a great 

1426
01:16:59,320 --> 01:17:01,080
contributor to that that low 
cost. 

1427
01:17:01,800 --> 01:17:05,800
Absolutely helps that you've 
got, you've got 100% of the gold

1428
01:17:05,800 --> 01:17:09,840
and only 30% of the copper. 
Yeah. 

1429
01:17:09,920 --> 01:17:12,360
Wow. 
What a what what what a 

1430
01:17:12,360 --> 01:17:15,400
remarkable asset to to call a a 
gold mine. 

1431
01:17:15,920 --> 01:17:18,280
I could, I could talk about that
deal for hours, but we'll, we'll

1432
01:17:18,280 --> 01:17:21,760
move on mate to fly over the 
next little period. 

1433
01:17:22,160 --> 01:17:24,600
Again, they just hammer down the
debt payments. 

1434
01:17:24,600 --> 01:17:26,720
They start with about 600 
million and they pay off more 

1435
01:17:26,720 --> 01:17:30,480
than half again in the space of 
the one year sort of following 

1436
01:17:30,480 --> 01:17:33,600
this deal, call it 10 months 
with Ernest Henry integrated. 

1437
01:17:34,360 --> 01:17:37,800
They then sell Edna May. 
So another deal from the the 

1438
01:17:37,800 --> 01:17:41,720
foundational merger that's 
coming late in, in 2017 that 

1439
01:17:41,720 --> 01:17:44,960
sort of received several offers.
No surprises here. 

1440
01:17:44,960 --> 01:17:49,960
Edna May was the the lowest 
quality asset in the portfolio. 

1441
01:17:49,960 --> 01:17:52,360
Just look at this chart here. 
You can see the the margins 

1442
01:17:52,360 --> 01:17:55,440
really struggling there. 
If you're, if you're listening 

1443
01:17:55,440 --> 01:17:58,640
into the the podcast, the EBITDA
margins across most of the 

1444
01:17:58,640 --> 01:18:01,440
assets around 50% and Edna May 
is below 20%. 

1445
01:18:02,080 --> 01:18:05,720
And as we heard from the team, 
we hated Edna May, so good to 

1446
01:18:05,720 --> 01:18:08,080
get that one off. 
They sell it to Remelius. 

1447
01:18:08,160 --> 01:18:11,000
They sell it to Remelius, paying
up to 90 million, 40 million in 

1448
01:18:11,000 --> 01:18:14,840
cash upfront. 
The other 50 is contingent and 

1449
01:18:15,520 --> 01:18:18,480
you know perhaps marginally 
below what consensus thought the

1450
01:18:18,480 --> 01:18:21,760
asset was, was worth. 
But these are relatively 

1451
01:18:21,760 --> 01:18:25,560
insignificant sums here and good
to to get that one off because 

1452
01:18:26,000 --> 01:18:30,960
the portfolio improves again, 
the mine life goes up the the 

1453
01:18:30,960 --> 01:18:33,360
average all in sustaining cost 
improves because it was a higher

1454
01:18:33,360 --> 01:18:37,600
cost asset. 
And they are making their way on

1455
01:18:37,600 --> 01:18:40,600
those stepping stones to being a
company with a portfolio of 

1456
01:18:40,600 --> 01:18:42,960
assets that are much higher 
quality than they were just a 

1457
01:18:42,960 --> 01:18:45,200
few short years before an. 
Interesting. 

1458
01:18:45,200 --> 01:18:47,840
Edna May served as a great 
stepping stone for Emilius too. 

1459
01:18:48,640 --> 01:18:50,880
Now we've got a period where 
they're scratching their heads a

1460
01:18:50,880 --> 01:18:53,240
bit because there's not an 
abundance of opportunities out 

1461
01:18:53,240 --> 01:18:54,400
there. 
You don't have 4 sellers 

1462
01:18:54,400 --> 01:18:56,440
anymore. 
The gold price is starting to 

1463
01:18:56,440 --> 01:18:59,200
tick up, but operationally the 
company is just checking the 

1464
01:18:59,200 --> 01:19:03,360
boxes. 7th year in a row they 
achieve production guidance and 

1465
01:19:03,360 --> 01:19:09,240
cost guidance in in FY18 and by 
20-19 about three years after 

1466
01:19:09,240 --> 01:19:11,200
the Ernest Henry deal, they're 
on the prowl again. 

1467
01:19:11,280 --> 01:19:16,200
Balance sheet very healthy. 
They are a $4.5 billion market 

1468
01:19:16,200 --> 01:19:21,000
cap company and growing. 
And just a quick one, in Feb of 

1469
01:19:21,000 --> 01:19:23,560
2019 actually they they spin up 
a bit of an unusual one. 

1470
01:19:23,560 --> 01:19:25,520
They take a 20% stake in 
Tribune. 

1471
01:19:25,520 --> 01:19:28,760
Now unfortunately, we don't talk
about this one too much more as 

1472
01:19:28,760 --> 01:19:32,000
much as I'd love to, but Tribune
of course with the JV partners 

1473
01:19:32,000 --> 01:19:36,320
with Northern Star in the EKJV, 
this one sort of goes quiet for 

1474
01:19:36,320 --> 01:19:37,680
a while because they weren't 
able to get too. 

1475
01:19:37,680 --> 01:19:40,840
Far away, yeah, I mean it would 
it would it would later become 

1476
01:19:41,160 --> 01:19:43,680
very relevant again. 
But clearly the intentions are 

1477
01:19:43,680 --> 01:19:47,360
signalled that of course it 
makes sense for the for the OR 

1478
01:19:47,360 --> 01:19:51,160
at East Kendana to feed the 
Magari Mill as opposed to what 

1479
01:19:51,320 --> 01:19:54,320
Northern Star were having to 
which is which was whole it 

1480
01:19:54,560 --> 01:19:56,840
much, much further it. 
Makes it makes too much sense 

1481
01:19:56,840 --> 01:20:00,040
but sometimes take things take a
little while to to work out. 

1482
01:20:00,320 --> 01:20:01,840
But we got a juicy deal before 
that, mate. 

1483
01:20:02,360 --> 01:20:05,280
Before that, sorry mate. 
Why did Northern Star not do the

1484
01:20:05,280 --> 01:20:07,600
deal with the Lamancho if the 
synergies are so obvious? 

1485
01:20:08,040 --> 01:20:09,440
I've asked that to so many 
people. 

1486
01:20:10,480 --> 01:20:13,600
Nobody has told me the answer. 
Yeah, maybe we should just give 

1487
01:20:13,600 --> 01:20:18,000
Northern Star a call. 
Yeah, it it just seems so 

1488
01:20:18,000 --> 01:20:22,160
obvious. 
And I mean, it would in in 

1489
01:20:22,160 --> 01:20:26,440
another incarnation happen down 
the track here, but not crystal 

1490
01:20:26,440 --> 01:20:28,200
clear to me why why that deal 
didn't happen. 

1491
01:20:28,280 --> 01:20:30,920
They preoccupied themselves. 
Yeah, I'm sure. 

1492
01:20:30,920 --> 01:20:34,560
I'm sure like Lamont would have 
approached Norman Starr having 

1493
01:20:34,560 --> 01:20:37,680
said that, like, there was a 
view out there that that Evo's 

1494
01:20:37,680 --> 01:20:40,480
overpaid for. 
Like there was there was a view 

1495
01:20:40,480 --> 01:20:42,760
that they paid too much. 
So maybe, maybe, maybe there's 

1496
01:20:42,760 --> 01:20:43,480
no. 
Discrepancy. 

1497
01:20:43,680 --> 01:20:47,280
Yeah, the price is very 
different to what Norman Starr 

1498
01:20:47,280 --> 01:20:51,360
had done their deals for. 
There's a bit of a bit of a 

1499
01:20:51,360 --> 01:20:56,800
chapter change for for Evos in 
the in the next the next deal 

1500
01:20:56,840 --> 01:21:03,680
mate, because they go overseas. 
They go to Canada, so November 

1501
01:21:03,680 --> 01:21:06,880
2019 they do a deal to buy Red 
Lake. 

1502
01:21:06,880 --> 01:21:11,280
Now this is very different. 
So it ultimately becomes a 

1503
01:21:11,280 --> 01:21:15,480
expensive lesson that that many 
Aussie Goldies learnt the hard 

1504
01:21:15,480 --> 01:21:19,320
way in. 
In Canada, what they agree is in

1505
01:21:19,320 --> 01:21:25,400
Aussie dollar terms, a $570 
million deal upfront, including 

1506
01:21:25,400 --> 01:21:28,880
the fees to Newmont Gold Corp, 
plus another 100 million US 

1507
01:21:28,880 --> 01:21:32,400
contingent. 
This is 100% debt funded. 

1508
01:21:32,520 --> 01:21:35,880
So they're buying Red Lake with 
a healthy balance sheet. 

1509
01:21:36,160 --> 01:21:39,160
So they take on the debt to do 
this like they've kind of done 

1510
01:21:39,160 --> 01:21:42,760
previously, No equity raised. 
This time though, $600 million 

1511
01:21:42,760 --> 01:21:47,960
loan comes on board and they 
label this as a, you know, an 

1512
01:21:47,960 --> 01:21:50,360
asset with significant turn 
around potential. 

1513
01:21:51,480 --> 01:21:55,280
Red Lake at the time, you know, 
very historic asset mining since

1514
01:21:55,280 --> 01:21:59,440
the 40s over 25,000,000 oz had 
been produced in the area. 

1515
01:22:00,320 --> 01:22:02,480
The reserves were a bit below 
3,000,000 oz. 

1516
01:22:03,040 --> 01:22:07,160
Within a year that goes to 
11,000,000 oz processing 

1517
01:22:07,160 --> 01:22:10,600
capacity a bit over 1,000,000 
tons per annum there across 2 

1518
01:22:10,600 --> 01:22:14,360
plants hadn't been operating 
anywhere near that for years and

1519
01:22:14,360 --> 01:22:17,320
even evolutions plans went to 
get it to name play it for you 

1520
01:22:18,120 --> 01:22:21,240
know, for the foreseeable. 
If you look at the kind of maps 

1521
01:22:21,240 --> 01:22:23,760
here, it's you know, there's a 
bunch of complexes. 

1522
01:22:23,760 --> 01:22:26,400
This is a you know, gold 
everywhere type of thing. 

1523
01:22:26,760 --> 01:22:29,920
There's an like an 
interconnected underground tram,

1524
01:22:30,280 --> 01:22:32,480
very different to kind of what 
we mine here in Australia. 

1525
01:22:32,560 --> 01:22:37,040
There's development everywhere. 
It's big, it's complicated, it's

1526
01:22:37,040 --> 01:22:38,520
historic. 
It is. 

1527
01:22:38,520 --> 01:22:41,760
And it's an asset that is not 
done well because as Evo's put 

1528
01:22:41,760 --> 01:22:46,880
it, the 2016 to 2019 has been a 
period characterized by 

1529
01:22:46,880 --> 01:22:51,560
underinvestment, underinvestment
in development, in exploration. 

1530
01:22:51,560 --> 01:22:53,360
And that's going to need capital
to fix it. 

1531
01:22:53,760 --> 01:22:56,960
But when it comes good, maybe 
it'll get to its glory days of 

1532
01:22:56,960 --> 01:22:59,560
500,000 oz per annum. 
They weren't saying that at the 

1533
01:22:59,560 --> 01:23:03,120
time, but they were very 
confident they could get it over

1534
01:23:03,120 --> 01:23:08,280
there. 200,000 oz per annum 
transition target and they also 

1535
01:23:08,280 --> 01:23:11,760
called it a beachhead in Canada,
so there was an inkling to do a 

1536
01:23:11,760 --> 01:23:15,040
bit more. 
The, I mean, the asset had all 

1537
01:23:15,040 --> 01:23:18,960
of the hallmarks of, of a, of a,
of a good deal at the time, 

1538
01:23:18,960 --> 01:23:21,680
right? 
It's, it's, it's being sold by a

1539
01:23:21,680 --> 01:23:23,480
major. 
It's, you know, an unloved under

1540
01:23:23,840 --> 01:23:26,240
undercapitalized asset in the 
portfolio of a major. 

1541
01:23:27,160 --> 01:23:29,920
It's got big, it's got, it's got
scale, it's got long life, 

1542
01:23:30,000 --> 01:23:31,840
etcetera, etcetera. 
So you could you could have 

1543
01:23:31,840 --> 01:23:33,880
wrapped a phenomenal story 
around this and the market 

1544
01:23:33,880 --> 01:23:37,640
believed the story that 
Evolution told at the time that 

1545
01:23:37,720 --> 01:23:40,400
it announced the acquisition. 
Yeah, the share price went from 

1546
01:23:40,400 --> 01:23:43,520
under 4 bucks at the time of the
deal, at the time the deal was 

1547
01:23:43,520 --> 01:23:47,800
announced to over $6.50 in about
half a year while the deal is 

1548
01:23:47,800 --> 01:23:50,600
getting finalized and that's 
through the start of COVID, 

1549
01:23:50,960 --> 01:23:52,800
remember? 
And that's a tumultuous period 

1550
01:23:52,800 --> 01:23:55,160
for for the gold price and for 
mining companies trying to 

1551
01:23:55,160 --> 01:23:57,360
operate in the other side of the
planet, no less. 

1552
01:23:57,360 --> 01:24:00,080
But we'll jump a bit forward 
before we analyse this deal 

1553
01:24:00,080 --> 01:24:03,000
because they do a bolt on deal 
in March 2021. 

1554
01:24:03,240 --> 01:24:07,400
Now they buy Battle N not quite 
18 months after the the initial 

1555
01:24:07,400 --> 01:24:11,880
deal was announced. 
Canadian $343,000,000. 

1556
01:24:12,040 --> 01:24:15,280
So Evolution is a much bigger 
company at this point in time, 

1557
01:24:15,280 --> 01:24:17,840
but it's still a fair bit of 
cash to to chalk up. 

1558
01:24:18,720 --> 01:24:20,840
Now Battle N. 
They were the underbidder on on 

1559
01:24:20,840 --> 01:24:23,800
Red Lake actually, so it made 
sense to consolidate that area. 

1560
01:24:24,480 --> 01:24:27,240
Their flagship asset is the 
Bateman project. 

1561
01:24:27,680 --> 01:24:31,600
So that's got reserves of about 
600,000 oz and plenty of 

1562
01:24:31,600 --> 01:24:36,280
infrastructure there, a new 
mill, plenty of sunk capital had

1563
01:24:36,280 --> 01:24:39,600
gone into to that one as well. 
So it makes a whole bunch of 

1564
01:24:39,600 --> 01:24:44,120
sense to combine these assets as
you can see on the map and EVO 

1565
01:24:44,120 --> 01:24:47,960
say combined we're going to hit 
350,000 oz per annum. 

1566
01:24:48,520 --> 01:24:52,880
So they're, they're still 
telling the, the market in in 

1567
01:24:52,880 --> 01:24:57,120
2021 that that this mine is, is 
going to be capable of of 

1568
01:24:57,120 --> 01:25:01,120
substantial production. 
But what we what we what we know

1569
01:25:01,120 --> 01:25:05,360
and reflect on today is that 
yeah, but I don't know what 

1570
01:25:05,360 --> 01:25:07,480
they're trying. 
They're trying, you know, maybe 

1571
01:25:07,480 --> 01:25:12,560
backfill, backfill the promises 
already and and and red like did

1572
01:25:12,560 --> 01:25:15,840
not live up to the to the to the
story that was initially told 

1573
01:25:15,840 --> 01:25:16,880
to. 
No, it didn't. 

1574
01:25:16,880 --> 01:25:19,520
And and it wasn't for the lack 
of capital being spent. 

1575
01:25:19,520 --> 01:25:23,040
I mean they outlined $500 
million major capital plan 

1576
01:25:23,920 --> 01:25:28,160
pretty early on. 
But one of the big problems that

1577
01:25:28,160 --> 01:25:33,000
it can comes down to was was a 
cultural type change there, you 

1578
01:25:33,000 --> 01:25:36,240
know, preconceived thoughts on 
the kind of change they could 

1579
01:25:36,240 --> 01:25:41,080
instigate at A at a personnel 
level just didn't match up with 

1580
01:25:41,080 --> 01:25:43,840
reality. 
Analysts around the battle time 

1581
01:25:43,880 --> 01:25:48,160
are still forecasting 400,000 
ounces of production every year 

1582
01:25:48,160 --> 01:25:51,920
for over a decade and at a, you 
know, at A, at a pretty 

1583
01:25:51,920 --> 01:25:54,560
compelling order and sustaining 
cost as well, so. 

1584
01:25:54,920 --> 01:25:57,200
This is another one. 
If I just just tell the analysts

1585
01:25:57,200 --> 01:26:00,520
what the value is, because I 
mean you you're looking at EVO 

1586
01:26:00,520 --> 01:26:02,920
share price and you've got to 
have a target price that's above

1587
01:26:02,920 --> 01:26:04,560
where the share price is. 
So you've probably got to have 

1588
01:26:04,560 --> 01:26:07,760
some pretty rosy assumptions 
about about this assay. 

1589
01:26:07,920 --> 01:26:10,560
You do, for those wondering 
right now, what guidance for the

1590
01:26:10,560 --> 01:26:12,000
next year is from this point in 
time. 

1591
01:26:12,000 --> 01:26:15,560
So FY20 6, it's 140,000 oz. 
So it's a long way off. 

1592
01:26:16,280 --> 01:26:20,160
Of course, margins is what 
really matters and the asset did

1593
01:26:20,160 --> 01:26:24,520
$74,000,000 in in cash flow in 
the financial year just gone 

1594
01:26:24,520 --> 01:26:25,680
that. 
Might have been the first 

1595
01:26:25,720 --> 01:26:28,360
financial year where it. 
That was a record the year 

1596
01:26:28,360 --> 01:26:32,280
before it lost $115 million. 
I mean, with, with investment, 

1597
01:26:32,320 --> 01:26:36,720
you know, going into the ground,
but Evos, I love some of the 

1598
01:26:36,720 --> 01:26:39,160
charts that Evos have shown 
throughout the years have shown 

1599
01:26:39,160 --> 01:26:42,040
some great ones from an 
investor's kind of perspective. 

1600
01:26:42,040 --> 01:26:45,120
And they, they would show this 
fantastic one, which they've 

1601
01:26:45,120 --> 01:26:48,440
kind of brought back in various 
incarnations where they show how

1602
01:26:48,440 --> 01:26:51,520
much an asset has has paid back 
versus the acquisition cost and 

1603
01:26:51,520 --> 01:26:53,560
the amount of money that's sunk 
into it. 

1604
01:26:54,600 --> 01:27:00,520
Quite clearly the, the ROI on, 
on Red Lake is nowhere near what

1605
01:27:00,520 --> 01:27:04,560
it has been on, on other assets.
But as is the case with all of 

1606
01:27:04,560 --> 01:27:08,040
these things, a a flying gold 
price does does help a lot 

1607
01:27:09,360 --> 01:27:10,960
there. 
There was, there was immediate 

1608
01:27:10,960 --> 01:27:14,080
scepticism, you know, going 
going back to the, the deal and 

1609
01:27:14,080 --> 01:27:16,400
the analysis of the deal and 
trying to think about like what 

1610
01:27:16,400 --> 01:27:18,600
do people think of at the time? 
What do they think of today? 

1611
01:27:19,120 --> 01:27:22,240
The North American shareholders 
were sceptical kind of from the 

1612
01:27:22,240 --> 01:27:24,560
beginning. 
And you know, perhaps they were 

1613
01:27:24,560 --> 01:27:28,680
the ones that had seen this 
asset a bit closer because down 

1614
01:27:28,680 --> 01:27:31,360
here in Australia, we're pretty 
unfamiliar with the asset Evo's 

1615
01:27:31,360 --> 01:27:33,640
targeted many areas of 
improvement, you know, mining, 

1616
01:27:33,640 --> 01:27:38,160
processing, exploration. 
But again, to to go back to that

1617
01:27:38,160 --> 01:27:41,120
point, I think there was just an
an overestimation of their 

1618
01:27:41,120 --> 01:27:45,800
ability to to effect a change 
and get the asset kind of 

1619
01:27:45,960 --> 01:27:49,320
humming again. 
It can't just be a cultural like

1620
01:27:49,440 --> 01:27:52,360
I mean the, the, the reserve 
gets downgraded like 

1621
01:27:52,360 --> 01:27:55,120
consistently. 
In fact, even, I think even even

1622
01:27:55,200 --> 01:27:57,960
this year's reserve was 
downgraded by like 2G per ton. 

1623
01:27:58,360 --> 01:28:02,360
So like consistent reserve 
downgrades from I know they 

1624
01:28:02,360 --> 01:28:05,480
upgraded it massively and like 
immediately after the deal, but 

1625
01:28:06,040 --> 01:28:10,520
their their geological DD was 
was was clearly not reality as 

1626
01:28:10,520 --> 01:28:11,560
well. 
Yeah. 

1627
01:28:11,560 --> 01:28:15,200
So to to put numbers to that 
point, in the most recent 

1628
01:28:15,200 --> 01:28:18,160
numbers, they chalked off 4 and 
a half million oz from the 

1629
01:28:18,160 --> 01:28:20,800
resource. 
That's a staggering number. 

1630
01:28:20,880 --> 01:28:24,160
And the grade dropped from 7g 
per ton to 4 1/2 grams per ton. 

1631
01:28:24,160 --> 01:28:27,880
So that's the most recent R&R 
statement that we're seeing. 

1632
01:28:28,160 --> 01:28:32,320
They are huge drops. 
So completely, completely right.

1633
01:28:32,320 --> 01:28:36,960
The ore body has not shaped up 
with what they kind of 

1634
01:28:36,960 --> 01:28:41,800
previously thought and how they 
kind of framed that. 

1635
01:28:41,800 --> 01:28:46,280
Now taking a fresh glance at 
what things are going to look 

1636
01:28:46,280 --> 01:28:48,640
like going forward, they just 
sort of say the asset needs to 

1637
01:28:48,640 --> 01:28:52,480
consistently deliver if it's to 
be worthy of, of any new capital

1638
01:28:52,480 --> 01:28:56,040
going in, whether it actually is
like again, to, to compare with 

1639
01:28:56,040 --> 01:28:58,160
the analysts value. 
This thing, is it a 2 or $3 

1640
01:28:58,160 --> 01:29:01,680
billion NIV asset? 
Like there's no way in hell I'd 

1641
01:29:01,680 --> 01:29:04,120
be paying anywhere near that for
the, for this asset. 

1642
01:29:04,120 --> 01:29:07,800
But you know, perhaps that's the
opportunity, like the gold price

1643
01:29:07,800 --> 01:29:10,760
we're in now affords it a lot of
opportunity to to make money. 

1644
01:29:11,280 --> 01:29:16,440
It's a big endowment, there's no
doubt, but a big complex mine. 

1645
01:29:16,520 --> 01:29:18,440
And that comes with high, high 
costs. 

1646
01:29:18,440 --> 01:29:20,760
And there's always the allure of
spending more capital to make 

1647
01:29:20,760 --> 01:29:25,080
those costs come, come lower, 
But more and more capital kind 

1648
01:29:25,080 --> 01:29:26,520
of keeps becoming more and more 
capital. 

1649
01:29:26,840 --> 01:29:29,520
I think they've learned well. 
They they always know they're 

1650
01:29:29,520 --> 01:29:31,520
great capital allocators, but 
you're always competing for 

1651
01:29:31,520 --> 01:29:34,160
capital, you know, to the most 
worthy parts of the business. 

1652
01:29:34,160 --> 01:29:40,520
And and to your point, like what
is the return on capital to Red 

1653
01:29:40,520 --> 01:29:44,080
Lake versus the other assets 
when, when it's returned so far 

1654
01:29:44,080 --> 01:29:45,800
it's been pretty, pretty de 
minimis I. 

1655
01:29:46,280 --> 01:29:49,880
Mean it's it's no coincidence 
either that every Aussie Goldie 

1656
01:29:49,880 --> 01:29:54,480
went to Canada and struggled 
like it's not as if there's 

1657
01:29:54,480 --> 01:29:56,320
there's not the gold there at 
every single one. 

1658
01:29:56,320 --> 01:30:00,200
There's there's a few too many 
cases in which that's happened 

1659
01:30:00,200 --> 01:30:02,600
for it to just be a fluke. 
You know the relative. 

1660
01:30:02,600 --> 01:30:06,400
Value at that period of time was
was was severe, right? 

1661
01:30:06,640 --> 01:30:08,960
Yeah, yeah. 
Like like things would bid up to

1662
01:30:08,960 --> 01:30:11,600
extreme over over in Australia 
and there was everything just 

1663
01:30:11,600 --> 01:30:14,600
looked cheap in in Canada. 
So you thought, well, heck, I'm 

1664
01:30:14,600 --> 01:30:17,840
going to get outsides returns by
going there, but it didn't quite

1665
01:30:17,840 --> 01:30:19,840
work out. 
I sound like I'm very critical 

1666
01:30:19,840 --> 01:30:23,560
of this, but you know, I, I 
think, I think like on the 

1667
01:30:23,560 --> 01:30:27,040
whole, you have to evaluate evos
for the phenomenal like like 

1668
01:30:27,360 --> 01:30:29,880
value creation story it is. 
And this, this is, this is a 

1669
01:30:29,880 --> 01:30:31,120
blemish that they had to deal 
with. 

1670
01:30:31,320 --> 01:30:33,480
Yeah. 
And and if you go back to like 

1671
01:30:33,480 --> 01:30:37,280
2019 again and and you look at 
this opportunity again, like, 

1672
01:30:37,280 --> 01:30:40,400
yeah, I mean, I'd be curious to 
know what they'd say about that,

1673
01:30:40,400 --> 01:30:42,440
whether they do the deal again 
because it just looks so 

1674
01:30:42,440 --> 01:30:45,320
compelling. 
So if we, if we keep going in 

1675
01:30:45,320 --> 01:30:49,400
between those 2 deals that I 
mentioned, firstly, Red Lake and

1676
01:30:49,440 --> 01:30:53,360
Battle N, they divest Krakow, 
another asset from, from early 

1677
01:30:53,360 --> 01:30:58,160
days, 60 million bucks in the 
door upfront with a a total 

1678
01:30:58,160 --> 01:31:02,520
price tag of $125 million. 
So again choking off one of the 

1679
01:31:02,520 --> 01:31:05,400
the weaker assets. 
And shortly after the Battle N 

1680
01:31:05,400 --> 01:31:09,600
deal, they wrap up the AKJV. 
It's a $400 million deal with 

1681
01:31:09,720 --> 01:31:16,640
Northern Star getting in 100% of
Kendana, 51% of the AKJV, a 

1682
01:31:16,640 --> 01:31:18,920
bunch of other assets in the 
Eastern Goldfields kind of area 

1683
01:31:18,920 --> 01:31:22,720
and they're elevating Mangari to
a cornerstone asset in their 

1684
01:31:22,720 --> 01:31:25,440
portfolio. 
All cash deal. 

1685
01:31:25,600 --> 01:31:28,520
The the edge of the competitive 
advantage here is, is pretty 

1686
01:31:28,520 --> 01:31:30,320
straightforward. 
Like you mentioned earlier, you 

1687
01:31:30,320 --> 01:31:34,080
can just chop that haulage 
distance down by nearly 90%. 

1688
01:31:34,360 --> 01:31:37,640
So it's it's super kind of 
compelling why this deal makes 

1689
01:31:37,640 --> 01:31:40,360
sense and why you can pay more 
for it than than anyone else can

1690
01:31:40,360 --> 01:31:45,040
because the returns are going to
be great and they raise nearly 

1691
01:31:45,040 --> 01:31:48,560
$470 million to to finance this 
deal. 

1692
01:31:49,320 --> 01:31:53,600
You can see again on the asset 
portfolio chart here that things

1693
01:31:53,600 --> 01:31:56,240
are things are looking better 
and that is a conservative chart

1694
01:31:56,240 --> 01:31:58,600
because it doesn't show the 
margin improvement just yet that

1695
01:31:58,600 --> 01:32:02,040
we'd see in time when they 
expand the asset. 

1696
01:32:02,040 --> 01:32:07,480
But a smart deal that that just 
sort of makes sense and the, 

1697
01:32:09,280 --> 01:32:12,440
the, the benefits that come from
it far outweigh the, the cost of

1698
01:32:12,440 --> 01:32:13,880
this one. 
The returns have been been 

1699
01:32:13,880 --> 01:32:16,200
great. 
And you know, add to that the, 

1700
01:32:17,280 --> 01:32:20,160
the expansion that they have 
done kind of remarkably, they've

1701
01:32:20,160 --> 01:32:23,880
done that nine months before 
schedule and under budget as 

1702
01:32:23,880 --> 01:32:26,720
well. 
That was quoted to be a $230 

1703
01:32:26,720 --> 01:32:30,440
million investment to get the 
asset over 200,000 oz. 

1704
01:32:30,920 --> 01:32:34,080
And what a time to, to do that 
sort of expansion act. 

1705
01:32:34,240 --> 01:32:37,720
It's going to help the the 
payback look very, very good for

1706
01:32:37,720 --> 01:32:41,200
that asset. 
It it, I find it, yeah. 

1707
01:32:41,240 --> 01:32:43,160
I think your reflections are 
right about this deal. 

1708
01:32:43,160 --> 01:32:44,880
But I do remember it at the 
time. 

1709
01:32:44,880 --> 01:32:50,960
Again, now they've they're like 
they've licensed to M&A to do 

1710
01:32:50,960 --> 01:32:54,440
M&A is a little bit in doubt. 
This one, like this one, what 

1711
01:32:54,440 --> 01:32:56,160
did they do? 
I think at the time the gold 

1712
01:32:56,160 --> 01:32:59,040
price was much lower. 
I think they paid about like 

1713
01:32:59,040 --> 01:33:02,640
full NPV of like, you know, 
like, like for Northern Star to 

1714
01:33:02,640 --> 01:33:05,920
be a willing seller and, and Evo
used to be a willing buyer. 

1715
01:33:06,960 --> 01:33:09,200
Northern Star thought they'll 
get a pretty good price. 

1716
01:33:09,200 --> 01:33:12,040
And I think evos are effectively
paying full NPV, including the 

1717
01:33:12,040 --> 01:33:13,560
synergies that they were 
benefiting from. 

1718
01:33:13,560 --> 01:33:17,960
So like, yes, like both parties 
like, like win, but, but there 

1719
01:33:17,960 --> 01:33:20,400
was, there was certainly like I 
remember conversations with 

1720
01:33:20,400 --> 01:33:23,280
peers thinking, I mean, he, he 
was paid top dollar for this 

1721
01:33:24,040 --> 01:33:26,440
with the fullness of time and, 
and what coal prices done in, in

1722
01:33:26,440 --> 01:33:29,040
the intermediate period and the 
additional benefits they've had 

1723
01:33:29,040 --> 01:33:32,520
from the other like East Cal 
assets, the mill expansion, 

1724
01:33:32,520 --> 01:33:35,200
etcetera. 
It, it, it looks a good deal. 

1725
01:33:35,200 --> 01:33:38,280
But, but, but I think this is a 
common theme with Evos is they 

1726
01:33:38,280 --> 01:33:39,840
don't always look a good deal on
the outset. 

1727
01:33:39,840 --> 01:33:41,880
In fact, the one that looked a 
good deal on the outset, being 

1728
01:33:41,880 --> 01:33:42,960
red light, turned out to be the 
dot. 

1729
01:33:43,320 --> 01:33:46,160
Yeah. 
And I mean to think about the 

1730
01:33:46,160 --> 01:33:50,080
seller in this case. 
So Northern Star had just done 

1731
01:33:50,080 --> 01:33:53,800
the deal with Saracen as well. 
So they've become a much bigger 

1732
01:33:53,800 --> 01:33:56,880
company all of a sudden. 
This is clearly a lower quality 

1733
01:33:56,880 --> 01:34:01,400
asset in their portfolio. 
And like you say, with the with 

1734
01:34:01,400 --> 01:34:04,400
the upgrade in mind that you can
unlock more value through it 

1735
01:34:04,400 --> 01:34:05,880
that way. 
Yeah, they might be taking their

1736
01:34:05,880 --> 01:34:08,200
pound of flesh for the synergies
that you're going to experience 

1737
01:34:08,760 --> 01:34:13,000
as well. 
But I think, you know, time and 

1738
01:34:13,000 --> 01:34:17,880
time again that that view that 
MPV is different to, to what 

1739
01:34:17,880 --> 01:34:21,280
most people might think it is 
because, you know, maybe they're

1740
01:34:21,560 --> 01:34:25,600
curtailed by the reserves or 
whatever it might be having that

1741
01:34:25,600 --> 01:34:28,280
long term time for you. 
And I know it's, it's, it's hard

1742
01:34:28,280 --> 01:34:32,040
because the gold price makes, 
makes it look so, so good. 

1743
01:34:32,680 --> 01:34:35,040
But. 
It was necessary to make 

1744
01:34:35,440 --> 01:34:37,200
mangari, what they call a 
cornerstone. 

1745
01:34:37,200 --> 01:34:39,480
Exactly. 
Their portfolio was improving on

1746
01:34:39,480 --> 01:34:42,240
the back of this deal and not 
just by a little margin. 

1747
01:34:42,240 --> 01:34:45,920
They continue continue to 
rationalize non core late life 

1748
01:34:45,920 --> 01:34:48,320
assets to improve the the 
overall portfolio. 

1749
01:34:48,360 --> 01:34:51,920
They finally part ways with with
Mount Carlton after after being 

1750
01:34:51,920 --> 01:34:54,720
a pretty important contributor 
for for for quite some time and 

1751
01:34:54,720 --> 01:34:56,600
having its hallmarks from the 
very early days. 

1752
01:34:56,840 --> 01:35:00,200
It had it's time, Yeah, 
$90,000,000 deal, 40 upfront 

1753
01:35:00,400 --> 01:35:03,240
they're getting for this one, 
selling it to Navarre. 

1754
01:35:03,280 --> 01:35:07,040
So a year before evolution into 
that to impair the asset by $100

1755
01:35:07,040 --> 01:35:09,480
million. 
So it started to to have a few 

1756
01:35:09,480 --> 01:35:11,640
problems getting a bit creaky 
and old. 

1757
01:35:11,640 --> 01:35:15,520
And yeah, I mean, some, some 
assets had this one, some 

1758
01:35:15,520 --> 01:35:19,560
analysts rather had this as a 
negative MPV on the books. 

1759
01:35:19,560 --> 01:35:23,960
So good to get a bit of cash and
again improve the asset, improve

1760
01:35:23,960 --> 01:35:26,480
the portfolio by divesting and 
then they consolidate. 

1761
01:35:26,480 --> 01:35:33,120
Ernest Henry So November 2021, a
big deal again, $1 billion, you 

1762
01:35:33,120 --> 01:35:37,120
know, 800 upfront and 200 just 
being paid a year later. 

1763
01:35:37,960 --> 01:35:40,240
So the stock bounced 7% on the 
day. 

1764
01:35:40,480 --> 01:35:42,960
So the market liked this one 
quite, quite early. 

1765
01:35:42,960 --> 01:35:46,800
And to finance this, they sign 
up US $200 million in debt at 

1766
01:35:46,800 --> 01:35:48,600
3%. 
We're in the zero interest rate 

1767
01:35:48,600 --> 01:35:52,280
era here, so you can finance 
these things quite cheap. 

1768
01:35:52,720 --> 01:35:58,920
They end up going to a net debt 
position of $1.3 billion and in 

1769
01:35:58,920 --> 01:36:02,200
time you'd kind of see because 
they go into a very heavy period

1770
01:36:02,200 --> 01:36:05,440
of investment. 
So the balance sheet is a bit 

1771
01:36:05,440 --> 01:36:07,680
extended, but it always kind of 
extends once they do a deal 

1772
01:36:07,680 --> 01:36:11,160
because they tend to sign up 
that debt but. 

1773
01:36:11,880 --> 01:36:15,800
This is the fruits of their 
labor from from the first deal 

1774
01:36:15,880 --> 01:36:17,160
kind of coming to fruition, 
right? 

1775
01:36:17,200 --> 01:36:21,240
Fruits of their labor, fruits of
their, you know, smarts to get 

1776
01:36:21,240 --> 01:36:22,920
this one done. 
Absolutely. 

1777
01:36:22,960 --> 01:36:24,880
We know they're not getting any 
more gold here because they're 

1778
01:36:24,880 --> 01:36:28,440
already taking all the gold. 
So they're getting 70% of the 

1779
01:36:28,520 --> 01:36:30,120
the copper and and the silver as
well. 

1780
01:36:31,000 --> 01:36:34,880
So EVNS Group all in sustaining 
costs would improve by nearly 

1781
01:36:34,880 --> 01:36:37,640
$200.00 an ounce in two years 
time. 

1782
01:36:38,400 --> 01:36:40,920
Isn't this remarkable? 
I know with the, I know the 

1783
01:36:40,920 --> 01:36:44,080
precedent had been set globally.
And yeah, new Crest was a, a 

1784
01:36:44,720 --> 01:36:49,000
leader in, in, in having a, a 
reported loyal in sustaining 

1785
01:36:49,000 --> 01:36:51,080
costs because they had like 
phenomenal kind of copper 

1786
01:36:51,080 --> 01:36:54,400
credits in with several assets 
in their portfolio, Katia being 

1787
01:36:54,400 --> 01:36:57,840
a big, a big run of those. 
And I think like, you know, to 

1788
01:36:57,840 --> 01:37:01,800
your point on, on, on Jake 
studying the what made great 

1789
01:37:01,800 --> 01:37:04,880
gold miners. 
Well, the, the unspoken rule 

1790
01:37:04,880 --> 01:37:08,360
that he didn't list in that 
speech is make sure you've got a

1791
01:37:08,360 --> 01:37:10,320
low all in sustaining cost 
because you've got copper 

1792
01:37:10,320 --> 01:37:14,360
credits. 
And it, it like, it tricks, it 

1793
01:37:14,360 --> 01:37:17,200
tricks people, it tricks 
generalists, it tricks not even 

1794
01:37:17,200 --> 01:37:20,200
just generalists, but but 
resource specialists, who I 

1795
01:37:20,240 --> 01:37:23,360
mean, the, the, the all in 
sustaining costs, which was just

1796
01:37:23,360 --> 01:37:26,200
adopted by the entire industry 
and popularized by the World 

1797
01:37:26,200 --> 01:37:30,400
Gold Council. 
It has, it has its pitfalls. 

1798
01:37:30,400 --> 01:37:33,000
And but when you just look at 
that and you try and think of 

1799
01:37:33,000 --> 01:37:37,720
well, who's a, who's a low cost 
producer come up with with evos 

1800
01:37:37,800 --> 01:37:40,440
with these big cup of credits 
despite cash flow not 

1801
01:37:40,440 --> 01:37:41,800
necessarily being reflective of 
that. 

1802
01:37:42,480 --> 01:37:43,960
Yeah, the rules are the same for
everyone. 

1803
01:37:44,320 --> 01:37:46,840
They're just, they're just using
them to their advantage, I 

1804
01:37:46,840 --> 01:37:49,680
think. 
So we've touched on pre emptive 

1805
01:37:49,680 --> 01:37:52,640
rights, super important. 
They did the groundwork, Yeah. 

1806
01:37:53,200 --> 01:37:56,480
Still it was a fairly steep 
price that they paid. 

1807
01:37:56,480 --> 01:37:59,800
But again, people analyzing the 
deal at the time were a bit 

1808
01:37:59,880 --> 01:38:03,680
restrained in how they thought 
about this deal because of the 

1809
01:38:04,240 --> 01:38:08,880
relatively shorter reserve life 
that was left, which in in due 

1810
01:38:08,880 --> 01:38:12,400
course evolution prove out and 
extend the mine life quite 

1811
01:38:12,400 --> 01:38:14,320
substantially. 
This is a great asset. 

1812
01:38:15,240 --> 01:38:16,840
This is a really, really great 
asset. 

1813
01:38:17,080 --> 01:38:20,560
It's a truly great asset. 
They've also, you know, taken 

1814
01:38:20,560 --> 01:38:23,000
ownership then they're now the 
operator of this one, which is a

1815
01:38:23,400 --> 01:38:25,320
an important detail. 
You know you control your own 

1816
01:38:25,640 --> 01:38:28,480
destiny by all the cancer 
Glencorp joint venture went 

1817
01:38:28,680 --> 01:38:30,800
relatively smoothly, but. 
Was it a JV mate? 

1818
01:38:31,480 --> 01:38:34,760
Economic interest. 
Economic interest, call it what 

1819
01:38:34,760 --> 01:38:41,240
you like, they in time validate 
that that price and financing 

1820
01:38:41,240 --> 01:38:46,280
things in that period 3% debt. 
That's, you know, I mean, we're 

1821
01:38:46,280 --> 01:38:48,520
getting to an era now today 
where where interest rates are 

1822
01:38:48,520 --> 01:38:51,600
going down again and we'll see 
what what miners do with it, but

1823
01:38:51,760 --> 01:38:55,160
very, very smart to to get that 
over over the line. 

1824
01:38:55,440 --> 01:38:57,240
So that that wraps up the the 
kind of history. 

1825
01:38:57,240 --> 01:39:00,480
Obviously they do N parks, but 
that's too close to where we are

1826
01:39:00,480 --> 01:39:05,520
today to analyze thoroughly, but
well. 

1827
01:39:06,120 --> 01:39:09,280
I find that interesting too. 
N parks because, because we, I 

1828
01:39:09,280 --> 01:39:13,880
remember doing a potty when they
announced N parks and you and I,

1829
01:39:14,400 --> 01:39:16,440
you and I are doing like the 
numbers and being like, Oh my 

1830
01:39:16,440 --> 01:39:18,840
God, look at the crazy EBITDA 
multiple. 

1831
01:39:18,840 --> 01:39:21,200
They've paid for this, they've 
overpaid, blah, blah, blah. 

1832
01:39:22,560 --> 01:39:27,000
The balance sheet was yeah, like
like looking a little bit shaky.

1833
01:39:27,000 --> 01:39:29,680
They, they did a raise to, to 
fund part of it, I remember. 

1834
01:39:29,680 --> 01:39:32,720
And then and the share price 
quickly kind of dips to below 

1835
01:39:32,720 --> 01:39:35,320
what the raise price was in the,
in the months afterwards as, as,

1836
01:39:35,520 --> 01:39:39,120
as markets looked a bit, a bit 
fragile gold as well. 

1837
01:39:39,120 --> 01:39:44,080
And we were critical, but again,
like N parks has the hallmarks 

1838
01:39:44,080 --> 01:39:46,640
of a of a, it's a very long life
asset. 

1839
01:39:46,640 --> 01:39:49,240
And in the fullness of time, if 
you have, if you have the 

1840
01:39:49,240 --> 01:39:52,880
commodity tailwinds, which, 
which you know, we've been lucky

1841
01:39:52,880 --> 01:39:56,920
enough to have over Evo's 
journey today, then it just rubs

1842
01:39:56,920 --> 01:40:00,240
over those, those facts and the 
people who maybe like people 

1843
01:40:00,240 --> 01:40:03,000
like us who called North Parks 
like paying too much at the 

1844
01:40:03,000 --> 01:40:04,880
time. 
I mean, I can totally imagine 

1845
01:40:05,280 --> 01:40:09,080
having the exact same reflection
about our comments then as as 

1846
01:40:09,080 --> 01:40:11,920
we've heard about like. 
Certain deals that Evos have 

1847
01:40:11,920 --> 01:40:14,960
done, like historically as 
well-being being Cal, ever 

1848
01:40:14,960 --> 01:40:16,560
paying for Cal, Do they ever pay
for Cal? 

1849
01:40:17,120 --> 01:40:18,400
You know, this is a common 
theme. 

1850
01:40:18,400 --> 01:40:20,840
Do they do they ever pay for for
La mantra? 

1851
01:40:20,840 --> 01:40:24,160
Do they ever pay? 
Like, yeah. 30 plus year mine 

1852
01:40:24,160 --> 01:40:28,920
life like you kind of get some 
very good years in that time. 

1853
01:40:29,200 --> 01:40:32,080
You finally didn't have just a 
crazy stream, but that's OK. 

1854
01:40:32,200 --> 01:40:35,120
Yeah, yeah, I think, yeah, I 
think you're spot on. 

1855
01:40:35,120 --> 01:40:40,360
So since the Ernest Henry deal, 
the EV of the company has gone 

1856
01:40:40,360 --> 01:40:46,840
from $6 billion to $22 billion. 
That is despite years of 

1857
01:40:46,840 --> 01:40:48,960
actually poor operational 
performance. 

1858
01:40:48,960 --> 01:40:51,440
They they miss guidance on 
several occasions over the past 

1859
01:40:51,440 --> 01:40:57,200
few years, very heavy periods of
capital investment and again 

1860
01:40:57,200 --> 01:41:00,560
papered over by a phenomenal 
appreciation in in the gold 

1861
01:41:00,560 --> 01:41:02,640
price. 
But where we are today, they are

1862
01:41:02,960 --> 01:41:05,880
they are Australia's 25th 
largest public company. 

1863
01:41:06,880 --> 01:41:11,840
And Laurie Conway from Jan 23 
became the CEO and managing 

1864
01:41:11,840 --> 01:41:14,320
director. 
Jake became just the exec chair 

1865
01:41:14,320 --> 01:41:18,480
at that point in time. 
And as of July of 2025, Jake is 

1866
01:41:18,480 --> 01:41:21,080
the the non exec chair. 
So I think that that puts a wrap

1867
01:41:21,080 --> 01:41:23,440
on on the history. 
It's a great history of that, 

1868
01:41:23,560 --> 01:41:26,640
like the evolution of evolution 
and I know we're capturing it a 

1869
01:41:26,640 --> 01:41:32,000
snapshot in time, but it is like
it is a, it's a tremendous 

1870
01:41:32,160 --> 01:41:37,280
growth story from deals and 
commodity tailwinds and like 

1871
01:41:37,360 --> 01:41:39,880
savviness and seeing opportunity
where it isn't. 

1872
01:41:41,440 --> 01:41:44,880
And for that reason, mate, we 
need to dive just quickly into 

1873
01:41:45,560 --> 01:41:47,040
their thinking behind deal 
making. 

1874
01:41:47,040 --> 01:41:49,840
So they have a three pillared 
approach to creating shareholder

1875
01:41:49,840 --> 01:41:53,320
value, operations, discovery and
M&A. 

1876
01:41:53,360 --> 01:41:56,160
But as it was put to us now this
is a tongue and cheek comment, 

1877
01:41:56,160 --> 01:42:00,960
but I loved it nonetheless. 
Operations are where Evos tease 

1878
01:42:00,960 --> 01:42:03,640
shareholders about the prospect 
of creating value. 

1879
01:42:03,640 --> 01:42:07,880
Discovery is where they torture 
shareholders and M&A is where 

1880
01:42:07,880 --> 01:42:10,640
they really create value. 
Now that's the type of comment 

1881
01:42:10,640 --> 01:42:14,520
that could only come from the 
corporate team and I think it 

1882
01:42:14,520 --> 01:42:18,000
actually speaks very highly to 
the culture knowing the context 

1883
01:42:18,000 --> 01:42:22,640
in which that comment came 
internally there. 

1884
01:42:23,600 --> 01:42:24,960
But I think it's worth talking 
about. 

1885
01:42:24,960 --> 01:42:29,600
I mean, Evolution have proven 
themselves to be competent 

1886
01:42:29,600 --> 01:42:33,000
managers over the long run of 
the assets that they've gone. 

1887
01:42:33,440 --> 01:42:36,360
The geos on the discovery 
component have gone above and 

1888
01:42:36,360 --> 01:42:40,040
beyond replacing depletion, 
adding to the mine life of many 

1889
01:42:40,040 --> 01:42:43,840
of their assets. 
They've put themselves in the 

1890
01:42:43,840 --> 01:42:47,040
right post codes to do that. 
That's coming from the M&A. 

1891
01:42:47,120 --> 01:42:50,880
So there's a whole bunch of 
things that are lining up there.

1892
01:42:51,840 --> 01:42:54,920
Operations are kind of limited 
by your geology. 

1893
01:42:55,040 --> 01:42:58,480
You need to be playing in, in 
the right areas to, to have the 

1894
01:42:58,520 --> 01:43:01,680
the work cut out easily enough 
for the operationers team. 

1895
01:43:02,320 --> 01:43:05,960
That in turn, you know, allows 
Brownfield's exploration to, to 

1896
01:43:05,960 --> 01:43:09,840
kind of be successful and, you 
know, allows the the geos to, to

1897
01:43:09,840 --> 01:43:13,560
do their work effectively. 
And we've seen that in abundance

1898
01:43:13,560 --> 01:43:16,960
at Cal and Ernest Henry with the
mine life extensions. 

1899
01:43:17,800 --> 01:43:21,200
But looking at the management 
team here, M&A is, is the 

1900
01:43:21,200 --> 01:43:23,760
culture, M&A is the the the 
focus. 

1901
01:43:24,440 --> 01:43:26,000
They are deal makers through and
through. 

1902
01:43:27,160 --> 01:43:28,960
They're deal makers, but 
thoughtful deal makers. 

1903
01:43:28,960 --> 01:43:33,200
They're not deal junkies like 
where you are, you do deals 

1904
01:43:33,200 --> 01:43:36,520
because you just deal hungry. 
There's discipline to the deal 

1905
01:43:36,520 --> 01:43:39,000
making. 
It's knowing when to be like 

1906
01:43:39,080 --> 01:43:42,000
very aggressive and knowing when
to be reserved. 

1907
01:43:42,040 --> 01:43:45,680
Like this isn't just a 
scattergun strategy where they 

1908
01:43:45,680 --> 01:43:47,440
got lucky. 
This was a it was a it was a 

1909
01:43:47,440 --> 01:43:52,600
deliberate strategy about yeah, 
like knowing the time, the cycle

1910
01:43:52,880 --> 01:43:55,640
to be aggressive and knowing, 
knowing the times to to peel 

1911
01:43:55,640 --> 01:43:58,000
back. 
And like this was articulated 

1912
01:43:58,000 --> 01:44:00,160
from the very beginning. 
There was a deliberate decision 

1913
01:44:00,520 --> 01:44:04,360
about like having stepping stone
assets starting with, with a not

1914
01:44:04,360 --> 01:44:08,960
so good portfolio, but using 
those assets to acquire better 

1915
01:44:08,960 --> 01:44:11,600
assets with longer life, lower 
costs over time. 

1916
01:44:11,600 --> 01:44:16,200
And they bootstrapped their way 
via not so good assets to having

1917
01:44:16,360 --> 01:44:19,640
like a pretty formidable like, 
you know, portfolio. 

1918
01:44:20,240 --> 01:44:22,720
There, there's a comment that 
also really stuck out to me to 

1919
01:44:22,720 --> 01:44:25,760
add to what you've just said 
there, Jake said that people too

1920
01:44:25,760 --> 01:44:28,560
often have inertia and they 
don't do deals because they 

1921
01:44:28,560 --> 01:44:31,160
think they're undervalued, that 
that didn't hold them back 

1922
01:44:31,160 --> 01:44:34,320
because they did deals when 
their share price was in the in 

1923
01:44:34,320 --> 01:44:36,840
the gutter as well. 
They were proactive about doing 

1924
01:44:36,840 --> 01:44:38,920
deals. 
They were incredibly thoughtful 

1925
01:44:39,200 --> 01:44:44,920
about the deals that they did 
and to to put a bow kind of on 

1926
01:44:44,920 --> 01:44:47,000
on what you've said about the 
timing of deals. 

1927
01:44:47,360 --> 01:44:51,440
There's a time to do deals and 
there's a time to make money as 

1928
01:44:51,560 --> 01:44:53,320
as they've always kind of said 
and. 

1929
01:44:53,760 --> 01:44:56,520
Why do you think evolution 
didn't have the inertia that 

1930
01:44:56,520 --> 01:44:57,920
other companies might be plagued
with? 

1931
01:44:58,680 --> 01:45:00,920
I I think that just comes down 
to the culture of the team. 

1932
01:45:01,040 --> 01:45:05,200
I think they, they had a culture
within the corporate team that 

1933
01:45:05,200 --> 01:45:09,000
made them proactive about that. 
They, they wanted to be a mining

1934
01:45:09,000 --> 01:45:12,360
company from, from day dot and 
they, they just kind of got 

1935
01:45:12,360 --> 01:45:16,080
after it. 
The fact Jake was exec chair, do

1936
01:45:16,080 --> 01:45:17,360
you think that made a difference
as well? 

1937
01:45:17,360 --> 01:45:21,680
Like you've got a supportive 
board of being bold. 

1938
01:45:21,680 --> 01:45:24,440
There's no there's not 
necessarily pushback from a 

1939
01:45:24,440 --> 01:45:27,760
board perspective because like 
your exec chair. 

1940
01:45:28,080 --> 01:45:31,200
There's phenomenal alignment. 
Yeah, great alignment, great 

1941
01:45:31,200 --> 01:45:34,040
capital markets backing as well.
Like nothing was impossible to 

1942
01:45:34,040 --> 01:45:39,040
finance because you're dealing 
with someone and like a team 

1943
01:45:39,040 --> 01:45:40,760
which has done it before 
together. 

1944
01:45:40,840 --> 01:45:44,480
No accidents either. 
Like they, they nurture the 

1945
01:45:44,480 --> 01:45:46,720
relationship with having a major
shareholder, which a lot of 

1946
01:45:46,720 --> 01:45:49,600
people would look as a negative,
having someone sit on your 

1947
01:45:49,600 --> 01:45:53,040
register with 30 plus percent. 
If we quickly look, there's this

1948
01:45:53,040 --> 01:45:56,120
matrix I want to show in how 
they think about the deals. 

1949
01:45:56,600 --> 01:45:58,680
And I think it's a, it's a 
really cool one to understand, 

1950
01:45:58,960 --> 01:46:00,800
you know, a bit of a guiding 
light in, in how they think 

1951
01:46:00,800 --> 01:46:02,480
about deals. 
And it differs for every company

1952
01:46:02,480 --> 01:46:05,320
depending on you, you know, your
expertise, your size, your, your

1953
01:46:05,320 --> 01:46:06,600
balance sheet, all these sorts 
of things. 

1954
01:46:07,520 --> 01:46:10,600
But essentially for those 
listening, it's a, it's a kind 

1955
01:46:10,600 --> 01:46:15,120
of circle and it has 10 
different boxes to check and you

1956
01:46:15,120 --> 01:46:17,880
can kind of rate them. 
When you think about a specific 

1957
01:46:18,200 --> 01:46:22,080
asset, we're talking about 
things like the mine life, the 

1958
01:46:22,080 --> 01:46:25,160
transaction complexity, social 
license, commodities, these 

1959
01:46:25,160 --> 01:46:27,680
sorts of things. 
And I think there's a couple 

1960
01:46:27,680 --> 01:46:30,160
points here that need inspection
because they make transaction 

1961
01:46:30,160 --> 01:46:34,960
complexity look like something 
hard, but that is an edge for 

1962
01:46:34,960 --> 01:46:37,600
evolution. 
Another one, if we're going to 

1963
01:46:37,600 --> 01:46:41,400
be nitpicky on commodities, I'd 
almost put copper, gold above 

1964
01:46:41,400 --> 01:46:45,040
gold there in how they actually 
think about things. 

1965
01:46:45,360 --> 01:46:49,000
And then lastly, annual 
production there, annual 

1966
01:46:49,000 --> 01:46:52,280
production and evolution of 
showing this only matters so 

1967
01:46:52,280 --> 01:46:56,280
much as in like how much it 
impacts your margin. 

1968
01:46:56,720 --> 01:46:59,480
That's what really matters 
because some of their, you know,

1969
01:46:59,680 --> 01:47:04,560
like Ernest Henry for instance, 
that's not, you know, a massive 

1970
01:47:04,560 --> 01:47:07,880
gold producer produces a lot of 
copper as well, obviously, but 

1971
01:47:08,440 --> 01:47:11,520
margin is what really matters. 
Which year did you first see 

1972
01:47:11,520 --> 01:47:13,920
this in their in their public 
materials in? 

1973
01:47:14,360 --> 01:47:18,840
The late twenty 10s Wow 
internally used before that. 

1974
01:47:18,840 --> 01:47:21,760
Before that. 
This is this like this one 

1975
01:47:21,840 --> 01:47:24,200
image. 
This is the evolution playbook. 

1976
01:47:24,280 --> 01:47:28,080
Yeah, like your, your, your 
sweet spot is becoming a company

1977
01:47:28,080 --> 01:47:32,240
full of assets that have that 
that green circle. 

1978
01:47:32,480 --> 01:47:35,440
But the only way you get there 
is incrementally. 

1979
01:47:35,840 --> 01:47:38,320
On the deal making, there's, 
there's one more fantastic slide

1980
01:47:38,640 --> 01:47:40,440
we have to show they break this 
out. 

1981
01:47:40,440 --> 01:47:44,560
I think they showed this one in 
2017 or so and they show that 

1982
01:47:44,560 --> 01:47:51,640
17% of M&A deals add value. 
So if M&A is where you create 

1983
01:47:51,640 --> 01:47:55,680
value in your business and only 
17% do you have to be bloody 

1984
01:47:55,680 --> 01:47:59,200
good at doing deals? 
Backed themselves didn't they? 

1985
01:47:59,240 --> 01:48:02,440
The only thing I don't like 
about this slide mate is the 

1986
01:48:02,440 --> 01:48:05,720
source for that stat is a 
management consultant. 

1987
01:48:05,720 --> 01:48:08,360
KPMG now talk about things that 
don't add value. 

1988
01:48:13,360 --> 01:48:15,240
Can't I do that? 
But no. 

1989
01:48:15,240 --> 01:48:18,280
But yeah, like, yeah, these were
deal makers. 

1990
01:48:18,280 --> 01:48:20,840
They backed themselves to create
value because because some deals

1991
01:48:20,840 --> 01:48:23,200
do create an enormous amount of 
value, but you have to pay an 

1992
01:48:23,200 --> 01:48:25,600
appropriate price and get the 
like the timing right in the 

1993
01:48:25,600 --> 01:48:27,480
cycle. 
And those things are very, very 

1994
01:48:27,480 --> 01:48:31,520
hard to do. 
And, and Evos did it, albeit 

1995
01:48:31,520 --> 01:48:35,440
with with commodity tailwinds, 
but I don't, it didn't, it 

1996
01:48:35,440 --> 01:48:39,040
didn't take a lack of like 
these, these, these, this was a 

1997
01:48:39,040 --> 01:48:41,680
team in the right place at the 
right time with the right skills

1998
01:48:41,680 --> 01:48:43,520
and the right amount of 
confidence and they saw the 

1999
01:48:43,520 --> 01:48:45,560
opportunity. 
And like, what do I mean by 

2000
01:48:45,560 --> 01:48:48,520
that? 
Like no other mining team, in my

2001
01:48:48,520 --> 01:48:53,000
opinion, I don't think could 
have enacted as nimbly as 

2002
01:48:53,120 --> 01:48:55,320
evolution were to the 
opportunities in front of them 

2003
01:48:55,320 --> 01:48:59,200
and being so like being so 
thoughtful about even seeking 

2004
01:48:59,200 --> 01:49:01,040
the bilateral deals that they 
did do out. 

2005
01:49:01,440 --> 01:49:04,720
They, they, they, they minimally
used advisors like you mentioned

2006
01:49:04,800 --> 01:49:09,080
that they, they trusted their 
own internal team and a small 

2007
01:49:09,080 --> 01:49:13,520
number of people to, to take a 
view and deliver like the, the, 

2008
01:49:13,680 --> 01:49:17,880
these were, these were rapid 
succession deals that were done.

2009
01:49:17,960 --> 01:49:21,120
And it takes an enormous amount 
of effort to achieve that. 

2010
01:49:21,120 --> 01:49:23,760
And the only way in my opinion 
that you do achieve that is with

2011
01:49:23,760 --> 01:49:28,640
the capability like the 
confidence and also not using 

2012
01:49:28,680 --> 01:49:31,600
advisors. 
I couldn't agree more and I 

2013
01:49:31,600 --> 01:49:34,400
think it's a great segue into 
what what are the guiding 

2014
01:49:34,400 --> 01:49:39,080
principles to the evolution way.
So firstly, the strategy Jake 

2015
01:49:39,080 --> 01:49:41,560
would always say, I'm not 
convinced that gold companies 

2016
01:49:41,560 --> 01:49:44,880
are scalable, hence may just 
aren't the ones that create the 

2017
01:49:44,880 --> 01:49:46,240
best returns. 
Sorry. 

2018
01:49:46,240 --> 01:49:50,880
The strategy Aussie mid tier 6 
to 8 assets, 8 year plus mine 

2019
01:49:50,880 --> 01:49:55,320
lives, Tier 1 jurisdictions. 
Improving the portfolio means 

2020
01:49:55,480 --> 01:49:58,480
investing as well as divesting 
all these sorts of things. 

2021
01:49:59,480 --> 01:50:02,160
They they just sort of ring true
and they didn't change from from

2022
01:50:02,160 --> 01:50:04,920
day one. 
Remarkable that strategy has 

2023
01:50:04,920 --> 01:50:07,840
stayed the same. 
It's consistently said that over

2024
01:50:08,200 --> 01:50:12,080
the last decade plus, this is 
the this is what we want to be 

2025
01:50:12,240 --> 01:50:18,560
when we're now it and and. 
Yeah, add to that knowing your 

2026
01:50:18,560 --> 01:50:22,080
competitive advantage, you know 
from from the experience selling

2027
01:50:22,080 --> 01:50:25,560
gold concentrate with Mount 
Carlton to the complex deal 

2028
01:50:25,560 --> 01:50:27,760
making, they knew their 
competitive advantage. 

2029
01:50:28,440 --> 01:50:31,760
Another part of the evolution 
way is marketing. 

2030
01:50:31,840 --> 01:50:36,960
We've joked about the marketing,
but it works, it's effective and

2031
01:50:36,960 --> 01:50:39,000
the rules are the same, like I 
said, for everyone. 

2032
01:50:39,400 --> 01:50:41,760
Do you think just on the 
marketing, like not just 

2033
01:50:41,760 --> 01:50:46,560
marketing the own sustaining 
cost like Evos, Evos is such a 

2034
01:50:46,560 --> 01:50:52,040
popular name amongst the Sydney 
like generalist funds management

2035
01:50:52,040 --> 01:50:56,560
community, even international, 
yeah, international investors 

2036
01:50:57,040 --> 01:50:59,560
being acquainted with. 
Do you think, you know, and I 

2037
01:50:59,560 --> 01:51:01,960
know there's stories like 
parallel with with Northern 

2038
01:51:01,960 --> 01:51:05,200
Star, but like you couldn't 
juxtapose to very different, 

2039
01:51:05,200 --> 01:51:08,440
like leaders of those businesses
in Bill and Jake, like, you 

2040
01:51:08,440 --> 01:51:11,480
know, Bill, the country guy who 
who's like, you know, 

2041
01:51:11,480 --> 01:51:15,080
experienced minor and, and 
speaks in like a like a speaks 

2042
01:51:15,080 --> 01:51:17,960
like a minor. 
And Jake the polished like 

2043
01:51:18,040 --> 01:51:21,520
Macquarie banker. 
He's he's so like schmick 

2044
01:51:21,520 --> 01:51:26,120
corporate flair, like, you know,
endorsed by maybe the fund 

2045
01:51:26,120 --> 01:51:27,680
manager community. 
Do you think there's anything 

2046
01:51:27,680 --> 01:51:30,240
about their images and like 
characteristics as people that 

2047
01:51:30,240 --> 01:51:34,040
also like you know was a, was it
was a marketing advantage or do 

2048
01:51:34,200 --> 01:51:35,360
you think I'm reading too much 
into it? 

2049
01:51:35,760 --> 01:51:38,240
No, I think you're 100% right. 
I mean, for one, it shows you 

2050
01:51:38,240 --> 01:51:42,400
there's multiple ways to to get 
to a fantastic outcome, but 

2051
01:51:43,440 --> 01:51:44,680
there's no, there's no 
accidents. 

2052
01:51:44,680 --> 01:51:46,960
We we've just, you know, spent 
hours looking about how 

2053
01:51:46,960 --> 01:51:49,480
thoughtful they are about 
everything you think their, 

2054
01:51:50,160 --> 01:51:53,560
their appearance and reputation 
is, is an accident. 

2055
01:51:53,840 --> 01:51:56,120
Absolutely not. 
I know you're a big believer 

2056
01:51:56,120 --> 01:52:00,120
that that companies culture is a
reflection of their founders. 

2057
01:52:00,120 --> 01:52:04,800
And in the case of of Jaycar, do
you think yeah, evolutions 

2058
01:52:04,840 --> 01:52:08,360
culture is is what it is as a 
result of? 

2059
01:52:08,640 --> 01:52:11,560
You know, we spoke about the 
dynamic of the team coming back 

2060
01:52:12,440 --> 01:52:15,040
on board. 
I think a little less spoken 

2061
01:52:15,040 --> 01:52:17,000
about dynamic is just like 
getting the job done. 

2062
01:52:17,480 --> 01:52:22,680
Like that shines through when we
talk about doing all those deals

2063
01:52:22,680 --> 01:52:27,960
in kind of quick succession just
to a can do attitude to get the 

2064
01:52:27,960 --> 01:52:33,160
job done in a very quick 
turnover time period, relying on

2065
01:52:33,160 --> 01:52:34,240
everyone. 
You know. 

2066
01:52:34,360 --> 01:52:38,520
You got Laurie doing the the 
cultivating with the the banks. 

2067
01:52:38,520 --> 01:52:42,080
You've got Aaron and and Karen 
doing the the more kind of deal 

2068
01:52:42,080 --> 01:52:44,840
making aspects. 
Jake would be doing the roadshow

2069
01:52:44,840 --> 01:52:47,920
side of things. 
All those and a whole bunch more

2070
01:52:47,920 --> 01:52:49,160
people that we haven't met 
there. 

2071
01:52:49,560 --> 01:52:52,200
But there's that sort of 
accountability that that rings 

2072
01:52:52,200 --> 01:52:54,880
through and and people having 
their responsibilities 

2073
01:52:54,880 --> 01:52:57,080
throughout the organization and 
just delivering up to them. 

2074
01:52:57,400 --> 01:53:00,160
They would, they could make, 
they could make things happen 

2075
01:53:00,160 --> 01:53:02,880
and fill in the void to back 
solve just to get to the 

2076
01:53:02,880 --> 01:53:05,480
opportunity. 
That's yeah, that's, that's, 

2077
01:53:05,640 --> 01:53:09,040
that's a great trait of an 
organization to to lean into the

2078
01:53:09,040 --> 01:53:12,880
complexity, even though it's 
harder work, but you need the 

2079
01:53:13,320 --> 01:53:15,280
just get it done attitude in 
order to get it done in the 1st 

2080
01:53:15,280 --> 01:53:17,720
place when it's hard. 
Yeah, and and it pays off. 

2081
01:53:18,000 --> 01:53:21,040
It pays off big time if we 
rattle through the other kind of

2082
01:53:21,040 --> 01:53:24,240
parts of the evolution way, 
making your people with like 

2083
01:53:24,360 --> 01:53:29,120
owners like massive cliche, but 
they pay everyone with stock. 

2084
01:53:29,160 --> 01:53:31,440
And that's something that 
Mcquarrie did as well that the 

2085
01:53:31,440 --> 01:53:34,440
Jake experience from when he was
a, you know, a young employee 

2086
01:53:34,440 --> 01:53:36,760
there. 
They buy from majors and not 

2087
01:53:36,760 --> 01:53:39,640
just in the sense that people 
think about, oh, you'll get a 

2088
01:53:39,640 --> 01:53:43,240
good deal out of a major, but 
they just put themselves in the 

2089
01:53:43,240 --> 01:53:46,160
areas, you know, in the best 
positions geologically and 

2090
01:53:46,160 --> 01:53:49,480
otherwise. 
So that rings true as well for 

2091
01:53:49,480 --> 01:53:52,480
all the deal making now organic 
growth is best. 

2092
01:53:52,480 --> 01:53:57,960
So if you are in those great 
regions, the the geos can find 

2093
01:53:57,960 --> 01:54:01,560
the prize brownfields wise. 
And lastly, they paid a 

2094
01:54:01,560 --> 01:54:03,360
dividend. 
They paid a dividend 

2095
01:54:03,360 --> 01:54:06,240
consistently because that forces
capital discipline. 

2096
01:54:06,520 --> 01:54:09,280
It makes you think more about 
the dollars that you have and 

2097
01:54:09,280 --> 01:54:11,840
how competitively they need to 
be used and invested or returned

2098
01:54:11,840 --> 01:54:15,000
to the owners of the business. 
The alignment, The alignment is 

2099
01:54:15,000 --> 01:54:19,800
striking in in all three stories
that all three big value 

2100
01:54:19,800 --> 01:54:21,600
creation stories that you've 
told. 

2101
01:54:21,840 --> 01:54:24,760
And yeah, Evo's no different. 
Alignment makes such a 

2102
01:54:24,760 --> 01:54:28,840
difference. 100% we have 
obviously spoken about how 

2103
01:54:29,200 --> 01:54:32,000
positive the gold price has been
as well. 

2104
01:54:32,080 --> 01:54:35,840
And, and maybe just to, to add 
to that, you have the, the 

2105
01:54:35,840 --> 01:54:38,800
opportunity there for everyone, 
but it was there for, for 

2106
01:54:38,800 --> 01:54:41,040
everyone. 
The outcome is where execution 

2107
01:54:41,040 --> 01:54:44,040
meets opportunity that leads to 
success. 

2108
01:54:44,080 --> 01:54:45,240
And that's, that's what they 
did. 

2109
01:54:45,240 --> 01:54:47,840
So maybe for a moment, we can 
sort of patent them on the back 

2110
01:54:47,840 --> 01:54:50,920
after, after saying the gold 
prices treated them so well. 

2111
01:54:51,080 --> 01:54:53,720
So some takeaways, mate. 
I'm kind of keen to, to hear 

2112
01:54:53,720 --> 01:54:56,040
some from you, what you, what 
you kind of think and reflect 

2113
01:54:56,040 --> 01:54:57,200
on. 
But I'll, I'll start with a 

2114
01:54:57,200 --> 01:55:01,240
couple, as you mentioned before,
the the alignment. 

2115
01:55:01,240 --> 01:55:05,520
So Jake shaped that board and in
a different way to what we've 

2116
01:55:05,520 --> 01:55:08,600
seen with many other companies 
with that exact chair role from 

2117
01:55:08,800 --> 01:55:11,720
very early on. 
And you know, maybe if you're 

2118
01:55:11,720 --> 01:55:13,680
listening this and thinking as 
somebody who wants to build a 

2119
01:55:13,680 --> 01:55:16,440
gold company or any sort of 
mining business or any business 

2120
01:55:16,440 --> 01:55:19,240
at all for that matter, in the 
future, that is an interesting 

2121
01:55:19,240 --> 01:55:21,480
way to to think about it, which 
is not the most common kind of 

2122
01:55:21,480 --> 01:55:23,800
route. 
You know, maybe it's, it's 

2123
01:55:23,800 --> 01:55:27,520
different from a governance kind
of perspective, but it's worth 

2124
01:55:27,520 --> 01:55:30,400
noting. 
I can't think enough about like 

2125
01:55:30,440 --> 01:55:32,240
how many of the people came back
like that. 

2126
01:55:32,240 --> 01:55:35,800
That just sounds, that's just 
such a, a glowing endorsement to

2127
01:55:35,800 --> 01:55:39,640
have people come back and do it.
One company, maybe a second 

2128
01:55:39,640 --> 01:55:42,760
company, maybe sometimes even a 
third company together is just 

2129
01:55:43,080 --> 01:55:45,520
such a, a glowing recommendation
that you sort of love, love 

2130
01:55:45,520 --> 01:55:49,040
working with with the people. 
And it's a it's a really cool 

2131
01:55:49,040 --> 01:55:51,880
thing to say. 
That that is, that's not to be 

2132
01:55:51,880 --> 01:55:54,560
like, yeah, I think I'm 
understandably spent so much of 

2133
01:55:54,560 --> 01:55:59,640
our our life with the people 
that we're working with. 

2134
01:56:00,280 --> 01:56:03,480
It's a big choice and it's a 
huge vote of confidence to even 

2135
01:56:03,480 --> 01:56:07,640
though like it would have been 
at a, at a, at a substantial 

2136
01:56:07,640 --> 01:56:13,320
intensity, I'm sure like to, to,
to have the continuity of of of 

2137
01:56:13,360 --> 01:56:15,560
personnel. 
Like that's, that's, that's 

2138
01:56:15,680 --> 01:56:18,640
that's, that's huge. 
A fun one to to think about in 

2139
01:56:18,640 --> 01:56:20,480
the takeaways, the deals that 
didn't happen. 

2140
01:56:21,560 --> 01:56:24,960
So I'm just going to rattle a 
few off here, but the Super Pit 

2141
01:56:25,280 --> 01:56:30,240
with Newmont before that. 
Dundee like they were they were 

2142
01:56:30,240 --> 01:56:35,120
trying to be troublemakers when 
when Northern star were were 

2143
01:56:35,120 --> 01:56:38,080
finalizing, you know, everything
and and to had agreed something 

2144
01:56:38,080 --> 01:56:42,040
with crazy like like, you know, 
evos were I think it's public 

2145
01:56:42,040 --> 01:56:43,760
knowledge. 
They were that would really try 

2146
01:56:43,800 --> 01:56:47,880
to put forward a a more 
compelling deal for crazy and 

2147
01:56:47,880 --> 01:56:51,280
they were willing to pay more. 
But but but crazy didn't renege 

2148
01:56:51,280 --> 01:56:54,600
on his on his word with with 
with Norman star. 

2149
01:56:55,760 --> 01:56:57,520
Another one that could have been
Kara Sudan. 

2150
01:56:58,520 --> 01:57:01,840
This is an interesting 1 to 
reflect upon because they were 

2151
01:57:01,840 --> 01:57:08,040
fractionally the underbidder 
here in a a deal that Saracen 

2152
01:57:08,080 --> 01:57:11,240
would win and they were relieved
that they didn't win this one. 

2153
01:57:11,240 --> 01:57:15,760
But that led to the emergence of
a a pretty a pretty mighty 

2154
01:57:15,760 --> 01:57:18,880
competitor in in Saracen. 
They were relieved because they 

2155
01:57:19,120 --> 01:57:22,200
they it reminded them of Edna 
May and they already had Edna 

2156
01:57:22,200 --> 01:57:25,200
May and they had a bunch of 
problems and issues and they 

2157
01:57:25,200 --> 01:57:27,680
didn't want any more headaches 
similar to Edna May. 

2158
01:57:27,760 --> 01:57:32,520
But as it turns out, like not 
not when Kara Sudan, yeah, 

2159
01:57:32,520 --> 01:57:37,320
created, created Saracen. 
Like that's the gold landscape 

2160
01:57:37,320 --> 01:57:39,400
would look very different. 
Sure would. 

2161
01:57:40,080 --> 01:57:42,520
Kingsgate as well. 
This is one we heard the 

2162
01:57:42,520 --> 01:57:46,200
presentation was even done and I
cannot verify at what point in 

2163
01:57:46,200 --> 01:57:47,880
time this happened so I'm just 
going to leave it there. 

2164
01:57:48,120 --> 01:57:51,960
But Kingsgate and the Chat tree 
mine in Thailand, that would 

2165
01:57:51,960 --> 01:57:53,320
have been different. 
That would have been so 

2166
01:57:53,320 --> 01:57:56,560
different. 
And then there was also Detour 

2167
01:57:56,560 --> 01:57:58,920
when they looked in Canada and 
they looked in North America for

2168
01:57:58,920 --> 01:58:01,680
a long time. 
So Detour is another one that 

2169
01:58:02,000 --> 01:58:03,520
might have been. 
Yeah. 

2170
01:58:03,680 --> 01:58:06,040
So there's like opportunity cost
in the deals you didn't do. 

2171
01:58:06,040 --> 01:58:09,400
There's also opportunity cost 
obviously in the deals you did 

2172
01:58:09,400 --> 01:58:12,840
do. 
Do you think Redblake is a deal 

2173
01:58:12,840 --> 01:58:16,080
that they shouldn't have done? 
I think it's just too hard to 

2174
01:58:16,080 --> 01:58:18,600
say if you're there at that 
point in time, your balance 

2175
01:58:18,600 --> 01:58:20,840
sheet is healthy. 
These things are trading super 

2176
01:58:20,840 --> 01:58:24,720
compellingly and you know, come 
at it from from a finance kind 

2177
01:58:24,720 --> 01:58:27,720
of perspective. 
Oh, these guys have just under 

2178
01:58:27,720 --> 01:58:29,200
invested. 
Oh, there's a lot of low hanging

2179
01:58:29,200 --> 01:58:31,080
fruit there. 
Sure, you think you can do it 

2180
01:58:31,080 --> 01:58:34,400
better so. 
Is the risk of like leaving your

2181
01:58:34,400 --> 01:58:38,680
backyard so substantial and 
maybe maybe underrated in some 

2182
01:58:38,680 --> 01:58:41,560
respects? 
Because I think Red Lake was was

2183
01:58:41,560 --> 01:58:44,960
announced, was announced, it was
announced before the Super like 

2184
01:58:44,960 --> 01:58:47,480
the Super pit halves kind of 
sold in rapid succession in 

2185
01:58:47,480 --> 01:58:48,800
between the two, in between the 
two. 

2186
01:58:48,800 --> 01:58:50,520
Wow. 
So like that, that was the 

2187
01:58:50,520 --> 01:58:52,040
opportunity cost in some 
respects. 

2188
01:58:52,040 --> 01:58:56,360
Like I know the upfront price 
maybe wasn't as comparable, but 

2189
01:58:56,600 --> 01:58:58,480
like in the fullness of time, 
the amount of capital that 

2190
01:58:58,480 --> 01:59:01,000
they've they've put in and the 
additional bolt on acquisition, 

2191
01:59:01,000 --> 01:59:04,760
they've put more capital to work
than they would have been 

2192
01:59:04,760 --> 01:59:07,320
required for for half of the 
Super pit. 

2193
01:59:07,560 --> 01:59:09,960
I think that's that's the 
opportunity cost that that may 

2194
01:59:09,960 --> 01:59:11,480
have been missed. 
And I'm sure they're awake to 

2195
01:59:11,480 --> 01:59:13,560
that. 
And it's rich of me to to say 

2196
01:59:13,560 --> 01:59:17,080
and be critical of. 
But but yeah, like, you know, 

2197
01:59:17,560 --> 01:59:20,400
we're not, we're not perfect 
even if we've got like many, 

2198
01:59:20,400 --> 01:59:22,880
many runs on the board from a 
capital allocation perspective. 

2199
01:59:22,880 --> 01:59:24,240
I think that's like a reflection
I have. 

2200
01:59:25,280 --> 01:59:28,240
Yeah, I would totally agree. 
And my last two, it might be a 

2201
01:59:28,240 --> 01:59:31,880
bit sort of philosophical, but I
think that thinking about like 

2202
01:59:31,880 --> 01:59:36,360
the the toughest time for the 
business is also the best time. 

2203
01:59:36,880 --> 01:59:41,280
So 2014 to 2015 you, you know, 
you heard all the the costs they

2204
01:59:41,280 --> 01:59:43,320
were cutting out of the business
and all these sorts of things, 

2205
01:59:44,000 --> 01:59:46,560
but the deals they did led to 
the growth of the company. 

2206
01:59:46,560 --> 01:59:47,840
There's there's something kind 
of in that. 

2207
01:59:48,320 --> 01:59:52,440
And lastly, good things just 
take a long, long time. 

2208
01:59:52,440 --> 01:59:55,240
We spoke about the amount of 
times you could look and take a 

2209
01:59:55,240 --> 02:00:00,000
multi year snapshot of the share
price and it would be down or it

2210
02:00:00,000 --> 02:00:03,240
would be flattish. 
But if you zoom out long enough,

2211
02:00:03,680 --> 02:00:06,760
it's an incredible value 
creation story and. 

2212
02:00:07,200 --> 02:00:09,200
I think that just hammers home 
the fact that, you know, you 

2213
02:00:09,200 --> 02:00:11,160
keep compounding, you keep 
working at things over a long, 

2214
02:00:11,160 --> 02:00:13,800
long time and it sort of pays 
off. 

2215
02:00:13,800 --> 02:00:15,960
But you need to be patient. 
Takes a lot of patience. 

2216
02:00:16,800 --> 02:00:20,400
Yeah, it's, it's a story of 
deals. 

2217
02:00:21,000 --> 02:00:24,440
There's like a point there on 
like, you know, you bring up the

2218
02:00:24,680 --> 02:00:28,240
that slide with all of the peers
and a lot of those peers like 

2219
02:00:28,240 --> 02:00:31,800
disappeared or fell over from 
like far, far, far more 

2220
02:00:31,800 --> 02:00:36,280
erroneous capital allocation 
than than than red, red, like 

2221
02:00:36,280 --> 02:00:37,720
proved to be the fullness of 
time. 

2222
02:00:37,720 --> 02:00:43,280
Like like, I don't think like I 
can understate how, how 

2223
02:00:43,520 --> 02:00:47,720
appreciative I am of like of 
capital allocation of gold 

2224
02:00:47,720 --> 02:00:48,840
miners. 
This is the thing that 

2225
02:00:48,840 --> 02:00:52,520
differentiates gold miners from 
each other is how you allocate 

2226
02:00:52,520 --> 02:00:54,240
capital. 
And I think like what is 

2227
02:00:54,240 --> 02:00:57,920
evolution as a company? 
Like they get capital allocation

2228
02:00:57,920 --> 02:01:01,920
right 9099% of the time. 
Like these are these are 

2229
02:01:01,920 --> 02:01:04,200
remarkably good capital 
allocators. 

2230
02:01:04,880 --> 02:01:08,720
They're like thoughtful, nimble 
deal makers and they take the 

2231
02:01:08,720 --> 02:01:12,080
responsibility like serious. 
It's a it's a safe set of hands.

2232
02:01:12,520 --> 02:01:17,240
They're they're they're just 
they're they're they're insanely

2233
02:01:17,240 --> 02:01:19,120
backable. 
I wonder if you like, if you you

2234
02:01:19,120 --> 02:01:21,880
thought much about that 
perception of them as you've 

2235
02:01:21,880 --> 02:01:23,200
like put this work together. 
JD I. 

2236
02:01:23,520 --> 02:01:27,080
Think like a safe pair of hands 
is a, is a kind of great way 

2237
02:01:27,360 --> 02:01:30,680
that what you mentioned before 
the institutional investors in 

2238
02:01:30,680 --> 02:01:33,360
particular perhaps the the 
generalists would kind of call 

2239
02:01:33,360 --> 02:01:35,400
them a safe pair of hands. 
They're reliable. 

2240
02:01:35,840 --> 02:01:40,040
And again, a bit of a cliche, 
but like we say, we do deliver. 

2241
02:01:40,040 --> 02:01:42,840
We deliver that type of thing 
which they've said for a long, 

2242
02:01:42,840 --> 02:01:45,480
long time. 
And the consistency comes back 

2243
02:01:45,480 --> 02:01:48,560
to the strategy as well, which 
hasn't changed throughout. 

2244
02:01:48,560 --> 02:01:52,120
And yeah, you can't say the same
for, for a heap of miners out 

2245
02:01:52,120 --> 02:01:53,880
there. 
So I, I couldn't agree more with

2246
02:01:53,920 --> 02:01:56,440
with what you kind of put 
together and the bar you kind of

2247
02:01:56,440 --> 02:01:59,760
put it on there. 
It is a remarkable story to, to 

2248
02:01:59,760 --> 02:02:02,400
think about, to learn about, to,
to understand. 

2249
02:02:02,480 --> 02:02:05,160
And yeah, hopefully there's 
there's more than a few sort of 

2250
02:02:05,280 --> 02:02:06,840
Nuggets in there for for people 
to glean. 

2251
02:02:06,840 --> 02:02:10,680
From I've got some more 
questions for you unprompted 

2252
02:02:10,680 --> 02:02:12,800
mate. 
How do you think? 

2253
02:02:13,000 --> 02:02:17,800
How do you think evolution 
differed from Northern Star? 

2254
02:02:18,440 --> 02:02:22,120
I mean, firstly, the stories 
kind of track themselves in 

2255
02:02:22,120 --> 02:02:26,560
particular once the story gets 
going at Northern Star, 

2256
02:02:27,320 --> 02:02:30,360
Evolution took an asset that was
more mature. 

2257
02:02:30,360 --> 02:02:33,200
They took a producing asset that
wasn't going to shut down in 

2258
02:02:33,200 --> 02:02:36,040
seven months time like Paulson's
was. 

2259
02:02:36,200 --> 02:02:38,840
So once that quick share price 
appreciation is done at Northern

2260
02:02:38,840 --> 02:02:43,560
Star, there's a lot more of a 
closer tracking between the two.

2261
02:02:45,000 --> 02:02:47,480
Jundee may be the best deal ever
like that. 

2262
02:02:47,480 --> 02:02:49,240
That is one of the the the 
takeaways. 

2263
02:02:49,560 --> 02:02:52,760
You kind of got to have like 82 
and a half million bucks for 

2264
02:02:52,760 --> 02:02:54,400
that. 
It's just astounding. 

2265
02:02:54,400 --> 02:02:56,400
As good as all these deals that 
we've spoken about. 

2266
02:02:56,440 --> 02:02:58,440
We've just spent two hours 
talking about the deal making 

2267
02:02:58,440 --> 02:03:01,640
the House of Evolution, but 
Jundee is still a far better 

2268
02:03:01,640 --> 02:03:03,240
deal than you guys could pull 
off. 

2269
02:03:04,200 --> 02:03:07,080
I still kind of scratch my head 
at at that one. 

2270
02:03:07,440 --> 02:03:09,880
And yeah, I mean, I I coming 
into it had always thought, you 

2271
02:03:09,880 --> 02:03:14,560
know, evolution like the deal 
makers Northern Star, 

2272
02:03:14,800 --> 02:03:17,560
particularly because of that 
early period with, with the the 

2273
02:03:17,560 --> 02:03:19,800
G OS and what they had to do to 
kick out the life. 

2274
02:03:20,160 --> 02:03:23,240
But you know, these these two 
stories are far more alike than 

2275
02:03:23,240 --> 02:03:26,600
they are different. 
Balance sheet do you think like 

2276
02:03:26,680 --> 02:03:30,480
yeah, I know, I know evos have 
have a you know, their own 

2277
02:03:30,480 --> 02:03:32,920
target net debt range or gearing
range and the likes. 

2278
02:03:33,640 --> 02:03:37,120
At times, their share price has 
been quite volatile because of 

2279
02:03:37,120 --> 02:03:41,520
debt in the cap structure. 
Do you have any reflections or 

2280
02:03:41,520 --> 02:03:44,520
thoughts about about gearing? 
Super good question. 

2281
02:03:44,520 --> 02:03:48,440
Like today talk about that 15% 
gearing and I've reflected like 

2282
02:03:48,440 --> 02:03:51,080
a bunch on this because I've 
always come from a position that

2283
02:03:51,080 --> 02:03:53,760
like it's kind of terrifying. 
And we saw on the other hand 

2284
02:03:53,760 --> 02:03:57,080
with with the Fortescue story, 
yeah, when it goes well, boy 

2285
02:03:57,080 --> 02:04:01,280
does it go well. 
But if you have a portfolio of 6

2286
02:04:01,280 --> 02:04:07,360
to 8 assets that operate in the,
the better half of the cost 

2287
02:04:07,360 --> 02:04:11,360
curve, then I think 15% is, is 
pretty prudent. 

2288
02:04:12,360 --> 02:04:15,480
I, I'm a fan of the, the 
strategy of taking on a bit of a

2289
02:04:15,480 --> 02:04:19,480
debt if you have the confidence 
that within like 2 years you can

2290
02:04:19,480 --> 02:04:22,400
hammer that down. 
Like there, there is a bit of 

2291
02:04:22,400 --> 02:04:26,520
risk to it, but that, that 
amplifies the return quite a 

2292
02:04:26,520 --> 02:04:29,080
bit. 
And I think they're very, 

2293
02:04:29,080 --> 02:04:31,760
they're very sort of thoughtful 
with that. 

2294
02:04:31,760 --> 02:04:35,840
But again, you know, they, 
they'll often say like single 

2295
02:04:35,840 --> 02:04:37,560
asset producers are far too 
risky. 

2296
02:04:38,000 --> 02:04:41,080
They they will say that and they
will after you know, almost all 

2297
02:04:41,080 --> 02:04:44,160
I think all their deals they 
would hedge in, they would lock 

2298
02:04:44,160 --> 02:04:47,760
in a bit to to minimize the, the
gold price falling away risk. 

2299
02:04:47,760 --> 02:04:50,440
So I think there is there is 
room for that and we see that 

2300
02:04:50,440 --> 02:04:52,800
more at the bigger end of minus 
which we don't speak quite of 

2301
02:04:52,800 --> 02:04:57,160
quite often about being a bit 
more sort of thoughtful given 

2302
02:04:57,160 --> 02:05:00,200
where they sit in the cost curve
with their assets. 

2303
02:05:02,200 --> 02:05:05,280
The, the part of that marketing 
pace is the like the dividend 

2304
02:05:05,280 --> 02:05:07,600
predictability as well. 
Even in the bad years, they'll 

2305
02:05:07,800 --> 02:05:10,360
pay a pretty, pretty marginal 
dividend. 

2306
02:05:10,360 --> 02:05:15,280
But the marketing pace, like, I 
wonder what impact that actually

2307
02:05:15,280 --> 02:05:17,920
has to their multiple. 
I think it's, I think it's a 

2308
02:05:18,040 --> 02:05:22,160
bit, I think they get a fair bit
of, of a multiple rewrite purely

2309
02:05:22,360 --> 02:05:24,240
based on how marketable they 
are. 

2310
02:05:25,280 --> 02:05:28,360
Like I've spoken to a bunch of 
different people over over many 

2311
02:05:28,360 --> 02:05:30,120
years. 
I always like ask people like 

2312
02:05:30,880 --> 02:05:33,240
Evolution's valuation makes 
sense, right? 

2313
02:05:33,320 --> 02:05:36,760
And yes, gold price keeps going 
up and so evolution share price 

2314
02:05:36,760 --> 02:05:39,880
keeps going up. 
But everyone always says no, a 

2315
02:05:40,480 --> 02:05:43,280
lot of people, a lot of people 
think that, you know, Evo's 

2316
02:05:43,280 --> 02:05:47,200
commands a premium in the market
that is not at all not not that 

2317
02:05:47,200 --> 02:05:49,480
is that is that is like 
sufficiently larger than what 

2318
02:05:49,480 --> 02:05:52,160
the, you know, the, the real 
value of, of what their assets 

2319
02:05:52,160 --> 02:05:55,360
might be, especially compared to
other people, other, other other

2320
02:05:55,360 --> 02:05:57,360
comparable companies. 
And part of that, it's like just

2321
02:05:57,360 --> 02:06:01,400
that, that that marketing factor
and now this company is, is so 

2322
02:06:01,400 --> 02:06:03,840
large that it is in enormous 
indexes. 

2323
02:06:04,640 --> 02:06:06,280
Yeah. 
I've always thought the same. 

2324
02:06:06,360 --> 02:06:09,080
I've always thought the same 
more so in the last few years. 

2325
02:06:09,080 --> 02:06:12,960
And that has been tainted by 
that period of heavy investment.

2326
02:06:12,960 --> 02:06:18,920
So like, you know, a lot of 
money was spent in in 2223 into 

2327
02:06:18,920 --> 02:06:23,680
24 and obviously like the the 
change in cash on on, on the, on

2328
02:06:23,680 --> 02:06:25,920
the books didn't look that great
through that period because they

2329
02:06:25,920 --> 02:06:27,720
were investing so heavily in the
assets. 

2330
02:06:27,760 --> 02:06:30,600
So very kind to see what that 
looks like in in the next few 

2331
02:06:30,600 --> 02:06:33,120
years. 
I want to put like a couple of 

2332
02:06:33,280 --> 02:06:38,360
questions to you as well, mate, 
just in relation to, I suppose, 

2333
02:06:38,360 --> 02:06:42,240
like firstly evolution the 
company, like what, Like what do

2334
02:06:42,240 --> 02:06:46,560
you think is next for them? 
In some in some ways I, I ask 

2335
02:06:46,560 --> 02:06:50,520
you that because the story that 
Jake tells with Sino gold is 

2336
02:06:50,520 --> 02:06:53,480
sign it like you know, the next 
phase of growth for Sino gold 

2337
02:06:53,480 --> 02:06:56,080
was not actually was not 
actually them embarking on more 

2338
02:06:56,080 --> 02:06:58,080
growth. 
It was to to to combine with 

2339
02:06:58,080 --> 02:07:01,040
another company. 
Sometimes the deal is is the 

2340
02:07:01,040 --> 02:07:06,800
phase of growth like Jake's 
stepping stepping down from an 

2341
02:07:06,800 --> 02:07:09,800
executive position into a non 
exec and and and embarking on a 

2342
02:07:09,800 --> 02:07:12,160
new adventure in a smaller 
company. 

2343
02:07:13,200 --> 02:07:15,760
Yeah, yeah. 
I mean, from Jake sort of 

2344
02:07:15,760 --> 02:07:17,920
stepping down, I think growing a
smaller company is just more 

2345
02:07:17,920 --> 02:07:20,520
exciting. 
But the bigger question about 

2346
02:07:20,520 --> 02:07:23,000
where does evolution go from 
here is a really interesting one

2347
02:07:23,880 --> 02:07:27,560
because where do you kind of go?
Obviously, you can continue to 

2348
02:07:27,880 --> 02:07:30,640
improve the portfolio On paper, 
that makes a whole lot of sense.

2349
02:07:30,920 --> 02:07:34,080
How do you actually do that? 
The best answer I've kind of got

2350
02:07:34,080 --> 02:07:38,080
is like looking back in time, 
looking 10 years back, you wait 

2351
02:07:38,080 --> 02:07:40,480
for your opposition to trip 
themselves up. 

2352
02:07:40,760 --> 02:07:45,080
Like if you can make good cash 
when times are really, really 

2353
02:07:45,080 --> 02:07:48,520
good and just wait for the bad 
times, you don't know what 

2354
02:07:48,520 --> 02:07:50,160
opportunities are going to 
present themselves. 

2355
02:07:50,480 --> 02:07:53,240
But as we sit here today when 
everything looks very expensive,

2356
02:07:53,520 --> 02:07:55,480
it's pretty hard to think like, 
where do they go from here? 

2357
02:07:55,880 --> 02:07:59,720
So remember how different that 
landscape looked 12 years ago 

2358
02:07:59,720 --> 02:08:01,200
when we looked at all the 
companies around? 

2359
02:08:01,600 --> 02:08:03,040
What's it going to look like in 
10 years? 

2360
02:08:03,960 --> 02:08:07,000
Like that comes down to how you 
manage yourself in the good 

2361
02:08:07,000 --> 02:08:08,880
times. 
You, you know, you set the table

2362
02:08:08,880 --> 02:08:10,800
in the good times to what's 
going to follow. 

2363
02:08:11,640 --> 02:08:13,760
We've spoken about this with 
companies taking measly amounts 

2364
02:08:13,760 --> 02:08:15,400
of debt when things are really 
good. 

2365
02:08:15,400 --> 02:08:18,160
And all of a sudden that amount 
of debt looks enormous when when

2366
02:08:18,160 --> 02:08:21,640
the tide turns very quickly. 
So who knows what opportunities 

2367
02:08:21,640 --> 02:08:23,760
will present themselves if you 
just remain disciplined in the 

2368
02:08:23,760 --> 02:08:25,480
good times. 
What do you think? 

2369
02:08:25,880 --> 02:08:30,840
I think like even though yeah, 
transitions happening with Jake,

2370
02:08:30,880 --> 02:08:33,040
Evo still has great consistency 
of personnel. 

2371
02:08:33,360 --> 02:08:37,240
There's, you know, like Laurie 
has been there for a very long 

2372
02:08:37,240 --> 02:08:42,720
time and has like tremendous buy
in from from his employees. 

2373
02:08:42,960 --> 02:08:45,040
Yeah, you've still got Kieran 
and the BD team. 

2374
02:08:45,200 --> 02:08:49,720
There's like there has been 
some, some change, but like 

2375
02:08:49,720 --> 02:08:52,200
there's still like, you know, 
great, great consistency there. 

2376
02:08:52,440 --> 02:08:54,600
I don't think you'll have like 
massive deviation from the 

2377
02:08:54,600 --> 02:08:56,040
strategy. 
And I think like the party line 

2378
02:08:56,040 --> 02:08:58,360
has been in the good times, 
we're more likely to be sellers 

2379
02:08:58,360 --> 02:09:00,080
than we are buyers. 
Like I should believe them on 

2380
02:09:00,080 --> 02:09:01,640
that. 
Like I wouldn't be surprised to 

2381
02:09:01,640 --> 02:09:05,560
see them potentially rationalize
certain assets in these good 

2382
02:09:05,560 --> 02:09:07,200
times. 
Like I think of the likes of, 

2383
02:09:08,600 --> 02:09:10,800
yeah, if you get if you get a 
great offer for red light, do 

2384
02:09:10,840 --> 02:09:12,360
you sell it? 
Or if you get a great offer for 

2385
02:09:12,360 --> 02:09:14,960
mangari, do you sell it? 
You know, I think the answer to 

2386
02:09:14,960 --> 02:09:17,640
that is is you probably do. 
I wouldn't be surprised to see 

2387
02:09:17,640 --> 02:09:20,640
them like incrementally continue
to add more like copper. 

2388
02:09:20,640 --> 02:09:25,400
And why do I say that? 
Because in what worked, like if 

2389
02:09:25,400 --> 02:09:31,320
the next phase of growth for for
Evos is, is is unclear, because 

2390
02:09:31,320 --> 02:09:33,760
they've already got the right 
number of, of mines that they've

2391
02:09:33,760 --> 02:09:35,120
always said that would, that 
would have. 

2392
02:09:35,160 --> 02:09:38,760
And they, and they trade at such
a like, they trade at such a 

2393
02:09:38,760 --> 02:09:41,200
premium that like it never makes
sense for them to get acquired 

2394
02:09:41,200 --> 02:09:42,480
at a premium. 
Do you know what I mean? 

2395
02:09:42,480 --> 02:09:45,240
Like if you traded at a premium 
to everyone else, no one's doing

2396
02:09:45,240 --> 02:09:47,400
a deal to buy you at a premium 
because it's not in a creative 

2397
02:09:47,400 --> 02:09:48,240
deal. 
You can't sell that to 

2398
02:09:48,240 --> 02:09:51,760
shareholders. 
So but adding more copper kind 

2399
02:09:51,760 --> 02:09:55,480
of does every everyone, everyone
wants more copper. 

2400
02:09:55,480 --> 02:09:59,440
Everyone wants like, yeah, I 
think you attract a high, a high

2401
02:09:59,440 --> 02:10:02,800
premium and you can backfill 
that with with more copper in 

2402
02:10:02,800 --> 02:10:06,560
the very long run. 
I think they I think it's a 

2403
02:10:06,840 --> 02:10:08,640
merger of equals with a, with a 
PRI. 

2404
02:10:08,680 --> 02:10:11,880
Think like one of the Canadian 
miners, yeah. 

2405
02:10:11,880 --> 02:10:15,560
Where where scale becomes 
increasingly important, Agnico's

2406
02:10:15,560 --> 02:10:19,600
become like enormous, like as, 
as they already are, you know, 

2407
02:10:19,600 --> 02:10:22,400
maybe, maybe, maybe Barrick and 
and you might merge. 

2408
02:10:22,400 --> 02:10:24,600
So where does that leave the, 
the tier below that? 

2409
02:10:24,600 --> 02:10:26,840
I think you might have yeah, a 
merger vehicles. 

2410
02:10:26,960 --> 02:10:29,960
That's my prediction completely 
unfounded and not substantiated 

2411
02:10:29,960 --> 02:10:33,160
by by anyone other than my own 
like, like thoughts. 

2412
02:10:33,160 --> 02:10:36,720
But yeah, I think the next phase
of gross growth is actually it's

2413
02:10:36,720 --> 02:10:40,360
actually similar to what Sign of
Gold was when when they actually

2414
02:10:41,080 --> 02:10:43,240
had to to sell themselves to El 
Dorado. 

2415
02:10:44,760 --> 02:10:47,240
I think that's a good take. 
What do you think of like 

2416
02:10:47,880 --> 02:10:51,240
Jake's? 
Yeah, like so he's now he's now 

2417
02:10:51,600 --> 02:10:55,840
new vehicle is, is Federation 
mining Endura Endura renamed. 

2418
02:10:56,480 --> 02:10:59,800
This is a an Aussie super kind 
of back back vehicle. 

2419
02:10:59,840 --> 02:11:01,760
I'm sure it'll make its way to 
public markets at some point, 

2420
02:11:01,760 --> 02:11:06,080
but do you just apply cookie 
cutter evolution playbook to 

2421
02:11:06,080 --> 02:11:08,000
that vehicle and expect that's 
what will happen next? 

2422
02:11:08,120 --> 02:11:11,760
Well, it's kind of funny, right?
Because Conquest, it was also 

2423
02:11:11,760 --> 02:11:15,160
started in a period of a bull 
gold market, which we're clearly

2424
02:11:15,160 --> 02:11:17,760
in today. 
You're going to have to be a bit

2425
02:11:17,760 --> 02:11:20,600
patient if you want to find kind
of four sellers around there. 

2426
02:11:21,040 --> 02:11:24,320
But they've got a bunch of work 
to do in in the meantime and 

2427
02:11:24,320 --> 02:11:27,040
they're going to have no 
shortage of people giving them 

2428
02:11:27,040 --> 02:11:31,320
money. 
So let's let's kind of say, are 

2429
02:11:31,320 --> 02:11:33,440
they going to do something 
massively different to what's 

2430
02:11:33,760 --> 02:11:35,200
what Jake has kind of done in 
the past? 

2431
02:11:35,360 --> 02:11:40,160
I find that hard to to believe, 
but yeah, it's, it's all about 

2432
02:11:40,160 --> 02:11:42,040
the timing and how these things 
sort of present themselves, the 

2433
02:11:42,040 --> 02:11:45,320
deals that present themselves. 
Are there maybe slightly 

2434
02:11:45,320 --> 02:11:47,520
different jurisdictions they 
could play in perhaps? 

2435
02:11:47,520 --> 02:11:49,960
I mean, New Zealand already is 
is slightly different, although 

2436
02:11:50,240 --> 02:11:53,440
evolution did look there a bit 
of exploration there back in the

2437
02:11:53,440 --> 02:11:56,400
day. 
But it's it's a tough one. 

2438
02:11:56,400 --> 02:11:59,360
How do you think about that? 
I think it's, I think it's the 

2439
02:11:59,360 --> 02:12:01,720
same playbook that'll will pan 
out in time. 

2440
02:12:02,400 --> 02:12:07,080
What what you have is like a 
serially successful person, 

2441
02:12:07,800 --> 02:12:10,280
nominal access to capital is an 
opportunity. 

2442
02:12:10,760 --> 02:12:14,120
And that's like that's one, one 
common theme is like they can, 

2443
02:12:14,320 --> 02:12:16,280
yeah, evolution conceive the 
opportunity. 

2444
02:12:16,640 --> 02:12:20,000
I think it'll be a story of 
deals to come there. 

2445
02:12:20,360 --> 02:12:25,120
I'm excited to see what deals 
can kind of be manufactured in a

2446
02:12:25,160 --> 02:12:27,120
in a new vehicle. 
But I've got no doubt that that 

2447
02:12:27,120 --> 02:12:28,800
that's where that's what will 
happen. 

2448
02:12:29,160 --> 02:12:31,320
Commodities are cyclical and 
I've no doubt we're going to see

2449
02:12:31,320 --> 02:12:33,160
another cycle in the gold market
sooner or later. 

2450
02:12:33,600 --> 02:12:34,760
Another cycle? 
What do you mean mate? 

2451
02:12:34,760 --> 02:12:35,840
You're predicting the end of 
this one. 

2452
02:12:37,680 --> 02:12:39,480
It's right when things are so 
good that you don't think 

2453
02:12:39,480 --> 02:12:42,320
they're going to go bad when 
things turn, so let's see what 

2454
02:12:42,320 --> 02:12:48,280
happens there. 100% mate. 
Well, thank you for for your 

2455
02:12:48,280 --> 02:12:50,720
research and thanks for, for 
telling the story. 

2456
02:12:51,000 --> 02:12:53,920
I, I love it. 
I know a lot of other people 

2457
02:12:53,960 --> 02:12:57,200
love it get some great feedback 
from from the work you've done 

2458
02:12:57,200 --> 02:12:58,040
on these mate. 
It's. 

2459
02:12:58,480 --> 02:12:59,680
Mate, appreciate you putting out
with it. 

2460
02:12:59,760 --> 02:13:02,080
It was a long sort of story to 
tell, but yeah, hopefully the 

2461
02:13:02,080 --> 02:13:05,040
listeners got a bit of value out
of it because the the research 

2462
02:13:05,040 --> 02:13:07,240
was super fun to do and I think 
it's a story worth telling A. 

2463
02:13:07,520 --> 02:13:11,400
100% hoodoo Hoodoo. 
And a huge thanks to our great, 

2464
02:13:11,400 --> 02:13:14,640
great partners, Mate, Sandy 
Ground Support, Focus Platform 

2465
02:13:14,640 --> 02:13:16,960
by Market Tech and Intralinks. 
Check them out. 

2466
02:13:17,400 --> 02:13:21,320
Hoodoo, hoodoo. 
Now remember, I'm an idiot. 

2467
02:13:21,600 --> 02:13:24,040
JD is an idiot. 
If you thought any of this was 

2468
02:13:24,040 --> 02:13:26,640
anything other than 
entertainment, you're an idiot 

2469
02:13:26,920 --> 02:13:28,160
and you need to read out a 
disclaimer.