Mega Copper M&A Manoeuvres

Right eye buddy Waters. Welcome to another week, Jay Say welcome back. You're a regular. You're gonna be a regular cause the fans love you, Trav. Jason, could you friggin imagine if on the weekend you're drilling some exploration holes in your jar? I broke. Can you imagine that? Bad, bad, bad. Stand down costs everyone money, but if you're using Axis gyros 24/7 they pick up the phone and they will ship on the weekend. Life saver.

Law absolute absolute godsend of a company and I'll tell you what money miners yeah bloody ring him up this week and you drop money of mine to get a free trial. That is a deal Sean. He's numbers in the shy nights. Give him a ring. 22 week free trial. You got today. Flying out the door, mate. Travel. You're going on the big landscape. It's like we're not building. We're buying these days. And OHS, no. Maybe BHP's building. Yeah, maybe Ryo's buying.

Yeah, that anyway. But there's some, there's the two biggest, you know, miners that we think of when we think of big mining companies. There's deal rumours about big copper, deal rumours about them going around. So we're going to talk about BHP, Lundeen, Philo and we're also going to talk about Rio Tech. My Dolly snapping dog shit. It's bigger than the Trump assassination scandal. That story. Right now Bellevue come out with the early quarterly.

Now I can only surmise that they've put it out. So I did not have my attention diverted to any other mining companies and they wanted me to give it a full suite of a segment and I've done. That there's a carton on the line, Maddie. There now, yeah. Well, I think my landscapes changed. Mixtape Cheese Say you've done a bit of around the ground. Around the grounds with a disgraced quarterly.

Today we got the Lion town done, small offtake and also Mika Metals as. Well, Oh yeah, blowing up some bloody cheap mills. I like the way they're operating. Like it. Right, Let's get into it. Trav's big news from the big miners. Is M and I about to? Really. It's rumours about mate. Really start happening. Yeah, I'll start with the more material, more material sort of deal on the table right now.

Well, look, BHP has apparently been approached by Lundeen to put forward a joint bid for Filo Mining. Late late Thursday, BHP actually came out with the news of nickel W would go into care maintenance until at least 2027. We didn't get a chance to chat about that on the body potty cause we, we, you know, we ripped the show by then. We put up an interview on Friday.

So made big news. I suppose the one, the one thing out of that travel was like shows how much money they'll probably losing if they're willing to pay for $150 million a year to put it in the care and maintenance, Phenomenal. Dreadful. But yeah, I was. I was that. I was like, geez, this is big news. Didn't impromptu Twitter Spaces, Tommy Wallrich jumped on, Koala jumped on.

We barely talked about Nicole West, but we did, you know, have a pretty interesting chat about the state of capital flows in the mining industry. It was actually pretty insightful. So don't know, maybe maybe we put it as a bonus audio only episode on on Wednesday. So yeah, if you watch this on YouTube, make sure you jump on Spotify or Apple or whatever. And so you can get that one on Wednesday. Mate, nothing defamatory and Twitter spaces that one. Bloody risky though.

Twitter Spices. I'll have to read, listen to it. Actually, I'll probably said something I shouldn't anyway. Now to the actual news though. So Friday, on Friday, fellow share price showed up as much as 10%. And then it gets gets halted, right? Lundin mining shares briefly dip and then recover.

And there's this story that emerges in Bloomberg saying that Lundeen has approached BHP to pitch them to jointly bid for Philo. There's some context that is important when we talk about Philo and Lundin and everything like that. Unless you've been, you know, paying close attention to the Pecunia district dynamics, a lot of that context will probably be lost on you. So I'll, I'll try my best to summarise the higher level points for the for the money miners here.

The Vacuna District in is is an emerging kind of copper super district, as you know, high grade, well, sort of lowish grade, but you know, there's just copper porphyries, large, large, large scale copper porphyries almost everywhere. And then I know, I know little Lacey isn't isn't a poorly, but there's just buddy Copper everywhere and it's all in this kind of condensed district called the Koonya. Which and it's sort of chilly Argentina, it's near.

The ball, yeah, yes, correct. Yeah, it's the, the, the, the, it's not without its obstacles like, you know, there's, there's water politics, infrastructure, like you said, you know, into country kind of dynamics. But the size of the prize looks worth it. The, the, the tenure kind of most of it all used to sit within Lundeen.

The Lundine spun out NGEX and Philo into separate listed vehicles so they could independently fund the drill out of the, the various kind of perspective projects that were within that package. Simultaneously, both Philo and NGX have independently had like a lot of success doing just that. Lundin Mining, however, owns the the most advanced project project in the in the region are being Jose Maria. In fact, Jose Maria is Maria. Jose Maria is permitted to finally ready.

It's in San Juan. So Jose Maria is it's it's not as sexy a project as Philo del Sol just to the South of it, as you can see in this map here. But Jose Maria is permitted and Argentina now has a supportive regime, right? You got Miley very pro business. You know, there's just the time is now in Argentina if you think of it so.

So for the Lundens who who think about the long term, planning the development with the long term in mind means optimising for the synergies to be realised with Philo too. Now, London Group retains a 33% stake in Philo and BHP owns a 6% stake in Philo. So is there like you might have this later but can BHP only do something if they're on board with the land deeds here? Like the landings have a lot of control over the area. Massive. I mean they retain 33% of fellow so BHP can't.

They can't do anything without the support of of London Group. So it's a little bit if you can't beat them, join them. Well, yeah, I mean, this is that were that were separated from the from the London from the London group into this independent vehicles. And that's enhanced the acceleration of, you know, the timelines of this whole super

district. And and now in order to actually get, you know, sort of the the right funding and the right infrastructure in place, there's got to be some reunification plan because the funding's kind of got to be in a collaborative sense about the whole district rather than just the independent

project level. And that's where, as you stop stuck Subsec article written in February last year by the Koala, you talked about this scenario where the Lundens could actually emerge with a fully funded pathway to develop Jose Maria via takeout of Philo and a partnership with BHP. Given the developments on Friday, it's it's aged relatively well. But in a nutshell, he reckons Lundin Mining would end up issuing stock to Philo

shareholders. Filo shareholders would potentially also get a spin out of a royalty on Philo del Sol, which could be worth a lot of money. BHP would commit to $6 billion to you know sole fund Hose Maria CapEx and in exchange get a 30 between 30 and 49% stake in the Koonya Argentina, which would you know be in a JV which that Vicuna Argentina would involve both Josemaria and Filo del Sol. Jesus cross spinouts, JV's and fucker.

That's unbelievable isn't it? That are spinning all that out then spinning a royalty out there, having a JV for the whole thing. It's phenomenal, isn't? It, well, yeah. And it's a, it's a nifty kind of potential funding strategy that could, could be pretty attractive to, you know, all, all three parties there. If you think about it, London mining gets control of the development then because they retain, you know, they retain majority interest in Pecunia Argentina.

So like they'll actually be in control of the development pathway. Jose Maria is effectively fully funded by BHP. And recall London minings market cap is only like 9.2 billion and the, the CapEx there is at least 6 billion. So it's, it's, it's challenging to fund that on your own and then Lundens get a partner to fully fund that, which is pretty attractive.

And it would allow free cash flow from Hosea Maria to go towards the pre strip of FILO and which is kind of pseudo funded by BHP if you know what I mean. It is bloody nifty eye, but guys, better than nifty. And like, on top of that, you know, if you, if that, if that royalty spin out a part of it as well, it's, it's a pretty interesting kind of proposition for, for fellow shareholders too. So let's see what actually

emerges in time. But the logic for the deal is, is pretty compelling, you know, for all of them. I think one of the key considerations for, for Lundin mining was they'll sensitive about potentially, you know, requiring a vote of their own shareholders. And when you issue more than 25% of your, your, your stock shareholders need to vote on that.

That's where the fellow royalty, you know, can play a role because it basically reduces the number of shares issued in Filo Mining to go to fellow shareholders. Taho that that role to You might have said it before. Who's who's gonna hold that royalty? It would it would be a this spun out, but you as a a fellow shareholder owner today would would be entitled to a potential. I mean none of this is like really Daniel, this is just Koalas conjecture at this point.

Like would that that sounds like that would end up in a friggin Franco Nevada or something. Or not. It'd be a separate. Separate spin out listed vehicle, which in its own right could be yeah, pretty, pretty attractive standalone or could ultimately end up taking over at

depending on training dynamics. But you know, you could imagine a world where it's worth a lot of money because the I mean some people have like compared if you like Del Sol to to Escondido and imagine having like a a 2% NSR for a fucking long time. Exactly. Talking like 100 years of my life in these giant sort of projects, and that's like a royalty with 100 years of my life is pretty fucking attractive. Royalty and shit, yeah.

I think with this hypothetical, you know would do you think BHP would potentially take issue buying the minority in that JV? They, they pretend, I mean, like, yeah, I'm sure, I'm sure they potentially would, but it's just about having like who, who's really who's really who's really gonna be calling the

shots here. Because the, the, I think the reality is like the Lundens have far more say in how this is going to go than measly BHP who owns just immediately 6% of Philo and you know, not more, not much else.

This is going to be like a deal on the table for BHP to step up and say yes to. I wouldn't be surprised to see, you know, if BHP is not there for it, then I wouldn't be surprised to see, you know, the equivalent proposition put forward to the Sumitomo's of the world and things like that. And you might actually get, you know, like it might not be the same stake, but you, you might see some real, real contributions from the Japanese trading houses instead.

But like, and if you think of BHP right, they've, they've talked very recently, I think it was their, their own head of copper said super recently that they're much more interested in, in buying than building. And this is building, not buying. And it's a, but it's a deal on the table for them right now. At the time when copper growth is, is, you know, such an important objective for them. I, I, I think that they should pull the trigger on this.

I don't know what their final, you know, proportion of, of a, of a JV they might end up with, but it's also don't know how HP really makes, makes their decisions. But yeah, you know, in a, in a world with very little attractive like copper growth, this is attractive copper growth. And the, the Lundens, it's not like they're like they're that that's a great partner to have.

They're super, super well regarded and like, not too many, not too many people have phenomenal working relationships in Argentina. Guess what the London family does? Yeah. And, and it's pretty light. And it sounds like this could be the only way that BHP will get exposure is working with them. And it's similar to, again you'd say Riyadh stake in Escondida. It's not the big one, but they've got exposure to it. Yeah, with BHB, it's not as big as BHB's.

And this might be what BHB has to do to get exposure to this district by not being the big dog, just being the partner. They're really attractive thing did I see for the landings in it all is if is if they can yeah, like basically shuffle the free cash flow of Jose Maria into the pre strip of of of Philo.

If it was if it was BHP in control, would that be would that be the location that BHP chooses to allocate that marginal like free cash flow or would run through there their capital allocation framework and it might not, you know, go go to that location on the timeline you wanted. So it's a really attractive proposition to me if if mundane, retain operating control of that region and they can, you know, really just shorten the timeline to to bring Jose Maria online as

much as possible. Sorry to bringing Filo del Sol online. It's possible. It seems to me it's sort of like you were saying, Maddie, like BHP seemed to be happy to sort of forgo their previous thoughts around M&A to get this, this copper exposure is worth it more to them. Wonder if they'd be doing this if the Anglo deal fell over. Yeah, well, who knows what they're gonna come out with and if they say yes or no to this, But yeah, I, I, I got no idea. Maybe you got no idea, but

probably not, I suppose. Yeah, it. Hasn't happened yet. Hasn't. We're talking about in the theoretical. Sense, but we're trying. You're that fucking far ahead of the market like steps ahead. You're like you're thinking that you're thinking about next week's cuts underground. You're not thinking about getting the one on the deck today. No, this is what separates you from the pack. Thanks, Mattie. There. It's just good vibes. It's an inclusive environment, buddy. Right? What?

So what's happening with Rio then? So that's the BHP. Specification. You'd think BHP would would steal the show, but apparently Rio Tinto has moulded takeover offer for tech. This is. This is an interesting story and there's a big time pack here too. But according to Sky News, yes, Sky News, who isn't exactly known for breaking stories in the mining industry. They say that Rio Tinto had drawn up detailed proposals for a potential takeover for Tech, including approaching banks

about financing a deal. That same article says a source close to Rio said there was no imminent takeover offer for Tech, though. So I think there's some important context here. Firstly, it was it was literally Thursday last week that tech completed the sale of its 77% interest in Elk Valley Resources or VR. That's the the steelmaking coal business, which they divested to to Glencore for about 7 billion U.S. dollars.

But it's a really, really like top quality coke and coal business that tech is one of the few companies with a fantastic kind of copper growth pipeline. And with that divestment of VR, there's like no more fossil fuel exposure and its production. With the ramp up of QB, they reckon they're gonna double copper production to 600,000 tonnes per annum this year. So of course, mostly pure applied copper company with growth is damn attractive to the major miners.

Fascinating that this deal, potential deal leaks literally the day after Elk Valley, um, divestment kind of complaints, but. Anyone would think, Rayo said. Oh look, if you get rid of all that, maybe we'll come to the party. Ohe yeah, yeah, yeah, yeah. Getting a deal done would be, would you know, would absolutely not be straightforward though as well, right?

Because if you remember, last week, the Canadian government literally, literally said it would only green light foreign takeovers in the most exceptional circumstances. So it's the exception, not the rule. I think this one's a lot bigger than 1.3 billion. Which one? Yeah, that was the threshold. You know, potentially $30 billion kind of take out would be involved and I don't imagine it would be a a particularly straightforward pathway to control on the shareholder

approval. So you got the regulatory doubt, which it's the exception, not the rule that Canada would allow it. And then you've got the complicated shareholder pathway as well. So tech, they've got this stupid dual class voting system. There's Class A shares and Class B shares. Now the Class A shares get super voting rights and they are largely controlled by the civil family in in April last year it was agreed to phase out the dual share structure in six years

time. But they they still exist today and for all intents and purposes, the key for family still have the ability to to defend any Rio Tinto offer in their own right by way of these super voting shares. Codes. The Caval family? Never heard of them. Just really. No, they've got like 4 generations of of history with with tech. It's yeah, it's one of those like, yeah, really well established mining families over in Canada. Ah, right, there you go.

They sound rich. They. Probably gotta gotta couple of Bob to him. Yeah. Evil family, There you go. Yes, as today the like you know, the keepers have not been particularly receptive to to unsolicited offers. Didn't Glencore bid for the company last year? They certainly did Allie. It was, it was emphasised by Gary Nagle, the CEO of Glencore that, you know, the, the offer was, the proposed offer was, was script merger. So textural holders would retain upside exposure.

And if the Rio rumour is true, it sounds like they're planning at least a partial cash over. I mean, they talked about getting financing in place with banks. I don't think you do that unless you planning to be with a good chunk of cash. Ultimately the Glencore bid for tech, which was implied, you know, value of 23 billion in, in Glencore script last year got shelved and then a deal to just buy VR instead sort of went through. But the, the tick tacking between the companies back then

was, was really fascinating. In fact, I want to play this brief snippet from a BFA conference last year Text CEO Jonathan Bryce. Morning to you all. I do understand that in his presentation this morning, Gary Nagle made reference to tech. Now Gary and I have had the opportunity to chat several times over the course of the last year. And interestingly, I've learned that Gary and I actually have quite a lot in common.

We each had long careers in mining, we're around the same age and we're both relatively new to the role of CEO. And as it turns out, we both want to run tech. I think I remember you playing that last year. Yeah, pretty funny. That was yeah, mate May last year for reference. Look, I think it's I think it's too early to really get in the weeds. I wanna deal could look like and like I said, it's it's a complicated pathway to control for Rio or frankly any mining

company for that matter. And and throw in the fact that the possibility of more interest from other miners to Koala mentioned on on the spaces that we did the other night that that the final home for violates base metals business would be tech. So there's, you know that that's that's another possibility throwing throw out there as well. I'm leaving leaving kind of vile apparel focused on line or so.

Yeah, I mean, look, the the the marsupial is keen to follow up Thursday night spaces with an Australian appropriate time zone. So it might have a chinwag at 7:00 PM per time tonight on on those two stories as well, which is very much in his his wheelhouse. They are the big, the big, the big M, and a big, big end of town. MNA Maddie. Yeah, nice. He would. Azz. You can't see what he's wearing

on spaces. He's probably got a nice dress shirt on. He was, well, he was much more succinct than usual on on Thursday. OK, Koala. Yeah, you would. You would have actually. You would have actually liked it. Retained some of it. Yeah, one last comment just on just on multiples. Alright, so, so I just wanted to simply talk about the EV EBITDA multiples of some of these listed copper producers.

I put it on this table here a little D next to the ones if they're big diversified miner and the others are, you know, mostly pureplay kind of copper miners. And these multiples aren't perfect. It's it's based on kind of consensus next 12 months, some of them are ramping up substantially. So next 12 months isn't really representative of steady state on have or anything like that. But the point is pureplay copper companies command. Much juicier multiple than the

diversifies. Take take Freeport for example, just as the benchmark there, you know, you could think of them as like steady state, not much ramping up of new production. They trade it, you know, above 8 times next 12 months. Ever compare that with the diversifies, the larger diversified miners, which you know, traded around five times? Yeah, I can. I will. I can. You can see why bloody Ivanhoe's frigging screaming at at 14.8 times. It's not because of bloody Robert Friedland, did you say?

Saw it in the director's special The Bloody Ivanhoe Verifier model. But. That got that, got the absolute shit clicked out of it on the. Newsletter It was the most click thing in that day. Yeah, yeah, yeah, there. There's your bloody multiple proof. Like, look, I couldn't believe, I'll bring it up here. I couldn't believe the frickin blanket of copper that is at this joint Air is just a metric, absolute shit tonne of copper there.

And look, I wouldn't have known that if it wasn't for Steve to John and the team taking me to the mine via the Verify model. Virtually mine tour, social site tour, Save me. Look, I didn't get the frequent flyer points if I flew to the Congo, but I didn't have to pay the cash to go there either. I went there via the Verify model I thought. About sits in the DRC and I thought, you know what, I'd much rather stay in Perth and just click through the fucking

verify. So stay in the Verify team. Thank you very much. Anyone, anyone just Google verify Ivanhoe mines model Ivanhoe verify model site to it and you got the whole site too. You see the whole body it's bloody brilliant. So look if you want your you wanna trade it 15 times and just make your life great like mine is now. Get bloodier verifier model granted verify dot. Com and get the verify EBITDA multiple rewrite. Yeah, yeah. Easy, easy. Simple, right?

Bloody. Yeah. Right. So what would? OK, zooming out, Trav. Yep. For the Rio side. What do you think? If if the story is true from me, it would suggest a couple of things. Firstly, like three months ago, Rio Tintos Copperhead said he sees much more value building mines rather than buying existing assets.

So an acquisition of tech might seem contrary to that statement, but it's a bit nuanced, I think because text cop portfolio, you know, includes growth assets which have pretty attractive capital intensity about them as well. Unlike, and then the other point is like, unlike BHP, Rio actually has a really attractive copper growth profile ahead of themselves already. Over the next five years, it's going to grow from 700,000 tonnes to 1,000,000 tonnes per annum, mostly thanks to Oriental guy.

So if if we were still hungry for more copper despite it having a pretty damn attractive growth profile, that that says something. Yeah, yeah. What are they? They're expanding Olympic Dam, aren't they? Yeah, proposing too. But comparative or your toggle, right? Yeah, you know. Get the bloody double whammy there. With you. Told Uranium. Dwarfs Adam, yeah. Yeah, yeah. Bloody fascinating. Good stuff, mate. OHS appealed. Look, God, that's gonna be some big news segments that'll fill

us out there. God, man. God, they better not. Both happen at the same time, far right. Well, I don't think they're, I don't do this too much of the radio tech one just yet. And it sounds like you really think you get approvals. It might be the last we talked about that one. But the the BHP like fellow Lundeen, that's the story and I think that's going to that's. Probably the best thing. If it doesn't manifest with HP, it'll manifest in another way

with someone. Else I'd say it's been stewing in the background for a while. Yeah, now good stuff. Right on to the next, uh, Bellevue Gold add 36 million to the balance sheet that they said free cash flow 41, but they added 36 million to the balance sheet. The definition of free cash flow should include first interest repayments. Yes, cause it wasn't a principal repayment, it was a capitalised. Interest not capitalising interest and then classified it as principle and then paid down

that. And therefore we don't wanna upset the CFL again. But anyway, as I said, they thought of, they obviously didn't want me to get distracted. So I've just we've done a full segment for him. They got it out early. Bloody good on you. So look, 36 mil for the quarter, pretty bloody. That's a bloody good result for mining ramp up. We don't know payables and everything but that's just what what we know today.

Like considering W Guild only added 16 mil last quarter and they they're unhedged and don't have any debt. So look well done to the bloody Bellevue team. Sure it's it's fucking hard to build them on and they've done it and we've seen numerous cases recently that haven't lasted the distance. So Congrats to all involved, I'd say let's let's get into it, my Bureau butter and a mop of it

before we get into the. Segment I was gonna say, mate, you're you're much more complimentary than you were just chin wagging beforehand. Well, just just there's always questions, there's always questions, but I feel good now. Alright, so they've still got debt of 219,000,000. I'll bring up the waterfall chart is so 5 million was paid off is like debt, it's interest. Yeah. So that's so they maintain 219 mills.

So they've got the neck, the there's a principal payment coming up in 30th of September. So that's 6.8 million they've got in restricted cash. So the Argonaut model has them repaying about 60 million in debt per annum. So it takes it out three or four years before that that quantum is is pied off, so. And what are you boys thinking this water flow chart? They've broken one of my rules, site expenditure, including growth capital. What was one of my rules, Maddie?

Gotta separate. It separated, right? What do you like? What's your growth cap? What's so they've they've they've grouped apex with whatever they're spending still sinking a shaft and all that sort of stuff for vent. Like I want to see that separated. You can't say you didn't inform everyone, Trav after your brilliant segment. But anyway, let's just like, let's light the waterfall chart. Let's get on to the nitty gritty.

So they, they processed 2. I'll bring up the table of the physicals what and I guess what, what can we summarise from it? They processed 240,000 tonnes, so pretty bloody close to that name plate, 1,000,000 tonne per annum. So it looks like the mills, the dirts getting through the mill, but they only mined 200,000 tonne of awe. So effectively mining hasn't kept up with processing. And you could also say there was a lot more capital development

than operating development. So the operating advance is about half of what it was in the last quarter. Operating development is pretty much the old development plus everything sort of close to the your. Once you get past all the the escape ways and the stockpiles and everything, that's when capital development turns into operating development. It's all the operating developments, the stuff that goes to the ore. So odd surmise from that. I reckon stopping is right up

the ass of development. Like the development isn't shit loads ahead and I think probably a better development pressure on, which is always going to be a challenge in in hard ground because you're just trying to get bloody as far as you can ahead and putting all your capital infrastructure in. But the rock just won't let you get there quick enough. So that's that's my prediction. Was gonna say merry for the money miners and for the non technical heads out there like

myself. Can you explain what the difference is between development and stopping or? OHS yeah, cause well, that's funny is it will cause and that was the other one and I'll I'll I'll on the back of this. So stop stipple haulage 167,000 tonne, which is about what they need every month. And then but the development or was down because the obviously the development advance is down.

So you, I remember, I think it was the Northern Star, one of the quarterlies previously there, they said they target and I'm pretty sure everyone's saying they're targeted about 2/3 stopping all and 1/3 development or so your development. Nor is what comes out when the Jumbos developed the ore drives, the four and a half by 4 1/2 excavations tunnels that you'd use to get the machinery in. And then the stopping ore is what comes out between the two

the development drives. So that's like the big bloody narrow mining, the bloody gold vein and and a bit of shit around it. That's your bulk mine and that's where that's the money maker. But The thing is that's how you get the most or out quickly is the skipping all but the development or like say with narrow vein mining, which is what this is not all of it, but most of it is you have to mine 4

1/2 metres wide. So I bet you're stops, you might try mine them as thin as possible to just get the vines out. Might be, you know, two, 2 1/2

three metres wide. So you're grade for your development drive is lower because you're taking more waste on the outside, whereas the stopping or you're cutting it a bit Luna. So if you have too much development or and you're not getting enough stopping or out, your overall grade gold grade is lower because you're diluting it with more development or hopefully then the stopping or catches up, which means lower grade through the mill. So that's why they target 2/3 stopping 1/3 development.

So that 167,000 tonne that they got out of stopping for over 250,000 tonne run rate is bang on 60. That's 67%. So that's 2/3 striping. But because of the development, they looks like there might be a bit behind getting to the next level of development or they or they didn't have as much and they'll probably focusing more on capital. The development was down, which

bring the total down. So, yeah, so look, looks like there's a lot of work ongoing to properly set up the ventilation, the pumping and the power infrastructure. Because there, there there was a comment, comment in there saying that explicitly signed infrastructure will like continue into FY25, which is talking about the, you know, pump, pump stations, ventilation drives and I shouldn't ventilation rises power, which is like substations. And that will help increase development rates.

And look, because the challenge with Bellevue is not not just the hardness of the ground. You look at the verify model here again, publicly available is that it's a very laterally spread out mine. So H or body like because it's there's one over here, one over here, one over there. Yeah, like, you know, you independent ventilation for those areas, independent pumping infrastructure, more substations

to get the power over there. So it's it's a lot more to set up compared to, you know, compared it to Spartan before when you've just got sort of one decline going past each or body, you can then pump all the water out together. You can set up the power independent, but at the same area such that it's just a challenge of the way the all body is. So and because you got more, more vent, more substations, more stuff to set up that can chew up the jumbos because you need more.

It's more capital work. That's all class, That's capital. But the more capital work you do, the more you take away from getting to the all quicker. It's more stuff to set up. So and just it it just slows. It can slow the mind down while you're setting all this up because you you're waiting on getting another substation in. So you might your power might be tripping you waiting on getting vent drives in and rises pulled through.

So you might be getting our vent to get enough trucks down to everywhere to get the dirt out quicker. If you haven't got the pumping infrastructure set up, means you might be pumping the water out quick enough. It's all flooding the decline all the time and it just, it just slows the whole operation down. It just feels like they're still in that they are ramping up. They're still in that phase of getting the infrastructure set up. This is what happens.

Yeah, Yeah, it's fine. Fuck it hard. It's easier talking about it on a body. I can tell you that. That's why I give it away. Well, I'll just, I couldn't cut the mustard. So yeah, I think and I, I think all of that combined is linked to the fact they're processing recovery was 90%. Now, you wouldn't think that would. You no, no, because the what the feasibility study was 95%.

Yeah, I think they were above 95 like per load, but I don't think that you can directly relate that to having it out of the mill because the mill, the mill has been designed for, I think the reserve grade was 6.1 grammes. So you can say that the Deacon load high grade is like 9697% metallurgical recovery. But when you run it through a mill that is designed for 6.1 grammes, you can't just Chuck

high grade in and get that. It's gonna like it's optimised for that, that grind or and I'll get to why that so and so why, why would the processing recovery be low? Because and as I said, the Montanans are less than the processing tonnes because you want that the other way around. You want you want to be building up stockpiles on the ROM side that can be fed into the mill at the optimum blend.

So you want to get your high grade ship, which is their Deacon stuff and the low grade other stuff. Blend it down to get it at around 6 and then you know that you're getting the given that given the best chance to get the best recovery. And look, they're great. They're Stockport. Their processing grade was six.

But I'm, I'm, I'm thinking because if the mind dirt is chasing the processing dirt, especially the fact that they're in, they want to get a good quarterly out, they're in ramp up. So you have a high grade dirt sitting on the room in and it's friggin 3 weeks till the end of the quarter and you gotta leave it sitting there waiting for some low grade stuff to come up to blend it in and maybe not feed the mill? Or are you gonna throw it in, get the answers and sacrifice a bit of recovery?

I reckon you gotta throw at it once you get the cash because I need the cash. I made the market to show that they're producing the answers, which means you sacrifice a bit of recovery. And I'd say that's might be what's happening because they're chasing their tail a bit, getting the dirt up there. So we're going to get so much more frigging info by the end of the month when they release the, you know, the production and cost guidance and where the

mines going. But can I or can I only No, I won't say that, but you know what I mean? Or can only do what I can do? Do you know what I was about to say no. What were you gonna say? I look, I look forward to seeing what I was a bit disappointed not to get details of the cost guidance and FY25 guidance in this quarterly, Maddie. So now we gotta wait till the

end of the month. I couldn't remember if they said it was going to come out in the quarterly or maybe that's why the quarterlies coming out early and get that like going out later. And then I'm reading broken notes about a potential plant expansion to 1.5 million times per annum. And I just, I, I don't know, I just always that's always read these things and just like I, I couldn't quite. So there's obviously an analyst site visit and now that analyst is writing about a plant

expansion to 1.5 million. But I can't understand why why you why you do that expansion now or why it wasn't your base case. You're just body built the thing. Why don't you build it the right size to start with? Or is it the right size now and this? Is just yeah, yeah, Great story.

I've. Got a bit of a I've got a bit of a theory cause then that was in the front page of and read that out yet that they've stuck commenced to a scoping study for a processing plant expansion from 1 to one and a half million tonne per annum. Think of might relate to what I was talking about before about this.

Blending like this is because to do this, you you'll have to, they'll have to bring forward, I would assume additional mining areas that aren't included in the plan as of yet that will, you would assume be lower grade because if they're higher grade, they'd be trying to fucking mine them now. But they're going to, you know, bring forward other the other areas low grade that weren't included in the original plan.

So, and as we've seen from, because we gotta find half a million tonne a year that which means more gear, more areas, more it has to come from somewhere. So we've seen from the infill drilling of that Deacon load, which is the honeypot for Bellevue, it looks like the grades are looking to be higher than originally forecast. There's that high grade shoot that they were talking about.

So there might be like a a positive reconciliation because they wouldn't have they wouldn't have wanted to overcall the Deakin in that stage two study because they've real fucking committed. Then you always want to under promise and over deliver, especially when dealing with high grades. I don't know they and at no point did I get the impression that Bellevue was under

marketed. Definitely not under marketed, but really you could, but they could really shoot themselves in the foot if they aren't conservative on a real high grade or body that could have variance.

So and it looks like there so there might that might be yeah, might be a thing might not be. So if if that is the case, if it is over reconciling and the mills being designed for this frigging 6.1 gramme reserve, maybe expanding the mill and bringing on some lower grade areas is not just about adding more ounces to the profile, which it will, but it might actually be about giving them more flexibility to blend down that Deacon load to optimise the plant recovery.

Because if we've if we're if I'm right in saying that they've had to haven't had the material on the rum to blend the Daken lie down and they've had to throw out through maybe getting more lower grade and getting more stocks up there gives them a lot more flexibility to maintain to optimise that plant and

recovery. So I'm not not sure like look and it's more answers which would hopefully mean more cash, but it is more capital cause like look that extra 5% recovery that they say they've sacrificed 5% recovery this quarter at seven and a half million cash on the answers they produced like because that would have been sold at the spot price.

The thing I don't understand ready and if if this is the case and further Trev Trev's point before this would have already been known before they started binding, so why wouldn't they have started this at one and a half million tonnes to begin with? A lot more capital they would have been a lot more debt, a lot more risk. I think staged approach is. That's why. Is it? Doesn't every all body have an? It's a perfect an optimal rate at which you can mine it.

Not when they're spread out like this, because they they do when they're when it's like I guess one U1 going down. But when you've got additional areas that you can go mine independently, no, it doesn't because it can, you can set up additional mining fronts. You do need additional capital and additional fleet, but you can add to it a lot easier when it's laterally spread out and independent like this, so. You know what a cynic would propose. Ohi, I reckon it's exactly what I'm thinking.

Too, Well, it's a, it's a, like you said, it's more capital, but it's a, it's a positive spin on more capital and. It's a it's a story. It's a story, but you know, I mean, I don't know, maybe I just you wouldn't you wouldn't you wouldn't be surprised to see us a growth story kind of now, now, now that we've proved where I'm cash flow positive, you might be able to take some of the some of the, you know, medium term stress off the the hedging and the debt repayments and stuff

like that. If if you have a bit more better capitalization and yeah, and you have a growth story. You're talking about a capital rise. Maybe. Maybe it's a it's it's building up as a potential story to wrap around a capital raise, isn't it? Oht could be. Cause that, that I saw one number floated for the mill expansion at 80 bucks. But that's, that was just a

research not. But then you got the if there's additional mining fronts to be mined, that's additional development capital for the mine as well to create another half a million tonnes. So it starts starts creeping U and if the God if there another one to keep the eye on is because if they have development is a bit of a bottleneck there, then develops. They're doing it and like they're probably the quickest at doing friggin underground

development. They're a bit over halfway through their contract there as well. I think it was a bit under 4 four year contract. I think they've been there two and a bit years now. So it'll be interesting to see if they return depending on develops plans, if they retain the contract there or if they go down their own owner operator routes with developed something to keep the eye on there. But they having them there doing the development is a freaking pretty bloody important, I

think. But yeah, I think there's. Yeah. Well, with 219 million in debt, there's potential to fund it with operating cash flows, but it remains highly levered, highly debt leveraged and a lot of everything's got to go right to keep producing that operational cash flow, which look, it can be done. Or Will and I've got a bit of cash balance here. I don't know what they are trade creditors position is right now because I didn't report that. Have to wait till till a later

date for that. Yeah. But then yeah, like you say, there's a yeah that there could be, there could be like they're in the deck and load, which is happy days. And could you, could, you could cash fund it or, or you could look to be prudent in a, in a time when you've got a full valuation and equity fund a growth plan, but also also, you know, over, over, over fund their growth plan and. Take the pressure. Take the pressure off the cap structure to know each other.

Go. Yeah, I sound like you, mate, because last time I bet against them during cap raise and you bet that they would. And now I'm coming the other way. I think you've gone the other way. No, I, I still still got my eyes peeled, put it that way. It's just like they're, they've and look, it's they're, they've just been adamant that they're not going to cause they want, they want to be the management. They wanna be the next Capricorn sort of thing. Executed fully, pretty much fully funded.

They did do that bit of a raise last year. That was for the Tribune decline. I'll add a few raises. Yeah, yeah, yeah. But like for the project was. There's a lot of equity that's going into this. Yes. Anyway I will get will get more info by the end of the month for the production and cost guidance because yeah, it's one of those ones you'd want to say it like. And what I guess what the market and myself are looking for is a keen look.

If they are a fucking aluminium or a potash producer, I wouldn't give it this much attention, but it's underground mining and I love it. So shoot before it. But you you wanna say, you wanna say mining outrunning processing and hitting that 1,000,000 tonne rate before we even start thinking about getting to 1 1/2. But but there's yeah, it sounds like there's still a lot of once that infrastructure gets properly set, U yeah, wanna see those physicals bloody

outweighing each other. So yeah, but look, cost guidance. Just scrap those friggin days. DFS numbers, yeah. And that and that should not be a surprise to the market that they're going to be much higher than the DFS you would anticipate. Yeah, I don't know. Just don't know what brokers are running through their cost assumptions. And there's a lot of yeah, yeah, holds or or buyers with the target price just above current price and stuff like that.

So what if they had to revise lower on the cost? Does that actually hinder, hinder the share price? I don't know. Yeah, don't know. Yeah, buddy. Love it. Love it. Our goods go morning. Go fighting. Actually going off on a bit of a tangent. We were talking about it this morning, the the Trump assassination attempt, right? Over the weekend. Just absolute madness, right? This is like literally the stuff you say in movies. And look at this picture here, right?

I mean, look at Trump. This is an incredible image regardless of what side of politics you're on. He's literally just been hit by a bullet. The Secret Service, allegedly. Allegedly. Depending on the conspiracy theorists, you listen. To the glass off the teleprompter I've heard. But yeah, anyway. The Secret Service is all rallying around him to protect him, and he's raising his fists to the air to all the supporters.

I mean, no matter the adversity he encountered, he's just dedicated to his cause and his country. And the only person I know that is more dedicated than Trump to his cause and country is Maddie Hall again. With solutions. Maddie Ohl making water grade. Again, making water great again. If the Gateway bladders weren't already sensational enough, Maddie Hall has now got a brand new offering for the miners out there. Bladder rentals. OHS really? Bladder rental? Rental bladder.

You can now rent a bladder. Yeah, right. Try before you buy. Try before you buy. Yeah, goods that. It's like bringing back Blockbuster, but for bladders. Yeah, yeah, cheap, cheap Tuesday. Get a pizza in the bladder. But with Santa and party ready to go, how? Good is so good. Buddy Hall so you could get What do you get for Jay on a rental? So you can rent out a get wet bladder to your mindset for as long or as little as you need.

You get the full get wet service with installation and all the supports included just as if you were buying one. It helps miners reduce their CapEx. I mean, what more could you? Want so is there more? You know what, I don't know? I don't know if you can get better than that. I mean, like big props to Maddie Hall and the teams dedication to putting clients needs first. They're backing the bladders. Go get wet and go straight. Have a look at. Look at him here.

Look at him with his. Look at him. Flawed. Go get. Go get wet. And go Australia, lover. Good, good work, Jason. That's bloody. I can't believe you found that image. That is, it's a powerful thing, mate. What's going on around the grounds, Jacey? So the first one, first cab off the rag. Grey put out their calling in Ding Ding Ding. I am a shareholder. Lots of cash.

Cash, lots of cash. So they ended the quarter with $867 million of cash in the bank and that was after raising 600 mil or 600 bucks, sorry, during the quarter, so much cash. They've earned over 5 million of interest just for the quarter. They should be earning more than that soon if they get in A5 percenter that's bloody 40 bucks. Well, that's 600 only came in late. Yeah, yeah. So they should be getting about 10 mil 1/4 after this interest. Yeah, fantastic.

You want equity returns, not fixed income returns. As a shareholder, I don't. I don't want to. If I could interest the bank I want share share it. At least it's paid for. The bloody, The raising. Fees OHT. The clips, That's weird. So the key takeaway is there's not much new news. Credit approved term sheets was you know received from a syndicate of banks for a $1 billion senior debt facility and an additional $130 million cost overrun facility that was

announced during the quarter. Degree saying that the that debt package and existing cash are expected to fully fund the estimated capital cost of Hemi. I like the use of the word expected there formal docks on the project financing is anticipated to get all sorted by the end of this calendar year. Nath and EFA, the two to government agencies, are considering participating in that debt syndicate. So that new news, I didn't, I didn't heard them.

Before that was, I think that's the first time I've seen them that was included in the in the quarterly so. How do you feel about that as a taxpayer? Well, given that most of the other no funding hasn't gone that way, hopefully this time it's different. I mean, I haven't really dabbled in gold too much, so it'll be interesting to see how this goes. I mean, a lot of their previous forays have been in what, like bauxite, potash, Carrie. You know, sense.

Mineral sands, all of that so and final debt drawdown is primarily subject to the receipt of enviro approvals and FRG by the company. Looking at the enviro approvals, the second section in their quarterly, it seems that like they're progressing but on the slower side. Just quote from the quarterly. These approval pathways are consistent with those published in the HEMI DFS from September 23, although the timing of receiving such approvals is

uncertain. Lots of progress and various items on the project development front, including expressions of interest to contractors for a PC or APCM bids for the Hemi plant. And we saw also a few days ago the release of the Hemi regional study, which adds like around another 140,000 oz per annum to Hemby between years 4/9. Fuck this, I'm going to just sign it to grey. Makes me nervous. Hmm, what? What makes you nervous about it? Maddie, let me go through my nerve wracking reasons, right.

1.2 green refractory deposit. That is fucking huge. It is being built as a huge operation. I'm like, is there is there a a chalky risk to this that it might not be that big and get downgraded in the it's not as big as everyone thinks it is. I don't know if that's gonna happen. It's in the bloody pill brats. So it's going to be dealing with friggin cyclones all the time.

And it's like imagine the imagine the quantum of randomise that would make the Oz that are attributed to any cyclone delays up there. And yeah, it's just, yeah, there's so many moving parts. It's a brand new, I know you can recruit anyone you want, but a, you know, a new company to build one of the biggest gold mines, definitely the one of the biggest recently built gold mines in the country. And established in the process, but one that does not exist here

in Australia yet. No, no, it's yeah. Makes me nervous. And. Ding Ding Dong. Yeah, and a team that needs to prove themselves, not one that is proven. Nah, and talk about a friggin trial by fire. It's but yeah, it's just, I don't know. I don't know. God, if it was fucking 1/2 grammes, maybe there's a refractory.

Well, as you say, just a .1 gramme a tonne movement when you when you're mining or you're processing, I mean in absolute terms it's not huge, but in the case of a 1:00-ish gramme per tunnel body, that's 10%. Yeah. And that, that's 12%, that's a guy. Imagine a freaking 10% variance in the recovery if the pox isn't work when it performing like yeah. That's so not without it, some without its challenges, but very keen to see what. Happens like travel.

I think you got listened to by some people from the Fr. I was listening to the Chanticleer. I didn't listen. To this the other the other day. What would they say? Shout out Macca, the guest, the colleague he had on. I forget it. I'm sorry, No apologies for that.

But she actually talked about mining and I think I don't know if it was specific about mining, about impacts of rainfall being negative, but and she said that there's never been a mention of cost of guidance uplifts due to better than expected rainfall. Oh really. And I feel that that came from you. Is it Miriam? Yeah, I think it was. Miriam she So she writes Rear Window. She listens to the shout out Miriam. That would be why.

She's the one that wrote the cram care article off the back of our work that she got from the she got the inspired from the party. Ohe shout out, I'll just bloody confirm it was her cause I'll sound like a dickhead otherwise. No Vesna. OHP fuck. Sorry, Miriam, it wasn't you it was based on. Yeah. So yeah, give trap credit next. Time. No, no, no. I'm sure she got independently. Right. It's good. Jason, what's next?

Line Town quick update, they added another off take for initial ramp up volume, so 100,000 tonnes to Beijing Sino mine over 10 months commencing this September. The pricing is a little bit different to some of their existing offtake, so it's going to be determined using a formula referencing market prices for battery grade lithium carbonate, not spodumene index indexes. But the sign this the pricing is the same as all the other pricing is that you never know

the pricing. Yeah, pretty much, yeah. And in addition to the the existing long-term off takes they've got with Tesla, LG and forward, this one will be and this provides them with a bit of flexibility to sell spodumene that may not match the product quality specs that are in their existing Co off take agreements and the expected delivery before 30 September. I think it's quite interesting is you wouldn't do that if you weren't pretty bullish on your ramp up going bang on. Hmm.

So that's that one there. Right. I saw, I saw that one. They're they're pretty they got a lot of contracts in place in the early years now. And yeah, like, and I think I raised this round, they came out with the connote. But like, what happens if they can't meet all of the contractors problem, right? Yeah, Anyway. Gotta buy it off someone off something I don't. Think it depends on the sponge mean spotlight, it depends on the terms.

Not not all of them are not all tax structure that way and oftentimes you off takers will be flexible when you have challenges. But I'd love to know the details of that one. That's probably an easy answer to it, but. Yeah. And last one for the day, we had make a medal. So they picked up a 750 kilowatt ball meal for their merchants

and Gold project. It's claiming to expand their processing capacity by 30% to 640,000 tonnes per annum, cutting back some of their ball mill CapEx compared to the DFS and reducing the the lead time as well by 33 weeks.

So it's expected to be on site this September and by doing that sort of allows some previously excluded answers from their recent DFS that were excluded due to mill capacity constraints to come in. And also some ore stockpiles that have built up in the, those initial years to be taken advantage of with the, the expanded capacity. And they're doing an updated DFS off the back of this, uh, later

this year. And I think that would dragging out the sort of the processing life based on the mill capacity and the last one. Yeah. Probably compressing it. Now compressing it now, which is much, much more sensible just to get that cash flow more of it up

front. Um, and the funding that with an existing secure bridging loan which they announced the other month, which they also used to buy some of the camp infrastructure from De Grasa, which is not too far away, which was also at, at a fraction of the defects CapEx estimate. So I think a good proactive move by maker to sort of minimise costs and, and lay times where they can. We are expecting credit approval for the the main project finance facility for Murchison this month.

The DFS has 44 mil in pre production CapEx. They're about A50 mil market cap company last I checked. I expect the, I would expect the project finance to be around that 30 mil mark sort of give or take 5 mil. And then obviously they'll have to solve for the balance, you know equity or some other alternative.

But you know, even if they get sturdy million in project finance, that's still 15 mil, they'd have at least 15 mil because you'll have a bit of working capital leading into going into production as well, which you know, 15 mil equities around 30% of the current market cap.

So that's pretty chunky. So I'm keen to see what sort of financing solution they come up with saying as we haven't really seen a single asset gold developer come into production super recently, well, there hasn't been many. So I'm keen to see what they come. Up with daily Macquarie funding it. Yeah, Nah, Nah. At least it's like it's brownfields, at least a lot of existing infrastructure and

mine. So it's not like you wouldn't say it's easier, but it's like it's a lot more established than yes, slightly build. No, we've seen how bloody hard it is to build a brand new one from scratch. It's a prick of a spot to be in when you're on that small cap end and you're you're trying to sort financing and the whole market knows that you're there might be an equity portion and they don't wanna bloody couldn't they just wanna wait for the. Equity that. The joys have been on the

smaller end of town. Yeah, tough going. No good on it. I like I like this sort of shit. I can get the dribs and the dribs and drabs around the joint. Saving money they got got a lot of skin in the game. The boys that are running it. So the treating it like a business.

I like it. Yeah, hopefully, hopefully, hopefully it's it's a palatable debt quantum that comes to market because yeah, some of the historic troubles is you put too much debt in it really high risk to bring new developments on mine and on online. Sometimes that the structuring of whatever project finance is in there is to onerous for whatever hiccups come along and equity has to buddy save the day which is bad for shareholders. So hopefully that doesn't happen

this time. Yeah all these cars you'd rather have 30 mil than 219 yeah, but you'd rather have a lot more oz too. So true to pay off the 219 have good work JC fucker love avid Yotti. You know, you're on it most weeks now. Yeah, just like. Yeah, you got my weekly segment. Below it. Another day that we have too much news I didn't even get to talk about. The Rumble in the Jungle is a bidding war on Frasier Rotor. Could you believe it? Anyway, I can't believe that.

Unfortunately I just have to save it for another. Day oht mate, there better be no news out tomorrow so traffic can give you the bloody Sierra Rutile the attention it deserves. Quarterly season? I doubt that's the case mate. I know Bellevue threw a spanner in the works getting it out early today or pump me up for a Monday, right? I thanks all the bloody partners. Axis morning technology.

Remember the two week free trial if you ring Sean and sigh money of Mon Primark guide mineral mining services MMS verify get wet solutions to DSI underground Silverstone CR insurance WI waterboards kidro. Sorry, yeah. Else what else would you use than Spark Chart? 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

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