Is there really a Copper “Shortage”?

G'day, money miners. We've got a exciting chat here with the King of Copper, Ahmad. And Speaking of the the kings of industry use Axis mining technology. The kings of true hole orientation and surveying give Sean a call. They always pick up the phone. Not good enough, JD. It goes like this. Access mine and technology of the trusted advisor and drill. I'll survey instrumentation. You need more access in your life 'cause you just know exactly where everything is in

space. Thank God you popped up Maddie. I'll hand it back over. So let's get into, let's get into some copper now. Thanks for coming on. No worries, I'm going to say the same thing I say every time I come on here. You're only as good as your last performance, so. If I farm here. You'll never see me again. You're putting the pressure on yourself there. So we've been, we've been planning actually this, this copper chat for quite a while.

It's an exciting one for for so many different reasons. There's so many big companies, small companies, analysts, you know, buy side, sell side that are just bullish about copper and it's a it's a super interesting space. You got from a geological perspective, different deposits you've got, you know, from the smallest miners to the biggest out there looking for these these projects. It's probably the most reported about metal, I'd say, you know,

by none out there. So I'm very excited and I think the kind of logical place to start this discussion is exactly they're just talking about those demand projections that we're seeing how the world is kind of going to get there, whether those projections are in fact going to eventuate. So you know, plunking that all on you. I want to kind of hear what do you make of this whole, you know there is a complete dearth of copper projects out there kind

of discussion point. I mean, I think as far as commodities goes, I, I don't think there is a higher premium in any commodity right now for finding a significant deposit in copper. I I think that is yeah, like, and, and a lot of that is driven by the demand and, and whether you believe the demand curves, like the timeline of the demand curves, all of those things, you can make a rational argument for both, both of those sides. All right, Like we are definitely going to use more copper.

Are we going to use it as quickly as some people are projecting? You know, probably maybe, you know, like copper is kind of directly tied to infrastructure and some places it takes a while to build infrastructure. So I don't think it's going to, you know, like you can make a rational argument that some people's projections are aggressive. You can make an argument that some people's projections are conservative, but in the end I think. You know, like to your point

that. There is I think no other commodity that has the an actual as well as a perceived premium tied to finding a deposit that will that will that will be a company maker or you know like a return significant value. And I don't think we need to sort of flesh out the the kind of bull side of it too much. I think the the audience, you know, very well understands that that is the the widely held

view. Yeah. But I'd love to hear from you. And we were speaking about this before we recorded today, the kind of contrarian take in it. There are a few of these out there. There is a few of these sort of takes emerging. And I think the yeah, so the so the current view is that, you know, we're not finding enough copper deposits and that's going to create this gap in the supply demand that we're going to have.

And that's true. You know, like we we are definitely not finding new copper deposits at at at the same rate that we were say 10 years ago or 20 years ago. I guess one of the contrarian views that that we talked about and I guess is the kind of the, the thing that we wanted to talk about here is that the sexy bit is, I think everyone says that we should make new discoveries. But there's a, there's a like a body of work that's going to come out.

And it's not my body of work. It's by two people named Richard Shoddy, who's who's a consultant on the Minix Consulting, another guy named Pietro Gouge, who works at the centre of exploration targeting at Ewa. And their study will be it's an upcoming paper in a journal called Geosystems and Geo Environment. So that'll come out later this year. But Richard will also present this work at I mark. So if you're going to I mark, you can go watch his talk. I think it's called What's the

real story of copper? And I guess what they've, you know, the work that they've done shows that if you look at existing assets, those, the, the resource growth on these existing assets is actually meeting the copper demand that we've had since 2010 till now. So, so the resources on these existing assets, so we're talking about mines that are already in production, you know, like we call them delineation

projects. So, you know, so they're delineating more resources or adding more resources to the inventory. And that has delivered twice as much the amount of copper as new discoveries have in the last or since 20/20/10. So the last decade or last 15 years now, you know, they've delivered twice as much on existing assets as they have now in that parlance of what we talk about, you know, this is say call it brownfields discoveries or you know. Expansions.

Really. Yeah. Like resource expansion, drilling. And so there's, so there's a few things and you know, like sometimes you call it exploration upside. You know, you have a resource and then you drill it out and it becomes double the size. But the initial resource was what you built the mine on. So you know, so, so new discoveries haven't quite filled the demand that we've had in, in the past. And they're not likely to fill the demand that we will have in the short term either.

Because if you make a copper discovery now, you know, it's probably going to be 10 years if it's a substantial copper discovery of mine for it to come into full production. And 10 years is probably pretty aggressive, like it'll probably be somewhere in the order like 12 to 15 years that realistically that you can kind of put it into production.

And I think, I think QB is the the case in point that a lot of people have in their mind and that was 29 years off the top of my head from when they first discovered it in I think 1992 to when it comes online and. That's why I'm and there's a lot of these. So I mean, the Lost Bronzes is another angular one that was stuck in development hell, you know, kind of like that Hollywood term of development hell for like, what, five years I think it was.

It still has challenges. Now Resolution's another one. You know, it's been stuck in this thing for decades. Several, you know, Supreme Court cases on that stuff. And these, these aren't, you know, I mean Chile, they're developed countries, you know, but it's not the quote unquote Western world we're actually talking about. And there's been a lot of, you know, arm raising about what's going on in Australia in the past couple weeks and what's been going on in Canada for some time now.

But can we just knuckle down for a moment on, on what's really holding up these these projects? So I mean, to start with, it takes a long time to draw them out and actually get a solid understanding, right? Yep. And then and then following that, you've got the same as in Australia, you need to get native title, right? You need to get government approvals. Water is a big challenge. Yep.

Are there specific areas that you think are or challenges that are under weighted by by the market at the moment that just take a long time? For, for, for. Like, yeah, I guess this is more a large, I guess it's more a porphyry type question. Yeah. So I think that the the two major challenges in porphyry tend to be usually community or environment, you know, like they they tend to be an environment, I'll use the bucket term like

water being one as well. Because the end, if you're taking water from one source, you're probably affecting someone else's ability if you use that water somewhere else. You know, so things like Pebble pebbles are really big copper deposits that's been stuck in Alaska because it's close to an environmentally sensitive area. It has Native title concerns as

well. But I feel like, you know, like we're kind of getting into a point now where community and environmental issues, I think we understand the risk with land access or native title, but I think we're probably now starting to understand that environmentally and community wise how these things can be affected. And the environment is, I think, just a function of that.

When you build these big minds like you can go to Google Maps and look at how big an. Escondido, Chuki Kamada are, you know, like they affect a significant amount of real estate on on this earth. So, so the chance that you're going to affect the environment in a certain way or community in a certain way is just higher when you're building such a big thing. Yeah, yeah.

And sort of anecdotally, given your experience in in Africa, can you comment on on development timelines as they sort of compare with with Latin America? Well, yeah, that's a good question. I mean, Latin America, I think it's probably becoming harder because, you know, particularly in Chile, you know, air, the

water is an issue. The other is like, you know, anytime you're building something on the side of a mountain that's 4 or 5000 metres high is, is problematic as it is. Yeah, like just from a labour force like, you know, like if you're asking people to work at 4800 metres or something like that, you know, like there's a whole another problem that you have to manage in Africa.

It's been, I don't think the development challenge is, is as big, but it's just more jurisdictional in that, you know, like the the government is not as stable as in places like Chile. So it's always a trade off. You know, you trade off the fact that you can develop things really quickly because the government is happy to take your development dollars and and the revenue that comes out of it.

But then the government, you know, like it may not have the same residency time as your asset does. And so how you how you kind of play with that? Actually on that jurisdictional risk side of things, and we sort of touched on this in our chat with Jon Ronsky as well.

Do you think there's also a bit of another reason why there's a lack of copper discoveries in the last decade is because perhaps more of this sort of copper prospectivity is in these risky jurisdictions and, and mining companies are too scared to to go there and commit the dollars and, and, and tap into that? Yeah, completely. I think, you know, like if you're, yeah, a company like BHP Real, you know, Anglo, Yeah, like your appetite to go into places like the DRC is probably low.

You know, like that's why you see companies like Ivanhoe that go into these places and and they find a Chinese kind of SOE that becomes partner with them because their risk appetite is different. So I think that's definitely the case where, I mean, I think, you know, like part of the cannibalization of assets in places like Chile and South America is because everyone wants to kind of work there and so. You know, so everyone's kind of

fighting over the same. You know, like same assets, it's the red ocean, blue ocean kind of thing. You know, it's red ocean, it's fixed assets and everyone's kind of fighting over them. And so the risk appetite for people to go and, you know, explore where others aren't, I, I don't think is as high as it's probably been in the past. Yeah. Do you think that's going to change over time? We we had a discussion with Sheppo and a former investment banking analyst out of South

Africa and he was very pro. The development of places like Zambia may be a bit less so DRC that's probably one step further in its challenges for a BHP or one of these sorts of companies. But do you see a world where BHP is in Zambia for example? Yeah, I think so. I mean, like, to be honest, if you're serious about copper, you're going to have to go to

some of these places, right? Yeah, I would advocate that your whole portfolio shouldn't sit in, in a, in a jurisdiction like Zambia. But I think you should be able or you should be willing to take that risk, you know, to go into these places. You should be willing to take the risk and to go to like places like IRI and Jaya or, you know, like PNG and things like that.

Because you know, like otherwise you're, you know, it's kind of like to some degree it becomes a know sum game, you know, like you're fighting over the same assets. So, so if you're happy to pay the premium to, to kind of push someone else out of the way, you know, like a BHP could probably do that, right? Like they could pay a higher premium and, and, and push other bidders out of, out of that kind of race. But that's not a strategy that's

going to work for everyone. You know, like the Techs or the Anglos, you know, like these guys wouldn't be able to go compete against the real big majors if they really had to get in that fight. So to, to pull the the chat back on the path of where discoveries have sort of happened and where expansion in copper production has happened in the past few decades. I've seen you've, you've put a chart here which will Chuck up on, on the YouTube talking about the, the changes in cut off grades.

And you know, specifically as it relates to some of the biggest operations in the world. Just a handful of these operations can change the landscape or add a huge amount of production in a, in a real global sense. Can you, can you kind of talk us through and like what the takeaways are from your perspective? Yeah, yeah. So, yeah.

So you can put this graph up and this is again from Richard Shorty's work, you know, so he had this graph where he looked at the top 12 porphyry mines in 1929 and then he showed, you know, like so at that time in 1929, they had 50 million tonnes of contained copper at that time.

Yeah. So, so 3 billion tonnes at 1.5% copper and so then you go to today with like and today was 2008 in that time and you know see these same mines now have more than 61 billion tonnes of .6 and so and that is purely a function of them dropping the the cut off grade. And so my earlier comment about, you know, like existing assets have provided twice as much as twice as much copper inventory as new discoveries in the last 15 years.

You know, one of the things that people will argue is they say, well, is that just a drop in the cut off grade now from 1929 to now? That definitely is a drop in the cut off grade. You know, like we were mining probably 1% copper or 1.5% copper then and now we are mining, you know, substantially lower grades. But when you look at this inventory over the last 15 years that's been added on the existing mines, that hasn't been

due to cut off grade. Yeah, that's been at pretty much the same kind of average grade that these mines have had for the whole time. So that's not a function of people just dropping cut off grade and just making the resource bigger. That's a function of them just finding this similar material they're mining, but just more of it. And the, and the point of it was that if you look at these top 12 mines in 1929, I think it's like 8 or nine of them are still in production now, right?

So like, you know, so for example, Bingham Canyon is still in production. Chuki Kamata is still in production. Morenci. Yeah, El teniente Morenci from Miami. Yeah. So a lot of these are still still operating. And this kind of goes back to, I guess one of the other things that, you know, we'll kind of get into is that, like, why do big companies look for these

things? Right, it's because they exist for 100 years and you can keep mining them for for essentially, you know, 100 years and you because you'll keep finding more and more material, you know, like for example, in the chart that which is made like you know, you look at it and you go so the total. Resource in 1929 in these top 12 mines was 50 million tonnes. And so from 1929 till now we have mined 136 million tonnes of copper out of those.

So, so we've mined three times the amount of resource that was listed, you know, like in 19301929. All right. I was just going to say quickly for the benefit of the money miners as well, just explaining what what a cut off grade actually is as well. Yeah. So, so cut off grade, and it's like layman's terms is basically your economic threshold above which you think you can make money.

So, so if a cut off grade, you know, like if you read it, if it says 1%, what you're effectively saying is that any raw material below 1% copper is something you're not likely going to make money on. So that's your economic line. And so as copper prices have increased, that line drops as well. So you know, say if the unit value of 1 tonne of copper increases, you can then mine lower grade material because you're getting a higher unit value. Out of it.

Right. And the example of this is like, you know, like things like diamonds or gold or higher unit value. So you can mine less gold for exactly the same economic payoff as mining something like copper. Perfect. So I'm very keen to go down the, the path of M&A and what the the major companies are looking for and you know Philo, these sorts of things that we've seen

lately. But to round out on the, the point about the, the shortage, you know, the the big question out there like are we going to have a shortage? What is the kind of consensus you come to? Perhaps not. I mean you can maybe break it up into a short, medium and and longer term time frame. I mean, like, so like, I mean, Richardson Pietro's work shows and in the short term, existing assets will fit, will fill any copper demand we're going to have.

Now, that doesn't mean that they're going to like fill this demand forever, right? Like resources are, are finite resources, You know, they're, they're not renewable. So at some point they will hit a line where we're not going to mine them anymore and they're going to shut down. So, so, so the, my, my point is that we don't need, it's not that I'm not saying that we don't need new copper discoveries. I'm just saying that I think we have to be a little bit realistic about that.

Our copper discoveries that, that this kind of rhetoric that's out there now that we got to go and find new copper discoveries, Are they really going to fill the demand that we have in the short to kind of medium term? You know, like I think that's unrealistic, but we do need new copper discoveries to fill the medium to long term kind of demand that we're going to have of copper going forward.

Do you think copper recycling will have any material sort of impact on perhaps filling that more medium to longer term shortage? I think it will, you know, like it recycling. I think if you look at kind of like when recycling programmes work and how they work, I think recycling programmes work when your demand is kind of fixed to some degree, right? Like so you can, you can recycle material and you can fill the the fixed demand that you're

going to have going forward. I think recycling will never really be a substantial thing if your demand keeps increasing because, yeah, like, yeah, like, and also, I mean, I think JD, you made the point, right? Like a lot of copper goes into infrastructure. So in order to recycle that, that would suggest that you have to take down infrastructure to to use that in new infrastructure.

And what we're saying is, you know, like we don't have the amount of copper infrastructure we need to build more. So I'm just not sure recycling is ever going to be a substantial amount in in that sense. You can't recycle your way to growth. Yeah, exactly. Like, yeah, I mean, like the recycling will, I think fill the void. And I think it's it's a good thing we should do.

If that means we have one less copper mine in the world because we can recycle enough copper to to fill that demand, then I think we should. And universally, I don't think we recycle. Yeah. Like, we're not very good at designing things in the way that we can recycle metals efficiently. But I think, yeah, definitely we should go down that path. But it's never going to be more than like a small slice of the pie, really. Right.

So let's talk about the exploration strategies of the major miners and following on, I guess we can talk about why specifically they are always looking for these porphyry style projects. And maybe, you know, you can throw in a couple of critiques of the way in which they size their beds or maybe why they're opting to to buy this build

projects themselves. Yeah. So they, I mean, so you know, like as a kind of a general view, you know, like there are several copper deposit styles you can go for and it and I find like, you know, someone that kind of views this market or has to comment on it, I find that it seems to be very like a bimodal distribution, right, That, you know, majors only go for very, very select deposits. Like yeah, like they will go for pool free deposits.

And for people that don't know, like, you know what we mean by pool freeze, Pool freeze are, you know, like these large kind of high tonnage, you know, big deposits, but they tend to be low ish grade, you know, like you're talking about. Like half a percent to a percent copper. If a pore free deposit tends to be bigger than that, you know, it's quite a unique kind of deposit in that sense.

And for, you know, like for anyone that's a part time geologist, you know, pore free deposits are essentially things that formed in volcanoes Once Upon a time. So yeah. So that's kind of like their

link. So, yeah, so majors are like predominantly only really looking for pore freeze and these large sediment holster deposits like the copper belt in in Africa. And there's a fundamental reason, you know, these things tend to be really big and they tend to have a great profile that they can mine these things

for like 50 or 100 years. And and so majors aren't interested in copper deposits that are say small but high grade, you know, so like things like what sand fire kind of goes after things like that in Spain. You know, these tend to be high grade, but quite small. Doesn't mean they're not economic. You know, they're quite economic, but they're not going to have the like the mine life that that interests a BHP or something like that.

And so, yeah, so I think it's, you know, like over the last kind of, I could say like 1020 years, I think there's been like a very like quite a divide in the industry in that sense. You know, like, you know, like we were talking about this, you know, there's not a lot of copper meteors now, you know, they've all been swallowed. So you have this kite like dichotomy. Like, you know, majors will only look for porphyries in a certain type of deposits and they're

only interested in those assets. And then there's juniors who realistically can't build a big porphyry mine at like 4 or $5 billion CapEx. So they'll go look for these small things, you know, like and then that's kind of divided the market really, really clearly I think. Yeah. I mean, it sort of seems to come from a place and this is probably far too blunt an assessment, but bulk commodities tend to to make serious money and, you know, smaller operations.

Yeah. You know, perhaps they're a bit more cyclical. Yeah, as one way to kind of put them. But you, you look at all the majors and it's, it's iron ore and it's cooking, cooking and thermal coal. At least it has been for a long time. That's right. And I think, you know, like you can understand, like, you know, a company like BHP really for it to kind of add the, the gravitas that it wants inside its organisation. You know, it really only goes for bulk commodities.

And my view is that I think mages really look at copper as a bulk commodity, right? So the sort of go after assets that filled the, that filled the kind of bulk commodity view of the world, right? They're not looking for things that have a mine life for 1020 years. They're looking for something that you know will will exist for 50 years or something. So we're talking about

porphyries. What other sort of styles of copper deposits are out there sort of for for the non geological minds and sort of what, why, why are they sort of what are the differences between that those and a porphyries as far as you know the grades and scales and sort of economics you can expect from each of them? Yeah. So that's a good question. Yeah. So porphyries tend to be, like I said, yeah, it's kind of like

like a continuum, right. So like porphyries will be at one end, you know, they tend to be really, really big, you know, kind of lowish grade that usually tend to be. Not very, you know, like they don't tend to have a lot of elements in them. So, you know, so they tend to be the copper or they'll be copper, gold or copper Molly, something like that, which which makes them easier from a processing. Point of view because you don't have to figure out where all the

elements are going. And so, you know, sediment hosted tend to be on on the same spectrum that they, they can be really big, they can be also small. That's a genesis kind of thing like how they get formed. But they tend to be usually copper or cobalt. You know, like and they don't get a lot of other elements attached into them. So these are the the Africans, the DRC. The yeah, that's fine. Yeah. And yeah, like in their yeah.

And then they kind of fit. I mean, like the Central African copper belt is kind of like the type example of them, but there's also like the Cooper Shifa, which is one in Poland. Yeah. So they tend to be this big deposits that can be mined for a long time as well. And then we've got the, you know, the Spanish examples, the the Matzes, Rio Tinto, the original sort of project. That's right. Yeah, that's right.

So they tend to be more of these deposit style called VMS or Volcan volcanogenic massive sulphides. And they tend to be like much higher grade usually on that spectrum, but they tend to have other things, you know, so they're often lead or zinc associated with silver, gold, you know, like all of these things kind of come in.

So they tend to be smaller, you know, metallurgically usually a little bit more complicated, you know, like they, they are a little bit harder to find as well because they tend to be a smaller deposit to find. So you what you find is like, you know, they're they're the deposits that you know, smaller to mid tier kind of companies go after. Companies that can't spend, you know, billions of dollars

building a mine. And that's the other thing you know, like sediment hosted and pull freeze, you know, the CapEx required for them on the economic side, it's almost always a billion plus that you know, like you're kind of looking to build. And then you know, like you have other things like, you know, some people target copper deposits which are associated with with nickel and mafic intrusions, you know, like that's another end member.

So some people target them, but that's like, you know, most people don't do it. Primarily they're looking for nickel, copper and PG ES and that that type of stuff that they find there. Olympic Dam type IOCG. Is that the other one? Yeah. Yeah. So IOCGS are another where you know, like there's some some IOCGS that can be mined almost like a bulk kind of operation. And so, so again, majors are interested in them. I think a little bit of that is.

You know, majors go in them, like particularly BHP goes into them because they hold Olympic Dam. So you know, so it's a deposit style, they understand, they understand the processing of it, they understand the complications of it. So you know, so they go down that path. But so like I said, like you know, to answer your question, there's deposit styles like IOCG, sediment hosted Porfree, that's it on one then which are CapEx intensive, you know, usually lowish grade but high

tonnage. And then there's another spectrum which is more the BMS and carbonate hosted and a few other deposit styles that fit in there and they tend to be higher grade, but much smaller, but very low CapEx intensity. Great. That's good summary. So I want to pivot the the conversation briefly to commodity price forecasting and I guess this layers in with what we'd initially discussed. We're we're pretty critical on the show about anyone's kind of ability.

And I mean, we just just listening to calls this week, you kind of heard it. You know, I think Chris Ellison said on the min raise, cool, I've got no idea where lithium is. It's going. I certainly didn't think it was going under 1000 bucks a tonne. And yeah, you can you can kind of see that across the spectrum, even some companies who pump a phenomenal amount of money into into the research side of things get it wrong.

And you showed me this this fascinating chart, which again will will pop up on the YouTube about long term copper forecasts. You know, I think they're kind of clumping together a whole bunch of analysts sort of forming a consensus view. But what what's your sort of take away and how you think about companies forecasting the the price of commodities? Yeah. I mean, I think as a general statement, I think we do it pretty badly, I think. And that's not, not just

commodity price forecast. I think if you look at forecasts of other commodities like orange juice and things like that, you know, like similar problems exist in in that space as well, is that generally most commodity forecasts tend to be really good in the short term, but they tend to be horrible in the long term. And and it's just because, yeah, part of that I think, I mean, this is just my opinion. Part of that is I think some commodities don't really have a relationship to supply demand

curves. They have more of a relationship to the futures that people are investing in them and speculation of what they think the future price of certain commodities is going to be. I think that's driving commodity price more. But the challenge for I think mining companies is that, I mean, the reason why I always like showing this graph is like, you know, when I worked in companies, we looked at consensus price forecast

religiously, right? And we would use those as a way of deciding whether we would build things. And then when I see this graph, which you guys report, and just to explain it, yeah, in that graph, the black line that you see is the actual copper price. And the coloured lines that you see that end up with a dot are the consensus price forecast of what people thought was going to happen over the next five years.

Right. So just as a general reference, the black line is what was the actual price. And if you connect all the dots that you see, the blue dots, that is what people thought was actually going to be the copper price. Yeah, in the future. And so you see that there's absolutely no relationship offset by about five years. It's a consensus price forecast.

And for example, on the graph you can look at like, you know, look at December 2005. So just after that, you know, the the price was nearly $5 per pound. And the forecast had predicted a couple of years before that it would be close to $1.00, right? Like that's not really like a sound mechanism to actually develop, you know, like whether you should go ahead with the decision to build things or not.

But, you know, we used to use these things as like, you know, like gospel, like, you know, we could not not touch these things at all. And then when you go and look at this, I mean, you go actually our ability to predict this stuff is we're in this, you know, like we're, we're going to be. Out by a factor of 5. Like, yeah, that's not really a good way to kind of operate. And that's. Pretty business.

Pretty scary thing, right? Because, I mean, this is one of the main tools companies are using to make decisions on, you know, whether to develop things or not. And most of the time it's wrong. Yeah. No, no, no. That's right. And so, so, yeah, so the, the, I guess, I guess I don't have an alternative to what you do, right. Like I wouldn't put you on the spot like that.

Yeah. And and so this so this is where I think kind of the problem comes and, and to back to, you know, like one of the topics we talked about is why do companies like why are they buying assets that I say producing now versus buying things that could be put into development is because you don't know what the future kind of looks like. Yeah. So, so it's much better to buy something now and you know that the price is probably going to

be right for the next year. So you know what what you're what you're kind of buying and how you can kind of optimise and then go and then. And if that works financially, I think then yeah, you hedge on on the price in the future doing something and and you can then make the the alpha that you want on that. By the time the sales process is closed, most that year is kind of gone and then it's all yeah,

yeah. Yeah. I mean, there's also examples, like there's a classic example of when BHP sold its coal asset in I think is in Colombia, you know, like, and Glencoe bought it, you know, like, and by the time that the deal actually got finished, you know, Glencoe had made so much money out of out of just the coal price moving that they could just like they could pay for the purchase of the mine through just that year's worth of price movement and, and the

revenue they got out. Of what a champagne problem to have, because I was going to say actually, while we're on that as well, I mean, I mean that's also sort of, you know, one reason why we're we're seeing a lot of people, you know, buying rather than, you know, slash building discovering. And we saw, you know, so the recent manoeuvres this, you know, the BHP and Anglo and then it went, you know, BHP London and and the fellow assets as well.

Do you say that sort of continuing going forward like that that focus of you know, sort of, you know, buying rather than building in in discovery? Yeah, I think so. I think, I think there's more risk in developing these big assets and and I think some of it is perceived, but some of it is is real. Yeah. Like I think it's hard to build these things. It's hard to build them on time, you know, without having cost blowouts and things like that as well.

And there's plenty of those, you know, stories around the traps. So I think, you know, so companies I think are now, you know, like probably happy to pay a premium to pay for something that's already in production that like that they don't have to worry about how, how they're going to make it work and they

can expand it along the way. And that kind of goes back to the, you know, the research that Richard and Pietro have done, which shows that, you know, like when an asset is already there, it's it's much easier to grow that resource base and add it into into production rather than have to go find a new mine and go through the permitting process of building it and doing all of all of those things as well.

So, yeah, so I I think people will happily pay a premium now for something that's already in production it. It makes the Phyllo example particularly interesting because the the the stab they had at Anglo was for producing assets. The Phyllo 1 is, you know, very family development. Yeah, that's right. It's, I mean, it'd be interesting to see how that goes along.

Like, you know, I mean, you know, like I'm not completely a fait with what Filo has done from a permitting side of things or whether they've gone down that path, but I think that's more of a play as well. Like, you know, you've got a number of substantial deposits close by. So if you can kind of put them together, you know, like that kind of gives them the scale of operation that probably a

company like BHP is looking for. So I think it's more of a play and you know, like how can you kind of put all of these things together so you're not completely dependent on one asset kind of working, You know, you can kind of make them work

in in a hub kind of model. On, on the point on commodity price for forecasting once more, do you, do you think this is something that people from other industries would kind of look in at the the mining sector and just not be able to wrap their head around how you know, you can't control, you know, P in your P * Q equation or you can just be so horribly wrong in, in forecasting. I guess it just hones in focus on controlling your costs, but that should be a staple in any,

in any kind of business. But I mean, do you think there's sort of gaps like that that lie in in other sectors that perhaps I just haven't spent too much time looking at? Well, I mean, yeah, like I'll kind of say this. I mean, one of the most challenging things about the mining industry is that the companies are price takers and

not price setters. You know, like the, you know, like if you're, you know, like if you're Apple, you can kind of set the price of your consumer goods to some degree. And, and you know, you can back it up with some level of marketing and things like that. You know, like if you had gone to set to, to, to say to someone that you could charge $2000.00 for a phone, you know, like, prior to the advent of smartphones, like people would have thought that was

ridiculous, right? But, but they have created the, the marketplace. I think now that that you can kind of do that, you know, whereas commodities, you know, like as a company, there's very few companies that get to set

their own price, right. So I mean, companies like Glencoe can kind of benefit from the commodity trading point of view on the other side, but but you're fundamentally not setting the price for genuine for a good reason, you know, like you know, otherwise it would be a monopoly kind of set up which which which wouldn't work for anyone. I suppose the, the kind of saving grace or one of the, the factors that the mining industry has in its favour is that there's probably a lot more

continuity. Like if you're if you're getting a world class iron ore operation, you know the the set of companies that had them 50 years ago are still around, whereas the set of top tier tech companies as your example was is completely different. That's right. Yeah, Yeah. I mean, I think that's, I mean, that's a really good point in that, you know, like, I mean, this is where I think This is why people like these long life assets as well. Like, you know, they exist for a

long time. Yeah, it's hard to replace them as well. Like, you know, if the Pilbara didn't exist, you know, like it'll be pretty hard to replace that amount of iron ore coming from like, you know, like 10 different kind of kind of mines as well.

And that's also, I think, you know, like this is maybe more of a, like a personal point of view is that I just think, you know, also if you're the executive for a company like BHP, you know, like it's, I would think it's much easier to have one or two kind of assets in your, in your portfolio that produce rather than having 20 assets that you have to manage and like produce

the same amount of copper. Like, you know, like operationally and logistically, that's a much bigger problem than, you know, like, I'd much rather take something like Escondida. I just have 1 copper asset that runs for a long time rather than have, you know, like 20 assets that produce the same amount of copper. But you are at different stages where you got to build this thing out, you got to expand this thing.

You know, that's I think a much more challenging kind of operation as well for a large company. I'm just churning in light, but as Ahmed mentioned, verify. Yet he's always been a serial verify mentioner. He. Has, although is there a verify model for Eskandida? How good that is? I've seen the one for for Kamal Kakula that's pretty good. Yes, yes, but yeah, that's well if it's good enough for Kamal Kakula, it should be good enough for Escondida.

Well, and as he's didn't he say like once in a one in 100 year discovery? Yeah, one, one in a 100 year, you know, And if you got people like, you know, Robert Friedland using it, why aren't you? Why? Why aren't you trying to find the next Escondida with a verify model? Escondida verify model would started small. It's growing into Escondida. Verify models grow proportionally to how much you drill and find. You know what Escondida means in Spanish? What does it mean?

Hidden. Verify it means hidden. Yeah, it does. Yeah, yeah, because it's like 500 means below the surface. Unlike you out love for verify which is not hidden. So prevalent. Explain your story. Simply go for news. Verify. News verify and go get an Escondido India. And the verify AI to actually find these hidden deposits. Yes, email Grant and even better, go have a beer with Grant 'cause he is AGC. If you're in Perth as well, Nathan. Oh, big knife, yeah. They're all over.

They're all over the world. Yeah, yeah, you'll see him at the bloody IGIS and everything. They're just everywhere. Go verify. Yeah, I think it's a kind of reflects on the the management and the CEO and how they are in their headspace and how they think about things.

It was interesting to listen to the the call with Brendan Harris at Sandfire and he held a similar view to to you there talking about not wanting to develop Black Butte unless it, you know, reaches substantial scale because it adds another time zone. There's a whole another workforce. Yeah, another office. And, you know, it's kind of refreshing to to hear that it's, yeah, like you said, it's so much harder to have all these moving parts around. You actually hone in on BHB, for

example. And it's perhaps not as confusing as people may initially think. You know, you've got 2/3 of the revenue iron ore, then you've got cooking coal now and you've got copper and there's bits. They're trying and they're sinking money into potash here and there. But they've done well to to simplify the kind of narrative in. The yeah, and I think that's the adage, right? You know, do do less, but better, right like, you know, like really know the businesses you're in.

And I think that's that's that's a much more effective strategy. And I think this like simplification also I think leads to why, you know, like to your comment about like

geographical spread. I think, you know, This is why also people concentrate on certain geographies or certain deposit styles maybe is because it's, it's much better like, you know, you remove degrees of freedom, you know, like, so if you're a company like BHP or you're Anglo, you know, you're in Chile, you know, like there's not a huge incentive to go take on the risk of like trying to develop something in the DRC or like sub Saharan Africa or things like that.

You know, like geographically, you know, you probably concentrated become a little bit more conservative because you know, that jurisdiction, you know, the way of how to work with parties and things like that, you know, like why complicated by trying to take on, you know, like 10 different jurisdictions. So yeah, so that I think realistically, if you're a business, you know, you want to take complexity out of your business. So it makes total sense why you want to do that.

I want to dive a bit deeper on on BHB. So you know, Olympic Dam is been there since they took over Western mining 20 some years now and then they've pulled in the the odds assets and they've recently for the first time come out with a resource at Oak Dam. So to start with, what were your thoughts on the the resource that that came out there? I mean, to be honest, I think it was probably a little bit lower grade than I thought it was going to be.

Yeah. Like, I know they have a high grade component, but I thought that high grade component would be a bigger portion of the overall deposit. The overall deposit is is quite big. It's it's, you know, it's probably the size of deposit they would probably look at as A at a minimum. But I think at that depth, you know, like it's probably. Needed to be a little bit higher grade.

But they'll probably still get developed, you know, like as an asset, you know, maybe in the BHP world that asset loses money. But overall, the business will probably do really well out of having having something like Oak Dam in there. Yeah. And and for those curious, the the numbers that sort of came out were 1300 and 40 million tonnes at .66% copper with .33 grammes per tonne in gold and the, and the ore body was starting at 650 metres sort of depth.

Yeah. So around that 6700 metre kind of depth. But this is where I think, you know, like, you know, there's some synergies in how there's some synergy in BHP taking over Oz because Oz is going through the process of developing Carapatina, which is roughly the same depth. You know, it's roughly the same grade profile as well. So you know, so they're going to probably learn their lessons there.

So hopefully Oak Dam should go a lot smoother because you know, like they've already kind of learned that lesson and have that corporate knowledge to, to how to mine Oak Dam. You, you talk about synergy from an IP sort of sense there, right? Yeah, because I, I mean, you know, like a BHP probably as a company, you know, like they're pretty good at large open pits, you know, like they're not, I don't think they have many assets that do large underground, you know, like bulk kind of mining.

Yeah. So that's where that expertise from Carapatina will kind of come in, so. We're going to apply the learnings there. Yeah, that's right. So that makes sense, right. Like, yeah, they're the same deposit style, same like geological domain really. It's going to have probably the same level of complexity. So it makes sense.

I think deep, I think underground, I think DSI and I think of like the deeper you go, the more concentration you need of DSI bolts in the ground to keep that bloody joint humming. Right. Bloody DSI set up a factory in a bloody SA with all this shit happening. Oh damn is oh it's pretty. Pretty deep 1,000,000 bucks a drill is isn't it? Every every drill hole was like a yeah, kilometre date, but I think the world works out.

It's like 750. Oh mate, there's going to be millions of bucks worth of DSI bolts and mesh down in that joint because who else would you buy them off? I don't trying to think. No, I can't think of anyone. It's just DSI. Thank God we've got them. Take off. Thank God we've got DSI in Australia. Go Australia. Go DSI, go, Derek heard. Get on the front foot, BHP. And So what are your thoughts about on sandfires, that position of Metsa and that sort of whole Spanish region as well?

So this is like, you know, like stemming off from our conversation, like if you're a company like Sandfire, like, you know, like what type of assets could you go and buy in, in the copper space? You know, like you're probably not going to be able to buy like, you know, an Escondido or or something like that. You're probably not going to be able to buy something like Oz, you know, like the assets they

have. So, so I think you know, like Matsa kind of fits, you know, like if I had to recommend an asset that that Sanifi would have to buy, you know, that's the type of asset that that you'd probably go for along with the company that they bought in Botswana mod, you know, like so you know, so they kind of fit in that right kind of profile. Very different price tags, yeah. Yeah, I know, I know.

So, yeah. So I mean, I guess Spain is, you know, like from a geological point of view, you know, Spain is like it's the, the belt is called the Iberian pyrite belt. You know, it's been mined since like the times of the Romans. You know, it's where Rio Tinto kind of became Rio Tinto. And so, so, you know, so Rio Tinto spent quite a lot of time exploring that part of the world. They didn't find anything big. You know, they found Las Cruces, but it probably wasn't the right size for them.

So they sold it. So there's been a lot of discoveries along that along that belt. You know, there's about 8 to 10 kind of decent discoveries that were had, but they're not at a size where, you know, Major is going to go in and, and attack them. So I think they're the perfect kind of area for for a meteor like sand file, which has growth aspirations to kind of go and go and take over. So I look at like, you know,

like why would you buy mats? You know, it's probably worthwhile to buy mats where you have a processing kind of centre as well. So you don't have to go down that path. Then once you have the processing centre, it's the old kind of WA gold adage that you know the person that has a milk and then they'll have gold from all these small things kind of coming through. Yeah, what happened? Spoke.

Yeah. So that's I think maybe the like, you know, I'm I'm just saying this as a external person that that's I think maybe their angle is that, you know, the get a foothold would get a keystone kind of anchor. And then a lot of these kind of other deposits start becoming live because you know you you are the only party that they can

sell to are. You surprised that we haven't seen any of that consolidation yet or is that just a factor of how much debt sand fire kind of took on and the fact that they might need to just you know balance the. Yeah, I guess, yeah. Like again, assuming that they would have probably predicted copper price to have peaked by now. So, so they would have been able to kind of go and and you know like a either pay off the debt so the balance sheet looks better or be able to go and and

transact on these things. So maybe they're kind of holding the powder dry until, you know, the market kind of allows them to to expand as quickly or as aggressively as they want. And actually on that consolidations sort of strategy as well, I mean do you think you know Sapphire as a say or just more generally a mid tier is perhaps the more capable sort of size company to do that sort of regional consolidation then

perhaps a major? Yeah. I just think, yeah, like the major would, it'll be too. It wouldn't be cost effective for them to do like a lot of these small things, you know, like even think like, you know, things like, you know, like when even a company like WMC couldn't kind of hold Cambaldo together, you know, like even those assets kind of became too small for a company like WMCWMC at that time was probably a mid tier, you know, like maybe a upper tier

kind of mid tier. But yeah, so I think they're just too small. Like, you know, you there, there would be so much lost between the the seat cushions for for company like BHP to try to put all of that stuff together that just wouldn't be worth it for them. There there was also speculation back on sand fire that they would scoop up Comic cow. Yeah, they ruled themselves out relatively early in the in the process there.

But the company that's ended up buying at NMGI think you have experience with back in in the mid sort of 2010. So have you, did you make an assessment at the time of what you thought of the, the price they paid the, the asset and these sorts of things? Yeah. So I think, I mean, you're right, Like I, I would have predicted if they'd gone after like a company like MOD, they would have gone after some of the other assets there as well. Yeah, like I'm not sure exactly why they didn't.

I mean, I think, I think they could have gone for it, you know, like the MMG asset is maybe not the same, same level as as the mod assets. So, so maybe they would have gone for that, like they went for the the best thing they could go for. But yeah, I'm not sure. Like I think, you know, like that's also another space. You know, there's a few deposits there that found in that belt.

You know, they've grown significantly since then, you know, like, so someone can come along and kind of put that back together. But the general view that I have is I think, yeah, like in principle, I think it's easy to say people should go and kind of put these things together. But I think the, you know, like the timing of when like the deal window for all these assets kind of aligns. You know, it's kind of like the Swiss cheese model, right? Like all the holes have to kind of align.

And I think that's, that's sometimes a little bit hard unless someone goes and is ultra aggressive and is happy to pay premiums to kind of get deals done because they know it'll it'll kind of amalgamate and, and, and there'll be the benefit down the line. How do you think about, you know, given you've got a a few years of experience on, on me that the the timing of you know, acquiring the assets as well as getting the financing done to to develop it if we're talking

about acquiring it? Yeah. So I think one of the risks that's kind of coming in now is that, yeah, like as a development timeline blows out, you know, the risk you have. Is that if? If you if you're developing an asset and you miss commodity price boom, then it's really hard to get that that money back, you know, like all over the time.

So I think that's why, you know, people are aggressively going after assets that are already in production because then when, you know, it's much easier to expand a mine and you know, I can mine more while you're sitting on the asset than having to worry about trying to get a government to hurry up or, you know, like trying to push environmental permitting through when when kind of the price is kind of booming as well.

So, yeah, so there's always these like windows where I think people are happy to pay that premium in M&A because they know that, you know, like when the the market flips, you know, like they're in the perfect position to kind of, you know, like take advantage of that price, price spike that comes along.

And one of the classic examples of this is, you know, like when when BHP bought WMC, you know, like, like for all intensive purposes, BHP wasn't buying WMC for for it's nickel assets, you know, but they bought it the you know, the deal was done in 2004, 2005 and then 678 was probably one of the the biggest nickel booms we've ever seen. So, you know, at one point nickel W was probably making more profit than other parts of BHP just by pure not not coincidence.

But yeah, it wasn't probably something that they had planned for nickel. To go to 50. $1000 per tonne and yeah and just be creamy money out so yeah. So they you know, so like the the numbers that I heard is like, you know during that time the the nickel business would have like far outpaid any of its costs for trying to buy that business at that time just over a couple of years.

And that was purely because all those assets were in operation, and all PHP had to do was sync the capital to expand them. And they did that pretty quickly, pretty aggressively. And then, you know, they were kind of off to the races. 11 region we haven't spoken about is, is Mongolia with obviously the OT being the the flagship asset in the area there. Now that's got a a long and interesting history with with Ivanhoe and then Yep, Turquoise Hill and Rio Tinto.

What what are your thoughts? Not on OT itself, but on juniors in in the area. In Mongolia you mean? Yeah, in Mongolia. I mean, I think that's, I think that's a classic kind of case of your question in that, yeah, it's probably a terrain that majors are probably not going to go into. So it creates a space for juniors to go in and then and then, you know, like, and that's I think the part where the really aggressive kind of juniors that are happy to go into those terrains, you know,

they can kind of do that work. And that's where I think their space kind of fills in really well is that they're happy to take that risk. You know, like they don't really have much on the line, so they can kind of go and do that stuff. And so the question really becomes is, you know, like when the junior finds something that's bigger than his boots, like what are they going to do with it? Like are they going to be able

to raise the money? You know, like if you're 100 million like market cap junior and you got to build a mine for $2 billion, like how how are? You going to? How does that work? Yeah. Like how are you going to do the even the like 6040 debt kind of equity thing, like how are you going to do that? Like you're just going to blow the company up if you go down

that path. So, so I think, you know, like sometimes, you know, like I, I, I think it's like, you know, sometimes juniors say they're going into elephant country to catch elephants, but you know, you got to be careful because if you catch 1, like, what are you going to do with it Are?

You going to get paid for it On, on the, the theme of, you know, juniors rolling the dice in, in Montgoli, is it kind of right to assume, given the, the depth and the scale of these, you know, elephants that you're, you're looking for? Yeah, that exploration is a bit more expensive, not to mention the, the remoteness and, and all these sorts of things. Is it harder to kind of roll the dice? Yeah, I think they, you know, like this is kind of I guess a

dichotomy, right? Like juniors are, are not the best agents to go explore in these areas because you know, it's remote, it costs more, you know, like especially if you add in the depth component, you know, that costs more as well. A junior company that has to that has no revenue and has to raise their money to go and and search for things that are expensive, you know, like are they the best entity to go and kind of do this work? So, yeah.

So in reality, the best entity for to do this work would be a major. Yeah. Because they like they can go spend this type of money and then it will be a rounding error in the stationary budget. It's so they would like nobody would care this happened and they have. To roll the dice a lot of times to prepare the fruit, which, yeah, it's hard to wear.

Yeah, that's why it's and this is where I guess I'm, I'm a little bit critical about when, when major sometimes say that they're looking for these, you know, when they say they're looking for an Escondido or something like that. Is that I think, I think like genuine, like genuinely like we've had one Escondida discovered in the last 100

years, right. That's probably not a great thing to go and explore for, you know, like what you should look for is slightly smaller things that could probably become an Escondida. Alright. And then that's a strategy that Rio is kind of adopting now. Yeah, they look for Tier 2 like large tier twos, and they're hoping that they become a tier one while they're working on it along that lines. Speed it into shape and make it a Tier 1 exit of the time. Yeah, yeah.

Or or like, you know, like market conditions change and from like it becomes an economic tier one, right where where you can kind of mine it and then and then pass it on. But then, you know, like that kind of conflicts with with this strategy of having a mine that can just, you know, look exactly the same for 50 years, you know, like that, that that's the problem for them. I like that. An economic tier one. Yeah, Yeah.

Not a geological Tier 1. No, because I mean, once you've found the resource, like, you know, like the resource relatively doesn't change, right? Like it's, it's, it's fossilised a long time ago, but it's, it's just our, our economic perception of it or our ability to mine it and all those things that, that change over time, you know, like, so the resource is a resource. It's like, you know, if it's 1% copper, you know, like there's not much you can do to get it to 10%, right?

Like, you know, like it is what it is. You also think it's a bit of a, you know, let, let explorers do what explorers do well. And then, you know, when it comes to that Inflexion point of, oh, the multi billion dollar CapEx bill has come come through because they've discovered this big thing. Then that's that's the time for these big guy or mid tiers or majors sort of to to step in.

Basically, yeah, completely. I think, I think it's like, yeah, it's a fundamentally different skill set, I think to go and do like grassroots exploration as opposed to mine development. You know, like I wouldn't advocate people that are good at doing grassroots exploration to go become mine developers, and I wouldn't advocate mine developers to go to grassroots exploration. You know, there's fundamental drivers in that in that sense.

So I think like, you know, so companies that have historically been really good explorers, you know, they tend to be explorers, you know, they tend to hold on to that kind of kind of moniker. Whereas, you know, large companies tend to be really good at building, you know, assets and building mines and running them. You know, like they're probably not the best agents to go go and explore in certain areas. So I think that there has to be that kind of dichotomy.

It's just a question of how do you incentivize each party along along the path? Like how do you incentivize juniors to do that? How do you incentivize large companies to to accept that, you know, maybe they're not going to be the best explorers, so they should create an environment where other companies, juniors do a better job, but they still get to benefit out of it? Have you got thoughts on the the framework that we discussed with with John Ronski, his aggregator

kind of model? Is that something you've spent time thinking about? Yeah. Yeah, quite a bit, yeah. Like I think, I mean, I think John's model is it's probably the a good jumping off point, right, That the, you know, like a John's model really comes from a part of you. And you know, like him and I have had these conversations a number of times that, you know, like we've had these conversations on this show as

well. Is that the funding model doesn't incentivize people to go find things in an appropriate time frame or to actually find the right things either, right? Because juniors can't raise the the amount of money that they would realistically need to go find something. Alright. So, so, yeah, so if you could take that funding imperative out of their hands and you could fund them appropriately, then you could get to a point where they, they could hopefully be better at what they're finding.

And you find this in, you know, like this is not a novel idea. Like you find this in the startup world about and, and, and most of the VCs or accelerator programmes that are really good at, at taking companies through, you know, they fund companies all the way to an appropriate point for them

to develop their product. You know, they don't go, we're going to give you a million then, you know, come back to us in a year, we'll think about whether you're doing things right not and then we'll give you some more.

You know, like often the best accelerator programmes are like, you know, we buy a story, we're not going to give you $5,000,000 to go execute it. Now, if you crash the car along that way, that's OK, We take that risk on, but you know, we're kind of incentivizing you to get all the way to the end of your your kind of product line. Yeah.

And also taking the the appropriate amount of bets, right, If you, if you look at like, I don't know, Y Combinator or something like that, Yeah, yeah, when you're taking two batches of whatever it is 20 twice a year. I mean, I did the numbers. So Y Combinator is probably got to be somewhere around 4000 companies now that they're that they're invested in, right. I mean, that's over a long time,

but still, yeah. And then out of that, I think there were at last time I counted there was somewhere around the 3000 mark, 3200 mark or something like that when they had done 11 unicorns, a billion dollar companies out of that. Yeah, one strike, one Airbnb, a few drop boxes and those kinds of. Companies and it pays so. But that but that, yeah, like, and you and you talk to people in Y Combinator, you know, that was their strategy. They were going to take a lot of bets.

Like that was the whole model. And that means they were going to burn a lot of cash along the way as well. But along the lines, you know they they have made far more back by just taking a lot of bets. Yeah. We've sort of seen that in the mining world to some extent with BH PS Explore programme, which you've sort of spoken about before.

But I mean, could you also say that playing out more with majors or mid tiers during strategic investments or JVS or you know, something along those lines into juniors and sort of having the exposure having or some sort of smaller level of exposure and then sort of wanting to take that further. Once you know safe something's discovered or something gets to a more economic size and they can sort of step in and and take

it from there. Yeah, I think, I mean, I think there's people that have done that, you know, like a company like South 32 at one point I think had so few people in this exploration department that that's the model that they had to use. You know, they, they work with other companies, you know, they funded them to do the work. And then if it got to a point where it looked interesting enough for them, then they would kind of take over. So, yeah, so people have done those as a as a general

statement. I'd say people haven't done it at enough of a scale or for long enough to actually see that kind of fruit come through like Y Combinator has been running for. Yeah, it's been like 12 years or something now. All right, So they've done it for well over a decade consistently. Yeah, even even longer, I think. Yeah, I think so. I mean, like it's at least a decade old, right? Like it's got to be more.

And you know, so like you said, you know, they take two cohorts every year, you know, without fail, they fund them, you know, they go down that path. And, and if you look at, you know, like the early years, you know, they didn't have much success for, for a while, you know, because they have to get their own ecosystem of how they're going to help founders

to kind of go down that path. And, and so I think, you know, like one of the things that we haven't been very good at doing here is that I think people do it for a while, but then when they don't have early success, I think it's harder to maybe justify running them and and people end up bailing out of them. So, so I think, yeah, like maybe a bit of residency time in those would be good as well. Yeah, it's fascinating how many sort of things could be learned

from a process like that. Like it's very structured in that they always took 7%. I forget what the exact number was. Correct. Yeah. They. Might have been like they pay you, I think it's like, I mean these numbers might be changed now, but they pay you $125,000 to get 7% upfront depending on what stage of company you're in. And if you meet a certain hurdle, then they'll put in another amount which is again for another 7%, you know.

So all of these things are kind of fixed along the way and. Then they pass you on to the the set of growth and investors and they they make that sort of connection. That's right. Like quite simple. Yeah. I mean, the the idea of a group of these sort of wealthy individuals as well as endowments and everything to potentially come into the mining industry and, and change the game.

And you know, another feature of them being private companies is, is another attribute where you see the, the markup in valuations is, you know, a much smoother line. You know, it might be an artificial line, but it, it's another potential learning that could get investors more comfortable with, that's right, with mining. So. I mean, this is like, I mean like, you know, to back to like John's kind of aggregator model.

This is something that you know, like I think him and I both agree with is that I think some of the early capital will probably be better to be private. You know, like I think it's hard for junior companies to go and do you know, such, such risky things and, and have to like you provide market news and all, all of that type of stuff.

You know, like I think that ends up being maybe a distraction not just in their execution, but also financially ends up being a distraction in the amount of money they raise and things like that as well. Probably not the best use of their capital as well. Yeah. I mean, I think, yeah, like, I mean, it's not the best use of the capital if they're not appropriately funded.

You know, like if they're raising, you know, $3,000,000 for say, three years, you know, like half of that money is probably going to go into listing costs and all, all of the other things that they have to do, you know, like auditing and all of that stuff. You know, like, is that the best use of of kind of like money in that sense? And yeah, like, and there's people that have looked at, you know, like how companies have spent money.

And what you find is that, you know, in a in an environment where capital is not that available, you know, like the the part of the company's costs that get cuts is the in ground spend. You know the rest of the stuff has to be a baseline cost that has to be maintained.

To keep them going. Yeah. So then, you know, so in times where capital, when when people think capital is least efficient because and then they take it away from the market, you actually incentivize the companies to become even more inefficient because now they're just spending that money to just survive for the next little while. The the time as well, the amount of time that a geologist running these companies might be spending on the road trying to drum up more capital if that

could. And yeah, it's, you know, there are similarities for private companies. They still need to raise money and stuff. But that's why the amount of flow on benefits. And we do have a lot of the things that the US have. We have got wealthy people, a phenomenal superannuation system here. We have the mining expertise.

It'd be. I mean, the one fundamental difference here is obviously is that the amount of like the quantum of money that it takes to to get to a decision point as a junior exploration company on the project is quite a lot more than what a lot of startups can do, right.

So, yeah, so that like I, I fundamentally understand that, you know, they especially if you're like a technology company that has a SAS product like a software as a service product, you know, like you're talking about a few $100,000 to get to a point where you could have a product that you can take to market. And, and, and do that, you know, like that's probably not realistic in, in exploration, you know, you're talking about a few $1,000,000 to get to to at

least a minimum kind of output. And so, you know, so to back to John's kind of model, that's, that's part of the reason that the aggregator model was that it's like, you know, if you know, you're going to have to spend this much money to get to a like a realistically conceivable proof of concept or, or key decision point, like, you know, why wouldn't you try to make that money as, as efficient as possible rather than wasting half of it on listing fees and all this other stuff that goes

on. Beautiful Ahmad, I think we almost solved all of Manning's problems there. But yeah, thanks again for for coming on. It was great to chat about proper and I'm interested to see what we chat about next time. Sounds good, thanks a lot for having me again. Here's Aman. Also a huge thank you to Axis mining technology, mineral mining services, verify smack power and technology, DSI underground, Silverstone, CRE insurance, Greenlands equipment,

K drill and use a spark chart. While you're at it, Odoru. Money miners. Odoru. 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.