Righto buddy miners. Sorry lads, those bloody drive at the porcelain bus yesterday for 24 hours. I thought I was done with gastro but since daycare finished but it appears not. Gastro's not done with you, Maddie. It's just been a prick of a fortnight. Wow. Oh yeah mate, the big old. As much as I was spewing yesterday, the biggest thing I was spewing about was not getting to mention Axis mining technology. Yeah, like that just. That's nearly worse than the
gastro itself. My daily fix of talking about the trusted advisor for survey instrumentation. Oh God, it's like a bloody part of me didn't exist yesterday. Trying. To do ads without yesterday was a bit like a, you know, a Geo and a driller out on a rig with that's not using a champ jar or a champ already. That's it, that is. I couldn't have put that better myself. Travis, those well said. Perfect mate. You'll see them and the bloody every other driller. I forgot to end drill 24.
Get your tickets for that as well. We're all going to be there. I missed plugging them yesterday too. Ah boys, what do we got? We got a bit of a uranium deal, that of bloody battles through stomach cramps to analyse in some way, shape or form. But it's a good deal. I think it is for the value, yeah, for what they're getting and on a dollar per pound basis and a plant is a pretty good bloody bang for buck, I think.
And JD, you have you've gone deep into a little short report Sunshine. Very, very exciting mate. We're gonna be venture over to Newfoundland in Canada for a for a short report. So sit tight for that one. Travis, what do you got, Sunshine? Mate, the company I'm talking about was also the recipient of a short report earlier in the year.
Adriatic bet it was the short report was probably a bit bit weak on, but they faced a lot of adversity and they hosted this investor webinar yesterday afternoon Perth time. And I'm keen to keen to talk about what the update is because there's yeah, there's so much happened there and it's it's a riveting period of time for them. Don't know which way it's it's going to go yet, but if you just oh. Big between the personnel charges like the there's a reset happening, it appears.
Yeah, yeah. Yeah, lots, lots. Of change what you got there. All right, let's RIP in. UEC buys Rio Tinto's uranium assets in Wyoming. So as always, since we haven't talked about them before, give a bit of UAC overview before we get into what the deal is. So before today they had go and just remember North America, US and Canada, there ain't shortage of M and I deals in uranium. When you go through the history, yeah, these companies are formed
and this is one of them. So before today they had about £230 million in measured and indicated you throw out resource across US and Canada. So they just recommence production at their Wyoming ISR hub and spoke project and looking to commence their second production area in Texas, not yet known when that's going to happen. Both have got permitted processing facilities.
The the Texas operation was I guess the original UAC where the Palangana mine produced about a bit over half £1,000,000 in 2010 to 2016. It's not very much over a an annual. No, but it's, it's like permitted for frigging £4 million a year. OK, they can, they can do there. So there I guess the, the Wyoming portfolio that, that came about at the end of 2021. So UAC bought the Uranium 1 America's portfolio for US 112 million back in the end of 2021. That included the processing
plant. So Uranium 1 is part of Russia's Rosatom. So that's the same Uranium One that sold Honeymoon to Boss Energy. So first shipping a yellow card out of there is anticipated for
November or December this year. So and like for how much they're only looking to produce according to the Canaccord note, about £400,000 for FY25, maxing out at about £1,000,000 for this Christensen Ranch. And then they've got the other satellite deposits they're intending to bring online to hopefully ramp up to £4 million a year for the Wyoming bit, for that Hobbensburg part of the Wyoming bit.
And I think they've got a, they're licenced to process two and a half million pounds for the plant, but then they're anticipating to increase that to 4,000,000 lbs. So uncontracted as well, intending to sell everything into the spot market, which is interesting. Well, and what they call unhedged in, yeah, I know we say unhedged gold odds probably say uncontracted, but yeah, unhedged, same thing but. That is my, is my understanding
of like the US producers, right? I've got this like preconception that US uranium producers and the restart projects, they're all kind, there's a bunch of scattered like quite small scale stuff that yeah, that doesn't like move the needle too much on
a per project basis. No, no. And I think once these guys combine, like combine everything, so like, you know, £4 million there probably maybe another potentially 4 in Texas, what extra they're going to get out of this acquisition today, plus any future stuff in the Attabasket Basin that I'll go through, like they might creep up towards a double, double digit producer, but long, long
way away, yeah. Not not small on the the market cap front, 2 1/2 billion US. Oh yeah, huge like and lot of lot of M&A to to get there and like there because in 2022 they acquired that Rough Rider project from Rio Tinto. Oh yeah, yeah. So that's the, that was for 146,000,064 of it was in USA stock. That's in the Eastern Adabasket Basin. That's about £63 million total resource grading above 3%. So it's just West of that McLean Lake Mill, which is 22 1/2%
Denison, the restaurant. So there that's like a tall trait. There's plenty. I think there's multiple meals around there. That's one of them because MacLean, like they told traded 18,000,000 lbs for cigar like back in 2022. So there's there's an option there as well. And so that's then then 2022 like the rest of their out of basket base and stuff. They've, they took over UAX in pretty much the same similar time that they did the Rio Tinto
deal as well. Then they did another bloody deal with a smaller one with Rio Tinto as well. So that's how they sort of accumulated this bloody shit loads of # resource. Common theme here? Buying assets from Rio. Yeah, exactly. And I'll, I'll comment on that, which probably indicates what Rio Tinto's thoughts on uranium are. So the deal today USA are purchasing 100% of Rio Tinto's Wyoming assets. So this is creating like a third
hub and spoke operation. So adding to the Irigara, How do you fucking say that Irigara, right or something? That's the existing Wyoming one they got from Uranium One. They got the Hobson plant in Texas. This is going to be a a third one. So and they're it, it doesn't say if they're paying all cash or shares or anything. It just says the 175,000,000 paid from they're available liquidity.
So I'm not sure if it's going to be they're going to be rising or paying cash or offering some shares. Or I read it as cash. Yeah, Cash, Cash payment, yeah. Yeah, I think cash. Yeah, I couldn't say the word cash, but anyway we'll wait and see if it is. So they're because they've got like the last reported cash and liquid assets was US 303 million. So 95 cash still got a bit under one and half 1,000,000 lbs of uranium physical. So that's worth about 112 mil
spot. They got 90 million equity investments. So they, I think they, they've raised capital each year by the looks, but then then they did, they were acquiring physical uranium from about 2021 I think. And then they sold £3.15 million last year into the spot market. So sold an average price of 52 bucks a pound. But I think it ended up being about a 40 mil profit for him. So that's obviously helped a bit of the cash they've got.
So for this 175,000,000 US, so they're getting the Sweetwater plant, which is lost its capacity of £4.1 million. It's been on care and maintenance since 1983. Wow. Yeah, they operate for two years. There's some refurb that might be. Yeah, but they don't, they said it's been maintained. My real standard, it's maintained for 41 years. So and it's so there's there's gonna be a bit of refurb there. No doubt because the licencing is is is the. That's it. You just pay for that, wouldn't it?
Yeah, so, but it's a it's a conventional meal, so and so it will be if they chew. So it looks like what they've picked up from this rare deals about half ISR, half conventional mining. So I think they'll have to do a bit of they've got to adapt that plant to, you know, recover uranium from loaded resins for an ISR method. So a bit of work to do there. So, and probably that'll require probably additional changes to the licences and permits.
So the they said it could take one to two years or so to get all that shit sorted. So, and they're all so they're and within that they're also getting 175,000,000 lbs of uranium resource between the Red Desert and Green Mountain projects. So as I said, half of half of it looks ISR amenable, half open pit. You can see on the, oh, I don't know, it might be underground actually I'm not sure. It just says conventional
mining. So you can see on the tenement map here that what USA had before this acquisition all from the that that'll come in from the Uranium 1 America's acquisition in 2021. So this deal today solves the whole issue of not having a permitted processing facility. So that's, that's that sorted. So they've got a pretty big,
pretty big holding there. So waiting for a so you'll be waiting for a restart decision for this acquisition, which will, you know, probably go through in November or so. But before that, we'll likely hear a restart decision for the Texas operation by the year end. So that that's licenced for £4 million that Canaccord night said it realistically only produced about £2,000,000 for the first two to three years.
And yeah, so, yeah, good to good to see some uranium M&A that makes the geographical sense you'd say. This is the first one to make a lot of. But like if you look at, I think they're pretty much paid a dollar a pound for the resource. And then the processing facility is as well the per you're paying for the permit, obviously. Yeah. So yeah, it looks pretty bloody real. Like take it, catch you later. So I think it's, yeah. What did they sort of say about
a a restart decision mate? What's the what's the kind of plan on when they want to press go? Oh no, it just I think they what did they say? They got to obviously delineate and reconfirm a lot of the the resource do the studies and everything for the for the restart. So I think yeah, it wouldn't be not not a year or two away I'd say, especially if they got to convert the plan or or anything like that. So yes, but they're just growing by bloody acquisition as you
say. What did you say to and a half billion dollar cap are they? Yeah, jumped to a 12% on this one. So the market kind of liked it. I think everything, everything uranium jumped last night, still got a bit of a bit of a bloody Three Mile Island, bloody boost up the backside. I think had two good nights on it. So that's going to be yeah, going to be going to be interesting though.
That's right, mild thing. I was just we were talking to Trev about it. It was it was interesting to say that you know, the whole everyone's been talking about the structural supply deficit for so long. So no, there's not going to be enough pounds to go in and all this, but nothing sort of really moved the needle yet on a big take off for uranium. But it look, look at the reaction that the market had on the three mile Island thing. One just saying like probably a bit more imminent nuclear
capacity coming online. So that's all right. They, they will need pounds Big, big tick for the whole data centre thing. The fact that Microsoft are putting the cock on the block to say now we want to secure this plant to supply a data centre that sort of validated a bit of that thesis a bit. So it looks like, yeah, it was.
It's got to be interesting to see what comes out with you, the rest of your your Amazons and your Meta and everyone else is going to be in this whole data centre thing because Microsoft is just one of them. Yeah. Well, we saw, we saw Amazon a good few months ago already say they were keen on it and there was a bit of a, a tick up across all the U stocks, right. And then this one's, you know, a
bit more concrete. So you can see that the real kind of kick up. And like you say, it'd be interesting to see what the others start doing and whether whether there's any sort of capacity within the US for them to you know, fast track permits or anything like this as the the tick up in power demand is pretty substantial over the sort of coming five years, right? Yeah, exactly, I think. And we're still yet to see the the contracting cycle begin for
this 5-6 years down the road. So Mike, it could be a big back end of the year. Oh no, like this USA thing, we're obviously our network is in North America is obviously not what it is in Australia. So it's probably not in the weeds as as a hoped. But I do want the American listeners to tell us who is the American equivalent to MMS in regards to open pick contracting because like this is when they're talking about the conventional Hard Rock mining and the race start and everything.
I'm thinking MMS, but I'm like who's the American equivalent? It that's a really hard question. No one comes to mind. Well. Because if we don't find out who it is, we are going to be pretty much forced to get MMS to expand into North America to fulfil the potential for this nuclear renaissance. So. If they have, I think. They're pretty, pretty unparalleled, Maddie. I think so. I don't think yeah. I don't think there's a direct comparison for a group like
that. Their competitive advantage is being like nimble, flexible, just getting on with it. So, you know, if if there isn't a contender in the United States and it kind of just makes sense for them. Logical job, logical growth, expansion. Yeah, yeah. You think the likes of like, you know, your black cat, your red 5 Corinthian, mine and Legacy on or Carora before they got taken over like they've all, they've all had the early contracts with MMS.
They're going to be at the pub in future saying we had the first ever open pick contracts with MMS. It'll be like a a badge of honour for them and that's when MMS become an absolute multibillion dollar international mining services provider. That's where we're going, that's where they're heading. I would recommend getting on the journey with them money miners out there. I'm excited to be on the journey. I love it. Righto JD the buddy. It's a bit of real North
American feel today. Love it. We're heading to the Far East of Canada. Oh, newfound land. Yeah, this one, this ones really up our alley. So late last week, I think it was Thursday, but Friday our time in Australia, a, a short report surfaced for this, this company new found gold. So on, on the day on the Thursday in North America, they sort of peeled off 5%. They sort of recovered a bit on, on Friday and then they, they peeled off another couple
percent yesterday. But I'm, I'm pretty excited to, to talk about this one guys, just sort of sifting through the, the short report. I think there's a a good bit for us to kind of tuck into. But who? Who is new found gold? Mate, I've had to, I've had to do a bit of reading myself, but they're, they're not a tiny company market cap over 700 million.
They they own the Queensway Gold project, like you said, Maddie Atton, Newfoundland with a, a market cap that was well over a billion bucks in, in the past year. So as you can see in the in the chart there, it's been up and down a bit, but they've got some sort of A listers, if you like on the, on the registry. Eric Sprott holds 19%, as the company's pretty keen to point in, point out rather. And he sort of tipped in 260 million bucks over 5 different rounds over a number of years. Yeah.
And then you've also got Palisades Gold. So they own about 27% of the company. They they're sort of largest shareholder owning 28% of them is Colin Kettle and he is the CEO of this group. So a bit to a bit to kind of work out there. But you know between the two of them, they're speaking for about 50% of the registry. And like, yeah, kind of hinted at before Maddie, these guys are Canada listed on the the TSXV as
well as on the NYSE, the. Palisades Gold is that is that a fund or is that what is Palisades? So Palisades is itself a listed entity and they hold stakes in. Yeah, obviously their their biggest stake is in, in this one here, but they got stakes and a whole portfolio of of warrants and other sort of Knick knacks in Canadian juniors. Gotcha actually. Gotcha. You only see it on YouTube, the Palisades Gold Radio or whatever. Is that the same? Yeah. Is that the same?
Yeah, they've got a, they've got a podcast and A and a YouTube sort of channel as well. Gotcha. Kind of like us. We, we, we just don't own 25% of any companies other than our. Own no bit of a difference. So let's get into the the report now there's you know that the key critique here is that this is a super sort of nuggety gold project that lacks continuity in its mineralization. These guys have drilled over 500 kilometres and they haven't
chucked up a resource. So that is the yeah, that's the, that's the stand out take away you get in the first few dot points of that short report. I think it's 5. 100 kilometres is that is so much drilling. That's like it, yeah. That is so much drilling. Do not do not provide a resource. It is indeed. It takes years to do that much drilling like. Well, they, they picked up the asset in sort of 2016 and over time added tenements and a few other bits and pieces around it.
But 2016 is when it kind of started. And then they've got, you know what, what they kind of call discoveries sprinkling in every every other year, starting sort of the 2019-2020 in 2020. From then to the next year, they jumped 10X on some of these, you know, discoveries as they call it. Obviously the, the short report is pretty critical of these discoveries as you can kind of go and read, it's pretty easy to find.
But yeah, they, they really just highlight the, the lack of continuity, the the fact that previous owners had kind of drilled in these areas and it was to be expected on some of the the hits that they were getting. Interestingly, on the, on the more corporate side, you've got 4 sell side analysts covering the stock.
So BMO Paradigm, Roth and National Bank of Canada and their target prices, you know, haven't been updated in a little while, but they're all sort of 2 1/2 to 3 1/2 times the the current price and that just sort of crank one open. I found this pretty hilarious. So the, the name of the research entity that has written the report is called Iceberg Research. And the most recent title, which came out over a month ago, so well before this report, is called just the tip of the iceberg.
That is unfortunate. See how good's that? Right? But who's who's actually shorten it, JD? Yeah, so, so disclosed upfront, these guys Iceberg Research, they've they've written the report. They are short the stock naturally like you get with a lot of these short sellers, you know, specialist short sellers, not hedge funds that run a, you know, a short book as a part of a broader portfolio. But these guys are pretty, pretty undercover. It's hard to find too much colour about them.
There's a. You know that that is one of the big criticisms of groups like this. But you know, historically groups like this have kind of copped it quite a bit as well. So there are kind of good reasons for them to be pretty private about things. But first and foremost, they have a financial interest in saying that the stock go down. The one bit of info you can get is this sort of pseudonym of the founder guy called Arnold Wagner. And he's he's actually got a bit
of a history. This is really interesting. So he wrote a series of short reports about Noble Group. I don't know if that rings a bell for you guys, but they were a a huge commodity trader and he started writing these reports in 2015. They at the time were a big publicly listed company led by this billionaire founder who'd started the company in the 80s. There was a giant of the industry listed in Singapore, and he accused them of
accounting fraud. Noble then accused him of being just a disgruntled former junior employee. But you know, history sort of showed it ended pretty, pretty nasty for Noble. They ultimately delisted. The stock dropped 99%. They had to do a massive restructuring with obviously the the equity kind of getting wiped out in the process. So the piece Arnold might be might have been right. But it does look that way.
See, the, the, the crux of this report is they've done heaps of drilling and never provided a resource over all this time. Plus, you know, you've, you've got like real doubts about the continuity of the the ore body that maybe the market's factoring in there is that is that like as far as the report went? Yeah, so the, I mean, the title of the report is lies, misinterpretations and a professional stock promoter. So that, that kind of tells you
a bit, mate. It goes a bit beyond the lack of continuity. As we said, they've done a heap of drilling. They're on their way to 650 kilometres still with no, no real plan to whack a resource around that. You've also got the fact that the British Columbia Securities Commission pulled them up in 2022 for smearing. So these guys then had to go and correct a number of the reports that they put out, though the short report says they didn't even go and correct all of their
statements. A lot of them are still pretty misleading. And you can sort of work that out by marrying up the more detailed technical reports with, you know, shorter announcements that they'd put out. And for those sort of wondering, smearing is essentially trying to make those high grade hits look like they spread over a kind of wider area to make the continuity look better than it
might actually be in in reality. They're also kind of accused them of presenting the cross sections really poorly, presenting data very poorly. So it's very hard for analysts to go and actually see what's going on. And of course, like I said in the title, being led by a Korea stock promoter. So this point is super, super interesting and I won't go into the whole history of the, the managing director, the CEO like the report does. You can just easily go in and read that one.
But the, the interesting point is that both the chairman and the CEO play pretty important roles in the mining news sort of world in, in Canada. So they are ownersofceo.ca, the Northern Miner, mining.com and a few other groups. So to be fair to them, I did read an article in in mining.com about this exact story. How to disclaimer at the bottom, they weren't trying to defend anyone. They just sort of represented the facts. So you can see a good bit of independence in the reporting
there. But it it does kind of show a bit of a conflict of interest in, in my opinion, the fact that these guys have those stakes in those those media companies and that kind of ties in well with one of the key accusations that they are, you know, a kind of slick marketing machine. If if you like, I'm not sure if you guys had kind of thoughts on that. I think if you're talking led by a career stock for a promoter, think of Ivanhoe.
Good on Robert Friedland. Yeah, stock promotion isn't sort of, you know, by by itself a bad thing. And it's in part pretty necessary in the industry, right? You, you need to make a name for yourself. It, it becomes blurry if you're, you know, if you're misrepresenting the facts, not accusing them of doing that here, but it's a, you know, it's an interesting sort of line to to balance and sort of walk.
Yeah, well, maybe 22 comments. 1 is that to do that much drilling and not put out a resource, it's just absurd. I can't, I can't, I can't, I can't fathom it. If it was an ASX company, we'd have called it out yonks ago
like. And then the other point is often see this a lot, particularly with the Canadian companies is like, you know, when you hear you hear a lot of the promotion of certain stocks go something along the lines of this Eric Sprott's invested in it or Rick Rules invested in it or you know, XYZ kind of Ross Beatty's invested in it. There's a lot of like this this kind of like trying to convince retail or the public by leveraging on someone else's reputation who is an investor in it.
I think like, I just think like overweighting that sort of signalling is, is really like a, a, a yeah, a kind of a bad strategy if you base your personal investments off of it because you know, it, it devoids yourself of making your own investment decision based off your own due diligence. And reality is like, I can remember another thing where Eric Sprott was a big shareholder in and it lack continuity. Anyone else remember Novo resources, the nuggety watermelon seeds?
Like, you know, so I just yeah, like I, I've got no idea how this will all unfold, but you know, there's I just, I just hope that people don't get kind of sucked into investment theses. But the big selling point being, you know, one of these big name people is a is a back rather. Yeah, I, I think people probably automatically think they say those names and that they make an assumption they're thinking, right, that big name has done their due diligence and thinks
it's their next big thing. So that's like whether that's the case or not is the unknown thing. And I think they how much weight that you put to that. And then but then realistically, like you get that friggin market flow behind it. They're like, oh, sprouts in and oh buddy, and then everyone starts going and just make sure you get out. Yeah, I think, I think that's a great point, Maddie. You see that all the way
through. You see that with people pointing to debt investors say, oh, they, they did the work, they've got, you know, the availability of way more data. Let's just piggyback on that. And on the point that you raised travel, so a really good one, but you don't know the, the price that some of these guys bought in at.
You know, they, they know the, the weight of their name and you know, not not accusing any of them of anything, but they might have picked up warrants, they might have come in on a placement or something like that. So you need to be pretty cognizant of all of those things. So to kind of round out on, on the company, they haven't put out any response, which is also somewhat bizarre to me. It's been a number of days now. And it's not like they don't know about it.
Obviously they came out and posted new drilling results without, you know, not even a, a kind of cursory acknowledgement of the, the short report floating around, which I find, you know, interesting to, to kind of say the least. So what, JD, have you got any what, what, what these intersections are like, what grades we're talking about or thicknesses? Absolutely.
So to, to give an example of the, the kind of smearing accusation before they're sort of .4 metres by 400 grammes per tonne and they've been represented as two or three metres by 50 grammes per tonne. You know, that's the kind of thing it's, it's super high grade. You know, they, they speak about it as being a quite a, a nuggety project, but perhaps that isn't kind of weighted, but there are supposed notes out there you can go and see.
Yeah, I suppose. I suppose technically that is that would be the reserve grade of it because you'd have to, that's what you have to mine to get it out. So it's sort of technically correct. Like if you got .4 / 400, you got to take it out at a three metre start. That's probably what it would be. Yeah. I mean that the onus is kind of on them, right to, to put out the to put out a, a resource in a bit of a, a shape, right that.
Yeah, yeah. And that and that doesn't like that's that's a reserve that's not a resource should be the most accurate description of combined. Yeah, Yeah. What's in there? And to, to the point of the, the resource, again, there was technical experts that these guys hired that said they can do one for 300 grand. These guys have spent 10s of millions of dollars on drilling and they themselves said it'll
cost $300,000 to do a resource. You know, they're not, they're not without the, the, you know, the, the resources, pardon the pun, to do a, a resource estimate. They will have the grade and tonnage that they'll know all of this. They'll want to know whether the additional drilling that they are they are doing is adding
value overall to the project. And you as a shareholder, you'd want to make sure your capital being invested every time these guys do a raise is being adequately and appropriately allocated to the different sort of projects that they have there. So I mean, you, you've got other red flags as well, which kind of stand out, the fact that they were pulled up by the regulator, the fact that they're making the
data pretty hard to collate. They've got a big at the money facility, which is, you know, something I'm just not, not kind of a fan of. So there's a few kind of hairy things about this one. Sort of, I would kind of steer clear. But if you're a shareholder, you've got a clear set of questions just to go and ask management and hopefully they can address them one by one and just listen to listen to what they have to say.
I'd be very keen to hear how they, you know, pull apart this report and what they say to it. Best practise is to yeah be iterating your internal resource model as your new hits kind of come in you're you're not it's not like these discrete kind of things where you go, you know got to do my 5500 kilometres of drilling and then do my resource model.
You kind of like you put it, you put it, you know you do it all at the same time You got AG is on the rig, you're putting in your yeah, your data and all that sort of stuff it's. What would you think about the exploration? Thought the buddy try and fail or whatever. What what was your what was the saying? Bloody OH. Fail fast. Fail fast. Yeah, there doesn't appear that they've taken that approach if if it is a there is questions on
the continuity. But yeah, we don't know until we see a resource if it yeah, if it proves proves to be nothing, which I'm sure there's something there, but bloody K drill could have told him after 50 kilometres of drill and if probably go elsewhere. 50 kilometres. Instead of 500 that'd be like mate this doesn't look like it's stacking up. They have integrity as a
drilling business. They do in bloody Australia or North America where they end up. They drilled some bloody Arsene dominoes over the years, those boys, They could, you know, they talk about your leapfrog and ore body. Yeah, you can K drill an ore body because they're watching the bloody chip, the RC chips and the core come out. They've got a mental map of what that ore body looks like before it even gets aside those plugs, right? Years and years of experience they and ripping blocks.
They wouldn't make things like this just wouldn't happen on their watch. Now they wouldn't. I'm sure they'd love the extra 450 kilometres of drilling, but the biggest thing about K Drill is their reputation. They don't want anything to bloody into that. Give all Drewber an email. He's in the show nights. You might get some exploration holes out of him. You've got him a record thing, yeah. Record matters. Record bloody record say.
I don't know if there can be a record for sample management process, but these guys that have it. Record safety and record for just good yarns with over a beer. Walking away feeling good about yourself? Yeah, Yeah, I've never walked away feeling bad about myself after talking to Ryan or Druba. Thank you, lads, said Maddy. Travis Adriatic, a bit of an operational update for the Bosnian mining producer. Yeah. This is it's. I'll be following Adriatic closely and.
Haven't yelled about him for a bit, have we? No, no, yeah, but but still following. So, you know, yesterday afternoon they they provided this operational update webinar to shareholders. So of course, I tuned into the webinar because, you know, I think we have, we've covered a bit why Adriatic is in, in that fascinating phase of its life cycle, right ramp up. And they've, they've had some real obstacles to navigate in
this phase. I'm probably missing a bunch of these obstacles, but I'll, you know, in, in quick kind of summary, the obstacles that I can remember are, well, they're developing a mind in a country that hasn't had a mind developing God knows how long ground support challenges getting through the early development works, minor contracted challenges resulting in Adriatic bringing in house instead. Tragic death of a of a, you know, a, a local contractor on site.
They've been the the recipient of their own short report. They rejigged the kind of, you know, mine reserves plan, but generally like like lower grade. And you know, there was previously there was a ruling by the Constitutional Court of Bosnia which effectively suspended the felling of trees, which which impacted Adiotic permanent tailing storage facility at Veresh, the the waste rock storage at Rufus and the location of the planned pace plant.
So and then in the last five months, Adiotic, CFOCOO and CEO have all resigned from the company. Now there's an interim CEO, an interim CFO at the helm. Interim CEO is this ex BHP bigwig Laura Tyler. She was a non executive director at Adriatic for only six weeks before becoming interim CEO. Meanwhile, the interim CFO is Michael Horner, who was previously heading up Adriatics
business development function. Unlike Laura Tyler Michael Horner, he he he'd at least been an Adriatic for a few years beforehand, and he forked up $100,000 of cash to buy more shares in Adriatic yesterday. Oh. That's good, good sign of confidence. It's. It's probably also worth highlighting that even with all of that Adriatic share price, it, it isn't all that far off from its all time highs. Like it's somewhat it's been somewhat resilient in in sort of
recent history. You see in the Spark chart in Australian dollars $3.58 today. That's versus an all time high of $4.90. And and kind of that gives the company a fully diluted market cap today of about 1.2 billion Australian. And that's after the stock actually bounced today up 9% and the short interest has climbed to 7% of the of the CD is alone. You can just see that kind of short interest chart kind of flying.
Particularly interesting is the the shareholder on the register that appears to be buying into the fear, L1 Capital, an Aussie hedge fund. I feel like we mentioned L1 Capital always and he's like, yeah, really interesting points of time. I kind of just bet against the fear. They go against the grind. We'll I'll do it with next Gen too I think.
That we're kind of doing that sort of, I remember them being kind of, yeah, near the top sort of being laid about next Gen and then when they've had some powerless as well, but especially mining, but you know, inaugurate their returns are pretty good. So L1 capital, they appeared to have been buying in February, but they ratcheted up pretty consistently. They now have 36.6 million shares or about 11% of the fully diluted share capital of Adriatic. So that's the title, not just
the Cdr, exactly the total. Yeah, yeah. Meanwhile, Orion, who, who has the the debt facility with the Adriatic, keep in mind they've been trimming their, their equity position of apparently it was around 8.3% around a year ago, but but today per sort of Adriatics website, it says their stake is 3.7%. So you've got the, the debt finance here sort of sort of trimming. Although apparently Orion, I, I'd heard, I'd heard previously they were, you know, trying they were starting a new fund.
So they were realising kind. Of. Stuff, so don't know if there's a read through there or not, but pull that out of the way you can, you can kind of see why Adriatic is, is really bloody interesting right now, can't you? Very much so. They're at, they're at a very, yes, they're at a very like a reset point in a in a way with all, with all that happening. And because it wasn't like like brilliant grades there. Like they're the best thing they got on their side is the grades
of the the ore body. But the challenges they went through getting the capital development in for the ground conditions, obviously pretty odd and all those other things you mentioned. And then, you know, tough for you've got expat people were living over there to run this company in Bosnia, which presents its own challenges on a personal level, which I'm not sure if that's the case of what's happened. So it's yeah, it's, it's a tough one to maintain long term consistency with.
I think it's a big ask. Yeah, I don't even know. Like it's has there been a single, you know, mine developed in the past, like, you know, two to three years it hasn't like that has been smooth. It's like I can't remember one that's in recent history that's been smooth. It's been a long time since 1's been smooth.
Right, Carla Winder. That was that was 20/20/29 like so then so you got to go back a fair while and and then, you know, if, if a typical company kind of building a mine and developing faces just one of these issues, it's a pretty fucking like, you know, it can be pretty, pretty tumultuous that they're just is a lot to sort of, you know, juggle as a as a single asset developer and hence.
Fascinating how yeah, how how resilient the the stock has been in amongst all those sorts of challenges. Obviously they they really ticked up when when Bayes metals performed really strongly in sort of may ish period in the in the sort of three months in and around then. But with all, all the challenges that faced that, like you said, still, you know, within touching distance of all time highs
performing really strongly. So what what did you sort of make from tuning into that operational update that they kind of provided? What were the the takeaways you had? I, I was expecting like a, a, a bit of a detailed kind of operational update to to, you know, come out in the press releases, but it was, it was actually like a slide deck with three real, real pages in it. And the webinar was largely AQ and a where sort of substance
came from the answers. But I'll play this opening from, from Laura. This is what she opened, yes. I've spent the time working through all of this and I see no fatal flaws. No fatal flaws. It's a it's a relieving message to get no fatal flaws. Yeah. It's like a Yeah, an independent technical experts like no fatal flaws report that you get to sign off on. But like, I think in a nutshell, to summarise all the all the stuff that came out, Adriatic,
they finally started stopping. Hence you can see this big leap in, you know, the ore tonnes in, in, in the month of August there. Apparently the the first stop had a few issues, to quote Laura, she said a few issues pulling through the slot against the fault boundary of the ore body. Apparently the design has been tweaked to prevent that issue from the second stop. But Maddie, what does that actually mean? Well, the slot is the it's your first voyage you create.
So I like to start firing everything into. So they'll Chuck a box hole up like A1 metre, usually A1 metre bloody void, circular void, or they'll drill a long hole rods
with Ravens and all that. But if you if you sort of got a fault, a fault running through the if, if that is the case against the fault boundary of the ore body there unless there's a fault running through where they're pulling it through that that fault is like a. Can discontinue things so when you when the explosives go off, the energy might dissipate out through the fault and not actually blast the rock fully so they might have like bridged it. Usually if there's an issue with
the stope, it's always it's being bridged, which means that instead of bloody 20 metres came out, only 15 come out or something, then you got to do a lot of work to try and get the rest out. So that's, I'd say that's what's something like that has happened. But if they've had issues it just means it hasn't pulled to hide or something like that. Such a yeah, faults and friggin contacts and stuff through the middle of not fun. Exact bit of a pain in the ass, yeah.
So on the guidance, so the all tonnes of production, all tonnes kind of guidance for Cy 24 is now lower than previously flagged. They now say it's going to be 180,000 tonnes versus the previous range lower bound, which was 240,000 tonnes. And and while like last time they got it grade as you can see in this this slide here, the guidance update that they they put out sort of yesterday didn't
include guidance of grade. The other bit I found that I can't quite piece together on on the guidance is, you know, you can see in the in the slide deck they put out yesterday, Adriatic explicitly says that guidance for Cy 25 is unchanged, but they say it's unchanged at 750,000 to 800,000 tonnes. But if I flashback up the, the prior guidance, which I'm, I'm, I'm snipping from the equity raise presentation, the upper bound is actually lower by 50,000 tonnes.
So unless I've missed something, Cy 25 guidance is in fact a bit lower too to the, to the TSF issue, right? Because this is a been a big spanner in the works to have to deal with this constitutional ruling. So Adriatic Day, they, they say they have this alternative location for the TSF now, which will be two kilometres away. So they expect construction approval in October.
Keep in mind that's going to be after there's these municipal elections I've googled and they're on the 6th of October. So I suppose they're expecting the newly elected officials to be speedy quick into the into, to sort of get these, these approvals sort of done. And then when I say the construction will be completed, like going to aim to complete that by the end of the year, If they can execute that, that'll be a pretty remarkable kind of time frame to, to, to do all of
that. You know, meanwhile, the, the temporary TSF, which they're using at the moment, it's near the plant that hits capacity in Q 12025, which I imagine is a pretty, pretty big motivator for that speedy timeline to get, you know, approvals and construction all sort of done by the end of this year. So I hope, you know, hopefully they can achieve that without the any interruption to
production, right. Adriatic, they, they addressed the, the TSF like I talked about, but like I said that the location of the pace plant is also an issue. And you know, this work stream, Laura said it's actually on, on hold for the time being, like work at least construction and see why 25 is on hold with the, with the constitutional ruling. They say they're looking at alternative locations for the pace plant And but they, this is the, the interim solution.
I'll, I'll, I'll play. I'll play for you. What you said there. We always had plans to use calf or cemented aggregate fill in our Stopes. So the processes are in place to do that. We you know we'll use obviously some of our own, some of our waste rock as as aggregate as well as import some quality aggregate. We've got all those contracts in place that work has already is already commencing for the first stop. This was always in the plan.
We just now have to extend the calf placement for an additional few months, but we don't see it as being a long term solution and we will move to having a paste plant as the long term solution fulfilling all of the Stokes. I was keen to to leverage your expertise again, Maddie. You you boys should have enough after the last year, right?
He's got a sub Did he? What it like what are what are some of the challenges like using calf over the long run instead of paste and like you know, what are the issues if they can't, you know, get a pace plan up in a medium term timeframe. Yeah. So it depends on where it's being deposited into the stove.
So like CAF is cemented aggregate fill, so it's like crushed rock down, whereas CRF is just like they'll just blast any waste heading, tip it in a stockpile, mix it with cement and water and tip it in. So CAF is like if you're importing aggregate that obviously costs a bit yeah, you need another you need extra loaders to tip it into the Stopes. And then if you're like tipping it in from the front of the stope, you can only get it to a certain point for the real angle.
Then you got to advance the tip head forward to sort of fill the whole thing because you're in a you're going to be and depends if the grounds assuming all the ground is still supported above you. So there's challenges there. So it takes, it's takes longer to put it in, tipping it in with a loader compared to a like pace just pumping it down because pace you're just using the old tailings.
There's obviously the capital for, there's capital for the pace plan and then the reticulation to put in. But you do, it's the quickest way to get it, to get it in there. And it's a a lot easier product to develop back through. So whenever your pace fill is stoked, there's always a chunk that you have to develop back through usually to go and access the next one, usually on the sides of it. So that's and trying to trying to bloody develop back through calf and CRF as a nightmare.
Oh, trying to you can't throw owls in or you're just trying. Yeah, because it all just falls back in. It's a fricking not. It is a friggin nightmare. Yeah, just got to put stoke Proms in there and blow the living fuck out of it. Pretty much yeah. But then if they, it depends if they set like funnel enough Olympic dam, what the fucking how big that joint is. All those stoves to to my knowledge, there's no pace plant
there. All those stoves are filled with there's just friggin ball holes from the surface and they have a big quarry on top. And that quarry just mines waste, produces aggregate and there's just edges that tip calf down those ball holes to fill the stuff. It's just this big massive surface operation that just keeps tip and calf down these ball holes. So that's how Olympic dams actually feels.
It's not filled by paste. So it depends on, not sure that they're depending on how the all bodies are set up, if that'll be an option here. But usually if you got to do it, you got to tip it from underground. So it's just a bit of a, it's just slower, which means it slows your production profile down a bit. You can't get to the next step as quick as paste. You can, you're jamming in over 1000 cubes a day. Whereas Kathy Martin when I get 500 in or something. Gotcha. So.
Yeah, yeah. God I'm starting to forget all me, underground mine and shit on the bloody washed up husband. So half, half of it's probably wrong these days. Yeah. And we're like when, when she when they described the three things that were impacted by the court ruling. Yeah, 1 was the the tailings facility, the other one was the location, the pace plant. But it was also mentioned that the the long term waste rock storage near Rupus would was impacted.
But on the webinar I didn't, I didn't hear anything about what the workaround was for that in the webinar. But yeah, maybe, maybe something else has been guided separately. I don't know. Well, that's the one benefit of doing CRF is that you don't have to take as much rock to the surface because you get to use it to backfill the types. OK. So, yeah, and Betty in, in the past when we talked about this, you, you've drilled down on the,
on the development, right. So they were kind of getting in a, in a, in a tough ground. It sounds like the, the rates that they had in the DFS, which were 600 metres, sounds like those numbers are kind of null and void. And they've got sort of, yeah, they've readjusted to a, a new, a new normal. I'll, I'll play what Laura says
about that. So with the development, originally the schedule for development to bring production in required a much higher rate than was achieved, like a significantly higher rate than was being achieved. So that development has been now basically achieved over a longer time period. What it does mean though is we need to be at 300 plus going forwards the rest of 24 and then into 25 and beyond. In some instances where we're opening, opening up brand new kind of access it through the,
through the decline. We might have, you know, slight variability from one month to the next, but that 600 metres is, is no longer required. That was the initial requirement that we needed in order to to start the date the, the stopping up. We've now got stopping in place and we we're looking at the schedule. We believe a 303 hundred plus is going to be what we require going forward to 24, the rest of 24 and into 25.
I don't have the fine detail in front of me right now on, on a kind of like the monthly rates as we go forwards, but looking at an average of 300 to 350 through 25 is, is what we are expecting to see and to require to to maintain production. It's avid obviously their comment about opening up the additional decline levels and accesses because from what from what we know we are, we did speak to the company about it, is that all the shit ground is in the capital and the waste
area outside the ore body. Where is the ore body itself? Sounds like pretty standard bolt bolts and mesh. So the, your development rights when you get in the ore will jump up a lot higher. They, they naturally do anyway because it's a, it's a smaller excavation. There's usually multiple of them together. But then the extra, the better ground conditions as well.
So I think that variability they're talking about is if they have to do anything in those capital areas, that's where it really slows down 'cause that's where they got to put the bloody, all the shit loads of ground support the concrete sets in the in the sections and and things like that. So that's a way our knowledge the actual ground is a lot better in the ore. So it should be a day. The capital is the bottleneck there, capital development.
Yeah, Yeah. And like with all that sort of sort of said, you know, that they're still stating that that they they're going to achieve sort of statutory commercial production by year end, but sort of think Q1 onwards doing that 800,000 tonnes per annum is, is what they're sort of signalling to the market. I think like the next chapter for Adriatic is, is unwritten and many different views make a
market. And, and I'm so curious because, yeah, like I say, it's in that it's in that ramp up phase grade
is forgiving. They got great on their side, but there's a so many like there's so many like, you know, obstacles that they have faced and and, you know, still continue to face, you know, I don't know, in a country that doesn't have like, you know, a really thorough kind of mining economy like Australia. Yeah, no, they and this, but this sensitivity do like you know, grade is forgiving, but you think of when you're running a, you know, 800,000 tonne per
annum really high grade. Like imagine if like your grade doesn't reconcile to what it should be and recoveries, recoveries and there fuck it can it can swing so quickly. Totally could go the other way too. And on the recoveries, like they're aiming to increase them to 70% in Q4 and they haven't been out, they're still running the plan on campaign mode. They haven't sort of they're hoping to kind of tweak that over time. But Laura even made the comment that they never did a pilot plan
kind of thing. So a lot of the stuff they're doing now is kind of pilot plan task. So, you know, I think there's, there's reason to be kind of to have question marks on what, what is the long term recovery going to be as well, because it's it might still be uncertain if how much the plan can be optimised. Yeah, yeah. Bloody good stuff. Yeah. Just put up a preso from about a year and a half ago and you can see 2024, this was meant to be a year of 284 millions in post tax free cash flow.
So it's amazing how quick things have kind of turned. But you know, they're, they're still going pretty decently strong and here's kind of hoping that they can, they can pull through with the, with the grades and everything there is still the the opportunity for pretty strong cash flow in the in the near term if they can get it right.
Yeah, repetition as well. When you're dealing with that shit around and everything like the fact that they've done it before now they now it's there, they know what to do. That's should be on their side. The big risk that I see is just any blowout in the timeline of that TSF, right? Because it to me felt pretty ambitious to have that kind of solution solved by the end of the year.
But but saying it would be done by the end of the year, allow them to say there'll be no interruption to production, which, yeah, is like would be a relieving thing for shareholders to hear. I can't help but think it is. It would still be, you know, kind of an ambitious job to happen. And, and there might still be some uncertainty around the, you know, the, the ability to to build it in the way that they want and all that sort of stuff.
So. Their God, they might have to revert to what, like your Pogo and that have to do where they're all tailings have to be deposited underground, which not feasible in an early stage mine. I think it's when you got a historic mine, you can just start filling up levels and yeah, and shit, I think that's doable, but it wouldn't be plausible here, I don't think. Yeah, yeah.
Debt repayments start at the end of at the end of this year, December 31. So, yeah, and they've still got a $25 million undrawn facility with a, with a Ryan that sort of, yes, depending how things go, they might they might have to dip into that too. But yeah, we'll wait and watch. There there, God. Fingers crossed. As I said, always ramp up like this. Bloody rooting for you, I hope it works. Oh, very easy, hey? Jesus cross these bloody stomach cramps. You know the the metaphor for
the stomach cramps? Like like there's a jaw crusher with a shit load of mesh and bolts stuck in it and I need old miles contracting to come and RIP it out. You'll love that shout out Mossy killing me. Righto. Oh, thanks to the bloody partners. Bloody sorry, sorry. I've I've turned up, I've turned up. I've did me best for you. Please still stays thanks to bloody the trusted advisor Axis mine and technology MMS go on global and international as a mining service company.
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