I'm excited. I don't want to stop a sort of
do. I'm excited about uranium.
Yeah, for the last year or so. Bit of news out Friday.
Mate, there's lots to be excited about today.
Just bringing you a Christmas present.
Oh no. Maybe, maybe, maybe not
aluminium. Aluminium, a bit of copper as
well. Super, super interesting news
coming out sort of Friday over the weekend, which we'll chat
about. Craig, you've got a couple
cashbox companies. Exactly.
Yeah, I came to talk about some funny special dividends from 2
separate cashbox companies on my radar today.
Plus I've got 2 announcements for the money miners.
Maddie, first one along, you're thinking of Christmas.
We're going to have a Money of Mine Christmas party, which
basically means drinks at the pub.
If you're a money miner and you want to talk mining stocks and
just reflect on the weird wacky year and look forward to the
year ahead and maybe talk about some word on the decline, then
we want you to come along. It's going to be at Brew Dog on
the 3rd of December, 5:00 PM onwards.
It's pretty exciting. Tuesday night.
I'll happily talk about fishing or golf or something because I'm
probably sick of mine and by the end of this year, very right.
And the second announcement that he is what's coming after the
end of the year, that's the fact that JD and I are going to go to
in Darba this year, which will be a first for us.
Fuck, sorry, I keep, I keep doing that.
I'm coming for it. It's 20/20/25.
We're going to in Darba. It's not just the fact that
we're going to go to a buddy mining conference in South
Africa that we're excited about. We're very keen to visit a bunch
of mining operations that are also in Africa on the back end
of that trip. So you know, we're, we're
literally, we're keen to do a bunch of site visits.
We're keen to see what mining is like in in Africa.
We're keen to, you know, get as close as we possibly can to some
really interesting kind of operations out that way and get
some cool content about it while we're there.
So you know, if you have any suggestions or ideas or you
know, or even just contacts for us to help make that happen,
both from a logistics and a funding perspective, get in
touch with us at gc@moneyofmine.com.
I'm not going because it's not safe for me to be drum drunk and
obnoxious in South Africa. It's better for the business,
boys. Let's get into it.
The Russian uranium enrichment ban, temporary ban that come out
on Friday. So she's all up and green on
screen for uranium. So what's actually happening?
Also Ding Ding Ding, I'll do hold.
I have skin in the game for Uranium Paladin and Spa.
I never would have known you'd. Have had some exploration so
just letting you know God, if you wouldn't be this keen if I
wasn't exposed. So no, I would be right.
Let's let's paint the landscape of what this means before we get
into the news and everything. So for those who don't know, US
relies on Russia for about 20% of their EUP enriched uranium
products. So Russia is responsible for
about 40% of global uranium enrichment.
So and this temporary ban is it is banning the export of
enriched uranium from Russia to the US.
And this was on the back of US previously announcing this year
that US would have to apply for waivers to import enriched
uranium from Russia. So that that was, you know, on
the back of, I guess, US backing Ukraine for the Russia invasion
of Ukraine. And that was sort of the start
of this whole US really putting the foot down to separate itself
from Russia. So it's retaliation to those
sanctions. Yeah, effectively.
So now I'll I'll just go into briefly the context of uranium
conversion and enrichment. So I guess like the platform of
what the flow on effects of all this is for might some of it
might be repeated for first time listeners.
This is a mining podcast. If this is your first time
listening, anything you want to know about mining, this is a
place to be this. Is this is this is more dense
than mining mate conversion and enrichment?
Oh mate, mining, nuclear, fucking upstream, downstream,
bloody everything. We are the men Vertically
integrated, yes. OK, so uranium that comes out of
minds, U3O8, that's the the powdered uranium product, they
call it yellow cake. But U3O8, it's actually the step
after that it's a bit of an olivey thing.
So that's 99.3% U 238 and .7% U 235.
So that is then sent to a converter.
You hear about converters, which is turned that converts that
powdered shit into U F6, like the gaseous form.
Now the biggest ones that do this conversion.
So Iran has tricastanside in France.
You got the Honeywell uranium hexafluoride processing facility
in Illinois in the US and that's that partnership between General
Atomics and Honeywell known as Convidon.
So you'll hear about Covidon. So that's that one that was, you
know, recently turned back on Camico has got their Port Hope
conversion facility in Canada. So that's in Ontario.
And then you've also got Russia and Chinas conversion facilities
as well. I think Russia is about 20% of
global conversion. Don't quote me on that.
Something like that. So then that U F6, the converted
uranium is then sent to an enricher so that that's where
the centrifuges spin the fuck out of the gas to take away some
of the U23A and increase the concentration of the U235.
So that takes that U235 concentration from about .7 to 3
to 5%. And that's the range it needs to
be into work to go into a fuel fabricated indoor fuel rod to
power a nuclear reactor that's referred to as low enriched
uranium Lau. So as you can see, as I said
before, Russia's responsible for 40% of that global enrichment
and US relies on 20% of their needs for their nuclear power
plants from the Russian enrichment.
The rest, the rest of it is done from like Urano and Uranco.
So enrichment expansion is going on at the moment.
It's not all just fixed to Russia like that 40% to Russia.
So you've got your Ranko expanding their New Mexico
facility in the US. So that starts lifting in 2025.
Irano, they're going to, they announced they're going to build
a new enrichment facility in Tennessee.
That's a bit bit away because these things are like freaking
football fields of centrifuges. They're huge by the sounds.
Irano also expanding their Tricaston enrichment in France,
30% left due in 2028. Euranko also expanding their
Almelo in facility in Netherlands by 15% in 2027.
So that's Uranco is the consortium of its UK Neil Dutch
and Germany. So they're, they're the main
ones, so. So that Euranko one in New
Mexico right now, my understanding is that makes up
1/3 of the enriched uranium demand that the reactors in the
US need in the US, Yeah. And that expansion you're
talking about is just a 15% expansion by 2027, so?
So not, not there yet. And then obviously, so it's all
in the pipeline. And then from what they say
about that's the enrichment and then from what they say about
the conversion at the moment, like the conversion's going to
be like pretty skinny for the next few years.
Because you look at the actual like the U F6 price has
increased fourfold since 2022. Like the, which is essentially
the cost of conversion, like enrichment costs, prices tripled
in the same period. So you can see the graph of the
relative increase in conversion in enrichment to the actual spot
price here. And it's like really started to
started to sky rocket. But that makes the economics of
building one of these things better.
Yeah, I would think from what they say at the moment, and I'll
get into this whole lot, the bit of a U F6 bottleneck, you would,
it sounds like if people really need stuff converted, they have
to pay through the nose, which you would assume flies into the
pockets of the converters for that.
So I think is if the conversion is that skinny at the moment and
they're having to overpay to get it done and we'll get into why
that is, I would imagine that would flow into the pockets of
the converters. Yes, No, let's do another
episode on it. So I guess the big thing now,
now on that landscape of conversion and enrichment, the
big thing to consider for this AUP, import ban, import export,
bloody Rusher and US ban and each other.
So when the US buys the AUP, the enriched uranium from Russia, so
namely Rosatom, they have to send return U F6 feet.
So that's a benefit for them. So they get the enriched
uranium. Once they get it, they then have
to send back the U F6 that would have been effectively needed to
create that enriched uranium. So it benefits them because it
delays that having the U F6 first, they can get the enriched
uranium, then send it back. But for the Western enriches
Arano in France and the Uranco consortium, they have to send
the U F6 first for them to use that U F6 to create the enriched
uranium. So they need the U F6 sooner for
that enrichment to to occur. So with this temporary being
being invoked, it's there. There is some there.
They said there's some U F6 that would be currently already
converted in the US that is owing to Russia for enrichment
that they've already already received.
And then so they have to send that back.
But then they also need to get more U F6 to presupply Iran on
your Ranko now that they can't get any more AUP from Russia.
So it's a bit of a double whammy on that supply of U F6 and
temporary. Temporary is probably the
keyword here as well. So I'm not heard commentary.
Not sure if that temporary ban is in place because US hasn't
sent back all the U F6O2 Russia as part of that the return feed
contracts or if it's more in line with the fact that US have
import banned the import of Russian AUP and now Russia are
banning the export of it to US. So might be a bit from column A
and a bit from column B the. Big question, Mattie is, you
know, what does this mean? Like how's it impact?
Does it mean? Does it impact the equities, you
know, the physical price, all that sort of stuff, right?
So as I said, pretty green on screen for the ASX 1, so Palatin
boss, DPLA, Banneman all up between 68% on the ASX today
spot uranium price lifted from 79 to 8250 on Friday.
As I said, spot is that I think it accounted for 15% of uranium
purchase last year. So majority 85% is from long
term contracts. So it's a thinly traded liquid
market. But the spot price does sort of
have have the role of like setting floors and ceilings and
what they're getting paid in those contracts based on its
fluctuation inside those floor and ceilings.
So it serves a purpose, but it is very thinly traded.
So if there is a bit of a bottleneck of U F6 currently,
because they've got to send some back and they've got to create
more U F6 to send to the western enriches like you can't make U
F6 without U three O 8. So it's the the question is, is
like will will there be like some short term movements in the
spot market or however, for utilities having to buy get
uranium quicker to get the U F6 created to get the enrichment
going. So like you can't can't have one
without the other. So it's with that jump in the
spot price. I'll be interested to watch this
week if this if that bottleneck is sort of a short term thing
that will require pounds to be actually produced earlier than
utilities expected to produce them.
Not sure that's that's the very because it's a pretty firm
fucking stance that's been put that like you cannot get AUP on
this anymore. There's 20% of U SS enriched
needs which they are no longer able to access from Russia.
Yeah. And even for the alternative
like enriches to be able to meet the requirements, they might
have a pound shortfall in in order to even get that to there
is what you're saying? Yeah, well they got to yeah.
They just they need to get them U F6 quicker if they want the EU
pay back quicker which they and they'll I would anticipate they
will need, but need to buy pounds quicker to create that U
F6. So it's going to be.
Hence price up Oh. Maybe.
Maybe it's only one day and because this happened mid during
trading on the Friday night in the US.
So just going to be going to be an interesting, interesting week
because you can't, you can't go on Twitter at the moment without
saying something about maybe it's just who I'm subscribed to,
but something about bloody nuclear data centres, Friggin
Elon Musk promoting nuclear. Like it's all friggin, it's wild
at the moment, but this whole data centre talk, it's like it's
not really, it doesn't really affect uranium supply and demand
today. Like it's, these are obviously
long term things. It's all like good for the long
term nuclear sentiment and, and the whole flavour of it, but
it's, it's still a long way away, still need reactors built
and all that. Like it seems like the short
term things like the Three Mile Island race start that we heard
not long ago, that seems to move the needle because it's doesn't
take as long to restart an existing plan as to build a
whole new one. So that is shorter term pounds
that are needed to be purchased. So it's it's a bit more bullish
like that. I saw an interesting just on
that one quickly Maddie, a sort of vote from the, the local
people that live around Three Mile Island.
So 57% said they were in favour of a restart, 43% said they they
were not in favour, which is kind of interesting number that
kind of stood out at me just on in terms of that one getting
going again just to get a feel for the sentiment.
Well mate, if it was a scheme of arrangement it wouldn't get
through 5757 in US or Australia. It's.
True. This is true.
It's greater than 50. That's a good start.
Don't forget, I haven't heard, I haven't been able to confirm,
but I haven't seen anything to say that Olympic Dam has resumed
operations after they were smashed by a tornado.
Tornado, so that was mid October.
So that was another. So that's about, they're about I
think 5% of global supply, uranium around £8 million.
Did say it was just going to be out for five to seven days.
No, but there's nothing. Didn't say the restarting.
Nothing to say that it hasn't that it's restarted yet and I've
heard I've heard come true. They'll say and it was still
down. I'm not I'm not sure.
So I can't confirm that, but that's that's a some pounds that
have been taken out. So yes, it's going to be very
interesting this way to see what they say you pan in this U F6
feedstock thing has on the market.
So it's because I've heard I've heard people saying as well,
like everyone just puts a friggin a graph up to find
something to support their thesis.
They're like you're right, I'll bring up the graph.
You're right. Uranium spot prices back at the
same .1 year ago before it went on the run from eighty to 105.
And so it's just a perfect craft to support everyone's thesis.
Good time on to reflect on what actually caused that last year
and you can weigh up what's happening now and what's
happening then. So, so that was sort of November
to February when it had its run last year, because I because
September 4, that's when Kamiko announced 2023.
Kamiko announced challenges at Cigar Lake, Key Lake, MacArthur
River and drop production guidance by about £3,000,000 on
100% basis that the political upheaval in Nigeria commenced.
So that disrupted uranium shipments to European nuclear
plants. So that because Iran, I was 63%
owner of that Samir operating the Alec mines, that was about
5% of global supply. Yet Russia's invasion of Ukraine
was ongoing. So the everyone trying to D
bottleneck from Russia day couple from Russia, sorry. 12th
of Jan 2024, This was the big one.
That's when Khazadimprom announced adjustment to the 2024
production due to sulfuric acid supply issues and construction
delays. And then, you know, three days
after, that's when the spot price actually peaked at
$105.00. So that's everything that
happened back then and this is where we are now.
So another one. You missed one there.
Another like, yeah, well, December 9th, 2023.
That's when Daesat released their new All Terrain vehicle
for Remote Gravity Survey. So that was that was in that
period developed by their in house engineering business
extreme fabrications might all wouldn't underestimate Daish
that's influence on the uranium spot price at all got it it it
it was in that window it. It happened then.
Yeah. That just want any sort of GFS
work They can do it all hey? Well, they had just got planes
and helicopters JD there they can go on the ground for
magnetics, gravity and seismic. Bloody Nathan Daish is the man
you need to call his numbers in the show notes and most
importantly, he is AGC. Do you think JF is?
Do you think Dashet? JC authority vehicles,
helicopter gravity control, that's all you need to know.
So going to be interesting. Wait for the ubles.
I love being I'm in a Twitter chat now with all the ubles a
lot. What do you what do you think?
Well, just to flesh out the kind of bear, the bear side of it.
It's, it's another fragile point in the whole nuclear supply
chain. Like not only do you need to
race out or build all these reactors as well, but you now
realising if you're in the States, hey, we should
definitely be building our own converting and enrichment
capacity because we can't rely on the, the current, you know,
status quo. Yeah, yeah.
And I think and it is happening with the New Mexico and
Tennessee, interesting one's going to be the you'd say it's
the DLA of uranium is the laser enrichment as well with Silex
and that I haven't dug too deep into that.
But they're up more than any of the uranium miners today.
Silex How much are they up? 15 odd percent.
Yeah, yeah. So that's going to feed into
that. But that's, yeah, now that it
was interesting talking to listening to that.
Mark Alcon did a potty on that triangle investor and you know,
the whole fantasy around SMRS and everything reckons that in
their models they don't attribute anything to SMRS just
purely based on the fact they don't know when they're going to
come online, how much they are like, when are they going to
work as good? Like don't attribute anything.
I mean, obviously Mike Alkin is extremely bullish because he's
Mike Alkin. He'd have to, he'd have to learn
too much other shit to go bullish on something else.
So. Very interesting that.
Was a good, that was a good yarn.
So yeah, there we go. That's Bob back and relax.
Yeah. There's actually a bit of a
geopolitical kind of theme to the show today.
So going to talk about aluminium and a bit of copper as well.
Now. Now this time it is China US as
opposed to Russia US. But you guys might have seen on
Friday, the aluminium price pumped over 5% on the LMA and
futures were up almost 8 1/2 percent.
I think they settled about 6% higher.
And conversely, the aluminium price in China fell a couple
percent. So here on the ASX Alcoa, the
CDI that trades here up 7% is 32, up over 5%.
And, and I think if there were more names kind of like the
uranium space that are in this, you know, supply chain, then
people would be talking a bit more about it.
But there's just. Not quite as much attention and.
My memory of the we've been watching the aluminium price
expecting it to tick up in the same way that we've seen the
alumina price, you know, just just soaring up amid the
fragility in that supply chain as we've sort of discussed with
with Alan Clark and been following that since, but the
aluminium price hadn't really. Moved.
Yeah. It's just sort of single digits
up this year. And was this the first time you
kind of like we sort of actually said responded to just the lag?
Yeah, it is. But it's, it's not because of
those reasons. It's because something else has
come in. So should, should flesh out what
what exactly has happened. On Friday, China came out and
said they're going to reduce the export tax rebates for a bunch
of products. So you've got some refined oil
products, batteries, photovoltaics, these were at 13%
roughly, you know, different on some.
And for those products they're going down to 9%.
Whereas for aluminium and copper, again, all about 13%
rebates, they're being cancelled.
So, you know, depending on the specific semi finished product
that you're exporting, there was a slightly different percent
rebate, but they've been wiped. So traders on the LME have
essentially bet that less rebates means there will be less
Chinese aluminium exports, hence lower global supplier value.
And on the back of that, you see a price bump on the
international prices. Again, like I said, not in
China. The the world's just not getting
along at the moment, are they? I was thinking.
No one's, no one's working together.
How much, how much easier would it be if we all just got a lot
of things would be cheaper? They need to get me in there.
Get some good vibes. We'd have nothing to talk about
though Manny. So these changes are coming into
effect pretty quick. In two weeks time, they'll be in
effect December 1st. And like you say, Trav, this has
all come at a time when bauxite and aluminium markets have been
pretty heavily disrupted. A lot of that came from what
we'd seen in Guinea straining supply at the bauxite end.
We'd seen stuff in, in WA with, you know, Kwinana being shut
down across the world. There's been quite a few
disruptions. So like I said before, aluminium
prices up single digits sort of under 10%.
Guess how much the alumina price has been up this year.
I'm. Going to guess 45. 45. 70 fine,
that's way off. Yeah.
So consensus expectations right now take take these with a pinch
of salt because it's pretty hard moving and you don't know when
these disruptions come and sort of get get resolved.
But the expectations are that a bunch more alumina will come to
the market and ease this price spike that we have seen in the
next few months. Early 25 a lot of people were
sort of pointing to but you know, we'll see sometimes it can
take quite a while for these things to to work their way
through the market all. Right that that China aluminium
output is a very NE trending thing, O isn't.
It it is pretty incredible. Yeah.
So I mean, it, it kind of leads to a bit of a chat about the the
history. I found this pretty interesting
digging into why China set these up.
So they, they set these tax rebates up in the 80s with the
goal of just offering Chinese products at lower prices across
the world, you know, targeting international customers.
And that would obviously, like you see in that chart, Maddie,
boost their export volumes as well as economic growth in the,
in the country. This year specifically, the
exports have been particularly strong for, for one reason
that's weaker domestic demand for products, leading these
people to to look elsewhere. I know we'd sort of spoken in
the past, we'd seen it with steel.
You've had people like Bluescope here in Australia complaining
that the Chinese steel makers are just dumping steel across
the world, lowering the prices, making it a bit tougher, you
know, for companies like Bluescope.
See the same for the domestic steel producers in, in America
as well. On aluminium specifically, in
the first half of the this year, exports were up 13%.
Like, I mean, just look at the trend on that chart.
These are, these are big numbers.
This has been going on for decades now and to still have
1/2 year, we're up 13% on copper, which had, you know,
similar sort of story overnight on Friday with the, the rebates
being cut, the exports of unwrought copper were up 38%
year on year. So a lot going on.
And these are, these are big numbers on trends that have been
going on quite a while. There's pretty, pretty eye
opening, not the sort of stuff I'd expected to see.
And this has led to a bunch of tensions with a lot of people
saying, hey, we need to slap on tariffs on all the products
there they're exporting because it's just making it super
uncompetitive for our domestic industries.
You've seen that. All over the world.
Cause the whole Trump tariff thing is nothing's really been
announced yet. It's all just theories and
everything, isn't it? Yeah.
I mean, it's all just what he sort of chipped up and and kind
of said, who knows what actually gets put into legislation, but
that is that is why we've seen this from the Chinese.
They didn't say specifically why they've actually cut the
rebates, but you'd have to imagine it's exactly that.
So we've seen similar stuff with gallium, germanium a little
while ago, Antimony, obviously, they're much, much, much smaller
markets like the aluminium market, the copper market, they
are huge. And if you just sort of think
about the implications of of what these guys are doing, they
know around the world there's pretty limited capacity to grow
aluminium production. You know that that you can't
just turn that on overnight. So they know that the Chinese
will be able to pass on some of these costs.
And the the direct result of that is the cost of
manufacturing products, say in the US, say if you're a car
maker that needs aluminium, is it's going to increase your
input costs. It makes it more expensive.
And maybe that gets passed on to consumers as well.
And you and you feel the pinch. So it's the sort of starting
point of the negotiations between the Chinese and the US
when, you know, it comes to comes to your country and you
realise everyone's paying a bit more and they bought themselves
a bit of leverage, right, And might have to negotiate the
other way. A lot of this is also targeting,
there was a whole bunch of other medals being targeted too often
those sort of jewel use ones, which are both civilian and
military in their application. So that's just kind of something
that that jumps out and is a bit interesting.
But yeah, I mean, like, like we kind of said, I think when Trump
takes office at the at the end of January, I'm sure this would
be one of the top sort of talking point or one of the
talking points in a bunch of heaps that they're talking about
when they're sort of setting these tariff levels that Trump
has spoken about. You know, said 100% of time,
said 60% at other times. Who knows where, where things
will add up. But ultimately, it does kind of
make things a bit more expensive, at least in the
interim here. Is do you reckon those tariffs
are going to be like a blanket across the board thing or is it
going to be different tariffs for different items?
Like would aluminium and copper be different to other things?
You would think you would take them differently depending on
what you can produce internally. So you don't want to make your
own people suffer too much. You kind of want to set the
tariffs to protect your industry, but if you don't have
an industry to sort of speak of in the certain production of
whatever product that might be and it's only going to hurt you
to to ramp it up so. Aluminium would have to be a
case there because it is so, so bloody China.
Yeah, I mean China is more than half the the global production
of aluminium. No, no surprises on on that one.
You're dead right so. Rare earths would be another
one. Like, yeah, control they've got
there. Yeah.
And it's not just. It's not just and commodities,
it's a whole range of things. You know, finished products,
yeah, like electric vehicles will come into the discussion.
Heaps of different products will come into it.
So to be. I think it's pretty much
legislation and I think it's, I think it's more than just
talking points. I think there's like some
fleshed out kind of proposed policies that were a part of his
campaign which, yeah, have nuance to it.
So I should buy BYD right now before the price?
Comes up. I don't know if Australia will
follow. Yeah, yeah.
I don't know if Australia will Chuck on there.
We don't have a car industry to protect, Yeah.
Yeah, Yeah, we might. So their their tariffs won't
affect, do you think they'll affect the price of things for
us at all? Or potentially prices might all
trend north and just inflation. But yeah, in terms of like the
the relative discrepancies in in EVs, I don't know if where is it
like if Australia is as at as much of A risk of having tariffs
put on Chinese EVs as the US? Yeah, again, just just one
product. So we'll, we'll wait and see,
but it's a very, very interesting time.
Fun fact about aluminium, I didn't, I didn't know this.
Aluminium is like especially in coal mines.
It's like a bit of a frowned upon, not allowed, heavily
regulated thing because aluminium if it if there's
aluminium alloys and they strike steel, it could create a spark
and there's heavy regulation around how much aluminium can be
in things. Risk of a fire Risk of fire and
the. Gas or stuff, No, so I didn't
know that. I didn't realise that aluminium
was a bit bloody, a bit bloody Voodoo chat, cheap.
BT has actually informed me upon this discovery that there is no
indication that Sandvik uses aluminium in their ground
Support Solutions. No, no.
I did try to call to confirm it, but I don't know.
So I think based on, you know, if you're thinking that possibly
aluminium, no prices could lift with this China playing silly
buggers, I don't think it's going to impact the ground
support division of Sandvik. No, I don't think.
Do you know what what is in there?
Alloys that Sandvik's ground support division uses that Pixie
dust magic? It it's just that is why they
are the best ultimat you could ever use.
Yeah. That's something that doesn't
change. And it's quite the metaphor,
isn't it? Because like, even if China are
playing silly buggers, the durability of Sandvik's ground
support division is as durable as the bolts themselves.
What they could like 1MCM VMDX Bolt couldn't hold up the weight
of the underground mining industry.
Like I'm getting philosophical. Talk about heavy shoulders for
Derek. Oh.
Yes, just and like when you think seeing the ground support
division, you think Derek heard. Give yourself a Christmas gift.
Get an order in. Oh, get him in before bloody
even. It doesn't matter when you put
it in, they'll just get it to you anyway.
Speaking of Christmas gifts, Maddie, couple of unexpected
special dividends from some listed cash boxes that I caught
my eye today. I found a pair of announcements
which were kind of interesting this morning because they're
both along the vein of, you know, these listed kind of
cashbox companies paying out a special divvy to to
shareholders. How so?
I've got two companies to talk about and they both became
cashbox companies in in in pretty different ways.
So I thought, I thought there'd be a story to tell on both of
them. Oh.
Take it away. First one is Red Heel Minerals.
This is the the company that previously held a 40% interest
in the Red Heel iron ore joint venture.
That is the project that Minrez did the deal on and that is what
is, you know, Onslow Iron Ore project today.
When we, when we talk about that project, Minres paid, you know,
all up $400 million for that project in the deal.
And Red Heel they basically retained, in addition to getting
paid that much money, they retained a 0.75% FoB royalty
over, you know, over the project too.
Now Red Heel because they got a bunch of cash in the door from
these big chunky payments from from Minres They've they've
actually paid a series of special dividends to
shareholders to kind of distribute a good chunk of the
cash it received. Today's announcement was that
they they're basically paying a fully franked 30 cent special
divide to shareholders and you know the stock price ticked up a
little bit so the shareholders were happy with that one.
These days I find the company kind of interesting, one of
those interesting vehicles because like the shoe mine oil
prices are USA $100 a tonne. Then you you'd expect Red Hill
Minerals to get about 25,000,000 Australian per annum in royalty
revenue from the Onslow project. So that's already interrupt that
30 cent per share divvy, what's the share price, how much
percent, what's the yield on that?
About four low 4 bucks. OK.
So I'll be a bit less than 10%, yeah.
Up up 8% when I looked on the day.
God, that's not bad. Down, up, up after you release a
dividend A. Pleasant surprise for
shareholders. You don't say that.
Yeah, yeah. Gotcha.
Continue. Sorry.
Yes. So they'll, you know, if all, if
all goes well at Onslow, then you can imagine Red Hill
Minerals getting kind of $25 million in in royalty revenue
per year. At the same time, they're using
some of that royalty revenue to advance some greenfields
expiration programmes in their portfolio.
So you can kind of imagine this, this vehicle, they're spending
about $6 million a year on Greenfield's expiration.
They receive a lot more of that in the in the royalty revenue.
And so then, you know, I imagine they'll probably pay like a
handsome kind of dividend to its shareholders in addition to
doing it's, it's some expiration endeavours along the journey as
well. It's kind of like Talisman, if
you if you, yeah, which kind of comes to mind just from that
royalty funding, the expiration sort of sort of a model.
Bloody a high a yielding exploration company that's
bloody that'll be on. Oh, there you go.
I never heard of it. Any other any other similarities
to the Great Talisman and? There's there's other
similarities, Matthew. So they're both both, like we've
talked about Talisman before, both both both Red heel and
Talisman, they kind of got these things, you know, major
shareholders, which are also the the chair people of those boards
and they've been pretty successful in the mining
industry. For Talisman, it's obviously
Carrie Armanis of Jubilee fame. For Red Hill Minerals, it's the
lesser known fella by the name of Josh Pitt.
And while you probably haven't heard of Josh before, he's being
associated with three discoveries in WA, Golden Grove,
Thunderbox and Bounty. So a fair bit more successful
than most punters out there. Bounty, one of the most I've
heard, one of the most seismic underground minds.
It was they were Yeah, right frigging off, it said.
You people that worked at Bounty, wow, I didn't job.
She's not opens, brother is. He the other similarity to
Talisman. So both Red Hill and Talisman
got their royalties thanks to Minres.
For Talisman, it was one Mara royalty that paid the royalty
income and that funded the expiration.
That's actually coming to an end if you read Talisman's latest
announcement. So they're going to no longer
have that, that royalty paying their their revenue to fund the
exploration. In the case of Red Heel, it's
yeah, the Red Heel Lion or JV, which has a pretty extensive
mine life ahead of it. So that that that bloody that
was IGN was today, wasn't it for a deal?
It was, and yeah, being 50 metres away from Money Mine HQ,
the Country Women's Association, I popped my head in Maddie. 2
reasons why I went one. Scones.
I had, I had. No, it was.
It was sandwiches and wraps. Not bad, not bad.
So 1, I just find it an interesting vehicle, right?
Like when you can fund expiration with the royalty, but
also you have it, it's kind of interesting.
It's only 64,000,000 shares on issue with this company.
You can see they don't raise money.
It's not like, you know, the, the 64,000,000 is not there
because they've had to do a consolidation of shares.
They don't raise money. Major shareholder owns like 40%
of the company, you know, so it's an interesting vehicle from
that perspective. Second reason I'm trying to
learn as much as I can about the Onslow project because of the
significance it has to to the min res situation right now.
So obviously, you know, these guys have no shit load about
that project being it was in their portfolio for a very long
time. So I spoke with people and had a
yarn about, with people who are all, they're all pretty
optimistic, to be honest on that front in relation to us about
this, Albeit they do have a, you know, a royalty that will pay an
annuity like income from, from that project, but they seem
pretty confident in the cash flow generation potential of the
project. But, you know, they're, they're
candid and they talk about if you even read their kind of AGM
addresses over the years, like they, they talk about, you know,
they recognise that the project has, is low grade and has
impurities. Like they're, they're well aware
of all that sort of stuff. It's, yeah, it's not like a
glowing, glowing review on that front.
But they but you know, it's they're positive about its
ability to make good free cash flow when optimistic about
Munoz's prospects, too. Very good.
Now, now the cashbox Trav. What else have you got in the
Cashbox box? The second one was Indiana
Resources, a bit different to Red Heel.
They didn't become a cashbox by selling a project for a lot of
money. Instead they they had their
project expropriated by the Tanzanian government and in a
lengthy arbitration process, the courts have ruled, you know,
that, that they're in favour of getting a healthy payout.
There's US $90 million settlement owed to the
claimants, of which 60 million has been paid so far.
The final 30 million is to be paid by 30 March next year.
Indiana said that their, their cash balance as of Friday last
week was was $48 million in Australian dollars.
So what they're doing is they're paying out a special dividend
that accounts for 32.6 million bucks and you know, hence
retaining a cash balance of of 15.4 million.
Speaking with some shareholders, they, they kind of have high
expectations that there'll be a decent distribution at the back
end once that kind of final payment is made as well, you
know, to so, so let's hope shareholders get what they're
they're hoping for in that front.
And there is like a, a healthy second distribution in, in due
course. If you, if you look at both Red
Hill and Indiana, both of these sort of cashbox companies, they,
they have a separate expiration agenda that they're trying to
pursue. One of them is able to
consistently fund that with the royalty.
But you know, if you just look at the the the two exploration
agendas, you know, Red Hills team, at least with some
discoveries, have a few more runs on the board with their
greenfields exploration though versus Indiana, but interesting
nonetheless. Their share price was flat
today. Very nice trap.
Good digging mate. Would never find that if you
paid me for. It that that is a Jeremy rapper
company. That's why it's on my agenda.
An interesting one. Right.
But news out a update from Resolute on the back of last
week with the detainee of the seat with three employees, one
being the CEO in Mali. What is going on?
Yes, we got an update today, Maddie from from Resolute.
They went into a trading halt a few days ago pending the update
that we saw this morning. Unfortunately, the three
employees still being detained, Resolute reported that they're,
they're safe and and all is well, but hopefully they are
released shortly. But Resolute, the company has
signed an MOU with the government of Mali.
So there's a protocol that will set out a framework to migrate
their assets in Mali to the 2023 mining codes.
That's the most recent mining code.
There'll also be a couple payments totaling US $160
million. US one US 80 million is the
initial payment that's already been made and that will settle
all outstanding debts between Resolute and the government of
Mali. So you'll see a further US $80
million to be paid in the coming months.
And this will also be paid from the existing liquidity sources
that Resolute say they've got. So just tapping into the the
funds that they've got, Resolute said that cash and bullion at
the end of the last quarter of USA 188,000,000.
So 80 million of that is gone. They also had US 43 million in
drawn debt plus the company had 140 million.
This is all in US in external debt facilities.
They were with Ned Bank and Citibank.
I don't know about this, but I'd be curious about the bank's kind
of positioning and lending any further cash.
I don't know if they've got any sort of claims or can tell the
company they don't want to, you know, if they want to pull that
sort of financing for further cash to go in that's a sort of
open ended. Kind of question, but is that
140 undrawn that yeah, that US 140 is undrawn.
OK, Yeah. So not, not yet called upon.
So that the company now has an $830 million in Aussie dollar
terms market cap net debt after the second payment assuming that
goes through in a few months time of US 15 ish millions, you
can call it an EV of about $850 million.
So it's in an interesting position and the share price is
less than half of what it was about a week ago trading in the
off a couple percent on on the news today.
So just looking into the the new mining code and trying to get a
feel for how things might look going forward.
And you know, importantly, what resolute might do the decisions
they might kind of make. So the new mining code outlines
a minimum 10% free carried interest plus the option to
purchase a further 20% for the government.
That is obviously and it's not yet clear on what terms you'd be
purchasing that extra 20% like in the cases, so.
That's going up to 20% on top of the 10.
So to go to 30% total or to go to 20% total?
Yeah. So that is how it will be for
new projects in Mali with Siama. There is already a 20%
government interest there, although they have another
deposit sits at 35 kilometres away, Tabacaroni that provides
oxide feed to Siama that is 90% resolute owned.
So that might be the first spot we see a bit of change on in
country. Yeah.
So and as you said how who determines the price for the
extra well 10% in that one, but other ones 20%?
Yeah, it's kind of interesting. It's tough bartering.
Yeah. And these are the sort of big,
big talking points. There's also an obligation to
give 5%, a further 5% to local Malian investors.
Again, pretty ambiguous what sort of terms that would be on,
but they they stand out as the big kind of talking points
because a lot of these changes in the mining code, they're more
applicable to new projects coming online.
You're talking about tax holidays after you build a
project, all those sorts of things.
So for projects already in play, you know, bearing in mind that
they were under the assumption that they were grandfathered,
that clearly hasn't been the case.
There's a few more open ended kind of questions and it kind of
leads me to think what what is resolute going to do?
What's what's the the sort of philosophy of the company going
to be on investing further cash in country there.
So they have expansion plans already underway.
The Siama sulphide conversion plant is being constructed as we
speak scheduled to be commissioned in mid 2025.
That was a $55 million CapEx project.
This was the avenue to get Siama from 210,000 ounces to 250 odd
1000 oz and they'd already outlined plans to get themselves
up to that 400,000 oz per annum number at Siama.
I I wouldn't be shocked if they sort of put those bigger
expansion plans on ice, but it's, it's a kind of delicate
position. You know, maybe Mali will be
like, no, we want to see you continue to invest in country or
we'll put the squares on a bit tighter.
So that's pure speculation on my end.
I don't really know. Resolute had sort of spoken
about other growth projects. Obviously they're mining in
Senegal as well. They have sort of advanced ish
exploration projects in Guinea and they've also spoken about
exploration in Cote d'Ivoire. So maybe those things, you know
that it's a long process that these are exploration plays.
We don't know where it goes. Maybe they look at sort of
smaller scale given the sort of trading values of some of the
peers. There's not heaps out there, but
I wouldn't be surprised if they're looking more at Cote
d'Ivoire Ghana, places they think they might feel a bit
safer in. That sort of said, they're not
completely flush with cash at the minute.
After there's, there's, there's something on the cash that
you're missing there and that's there's a contingent payment
that will be due to them upon the sale of of Ravenswood, which
is expected Q1 next year. And I think it's like, it's like
100 million bucks or something like that.
Yeah. So there's a fair bit of money
coming in the door for them too. But all accounts, this is a
pretty fucking disastrous announcement in my opinion.
Yeah. Like they've just been.
Yeah. They've just like the government
has basically put the the knife to their throat, demanded more
money and more ownership and they've gotten gotten their way.
And the the execs are still are still detained.
Yeah. It's a, it's a, it's a
disastrous outcome, I think. And I'll be interested to know
how quick the process would be to get CAT if they did choose to
sell. If Marley took up the option to
buy the extra stake in the project, how long would it take
for that cash to get into the door?
What that process looks like? It's, it's very, very tough.
It would also be interesting to see what, what the other
companies in the country are going to do.
You know, we, we saw the sort of warning shots and some of them
try to sort of play ball and write some cheques and stuff.
But that barrack is operating in a much bigger scale and they
didn't kind of pay anywhere near this much so.
They paid it earlier, but. Exactly so.
Is there something to read through there?
Who knows? I mean, I saw with some media
outlets sort of reporting this was a warning shot to Barrack,
which is kind of interesting on the back of what had kind of
happened. But what, what are you really to
do? You just got to keep on going.
Once you've invested that sort of capital and do what you can
work with the government, try and make it a sort of cordial
relationship and beneficial to both parties.
But if you just fly in the country and they they detain
you, you know you're in a in a rock and a hard place.
Yeah, I'd, yeah, I'd be interested enough.
There was anything in the lead up if they were asking not as
forcefully for money in the lead.
Up, well they absolutely were you.
You go back and look at the quarterly report from Resolute
and there's wording to to that effect.
There is, you know, tough negotiations going on in Mali
and Senegal as well. And, you know, we expect these
discussions to continue, these challenges to kind of continue.
So there were thing, you know, tax audits or whatever you like
to call it, ongoing in the background.
They could have been pretty forceful, who kind of knows.
But obviously if you're if you're going to go in the
country and you'll see you've got some sort of confidence that
you're not going to be detained. So yeah, it's a it's a very
tough position. I'm sure that you know the
company wouldn't want to really be operating there anymore, but
it's not not really a viable option.
I'm not sure if you could really sell this thing for anywhere
near what you think it might be worth.
But you'd think with those expansions and everything like
it's obviously in both sides best interests if those
expansions go ahead and like if that expedites Mali taking
acquiring a stake to give resolute the cash to then fund
those expansions. Like that looks like a win win
for both sides. But is it that simple?
I don't know. Is it the best use of your
capital as well to like to keep allocating your capital in a
country where yeah, you've you're expropriating more of
your resource? I suppose, but when you're when
you're already there and you're already operating versus going
to build or yeah, greenfields elsewhere that that's the way
up. I imagine that's something out
of different countries as much as possible, yeah.
Every country is different though, so you got to you got to
weigh it up on its on its own sort of propositions.
They don't want to paint all of the countries there with the
with the same brush. A lot of them have operated in
Africa and different countries, you know, sustainably for a for
a long period and and done well. Mali is a particularly tough
spot to operate and it's not not gotten any better over the past
few years. Was it good two years ago?
But it it. It's been on a, on a downward
trend and it wasn't, you know, stand out to start with.
Yeah, that's how you kind of put it.
Yeah, yeah. Yeah.
So I mean, just fingers crossed they they, they release the
people and everyone is sort of safe and sound and we'll sort of
see where it goes from there. Drive the merchants or not?
Bit of a sombre note to wrap it up on.
Yeah, very much so. Oh God.
Well, thank you to the partners. It's hard to like after talking
about that, just to put the energy into the partners, but
that is a go team, go team. December 3rd as well.
Remember it's up. Yeah, that's it.
Down to the pub. Hook, JD and Trav up with some
site visits for In Darba. Yes, Touch.
Another good shout out. I don't.
Want to go to Mali though. Or the conga, no.
Kids go to DRC. Definitely.
Go on. Yeah, DRC.
We're going, Yeah, yeah. That's actually, that's actually
safe. Is it?
Yeah, that's fine. Oh.
Good on you. Anyway, we've got a couple
partners of that. Stone site for West birth,
mineral mining services, grounded cross boundary energy,
same big ground support. CR sure it's catral, Dosa and
Hoodoo money miners. Information contained in this
episode of Money of Mine is of general nature only and does not
take into account the objectives, financial situation
or needs of any particular person.
Before making any investment decision, you should consult
with your financial advisor and consider how appropriate the
advice is to your objectives, financial situation and needs.