Did BHP Blow $10B Buying Oz?

Going to say, you know when you like have to tell a joke on demand, Like yeah, what's your like, go to joke? Mate I'm terrible. I'm blanking mate, what's yours? I don't know. It's always why Parts, parts. Why? Because they are. It's dreadful. I think I'm almost better off having not having one. No one ever laughs. All righty. Should we RIP into it Travis Ricciardo? We've got an exciting episode in

store today, mate. Some some big companies reporting, some interesting companies, capital raising and a prelude to one of the most exciting companies on the ASX. None other than Min Res. And you're looking very smart for the occasion mate. You're all dressed up. I I mate this is a a shirt I I bought when we were in in in Cape Town because I I didn't have nice enough shirts to to to wear. I thought I recognized that one. Yeah, exactly mate. Subsequently got worn 3 or 4

days in a row. How's it feel to be back in the back in the hot seat mate? Mate, it feels, it feels pretty good. It was rather seamless today when you jump onto a couple good stories and we've got a few good ones. I think I was pretty excited getting into the weeds on Adriatic. We've sort of followed it in and out for a couple years now.

What's going on there? And we've kind of keenly been following the the evolution of the company from a, you know, construction story, development story in no. No, no, it was construction into fully funded developer, fully funded developer, fully funded developer, fully funded producer, fully funded producer. The subtitle ramp up, ramp up, ramp up and. Gosh, anyway, they're raising money again today. They are, which we'll cover in good detail, BHP as well. A few interesting things.

Slash the interim divvy to the lowest level since the real, the real depths of the commodity cycle. Yeah, which, you know, there's a number of reasons why that's kind of happening, which we'll talk about and. I'm keen to revisit their acquisition of Oz Minerals and probably probably give them a fail for now, yeah. I think that's that's worthy and more unpack that one.

Why why don't we start there? Because they're the the big fella, the big Australian, a lot of eyes, you know, all the generalists look at them for a kind of bellwether of how the resource sector is doing, mainly iron ore, increasingly copper, good chunk of their earnings coming from copper. No surprises. They've spent a massive amount on acquisitions and what doesn't get quite the same attention as the amount of CapEx that they've spent on all of those projects as well. Totally mate.

There's always a bit the truth read with BHP's results. So the only way you can really do it justice is just to focus on a very small slither of that company. And I'm, I'm choosing the part of the company that's a bit close to home within the, within the big Australian, not the West Australian iron ore business, but instead the South Australian copper business. Because I actually think it'll be an important part of Mike Henry's legacy.

And the revelation recently, you know, is, is that is that, you know, he, his successor is going to be determined in the near future as well. So in the tail end of Mark's kind of reign, I just wanted to revisit the, the $10 billion acquisition of Oz Minerals because that was, that was, you know, just a tad over two years ago that that kind of all, all happened. And to kick things off, I want to bring up this chart. This was a chart on slide 20 of their earnings deck released today.

Where? Talk through it for the the people on the podcast. What are we kind of saying? Basically kind of articulating where the the growth in in copper tons or copper production from the South Australian copper business is going to come, you know, particularly over the the next five years. And then beyond that into the

mid twenty 30s. They're sort of saying that the copper production could go from 300, you know, 1000 tons per annum all the way up to, you know, potentially 700,000 tons per annum without stepping it up along the way. And. Got to have a growth story. Got to have a growth story. It's kind of interesting though. You look at, just look at the title of the chart as well, Copper SA growth pathway capturing US 1.5 billion in potential synergies. So the narrative's already

there. They're trying to kind of substantiate the, the acquisition of Oz Minerals. We're talking about synergies within the, the, the title there. And but like if you just look at the chart, they've laid out the volume growth and you'll notice the heavy lifting to be done by Olympic dam and eventually Oak Dam on the in the mid twenty 30s there. What what you'll notice is that it's not really Carapatina that's moving the dial or or Promhill, especially Promhill.

It's it's all pretty marginal growth to come come from the Oz minerals mines there. And and here's here's another chart which I pulled up from the half year results. This is one of the usual charts you'll see in in BH PS results when they report it. I love the chart.

It's return on capital employed by asset and of course, always W Australian iron ore business leads the way because any, any marginal expansion you can do there delivers just a phenomenal IRR as a result of the fact that it's such a high margin business. So it's always such a a dominant

part of this chart. But, but follow this chart all the way down the tail end and what you'll, what you'll notice is that the return on cap employed at the South Australian copper business is lower than they even get for, for, for the BMA business. And you'll remember they refuse to invest any more in Queensland coal business. Well, it's like a hardline stance they've got thanks to the royalty regime now, but kind of just. Interesting. Yeah, they, they do really love

this, this chart. I mean, it shows you so much about their business. It shows you how awesome a cash generator that iron ore business is. Just you get the sense from there where it sits on the cost curve and you sort of invert that you get you get some big sort of thoughts on copper South Australia. Keep in mind on the X axis there is, there is the cumulative

capital employed. So the amount of capital employed at the South Australian copper business, it's like I'm eyeballing it here, but it's kind of comparable to the final business. But the return on that capital is so de minimis in comparison, it kind of looks like on the numbers here, it's like a 2 to 3% return on capital employed for the South Australian copper business in, in the reporting period. He asked.

And if I, I kind of dial it back to Promhill again, there was, there was this disclosure within BH PS reporting today where, where they basically revealed that the capital budget for the expansion, there's a, a prominent hill operation expansion that's been kind of underway for a period now. The, the, the CapEx for that has now blown out to US 912 million. Now this, this project or expansion project, it's basically the sinking of a of the Weira shaft at the, at the

mine. This was approved by Oz Minerals back in 2021. At the time it was approved, it was supposed to be Aussie $600 million kind of capital project. If you convert what BHP has revealed today into into Aussie dollars, it's equivalent to 1.4 billion Aussie or 2.4 times the original estimate when when OZ Minerals approved it. And on top of that, it was meant to be completed by 2024 when when OZ Minerals approved the the spend.

Now, now in this detail today, we say that it's not going to be completed until second-half of of FY20 7 and. Shouldn't be a surprise it. Shouldn't, it shouldn't be, especially if you read the director special because I think we published last year were on the decline.

It was around September that there was 130 metres worth of frozen material in the, in the glory hole of the the shaft being being sunk there of. Of course, you know, that's the relates to the Weir shaft, which is the the key part of this PHOX project that is being being underway.

And and this project, the whole the point of it is you'll have this hoisting shaft which would then enable enable the, you know, the mind to to be able to reached tons of them in a resource which otherwise uneconomical to truck. It really kind of points to the style of mining that they're doing there being a bit outside the skill set, a very different to building a train line in a port and just running a logistics business super, super effectively.

To their credit, in WA this is a completely different challenge and requires a very different technical game. I do. I just, I just get this sense that every time one of the big one of the big miners embarks on sinking a shaft, they just fuck it up like. It's tough. I mean, we saw the article the other day about Rio and the delays at OT and everything that kind of happened that the article was about from Kerry at the Fin about non disclosure. Yeah.

And the the consequence was clocks, blowout time delays. And these things are super technically difficult and there's barely a handful of operators in the world that that actually do them. Yeah, yeah. I mean, BHP had huge issues with with Jansen as they were going going deep and of course, Anglo with wood Smith like the, you know, and this is a different scale entirely.

But but the there's a pretty big implication for for the South Australian copper business when you encounter not just the the cost blow outside of things, but it's, it's the implication of that time extension from 2024 all the way out to 2027, likely to, you know, get pushed further.

But yeah, we, we, we talked about this in director special to bring it back to the M and a kind of deal that was done by BHP in late 2022. They paid, they paid $10 billion, you know, 10 billion Australian dollars for for Oz

minerals. Now, now when they, when they did this, the independent expert agreed with the price tag and they, they broke down the value of each kind of part of the portfolio for us. So you can, you can basically infer effectively what BHP paid for each of the assets within OZ Minerals portfolio. At the time, Chrome Hill was 2.5 billion, Karatina 5 billion, W Musgrave about two billion. I'm rounding there, but you get the picture with W Musgrave.

After BHP acquired OZ Minerals, they they probably spent close to another billion dollars on the project before, you know, halting things entirely there and then you got to basically put a zero on that now. It sounds super brutal. Yeah, Christ, doing no favours. And yeah, yeah, it's on site. A horrible allocation of a capital.

Prom Hill, we've got in in Aussie dollar terms, $1 billion kind of capital blowout already and God knows what the impact is on the on the schedule delay implications. Carapatina, you know, it's the the only thing doing all right in the portfolio of what they they kind of picked up notwithstanding the block cave is already way behind schedule though. So look, I think there's just a big question mark here on whether the South Australian Cup portfolio is, is really BHP appropriate or not.

You can see by the return on capital employed in in in this earnings release and historic ones when they when they would categorize it as an Olympic dam only that it it historically isn't a BHP type asset. It just doesn't even yielded the returns on capital that you would expect if a BHP type asset. Of course, BHP are super bullish on copper and if copper price, you know, goes up, all of a sudden your return on capital looks marvellous. But to to date it just it just hasn't.

So I think does the deal stack up for BHP yet buying odds? I think no, I think you know these those potential one point US 1.5 billion in synergies don't offset the four billion Aussie of write downs that I've just talked about in between US minerals and the and the blowout that at at Prom Hill since buying US minerals. And and when Mike Henry's kind of term comes to an end, I think, I think there's even a chance that these assets could make their way out of the

portfolio again. New CEO comes in. Yeah. The board, yeah, it wouldn't happen, wouldn't happen straight away and there's probably like a low chance on it happening given the the DNA of of a copy Heather BHP. But yeah, can can a BHP which has, yeah, so much fat to that business, can it actually generate the returns required to to get good margin out of these assets or is it sort of better suited in a, in a right sized lean, lean operator that can that can do it?

It's looking looking pretty tough at at the moment. We'll see. You know, the big swing factor, like you said, is the is the copper price. We'll see how that sort of performs. That may change the perception that people kind of have. But as it stands, you know, this is the big the big deal that Mike Henry did and it's yeah, it's not looking too great. I'm sure he'll be, you know, all too aware of that at at the moment and he'll be working hard to look at other deals, look at

other propositions. Obviously the the Anglo deal, had that gone through would have completely changed his his legacy or everyone would have sort of put odds to the side and thought about however that deal might have gone down had it gone through. Needless to say, it didn't go through, so here we are. Yeah.

And look, there was a lot of there was there was a whole separate slide in the in the deck today, which basically showed the the capital intensity of of of inorganic opportunities versus organic growth opportunities that they have within their Chilean copper business.

And what the point of the slide was that they've got a lot more creative ways to add tons via their organic growth within, within Chile. Now it didn't show, it didn't show that same chart for their S Australian copper business. So I just use. The Prezzo to highlight the positive. Yeah, I think, I think it's been disappointing so far for the for the South Australian copper business. I think you're right, mate.

All right, what do we got next start? Well, you know, what I always find interesting is, you know, we, we've just come back from Africa, notably went to in Darba conference And when we, when we traveled to, to corners of the, the planet. One thing that I've picked up on a couple of times, I'm always amazed at just the, the brand recognition you, you can sometimes get across the globe for, for a little Perth kind of company. And I'm not talking about money of mine, mate.

I'm talking about K drill. K drill. We we were, we were talking about, I can't remember who the conversation was with, but I definitely distinctly remember it. Maybe you remember, but we're talking about the wicked partners that help us keep the podcast free for everyone in in a conversation with someone at one of the functions we were at at in Darba. I think that was South African and they said I bet those ads ads work. If if I needed drilling, I'd

Google K drill unprompted. It was amazing. But see mate, K drills, home ground is, is WA, all these spots on this map, that is where their rigs have been lately, RC, Diamond, Olga and air core rigs. They traverse the West Australian Outback to get the core needed for exploration drilling, mate. And you know who gets the most metres per shift? You know the drilling partner that says we can do it? The K spelled with AK.

We can tell me whatever. Your drilling needs mate K drill can hey drill call druba or rhino today call with AK. Go K drill all your RC diamond, any drilling needs you've got, give the big fellas a call you you remember. That chat it. Was I do? Was it Mike Henry? Oh. Gosh. All righty. Let's let's have a quick chin wag about M&A. This was just. A big end of town M&A.

A bit of a brain fart I had, I had just thinking the other day, the US dollar, US Aussie dollar, I think it's back to 64 cents, but it, you know, went like as low as 60 cents there. It's still the US dollar is still, yeah, like really strong on a relative basis. And when you've got that dynamic, I think it makes that cross-border M&AA lot more interesting here for any New York listed miners to potentially, you know, buy Australian assets.

You know, in the in the gold space, there's a there's a handful of New York listed companies. The inverse also applies. It's, you know, not at all compelling for for ASX listed miners to to go to the US, but I just think watch this space to see if there's any opportunism on, on this front. It's a kind of, you know, perfect set of, of macro scenarios that can can motivate, motivate that kind of M&A activity.

When you have record gold price, animal spirits kick in and then you've got the, you know, the USAUD kind of in your favour to to embark on these sorts of ambitions. I'm on watch out for those, yeah, animal spirits that you speak of, mate. That is what the gold industry has been whipped for for the last decade. And you know, you listen to the likes of Jake Klein, he comes, he comes to mind, very, very cognizant of these animal spirits returning, very fixated on shareholder returns at the

end of the day. And Agnico, another company I'm sure comes to your mind, you listen to their call, very fixated on what our shareholders getting for this gold price. Is it flowing through to the bottom line or are we just seeing cost inflation? It's managing those costs super, super tight. And yeah, not going and blowing it all if you don't make it on a, on a bad deal at the top of the cycle. So yeah, very, very keen to see how it. Plays out.

I don't think you'll hear the word on a per share basis mentioned more than during an agnico call. It's everything's per share. No qualms with that on my end,

Matt. Yeah, sorry. Something that there might be qualms on your end is Adriatic is raising today Australian 80 million or US $50 million. It's not the not the first time we've we've, we've woken up to a surprise Adriatic raise. Is it different this time mate? I won't answer that. I'll let the company answer that. Let's play. Let's play a snippet from about two weeks ago from the quarterly

call. Finally, on liquidity, do you believe that you will have enough cash to get through 2025 or will you need to look at other options in terms of capital raises? Yeah. So I should feel pretty decent and and to circle back to to some of the slides, 46 million of of cash today, you know, now that we've closed the traffic of prepayment and we have been basically cash flow neutral for for four months now.

So I think that's kind of a good, you know, sort of track record even though the plant has only been again running at kind of like 25% capacity. And we had our, you know, sort of challenges in October and and December, you know, due to weather, which obviously you know came in with a bit of a lighter quarter. So if you think about that, I didn't say, OK, but now we're doing 75 to 80% capacity in the

plant. The crushers back up to running 1500, you know, plus a ton per day, that's about a 40,000 ton a month sort of run rate. So kind of 2/3 to 70% of production. On that basis, we should be well ahead of of just cash flow neutral or break even. We should be, you know, positive free cash flow. So you think 46 today, we've got to pay back about 18 to 20 million a quarter for the next 4 quarters. But really it will be cash flow positive.

So from here, everything we're paying for should be, should be out of cash flow and we don't see the need for additional liquidity. No chance of a raise just two brief weeks ago. That was the the ideal thing to say if you want to raise money in two weeks time at A at A at a pretty they're pretty close to all time high share price and a

tight discount. It's, it's honestly, you know, impressive to get that, get a raise like this away under those circumstances when it was probably a relatively, you know, clear line of sight to a funding gap here too. Yeah, seriously impressive. And I think that's why it's worth giving a quick mention of the backers that they've got. I think a lot of people will know this.

But to your point about a 7% discount, which is, you know, relatively tight and you've got L1 on the register owning a big chunk around that 15 sort of percent range. The same can be said for Helicon Fund out of London and then Orion, who had tied in with the debt. They're on the Equity 2. And have they tipped in more Orion in this race? They got named yet? Really. Because they were trimming in the the last place when they did. Interesting to say that, right? Yeah.

And then former party guests in Old West and QRC are also on the on the register, nowhere near as substantial as the previously mentioned ones. And of course, you've got the, the board and significantly Paul Cronin, who was also named to be tipping into this raise. So US 50 million, like you said, ostensibly being raised to fast track, very expansion and enhanced balance sheet flexibility.

Now this sounds as you were alluding to, awfully similar to the rise that they did during construction, which was in quotation marks for exploration or the rise they did last year to go on an operator. And I, I don't want to take away from the, the difficulty of ramping up a project, you know, we've, we've never done it before. I'm pretty aware of that. And it's hard work. You're always going to face challenges that you had no idea would be whacking you in the face before you start.

So it is seriously hard, and I don't want to make light of that, but I think the amount of raises they've had to do just really speaks to the challenges in getting this particular operation up and running. There's been all sorts of problems. And with that in mind, I can't take the narrative sort of spin on the raise too seriously.

Just a couple of weeks ago when we played that highlight and the quarterly came out we'll put up. Now you can sort of see a snippet from Laura Tyler the the MD talking about a delay to the start of commercial production, which had been pushed, which has been pushed numerous Times Now this time into Q1 of this calendar year because of weather and other related, which were only the, the most recent of the challenges that they kind of

faced. So it's kind of hard to, to marry up going for an expansion when you're running the, the meal at 25% of capacity and you haven't really run it at any more than that like yet. There were times there were days where they were running it at sort of 60 or 70% the meal capacity of, you know, nameplate, which is 800,000 tons per annum. But it's, it's, it's hard to, you know, match those two up in my mind.

Is the, I mean we see, we see expansion raises all the time, but the use of funds this time it was actually kind of 5050 between balance sheet and and expansion and. Yeah. I mean, you have to do that from

a legal perspective. I'm sure general counsel would be saying at least for their own incentive, their own job, that they'd want that jotted down under use of funds, like you said, divvied up half and half towards this expansion capital, which no, that that's only going to hit nameplate supposedly in 2027. So that's quite a ways down the track. And the study showed that that was relatively cheap US 25,000,000 to take it from the 800,000 to the 1.3 million tonne per annum operation.

But this is showing up the balance sheet debt repayments start on the 31st of March. That had been pushed back three months, three months which had been pushed six months. So this was meant to start 3/4 of a year ago already. They've had pretty a pretty friendly relationship from the the debtors, I kind of say is. Orion on the OK. Yeah. And they got a prepaid with traffic late last year as well, right?

They did. So they announced that at the beginning of December and they locked that prepayment up I think on the 17th of January from memory. So if you might remember, I think in about April of last year, they got an additional facility with Orion, but this swapped out for the traffic prepayment.

Traffic prepayment was US $25 million, which these guys say is on much friendlier terms than that previously short term Orion. Which it very well may have been, but I, I always, because, because they'd done a raise before where they basically articulated that they, you know, the, the raise funds could be utilized instead of having to tip into that, that secondary Orion facility. And then they got the traffic, the traffic prepaid so that they didn't have to draw down the UI facility.

In the back of my head, I always wondered like, what are the draw down conditions? What are the CPS to actually draw down there? And are there any that they, they can't actually meet? And that might be driving some of the funding arrangements as well. I never quite got to the bottom of that line of questioning, but yeah, erased today and prepaid's already drawn. At least it puts to bed some of the balance sheet fees in the short term. Yeah, I think, I think through

2025 they're, they're fine. So like I said, repayment starting that's sort of circa US $20 million every quarter from March 31st. So that'll, that'll add up pretty, pretty quickly for as you heard in the snippet that I paid played before for an operation that was, you know, break even at best, at best. And there there are investments they need to make still, you know, talking about things like paste and other parts of the plant. You know, they've they've had to fix up the crusher.

There'll be other challenges they'll face. But yeah, there's investments that need to go into, into the mill. We know that operations are much more expensive than what they were. You can sort of glean that from all in sustaining costs. When they do talk about it, they're up touching on 50% from the the DFSA number of years ago. Because of challenges like we spoke about, we can't additional

ground support needed. Yeah, the sorts and the development meters are like half of what the, is that right? Yeah, exactly. And that that's just a couple of the issues that a whole other with consumables snow hindering access and all that. Yeah, Just to round out on the on the financing side of things as well, they've got that debt and while you won't see it in the the quarterly report, there's a good chunk of capitalized interest there as well. It's kind of hard to glean.

There's different reporting standards because they prioritize that London part of their listing for the the financial reporting as I sort of understand it, but I'd be guessing in excess of US $30 million is capitalized in interest there as well. So on the positive side of financing, they are doing this raise at a, you know, at a pretty decent price. Like this isn't a very dilutive raise for the challenges that they've faced.

I feel like we've spoken to that companies in a not and not too dissimilar position and they've had to do a way, way bigger discount whilst they're trading at A at a much lower, you know, P NAV or with it, whichever kind of multiple you use. So 80 million Aussie roughly when you're a billion odd dollar company isn't the the worst thing in the world from the

company's perspective? You normally, yeah, you normally say a company priced to raise the they'll become raised, the market can can figure it out, they'll sell off in the lead up and then the ultimate ramp up raise is a lot more dilutive. Really speaks to some supportive shareholders I think. Yeah, supportive shareholders, Yeah, yeah, yeah, there's, they're having some like some wins on the recovery, everything

like that. But I think it's still, it's still kind of hard to figure out how ramp up is really going to unfold and execute because you take some small wins, but then there's context to the wins that they've had as well. Like what they're mining right now is a lot higher grade than than you know, the reserve grade is, how long can that last? What does that do to the recoveries etcetera like that,

right? Yeah, we know the the positive flow through from higher head grade feed red that's going through currently looking a lot more positive versus what the study was. How long can that last as a question? But right now that should be flowing on quite positively to recoveries. That goes sort of both ways. So there there's a sort of question on that front. Also the challenges with the

mill, they've been at the front. You know the, the challenge was that they articulated in the call was regarding the crusher. And like I said, they're doing about 1/4 of the nameplate capacity as they sort of work through and really scale things up, maybe the bottleneck shifts and maybe they have other challenges in other plants, other parts of the plant. So we'll kind of see like these guys have their back against the wall and you know, to, to their credit, they've, I'm sure

they've been working super hard. Like I can rattle off some of the challenges from the the weather they faced, snow that sort of had its flow and impacts on power to the mine. The rock competency challenges, which we started speaking about a couple years ago now, the shortage in consumables, legal challenges regarding the tailings, the crusher like I just mentioned, contract issues, water challenges and the railway about everything under the sun that could have hit these guys.

Hannah has and haven't fallen apart. Things are still moving forward. So hopefully they can address them. And I'm sure that the internal learnings are just stacking up and up and up and hopefully they can straighten out the ship. But yeah, I think things are looking quite different from what the the DFS outlines four years ago and to what we were thinking a couple years ago. It's, it's a hard one to, I've always found Adriatic really hard to pick if it's a, you know, I'm optimistic or

pessimistic on, on the outlook. And yeah, I look forward to the, the, the ramp up kind of being over and commercial production being executed. It's just like what you're what you're funding dynamics look like in the interim that that matter a lot, especially when there's debt, the cap structure. What do you think matters to the stock from here mate? I think you hit the nail on the head. Debt. Debt has just amplified everything like like it always does.

But you know, you've just getting the mining side humming and then getting the plant humming. They're the biggest things. And then you can potentially see some sort of tailwinds if silver moves in their favor, if zinc moves in their favor, obviously they're polymetallic. So those are the kind of big ones. That's just what you kind of got to look out for. And hopefully, I think there's a lot that we don't actually know.

I think there's a lot of challenges that it's very hard for a public equities investor to to get good insight on at the moment. Lots has changed from the DFS like we kind of touched on there. So if you're an investor, you kind of just got to cross your fingers a bit and hope the team that can work it out. And yeah, you're the company just just keep on pressing away. What do? You, What do you make of L1 Capital? They've been pretty big here.

I think, I think the biggest shareholder now, I think. But their commitment, yeah, came about a year ago and has has ramped up and they've been, yeah. Yeah. So they're about neck and neck with Helicon in and around 15% when I last looked shareholders in this one. We've obviously spoken a bunch about this off the record that the track record in, in the main fund is super impressive. These guys have smart and anecdotally the amount of smart people we've spoken to that rate

their team very highly. I think you know that that reflects very well on them. Then you dive into the returns and again, like we've spoken about, a lot of them come from mining, which is interesting because these these guys are

generalist investors. So it's it's intriguing to see that the sector in which the highest amount of their returns has been driven over a decade plus is the the materials space, so. The one, the one equity that they've obviously been pretty public on lately is is min raised. And I think the average price in mittens is like 5453 bucks. It's now 30 and yeah, earnings coming off the market today. Yeah. And and they, they keep kind of doubling down a bit.

Yeah, yeah, absolutely right. They they play in a lot of the sort of bigger names, like I think you can't make a judgement on them as investors on, on one kind of company. You, you don't always get them right, you know, and we'll see how that one plays out. That's a that's a longer term bet. They're not like the quote UN quote fast money that we've spoken about in the past. They're not, they're not a pod shop or that they take a a long position. But other names, we've seen them

being busy. And lately West Gold comes to mind. Next Gen. biggest shareholder, next Gen. Yeah, Next Gen. did quite well for a while. It's sort of backtracked a bit. I don't know the latest on their position in that one. I think their net debt, wow, could be wrong, yeah. It's interesting, yeah. Never spoken with them so can't can't speak to that side of it. Getting Dutch show on. We've tried to reach out to you a few times. We would like to, we would love to have them on the show and

hear about their views. Rafi, get in touch, Mark. All right, there's another company I want to talk about, mate. Tell me mate. This is a company that can make a heap of challenges just disappear for a mining company. Got to talk about salt Bush contracting. These guys are the Champions of bulk haulage first and foremost. Get it in your minds. These guys are the mind to mill specialist. And it's not just bulk haulage, they also do earth moving, crushing and screening. I hate more.

If you want to hit your tongue targets when the ore comes out of the ground, comes out of the pit, wherever it is, just cool salt Bush, they'll move it. I don't want to hit my tongue targets mate, I want to beat them. You want to exceed that? I want to exceed salt Bush 200% as their website says mate, win win, win, win. Not my words. Their words I win, you win, and everyone wins. Community wins, the customer wins, the client wins, your employees win, everyone wins.

Mate. These guys have got hubs in Kalgoorlie, Makethara, Perth and none other than Perinjury. Perinjury. I had to look up, that's a Farmington. Mate. Yeah, I I was intrigued, but lo and behold, if you're around there, if you're in the area, get in touch with Salt Bush. And I don't think this has been stressed enough. Obviously everyone knows that they do bulk haulage, that's your bread and butter. But they're also in equipment.

Hire Rd. maintenance from handling and management, mine site construction set up. You want to get a box cut? Excavated site rehab, tailings construction. As Maddie said, you want anything done on a mine site, just give salt Bush contracting a call and they will happily look after you. Salt Bush go salt Bush. Good on it mate. What GCS? They are family business mate. Absolute legends. All righty one last thing to touch on mate, because I'm yeah,

by the time this episode goes up mid means have probably already already reported, and I'm sure we'll have a bit to to troll through tomorrow when when their call will be as well. And I'm sure we'll talk about it a bit more too. But, but I kind of just wanted to give a brief prelude to to in Rez's results, which which will probably be out by now. I don't think they'll be very good is my gut feel. But that could already be priced in, to be honest.

Ding Ding Ding Valley GC, who still holds men, by the way. The thing, the thing I I wanted to mention before the results actually come out, though, is a certain report that was released over the weekend. In the two trading days since that report was released in share prices has fallen 5%. It's flirting already with that $30 mark, which has been its floor for the last, you know, six months amid all of the turmoil that's that's come the way the company and and the

report that was released. It actually came out of album miles litany of reporting documents for their, you know, four year FY20 2024 calendar year 24 is there their reporting

period. And it was a technical report in amongst all the docs, which was produced by RPM Global specifically on Wodgina. Because it was a whole technical report on, on Wodgina with a bunch of comprehensive detail that hasn't kind of been publicly released before, both about the, the resource, the performance of the asset today and forecast performance based on the the life of mine plan that exists within the JV. And without going into like the

full detail of, of everything in this report, I think it's fair to say there'd be a few discrepancies between how the market has been valuing Wodgina versus what this report suggests the value of Wodgina is. Headline take away is it based on the Life of Mine plan detailed within this report. 50% of of Wodgina has an NPV of Aussie $1.3 billion at AUS $1300 per time spot price. Bit below broker consensus,

wasn't it? It's a fair bit below broker consensus for for men's 50% share of Wodgina is, you know, slightly north of 3 billion, which is which is nearly a difference of $10 per share when you think of it in min min share price. What's more is, is the life of mine plan that's in this, which creates the base case in this report. It assumes recoveries that wasn't actually, you know, increase like 80% over the next couple of years and it also assumes grade increases a fair

bit from where it is now as well. 2025 was looking like a tough year in that. Report Max strip ratio 2025. Yeah, capital investment was, you know, elevated it. It was coming at the wrong time to say the least for mins. Yeah. So I just think there's some big clouds hanging over the asset and this is remember this, this is the the best of the the bunch in there.

The the lithium portfolio and mins of course they have a favorable mining services contract at the the project, which you know helps them kind of offset some of the negative cash flows of being a 50% equity holder of the project. But you know, with the detail in, in this report, I, I don't believe that that that's offsetting the, you know, the cash outflow that you're, you're seeing at current lithium

prices. I'd still I'd still be a believer that this this asset is is cash negative for mins at the moment. Yeah, it's such a funny one that that, yeah, when you're the the half owner of the business, yeah, if it's benefiting one side, it's it's taking at least half from the other. Yes, yeah. So, yeah, I think their contracts have these like, you know, various escalation terms etcetera, depending on I do

yeah, certain. But I still can't believe a narrative that this asset would be cash positive for me. And that's my, my view based on everything that I've read in this report. Anyway, I'll have more to say about the whole, the whole business after their, their results I'm I'm sure and I look forward to, to reading them tonight. Yeah, lots of fascinating implications on what a potential sale of what you know could look

like. And that contract would be a huge in impediment to anyone wanting to. I totally agree. I mean, they often talk about how if they were, you know, they've got a life of mine mining services contract over the overall of their assets. So they ever sold them, they'd say them, but I just don't see, I struggle to see someone who would buy it and and want to keep that contract in place. You'd want to retweet it or remove it entirely. Like would would Pilgrim

Minerals buy what you know? Well, I don't know, but I doubt they'd buy it if it came with Inreza's contractor. Yeah, I could say that with a bit of confidence. I think, you know, you'd want to have a bit more control in your own destiny if you're going to buy the asset and maybe they'll get an opportunity in the the coming sort of period. We'll sort of see. Yeah, it's, it's an interesting one. Very excited to see how that earnings release goes and the call goes down.

I'm sure to be fireworks as usual with. See if they hold 30 bucks mate. Let's see, all righty, we've got a couple awesome partners to thank as we wrap up, mate. Big thank you to Mineral Mining Services, Grounded Sandvik Ground Support, CRA Insurance, Kdrill, the Mighty Saltbush Contracting, SWIC, Quattro, Project Engineering and Cross Boundary Energy. And last but not least, if you want to go to the AUS IMM Underground Operators conference, get in touch, go on the show notes.

There's a discount of 100 bucks waiting for you. Go Australia. Go Australia 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.