Is Ganfeng Bearish Pilbara Minerals?

Righto Bunny Bonners Thursday Special big going on today, boys. Some big cash getting changed hands at Pilbara. Holy Snapp and Dutchie, you boys are going into a behemoth of a freaking copper gold project as well. Yeah, very. Interesting. It's an interesting part of the world, yeah. And it's a name there not too many people really know or care about. But yeah, it doesn't mean that we're not interested, Maddie. They'll care after today, Trav, because if you care, everyone

cares. And the you deal. Look what Look what happened with Sierra, Ruta and I. Still know what it is delisted today so there's like it was complete. People cared for a bit. It'll go back to no one cares about. That you're gonna touch on the big fission power. Yeah, very open ended. Nothing provided there, but there's there's just a bit going on in that deal and whether it

will happen. Oh bloody, who knows, The thing that will happen, and probably already has happened this week is probably MMS should have secured open pit mining contract 'cause we bloody we throw it out there to the companies that they're right, they're available, they're ready to go, they're ready to start moving dirt and start making your money, whether it's for a bloody contract or AJV arrangement.

And I I assume their phone's been going off the hook this week, but doesn't mean you still can't call them. Mattie, you, you put it out to the companies, I reckon you put it out to the shareholders to put pressure on the companies to be like, hey, you, you got, you got approval to minister and why are you just sitting on it and minister right there.

They got the fleet like after. The fundies we've interviewed that are like on the register of these small companies bloody put the boot in and tell them to get MMS, mine and the dirt straight away. Every cash is good for everyone. So boys, what is going on with Pilbara? Big chunky block trade today and mate, yeah, to be honest I didn't stupidly didn't even know this mob was a shareholder, but I do now, thank you very much. Now you know. Yeah, I, I forgot to be honest too.

So no, no, no worries at all, Maddie. But there's a, there's a back story, right? It's actually a pretty interesting story. So AFR they reported that a giant $271,000,000 block trade of Pilgrim Minerals was being fished out yesterday. That represents a nearly nearly 3% interest in the, in the stock of the, you know, lithium miner, which still has like a healthy

$10 billion market cap. Here's the bit that was really interesting to me in the article that Straight Talk put up says the trade was under a 4% discount to the $3.31 last close. Forces said the block trade was a secondary share sale stemming from an equity colour transaction for China's Ganfeng, which owns 5.7% of Pilbara. Secondary share sales stemming from an equity colour transaction is. I spent my morning figuring out the mechanics of how an equity colour transaction happens.

Why is there a block trade anyway? What did you find out? If it's, if it, if it's it took me water up my head around it. But I think I kind of get the mechanics now. But basically Ganfing have owned stock in Pilbara dating all the way back to 2017. That 5.7% stake has been like basically the same shareholding at least for like the last four years in Pilbara.

As early as May 2023 I found a Ganfing release where they talk about their trading approach and it explicitly talks about potentially using these equity colours. I'll read this bit out. It says the trading approaches include but are not limited to utilising derivatives portfolios such as a colour position to protect the value of shares, such as the shares of Pilgrim Minerals held by the company. The derivatives that the company will trade involve both offshore

and over the counter contracts. The counter parties for the company's derivatives trading will be limited to financial institutions with prudent operations and sound credit ratings. So if, if Ganfing has has been using these, these colours, like, because I found that that release was like 2023 and so over a year ago, but I don't, I don't know if there's any indication that they've ever used these kinds of colours before.

In fact, kind of today might, might actually be the first time that we've actually kind of seen this, this happened by them. But you know, but, but it does pose a bit of a question like what's with the block trade, right? If, if you're using on derivatives and options and all that sort of stuff, why does it involve a block trade? There's a secondary part of that.

And before I answer that question, there's one other detail that's kind of worthy of of pointing out to that really caught my eye and that's the fact that the AFR article says it was at a 4% discount to last. And normally when you see these block trades, they're kind of priced with a bit more of a discount than a 4%. Remember the FMG 1 was like, you know, a fair bit more than that. And FMG is a bigger company than the. Spartan one.

That was probably more than 4%. Yeah, I. Think, yeah, I mean Spartan's a much smaller company, but but FMG is like, you know, like much bigger than Pilgrim. I think there was like a six odd percent one. It was all set out in stages, depending on how much interest there was in these things. Yeah. Yeah, so the 4% really caught my eye. And there's even like you got Bloomberg, you can find this thing called the TCA general impact model.

That's like a on a theoretical kind of transaction cost impact model, which can be used to sort of help price block trades of these large, large caps. It's essentially kind of like modelling what, what the transactional cost impact you would have by selling kind of X percent of a stock that has, you know, why, why volume or liquidity or whatever like that.

What what I've been told by someone who actually has a Bloomberg Terminal, because I don't Bloomberg, if you want to give me one, I'll take it. Got. The cable drug in the car. Is that the the TCA model shows that the the market impact should be 10 negative 10%, but the blocks down at a 4% discount, which which I'm trying to figure out these mechanics. I was like, that's, that's a bit of a discrepancy. All right, so on game Fang, what what's the kind of deal with these equity colours?

What did you find out a bit more and what are they actually doing in in the scenario? An equity collar is a a trading strategy that involves options that Ganfeng has used to protect their downside. Is the easiest way to think of it. A typical collar for for someone who who owns stock and Ganfeng, they own stock it it and they've just watched the share price go up a lot.

What you do in a, in a collar is you would, you would sell a bunch of out of the money call options and simultaneously buy out of the money put options. And it's a kind of, you can think of it as like a bit of a, a bearish to neutral strategy that you can employ. Your, your, your loss is limited because you know, the, the put options protect that you've got, you know, protection to the downside there.

But your upside is also now limited because you, you sold call options and you have to pay the other side of that. If if the price climbs, you know, into the, into the, into the payout there. It's the name colour. Colour a true a true colour is kind of you know is is is doubt and neutral but like if if you are confused, I don't blame you and don't worry too much. This is like this is wacko shit that. Really end up if you're confused. You like, you don't really have

to know about this stuff. It really happens in our world and you know, the like ASX stocks don't even have a real options market like you can get in the in the US. But even even options of this scale, like the the the quantity of this you, you basically need an investment bank to to write the product, or in this case multiple investment banks because you know, like the liquid options markets don't don't don't even cut it for but this sort of size. It's bespoke, right? Super.

Bespoke gang Fang going to the investment bank saying yeah, I want to do this. That means to execute the trade like, you know, they, they've in this case, they've lent on both of Bank of America, B of A and Morgan Stanley together, those investment banks, they use the balance sheet to underwrite the other side of the trade for, for Ganfang, they'd make these kind of synthetic instruments and, and they price them for Ganfang

to enter into. And in in this case, because Ganfang has has bought an out of the money put option as part of that colour, Morgan Stanley and B of A they they don't they want to protect their own kind of downside. And and in the case that Hilbro stock sufficiently falls, they

need a way to hedge that out. The process of the underwriter being the banks to actually hedge out their exposure in the case that they're on the hook because people share price fell too much involves them selling Pilbara stock today. Well, hence the block trade. The block trade is actually the

banks selling Pilbara stock. This is a, a weird one to wrap your head around, but this, this block trade of the 82,000,000 shares that's been done, that's being done by the underwriters and they've borrowed the stock from Ganfeng. It's Ganfeng stock the banks have borrowed and the banks are placing it out of that 4% discount, which is why it's a bit tighter than you'd expect if it was a true block trade. They do this to hedge out their own downside exposure.

Because if, if, if Hilbert share price fell too much, Ganfeng could could, you know, they're, they're put now in the money in the process of that they've got the right to sell their stock to the underwriter. So their underwriter wants to sell it today so that their, their, their own kind of, you know, hedging situation is, is neutralised. So did you say that they've put it out on gang fan of like done

what insta does? They've borrow like put it out on borrow like a a fucking institution would if someone wanted to short their stock. It it's but then. They put it out on borrow, but then the bank's selling it. It's it's not like it's put out on, but it is it is it is, it is their stock that is sold been put out.

And it's instead of it being like another Insto that's short selling, it's actually the underwriter, the bank that's done it for them because they're trying to hedge out their potential exposure because they've created the product that's allowed protection for game thing. So is game thing going to end up with to 250 million bucks less amount of stock in Pilbara by the end of this? No, no, it's not necessarily. It's just, but they still have a

beneficial interest in the 5.7%. Yeah, because they can. They can call that back at any time from, from, from the banks. There you go. OK. So they're not selling them down? No, Well, they they. There's not yet. They there, there's a couple of interpretations of this, right? And I think like, that's why I wanted to go deep in the mechanics because I'm trying to figure out what is gang thing's view here? Are they, are they bearish lithium? Are they bearish Pilgrim

minerals? Are they just, or do they themselves just need the cash? And I think there's, there's two ways to interpret this. The, the 1st and more likely way to interpret this, I think is I think gang thing like on their own kind of books, they, they record their stake in Pilgrim Minerals kind of mark to market, which, which means it comes up as a, as a loss or a profit depending on what Pilgrim share price sort of did. And you know, that could be

problematic in in and of itself. So they're, they're just trying to hedge the impact of that because it's, you know, pretty substantial loss on their kind of last reporting period. But also Ganfang still has a fair whack of their own CapEx ahead of them. There's still more ahead with Gulamina. Practical completion was expected 30th of September, which is a couple of days ago, but there's still more capital outlay Gulamina ahead before it's sort of cash flow positive combined that too.

I think they've still got a fair whack of CapEx, you know, a project in Argentina as well. And with like depressed lithium prices, cash matters. So the transaction in a weird way, it actually frees up some cash for gang thing. It's a bit wacky to wrap your head around here because gang thing has sold call options. Selling call option actually gives you income. They've also bought put options. And so buying the put options isn't you're, you're paying out

there. But the mechanism which gives them cash today is the fact that there's this loan arrangement with the underwriter of the bank where you know, they've lent their shares to the bank, bank sold them. But in exchange, Ganfeng gets gets a bunch of cash today as well. So there's, there's basically cash or capital freed up the Ganfeng to allocate to the, you know, CapEx objectives and plans that they do have ahead of them at some of these projects while the lithium markets are

depressed. Yeah. So it's it's the same as any any mob that lends out their stock when they to be sure that they get the money. Yeah, there's, yeah, yeah, there's, there's mechanically kind of a similar thing going on here. Yes, yeah. Sorry, I've got that wrong. When someone takes when a shorter activates a short position, they get the money, yes. Yeah, not the person that borrows it out, lends it out. They just get the yes premium. On yes, yes.

Right. There's another interpretation which oh, I, I fleshed out first, but I think, you know, I'm sort of coming back to and think this is less likely. But let's just entertain, you know, this other theory for a moment too. Gun thing could be pretty nervous about the potential downside, more downside in the value of Pilbara stock. And they could have used this bouncing sort of lithium price to, to hedge edge here, which is kind of clever move if you think there's more pain on the

horizon. And look, if, if, if Ganfeng thinks there's more downside from, from Pilbara, from here, What like why, why would they think that? We talked about this little kind of thing in our conversation with YJ, which we put up on Friday last week. Basically, Ganfeng, they are, they are best in business for, for converting even crack spot into, you know, high grade kind

of battery material. They've notoriously dealt with Minrez's, you know, Marion spot, which is, you know, pretty, pretty low, low, low grade kind of product. That's what gone that they put out there. I've plucked this kind of cost curve from S&P. So I'm, I'm sure there's a few issues with it and people point out why it's wrong in a lot of different ways. But just kind of take it with a grain of salt for now, because this is the S and PS cost curve for 2025.

And I wanted to point out these, these are, I've highlighted the S and PS highlighted before Lithium projects producing in 2025 that Yanfeng actually has an equity interest in.

I've added labels to the ones that Marion and Gulamina on there just to sort of illustrate things because Gulamina is the interesting 1. You know, like I said, Gulamina practical completion was expected for that project on the 30th of September per kind of the latest announcement I could get out of Leo Lithium talking about it.

And that's intriguing, right? Because Gangfang gets 100% of the production Gulamina and other self, I wouldn't be surprised to see, you know, gang thing eventually get their costs from Gulamena to sort of, you know, and even the kind of lower unit cost. And then Pilgrim was able to do it. Pilgrim Gore I just. So the ore body's phenomenal. That's why it's like Kathleen Valley, but an open pit. Like in terms of the thickness and, and everything. Well, it's pretty friggin

unreal. Yeah. I wouldn't, you know, I've got no doubt that the Chinese will have a way to get costs far lower than, you know, we can imagine. Yeah, they're good at that shit. So, you know, that's the other theory is there that that, you know, maybe gang gang Fang have have a view on where the lithium market's going to be for a period of time. And then they're looking at Pilbury stock relative to all

that. They're looking at looking at the cost curve and they're looking at where, where new production is coming online, all that sort of stuff. Even my gang thing, they currently take up to 310,000 tonnes of of spot from hill Gangora for for 2024-2025 and 26 and that's their current off day. But but yeah, I think there's a few different ways you can interpret it. But then you know, the more one, the kind of yeah, like and maybe it's a little bit of both.

Maybe it's a little bit of both in those theories. Yeah. Do you think that do you think there's any chance that they're throwing up capital to buy more of a project? They they, they did something really recently where they picked up 30% of an interest in a projects. The 15% of an interest in a project any anyway they you know, yeah, there's a bunch of different competing objectives, I'm sure. And the truth is like on a multiple basis, Pilbury still

does screen pretty expensive. Like that's why it's got such a high short interest that it does because you're trying back out the earnings and you're like, does this make sense? I don't know. Do you think that ever trying to get it past fur? But do you think that ever buy more of Mount Marion off Min res? I don't think Feb will get there. No, because she's about maxed out now, yeah.

Yeah, I'd lean towards the the former rather than the latter, just freeing up capital to invest in, in projects have that flexibility like that they have been, you know, smashed on on kind of all fronts over the past year. They've got a heated debt in their own cap structure. It's not like they're, they're somewhat like a lot of lithium players, you know, they're, you know, distressed kind of period of time. Yeah, good, good in the weeds trap. It even confused the fuck out of

you. I think I. Mate, I didn't fit the fuck I couldn't piece it all together until the end anyway. It's like our back to the start of the pod. Very good. Right Next up, we're going to talk about an absolutely freaking huge copper and gold project in Mongolia that I don't think we've ever talked about before. Yeah. I was scratching my head, I can't remember. I think maybe a long time ago we got might have given a dimension. Oh no, but just there's never forget money miners.

Before project gets bloody huge, it has to be started. That is philosophical. The first thing you need to do. You've got a clear land, right? Exploration, drilling dams before we get these rigging, billion tonne resources and bloody Australian earthworks and haulage on the team to get it done, isn't it? Too right? You know another earth moving company does all this stuff, no? No, the AES. Yeah. Oh, they're tied in a EH. AEH. And IES, there's a bit of bloody, there's a bit of mutual

stuff going on here. You know the only two acronyms you need to know if it starts with. AE, it's good. Yeah. That's all you need to know. Look at this bloke. We we gave Sheamus enough of a run. We're going to give this this follow a run. The main man of AEH, Reese Spatolni. He's when he's not dressed up like this on the weekend, as you can see he looks like this HD fitter covered in shit working. He's bloody mate, he owns it, he operates the machinery.

He's the man, he's mate, he's the son of AGL and I've got it on good authority that he was crushed rock was mixed with his milk as a child. He is grew, grew up on dirt and has now decided to move it. Bloody shits on Orem pisses gold Nuggets like he is all over at this fella. You need any earthwork job he's done? Bloody premium mining post mining in the great state of WA Give bloody race and the team at Australian Earthworks and Haulage a friggin ring. Good.

Details are in the show notes. How good? How good is this black cheesy? I trust him to move rock. But he can move rock really well, funny, beautiful. So we are talking about how do you pronounce this Xanadu? Xanadu. Xanadu. Xanadu. That's the closest I've ever got to pronouncing something correctly. You know the ABBA song we're playing, What's the next line? It's an old classic movie as well.

But anyway, what we're talking about is copper and gold in Mongolia, like you said, Maddie, so Mongolia right at the top drawer. So these guys had an announcement out yesterday which sort of piqued our interest. And as you can see, it's been a a hell of a ride on the on the spark chart been up and down. They I had a bit of a deal that they announced a couple years ago now and there was a sort of second iteration of that deal last year. So we're going to get into the weeds on all of it.

But firstly, why it's kind of interesting. So these guys are $100 million developer out there like like a good few with substantial CapEx bill, but they have a PFS that is imminent IE this month and they have a sort of potential

liquidity event. They've already got an arrangement with Sage in which we're going to get into the weeds of later on. But there's, yeah, there's some key reasons why this one could to have some action happen in the, in the nearer term rather than the the later term when you kind of think of all those other copper hopefuls out there on the ASX that just praying for somebody to come in and scoop

them up or help them out. So let's get into the the project itself, because I think this gives the the overview that you kind of need to know to understand how the the potential deal machinations could work. But I remember about this project, JD is it's, it's like it's enormous. It's huge, but it's really low grade. Yeah, in Mongolia and that's all I remember. I. Always thought of it as like a, you know, a smaller, not quite as good.

Oh you totally. So they both previously were part of Turquoise Hill but back in the day and this one sort of spun out a decade ago now in 20/20/14. Turquoise Hill. Yeah, it sort of sits a couple 100 KS away in southern Mongolia there. So a scoping study came out in 2022 that was actually an updated one. There was one a few years before

that. The 2022 one was based on a 2021 one resource that was 1.1 billion tonnes for 3,000,000 tonnes of contained copper and 8,000,000 ounces of gold, about half of that in the indicated category. Then the scoping study from 20/22. The numbers I'll quote here are 100% basis. Xanadu at the time owned 76.5% of the project. They were talking about an average annual production of 50,000 tonnes of copper and 110,000 ounces of gold, more than sustaining costs of US $1.00 a pound.

Obviously netting off the byproduct credits from the the gold there and an IRR of 20%. The 30 year mine life NPV using 8% discount rate of US $630 million. So a couple other details that are important to know is that they were first going to have a throughput of 15,000,000 tonnes

per annum. That was going to jump up to 30 million tonnes per annum CapEx of just under 700 million US net revenue, which we'll touch on a bit later on why it could be interesting of US $16 billion with the important price assumptions of US $4.00 a # copper and US 1700, yeah, 1700 an ounce. So they're, they're the kind of key numbers that you you want to know from the scoping study. But obviously it's been a couple years since then, a lot of

waters gone under the bridge. They've expanded that resource. The contained copper is up some sort of 30 ish percent. The gold is up to over 9 million oz contained. Importantly on the Met side, they've done a fair bit of work because they were building in a scenario with the top sort of 20 or 30 metres, about $100 million of pre strip was just waste.

Essentially, they've been looking just do a heat leak and actually make a bit of money from that as opposed to just being a $100 million liability the. Other thing that stands out there. So it's got some grade in it, really low grade. It's not complete waste. Exactly. Yeah, yeah, we've got Australian earthworks and haulage job. He bothers sounds and I'll move it. I don't think it stands out there mate.

Just on the like those numbers on the scoping study is, I mean like a copper is a fair bit different and the gold price is a fair bit different today to what is assumed there. But but also just the the the CapEx like it was the scoping study coming out before Zijin was was a board because that's right. Zijin would probably be able to deliver a project build kind of like below, whatever your western kind of. Very very important point are. Able to to construct something for two.

Yeah, 100%. You can call that a Western style CapEx number, which Sage in, you know, being neighbours and just being operators at scale. You know, they've got a heap of mining operations around the world if they've done this, you know, partnered with Ivanhoe in, in Kamal Kakula and these sorts of things would be able to deliver that cheaper than than sanity would. Yeah, it's pretty bloody, isn't it? Funny looking at these, I think what was BHP's one they did the

long aisles for Bloody what? Oak. Damn. Which in in South Australia, Yeah, yeah. Oh dear, like like coming back at you know this point 3.4% copper just it might be the thing now like it's. The scale game. Yeah, yeah, so it's and look pretty unbelievable to get frigging half a billion tonnes of indicated material that is freaking huge reeks of a Cadrill standard. Sure it does Martha Bill indicated bloody.

I can confirm that Cadrill didn't drill this mine out, but it's possible of leverage someone of a similar standard might have. They leverage their IP because you're trying to Yeah, I. Think they were consulting over the phone to Mongolia. So yeah, it's don't know. There's no no bloody limitation to the bloody capability of K

drill. So because if I had a resource like that in my backyard, I would make the correct life decision to call Drew Harvey and call Ron O'Sullivan and get bloody cadre to start pumping Arsene diamond holes in there ready to go also ready to go for a contract right now. So bloody don't don't be a snoozer and be late. Call them right now. Drovers numbers in the show notes. You know the safety standards will be elite. You know they'll punch the metres in the most efficient way possible.

You know the sample management is 6 star level above 5 star. They're like one of those hotels that to get a six star rating and not many of it 7/7 right. Yeah, J and you know the resource will be bloody actual indicated because. Yeah, straight away, Yeah, straight away. It's absolute no brainer. So JJ, what about the Z Gin side? What is going on there? All right, so. Like I said, Maddie Z Gin really

interesting base. I have to sort of double check that there are $100 billion in Aussie terms market cap company. They're a big, big, big beast. Yeah, nearly as big as a bit smaller than Rio. Yeah, yeah. 100 Bill Aussie. Aussie, yeah, good, good. Bit smaller than Rio but firmly one of the the biggest miners in the world, no doubt about it. So they are 19.4% shareholders now. They first took a 9.9% stake in 2022 and they listed out this sort of staged investment process.

It's going to be a sort of second and third phase that would follow that would sort of see them logically lift to just under 20%, and that happened. They went to 19.4% in early 2023. Which Ferb had to approve as well, by the way. Yeah. Importantly, Ferb approved that. So in March 23, at that point, they created a 5050 JV which held what was previously the Xanadu State. So that holds 76.5% of the

project. Z Gene put in US $35 million into the joint venture that was to fund the PFS as well as some exploration which would take 18 months, which kind of brings us to today. Xanadu would remain the operator during the PFS phase. And at the end of that 18 month plan, Z Gen would become the operators, which again is where we're kind of at today. And this came at a pretty important time initially in 2022 for Xanadu.

They were in the doldrums a bit. They announced the deal at a 30% premium to what the stock price was at. So that was sort of circa 3%. Deal came in around 4%. So it was a bit of a pick me up for the stock at the time that went on for a bit of a run. Make such a different equation. You go from being like a micro cap that's got a project with a giant CapEx and you've got no way to actually find it. All of a sudden, you know you now have a funding partner

that's serious. 100%, So we should touch on yesterday's announcement before we get into where they kind of go from here. So the update yesterday says they're in the final stages. You can expect the PFS by mid October. So in a couple weeks time. Cash is running a bit low. There's about 5,000,000 bucks within Xanadu, another further 5 million within the joint venture.

They're planning for a BFS, which is kind of interesting because the the earlier wording gave an indication that they might not even really be considering. They might just go straight from BFS to, you know, kind of construction engineering work and and yeah, just power straight ahead like season. By all accounts that came to press on at some speed. You know, the operator transition is underway. So the GM and chair of the joint venture board is now Zeigen's nominee.

So this is a sort of four person board, two people from each company. But importantly, any new budget needs to be jointly agreed. So you can't have the kind of classic trap where the major money, the major minor can just flush out the junior by just spending more with a commitment that the junior can't even meet. So that that's quite an important detail that shouldn't be glossed over.

Totally. And heck, in that same part of the world there was yeah, I think, you know, Turquoise Hill would would, would remember a lot how challenging it is when yeah, you've got a a major mind with the the money and the challenges that come with being a minority joint venture party party in the dynamics too, just. Drag you along the floor? Yeah. Who's money? Who says money doesn't buy happiness? Though all righty. So this it lays out the situation where we are kind of at now today.

So in March of 23, they put forward 3 potential ways for this Zegin Xanadu relationship to advance. And the sort of wording is post the PFS coming out, Xanadu has the following options. Option A, they can fund 50% of the construction bill themselves. Option B, they can sell their 50% to Zegin for US $50 million. Option C, they can sell half of their interest to to Zegin. the US $25 million plus A0 cash loan carry for the remaining 25% to

commercial productions. I they can get Zegin to give them debt to fund them through so that they don't have to stump up and raise it to their equity, and that would. Be pay back with free cash flow when it comes. Exactly. Now there's sort of 1/4 option here, which is not mentioned for Xanadu to look at, which is do a deal with a third party or get creative in how they can try and maximise the value for their shareholders.

And this is where I think we should kind of start, start a bit of a discussion to start with. I think option B, selling your stake for US $50 million would be a bit of a travesty. I think the the company should just come out and say that is not what we're going to do. There's a whole lot more value in this project than just giving

it to to Zesian for $50 million. So it was a good thing at the time when nobody liked the stock, but a bit of a, a bit of a flaw under it, you know, gave them a bit of support. But I don't think that is what they should look at the renegotiation angle. I guess option D there is a kind of interesting 1 and I want to play a little snippet from Colin Moorhead, the the managing director of the company when he spoke about this in a podcast earlier this year.

How other options are, you know, for us to go and fund our own half? You know that that can be done, but it's not really our preference or or to do some sort of other deal with the gym to take the project. Yeah, they're, they're at a, they're at a junction, right where this is, this is kind of game time. Like, you know, PFS is coming out so that Xanadu's in charge of the PFS. They put the number out.

The number, the number in the PFS is like, we're going to be big, big kind of part of the negotiations. And so there'll be some gamesmanship going on there. But it's super like there's an obvious deal that happens and that's where like, you know, Asian acquires the other the other half of the JV from, from Xanadu or just acquires Xanadu outright at the premium or whatever it is. Yeah, there's, there's, there's, can you get competitive

attention? It's tricky because you've got a 20% more nearly a 20% shareholder there in, in if there was any change of control that is ZG in owning like, yeah, 19.4% of the stock in, in Zanadu. It's kind of no one else kind of comes to play normally in those situations unless you did another strategic placement to someone else at a premium. That is a very interesting point. Could they do another deal at a premium with, I don't know, an IGO, someone like that to try and. Create different.

To try and create a bit of tension and I had to do a bit of digging into this one and they they. Have the full right to like Zijin. Can Zijin? Do they have any power over them? So I went back to the 2022 announcement and found in the footnotes some wording around this. The company, being Xanadu, has granted Zijin the right to a reasonable opportunity to participate in future capital raisings. A reasonable opportunity. So that gets very legally and it's not. It's not a top up, right?

That's not yeah. Yeah, I you'd have to be a lawyer to sort of fight that one out. I don't, I don't know, get loose. Yeah. Because they say, you know, subject to the limitations and conditions, they would give them very short notice in which decision would have to reply, yada yada yada. So OK, yeah, I don't that that seems like a a hard one to kinda get done and stay within the bounds of the agreement. But who?

How many? Mobs are going to be find it palatable to go into bed with Seijin as well. No, Yeah, well get. That enough to limit. You're not quite going into bed, but like, let's say you did a strategic placement at a premium, then Seijin, I now know that they have to pay up. So you, you basically you kind of just get a short term trade on it or, or you go into bed, but you have to be open, open minded too.

Let's say if you can sort of have good line of sight on to getting an uplift within sort of a relatively short amount of time, that's why you would kind of do it. I'm not necessarily thinking another mining house to to come in and buy a stake in the business because that that gets

a bit difficult. It's not that like it's not that bad if you, I mean if you think about it like if, if you don't have to be operator of it, but you get the copper exposure like heaps of people on copper exposure and they don't have to do any work. And what else is Zagin like? Because looking at that option C like where it would sell half it said as Zagin and pretty much provide an IRU that obviously shows how bullish Zagin are on copper lot.

They're they're obviously wanting the copper exposure. They've obviously got it with Ivanhoe. They produced over a million tonnes of copper last year. They're one of the biggest copper producers on the planet. Yeah. So it'd be wonderful. And and now it's a link back to the old Freeland as well with Turquoise Hill and everything. But do you think like Ivanhoe would be interested in something like that with the Sage in existing partnership? It did pop in my mind.

I'm just not as close with with Ivanhoe. I know they've got a lot on their plate and like we've sort of said with other miners focusing on getting what you've got on your plate right, expanding, that is where you're gonna see the most amount of value uplift. And you know, especially considering KK now at 600,000 tonnes per annum. It's like, yeah, totally different quality asset to this one, yeah. Yeah. Brio's in the area you've got.

It's that they used to be called Poly metal, and they've just left Russia and now they have. Yeah, Now every name's a solid core. And then go and ham on Kazakhstan. It's all right next door. Yeah, maybe. It's nearby. They want, yeah. It's got to be. Yeah. So one of the other things to raise again, which you mentioned, the sort of Western versus Eastern, if you like CapEx build, that'll become a

part of the negotiation. And it's a, it's a good thing in my opinion, that Zetan will build it because I think they can build it cheaper, you know, and the, the number that we're going to see in the PFS won't be the number that Siegen, I think will believe that they can build the thing in. So that's something to, to kind of bear in mind, I reckon. So it's a, it's a kind of fine line. Now for Xanadu, like you said at the beginning, it's, it's game

day. You know, if they've got a short amount of time or hopefully a short amount of time where they just really need to fire up and try and get maximum value for their shareholders, They're only kept at 100 million. Like I said, it's a, a project with AUS 600 million plus NPV with, you know what you'd kind of call a modest copper price assumption, a modest gold price assumption. Obviously costs will have gone up a bit.

But then again, you do have siege in, in the in the driver's seat and the process could come a bit, become a bit drawn out, but it's a super interesting one. I think we should stay, stay focused. On yeah, I was trying to figure out if asymmetric, like like if, if the nice, the more upside or downside. And it's I can see from both ways because like the way you describe the JV now, Zijin's kind of in control of that. And whenever someone else is in control, like kind of, you know,

they're in control of the jet. I know there's like equal rights on the budget and all that sort of stuff, but you always get a bit nervous in those sort of JV arrangements without knowing the full details of how the JV structured and everything like that. On the budget side, you could see like, you know, the big gamesmanship, you might even, yeah, you might even not approve the budget and drag things out and go slow ball and try get an outcome that way.

I'd love to see a royalty spun out like or a royalty retained by Xanadu. I just. US $16 billion of revenue over the base on the base case. I know they're hard to negotiate, but like no, like we talked about the potential of having a royalty with kind of the fuel low transaction that never came to fruition.

But yeah, those those kind of like transactions that result in like they would say Hosanna do sell their interest in the JV but return to royalty like that's such an interesting vehicle, you know, but it probably probably probably ever happened. Yeah. I mean, you could kind of call that 25% project ownership in a way a quirky kind of. Yeah, Royalty. Vehicle. Yeah, it's interesting, Yeah. Yeah. I should be getting a bloody royalty from live wire with this friggin hat on.

You should. You should chase enough for that mate. No, they're offset by all the bloody the negative comments on the Uranium 1. Can we have the more polite lady back rather than this? I did, I did. I'll get that on for you. I didn't see that but I did see a comment saying where can I pick up one of those snazzy live wire hats. You did. You did drum up a bit of his

mate. Before I get on to the Paladin fission things, Z Gin just reminds me what the wonder what the hell is happening with AVZ if that's going to come to some court sort of outcome soon. I did hear some juicy word on the decline. I'm not sure if should be disclosed, but things are things are in motion on a on a sort of legal front. So I think there's some sort of timeline on things now at least until the next decision is made. You know that's what happens after that, but.

We haven't forgotten anyway, I Speaking of just something else, hell of a vision deal, so that the not not much to report here, but just it's just not going to plan. It appears and I remember when we said like fuck, once the votes over the line, like you're pretty much home, but not not the case in this one. So and and it's for the fucking weird, right? I wouldn't say weird. It's like, yeah, it's hard to properly substantiate this, but

they're trying the artist. And so because the final court here in Canada that's still ongoing expected to deliver a decision in the coming weeks. But then yesterday the Canadian Minister for Innovation, Science and Industry ordered a national security review of the scheme of arrangement. So and it's to do with China's CGN mining being a 11 and a bit percent shareholder in vision. How does that make sense? Because you normally object if it was the acquirer that had the

Chinese interest. Well, I think they're talking. About what the pro forma is going to be, which is going to be significantly less than 10. Such a stretch. Yeah, yeah. And I think because it's and they're going to be a, you know, a minority shareholder by the end of it. So you're diluting the Chinese ownership in the pro forma and yet you're objecting to that? Yeah, but then and but the most interesting thing is that CGM were voting against the deal, yes, because, because.

I don't know if you like, we peeled through the scheme Doc, the information circular and someone else had bid for fission, Maddie, which we our theory was it was CGN had said for fission earlier this year. Yeah. And it didn't, didn't, didn't go ahead. So that's why they were objected to it.

Yeah, yeah. So they're they're the sort of the cause of this, but they were voting against the deal anyway, which makes it so just a. Quick one, Maddie, this Canadian minister from, you know, the the Office of Innovation, Science and Industry ordering a national security review, is this analogous to a Ferb review or is this a different thing to what they call Ferb over there? I can't give an answer. This is that Investment Canada Act. Remember all that all? That is the investment.

Canada is the investment because I know that's what they mentioned. Earlier, that was the stuff that was all talked about like two months ago, yeah, ramped up and that that. Was what was mentioned specifically in the announcement subject to Canadian Investment Act? Approval.

That's what this is, yeah. So there and there and because, but and this is a part of it. This was the Curry wrote it in the far article, but not sure if this is a part as well that because you got Chinas CNNC also hold 25% ownership at a project level of Langa Heinrich, which would be obviously part of the pro forma on the paladin side. So like I don't know if they look at it right. If you had that project

ownership, it's fun. It's out there and it's like a last straw tempt on who's driving this. If it's purely can it regulatory driving it or yeah, because because the pro forma is going to be dual listed on TSX and TSX and Chinese minority shareholder with the project, it just might this might just be where Canada is heading like which we saw about you know the previous news about you know foreign investment in there. Like this might be the sort of

first little play it really. It's such a it's. Like battening down the hatches a bit, but it's, it's friggin, as I said, the fact that that votes got over the line just which was, and there was some scepticism on what shares were used in to do that, like employee shares and everything, because I just got over the line. And now, now this, it's, it is blowing out.

And it'd be interesting to see if these regulators have the final say on it. It's such a defensive protectionist perspective that they're, they're kind of taking as opposed to, you know, building a solid foundation for all of your miners to operate and be successful, whether that be through tax benefits and, and these sorts of things. It's, it's so much more, you know, protectionist saying that you can't do that, you can't buy this, you can't get involved

here. I think there could be a a different way to kind of look at this without getting too political to build a solid foundation for your miners to do well as opposed to just saying, you know, because this could damage exploration. Like we sort of discussed in the past, if there's less exit opportunities, you know, have less potentially less money going to exploration and these sorts of things if they think half the potential buyers are no longer allowed to buy the projects.

So. Any other thing I can think of is if they're they're trying to minimise the Chinese ownership so they can keep the uranium in North America in the future so it's not obligated to go there, but how do you control that? You can still sign an off take with. China, if you want it, would make if. They're not a shareholder. It would make so much more sense to have that, you know, the stuff being mined in your country, streamline the permitting processes, you know,

do all that more effectively. So there are, you know, a couple more mines or bigger scale mines in your country as opposed to just slapping their hand when they're trying to buy something. God, you, you can see our bloody weird. What you thinking is imagine running the companies and liaising with these people. God, pick your eyes out. Yeah, bloody out there. What? You what? Essentially I've provided nothing off you. It's like I just don't.

It's just weird. Yeah, the only way could make sense to me is if the JV partner at Lang Heinrich who they have the off take. Right. I don't know if they've got all of it. I'm not. Sure. Yeah. So what if they had the if only if they had like to write a first refusal on any other future production from Paladin and any operation that would include that would include vision if they did. That's the only hypothesis that could actually.

But I don't think that just seems like such a strategy too. Yeah, it's like are they going to ban exporting uranium to China? Like that's it. I don't know. Who knows. Who knows what laws are going to come in. Sounds like there's going to be that many independent fricking countries and geographies in the world coming up soon possibly if Russia detaching itself from Russia bloody this. They don't want anything to do with China here.

It's it's very weird, but unfortunately they're all connected in the vertical integration of all this stuff at the moment of everything. So. Bring on the West Australian secession. Yeah. Well, we're at it. I'll be right. I'll sort it out in Parliament. So right now, good work boys. Love you work. Enjoy tomorrow's episode everyone. She's a bit of a Corker, JD interviewing one of the old school mining magnates of. Australia. You know who else we love? Maddie.

Who do you love? JD Love MMSI love them too. Like grounded cross boundary energy, Sandvik ground support God it feels good saying that name. How good is it? CRE insurance, Greenland and equipment K Drill, MTS, Australian earthworks and

haulage. And don't forget to use a Spark Charter. Right Urdu Money Miners Urdu The information contained in this episode of Money of Mine is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making any investment decision, you should consult with your financial advisor and consider how appropriate the advice is to your objectives, financial situation and needs.