Righto money miners, welcome back to another week.
The flu's finished. But yeah, caught up with the UNI
mates, you know I did Mustang bar Friday and Saturday night.
What a business development innings from.
That is one sponsor I want to get.
That is the greatest place on earth.
Good. Venue oh so good.
It's a lot of. But our goods are frigging iron
ore price, buddy. What up 13%?
13% on open up the Shanghai exchange I think.
Yeah, mate, it's just, well, that's pretty.
Good. The majors RIP higher, all of
them. Large cat watch list.
Oh my energy is up a minimum 13 1/2 percent everyday when I just
before I RIP and access mine and technology ad Jesus Christ.
Nothing better than Oh my favourite pastime telling
everyone about the trusted advisor and drill Isle survey
instrumentation. Life has never been better it.
Just makes you feel good. Oh makes.
Go access. You want to feel good, give them
a call, but you'll feel great. Your energy will be up 20%,
right? China stimulus, big, big news.
This could be, as you said, trap.
Is this the start of a commodity super cycle?
He said it just like that. No, no mail at all.
It's a big U turning policy, right?
Like this is, yeah, like we're seeing it in the in the, in the
stocks, we're seeing it on the, you know, in the futures
markets. It's like this is kind of the
only story that really matters right now in the markets that we
all care about is the policy environment in Beijing, which is
maybe that's always been the case to be honest.
But you know, it's certainly right now feels like an elevated
time of importance on on this. I just can't believe how quick
things have changed. Like we were talking about min
rez at 30 bucks the other day and they're bloody 52 again but
it's just. Min rez is definitely definitely
getting a mention but yeah, I think you're dead right Trav.
This is this is the thing we've we've got to talk about.
Obviously a lot of the news started dribbling out late
Tuesday, Wednesday and it's just sort of shaken commodities as
well as, you know, heaps of other markets.
You can see the the sort of ramifications in European
markets you can look at like the the luxury stocks, they get a
pick up when Chinese buyers want to buy more.
So I reckon we should sort of run through it in, you know, the
best, the best way we kind of can.
And then in the background, we're going to keep working on
getting some China experts on the show.
So if you've got any recommendations for people, just
flick us an email, put a comment or just let us know and we will
try get them on the show. But.
If you live in Singapore, get in touch with All the gurus are in
Singapore it appears. Good time zone as well.
So to start with, let's let's run through like what's kind of
gone on. Oh yeah, we got, we got Long
Town in Kingston as well. But but China, we do China.
Don't forget about that. All right, so, so everyone sort
of knows that the the the property market in China has
been under a bit of a drag for four years.
I want to say we started, you know, hearing about Evergrand
and some of these other companies in China really
starting to slow down in 2020 through 2021.
So it's been going on a while and China's kind of policy has
been pretty different, like pretty Needless to say, the way
they operate is very different to the West.
Not these massive rounds of stimulus and you know, on the
right side of things, they've been actually cutting for a
while. So they're in a a bit of a
different sort of sink to what we are in Australia to what
they're in in the US and all these sorts of things.
They've also kind of steered clear of this individual
stimulus just kind of handing out money to individuals for
kind of ideological type reasons as well.
But like you said, Trav, a lot of this kind of changed last
week. They announced big measures
which were kind of run through the the kind of key points on,
but the the pretty clear results of all of this can be seen in
the stocks. So the Shanghai index had its
best week in 16 years. And if you look at the Hong Kong
index, the Hang Seng, that had its best week since 1998.
So absolutely flying. You have to caveat this with the
point that the Chinese real economy is very firmly different
from the stock market that they have.
So there is not the same correlation between the real
economy as there is perhaps between the, the S&P and the,
the broader U.S. economy. So that's something you really
need to note because the the Chinese first and foremost, they
want to stimulate the the real economy.
They want people to feel richer, spend more, all these sorts of
things as opposed to just see them the stock market go up
today. Well, this is this is a big, you
know, policy difference between the the largely the Western and
China is like a lot of the the policy settings that we see in
the West are actually more accommodative of just of just
higher asset prices rather than rather than being more in touch
with the real economy. A. 100% that's, that's been a
feature since the the global financial crisis in particular
since 2008, a lot of the policy that we've seen has just seen
inflation in asset prices across the, the Western world.
So to get into what the Chinese have done in the past week or
so, the the highlights are that they have cut some interest
rates. These, like I mentioned before,
have been cut in the past, but they did a bit more of a
substantial cut. They lowered the bank reserve
requirement ratios, essentially meaning that banks need to hold
a bit less capital to again, stimulate liquidity throughout
the economy. Then to boost the stock market,
this is a bit of a different one.
Again, they've done things like this, but not to this degree in
the past. They're going to help firms buy
back their own shares by refinancing bank loans that
they've got essentially this this kind of helps leverage
investment. I think that the kind of
takeaway is that they don't like the sentiment that is present in
China. When people see the stock
market, they see it continuously going down.
They feel, you know, less inclined to invest in assets
like the like the stock market because they just feel like
they're losing wealth. So they kind of want to put a
put a hold to that. They've never been outwardly
massively supportive of just saying the, the stock market RIP
higher, but they kind of want a bit of put a bit of a pause on
it just trending downward and downward over time.
But the signalling is super vital.
And we see that in the West as well.
You know, the signalling around the the central bank
discussions, the Fed, the RBA here in Australia, what they
kind of signal is super, super important.
And some of the messaging they were giving is that they would
be comfortable and it's a possibility that they would
double or even triple the limits on some of these packages of
stimulus, for example, the the stock stimulus there.
Isn't that, isn't that the whole stock stimul?
I mean, it's like there is a big difference between like, you
know, stimulating the real economy and then like letting,
letting companies effectively borrow more and have more
fragility in your in your financial system in order to
just buy back stock. That's not buying back stock is
well capital allocation that doesn't go to the real economy.
It just goes to sort of the wealth effect to the extent that
exists. Yeah.
And it it seems from the outside much more sort of short term in
nature just to put a bit of a a bit of a halt on the decline.
But you can see because they had a Politburo meeting at the end
of last week, this was sort of seemed to be pulled forward a
month from when it otherwise would have happened.
And some of the wording stopping the decline and stabilising the
property market, that was mentioned as a goal for the
first time. That sort of explicit wording
hasn't kind of been used before. And there's still questions
about how they're going to kind of execute that and put it into
implementation. But the, the fact that that is
like the the first ticket on the menu there is, is pretty
telling. They're also talking about
issuing bonds to the equivalent of 1.5% of its GDP to kind of
raise capital again. That's interesting.
That's a pretty big number. It's nowhere near the biggest
that China has done in the past, but it is a very, very big
number. But this whole stimulus package
it, it's not necessarily massive, but the the wording
that they will do more of it and that they're open to doing more
of it. I think it's just got everyone
super excited out there. Isn't it?
Isn't it funny how the the this is all about China stimulating
China, but how it actually just stimulates the world because the
the fact that they are just a buyer of so much stuff?
Raw material which? You're gonna go into.
Totally, yeah. And I'm, I'm no macro expert,
I'll be the first to admit that I still clear of it as much as I
possibly can, but I do love following the views of of some
of the the large money managers that have a firm view on China.
I don't know if you caught the commentary from David Tepper
just a couple of days ago. JD David Tepper, he's a, he's a,
he's a billionaire fund hedge fund manager.
He runs Appaloosa management, which I think over the last few
years has, has been kind of returning it's external funds
and it basically managers mostly tap his own capital these days,
which is just a casual $14 billion or their thereabouts.
He, he went on CNBC at the end of last week.
And I, I, I cut out a little bit and I'm keen to just sort of to
play it. So you guys get get a bit of a
you know, and and the listeners get get get an indication of
what these like large head funds managers are making this like U
turning policy from China. Because the undervaluation as
you, you know, listen, you can look at your chart and look at
the chart above on your on your screen right there, whatever
stock you like in China, they are even with the decent moves,
they're like on a flat line low compared to where they have been
in the past. And you're sitting there with
single multiple PES with double digit growth rates for the big
stocks that trade over here. That's kind of versus what, you
know, the value. You're 20 plus on the S&P.
OK. And then you have.
So the question was, was China going to do the things that you
want them to do? OK.
Are they going to do the easy measures they they that you want
them to do? So yeah, they came the other
day. And what's his name?
Pan Pan Gong Chang. And I apologise because I can't
even speak English. Well, you know, he came out and
he was like jovial. It's like whoa.
Jovial saying we're going to cut and we're going to and we'll
give you more. And he said we'll do more and
more if needed. Now, the Chinese to say we'll do
more and more if needed. They don't say that because it's
not been healthy to say those sort of things in China.
But they said that the other night.
And I've listened very carefully what government officials say.
So I took it that they did a lot.
They exceeded expectations. And he promised to do more and
more and more. OK.
And that's very strange language, especially for, you
know, any central banker, but especially over there.
So that was the first thing that happened.
And last night, you know, they we heard that they were going to
have some kind of meaning, but they kind of blew away
expectations on the physical stimulus, you know, that they
were going to do now physical stimulus, if you look at your
charts, if you like charts because you used to be a broker.
And that was a good way to do things fast.
What can happen around the world when they do that?
That's what you have to ask yourself now.
So now you have the Fed. So just a backdrop again, the
feds easy. And you know, you have a few
more easing coming. The Japanese, they don't know
what they want to do right now. But it doesn't matter what
people think. They're going to be forced into
things. And I can talk about that in a
second. The Europeans are lowering rates
and now the Chinese are lowering rates, OK.
And they're going to be they're aggressive and how they're going
to do it. And they're also believe this or
not, swap facilities to buy stocks.
What encouraging buyback of stocks, encouraging buybacks of
stocks. OK, this is China, all right.
This is box stock buybacks, not only encouraging it, lending you
money to do it. And they're giving money like
health money where you can put money out and you have no
losses. If you want to do it, you have,
you know how that thing works. You have what only the money you
put up and you can don't lose money.
That's a great deal for me. I want to be over there bar for
some of this stuff. The other thing I thought you
were going to ask us about tariffs and stuff like that.
I do not care. This is internal stimulus there
in the physical stimulus that did last night.
They're going to encourage consumptions directly saying it.
So they're really doing all the things that people have asked
them to do over these years. Good to say jd.com was up 9%.
What do you guys make of that? Well, it's a bit of sounds like
a bit of a perfect storm. I like if you've got like
interest rates going down in the US and everything, and then
you've got China's stimulus, it's a bit of a double whammy,
isn't it? It's such a, it's such a yeah,
the entire government regime globally now is, is a line to
focus on these, these stimulatory kind of like market
stimulus activities, which by their very nature kind of create
more fragility in the, in the financial system.
Like you heard, China's banking sector is now going to have
lower reserve ratios. Well, that definitionally makes
the banking sector more fragile. But it's, it's kind of crazy as
well. Like you, you see, you know, you
hear it in, in Tepper's voice, who's talking, who's been what,
who's been a China watcher for so long.
And this is just like a, this a really kind of unexpected and
serious kind of U turn in what the, what the policy regime has
been there in relation to the, the downturn they've experienced
over the last sort of, you know, 18 months.
I think historically stimuluses are you you think of JFC the
that was like a stimulus, like they're trying to stimulate the
economy to bloody everyone to own their own house and that
obviously went to shit, but. Yeah, it does seem in the, in
the short term it's very encouraging for for asset prices
exactly like as as he outlined there, all the measures kind of
put forward a positive in the short term for whether that be
you know, stocks, houses, any of these kind of things.
But you, you kind of got to bear in mind that the reason it's
done is because things haven't been looking so healthy.
So that's that's one to keep in the back of back of our mind.
Yeah, I think in like a, the way I, I, I internalise these
activities is you, you encourage your, your banking sector to
make riskier and riskier loans or, or you know, or have like
lower reserve ratios or whatever the, the greater proportion of
those new loans result in, you know, kind of can't, can't be
paid back. And that's when you have kind of
the, the you, you grow your, your credit, you grow your debt
and then it kind of compresses because at some point the
marginal kind of like, you know, person you lend money to can't
pay back. Yeah, I was.
I was going to. Yeah.
A. 100% I was going to mention something further down, but it
it's appropriate to kind of pull it up here.
A lot of the liquidity measures the the lowering of the interest
rates throughout China, you know that that has been done to
stimulate the economy in China, kind of Needless to say.
But there hasn't actually been the appetite to borrow.
These rates have been coming down since 2023.
And just, you know, reading, reading people who watch this
stuff religiously, they're saying that there hasn't been
that sort of appetite for businesses, for households,
whoever, to kind of borrow despite the cost of capital
declining over that period. So, you know, whether we see it
again after this sort of bigger drop down in interest rates kind
of remains to be seen. But there is super weak
sentiment both in the corporates and the households there.
And you know, in, in simple terms, if you don't want to
borrow a cheaper rate doesn't really matter.
So you know, it's, it's just something to kind of bear in
mind. And it kind of stood out very
interestingly that another reason why they're trying to do
this is turn the the sentiment around in China to encourage
people to invest and do these sorts of things that lead to
growth over the longer term. Yeah, to focus on what like
Teppers, you know, he highlighted this is just a long
term chart of Ali Baba, a little spike at the back end there.
It's up 30% less than a week, but you can still see it's like
it's pretty subdued relative to the, the highs that reach sort
of, you know, leading up to to 2021 there.
I, I don't have the numbers on me, but you know, I think it
still trades at a single digit multiple of earnings.
Like it trades Alibaba this phenomenal kind of, you know,
Amazon equivalent, you know, can actually trades on some
instances instances of lower multiple of earnings and some of
the mining companies we we we talk about and.
Tepa you don't think Sorry, Yeah, I don't think Jack Jack Ma
talking I'll of the the CCP helped his and Tepa.
Is not the only one that thinks this way.
This is from Shanghai Macro on Twitter.
In short, I'm aligned with David Tepper by China by everything.
Since the July Politburo meeting of 2023, I've been unequivocally
bearish. China On Tuesday, I ban in that
bearish view and shifted to a tactically bullish stance due to
significant shifts in Beijing's communication strategy evidenced
by the financial regulators press conference.
Then, after Thursday's Politburo meeting, I immediately sent out
a note titled By China, where I turned out right, Bullish over a
cyclical time horizon. Fresh off the press today,
here's a tweet I thought was worth sharing.
Beijing Stock Exchange 50 index soars over 14 1/2 percent.
You record for the largest single day gain.
So there's a couple of stocks mentioned to you.
China extra is more than 10%. Cattle.
Cattle rose more than 5 1/2 percent despite the HQS
production site catching big fire on Sunday.
The picture of the fire. So it's kind of crazy, isn't it?
Yeah. Wow.
Yeah, that I mean the, the common feature there of all the
commentary I've seen is people saying short term, they are not
out and out long term bullish Chinese equities or any other
sort of such Chinese assets. It's kind of 1 to one to very
much keep front and centre. They they're sort of betting on
a a shorter term reflation if you like.
So where's this? Where's this stimulus kind of
come through? Like what?
What's the biggest sector talk in China?
But the housing sector is one that I want to talk about Maddie
for, for a number of reasons, mainly because it is the, the
key asset for household wealth in China.
So roughly like 70% of a, a household's wealth is tied up in
the house in China. So the, the simple, in simple
terms, the negative wealth effect that we've kind of spoken
around is that when your house price declines and your overall
net worth declines because most of your wealth is tied up in it,
Yeah, less inclined to go and spend throughout the economy.
So it's not kind of great. But you need to bear in mind in
China, like this was very much intentional.
They they started this four and four or three kind of years ago
and they wanted to do it because they didn't want the property
sector to make up such a large portion of the economy.
They let Evergrande kind of collapse essentially country
garden. It's not completely bankrupt,
but it's a shell of what it kind of used to be.
The leverage in China sits within these developers, not the
same as it does say in the US before the the financial crisis
where it's all the, the individuals who have all the
leverage. It sits much more in these
developers there. And the, the Chinese Communist
Party was happy to see that kind of deleverage to become a much
more kind of normalised, if you like, size relative to the other
sectors within the economy. Now that the messaging they're
putting out is very much around stabilising this, because if
everyone thinks that the house prices are just going to decline
massively, then they're going to run and sell and it's not going
to be good for anyone. So they're going out there,
they're trying to stabilise this and they're doing these by
releasing all these measures, letting people buy more, letting
people invest in property, all these kind of things to to
counteract that negative wealth effect that we're seeing.
Right. So if you're going to make it
money of mine pertinent with the mining right talk medals and
miners for me, Jodie. I know mate, first and foremost
that's the one we've got to talk about.
So they had a huge week last week and as we just said before,
today has been a massive day. So US like roughly 110 bucks a
tonne. Again, we'll flash up a chart
here. That shows FM, GB, HB, Rio and
Min's year to date performance. So still sort of down, not been
a, a great year, but you can see that kick up in the last week.
It's, it's pretty enormous. If you look wider across the
other metals, copper, met coal, even lithium, they're all sort
of moving in the in the right direction.
And as a bit of a side note, Jim Chama's the Treasurer was in
China just last week. And interesting to note, there
was a lot of question marks about whether there'd be sort of
tariffs put on the EVs that we're importing here that you're
seeing more and more on the streets here in Australia, the
Byds and those sorts of ones. And kind of good to see from my
perspective that he didn't put any tariffs on them.
We don't have a car sector to protect or anything like that.
So sort of starting a trade war with China again over, you know,
slapping tariffs on their EVs would have been kind of shooting
ourselves in the foot. Pointless, really.
You, you mentioned those BIG4 on all miners, like look at look at
how they opened this morning on the Spark chart.
Like at one point today min res was literally 10% up sort of,
you know, peeled back down to 4% intraday.
But and the others all similar just yeah, huge volume on open
in response to the commodity moves that kind of unfolding in
real time thanks to the stimulus.
Yeah, I mean, mins is a really interesting example.
Obviously we've, we've spoken about them a bunch lately guys.
But you can see it will, will flash up the the the short man
chart here. And you can see just the kick up
in short interest from sort of mid September, sort of 10th of
September through to like the 20th.
And it's jumping from 7 1/2% of the shares outstanding to 12
1/2% in the same time that the stock's gone from about 30 bucks
to to 51 bucks. So that's a pretty short and
sharp nasty burn for a lot of those people just sort of piling
on as they kind of I guess anticipated the writing being on
the wall for for mins a bit. Hey.
Yeah, it's, it's so interesting, right?
Like the policy setting was a bit of AU turn and then yeah,
like those people kind of double down on their existing shorts
when when you had the share price come off.
And then because it's so levered as well as a hypersensitive
stock to the commodity price deviations which flipped on the
stimulus sides. Hawk was there?
Was there was there any inkling or Goss that this was going to
happen or coming out very abruptly?
The China stimulus. I didn't hear anything, Yeah.
There had been sort of rumours or I guess more hopes that this
would happen for years. Like I remember listening to to
sort of podcast back in 2022, people sort of thinking, yeah,
you know, it's it's sort of time China's going to light a big
stimulus. If you remember, they, they sort
of suffered from COVID a bit longer with these stronger
lockdowns that they're kind of implemented and people have been
anticipating this sort of stimulus for a long, long time.
But you know, the, the timing always kind of takes people by
surprise as well as the, the sort of intensity of it.
You know, they've, they've really locked this one in their
gaze now. I remember like, I don't know,
less than a month ago, obviously, but the iron ore was,
I think it was just above 100. It was like at 1:05.
And the Chinese media is calling that irrational like that, you
know, the, the, the spark above 100 is a rational and then iron
all kind of obviously fell pretty rapidly and now it's
bounced back again. Yeah, I mean, you got to give a,
a shout out to La Shrub. I reckon he, he was mentioning
a, a potential sort of catalyst at the, you know, the back end
of his mind of China stimulus. You know, he, he had been long
energy, long commodities more more broadly because they were
just so beaten up. And I think the, the best way to
kind of visualise this in Australia is just think about
the relative sort of value of the big four banks versus the
big miners here. The performance in the banks
have been so much sort of stronger.
So if you just kind of put on a a relative type kind of bet that
they would normalise that kind of ratio between them would
normalise a bit more. I mean, the, the big four banks
were just powering higher and higher and higher over the past
year. And the last week or so has been
a pretty nasty one. They've sort of corrected a
little bit and it's been the the complete opposite.
So that's pulled way more into a kind of normalised, you know,
relative valuations for, for the two of them.
The last point I think is, is worth noting on this kind of
China stimulus is that a, a lot of it has been financial kind of
related. It's not necessarily stimulating
demand for commodities themselves.
It's not as if China announced a massive infrastructure plan that
is going to soak up a whole lot more commodities.
So it'd be sort of interesting to see if it gets to the point
where they'd do something like that.
Like they're they're addressing homes that have already been
built that are kind of there these kind of things.
They're not talking about building a heap more houses.
So it'd be interesting if that takes on another sort of form or
is expanded if they really need to address this in a bigger way
down the track. And kind of lastly, China has
announced packages like this in the past and just not
implemented it. So kind of worth keeping an eye
out on whether they actually put this into practise in in the
future. So what's the sum up?
Real assets, you know, you'd, you'd think they're in a kind of
good spot despite all the bad stuff out there for the
remainder of the year, like at least at least in the short
term, you know, oil prices are low that that helps a lot of
people out there. the US is into a cutting cycle.
China's kind of stimulating all these things around the world
despite all the challenges out there.
They're just given a, a good tailwind.
So that's the sort of way the the funds have been flowing in
the past couple weeks. And you'd kind of imagine like
the US smashing through records on the S&P, the NASDAQ, all
these kind of things. But this one's a bit out of my
pay grade, Maddie. So we'll get on some some good
guests to to run through what they're kind of thinking, I
reckon. Yeah, well, as you said, Trav,
like buddy iron ore and Metcal, you think China stimulus they're
the first two things you you think of that start flying.
Steel mills. Yeah, steel mills, as long as
old President Z Jay knows like I guess the pecking order of where
that steel has to go, like, you know, the housing market, it's a
big market that's second preference.
But as long as he knows the first preference, it goes to the
the Sandvik Grand Sport division for the lot that's that's up
here. Or maybe he's all, I hope he's
all onto it. I think it appears that Sandvik
have possibly noticed the like this meteoric rise of the DSI
brand on the back of us vouching for them for the for the whole
past year 100. Percent.
And thought we'd better get it on the back of this and great
thinking. Sandvik, it's DSI Underground is
now branded as the Sandvik Ground Support Division.
It's all been swallowed up. I actually feel it quite an
honour. One of the most honourable
things since this podcast has started to display the Sandvik
logo on money of mine. I never thought it had happened,
but just he. Used to he used to have great a
great relationship with the Sandvik.
Jumbo, well, I had a great relationship with both.
I'll use like you jam ADSI split set into the ground with the
Sandvik Jumbo. But now operators can use the
Sandvik Jumbo to jam in a Sandvik bowl.
I think it's just great for the industry.
But look, don't feel, ladies and gents, Derek Hurd is still
running the shot. I pack CEO for the same same big
ground sport division. Go Derek Hurd, go Sambic.
Go ground sport. Love it.
Oh, beautiful. Right.
Speaking of, probably a medium amount of ground sport going in.
Yeah, good ground, apparently. Lawn tear.
There's news out. First shipment how of Spodcon
has been sent. Got in a bloody buddy.
Oh it's different to gold, isn't it?
I remember, I remember, I'm holding the spot in the photos.
But like God, the amount of time it takes to frigging get it on
the ship and everything. Bit different to sending it to
the men. The joys of bulk commodities.
So what a let's go through it. So 11 and a half, 11,855 wet
metric tonne of 5.2% spodumene concentrate was on the on the
water going to an existing off take customer.
So they're saying at the moment Kathleen Valley they've produced
28,000 wet metric tonnes of concentrate to date from first
production that was announced 31st of July.
Yeah, so and they've also commenced selling into the spot
market for. Uncontracted.
Uncontracted products. So they said there was a spot
sale of 10,000 tonnes sold to a Singapore based trader at a
premium. The spot actually US $802.00 per
dry metric tonne at SC six equivalent.
Now we're going to talk about this SC six in a bit, but so
that's considering the spot prices currently sitting the two
numbers I saw this morning 7:50 to 786.
So I look for around 5.2% it's about quite still about 10
million Aussie bucks outside of their off takes.
So scheduled to be shipped early next quarter that bit.
So yeah, I'm might be a bit of a informative week on the line
town front, I think because I think we might say something
from out soon around this sort of mine review.
We're all waiting for, for, for, you know?
Costs, costs are one thing, some guidance like probably and
guidance and timing of the guidance hopefully recoveries
maybe but probably clear sight also of whether this 4 million
tonne expansion in 2027 is still in the pipeline on ice or if
they're going to commit to that or not, that's another thing so.
Remind me again, 'cause I lost track at one point it was gonna
be 6,000,000 tonnes and then they.
No, no, no, it was only ever gonna be, it was, it was gonna
be 4-4. But then when they when they did
the yeah, the funding and everything they sort of and with
the lowering the prices, they sort of put the four on ice just
said we're gonna go for 3/3 the four's and the four's still an
optional thing. They just weren't firmly
committing to it like they were previously.
Yeah, Yeah. And probably another one about
what the, the product product spec is going to be.
So, and I'll get into that a bit later.
So because to my knowledge, like we don't really definitively
know yet when Lawn Town are going to sort of get to this
3,000,000 tonne per run, right. And look how many tonnes of
Spodcon that will entail. So I think there was some
comments around it being about 6 to 8 months or something after
first production, which would be sort of Q1 next year because I
haven't started stopping yet. I don't believe they're still
doing all the development and getting it all ready.
So I think it's looking to be the back end of the year when
they start stopping or like maybe yeah, like AQ four thing.
So that'll obviously say the bloody tonnes really lift
towards that 3,000,000 tonne run rate.
So I've heard, I've heard they might be able to get there
earlier than Q1 next year. So that'll be.
Impressive like. Yeah, and I think it helps with
the because it's big and bulky. Like as long as they got the
frigging part, there'll be that. There's that many headings
there, I think because it you go and there's just fucking
spodumain everywhere. So it's and once you get it
bloody get enough to develop like you'll be able to RIP a bit
out pretty quickly. So and look, since that day of
fast, there's anything I think it was 2021.
I think so much has changed when we talk spodumain concentrate
like for the status quo. So because you know, back then
it was everything was like right, SC six equivalent.
Most companies other than green bushes were sort of aiming for
that 5 1/2 SC 5.5. But now you see sort of SC 5.2
becoming what you consider normal.
Like that's what Pilgrim Minerals is selling.
So and this is what Lion Town have sold in this.
So I think Lion Town will be weighing up the trade off of
producing an SC 5.2 product, which I assume has a lot more
processing flexibility, probably less margin for error versus
having to fuck around to try and get an SC 5.5 or better.
And depend like and if people wanting to buy the 5.2 and you
can push more through and it's easier and and you might you
might get a better recovery. Yeah.
So it'd be interesting to see if we get a bit of commentary
around that. So I.
I heard Maddie that the the benchmark, the fast markets
benchmark is, is going to be changed to SC 5.
Yeah, that makes sense, doesn't it?
Yeah, because like why have a benchmark that only one mine or
sometimes 0 mines is producing? They're easier on the maths.
So. So, yeah.
So that, that'll be interesting to see how that all works
because you know, it does. That does throw out all the, you
know, from their DFS figures, the amount of concentrate
produced on their old numbers. Because if you look at, I'll
bring up the charts here, if you look at the DFS figures, like
two and a half million tonne per annum gave around 540,000 tonne
of dry metric tonne SC 6 equivalents.
I remember, I, I think it was in a fortnight today.
So the wet metric tonne contains about I think it's like 9.3%
moisture. So that's right.
When you convert it back to dry metric tonne, that's how it
works. So I look 3,000,000 tonne should
give around 650,000 tonne per annum of SC six equivalent.
But if they're selling 5.2% instead of 650,000 tonne, you'd
need 750,000 tonne to be sort of in line with those DFS numbers.
So I'm sure there's a bit of a balance and act I'll be
interested to say if the once I start punching through all the
the underground feed like from the honeypot areas, which is
probably high grade, what effect that has on the whole, you know,
recoveries in the spodumain concentrate grade, if that's a
if that's a thing or not. So because if you go off what
they've produced so far, 28,000 wet metric tonnes since 31st of
July. So that's 25,000 drive metric
tonnes in two months, about 12 1/2 thousand tonne a month so
far. They're in ramp up, obviously in
ramp up with the open pit feed because the run rate they'll be
chasing, they'll need to be around above 50,000 tonne per
month. So about four times what they're
currently doing. But I feel and but I feel like
if they're already committing spod into the spot market, you,
you would, you would think they'd be confident enough that
they're going to be able to fulfil their off take
requirements if they're already selling into the spot market as
well. So because if you look at the
amount they have contracted to LG, Tesla and Ford, looks like
their minimal contractual commitment for year 1 is about
265,000 tonnes of spodcon. There was there was another off
taker that came in late as well. I think it's a Chinese entity
that took a little. Bit a little bit extra during
ramp up, yeah, Yeah. So it looks like, so pretty much
double what they're pumping out now for this first two months is
what's actually contracted, right.
So they're obviously must be pretty confident they're going
to be able to fulfil all that by that, Cos I think there's a 10%
variance on, on the, on the LG one and the Ford 1.
So they can go 10% under those numbers if they need to.
So it'll be once this all comes out, it'll be like it'll be
interesting to see all the sell side models being updated with
the cost guidance at these prices.
Like, you know, because always plenty of rumours were
circulating in the past like month, month or so, and probably
before the cattle announcement of the Lupita like mine shutting
down. But like thinking like God is,
are we going to see any further curtailments?
So I think on the back of, you know, that cattle announcement,
probably this updated mine plan probably should house away those
rumours for them hitting the pause button.
I would imagine I because I get in terms of the finance side of
things, when that LG convertible note was announced, so it said
they had like $381 million of liquidity after another 120
million remaining capital costs. So and they've got, they do
obviously they've got the $550 million of debt with Ford and LG
convertibles. So you'd think, I think they can
call on another 100 mil of debt from LG if needed.
So but you'd, yeah, obviously got a bit of cash to say them
through. They're not even bloody.
It's not that we've got 50 million bucks left or anything,
just a real shit time to start a Lithium 1.
Yeah, it's it's like, you know, they're going to have like while
the market is where it's at, they're going to have a period.
It's just like how long is the period going to be where the
costs are going to be greater than what they they're able to
sell their product for, right. And it's like that's the whole
equation for for Lion Town is like, you know, how long is that
period going to be? Yeah, I suppose.
I suppose you want, yeah, it's a tough one.
You don't. You want high prices when it's
low. But if you're going to pick a
time to have low prices, you want to.
You probably want them when you've got the least amount of
product coming, being produced, if you've got enough money to
see you through. Yeah, the the the best, the best
thing is having. Early cash flows, yeah, outweigh
a lot. Pay back your debt and all that
sort of stuff. Riskier, but.
It'll be better later on, Yeah. So that'll be good.
I'll be interested to see if that I don't know if it's coming
out next week, but I don't think it's this week or better.
I don't think it's too far away and especially on the back of
sort of Y JS comments in in the last week, which is probably the
first sort of semi bullish episode we've done around
lithium in in recent times. Yeah, it'd be good to say a bit
of a turn around it'd. Be great.
I think like, yeah, calling, calling lithium market has
bottom versus calling like, you know, it's gone parabolic again,
a very different sort of calls. Just because the lithium
market's bottom doesn't mean that lithium prices go to the
moon again. It just sort of things can
things can stay bottomed out for a while and it's just sort of
grind sideways slightly higher over over an extended period of
time too. Oh.
Mate, that just take that take 1200 yeah like invited that all
all they wants. They just want lithium to go up
50% effectively. Not asking for a lot.
Not asking for much. We just want it up 50%.
But yeah, but that isn't that an amazing thing to say.
Like, yeah, it doesn't sound like much that it has to get
back to 1200, but that is 50% higher than what it is now.
It's kind of crazy. The idea is like to ask a
commodity price to do that. Yeah.
It's like saying rare earths, we needs to go back to 60 or 70.
But yeah, it'll be like saying iron ore should go to plus 200,
yeah. Yeah, yeah, it's, yeah.
But the the as you said, it's just that historic anchoring to
those to the mania prices. So, yeah, but I'm in terms of I
guess doubts and sort of like the confidence in what they're
doing there. Grainlands are on site there.
They've done some work there. Are they Grainlands equipment?
Yeah, so mate, it's all good. You got water specials there,
like Greenlands equipment, like, whoa, Jesus Christ, like having
a comfortable blanket put over your proverb proverbially.
So what did they make everything safe now?
What did they do? I think they're doing some bit
of Poly work, yeah. So yeah, right.
Bloody. I wouldn't.
I don't have any doubts about the Poly work.
Ohh right not not at all. The amount of the amount of MD's
I'm speaking to lately after listening to when they listen to
the Greenlands, I'd say like Jesus cross.
They sound like a perfect fit for our operation.
Yeah, but they were the exact words.
That's because they are. So turnkey mine water management
specialist, when I say turnkey mine water management, I don't
have to go through the website each individual thing.
It just means everything. Yeah, everything water.
Like name a random water thing that you would require on your
mind site. A Mount Franklin vending
machine. Yeah, they do that.
Yeah, guaranteed it's turnkey. So look, look at the clients,
Genesis, Minres, Pantoro, Northern Star.
And Speaking of Northern Star mate, they've done 3 separate
sites there, Karasuddin, Moon Pit and Thunderbox.
So it obviously they've done one job and Northern Star were like,
shit, how good were they? Let's get them back for another
one. They've done the second one.
They're like holy snap and duck shit.
They did the second one better than the first one.
We'll get them in for a third one.
Like what? A customer review.
Beautiful mate. The Cobar comeback kid.
Kingston resources show The Cobar.
I was keen to have a chin wag brief.
Cobar is the family. Kingston is a child, you'd say.
Yeah, yeah, I suppose you could say that.
Yeah, right. So this morning, Kingston, they
came out with an, an updated kind of mine plan.
I'm I'm getting curious about Kingston for a couple of reasons
#1 Cobar. We just.
We love talking about the cobar #2 was, I remember our chat with
Dan Porter last year and his his Pure Resource Fund has they've
kind of lent this company $15 million now.
So Kingston's going to have to pay that back and.
Kind of lent it or like literally lent it.
No, they've lent it. They've lent it yeah, they,
they, they don't con notes though.
So what they do is they lend them money which needs to be
prepaid, but they'll get a truckload of out of the money
options too. Yeah, yeah, yeah.
And the third reason is our good friends of the show at Delphi or
Deutsche Ballot. And you might know the most
they've they've kind of etched up their their shareholding from
12 1/2 to 15% on the register too.
So today, like this funky announcement that they they put
out together with a bit of a Schmicko presentation.
It's essentially a reserves update, but the gist of it is
spun like a a mine life update for their Mineral Hill project,
Kingston. They they acquired Mineral Hill
in 2022. They they processed the tailings
through the plant as they were sort of wrapping together a mine
plan for the for the rest of the resource.
Two months ago they started running open pit material
through the mill and they reckon, they reckon, you know,
the mill kind of hit full capacity there two weeks ago.
It's a, it's a small meal. But under the, the updated mine
plan drop today, they suggest open pit material will run
through the mill until the back end of FY20 6.
That's when Underground will take over.
So there you go, Maddie, there's, there's an underground
contract that's going to be up for grabs.
Development, development work. Development work's going to kick
off on the underground next year there.
But I know there's not, not too many of them coming up.
So people want to watch out for, it's a, it's a, it's, it's only
a 400,000 tonne per annum meal. So it's, it's kind of
interesting how the reserves update today, it included this
production target based on only 51% of the reserves as I've
highlighted here, 51% of reserves, 11% M and I and then
38% inferred. I think a lot of companies to
get pulled up by ASX for they put a mine scenario up that has
too much inferred in the mine plan and then ASX says you can't
do this. So I imagine when I see this
sort of thing, I imagine that's why this announcement doesn't
include any NPV for this six year mine plan.
If you look at the fine print, they, they do say that they ran
a version of their financial model which included only the
reserves. So none of none of the you know,
none of their their resources, just the reserves case in which
they say was NPV positive, demonstrating economic
viability. So if that fills you with
confidence on just the reserves NPV positive, they don't put a
number there, but. I think everyone's just trying
to find where the ASX line is. Let's just Chuck keep a
different shit in and see what it.
Depends who your advisor is like that you have there.
You can't argue with ASX, but there's a lot of different ways
that, you know, the companies are trying to, yeah, convey what
they want to convey on the work they've done at these like
projects within the the confines of what the ASX home permits.
Need to get all the MD's in a WhatsApp chat just to bloody so
they can share what they what what they got pulled up on Tron
Tron the WhatsApp ASX line they. Probably.
They probably exists. Yeah.
Anyway, this is this is where kind of Kingston I I think where
Kingston fits into the regional things and the cobar is the more
interesting sort of story for me.
You see, like Talisman is is next door.
They had they've had expiration success this year, AGC another
exploration story this year. See Alchemy on this map.
Today they announced an earning agreement with JOGMEC for their
kind of lithium gold tenure in near near Manor in WA mostly
mostly focused on the lithium for Jogmec.
But there's like with with that sort of in their pipeline now,
does that mean that that, that, you know, Kingston could
potentially do a, a deal with Alchemy's overflow tenure, which
has a 342,000 oz gold equivalent resource?
I don't know. The other 20% owner of that is
develop mining, which is interesting.
There's there's a bit happening in the region.
Kingston's meal is pretty small and like with, with $15 million
in, in drawn debt, I'm, I'm following it closely just to see
how their cash position trends because their CapEx isn't, you
know, it's not, you know, completely finished with the
CapEx when you've still got, you know, underground development
that needs to be done in due course and all that sort of
stuff. But hopefully they're making
money on the open cut material going through the mill at the
moment. They're they're also looking to
get some coin in the door for the sale of of Misima, which is
the gold project in PNG. But I remember them running a
sale process on that in 2022, which seemingly didn't amount to
a deal. I think like the best case for
for Kingston, is it their kind of cash flow positive already
based on, you know, the, the open pit material they're
putting through the mill. And that'll be, that'll be great
for them because they could use that money to do the underground
development plus pay back the debt and all that sort of stuff.
But but until kind of the quarterly comes out, which
should be out in about a month's time, it's pretty hard to get a
read on on what the economics of the sort of the mining scenario
is at the moment. It seems like you look at that
map log, especially Mac. Mac have named renamed to Mac
copper. Yeah, you'd think, you know,
they're obviously looking. I think every pill mining is
probably the logical one there. Like this is obviously gold.
Predominantly gold. Gold.
Copper, yeah. Little bit of copper, yeah, it
looks like more gold miner you'd say?
Like is that an Aurelia thing on the back of the lot once Darks
has finished now, are they going to be looking to get a bit of a
rebirth or something? Well.
Came to see how I really get get federation going now that that's
all you know in motion. Yeah, there's, there's, there's
heaps in this region and not a lot of MNA, sadly.
I love to see a bit more MNA in this region.
It's long region's long infrastructure.
Yeah, a lot of short quality projects though.
Yeah. And the the projects are all
kind of sort of subscale ish. So, you know, it's the whole
kind of hub and spoke thing, which is of a maligned, you
know, model for as a mining company in the 1st place.
But there's, you know, there's opportunity for the, for the
lean kind of operators who who sort of think differently and
can kind of just get, you know, get, get value additive deals
done with neighbours who have, who have resources and all that
sort of stuff too. Yeah.
You have to sort of be convincing and charismatic to
get a few of those deals over the line, I'd imagine.
Yeah. Yeah mate, bloody plenty of
balls in the air at the moment. Yeah, there are.
It's a, it's a really interesting time.
I reckon like everything, everything going on the the last
few weeks in particular, I think hopefully a bit more of a
tailwind through our kind of neck of the woods until until
the end of 2024. We'll kind of see.
It's all the stuff that you forget about that you don't
expect. Well, you know, you never know,
we might just see a massive gold M and a deal coming out in the
next month. Who knows?
I. Mean gold just in the background
just keeps going from strength to strength, hey?
Yeah, let's not forget that. Hey, Jodie.
That's it. Right, I haven't forget that.
Oh haven't forgotten Axis Mining technology.
Love your bloody work and our great friends of the rest of the
bloody Partners. Mineral Mining Services Verify
Adia. Get your trip tickets for Drill
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