Is $85/lb the new Uranium Floor?

It's the 37th week of the year guys, and there's some some real optimism in the uranium market. You know, I'm hearing all of these rumours surfacing around Twitter everywhere that, you know, there's, there's four prices as high as 85 bucks per pound being thrown around, you know, post sort of WNA and, and big lofty ceiling prices in that, in that term market as well. I'm so keen to get into that. And we're also going to look under the hood at the the

Palladium and platinum markets. Thanks to Sibanya, Stillwater stumbling and China mate, they're sending us some mixed messages in the rare earth market as well. Maybe as usual, I can't wait to bring you all of that today as Maddie's over East. But first we got a funny voice memo sent through to us the other day, didn't we team? Oh, we did we. Did indeed? Let's RIP it, I reckon. Let's have a listen.

Let's. Play this one for the money miners Zai. I'm out in lock and fold, belt man in RC rig trying to work out the world underneath me from the scale of a piece of grapple. And what do you know what pops up in front of me but a tablet with Axis mining technology and displaying the surveys that the drillers have just completed. While dust is flying, the chips are being washed and by God the hole is bending like a banana. Straight from the mouth of one

of Australia's best geos, hey? Mate, that's bogan owe you a carton for that wonderful bit of promo in the absence of Maddie. Didn't have to RIP it out ourselves team, but go to hell.

What is going on in the uranium world? Yeah. So as we know the West nail for those who don't know, the World Nuclear Association conference was held a few weeks ago. Big anticipation this year with you being obviously a fair bit higher than previous years when the conference has been held that this is where you have all the uranium companies, fuel buyers and all the like having to talks, you know everything you and nuclear.

And there was a great article that come up over the weekend from Kuppi called you need to focus on term. So this is from Kuppi's Corner and it had some interesting takeaways from the conference and sort of looking at you and nuclear going forward. Puppy is Harris Cooperman. Isn't that right? JD? If. Yeah, he's a a fundy over in the States who put a couple feelers out to to get on the show.

But for those that aren't familiar, he's a fund manager who's been watching the uranium space for for quite some time, as well as a few of the other commodities that we that we like to like to follow. Mate I. Remember looking at his funds performance and just being like. That real? That was my first thoughts as well mate. That's. A pretty good, pretty good performance, but yeah. So what were those takeaways, Ally? So first one which I think to be honest you could apply this to.

A lot of. Commodities. No pun intended to a few different commodities, but he highlighted sort of again that investors are very fixated on the most recent data points, you know, sort of bit like goldfish and a bit I'll pick at times. So, you know, we saw uranium spot price, you know, peak over 100 bucks a pound early in the

year. It's since fall back from then and this pull back seems like investors are sort of obsessing and catastrophizing over and it's sort of been amplified by a bit of a misunderstanding of uranium market and how it operates, which sort of naturally leads to take away too, which is the spot price is a price, it isn't the price.

And I think, I think we we all know Ali to to what you're saying there, what the spot price is, what the term price is. But reading through the article, I thought it was, it was pretty sort of funny and interesting. So I'll just read out a a couple of sentences. Firstly, talking about the the spot price. So to start with, it's where miners choose to sell their pounds or purchase pounds when they can't meet contractual

obligations. It's also a market where momentum based hedge funds go to express a view in another sort of sentence, he says it's a a market where enriches dump their excess pounds from under feeding.

So what you can essentially take from that is it's it's the place where hedge funds carry traders, producers, utilities, speculators all go, go. And you know, he, he summed it up quite well with it being the most quoted price out there, but also largely the most, well, the most effectively irrelevant price that you see out there. Any he put some numbers to that. It only makes up 10% roughly of the pounds that utilities get.

And then on the flip side of that, you've obviously got the, the term price, which in simple terms for people that haven't followed uranium for, for some time is where the, the utilities go and lock in the longer term contracts. These are, you know, executed over many years and they've got prices that reference ceilings, they're reference floors. They're not just flat prices, they involve periodic deliveries

as well. I. Always thought that, you know, the difference between the, you know, the focus on the spot price and then you look at the the, the term price and you know, the term price is the one that matters. But you know, like maybe a misconception that that I and, and even and other investors out there kind of had is I always sort of thought the spot price might have been like the tail that wags the dog kind of thing. But yeah, I think this article kind of questions that that

interpretation as well. I was gonna say this meme Tuppy had in his cool trap probably very accurately sums that up, right? Yeah, that's, that's a good one. I also, you know, find it kind of funny, right? Because I'm sure this is where a bit of Cappy's kind of edge comes from being able to take the differentiated longer term

view. So maybe it's a bit tongue in cheek that he calls it out or he's, he's obviously, you know, disclosed at the bottom of the the piece that he's got an interest in uranium at the moment. But I'm sure this shorter term focus which is commonplace in in markets today and I think it has been for us as long as time is where he actually makes a bit of his alpha. Absolutely, and I'll quite like this other quote from his

article as well. He says if the vast majority of the total transaction volume takes place in the term market, then it seems odd that so many investors use the most recent spot trade to guide the sentiment. Instead, they should be focused on the term market.

But unfortunately there are a number of problems with using the term market as a benchmark because a lot of those contracts as, as you sort of highlighted JD, they're, they're bespoke and sort of quite unique to particular situations, mines, fuel buys, etcetera. They're often, you know, the terms of that are pretty confidential. The actual volume of these transactions is a bit on the

lower side as well. So there's sort of the pros and cons, but again, just just highlighting that focus on this is where the majority of pricing is determined over here, not, not the not necessarily the spot price what's. Actually happened to the term market over like the last six months when you know spot's been under pressure and and equities have certainly been under pressure like the term market's

actually each tier, right. Yeah, I think, I think the important thing that that people are picking up on and clearly that's what Cappy's honing in on here is that you see a a gradual rise in the floors and the ceilings. And obviously they've got they've got features in them that can allow that to rise going forward in time as well.

But when they're sort of priced today, what he's talking about floors of 85 bucks, ceilings of 135 that that's not throughout the rest of the life of the contract that can, you know, elevate over time. Again, if that's the way in which the uranium price trends. But the broader trend of having those floors being set higher and the ceiling set higher is the positive trend that people are sort of fixing on, right?

Yeah. And probably the the final take away from this piece is from Cuppy's piece is that utilities are increasingly hungry to contract for uranium. You know, supposedly utilities are submitting, you know, to market RFP's requests for proposal in the next few weeks sort of post WNA mining companies have sort of sensed this change in sentiment and you know raising pricing and anecdotally sort of as you sort of mentioned, JD heard that miners are now quoting $85 floors and $135 ceilings.

That's wild, right? Which is $85 floor when your spot's 80 thereabouts. It's kind of kind of weird. Yeah, no, it's, it's, it's pretty huge, right. But I guess the question to ask is that's all good from the mining company side, but are utilities actually willing to transact at these sort of elevated prices that are, you know, especially from the ceilings as far as the ceilings concerned well above current spot prices?

And is the lack of transaction volume on these term contracts, is it due to this Mexican standoff between the the miners and the fuel buys? Or is it because there's a bit of a dearth of miners with uncontracted new term production? You know, perhaps it's a bit of both. And I guess that dynamic can really only last so long given there's already pretty low uranium inventories. We're coming into the Northern

hemisphere winter. So they'll start getting chewed up. You know, there's been guidance cuts, as we've seen recently from the world's biggest producer. So there's a lot of, you know, things sort of have played out and are playing out now and imagine some of that pricing for the term market will, you know begin to crystallise soon can. You point the alley on bit of a stand off. Gosh, I, I, I would have always thought like the initial kind of, you know, interactional

interest in, in securing supply. Like it's the it's the, you know, the nuclear buyer that kind of has that power to begin with to actually, you know, initiate, discuss discussions to lock in supply because they're trying to whatever they're, you know, they've got to meet their like contractual obligations and they've got like they're doing the power forecast. But then it's the setting, the actual price is sort of where where some degree of leverage might come to the come to the

miners. But yeah, I'm the, the, the rhetoric on Twitter would be that that Mexican standoff is in some part just due to the, the cyclical nature and actually these contracting cycles. And you know, rather than kind of seeing this, this homogeneous flow of contracting kind of happening throughout the year, it's actually, you know, these

these multi year kind of cycles. And you know there can be a Stampede of everyone trying to do at the same time at all, which you know people with the bull thesis will point to. Yeah, I think you've, you've framed the, the discussion really well there, Ally, with the the two sides.

I mean, we've, I've personally got no, no great insight into it, although I'm pretty interested because one way or another it seems like we'll find out in the, you know, the relative near future what the outcome is going to be. And that would sort of imply a movement one way or another. A sort of line that really stood out from, from the article was that the uranium market moves at glacial pace their utilities, after all. And I think that's firmly what

we're kind of seeing here. I just sort of caveat the, the article, if people go and read it themselves, you sort of finish reading that and you've, you've got a bit of an optimistic view, You've got a really bullish view. And you see the, the sort of downtrodden sentiment in the uranium stocks and more broadly across the, the nuclear kind of universe at the moment. And that that's a sign that kind

of gets me excited. But anecdotally, we'd heard from other people as well out there that, you know, it wasn't quite as as bullish as the article might have you believe. There were people with different points of view saying the, the utilities out there, they're pretty content. They're not feeling the need to rush in.

But, you know, who knows? Maybe that's a broader disregard that they've had for the uranium producers out there for a while to come, and maybe that comes and bites them in the ass in the future. Who kind of knows? Yeah, another, another piece of, you know, feedback we'd received is it it seemed like the mining of uranium was a bit of an afterthought for fuel buyers, which to be honest could be a a blessing and a curse for them. Sort of think thinking in that

way. You know, some people believe that because that a problem is sort of addressed the next 12 months of the sulfuric acid shortfall, which has been quite a topical issue the last few months. So it seemed like a lot of the finance guys and gals reckon yous going to the moon, but then, you know, you had nuclear insiders sort of a bit more muted on that front. So yeah, definitely a bit of a range of anecdotes and perspectives coming out from the conference, sort of depending on

the on the party I guess. Yeah, Speaking of conferences, Ali. Oh, Speaking of conferences, we have to talk about AUS big next event coming up, Drill 24, only 29 sleeps away guys. Oh, wait, wait, we're. Going to be there. And we're going to be there too. So look, if you haven't got your tickets yet, links in the show notes, get your tickets sorted. It's October 15th to 17th in Perth at the Convention Centre. It's as simple as that.

We've got, you know, they'll be showcasing all the latest and greatest in drilling tech and equipment and drillers take note because reps from the major modern companies based here in Perth will be there. So get yourself there. That's the mining tech mate. Will help you. Will help you drill more efficiently and cheaply. Yes, Oh, if if anything in this cost inflationary environment that's all you can ask for. And like Trev said, we're all

going to be there. Maddie's going to be doing a bit of M saying it is all happening at drill 24. That's. The real selling point did Maddie M saying the show big tickets. They're in the show notes. To. A another, another commodity market, JD, where, you know, we're seeing a good chunk of supply curtailment maybe not coming in the uranium space, but this is, this is five years ago you saw plenty of curtailment in the uranium space.

But yeah, the the Palladium made Palladium surging. Wasn't that, wasn't that uranium curtailment a sign of things to come? For the patient investors out there, it's almost like this. It's very cyclical nature of commodities where you have over investment and then lag time and construction and then commodities. It's kind of, it's kind of funny if you zoom out. So we, we both listened to this one mate and I, you know, we, we

spoke about it this morning. It was, it was really interesting and it's a basket of commodities PGMS that are just really interesting. I think the, the first time we spoke about it was a good three or four months ago and we described the, the hated environment that I think perks all of us up and really stands out to those, those investors that love trolling for, for beating up stuff, right.

Mate, I think it's the only like if you're interested in a commodity sector to like, you know, have positive PNL, it's the only way to to do that effectively over time is to look for the look. Look for when the the commodity is absolutely in the in the doldrums. That's when. 100%. Excited as opposed to follow the, you know, the whims of human emotion, which is follow the thing that's going up. Yeah.

So I mean that that is the perfect segue to Subarnay Stillwater. So to to simplify the business real quick for people that aren't familiar, they are, they're not obviously listed in Australia. They're to NYSE and a Joburg listing. I'll flash up their guidance to give you a a flavour of what they kind of produce for people listening in. It's PGMS across the the US and South Africa. There's also gold in South Africa.

In Europe, you've got a nickel refinery and a lithium project that they've sunk a fair bit of money in. Bizarrely, you've also got the Century Zinc operations as well as Mount Lyell here, both in Australia. And then there's also a uranium project which is earmarked to be sold. But in, in revenue terms, just kind of think 1/3 gold, 2/3 PGMS in you know kind of simplified terms. And what did you guys sort of get out of the the call that happened? The call was really interesting Ally.

So it was two hours long, a big, a big presentation because there was a bit to kind of chew on what they'd kind of done on an operational management balance sheet kind of front and then AAQ and A at the end. So the, the features that stood out are the the losses at an income statement level as well

as in sort of free cash terms. The income statement losses come broadly off the back of a bunch of impairments that they had to do. That is because like Trev said, they're curtailing production in the US Unfortunately, that also leads to roughly 800 job losses at in Montana where they have

their operations. And then like I sort of said, the the, the sort of underlying theme of saying our balance sheet is OK. You know if you if you do listen to the call, it might remind you a little bit of min res out there, although there are some sort of key differences which will kind of hone in when we get to the more broader Platts Palladium market near the end. So it's.

Pretty interesting, right, because there was a lot of yeah market rhetoric in the lead up for this like earnings event. And I think in some ways like there was an expectation that they would, you know, completely curtail production from the Stillwater OPS in Montana there they sort of, you know, half curtailed them and stock basically shut up.

I think on expectation that we've like that that'll, that's basically kind of the, the, the, the bottoming of the, you know, Palladium market price sort of downturn. Yeah. And I mean also sort of playing in perhaps that's the the bottoming of the the restructuring that kind of have to do.

I mean it, it sounds like it might sort of save money and all this sort of stuff, but just shutting off a mine is expensive as well, which they kind of pointed out, you know, running things on care and maintenance everything. And then there's but they'll. Lose the money from there like that operation was, yeah. Yeah, that they, they were losing money. So interestingly they talk about chalking off 200,000 ounces of 2 E production.

That's about a halving of what they're producing out of there whilst trying to get the oil in sustaining costs down to about US 1000, which is not the easiest thing when we always sort of think of logistics and economies of scale in mining. On the balance sheet front, they were talking up seeking prepayments. That's kind of their their final piece of looking after the the balance sheet. So they've done a whole bunch of other things.

They've, you know, renegotiated their their debt covenants to buy them a bit more breathing room. They've already got $100 million prepayment for the gold that they're going to produce in the near term, but they want to get this UUS $700 million prepayment over the line. Now the the language around this is kind of interesting because the question came in, aren't you just kind of giving away your,

your future upside? So the response was that they're very much focused on, you know, settling out streams and whatever other sort of premayment, prepayment structures you can think of for their secondary products. And they pretty much said analysts don't care about whatever your secondary product is. So you may as well just kind of prepaid it, which is. Then then why did they invest in lithium and fucking you've? Been in that one, Trevor, we'll get there.

So they they looked to really address the the equity raise concerns. You know, this is I guess the the min raise kind of comparison in, in my head again, they referenced it plenty in the call. They referenced it in the presentations in the in the half

year docs. So they pretty much said the the perception should now be moot that we need to capital raise so. I'm not sure if it's completely done and dusted, but I think they have gone a long way to to assuring investors by Catalian production, I mean, what we mentioned here today is a kind of almost a drop in the ocean. They've done a lot of this over 2023 in the first half of this

year already. So lithium Trav, the the Calibre lithium project is 1. I think you might be referencing they got €500 million in financing for this. I want first production in 2026. It's up in in Finland. I mean, putting aside for a moment the idea that they've got lithium in amongst the portfolio with zinc and undeveloped uranium and copper project PGMS, goldmine in the US in South Africa, that they're very adamant that with regional managers they can manage this all.

But I kind of think for, you know, poor old investors, it's a bit too much to to kind of take on. There's stuff kind of everywhere. I'm very concerned that, you know, hydroxide production who has done that well in the in the last few years of the kind of western miners. I'm sorry, no one really. I just, I just think it's very hard. I think that could be a potential money sink. They've got rhyolite Ridge eye knees project. That was, you know, a big sort of announcement in back in 2021.

A new century as well. Yeah. There has been some sort of confusing, Yeah, there's been some confusing, confusing acquisitions, right? Yeah, yeah, real confusing capital allocation at certain points, but yeah, I actually think, I think when, you know, Once Upon a time this was a gold company, it was a buying a gold and yeah, they acquired the PGM business in South Africa, which was like a phenomenal acquisition.

Actually I kind of delivered some brilliant free cash flow, especially especially during the, the big PGM kind of spike that happened in kind of 2021-2022 around that Russia, Ukraine invasion period. And it, it was so like remarkable the free cash flow that came in that like if you, if you look at Sibanya's market cap today in U.S. dollars, it's about 2.5 billion US in in market, sorry, 2.7 billion U.S.

market cap today. Well, in 2021 financial year, Subarnier generated 3.4 billion operating cash flow, which kind of converted to US 2.5 billion in unlevered free cash flow. So like that's the kind of capability the business has to, you know, spit out free cash flow in the good times.

But when you Chuck in the debt and the pretty average capital allocation that that's sort of, you know, happened since it probably explains some of the substantial selling off the stock has had, but also the interesting kind of part to some some investors. So we're really trying to, you know, get, get, get talk if they're, if they're predicting a turn around too. Yeah. I mean, they were a $15 billion market cap companies a few years ago. It's kind of wild.

And it is interesting what you kind of touched on there, Trav, how the company kind of came together. You got the PGM acquisitions and I think 2016 and then Stillwater 2017. And you know, a few years later, you know, after you've had a few years of just Ripper cash flows, you end up with a good bit of it just being spent on all these

kind of random things. But I mean, at the end of the day, right now, they're a company that is, you know, financially leveraged and operationally leveraged to PGMS and gold. That's where they are kind of right now. They're super beaten up. They've got a bit of optionality slash cash sinks in, in lithium and uranium. But it's a it's an interesting company to kind of look at to, to round out on the, I mean to kind of find our way into what's happened in Palladium and Platts

markets rather. It was interesting to note that straight away on the back of them having to unfortunately lay off people in Montana, you see these senators from Matana jump on and say, hey, we should ban all imports into the US of Palladium. And then you got the the company kind of playing into this saying Italy's Russia is inundating the Palladium market to tank its prices and the responsible and sustainable mining and metals processing that Sibanye does is

just going to be much, much more expensive than Russian competition. So it's eerily similar to what we spoke about about six months ago in the nickel market, right? Yeah, it's funny, right? Because there's this like line of argument, they often say the, the big talking points are that there's no, there's no like this is the, the only strategic kind of production of PGMS outside of Russia and South Africa. That's like a big talking point, right?

But I'm not sure that's right. I'm pretty sure there's a lot that comes out of Zimbabwe. They're forgetting the good people of Zimbabwe. No, you're spot on. I do. I, I see where they're coming from. Although if I, I just sort of thought, you know, history kind of teaches us that putting these bands and stuff just isn't a, a kind of long term solution. You know, maybe it kind of helps people in, in the short term. And I, you know, I fully appreciate the, the difficulties

there. But I think there's got to be some other sort of solutions and some thinking that kind of needs to be done to build a bit more resiliency into the into the supply chain as opposed to just once people have already been laid off banning production. I think it's. It's not too late then, isn't it? Yeah, Yeah. So I don't think it's the kind of right way, but it's a difficult kind of situation.

I think it's worth just a quick chat as well about the restructuring and maybe just sharing a couple of comments whether we think they're kind of done given everything that's gone on the last year and a half. So we spoke about all the assets they've accumulated over the past few years and I wonder if it's kind of worth selling or spinning any of the other remaining kind of assets out to get a more simplified kind of structure.

The company was, you know, uranium was the one that they said, yeah, we're happy to kind of sell that. But the rest they said they kind of want to hold on to or maybe they're not able to sell, but uranium assets, Centuries Inc, Mount Lyell, Gallican, that's this sort of pecan nickel refinery in France, Rhylite Ridge, Calibre, the the lithium project. And then you've of course got South Africa and USPGMS and gold. I think there's just a bit too much in there, right?

Like so if you if you got rid of century zinc and Mount Lyell, so they they picked both of them up by acquiring century now, Yep, I think there's no way in hell that they would be able to sell that those assets for what they they paid for it. And it just requires like a bit of, you know, a bit of eating someone's going to eat their own shorts, you know, to because of those acquisitions at the price they did.

And then yeah, yeah. The other ones I'm not sure of maybe what are you going to get for them? Like probably, probably like, well, yeah, every last dollar kind of helps. But if, if they think that their their cash flow is OK and they'll see it through. And especially if these PGM prices kind of re rebound relatively quickly here, it'll probably just go to the back burner. Yeah, I, I think you're right.

I'm, I'm kind of curious about how much of their sort of capacity, it's kind of taken up the, you know, calibre's the one that's requires a, a fair bit of cash. There's €300 million earmarked for that one for this year. But they've got a a sort of green funding line that as they call it to, to see them through on that one. But I can see, you know, I don't think they're really going to

get rid of anything else. That uranium asset is in South Africa. So even that one I think might be quite hard to to kind of pass on or sell. I just, yeah. Yeah, I sort of agree with you JD, as far as you know that that there's a lot of in amongst their main operations and then all the ones that you've just listed there. Like you know, how can you spread all your not just from a money perspective, but as far as people, resources, IP spreading across all of these different

projects. Like what's actually more important where, where's the best use of time and human capital? Where is that best spent? Now there was one more bit that we have to quickly quote from from the call you pointed this one out I. Did want to play this one. Yeah. I also read much around the issue, issues of diversity with suggestions that if you go work, you go broke and, and again, I

think that's such nonsense. We will continue to drive inclusivity, diversity and belonging as we believe it creates a competitive advantage for a company like ourselves. Go away, go broke. What do you reckon, Janie? I do love that it got to mention it's pretty funny, yeah. I mean. Looking they do go broke now though. That would be particularly bad. Although, I mean, you know, on a, on a kind of serious note, looking into Sibanye's safety record, it is, you know, pretty,

pretty awful reading. So there's definitely stuff on that front that needs to be addressed. Like unfortunately, a couple of the the miners out there. Hey, oh. Mate, they're like these South African PGM miners are particularly like atrocious on the safety front. But I think a lot of that's to do with the, the, the union workforce and all that sort of stuff out that way. But yeah, yeah, this whole like topic of, you know, mining companies going woke is, yeah,

big, a big theme out there. A lot of discussion, a lot of like rediscussion around DI kind of policies that have been adopted by some of the, you know, the largest mining companies out there and and question marks on their effectiveness. And then, you know, on the other side, you're going to have the, the like, you know, the boards and CEOs defending them like you see, you see here.

Do you think, yeah, the diversity and inclusivity was around commodities 'cause it feels like they're trying to include everybody commodity in the in the company. Like that's the way I took to interpret it. Like Jesus. Christ. Well played, well played. So, so why did the PGMS price surge so recently, JD, after this, you know, sort of production cuts that Sabania put out? Well, this is the the kind of point that really perked up our

interest. There's a, there's a few different kind of factors at play, but one of them was undoubtedly Putin's comments that we touched on on Thursday of last week. So you saw a good kick up in on Thursday, on Friday as well. Obviously we mentioned Sibanye jumping up 11% on the back of it. They obviously curtailed a bit. It all kind of plays into it more broadly. You've got stocks that have been built up and they're now kind of unwinding and stuff.

And I think there's a, another feature of the, the Palladium market specifically, not not as prominent in the Platts market, but there is a huge like a record short position out there. Now. If you think back to what we spoke about in the lithium market last week, it just makes those, those turnarounds quite jumpy.

When you have a a large short interest in the stock, you kind of have covering and all these things which lead it a bit, you know a bit sprung or tightly wound to sort of spring to the upside when it does kind of go. There was also a an interesting question in talking about like where does Platts, where does Palladium kind of go? And to be clear, like Sebania talk about very much like a A2 E way of thinking because they think firmly that Platts and Palladium are interchangeable.

The question was relating to to loading. What this kind of means is how much of either, you know, the two E is required in the hybrid vehicles going forward. And the question was kind of angled at has PGM demand been overstated because the Chinese have developed new technology where they don't quite need as much PGMS in a hybrid or an ICE vehicle. And you know, Sibanya battered

the the question off quite well. They kind of said that they are totally aware of this and they have forecast into their models these reduced amounts of PGMS that are needed in the in the new cars. But I thought that was a different way of thinking about where this market could potentially go and who's kind of modelling it, right?

But I remember it's been a while, but I remember back, back when I was at Macquarie there there's this like commodities, I remember what it's called, but like this kind of big commodities write up and like the commodity strategists would would put out their thought pieces on like all of the commodities and which one are five year coming? If it was a five year or ten year outlook, they were doing a

10 year outlook. They were most like bullish on and most bearish on. And I remember clearly most bullish was carbon of all commodities, most bearish Palladium. Yeah, right. So yeah, in terms of like sort. Of 2022 time. Yeah, this, this was, this was like, yeah, like 2022 when this way. But yeah, I just, yeah, things have changed a little bit and sometimes you kind of hit the Contra. Yeah.

Well, I just think that the, you know, taking the contrarian view is where the opportunity kind of lies. And that's not to say it's right. I just think that's the the place where you kind of need to look. Mate, I'd love to see if you're

you want to be a contrarian in this market which you've historically called too hard. Definitely China. Rare earths, eh? Rare earths in general. Yeah, I just want to give this story a quick will, mostly because I I'm trying to get people to see if they'll send in information that they know about it because I've found it particularly hard to get information on this story. But I saw this this headline, I think it was the bottom of the

UBS note. I had to do some Googling to even substantiate the story before I put a link in the director special this morning. So there's this news from from China that China Rare Earth Group has had an exploration breakthrough and that would result in it producing an additional 5 million tonnes of rare earth oxides. 5 million tonnes is a lot in that market. I don't know, I assume it can't be paramount, but an exploration breakthrough.

Look, So what interesting wording it's, it's, I mean, I'm sure it's been translated, but so yeah, my first thoughts too. Just take it all with with a bit of a.

It's full of salt. Some little Chinese whispers to this one so why is it interesting There's a few reasons right first of all, let me just give a bit of context about this state owned enterprise trying to rare earth group from what I can find online, this state owned entity actually formed because China merged sort of these three separate state owned entities in late 2021 to in quotation marks increased pricing power and efficiency.

So forget antitrust I suppose, because it's OK if you're just making W more anti competitive that's OK. I I I read some reports that this kind of like mega code of of rare earth production sort of just captured just you know stupid majority of heavy rare earths. So the first question, what the hell is an exploration breakthrough that can like definitively lead to a quantifiable increase in production? Like what does that, what does that even mean?

It seems pretty wild to to state that, right? What do you what do you think? I think that is mixed in translation to be honest, and I'd be curious what was meant by the writer. Yeah. And I mean, if there's going to be a breakthrough that leads in to more production, I would have thought that might have been more the processing part of the supply chain to sort of get more, you know, out of the rock. But you know, put simply, I'm not sure how doing that front end, but I'm just yeah, I'm, I'm

confused. I. Don't mean unless it's an actual discovery, yeah. Yeah, unless it's. But yeah, it must be or or unless it's a discovery. That's all very possible, but then I had the thought could China's state owned enterprise potentially have just discovered verifies AI capability? Because I think it's possible, right? I actually, I actually put the question to rock, which is if you didn't know, is the the AI chat insider Twitter.

And yes, I used AI to ask about AI and, and look like rock stood back from giving me a, a definitive answer. But I said is verify an expiration breakthrough for China and I'll just, I'll read out this little bit of response. Rock says Verify AI focuses on using AI for mineral expiration, which could potentially revolutionise how mineral deposits are identified and explored China or globally.

Its technology aims to integrate and analyse vast amounts of geological data to pinpoint prospective mineral deposits with greater accuracy than traditional methods. This could be considered a technological breakthrough in exploration methodology. But kind of, you know, stood back from definitively answering my question. But, you know, I, I must say I'm, I'm pretty suspicious that this is actually the, the real explanation for China's

exploration breakthrough now. And last I heard, there's a fat waste waiting list for verifiers, AI technology. But the, the 3D models that help you communicate, yeah, your deposit, they've been gangbusters. And apparently there were 47 of them on display at 47 Beaver Creek last week. They're they're also on the ground at Denver Gold Forum too, and they're even an AIMIC member. So getting amongst the other mining community. So hit up grant to verify.com or

Nathan at verify.com. Nathan's Perth based. So righto. Anyway, back to back to the rare earths in China. Guys. Last time we, we had a chin wag on the topic of of rare earths. I think we pointed to what looked like it could be, you know, bottoming out of the, the NDPR prices. In fact, the state owned enterprise China Northern Rare Earth actually recently raised their list prices by 5% as their you know second quarter earnings were zilch.

And that triggered basically these magnet makers to rush their seasonal restocking apparently which sent like NDPR spot prices to $62.00 US per kilogramme last week. And to China Northern Rare Earth they they raised their list prices, magnet producers flare to restock NDPR spot price climbs. And now magically, China Northern Rare Earth have had an exploration breakthrough allowing them to produce 5 million tonnes more oxide. Call me a conspiracy theorist on the timing of it all.

Might have to. And look, throw this one into the timing mix. Northern Minerals, the listed hairy, heavy rare earth developer on the ASXER. They've been the subject of a lot of, you know, geopolitical archibaldy. They raised a whopping $43 million Australian via 2 tranche placement just announced the details today. That's about a third of its free raise market cap, which is chunky.

And in a raise where I look at the the uses of funds in the raise and mate how's this $23.5 million is in that use of funds table for working capital site and corporate costs? Nah, that's more than half. Yeah. What? No, you can't. Yeah, no matter how you cut it, it seems bizarre. So look, something strange is going on in the in the rare earth market right now. You can you can connect a few dots and come up with some theories, but I'll let the money

miners do that themselves. And if you happen to have some Intel, end it in. Very curious, how do you how do you listen to something like that and not just think it stays in the too hard basket? I'm with you, JD. Once Upon a time, uranium was too hard. Uranium, you can do a bit of digging it, it just doesn't have that monopolistic, you know, Chinese grip all over it. It's obviously concentrated in, in some markets and you know, with regard to where uranium comes from and where things

happen. But I I don't know how you can be filled with confidence listening to that, even if there was a conspiratorial tone. But this?

Is why I like gold. JD Not in a too hard basket. Back, back to gold. Let's go to Denver, Ali. Oh, sorry. Honestly, this has been quite the week. I mean, but for LE GS say I mean like gold is at record highs. Bloody Oscar piastres run the F1 GPA over the weekend like it's it's just been a great start to the week. So and what a week literally to kick off the world's oldest and largest precious metals

conference. So this is the Denver gold forum in Colorado. So as, as we said, sort of, you know, gold prices hit bloody record highs over the weekend. Gold equities are on a tear. So the the G DX, which is basically a VANIC gold ETF is up 9%, then the GDXJ up 40% in the last five days. Deals. More importantly, I think the the L e.g. CETF must be great. She's doing all right. And then you know this this. Is bumping up off a low base.

Oh yeah. Yes, yeah, that, that is the caveat that needs to be made there. Just just a lot of talk and buddy, you know, deals are being done left front and centre. So, you know, we had great Land and Telfer last week, Anglo Gold and Cinnamon last week, Goldfields and a Cisco not too much earlier than that. You know, Perseus getting into predictive, you know, it's all happening. Great time to be a gold ball.

I was almost tempted to join our our favourite gold price reporters on LinkedIn, Simon Lawson and Alex Scanlon, but I thought I'd best leave that to the experts. So the conference actually officially kicks off later our time tonight. And I thought, you know what, where, where is this bloody hotel that they have this conference? And look at this, this is the Broadmoor Hotel in Colorado Springs where the, the, the Denver Gulf War is all happening. Look at that. Stunning, that is.

Just gorgeous. Straight out of like Succession or something. Oh, I actually love that. Great. Place to get a lot of work done. Oh yeah, lots of work, JD. Good place. To spend shareholder money. Look at it but so. You've been to the place where this is what you're funding, yeah. Have a look here. Could you investors don't forget that picture? But no, look, there's already been some news flow coming out

in and around the conference. So Endeavour mining commercial production at their bikes expansion and La Figuay growth projects. Apologies for sort of announce it incorrectly and West Gold put out the FY25 guidance and some you know reserve resources updates and is used as well as the usual Schmidt, you know corporate comments preso so. And the exploration target, Ali? Forget. Yeah, sorry. Don't forget the exploration

target as well. So no super keen to say what are the now that the conference sort of officially kicking off later tonight, what are the news flows sort of comes out in the next few days and we'll be certainly keeping our eyes healed. Well, you know, you're an ASX company. Yep. You're supposed to not time your news flow with a conference. You you've got a an obligation to disclose anything material. As it becomes material, it's continuous. Like that? It's it's all part of the process.

At least there's A1 commodity out there at least getting a bit of love. It's been pretty, pretty bare and the the kind of sentiment's been a bit beaten up across the across the space, but came to have a few a few chats with people from from China and the ones looking at the industrial metals in the in the coming weeks to get a a bit more of a better feel for everything going on out there. Hey. Absolutely. All right, let's wrap it up there guys.

Got to thank the partners Axis Mining Technology. During the show we had good on verify and ADR get get amongst them Mineral mining services, MMS get get amongst DSI, underground, Silverstone, CRE Insurance, Greenland's equipment, K drill and spark use a spark shop. Where are you guys? Information contained in this episode of Money of Mine is of general nature only and does not take into account the objectives, financial situation or needs of any particular person.

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