Who's going to be running Bellevue in FY20?
7? That's good, mum.
Is it cheating if I say the same?
Do I have to go different? Righto buddy, miners buddy.
I've figured out five day conference takes five days to
get the voice back. I'm I'm in day four of voice
recovery. Day.
Four. What a bloody week.
Sounds like your voice is about 70%. 70% I'm nearly there one
more day but you don't mind. The had a haircut and a
different hat so I think my face looks chubbier but anyway.
Going for a new look, Maddie. Thanks Oz, I meant for a bloody
great work. Sounds like a rising stars.
Good times, boys. Sounded wicked.
Bellevue the news has coming up today, so that is probably going
to take up the whole show. I, I think we may as well just
talk about it. It feels like, it feels like
they kept everyone in suspense for, for, for a while not being
in, in voluntary suspension and, and we finally get used today
that there's an equity race to go with it.
Yes, one of the best sealed suspensions going around.
Most of them are like that. But it was, yeah, it didn't like
there was a lot of speculations. But no, no, like very rigid
rumours during that period I think.
I would say like my prediction last week was based on nothing
was I, I wouldn't have been surprised if they didn't come
out of suspension at all and it was just going to be a a sale.
I was sort of surprised it got to this stage.
That'd be brave, yeah. Yeah.
So because I assume there probably would have been a bit
of interest during the suspension which we'll go into,
which was mentioned. So yeah, a lot to cover.
So let's take it away. I guess, I guess first and
foremost guidance first thing, right.
So FY25 redone at 1:29 to 1:34 at a midpoint of just under 2500
Aussie all in sustaining. So kind of like we touched on
Maddie, that puts it at kind of 40 to 45,000 oz needed for the
final quarter of the financial year.
Yeah. And then obviously you've got
the the five year plan being wiped 150,000 oz marked for next
financial year and then a kind of three-year period where they
do 190,000 oz. So that's a kind of basic five
year ish plan, right? Yeah.
So essentially looks like for the moment, the whole 200,000 oz
numbers being what like doing the doing the calcs for 190,000
oz, that's sounded about 1.2 million ton per annum at the
reserve grade of 5 grams a ton. They did say on the call they
were talking about 1.35, but then they were saying the
reserve wasn't going to be changed.
Well, one thing is probably surprising that the reserve
guard wasn't dropped, but it's these were like not gardens
numbers that 190. There's like a indicative
prediction for FY20 6. So yeah, it was.
It's a fairway off where where they'd last signal when they
raised money right like that was they've raised their last equity
and and sort of talked about it at 250,000 oz per annum kind of.
Yeah, yeah, we and efficient those, Yeah.
So those they're probably the numbers that aren't sort of
adding up saying 1.6 million tonne was going to get them
250,000 oz, but now they're indicating maybe 1.21 point 3 is
going to get them 190,000 oz. So which makes me think I don't
can't say it being it, it potentially just might not be a
5 grand, might it might be a 4 1/2, but I haven't yet said they
are down grading the reserve. Yeah, exactly.
To that point, Maddie, there was the question kind of asked and
they were kind of prying into that.
That sort of 60,000 oz per annum reduction that we're seeing, is
that purely a result of instead of doing 1.6 million ton per
annum doing 1.35 or have you worked in a bit of buffer by
being a bit conservative in your reserve?
And the signalling from management was that it's mainly
a factor of just those through that throughput number coming
down and not actually conservatism in in the reserve
grade, which we've of course sort of seen kind of trimmed
last year or so. So yeah, I think you're, you're
on the right track there. I was kind of expecting that a
bit as well when you see that they're they're going a bit more
cautiously at the overall output of the mine.
Yeah. And you look at like you look at
the photos here, like in terms of, you know, trying to figure
out what the reserve grade is from a geological estimation
point of view. And you look at like, you know,
this top picture here, you see, see a lot of like bits of this
is just in the drive itself. Who knows what's in between the
levels and everything. But like you see bits of
internal waste there, like in a, in a couple of spots, like you
see in one picture down the bottom, it's like pretty wide in
the drive. And then you see it pinch up at
the top. So I think there's a lot of
pinching, swelling, bit of internal waste here and there.
So trying to wrap a accurate number around the reserve is
probably a bit challenging whether I don't know if 5 grams
is what they consider conservative or not.
But maybe there's a lot of factors that contribute to they
talked about in the the blind Stopes that I'll say they're
talking about 3 blind Stopes they took at the end of quarter
had a lot the fault cut it off at a point.
So they took a lot of waste. So by the sounds, there's a lot
of cross cutting like faults that can shift the ore around
like that's that's on the extremities.
Look, I'm not sure. I think there might be also
faults within the drives that can sort of jump it around a bit
and you can follow it in the drive, but there might be a
fault up in the middle of the stope that you don't know is
there until you mine it in the grades lower.
So there's a lot of, yeah, it sounds like they they do point
to geological complexities. I think they worded it or for
parts of the quarter. So I think that's probably going
to be a a thing going forward. You could, you could kind of
infer that that degree of, you know, confidence or lack
thereof. When they talked about they said
the June, the June quarter mine plan is, is 90% delineated with
great control and they said the next two quarters.
So in September and December quarters are 75% delineated with
greater control. So yeah, there's, there's,
there's, there's confidence to be to be had through through all
of that. But but no, no reserve downgrade
yet. Yeah, just just a change in
change in guidance and. Yeah, I I think they'll get it
by tonnes. Like it looks like with the
upgrades they've done in the middle, they've shown that they
can get 1.35 million tonne through on an annualised rate.
So I think if you do the maths, 1.3 million tonne at 4 1/2 grams
is 190,000 oz, whereas I think it's 1.187 at 5 grams is 190,000
oz. So I think it's like, I think
they've got the capacity to get the tons through extra to
compensate if there is a bit lower grade than expected.
But who will own it? That's that's the other thing.
But 190,000 oz at 2 1/2 thousand all in sustaining cost.
Yeah, bloody take it any day of the week in this pricing
environment. So it is dressed up as, you
know, something that will be appealing.
But we'll get to that. A. 100% what?
About what about the raise, JD? Yeah, let's let's talk about the
raise before we jump the gun and get into to who's going to be
the owner of the mine in in due course or have a brainstorm
about how that plays out. But 156 bucks at $0.85 is the
raise. So 26% discount to the last
close or 30% discount to the five day V what before they went
into halt, you know, just chatting with people and hearing
rumours and stuff. Some some rumours were that it
would be at a bit of a steeper discount.
I mean it is what it is at the end of the day, it's a it's a
fairly common money after they raised not all that long ago in
terms of the the use of funds about 110 million is going
towards closing at hedges which we'll speak to as well and 40
million just going in, in the bank for, for working capital.
That kind of leaves them with about 90 million bucks to see
them through over the the next few quarters.
And then of course that 100 million dollars in debt that
they've got which is payable in in sort of four lots over the
the calendar year 27 period. Yeah, 'cause you would have
thought with that suspension it was going to be 75 like 30 plus
percent discount. Well, that was the sort of the
thoughts which which indicates there's to get a 26% discount
after being in suspension that long is like somewhat some fund
or something has probably come in pretty big and set that price
I would assume what do you. What do you reckon the the raise
price would have been if they didn't, didn't allude to a
strategic review and, and corporate bids?
That's an interesting question, right?
Like if they didn't say that, I reckon they would have that
raise would have been a, you know, that's the carrot.
Maybe even $0.10 lower, Like who knows?
Like it's, yeah. I think they, I think whether
they raised or not, it would have opened at exactly the same
price. It was, it was actually trading.
They got an OTC listing which was which you know, you can't
couldn't hold that. So that thing was trading at 50
US cents I think I saw. So I don't know how much
liquidity there is on that, but that's that's to some degree a
bit of a price barometer and install of everything that's
going on. Yeah.
And it looks like it looks like the the March, the March quarter
was obviously the catalyst to this whole event.
Like, you know, 25,000 oz at all in sustaining costs of 3125.
Like they've talked about, you say in the comments talking to
like localized geology, geological complexity, some sub
optimal mining practices, which indicate and it's what we've
said all along. I think there's there's always
been a bit from column a bit from column BA bit from column
C. So there's geological stuff,
probably some dilution or like there, there's just been a bit
of everything that bloody is causing to fall short.
So. Yeah, to your point, Maddie, on
the on the faults as well at Fiago specifically delaying
access, they said to a, to a high grade Stoke hits it because
I think the head grade came in at 3.1g per ton.
And obviously, you know, there's a few factors playing into that
one, but not being able to get into some higher grade spots is
not advantageous, right? And as well as that, mate, the
Viagra decline was delayed. So that's sort of been been
pushed out a bit. And to, to kind of give the
market and give investors a bit of confidence.
I think they spoke to April's head grade coming in line with
expectations, IE sort of better than what we've seen over the,
the March period. As well as that, you've got the,
the review of the resource model, which I think everyone's
pretty, you know, was pretty eager to to sort of see and
they, they reiterate confidence. They kind of speak to how little
of the the near term answers are coming from inferred.
And you know, I mean, there's only so far out.
You can kind of do that before it gets cost prohibitive, but I
think that's certainly things people wanted to see.
Yeah. And like the new, the new mind
plan they put out, we went over the physicals before.
But look, they've pretty much it's a bit of a scale back.
They're going from what 6 jumbos back down to 5.
They're going to sort of, they're obviously wiping all, a
lot of the CapEx to go out to these new areas.
It says that like they've the Viago mining area.
I think they're delaying going out there.
So they've put ground conditions as the cause of it.
So that might be just passed on to someone else to go Chuck a
upgraded ground support regime in because it's like they've
sort of, I think it's pretty good ground everywhere there
with, you know, the standard split sets of mesh.
So it sounds like that area would probably need a bit extra.
So that's probably a good thing to leave someone else to call
Sandvik for a bloody ground. Some ground support products
that absolutely might be used there, which I got to see in
underground operators. It would have been shining
colours. Look at me standing with the
billion dollar man here. I have a look at him.
Derek an A man heard. I'd say he looks $1,000,000, but
he looks a billion. Dollars.
He is a bloody billion dollars. Did I say million before billion
dollar million? Yeah, that's what they call in
him. And so mate should have seen on
showcase this could be good for the Viago.
Actually. It's like a it's a self drilling
posi mix bolt with a like a hollow centre with the there's
new resin injection technology that they're gonna bloody bolt
onto the Sandvik jumbos, squirt it up the whole encapsulate
around the posi mix bolt and absolutely revolutionize the
installation of posi mix bolts. All because of the billion
dollar man. Unbelievable, mate.
Good move, Sandvik. I can't there's bloody that
there was bloody mate. Resin injection was the feel of
the conference. That is interesting.
I'm. Glad they're all about green
energy. I can tell you that that that
that wasn't even to be seen at the conference.
She's all about resin injection. So mate, good to see the billion
dollar man so. Go, Sandvik.
Go. Sandvik ground support.
So what else? JD, you got some other go
through the update. We can just, yeah, we'll just
fly through the rest of the mine plan update, right?
Because I think it's kind of important in how the narratives
kind of change because when they came out last year with the
capital raise, we, we all kind of knew it was to address
underlying issues, but they kind of had to wrap this big growth
narrative around it. And obviously they've, they've
backtracked on, on a few of those.
So they've kind of spoken to reducing reliance on the
Marceline mining area, a bit of a reduction in the Deacon main
average Oz delivery also, as well as Viago delayed access to
Deacon N. So that's been pushed out by 6
months. And then Maddie, you'll, you'll
speak to this point a bit better, but they speak about
increasing in the, the lower mind pillar sizes by 60%.
So from memory below the the 550 sort of level, they're changing
how they're going about things down there.
Yeah, it sounds like I didn't find, I didn't write enough on
that, but I assume they're either making the pillars bigger
or putting more pillars in and reducing the strike length of
the stipes. So they're obviously identifying
as they go to depth, they might have some increased stress and
they need more pillars left between the stipes.
So I'm not sure if they're just making the pillars bigger or
they're putting more pillars in, which is 6 essentially 60% more
pillars being left in the ground.
So yeah. Yeah.
And to to wrap numbers, cost numbers around that they speak
to 35 to $42 million per month being the the all in, you know
corporate exploration, the all-encompassing cost base that
they're going to experience through FY20 6 and FY20 7.
So doing a bit of Bush maths on those numbers.
If you take them, I'll have some Bush maths, JD.
I did it just for you mate. So if you take the midpoint and
analyze those numbers over FY20 6 where we're talking about
150,000 ounces of output, you're talking about unit costs of a
bit over 3000 Aussie an ounce. Now remember, not all in
sustaining costs. This is, this is kind of
everything or most of everything in it.
Now if, if my numbers are, are right, hopefully they are,
that's a cash flow of a bit over $300 million Aussie in FY20. 6
back of the envelope after they pay out the hedges like they've
said there is a $110 million liability that still needs to be
paid over FY20 6 So I just net that off against the cash flow
and you're getting about 200 million ish in, in free cash
over that. That period.
Again, might be a bit of interest and and other things
they need to pay on the fringes there over FY20 7 when they move
up to that 190,000 oz per annum profile, the unit cost pull down
because the the total costs are the same.
Just using that midpoint again and you get a unit cost of a bit
under 2 1/2 thousand Aussie an ounce.
So at these gold prices, super healthy margin, that's 2700
bucks an ounce or cash flow of a bit over 500 million.
Again, of course, big hedge liability, 130 million over that
period. That's the kind of delta at the
moment we're seeing there. And as well as that you'll have
50 million bucks that needs to be paid in the first half of
calendar year 27 in debt. So that leaves about 330 million
bucks for the owners. So not, not too bad.
And I think that's going to tie in well with our our
conversation on who wants to own this or who might be interested,
especially when it comes to tomorrow.
And we see where the thing starts trading at.
But that gets you a bit of a a ballpark for a company that if
they come out at $0.85, it's a market cap of around about $1.25
billion. So you know, you, it'll, we, I
think it'll be enticing for some people, but I think we'll, we'll
talk through a few more different aspects before we, we
get to that point. Yeah, I know.
I think it like the interesting thing about that we're just
talking about it before is once it'd be interesting to say now
that they're they've slowed down a bit, they're going to, as you
said, focus, focus on quality a bit more like like the really
focus on the OR extraction and the like de risking and like
risk profiling each area to make sure it's drilled.
They know where the faults are and everything.
It's like whether they're going to be always struggling to hit
guidance, it's always going to be a push or there's some
potential upside where they can freaking have a 60 like a high
grade month and a 60,000 oz month.
Like it's yet to be seen if like there is that potential
outperformance in the ore body or not.
Once they really iron in on everything or it's going to be
one that they're going to, it's just going to really struggle to
hit, you know, 45,000 oz each quarter.
When they get to that point, who will know?
But it, it sounds like when they're talking about delaying,
was it delaying the Deacon NI think?
So it sounds like that one, which which obviously means,
right. We we could go there now because
I assume that's one of the bloody deacons, the high grade
area or we can delayed save the CapEx and then make 27/28/29 a
much smoother period. So it's good.
It's just I think this and to be honest, I think this is what
everyone wanted. They just wanted to like a, a, a
realistic something that they're like, yeah, no, that sounds,
that sounds achievable. It's not over ambitious.
It's not like we're like a bit of belief that like, yeah, we're
like 190 a 190,000 oz. Yeah, we feel that could be
achieved. And at a not at $1500 all in
sustaining. So yeah, it's this is this is
what I think the big dogs have been wanting for a while.
Yeah, for sure. And you got Trav.
Yeah, it's kind of symptomatic of like a like expectations have
been set too, too large for what's doable here.
And that's that's kind of why the Bellevue's been like a big
underperformer amidst every other kind of gold name just
really, you know, benefiting from this, this gold price
environment. Yeah, it's it's you don't want,
you don't want expectations to be beyond what's achievable
because then, you know, you actually want to, you actually
want to be able to outperform market expectations
consistently. And that's, that's how you,
that's how you, you know, become a market darling.
That's how the market loves you. But this unfortunately Bobby was
a market darling before it could prove itself because the
expectations are so big. So it's, yeah, it's unfortunate,
but hopefully that recalibrating of expectations of what's
actually like doable and then constantly setting them
realistic and then over delivering will well, will you
know, help it help. Navigate the next period.
Ahead as well as as well as like market expectations Macquarie
has to have their their expectations sort of regauged
right because you've got these these covenants and all these
other sort of bits and pieces that are based around the
original my plan. So they, Macquarie sort of said
that they've waived their review event kind of rights and this
was triggered by the, the quarterly production test at the
back end of the, the March quarter.
In simple terms that the output over the March period is just
not close enough to the mine plan.
I would guess. I mean, there's a few other ways
of, of assessing them, but to quarry the lender, they want to
be, they want to be safe, they want to reassess their risk and
they have rights when these things are sort of breached.
So you need to go and present the new mine plan to them, get
their permission. And with their permission as
well, close out, close out the hedges.
And of course, all of this stuff, they, they're going to
get paid as well, right? Sort of in the fine print,
they're getting eight and a half million shares just to to
restructure and for the privilege of paying out the the
hedges. For zero, for 0 cash, eight and
a half million shares. You have to squint your eyes at
the footnotes on page 12 to, to read that.
But, but that's $7.3 million at $0.85 a share.
That's a, that's an enormous fee in, in the banking world for,
yeah, for a kind of a restructure of, of, of hedge
obligations. Yeah, I think there sure is.
There is a bit of a cost associated with doing it, plus I
assume a margin on top for for that, absolutely.
It's a. Giant fair.
Yeah. I mean, let's talk more about
the the hedge book. Trevor, I know you, you jumped
into it. Maybe maybe pull up your notes
on that one. I did, I did have a good, yeah,
had a look at it. I mean you can see part of that
restructure involved rolling some hedges beyond the previous
latest date of that hedge period.
So you know, March quarter of 2028 now has some hedge dances
which it didn't before. And while rolling of those
hedges alleviates near term kind of, you know, cash flow and you
can maximize your free cash flow in the in the in the near term,
it does kick the can down the road to an extent, right?
And it has to be addressed at a later date and for a longer
period of time than you'd previously envisioned.
And unfortunately, there are examples and precedents in gold
miners in our in our state where if you roll hedges in, you kick
the can down the road, that liability can, can grow
substantially more in value. If if the gold price kind of
goes much, much higher than you thought.
And all of a sudden, you know, you thought you'd keep the can
down the road, but it was at a reasonable gold price.
All of a sudden it can look pretty, pretty daunting, as you
know, depending on what that gold backdrop looks like.
And yeah, I just, I just think that's worth, it's worth
considering the implications of of all of that, despite the the
Macquarie, like, you know, fee there.
I, I was kind of interested in plugging in the the hedge book
into an excel workbook and just having a bit of a play with it.
And if you just Chuck in, you know, spot price right now, if,
if 5200 Aussie for a gold price, then then what they're actually
the value of the out of the money value of the hedge book,
they're actually going to close out.
Is, is only about, it's like less than 30% of, of what the,
you know, the total hedge liability would be if they, if
they didn't close that, that, that amount out.
So this raises like 15% dilution to the equity capital structure.
And you're, and you're making a, you know, it's a modest dent in
the, in the overall picture of that hedge liability, which is
subject to getting bigger if gold brass goes, goes higher as
well. It's still about, you know,
$350.00 and 5200 store price right now that would would still
be there in, in, in hedges which can and, and there's a, there's
a period there, I think it's the back end of 2027 where the, the
quantity of hedge dances kind of shoots quite a bit higher.
So just managing that with your mind plan and all that sort of
stuff is going to be, it's going to be interesting.
I think they they alleviate the near term stress with this,
which is good. They can have some near term
like good cash flow, but I don't think investors should ignore
what what remains at the at the end of it, which is is still
still a substantial edge book. Yeah, because you say those
those two you're Speaking of, it looks like like if they have a
45,000 oz month or even below like that's you know half their
production is hedged at what's that 2900?
Yeah, 2906. Yeah, so and as you said, Rob,
when the principal starts being repaid for the debt as well.
Exactly. Yeah, there's that, that 100
million I think is yeah, payable Cy 27.
So you've got, you've got a a bit of extra cash flow pressure
that comes in calendar you're 27.
Of course it's not. It's not today.
But it it is. It is sooner than we all think.
You know, it's like, yeah. Like probably the the thing
that'll help with in, in the in the shorter term for delivery of
those answers and probably 27 as well.
This is like a a back end problem is like because I
didn't, it sounds like that paste plant isn't happening
anymore because I'm talking about it now.
I've searched paste can't find anything.
So it doesn't, it sounds like it's just going to be a pillar
operation so that, that, that will speed up the mining rights
because you're not relying on paste or everything, but it is
you're affected and we're there. It was in the study, I think in
the study was calculated, I think 82% recovery of the oil,
which takes into account the pillars that are being left.
They're obviously looking at putting a pace, planning to get
100% extraction or close to 100% extraction of the oil without to
which elongates the life of the assets.
So bad news for Quattro because that's probably looking like 1
pace plant that is not being built.
But someone else's problem is someone else's opportunity.
Someone else might might, that is.
Just like that means you can get them working on your pace plant
when they would have been working on this one.
They, they somebody, the pace, somebody would be on the ground
out there. Oh look at look at how excited
you 2 are like. Just excited just thinking about
it. Just going at it, but you would
have been excited if you'd come and seen the QD too underground
operators. But have a look at it.
The Quattro diverter version 3.9.
Unbelievable. Like this thing just I had lunch
next to it each day that I was at the conference at lunch.
Might have flipped on the night shift from bloody Wednesday
onwards. But mate, these these diverter
valves, they've just got even better. 50% increase in the
pressure rating like 15 MPA pressure rating right now on
those things, buddy, like man manless hanging system to put
these things up so manless manless like you're just same as
the fan hanging system that they've got like just Chuck it
up there, keep everyone safe, right?
The automation that goes in with these QD twos.
So if there's a bloody pressurized detected in the
retic line, the system will automatically flick it over to
the dump line, which will drop it in a sump, protect your ray
tick and you don't block the whole line.
All because of Jeremy Palmer. That is, that is amazing pace.
So if you want to protect your ray tick line, go buy a shit
load of QD twos or QD fours with the increased pressure rating
and just keep your ray tick line safe.
It's just a beautiful pace of engineering by Quattro.
And thanks for the lunch table. Pay for itself?
Go. Contracts.
Anyway, now the strategic review, it's do you.
Sometimes you'll want to hear it.
A lot of times you don't want to hear it.
Yeah, it's usually kind of the I reckon you're.
Wanting it right? I reckon you'll want to hear it.
Yeah, when when a company with multiple assets says for
strategic review, it's not normally a a great sign, but
there's a bit of nuance to it in in this case.
So they flag looking at internal and external options and then
they sort of mentioned control changes.
So a direct snippet was that Bellevue's confirmed it has
recently received unsolicited approaches relating to a
potential control transaction. So they say no formal proposals
or offers were received. Of course, that's, that's not a
big surprise, but people are, people are having a bit of a
peek. They're looking around, they're
seeing what they can sort of do with management, where they can
kind of get to. And it was interesting to hear
the question asked, like how many of these, you know, if you
can put a number to it or if any of them came in the last two?
Weeks. Can I, can I play that question
on the call? I'll play, I'll play, play it.
But but before you do, you should have seen how many
unsolicited approaches I've seen between mining companies late at
night at underground operators. That's right, it's so good.
Oh, what a place to be, right in the heart of it.
Where business gets done. Hey, Maddie, All righty.
On the the question was asked previously and I won't draw you
on more detail around the approaches from third parties
other than to ask about timing when they might have been.
And the question for that is, I'm curious to know whether a
third party is approached during the last two weeks, you know,
in, in opportunistically in what's potentially a position of
weakness or whether there were there have potentially been
approaches prior to this, I guess the last couple of weeks
of, of uncertainty. Yeah, Look, I, I think we've
said what we wanted to say in the statement that's in the the
announcements, Paul. So I think we'll just decline to
comment. It's no upside in discussing M&A
and, and speculation on that front.
So we've said what we want to say on it.
And if there's, you know, room for a future update, we'll
provide it to the market. As appropriate.
Got interesting, right? That's a lot the anti magnetic
response. What was the bloody some?
Runs in the data room, some runs in it.
Was someone doing their washing up while they were answering
that question? No.
It was 'cause I was, I was recording, oh, speaker into a
microphone and tapping, tapping the desk.
Yeah, but not. Not gonna lie, I did, I did have
it on like 100 trying to just, I can put my ear to it to, to
listen to it. But it's interesting 'cause we
all, we all got kind of attracted to the same snippet.
Really, really interesting to see.
I I found, I found it interesting because, yeah,
because not like, like Strallow responded by knocking back the,
the, the, the question. But here's, here's one view on
the response to that question. If there was an inbound NBIO
before the trading halt, for example, that's that's worth a
bit more then after the trading halt, in my opinion, it's, it's
a letter that possibly is anchored to a price that's sort
of much higher than the cap raise and higher than it was
when it went into went into halt and all that sort of stuff.
But if the interest has only come after the trading halt,
it's not as promising. You know, lots of miners would
be a bit opportunistic when you're you're in a three-week,
you know, suspension and and yet, of course you're pinging
out a letter depend. You don't know how dire it is,
but you ask for access to a data room and you know, give me, give
me DDD and maybe I can, you know, give you a proposal and
firm it up and all that sort of stuff.
So I wouldn't be surprised to see a lot of people kind of
opportunistic in that situation. But if, but it's a different,
it's a different level of firmness and, and, and, and
seriousness. If, if it came before versus
after. And what if it was if it if they
came before the trading halt? And what would have prevented
Darren Stralow from just just saying no, we had some before.
So maybe, maybe the inference you could have is they could
have all come after. Yeah, yeah.
And lying, to my knowledge, I don't think any strategics are
being let into this cap raise either to try and get a foot on
it either because competitive tension is their best friend at
the moment. Totally.
And for this. And this, this signalling to the
to the to the market that they are exploring the options to
maximise value, right? They list 3 advisors that
they've now got in their court to, to, to help them maximize
values at the inferences, you know, at at the right price that
they are, they would consider, you know, the a corporate change
of control. It just how real the interest is
from third parties, I think remains to be seen still.
And yeah, I like, I do wonder what, what price they would have
to raise if they didn't reveal that, that they had corporate
interest. But I'm very curious to know
what you guys think of in terms of what the potential corporate
interest is. Who, who would be interested in
and yeah, who like who, who come who you know, do you think, do
you think Bellevue will, will, will kind of get engulfed by a
larger, larger minor with the, the the more thorough balance
sheet to, to absorb some of their funding stuff?
Interesting. What you say is like, will there
be like with, you know, the mark to mark on the hedge book and
everything like will it be competitive or like will it be a
larger minor or will it be a smaller minor that might be able
to take a swing of this mate like between?
It caps could, yeah. Yeah, like between and some of
them aren't that small like like catalysts, like on the smaller
end, like. Yeah, Mark, it'd be.
A huge, huge, but that's the thing, like if there's not heaps
of interest, like might provide a opportunity for them like, but
then and then you got all the, you know, outrageous.
You know, they haven't got really the geographical
synergies, but they're, you know.
If they're if they're looking at.
Printing a bit of cash they're. Looking at Ravenswood, which,
which has a lower production profile, it has a worse hedge
book, a worse debt, debt situation and even and more
operational kind of, you know, question marks over it and, and
that and Ravenswood wants 2 billion.
Yeah. Like if you're Regis, you're
thinking I could spend, I could pay less than that and close out
all the hedges and yada, yada, and have this thing.
So I, I think like if you were to look at the two options side
by side, you go Bellevue. But so I wouldn't rule.
I wouldn't rule Regis out at all.
No, no. Before I go on the other ones,
when you reference 2 billion like so after this there's going
to be 1 1/2 billion shares on issue.
So that means I if it got done at a dollar, $1.30 would mean
essentially $2 billion plus the hedge book and the debt out of
the money. So it's about a $2.4 billion
deal equivalent to Spartan for a a walk up start to potentially
190,000 oz or 150 to 190,000 ounces for a 3,000,000 oz
resource. So that's the price like could
it get done at $1.10, which would be a bit below the two
like about 2 billion once you clear everything out.
So that's the sort of share process you're looking at for
what you know, potentially a deal could be done depending on
where it trades on open tomorrow.
But we've, we've went, went through the previous ones as
well, like gold fields could flick it over to Agnew.
I think, I think it's only a 1.1 million tonne mill.
I'm not sure if it's expanded, but I'll assume that it's
bigger. It must be bigger.
The with the yeah, chat check definitely be down the other
way. It must be bigger.
Like the, the big ones are obviously vault with they're
expanding to 6,000,000 tonne and they've just, I think approved
the $80 million expansion to put the regrant the ball mill in for
that. Because it's just, I think it's
just one big sag at the moment. So that could take it.
But they've obviously got their own hedge book to deal with.
But you know, you'd think that just cleared this out anyway, or
they might just keep it there. They love keeping cash.
Thunderbox, Northern Star. That's a very logical one.
And the degrade deal's about to be signed off on anyway.
My my two things. Very is imminent.
Yeah. And I did have a look through
that and it looked like Northern Star could they could do
anything. It was degrade that couldn't do
a deal. There there was a materiality
threshold and it was basically I think, I think the threshold was
like anything more than a billion dollars would it would
be yeah, like like game to to to, to, to material to to do
another deal it. Could degrade approve it but.
It wasn't even a consent thing. It got messy.
It got messy on that front. Yeah, yeah.
I did. I did some control I.
Think, yeah. But the I mean like it's kind of
irrelevant because the deal is going to complete soon anyway.
I do think, I do think that it's hard to pay more than the
companies that have synergies. So the synergies are Gold Fields
and and Northern Star and you might think synergies.
Is weird. Vault and are.
A good time, yeah, yeah, less balance sheet to, to maybe you
know, splurge with, but certainly synergies.
And then because the synergies exist because you've got high
grade stuff that you're processing costs much lower than
putting it through the, you know, 1.2 or whatever million
tonne per random plant that Bellevue has.
If you're, if you're sending it to your much larger economies of
scale mill that you've got, you know, 50-60 KS down the road.
Yeah, and they could go. They could probably bloody with
other stuff in the region. They could turn that into a toll
trading mill up there. You could sell it to someone.
Vivian comes back online ever. Like there's plenty of plenty of
options, but yeah, they're the lot.
I don't, I don't think Genesis, geez, you never know.
But like, considering what they paid $140 million for Daisy and
to set up that whole area up, doesn't strike me as a company
that'll be paying 2 billion for something like this.
I think they're kind of cyclical.
Investing is complete Evo's. Are they in harvest mode?
I'm pretty sure I don't think I. Don't think they will.
I don't think they'd go at it. Not their MO isn't.
It Nah, Nah. So like yeah, for Northern Star
lot, they'd probably be able to get it all script.
They they, yeah, yeah, they could they.
Probably. I think they'd if they were to
do it, I think it'd be script, right?
Yeah, similar to what they did with.
Pretty, and it's a pretty safe bet to take the script.
You'd think liquid. Very, very potential.
There's certain people that'll be, you know, still at these
prices having a bit of a win. So cash might lead to a tax
liability. You can potentially get rolled
if you're still bullish. The broader gold narrative, you
know, rollover relief, if it's, if it's script, I mean on the
margins that that ties into it. Yeah, I think that's pretty much
everyone. I think lower than.
One, yeah, I agree with you on Genesis.
Yeah, yeah, by the way, I think I think if a deal happens, I
think it's going to be lower than 130.
That's why like just got intuition on sort of how, yeah,
I do think there is there are definitely some like kind of
like I use the word desperate mid caps who need need to do a
deal and a hungry and yadda, yadda, yadda.
And and there's a very realistic chance that something happens
with that the cohort, you know, but the but the price matters.
You know, how much you pay does matter.
And even though we anchor to the share price or the share price
has come down so much, so a deal must be more attractive.
There's a bunch of dilution you still got to pay more shares to.
So the quantum you're paying can still be quite onerous even
though the share price looks lower.
So, you know, companies are are constantly thinking about what
the total amount they're paying is here and, and even though the
the share price has come lower, it's still it's.
Still a big it's a big price tag you want to be very confident
that the cash flow is going to come from from that investment.
Would Macquarie have like, because Macquarie are holding
obviously the debt, but the bigger quantum is the amount,
the out of the money hedge book liability.
Would they have a say at all on offers?
Because you know, it's it might be in their best interest that a
$1.10 deal gets done to take away the risk from them to
potentially not getting that gold in the future is a risk to
them. They wouldn't have a say on on
offers. They do like any deal it'd be
it'd be subject to, you know, certain consents per whatever
contracts you have in place for for a project finance, it depend
what the buyer wants to do. Do they want to clean out the
the hedge book on the acquisition or are they keeping
it in place? Either one does does need a
certain consent. But it's it's, you know, it's
assigning rights to a larger than a minor or something, you
know, aquarium and say yes to every day of the week.
And they're not. Yeah.
And and it looks like they're,
they're obviously they've signalled that they are very
amenable to selling it. I think that's pretty clear.
Like which is positive if if if true.
And good from inquiry. What about the oh so and it was
a good question on the investor call and it was probably the
thoughts are why have they cleared the hedge book, cleared
150 a hundred odd out of the hedge book and left the debt,
which would have you done? Because the question on the call
was why? Why didn't you clear out the
debt? Because then you don't have, you
know, Macquarie doesn't have security on the assets.
And Darren responded saying, look, that's because we've still
got the marked mark on the on the hedge book.
They still, which is what did you say it was?
After they paid back, they also left 350 million at 5200 Yeah
prices. Which means they've still got
security on the asset. So look, because I have, I told
just me what the analogy for hedging that I've known for ages
tell me. I've known this for ages.
I can't believe I haven't mentioned it yet. 100% have not
talked to. So like I enlighten us, these
Ford contracts are the dead set equivalent of short selling
effectively. So Macquarie are short selling
gold and to Bellevue for these contracts.
So all, all that hedge book that's in place, Macquarie have
borrowed it from Central bank or bloody friggin Fort Knox or, or
somewhere, borrowed it, sold it into the spot market, got a heap
of cash for it, put that on deposit, which is earning
interest. And then those contracts are
what Bellevue has to the gold that has to be given back to
Macquarie so they can give it back to the bank.
So when they say like they're obviously not making money on
the gold price, but it's like when that is why they've got
security on the asset because if you know, very obviously like if
Bellevue stops producing, Macquarie have to go into the
market and buy all that gold themselves.
That's on the asset side of their Ledger.
On the liability side is their obligation to return the gold at
those predefined points in time which they require Bellevue to
deliver. Yeah, those obligations.
And hence the decision for because clear in the debt is
like whatever you've cleared the debt, the debt isn't going to
grow that much. But as you said before, that
hedge book liability, if the gold price keeps going up could
keep growing and growing and growing.
Hence, keeping the debt, removing the hedge liability for
this year, for the remainder of this year means they've got more
of a runway to get free cash, keep the operation sustainable,
deliver the gold into the hedge book.
Less risk of the worst thing happening of going into VI or
like going into receivership or something where Macquarie have
to go into the market, use the security of the asset to buy all
that gold back to give it to the central bank.
So that's why they've done it. Yeah.
And I think. All my own idea.
We talk about, we talk about hedges, right heaps, but the
gold price going up is still good for for Bellevue it's still
much more if they can obviously deliver the answers it's.
Great. If they can.
Yeah, yeah. Deliver the answers.
But it obviously increases the risk to Macquarie if they don't
deliver the answers Exactly, exactly.
For sure, for sure. Now I like that, Maddie.
Yeah, no worries. I'm here all week boys, buddy.
Just a wealth of knowledge. Yeah.
I've been, I've been bloody years in everyone else's ideas
for the last two years. I'm not going to stop now.
Quickest way to learn mate, to to frame your question as well,
but going roughly a year back or I guess nine months or so back
to when they did the last raise and they they cleared out debt,
they would have had to be paying on average 15,000,000 bucks a
quarter. You know, they paid out $100
million of the 200 million in debt.
So that kind of would have, would have stung them a bit at
the time. They had the same decision last
year and they went the debt route.
Well, I suppose it's been a perfect storm, hasn't it?
So when not an unperfect storm from when they've when they took
that debt to OK, we're going to go down the debt route, we're
going to have the least amount of dilution.
We're going to get a great earnings per share.
We're going to have a bloody this great rated company on an
EBITDA multiple gold was, you know, those $2800 hedges, they
were above the gold price at that time.
So everyone just forgets. It's like, oh shit, why'd you
hedge at that price? That's what the bloody gold
price was. It was bloody lower and it was
in a lower interest rate environment, which mean
obviously the hedges were at not as much of A markup to the spot
price because because they hold the money on on account, higher
interest rates means they could give higher Ford contract
prices. But now gold prices going up
shit loads and interest rates have gone up shit loads, which
means it's more impactful on the debt as well.
So it's just really snowballed into what we see today,
unfortunately for them. Yeah, it's fascinating to think
that the the, the, the hedge liability that will even be
remaining after this is, is, you know, multiples of what the
initial project finance facility was like.
Yeah, it's remarkable how that all that kind of works.
Yeah. And that's the, well, that's
the, the unfortunate thing like because this could have been as
we're like we're talking about it getting sold at $1.10 dollar
30 or or whatever. Like, but like it's just, yeah,
it's just, it's unfortunate to see if like if they did execute,
did buy off the debt without rising like delivered into that
hedge book over a longer term. Like this could have been a
freaking cute. Like this could have been a
three $4.00 stock with that management like a management
premium and delivery and everything.
It just unfortunately didn't happen.
So I can really go either way. Like so, yeah, I'm sure the
shareholders were wishing that too.
For sure, we'll see what the future holds for the the new
shareholders sort of be interesting with those sort of
carrots they've dangled. So do you reckon this is the
final reset? This is this is the biggest
reset? Well, no, I hope so.
No, sorry, I don't think it is because this is the reset that
should have happened when they raised last year instead of
releasing that 250,000 oz plan. This should have been it should
have. This should have happened at
diggers before diggers. Like when they said that we're
just revising. It's going to be 190,000 oz
mine. It's not a 200,000 oz mine.
It's 150 next year. Like this is what should have
happened then. So it's but it's a bigger reset
compared to what they said they were going to do, which was much
higher. But is it the final one still 40
what, 47 1/2 thousand ounces a year?
1/4 from FY20 7 onwards. It's tricky.
It's tricky to have confidence and say yes, because you do want
to believe like the the revisions every time, but then
you like there are there seems to be just, you know, misses
that that weren't foreseen and things like that.
So you want you want to you want to think the operational kind of
question marks are are in the background now.
You really do want to believe that I'm, I think like because
of that they've alleviated the short term.
The short term looks, looks reasonable.
You know, like I do worry a little bit about that 2027
period when you've got more hedging and and the debt
repayments kind of kick in. I think it all depends.
I think it depends if Bellevue kind of keep persisting on on
their own or if, or if they get taken over.
If they get taken over, it's the last reset.
If they assist on their own, there might be some some some
some more kind of things to face as the the cash flow looks
compressed in that year. And when if they get taken over,
no one's looking at it as much. Exactly.
It's mixed in with seven other fucking assets.
It's all, yeah, it's all good sticking along.
But I I like how it's 150 next year.
Like that's that indicates to me, right?
They're probably going to know they're dropping a jumbo off and
everything, but it's like hopefully they get a bit ahead.
Sounds like a lot of the critical infrastructure is
probably in just cut it comes. It's going to come down to like
obviously they they've alluded to the mining practices.
Once they tidy that up, then it's up to the ore body.
It's got to be up to how that ore body behaves.
If like the if there's many irregularities, like as long as
your body stay on the ore top level, top level and bottom
level, what happens in the middle is out of your control.
So as long as all that is done spot on and slowed down, which
sounds like they're gonna like it's up to the gold gods.
Then sounds like they've got the process and plant sort of the
upgrades and everything like the oxygen circuit that they talked
about a lot that talks about the increased sulfides and the need
for the oxygen circuit to alleviate the higher use of
cyanide, which is copper. They don't say copper, they say
sulfides, but it is because of copper in the sulfides it
caused. So that's what the oxygen
circuits trying to. So it sounds like they've
gotten, it's manageable. The recoveries are going to be
hopefully maintained it a lot higher and then the recovery
issues before a lot of it was because of this fucking rush,
rush, rush trying to get the quarterly numbers out, throwing
a shit load of in cases, throwing a shit load high grade
in at once. And then you you know, you're
pissing a lot out to the tailings because you're trying
to get the gold quickly. So yeah, I, yeah, I reckon I
don't know, I'm saying 180,000 sustainably.
Seems like a good spot to leave it.
Nothing like. That, yeah, I think, I think
we'll, we'll see how they go against that.
Who do you reckon is going to come with it, themselves or
which other? Come on, we're going to come on
years. We've got to start throwing some
darts as well, boys. I.
Who's going to be the final buyer?
Who's going to be running Bellevue in FY20 7?
Northern Star. That's a good one.
Is it cheating if I say the same?
Do I have to go different? Northern Star seems the most
logical. Oh, Chuck in Goldfield's just to
just to spice it up, but I think that's a rough probability.
But Ruffy would be Regis. I'm gonna arcane I'm.
Gonna throw. That's the hardest thing though.
Like the reason I'm going against vault is the whole
succession plan of that business probably relying on maybe
Genesis, which take over from Luke Tonkin, unless Luke has a
swing at this and then maybe makes himself more amenable to
Genesis or they he might he might just go forever.
I think vaults the dark horse on this and make a lot of sense for
that to go down to their mill. I didn't need some upgrades and
everything. I don't know if it's got an
oxygen circuit or Yeah Vault, but I reckon Northern stuff all
righty. All righty, let's thank our
awesome partners, I reckon. Get your tickets.
Remilius hasn't even got a mention.
Yeah, they got a great project they've.
Got their hands full. God that could be a real dark
horse. Righto.
Let's take the partners. What mate?
Bloody the all underground operators is finished.
GRX conference is coming up. Brisbane May 20 to 22nd.
Oh God, I should be recovered by then.
Can't wait. The centre of tech and
innovation discount code on LinkedIn on in the show notes.
Make sure you grab on it. There are other partners I
haven't said these guys for a week of being devoured.
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