So I'm, I'm just very curious to see AI mean like this is, it's
just a leak at this stage. There's no binding deal on the
table, although the rumour is DD is underway.
But if, if it actually translates to an agreed deal,
super interested to see if there's, you know, more of this
and like, is this a way that I can recycle some, some capital
and and endure? Righto buddy miners, we're
giving bloody. We'll give gold a rest today.
We'll get it's bit of lithium. The Indians want in on lithium.
We've got bloody, we've got Lavato the OHH, the small cap
that's now in the All Ords and we've also got a bit of
Adriatic. A corporate update and you want
a corporate update at underground operators next week
from the Samvic team, their bloody tent and hopefully Derek
Herb will be there talking everything Samvic ground sport.
Tell me about the. Ground sport.
I cannot wait to just stand in front of that booth whether they
want me there or not. I can't wait.
I can't wait for that. I can't wait to to just hear
about the innovation that they've got underway.
There's gotta be selfies coming everywhere mate.
I wanna, I wanna see their new dynamic Bolt.
I'm sure that's gonna be showcased at the conference.
Bloody just an old school split set I can walk around with
fending off fans with don't. Forget the chemical innovation,
Oh mate, there's a whole bunch of different products coming out
that aren't even bolts. Well, you won't even.
They've probably got resin there, but you won't even know
'cause you can't. Smell it?
Amazing, but. I'm jealous you get to see the
€1 billion man mate, enjoy it. And the free set and the free
ground support division that come with him, right?
Let's take it away. The Indian groups that won in on
lithium and notably Australian lithium.
This is yeah, this is the story broken in Reuters a few days
ago. And, and their Intel or insight
was that a consortium of four Indian state firms they're
looking to collectively acquire 20% stake in SQM Australia's
lithium assets being a 30% stake in Andover and a 50% stake in in
Mount Holland. The, the article kind of goes on
to say that, you know, due diligence is on and the
companies have expressed their interest with an initial offer.
And the, and the number that's quoted here is 600 million U.S.
dollars, right? This is interesting for a bunch
of reasons, but the the thing I wanted to focus on to for our
discussion today is actually just valuation.
Because if there's a decent see through, you know, value on the
table here, that has some some pretty big flow on effects for,
for not just, you know, SQM, but other other WA lithium Hard Rock
players at the moment too. Yeah.
And considering what was paid for Andover, what the bid was
for Kathleen Valley back in the day and 600 million to wrap up
all those stakes, I'd like to see what you come up with here.
Yeah. So, so this is, it's, it's look
US 600 million is, is roughly 950 million Australian dollars.
So that would, that would imply evaluation if you, if you
multiply that by 5, because if they only want a 20% stakes,
that would imply a, a valuation of 4.75 billion Australian
dollars for SQMS kind of you know, entire lithium Australia
business of those those two assets.
So I am keen to kind of contextualise this here because
just think about 18 months ago Azua was gobbled up by Gina and
SQM together for, for what was you know, a fully diluted equity
value of of 1.62 billion Australian dollars.
That that implied that SQ Ms. share of of Andover would be
worth 810 million / 2 right. And 20% of SQM share, which is
what the Indians would would effectively be be be buying as
part of it would be worth 1/5 of that or 162 million Australian
dollars. And that that's for 60% of the
project because crazy's got still got the 40.
Correct. So that's, that's effective.
That's that, that number that I've deduced there is SQM, but
they're going to have 30%. But but you know, 1/5 of that is
what the the Indians effectively be buying.
So I'm trying to, I'm trying to contextualise that 162 and then
trying to figure out, OK, so what's, what's the, what's the
Mount Holland value here? And really frustratingly
analysts that cover SQM, they don't value it's mining assets
on a sum of the parts basis. They don't do DCFS on it.
They group the lithium segment and they apply this like
chemicals multiple on, on EBITDA, which is really
frustrating. So you know, I just wanted to
see what the Street was valuing Mount Holland at.
And of course you just get clueless when you're looking at
the analyst coverage. So I went to Wesfarmers and same
thing. Good luck finding a single NAV
estimate of of Mount Holland by reading Wesley's analyst
coverage. It's a big conglomerate.
It's doesn't doesn't quite cut the mustard with Bunnings, does
it? No, the closest you'll find like
you can, you can see JP Morgan estimating ramp up of Mount
Holland to take 12 months longer than the the planned 18 month
management target on and on their numbers.
Mount Holland isn't even positive until FY20 7.
Flash up a chart here. So I'll look through Wesley's
annual reports. And I was just trying to see how
much money like they and, and SQM have have sunk into, into,
you know, building, building the mine.
And by reading a bunch of the statements and, and everything
like in the last few statements specifically, they've, they've
constantly brought up a potential impairment on Mount
Holland. If, if their assumptions on the,
on the lithium market aren't accurate, but they, they get to
actually impair it. But yeah, I kept kind of
trolling through and, and trying to pick up a bit of a, a
ballpark number of what at least the carrying value of, of, of
Mount Holland is. And so Wesley, they paid 760
776,000,000 for their 50% of that project when they acquired
Kidman in 2019. And since then they've sunk
ballpark 1.5 billion Australian into into building their share
of the mine and the refinery. So Shum shum SQ Ms. 50% has kind
of a you know, the same, the same carrying value that'll be
yeah, two 2.3 billion all up in Australian dollars.
Hence if you want to get 20% of that, which is which is the
reason what the Indians would be acquiring here, 20% of 2.3
million is 450 million Australian dollars.
So All in all, 450 million for for you know, for the for the
Mount Mount Holland minority interest and plus 160 million
for the for the Andover minority interest equals 610 million
Australian dollars. That's that's kind of rough math
kind of carrying value of those two assets as as I interpret it.
And remember the, the Reuters rumour said 600 million US or
950 million Australians. So on my, on my in a very rough
Bush math, this Indian offer, if the number's right, would be a
pretty, a pretty attractive premium to the sunk capital or
the carrying value of these assets.
And, and remember, like the end over deal was done during
Lithuania. Like no way would that same deal
get, get, you know, go through for the same price that it, that
it did, you know, 18 months ago like it did.
And Kathleen Valley, like, sorry, not Kathleen Valley,
Mount Holland, Yeah, I mean, it's not profitable at the
moment. So you kind of this, this, this
offer from the Indians, if the value is right, yada, yada, then
it's a pretty, it's a pretty healthy kind of, it's a pretty
healthy deal on the table. You know, of course the, the,
the the Indian consortium, they're going to want the
product and marketing rights that comes with their respective
ownership percentage. But yeah.
And the other thing about the Reuters, the Reuters article, it
makes no, no mention of Kwinana. And so I don't know if the the
interest kind of covers that any respective share of you know,
Covalence hydroxide facility which is, which is being built
in Commission there. But if, if the value is true,
like it's just a, it's a massive kind of vote of confidence in
the value of FWA Hard Rock assets, which are are really in
the doldrum right now. Yeah, absolutely.
It's it's huge. I mean, just to go on from what
you said there, I, I would assume given the way the article
was written and stuff, and it's pretty, it's pretty early days
and everything. But the way it's kind of sounds
is that they're after that stake in Covalent, which is the same
entity that owns the Mount Holland stake and the refinery
as well. And given everything that's
happened since those transactions and you know, the,
the way you're talking about it being a carrying value, you
know, you're not really taking into account that everyone else
that has tried to go downstream hasn't had too much success in
WA. So those numbers and like you
said, super early days are a lot higher than I would have
suspected. Totally think about, think
about, think about min res right now, like if they could, if they
could sell down a 20% stake of their, if their, you know, W
Australian lithium Hard Rock business to, to an Indian group
for, you know, when, when these are the kind of numbers on the
table, That's that that'd, that'd be a huge, a huge win for
them. If if the equivalent kind of
deal's on the table. It doesn't.
The Reuters league doesn't say it's on the table.
But heck, if I was at Monrez, I'd be doing everything I could
to try and to try. Fine, yeah, to try and try and
get an equivalent deal on the table for for me.
Even even a 50% premium on all their minority interests
collectively, I'd reckon they'd take that.
Yeah, totally. It's, it's, it's a yeah.
And we, we, we kind of saw, see similar stuff whenever there's
these minority sell downs of the, of the, the big kind of
copper assets. There's, there's an entity,
strategic entities who have a strategic interest and they've
got a much different kind of cost of capital.
And, and are willing to have to, to, to buy a, a minority
interest for a much higher implied valuation than the
market is giving that company kind of credit for at that point
in time, which, yeah, can really assist any, any cash flow
dynamics that the companies might be, might be having.
So I'm, I'm just very curious to say I, I mean, like this is,
it's just a leak at this stage. There's no binding deal on the
table, although the rumour is DDS underway, But if, if it
actually translates to an agreed deal.
Super interested to see if there's, you know, more of this
And, and also if, if, yeah, if, if, if any of the, the lithium
producers out there who are either having kind of cash flow
challenges or a forecast to have cash flow challenges like is
this a way that they can recycle some, some capital and, and
endure, endure the storm? I think, and if you go back to
that and I've saw a lot the so-called lithomania, it was
majority of that was driven by, you know, M and a hype
speculation, yeah, not speculation, but like M and a
activity like the underlying lithium process dropped a shit
load from the highs. But it was all just everyone
trying to the the rush to get ground something like this,
which could you know, potentially create a bit of
momentum in that is like you're just saying what happened in
lithium previously purely dictated by M&A, not the actual
price. So whether this might get the
ball rolling again for that price, irrelevant.
We're about to find out. But they might be all licking
their lips a bit. The old lift pools.
What are they called the the? Bag lift bag holders, you'd say?
Just to add to the the broader point, I think action we've seen
from Indian groups around the world is really interesting and
that's a trend that I think continues.
Australia's not the first spot they've looked.
They've tried to tie up deals in Argentina, in Chile as well.
Even in Africa, in the DRC in particular, they're trying to do
more deals. India is a like a huge component
of a lot of analysts growth, you know, global GDP growth and
these sorts of things over the longer term.
So to see them start to kind of mimic what what China did 20
plus years ago is an interesting kind of different take on on
what they're doing here. What do you?
What is, what's your prediction do you think?
I just watched it, reckon it's going to come through or what is
it going to be a get the ball? Is it going to start a bit of
momentum or it's it's probably the first thing of recent times
that we've seen anything related to strategic investment in
Australian lithium of light? Yeah, it would be, I think.
I think it's just wait and see because you can't, you can't get
the vote of confidence until this is a binding deal on the
table. And then all of a sudden maybe
you can extrapolate to the to the other producers and, and
back out a see through value, which is, which is on their, you
know, lithium portfolios, which is, you know, either either more
attractive than the market is, is appreciating or in or in
line. And and if, if they just have a
pathway to actually unlock some of that capital and avoid kind
of short term funding squeeze because of, of, of market
conditions, that'd be awesome. But we've got no indication
whether there's this deal is, is going to be binding or if it's
going to lead to future deals as well.
Yeah. What do you reckon is going to
you guys, Jadie? Just to your point on strategic
investment, the only other like party that would have been keen
lately is the Chinese and there's just no way that that
was going to happen in Australia.
So yeah. Are we interested to see what
happens with Christie's 40% stake in Andover at whatever
point if things do start heating up?
Because that's a yeah unless he just keeps it forever, but he'd
think some that'd be a bit of a hot Ave. that people would mobs
like this would be going after. Yeah, especially when it comes
to CapEx time, that's when that's when we might see
something come up front. He's like I.
Don't want to, Yeah, I don't want to pay all that.
Yeah, well, he doesn't have to pay.
Remember, his stake, there's no, he doesn't have to pay it all
for any of the the, the drill out of the resource, all of the
work until that decision to mine is, is made.
So he's kind of value is getting added to that project in the
interim and and he gets to benefit that without selling his
steak. Yeah, yeah.
Frozen. Oh well, that's it.
Good old NSW. God, it's funny how this is
this. This probably could come in as
one of your best value deals going around JD 'cause once I
put those numbers out, you'll bloody fall off your chair.
So as you said, love auto. You look at the price here,
they're nearly I think they're $400 million market cap now and
you're I still remember, I mean it was in Lithomania.
They would love auto were drilling for bugger all down in
the Dundas region. I think down in the South of WA
they'll just a lithium exploration company and they did
it, They've done a deal and I'll go through the numbers.
They pretty much paid 8,000,000 bucks for this Hill Grove
Antimony gold mine in NSW and now the companies worth 400 mil.
But we'll go go through the things like Antimony it it was
the no, it wasn't it touted as the best performing commodity
last year. It it it had an absolute ripping
year last year, correct. Yeah, previously, you know, a,
a, a drag for people that have been attracted to it.
It's even had the nickname Anti Money before, but you, yeah,
Lovato's turned that around. Yeah, yeah, well, I think it's,
oh God, I think when they bought it, it was well, sub of 10,000
USA tonne for antimony and now it's $40,000 US tonne.
It's not the easiest commodity to find a price chart for, I
won't lie, but it's gone up a bloody shit load.
And I guess it was on the back of early December last year is
was when China banned the export of antimony to the US, which is
what really gave it the bloody momentum to where it is now.
Now everyone's drilling for antimony.
So this was so this was actually the first well did VAC work
there in 2009 at uni when Straits Resources held it and
Straits had just put it effectively it was it wasn't
full care and maintenance, but it went from when I got there,
there was just a skeleton crew on doing still pushing a decline
wasn't any production. They just really trenched deeper
people like. Did they call it a gold mine
back then? No, it was, it was always known
as one of the IT was a gold antimony mine.
Yeah, and it was, it was always one of the only ones in
Australia. The other ones, Kosterfield,
which is Mandalay Resources down in Victoria, so they've one of
their reserves, they've got about 1010 1/2 thousand tons of
antimony. You see the reserves of Hill
Graves that they've got at the moment, they've got about 39,000
tonne, 1000 tonne of antimony with a bit pretty similar
grades, a bit lower, but it's I think Foster Field produces
antimony as a byproduct. You've got the other ones that
Southern Cross Gold that's been the the balter that's they, they
haven't got a reserve out or anything.
That's going to be an interesting one to wrap a
reserve around with all the bloody veins going everywhere.
That's a bit that's .9% antimony on their exploration target.
So, but I think this like, you know, hill Groves set to in
their study, if it if they hit the numbers to that's going to
supply 9% of the world's antimony.
So it shows it's not a, not a big bloody, it's a market that's
controlled by, you guessed at China, 80% of the world's
antimony comes out of China. So, so they, they acquired this
project and it was sort of before antimony.
The, the price hadn't moved yet as much as it did now.
And they acquired it for 8,000,000 bucks.
So $3,000,000 purchase price plus $5,000,000 for replacement
of government bonds. And it come out of Red River.
So Red River went into administration based due to
their Thalanga copper projects up in Queensland.
Yeah. And you say that there was a
shares issued to in the investment in the transaction.
Shares were issued to traffic euro two and a half million
dollars at .07 cents in Lavato which is now a dollar.
So they were, they were one of the creditors for Red River and
then they agreed to convert some of the debt into shares in
Lovato. Hope they still got them.
Which I, I, I, I'm pretty sure they do.
I'm pretty sure they do. I couldn't say it's all do they
try is I'll see there's like one of the substantials holders like
Bank of Nova Scotia. Would traffic Europe be under
that? I couldn't.
It was the first time I looked at it today, so bear with me.
Yeah. And like another there was the
one of the, I guess the cornerstone investor that come
in for 20% of Lavodo was Gauge Capital Management of Beijing.
So it's like a sort of a Chinese major holder.
I think they're back at about 15 and a bit percent now holder of
Lavodo. So yeah, and it was and you look
at what like straights resources.
So straights actually become effectively became heiress.
So they actually sold it to Bracken in 2013 for 27 and a
half million. So these guys have picked it up
for effectively 8 million plus the traffic year shares they
issued. And it's just talk about perfect
timing for as I said, the antimony process is effectively
5X and yeah, that's how they've bloody ended up with it.
So it's and you, you look at the commodity when they did the
actual project study the the OR reserve and the pay FS, it was
based on spot price of 2350. This was spot at the time US
2350 for gold and $23,000 a tonne for antimony.
So Fast forward to today, gold is what nearly 3100 US as of the
other night and Antimony's 4040 thousand US.
So it's just yeah, phenomenal bloody rise.
So you can see you can sort of yeah see why it's getting this
getting this attraction. So and look they're touting
about 88 million pre production CapEx.
They've they ended up rising $30 million the end of last year.
So the joys of the big market cap.
So they've got about 28 left in the bank.
So I guess thinking. Yeah.
So because there's existing, there's existing operation
there. It's funny, you like when you go
from Kent, you go through this, go down this road, through this
gorge and then back up over to the mines on the other side of
this gorge to where all the processing and offices are.
Because it's like, it was like a little pilot plan.
It's only like a 250,000 tonne mill that was there.
It wasn't, wasn't a huge one. And then so they're looking to
expand, expand it to 500,000 tonne per annum.
But obviously we're in, we're in NSW here, we're in farmland.
We've just seen not putting a bloody knocker on it.
But you we've seen I guess what happened with the whole
Mcphillamy's side of things. We're in a much different.
It's, it's not a mining town at all.
Armadale. It's about 100 odd guys from the
Bloody Sapphire City in Burrell, my hometown.
It's a beautiful part of. It but it's not a like you don't
you don't go around and see West track buildings and stuff
everywhere and like it's, it's just not a mining error.
I remember when I was there they because they got a heap of, you
know, old school follows in from North Queensland to come and
start the mine as the superintendents and that and
they said they like to employ a local workforce there because
they employed them as owner operator like that to teach
everyone, all these people out of mine, like teaching me how to
put Polly together like because no one had ever never seen it
before. There was obviously people that
had mine before that they recruited.
But it's yeah, it's totally, totally different landscape to
to over here. I didn't, I didn't even know it
existed till I went to uni and it was only bloody an hour and a
half or what. So because if you look at the,
well, the, I think this was in, this was in their DFS or
something like talking about the, the development
application, because there was the development application that
was I guess that you'd say the development permit that was in
place before was for a 250,000 tonne of ore per annum
operation. And that was like effectively
expiring in December 2023. So they're talking about
increasing it to 500 and 550. They're talking about the
increasing the tilings capacity. So that is all part of a new
sort of development development application They did just they
did just release in February this year that they've converted
it from like a wet tilings storage to a dry tiling storage
option. So that's the pretty sure it
costs more like what I've been told about dry, dry stack
tailings is you only do it if you have to because it's a lot
more like machinery involved to stack the tailings.
You're not just bloody pissing, pissing it through bloody pipes
out into a dam. So you could say that's probably
a measure taken to get the NSW permitting a bit bit on side.
So it looks like they still have to only they will have to get
approval to increase it to 500,000 tonne per annum like
that's all been submitted to the regulators.
But it's just that that's probably the the key risk that
you associate with this is permitting in New South Wales.
Beautiful country. It's fucking cold there.
Oh, cold is a mother in This is.
If you want to work there. If you want to work there and
there is a quite appropriate company I'll attach this one to.
If you don't wanna get a grounded camp, this is what you
have to do. This is the only thing that is
probably equivalent to a grounded camp.
They've purchased the Echidna Gully, which looks like some,
oh, looks like somewhere where that host weddings.
It is. It's an event space for hire.
Yeah, yeah. So they've purchased it for
$3,000,000, so $3,000,000 cash, an issue of 770,000 shares.
So they're pretty much they've nearly paid the same for this
block of land and accommodation village as they did for the
asset when they first bought it excluding the bonds.
So this this is the the best non grounded camp I've ever seen in
my life. So.
That's up there with a grounded camp.
It's almost as good. I cannot confirm that maybe
grounded had a may have built this, I don't know like because
it like it just looks like a grounded camp in country NSW.
Stunning. It's beautiful.
I think grounded are probably going to have to add a bit of
their capability here because when I read it the, the the
sleeping quarters, it's like 8 people in a room kind of thing
now that that won't fly on a FIFO camp.
So you've got still going to need grounded to get there and
build some some sleeping. Quarters be bad.
Wouldn't be bad. Oh, yeah.
You know, it's like a bloody school camp, isn't it?
Shut up, Matt. So, yeah, that was so the
transformational accommodation acquisition you'd say.
So that's so there's if you want to go work there, that's what
you got to look forward to. You might end up getting married
on your days off looking at that joint you've got too.
Many price falls off a Cliff. Maybe they can become an events
company. Yeah, yeah.
So I think this probably, as I said, based on the other well,
that's selling Southern Cross or what is it SX1 now.
Now they're dual listed like that still that hasn't even got
a reserve or anything. That's that's still a long way
away. This is an existing operation
needs a needs a bit done to the mill and they're they're doing a
lot of you know, there's a lot more talk about exploration now.
So you might as well get the bloody story going.
But this would yeah, you got cost to field as well.
But in terms of near term antimony, near term antimony
production in Australia, this is probably it.
This was always known as the what the antimony model I'd say
because that's been in, well, when was I there?
2009, it sort of had AI think it had a bit of a restart then it
dropped off. But it's just never had a
seamless operation. So, yeah, it's one of them ones
that all all looks good on paper.
But I, I look at it with the obviously just the NSW non
mining area site. It's one of those ones where
you'd be like, right, get a contractor there, like get a NSW
contractor, come mobilize the workforce, bring the bloody as
many people with you as you can. Because it's not a FIFO site.
So you got to sort of bank on you.
You could make it FIFO, which is increased the cost, but you want
to bank on trying to make it residential to save money.
But you've got obviously find the people that have the have
the mining experience. So there you go.
Here's the bloody history of sort of.
You can pay for the play rugby league for the Armadale Rams if
you want. That's super interesting.
Maybe the the, the one area which is like a a whole can of
worms, but I'd be very curious. Obviously, you highlighted the
China impact on the market there.
These guys have a deal with with Wogan Resources kind of
specialty metals traders British.
I'd love to know. Traders, aren't they?
Yeah, yeah, exactly. They, they do like mineral sands
and all these kind of niche products and stuff.
But I'd love to know what the what the payabilities, what
these kind of terms are, given that China is the one ultimately
buying the vast majority of the stuff.
Yeah, what you're actually getting paid for once you get it
up, but. And that's a life of mine off
take binding off take agreement too for all golden and too many
concentrate. So market marketing, marketing
rights for it. Yeah.
The other thing I'd be curious about too is like we all know
high prices secure high prices. Like how reasonable is the
current spot price of antimedia persist and and yeah, what what,
what new supply could be coming online around the globe?
Yeah, yeah. And but it looks like you look
at this study, it's, it's probably one of those ones that
reminds me of sort of Pilgrim Minerals in a way that the, it
could operate at half the price, spot price today.
It appears like if it was 20,000.
So it's going to be a rush to get that to be a first mover and
take advantage while it is high. Because if this mine can produce
9% of global antimony, you don't need much more to come on to
really start taking market market share from you.
Yeah. So I think they'll be trying to
get stuff out as bloody quick as they can, at the mercy of the
government. Yeah.
I mean, and on the on the processing point, right, if
China's not exporting finished product, how keen are they going
to be to buy Antimony right from the training gift?
That's all right. They'll do what they can.
But you know, if if that's where all the downstream is to process
the stuff, but they're not allowed by their government to
export it, then what do you kind of do?
Yeah, yeah. And I and I, we're talking about
the the permitting and stuff like that.
Like if you compare, I know I mentioned Mcfillimy's before,
but Mcfillimy's purely grown field site that was all around
tailings dams. And I know it was native title,
but which was coincidentally where the tailings dam was
supposed to go. This one is if they go on dry
stack, they've got an existing mine, existing infrastructure
that just needs to be expanded in size.
They've got, they've got a lot more in their favour than Regis
had with Mcphillimy. So not a really like for like
comparison, but still needs a ticket for approval.
So yeah. All righty.
Let's let's talk about Bosnia. Adriatic, I reckon guys haven't
talked. About it for a while, eh?
Yeah, it's been, it's been a good six weeks, I reckon.
They, I, I think we had a, so we, we had a brief chat about
them sort of off the top of my head 6-7 weeks ago when they did
that capital raise. For.
Expansion in in quotation marks so they've they've come out now
with and operations update as well as their annual report and,
and updated reserve, reserve and resource statement and the the
stock's down 8%. So you can kind of tell that the
market doesn't love it and what the, what the problems really
are here, that they're an evolution of what we spoke about
last time. As we spoke, you know, starting
a year and a half ago about the, the mining challenges to start
Maddie, the, the softer ground and anticipated all these sorts
of things. And then as you, you work your
way through it, you work your way deeper into, into the
processing plant and you test the next bit of kit.
Every time you go through, you're finding out what's
working, what's not all a part of the, the kind of ramp up
story. So I'll start with mining
because they kind of broke the announcement out into mining
processing. And then we can quickly chat
about the, the changes they made to the, the resource statement.
But they mined 67,000 tons, which is down a few percent on
last quarter. It's it's not a great number to
to be honest. Remember the plant is for
800,000 tons per annum. So looking at the stockpiles as
well, you can see the stockpiles declined by 15% over over the
quarter working in their favor. They've got much higher silver
grades going through the plant then they've got in the reserve
grade. So comparing numbers about 316g
per ton is what they've got stockpiled at the moment versus
like a bit under 200 grams per ton in in the reserve.
So that will be something that they have to face up to down the
track. But that's kind of where they're
at at the moment. And I think they're actually a
bit constrained with the ROM pad at the moment.
So they've got a bit over 50,000 tons there.
Then they've got a bit of waste and you know, a few other bits
and pieces. But if you guys can can
visualize and remember what Votesh kind of looks like, it's
in the mountains, it's a foresty kind of area.
You're a bit space constrained. You've got construction roads
needing to be built to the the tailings facility, which they've
only just got the permits and the agreements in place to do.
So I think they might be a bit constrained on that front,
although we've only got like a one page announcement today.
So it's a bit hard to actually work out what's slowing them
down there. But we're two years into mining
here pretty much now and we're talking about 67,000 tons per
annum. Obviously there was previous
guidance numbers that came out beginning of last year and you
know again revised beginning of this year, they were revised
down pretty heavily because they weren't meeting the targets
there. So the numbers they've got to
meet for this half year is 250 to 275,000 tons to be milled as
if you're just kind of assuming that you you keep those
stockpiles constant for this half year.
You need a pretty enormous effort, you know, 2 1/2 times
the best half you've had to try and meet those numbers for this
half year. So I think they've got their
work cut out for them. But on a positive side on the
mining front, they did get the the development meters up
slightly on on the last quarter. It's, it's the development
meters that have been a bit of a bit of a drag because even even
that. The capital development made
exactly, exactly. Yeah, like that, that half half
year 25275 to be milled, you know in an 800,000 tonne per
annum plant that's still not full utilization, which sort of
signals signals a mining constraint, not a not a not a
milling constraint, right. I, I, I think it's, it's both
it's mining and and mill that the mill hasn't been tested yet.
So they what they sort of striving for, which you can see
in the numbers up there is that they want to be running at
nameplate capacity next half year.
Again, it's it's very kind of ambiguous in the statement we've
got here, but I think they're not quite kicking it out the
park on both fronts. So I'll talk to the processing
now. They got it to 5 million oz, the
midpoint for silver equivalent for this half year.
They've done halfway through that 1.3 million oz.
So again, a big stretch to kind of get there.
The amount of tons that they milled matched this quarter what
they mined, which on the mill is up 40%.
So it's a a big record on the milling front, but that's
running at 30% of nameplate capacity right now.
So backing out there, the grades and, and recoveries, you can
they, they didn't provide the specifics here, but you can kind
of work out there in line with expectations with, you know,
expectations not being all that kind of high.
They do give a couple specifics on what is causing the problems
though. They've got the tailings
filtration cycle times, which are just not up to scratch at
the moment, which essentially means they just can't get the
water out of the tailings quick enough, which becomes the
bottleneck for the for the whole plant.
Then you've also got the road that they need to build to the
new tailing storage facility, which they only just got the
agreements in place for. So that again took longer than
it was meant to take and it's holding them up in moving stuff
out. So commercial production was
meant to be hit this quarter. I think in reality they got they
got nowhere near kind of actually achieving that.
So they're aiming to hit that in the quarter that we're about to
approach. So.
Interesting that they they also released the updated reserve
statement concurrent with this announcement with it.
Were there any any any any devil in the detail with the reserves?
Yeah, I think, I think there's some fairly consequential read
through some, some were guided to already.
But the first thing you notice you open on the first page, you
can see the tons have dropped by a way bigger number than what
the mining depletion was. So we're talking over 10% less
tons. And then you can quickly see
just to the right of that the grades jumped up on almost all
the medals they've got. So you start thinking about what
have they done with the the cut off kind of mark.
And you can see the NSR cut off has nearly doubled from $68 a
tonne to $130.00 a tonne. So the NSR cut off being
essentially the minimum value of a block that they're going to
mine or would mine if it, if it makes a sort of value that
essentially just reflects higher cost assumptions.
And I think it's a, it's a pretty clear acknowledgement,
like they spoke about last quarter that operating costs are
much higher than they'd previously anticipated.
You know, it's, it's, it's not a, a massive surprise given the
two years of kind of struggle we've seen.
But if you look at the mine life, it just pulls it in a
couple years. So 15 years of mine life still
they're they're not troubled on that front.
But you know, I think this might be a middle, a bit of a middle
ground. And it'd be interesting to see
what happens on that front and what happens when analysts start
to flush through those high costs.
That's fascinating, Double basically doubling the cut off
grade, but it's only only results in an 11% reduction in
tons after depletion, which, yeah, I suppose thanks to the
pretty, pretty high grade nature of this whole body too.
Yeah. It's a solid, solid ore body.
Just, you know, the, the, the potential is there.
And that's been the, the one thing that the people that are
along the stock always fall back on.
Like just just look at the cash flow potential.
You know, you might say, hey, it's a bit expensive given how
the, the track record of performance has been and the
fact that the royalties might be jacked up because they're super
low and all these sorts of things.
But if things kind of go to plan, it's meant to print, you
know, 200 million plus per annum in cash for a number of years.
So that's that's been the fall back and hopefully they can kind
of maintain that, right. That's the the agile thing of
looking great on paper, but just going to a pretty fresh
jurisdiction for mining, getting the people there to do it, throw
in poor ground conditions for the capital.
Like it's just been a, you can tell how those things just start
compounding together. And you know, we've been talking
about this since the show started this project.
Yeah, the stock's near all time highs.
Yeah, even despite all of the the the challenges they faced.
Great is king. It's it's pretty wild, right?
Like, yeah, yeah, what you guys said is exactly right.
I mean, there's a lot of unanswered questions after this
announcement. You know, they gave a bit more
on the processing underperformance side of things
than the other. But I think if anyone had any
doubt about what that placement was for two months ago, I think
it's pretty clear now. And I keep thinking back to
McNulty curves and what that kind of what you can kind of
infer from them in the context of this project.
So I'll flash one up now and kind of talk to it so people
know what we're speaking about. But essentially you've got,
you've got four types and type 1 is if the project with the the
processing side of it specifically gets off the ground
very quickly and really hits nameplate in a pretty swift
amount of time, say say about a year, That's that's a cracking
ramp up. And yeah, I mean, these guys are
are pretty short of that at the moment.
These curves assume sufficient ore feed to the plant, right.
So there are shortfalls in using this as the kind of be all end
all analysis, but there have definitely been problems at the
processing plant side of things. And I mean, my next point's a
bit open-ended. I'm came to hear what you guys
think. But I read through it and
there's the customary two or three paragraphs from the CEO
and there's no real acknowledgement of all, of all
the problems. Like I know they're faced up to
analysts on a couple of the calls and they've answered all
the questions that have been had of them.
But I do find it kind of interesting and perhaps it's
just a strategy, a strategy they're taking to to highlight
the positives and, and just emphasize that there's this
things they need to do better and, and they're going to get
there. But they, they really talked
around a lot of the challenges without addressing them face up.
And yeah, I mean, I'm, I'm curious if you guys have any
other thoughts on that. Maybe the marketing strategy is
well, since it's I assume the share price all time high as a
function of zinc and silver prices being very high.
So it's like we've just we haven't hit ramp up, but that
means we've just left it in the ground and mined at higher
prices, which they are now. So it might actually work out
better for it because if they hit it, that was less material,
more material sold at lower prices.
So it's still in the ground. Mate, if the if the share price
is any guide to go by the the strategy they're doing is
working to tease so so I can't fault them.
Yeah, Yeah, we've our like our question marks have always just
been on what the, the interim funding pathway looks like.
You know, we, we sort of, I think collectively think at some
point they'll get to a, a period where they'll be printing great,
great money, but it's, what's the interim pathway look like to
getting there? And when your, your share price
is very high, then your cost of capital is it, it's not that
bad. It's not like the market's
punishing you if you, if you need to bridge it with, with
more equity or anything like that.
But they also when you, when there might be question marks
over the interim funding situation, but the ore body will
kind of get there. Then you're also attractive for
a, for a, for a takeover to, to various parties who have, you
know, better belt, better balance sheets and all that sort
of stuff. In the same way we talk about
kind of Bellevue, you know, those sorts of things.
So want to watch out for on all fronts.
Yeah. Surprised no one had to dig at
them a bit lower. It's hard.
To. Know buying a company out in
ramp up is not the most common thing you see.
Yeah. Yeah.
I mean like like there's a, there's a couple more kind of
points to it. Firstly, they've started
repaying debt now. So they paid 20 million bucks
USA couple days ago. That'd be a quarterly ongoing
thing. And to the take out point, it's
a tightly held stock, like five groups of individuals hold 50%
of the company. So you need to Queens.
Roads one of them, isn't it? The so Helicon is 21 odd
percent, L1 is over 15%. Then you've got Paul Cronin, the
former boss and and yeah, I think T Rowe Price and and
another individual up there. They make up the 50%.
Yeah, so Queens roads not in it anymore.
Other they converted their convertible early and I think
the read through was why. Why'd you do that?
Well, they probably sold their shares.
Yeah, yeah. Yeah.
Yeah, Yeah. So I mean, it's a, it's a super
interesting one to follow, right.
Like, wait, Trav, you mentioned the the capital raising the, the
sort of lower cost of capital that you can get away within
share prices higher. But they've done quite a few
raises now. So curious to see how, how the
support remains and how they kind of delivered into it over
the next few quarters. Yep.
Yeah. Oh, there you go.
That's bloody. We've mixed it up.
We've mixed it up because. She's antimony, she's going to
face medals. She's going to fire up at the
end of the week I reckon. We might have to record a Friday
episode. Dog spectacular.
Could be, could be. Yes, indeed.
And the smaller end of town. Yeah.
Oh no, no, I was thinking. There's a we're thinking about
different things. Certain stock coming out of
suspension on Friday. We might have to do a live cross
there. Yes, yes, yes.
No need to reveal what that one is.
So rolling out. All right, good stuff lads.
What have we got coming out? We might have.
AI was IMN mate, that's what we've got coming.
Oh yeah, we do bloody hell and Jake Jane oh cannot bloody wait
and continue on the Bender arm for the gathering and conference
as well. I'm going to come back a ruined
man cannot bloody wait and JRX as well Bruce don't forget that
one. Once you've once you've had fun
at all hug OPS go to the JRX one in Brisbane.
Dicks discounts bloody flying out the door in the show notes
click the links. Our great partners as well.
Can't think of enough mineral mining services grounded See if
the ground supports AR insurance, K drill war WA water
balls swing quattro and crossboundary Energy.
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.