Picking Small Cap Gems with Matt Griffin

Maddie in this chat Spartan and Middlesex gets mentioned and Ding Ding Ding for JDI. Righto money miners. Another bloody great yarn delivered by Axis Mine and Technology. Have a look at that bloody hat trap. How good's the hat? How good's the champ Orry behind you, The champ Gyro? Jesus Christ, I wouldn't. If anyone's thinking of any other bloody supplier, give yourself an uppercut 'cause that Axis Mine and Technology is all you need to think about forever.

The the the Gyros and the the Yaris are actually even better than the hat and the hat's. Pretty good tribe bought one. Yeah, Yeah, just out in his room. Right. Let's rip in, mate. We have got a bloody brilliant little fundy chat coming with Maddie Gryphon from Maple Brown Abbott. Mate, I've been watching Suits. Can we get your name on the company? It's all about getting your name on the door. Maple Brown Abbott Gryphon. It could be after this. Yeah.

The business was founded about 40 years ago and by Mr Mabel Brown and Mr Abbott. So I think I've probably got very little to no chance of that happening. So it's a. It's a pretty good name in the. Industry and don't give up hope. Don't give up hope. Oh mates were girl ripping you in so you're buddy. Actually I won't read the boys notes about what you do because that'll that's degrading to them. Boys, lay the land about who this Maddie Gryphon Fuller is. Oh, let's, let's root straight in.

So we've, we've tried to get Maddie on the show for a little while. Then we've finally managed to make it happen, which we're very pumped about. So Maddie, I wouldn't speak too much for him, but he runs the, the Aussie small caps fund. So a generalist, but quite a, quite a bent at the moment, about 1/4 of the portfolio in resources and a lot of the names that we love to chat about. So in honour of you, Maddie, Michael, I thought we'd start

with uranium. So Paladin and Boss Energy both in the portfolio and I heard you do an interview maybe 8:00 or so months ago talking about the the supply side narrative that sort of sits behind uranium. We've sort of talked about it quite a bit on the potty. But yeah, keen to keen to hear how you came across picking these two names to start with in the the wider world of uranium. Yeah, that's right. I mean, you know, uranium has been talked about a lot in your

show by a lot of smart people. So I guess the the difference in where my view is versus what a lot of the rest of the market is. I'm probably less of a Super Bowl on the demand side. I don't see sort of uranium reactors being rolled out like they were in in the 70s or 80s. I just think it becomes very hard politically in a lot of Western countries given these very expensive builds over 10 to 15 years sort of programmes and you really need to have that

industrial base in place. So I think that becomes a bit difficult. What we'll probably see in the Western world is extension of lives continue and then you supplement that with Chinese, Indian, Middle Eastern roll outs which come online. So I think that leads to some slight growth in uranium demand over the kind of the next 10 or 15 years, noting that uranium demand over the past 30 years has gone pretty much nowhere. I think that probably steps up to maybe one or two percent a year.

The interesting thing we're starting to hear a bit more of recently is in the US particularly these capacity upgrades. So the ability for existing reactors to add, say 5 to 10% on top of existing capacity for pretty low CapEx, the likes of Constellation, some of those US producers are starting to do that. So that's probably some incremental positive news for the space. In terms of the stocks, Boston Paladin, it's quite simple actually. Our process is pretty earnings focused.

We don't go too far down the value chain in terms of exploration. We want to see production and cash flow within two to three years. So Boston Paladin were effectively Aussie uranium stocks which fit the bill. We did get quite a lot of comfort on the projects on the restarts there, spent a lot of time with management and sort of related companies around space to get comfort on that. But essentially it's a pretty limited subset of stocks in uranium. They will kind of have hairs on them.

So you've got to put up with the a few issues and all of them, and I'm sure we'll talk about some of those, but that that was a decision driving past the Paladin into the fund over the past couple of years. Well, we'll start, start on Paladin, start on Paladin then as a as an equity holder, what was your, I guess initial reaction to the Fission merger? Yeah, it's an interesting one. I look, it's long dated, so that project's probably only going to be in production post 2030.

Taking a view on the project, it's it's a difficult part of the world. It's provided there's obviously a lot of permitting challenges to get through and there's issues around kind of freezing, you know, the ground there to get, get the production ramping up. So it's not without challenges. Having said that, it is a very high quality project, high quality deposit should be very low cost, reasonable size producer. I can see value in excess of where Paladin's paid.

So I think they've, they've bought it quite well, added a pretty, you know, depressed time in, in the short term cycle of your earning. I just don't, I don't think taking pounds out of the market or consolidating supply is a bad thing either. I think that can only sort of lead to better things on, on a pricing dynamic. So reasonably positive overall, noting that it is quite long dated. I think Paladin just becomes kind of the, the growth uranium option for many investors.

It's, it's big, it's got hundreds of millions of pounds. There's plenty of optionality there. So I think if and when we start to see the spot price, spot price tick back up, Paladin probably sort of attracts some of the global investors to that growth pipeline. It was, it was looking at the the fly over thing of the fission project. It looked bloody easy.

It was all green and everything. They don't put all the snow on the, on the animation of what the project project looks like there and, and, and it looks like, oh, that's pretty easy to get to. But from what I've heard that those projects are so remote and the logistical challenge of developing them is, you know, something not to be underestimated. But then you look at the Fission project being right next door to next Gen. So you got two projects very close in a very remote area.

It just makes obviously so much logical sense that there'll be one stand alone operation there instead of two. How do you see all that possibly tying up crystal ball tying mate? No, good point. And I mean, you know, the remoteness and, and the challenges around location, weather, all that sort of stuff. When you look at the project, it's the 350,000 tonne per annum mil and it's going to cost over a billion dollars at the moment

to build. So that just kind of goes to the challenges of how expensive and how difficult it's going to be. Absolutely agree with your point. Right next to next Gen definitely makes sense. Should be a lot of synergies in finding those operations. Having said that, you know, not covering the mining space for a

long time. There's been a lot of sensible acquisitions over time, things that make sense, but it depends on the people at the time, depends on whether you guys get involved, you know, board type sashes, that kind of thing. So on on paper makes sense, but let's see how it plays out. There's still kind of a long time to go on those projects. Matt the, the, the, the, what's on boss is obviously what I want

to talk about. I actually, I, I listened to as a poddy you, you must have done years ago. I think it was 2019 or something, but you would you were talking about the importance of of founder LED businesses. You you spoke about at the time, you know, selling all of your PA and, and putting it all in the fund. And, and and that's like that's alignment to you is you're fully aligned with yeah, and you know where I'm going with this line of comment, you know, you're

going yeah. So how do you how do you like, you know, there's only I get there's only a limited number of of places you can allocate your capital given the given what you articulated with uranium. But when you see the MD and two other directors selling, you know, 70 plus percent of their, of their shareholding in, in, in BOS, What's the read through on the on the alignment kind of factor for you? Yeah, look, I, I, I completely get the point of Boss management

and boards selling big stakes. Stakes and companies is always a red flag and it's never a good thing. So would I prefer to see them sell 20 or 30% of the holding and do that over stage period? Absolutely. So I think that was, that's definitely an issue and that's created some problems. I think it's worth just remembering where BOSS has been on the journey. Duncan joined that company in early 2017. He put 100 grand in his own money in at the start at four

cents. So that's a pretty good indication of just sort of the value that's been created over the time that he's been there over that several years. He took over a project which obviously didn't work under your rating. One had a lot of issues around the drilling side, the flows, the plant. So all those problems have been solved over time.

I certainly don't begrudge him taking money off the table, especially considering you did put more in and during COVID and in a placement post that as you say, the quantum's problematic, but it's, it's done now. So we've kind of got to move on and assess where we're at. I think the, the update they put out the other day, along with the guidance for the next three years is kind of exactly in line with the ramp up profile they previously communicated to the market.

There's obviously a month or two delay at the start there, which is not unusual in a lot of these Commission projects. But all the early signs seem pretty positive. I was up on site probably six or nine months ago. I got a pretty good read through about what they're doing differently, how that ramp up profile looks. So I'm I'm fairly comfortable with that, noting that it is still quite early on in these ISR mines do take 2-3 years to

ramp up fully. So there's it's not without risk, but I think a lot of those boxes have been ticked. Now the the other thing I'd probably say in defence and you know at the time that Duncan and the board sold, the price is 550 or 6 bucks. So there was a lot priced at that point. Were you assuming you're running price over $100 kind of forever clear ramp up and commissioning? We had sell side numbers, which still we're assuming some sales in, in Fr 24 and 25 looking a bit too optimistic.

So to be honest, we were actually trimming our position at the same time. So selling when when price is expensive is kind of kind of what you do. And we're looking at the now saying, well, the share price has retraced 35%. There's been a pretty good start to commissioning. Not even still the way to go there, but I actually think it's something worth another look for people in Mississippi the first time and something that we've added a little bit to the position in recent weeks as

well. So if they're, if they're down 35% now, like 'cause the, the, the whole thing about these uranium equities was trying to back solve, you know, the free cash flow they're gonna generate to what they're being valued at the moment. And it just didn't seem it was adding up. And especially considering boss isn't like a multi decade operation, it does have a no the it's yeah, it's it's not a 20 year life, but it's coming back down to where it is now sub sub 4 bucks.

Is it starting to maybe make a bit more sense about what they're going to make and what it's being valued? Yeah, definitely. Yeah. I think the valuation is a lot more reasonable now. Look, longer term, I do think there's upside from Ghouls Dam and Janssen, some of the other ground they've got around Honeymoon, which will either be tied in or have a separate plant. So I think that probably does

provide you a 20 year view. And I know there's a lot more work going on in terms of drilling studies out there at the moment. So that hopefully will eventuate over the next 6 to 12 months. So you get a bit more visibility on that growing production profile. But yeah, going back to the point, I definitely think there's, there's more value now. The cash flows over the next couple of years will take some time to ramp up.

But when you're looking at sort of two to three years time when they're at full production, you're probably getting to a kind of 10% free cash per yield, which is not too bad. Uranium's interesting though. I mean there is a very limited set of uranium companies to invest in. So we're positive on the uranium price. I do think we're kind of one or two years into what will be a

five to seven year cycle. Where can you play that is essentially some of the majors like Camico and Kazanoprom, which have got a lot of that contracted. So there's not a huge amount of spot price leverage. Boss has got a lot of spot price leverage. Paladin's got a fair bit as well. And I think just trying to in certain valuations on these things can be a bit troublesome given they will just trade the

spot price sentiment. We've had a fairly weak six months in uranium spot price feedback I've got is that people have been more focused on securing enrichment capacity and that and that's led to sort of weakness in contracting over the first half of the year. I think that'll flow through into better contracting in the second half.

I do think we'll see a step up in spot price and it's probably important to note that the actual term price has kept ticking up. We're at about 80 bucks a pound now on the term price with ceilings up, you know one 25130. So again that that just probably goes to the underlying strength of that market and just the dynamics we serve the next few years. Hard to hard to put evaluation

of these things. I think once the spot price starts to recover if when that happens, I think a lot of these things if you're given and the equity starts to recover in mind with that. The the obvious stock that's you know, not, not, not in your portfolio there is next Gen. And is that just a function of the fact that you you have to own something that you think will have earnings 2 years from now? Yeah, Yeah, pretty much. I mean Next Gen's interesting look, it's 1:00.

We we could own if we wanted to. Generally on the on the earnings certainty side, we want stuff in in production or profitability within two or three years. I think when it's a project as high quality and as obvious as Next Gen that it will be in production, I'm more happy to take that risk on getting involved a bit earlier that that's kind of an interesting one. I mean, we're sort of at a, a bit of a stage now where they need to progress some

permitting. What happens with CapEx estimates, how does the funding come through? There's some milestones that can take off over the next 6 or 12 months, which could rewrite that project. But I, I do think over the next few years, that's just going to be more driven by the uranium price than anything. The, the broad parameters are kind of set. There's not too much they can do in terms of construction issues or, or massive delays in terms of project that could derail it

over the short term. So again, I I think that just comes back to being driven by where the spot price heads in the next 12 months. JD, out of respect, I'll stop talking about uranium. I could keep going, but I'll let you keep things moving. I, I was just came to hear your thoughts, Matt, obviously you're an Aussie fun going at ASX stocks, but we've mentioned a few names with Canadian

relations. I just wanted to hear if you had any thoughts on the news we've heard about, you know, them clamping down on M&A and just how you see Canada as a as a jurisdiction for mining projects? Yeah, it's, it's an interesting one. I haven't, I saw the headlines. I haven't read in huge amount of detail what's what's happened there.

But look, I think basically what'll happen is if, if Canada cracks down on M&A, you know the capital for elsewhere, the companies are listed on other exchanges. I know one of the things the ASX has been doing to arrest the sort of decline in IP OS and the amount of companies leaving the board through through M&A is actually incentivizing some of

these companies to dual list. So we've seen the likes of metals acquisition, capstone, It sounds like that process of dual listing is becoming a lot easier on the ASX. So I do think we see probably more companies gravitate towards, towards Australia's investment destination. I, I think it probably just hurts, hurts Canadian stock exchanges to be honest. The money will flow somewhere and Canada is going to be too restrictive in terms of who can,

who can take over companies. And that's sort of seeing the companies. We'll, we'll just move to other exchanges is my view. NextGen dual listed as well. It's amazing when you see these these companies on other exchanges dual list on the ASX they because the ASX is obviously like their their incentivize to get more, more ASX listings. That's how ASX reaches their KP is, but they will, they will offer all of these like pretty insane waivers to these, you know, Canadian listed companies,

etcetera to dualist. And that means that they don't have to comply with the same like there are certain listing rules that they'll be exempt from. It's kind of, it's interesting, you know, they play, you get to play by a different set of rules when you get the dual listing on the ASX because ASX just wants you over here because you're a big company. Pretty much, yeah.

And that's the issue. I mean, there's just been a complete lack of new companies listing on the ASXA lot of especially in the industrial space. We've seen the whole building material space pretty much get hollowed out through through M and A lately. So the ASX wants to get listing numbers up. I think their approach has been, look, if you've good enough to list in Canada or the US or or New Zealand, then you should be

good enough the ASX. So it's always interesting though seeing just the the differences of reporting requirements, the differences in some of the waves you talk about. So you've got to be comfortable with that sort of stuff before you can actually invest in those

companies. One of those ones that is now listed here is Meadows Acquisition Corp that you've, you've mentioned you're a holder coming from the New York Stock Exchange where they've got another listing and they were super, super well received when they came on. I think they up the, the IPO amount of money that they took in twice and then they had a bit of a, a sort of bumpy start, obviously getting a lot of love on the, the copper thematic side

of things. But the last quarter on a production side of things was you know, a bit how you going. How do, how do you see the the company going forward? Obviously a high pedigree sort of management team with an asset that a lot of people have taken a liking to. What's your sort of view of it? Yeah, we're we're pretty positive on the name. Look, I've got no great insights

into where Copper's heading. You know, we're, we're taking three sitting in Sydney. So for us to have a a huge hugely differentiated view on copper is pretty difficult. But we're pretty comfortable with the commodity and and the drivers there. So finding copper exposure has been quite difficult on the on the ASX, especially ones of screen value, which I think metals acquisition does. We've done a fair bit of work there around kind of the

structure, the the turn around. There is complexity in that story and I think that's probably led to the opportunity and where the valuation is for some other copper peers. In terms of the quarterly production numbers. Look it is going to be lumpy. It is a pretty high grade, low volume mine going through a turn around. So no surprise they're going to have good quarters and bad quarters based on when high grade Stokes come into the mine

and different other things. I think there's there's quite a lot of work that's gone into that three year production ramp up. They show on the plan. I would back Mick and the team to turn around. I mean, you know, hearing about how Blinkle operated that mine, some of the challenges there. I think getting a good operator in really does provide a lot of a lot of opportunity, although

it's not a quick fix. I mean clearly the constraint there is ventilation that's going to take a couple of years to get rolled out fully through the mine and that's really where you start to see those productivity gains. There's some other interesting upside angles there.

I mean you've got you've got a zinc resource, you've got a bunch of remnant areas which kind of aren't in the reserve or the mine plan, You've got a very underutilised mill which probably needs a little bit of CapEx to get back to those levels. But I think once once the team gets into good operating rhythm, starts to deliver some pretty consistent quarters, that's when we can start to think about kind of what's next. I know the market's concerned as well about potential acquisitions.

It is called Mills Acquisition Corp system. I I don't think they're going to blow their brains out on doing anything too stupid. I think it would have to be pretty value accretive. You've got quite aligned and incentivised management team there. So I think the quick wins for them are really fixing up CSA. Maybe there's some some other things they can do in the region which are kind of smaller deals which add a bit of value.

But I think to do something bigger in a step out would have to be quite compelling for them at this stage. It's. Got to be it's hard to find the quality. Like they are very deep, but the, it's the quality of that ore body is just miles ahead of everything else. Like finding quality copper. Unless someone finds a frigging bloody VMS deposit at 5% in the next frigging month. It's there's nothing just

jumping out. It's like, do you look at it and think, would you do M&A just for the sake of it or is it going to be more detrimental? Yeah, good point. And I guess that's the problem with having a high quality asset that's kind of better than anything else out there. You're always going to be diluting. We've probably seen that with Duterra lately. You know, Duterra is quite an interesting one, the terrible, one of the best, probably the best royalty stream in the

world. But anything you're going to buy is going to be dilated to that. It was, it was similar to Sandfire years ago. You know, Sandfire had one of the best copper assets. In terms of grading costs and, and anything that we're going to buy was going to be diluted. So that led to some indigestion there. So yeah, it, it's going to have to be something pretty good for, for Mac to to buy. I think the quality angle is

interesting. I mean, definitely the quality of of these all bodies is decreasing and you've got to make trade offs between how low you're willing to go on the quality side compared to where sort of valuation is. We love to spit ball. You know what? What? What's Mac going to buy? And there's so many like, you know, players in that cobar

region. And when you look at the lay of the land of the, the, the, the juniors out there, where can you sort of, you know, see the most value of creative synergies at

the moment? Yeah, in the Cobar region, I mean the obvious one's really I find it hard to see Mac Bollinger really I think there's probably some asset type deals to do the the great cobar asset that I really have would fit quite nicely with Mac. I think potentially some of the zinc that that Mac has could go through really is peak mill.

So I think there's probably more synergies in terms of how those assets come together and which mills they go through rather than needing to do full kind of M&A. Other than that, I mean there's some interesting exploration ground. I think having having a mill that operates well in that region will provide power over time. It's just going to be a matter of I think metals acquisition needs to sort out how big CSA

can get. It's still quite early in the journey there of cutting resources and reserves and just planning out probably five to seven years because they may well have enough of the raw material to fill the mill without needing to get anyone else's product through there. And but it's just the it's the life risk there in terms of how deep can you go and keep the keep the ground from bloody squeezing in, like keep extending the ventilation to that's it's, it's very similar to Gualia.

Like it just everything just slows down so much at frigging 1800 metres deep. Well, the future of DSI is looking great with bloody everything getting deeper in the cobar region. Isn't there bloody any M And I more DSI bolts, the deepest CSI guys, more DSI bolts, more DSI bolts per metre per depth. So exponential bloody growth for

DSI coming. And when I was setting up the, when I was setting up the call with Matt Gryphon, I was speaking with him and he said he'd, you know, he's been on a site visit out out to the cobar there and he just knew, sort of bakes it into his model. Once they get the DSI orders in, they come and fill this place up and they'll be gone 345 kilometres deep there. Not a problem.

Rest. Assured why don't they what JD but the the DSI bloody portal sets will be just getting that'll that's how they'll be holding up CSI. So look my queries about CS as depth and the finite life. There not a problem because DSI making it happen holds the mind. Together and it holds the model together. Go Derek Head. That's they've got. It's like but it's offset by the grade. No, that it's a great point, Yeah. And, and look, we are in Genesis as well, which owns Gwalia.

I went out to Gwalior last year, went all the way down, 1800 metres down decline to the bottom. And you can see the challenges that depth has. You know, we got stuck behind a broken down truck coming up. So, but, but again, that's, that's the opportunity for these guys to, you know, make it meals acquisition, rally, Genesis, the guys who good operators get good people and they're that's the opportunity to turn around some of these deep minds, which have

challenges. I think with Gualia as well, just taking the pressure off Gualia in terms of the tonnes bringing USC and I think that's kind of a game changer there. So there's always risks with Zeke minds. You know, you can have seismic events, you can have other issues happen at any time. But again, that's just part of the the risk involved in investing in resources. And we we certainly take all those risks into account upfront and that really drives position sizing.

So high risk companies get a lower weight in the fund for that reason. And it means that if something does go wrong or blow up, hopefully it doesn't wipe out our returns. I just came up with a deal idea, JD and Maddie, and it's I'd love, I'd love to bounce it off

you off your mat. So obviously IGO where where the, where the well, they weren't really under bidders on Mac, but the deal blew up because it got late, but it was, you know, IGO where there and thereabouts in the in the process when Glencore was selling Mac and and now more than back then, IGO is desperate for copper. They need, they need a bloody, you know, they want copper. They've got an identity crisis. What if IGO acquired Mac today and Mick McMullen runs the vehicle?

Would you, you guys that? Well, that's not too bad, trap. I I put one reason why it wouldn't happen because Ivan just got into the hot seat six months ago. Yes, there's a, there's a couple of soft issues there. A big payout would make a few problems go away. That's all right. Take the hard drive on the way. Home. I was about to say that. Matt, what are your thoughts on that one?

Oh look, interesting one. I'd probably say the where Igos at the moment Nova, Nova obviously operates pretty well. I don't think there's too many improvements to be made there with the Green Bush's JV that's sort of non operators there. So it would be hard for someone else to come in and make huge operational improvements to Igos assets. I would have thought given Igos in large cap index we it sort of fell out of a universe few years ago.

So not as close anymore, but interesting, but unlikely I would say. We can always dream Travers like, hey, Maddie, we've got a thing. As long as it's recorded, we've got it in case it happens. So like probably a good segue into Genesis that you mentioned before, another one of your holdings there.

And, and probably in line with the, you know, silver, like Red mergers gone through Genesis, you know, big, big future growth coming from Tower Hill. And it looks like, you know, they've got a plan to, you know, change that location of that terminal for the, the, the terminus for that railway instead of extent diverting it. But the, the big question is for that growth of that company is the consolidation with Red 5. Do you, what horizon are you putting on that?

Because that will be a game changer for that region. And it's. I'm sure it's going to happen eventually. Yeah, it could. Do I look, I don't think it's near term. I actually think Genesis has got more than enough on their plate organically that they don't really need to look at M&A. If you look at that five year growth plan, there's a lot to exceed on Tower Hill approvals is really the key one.

And I think that's, to be honest, that's probably where rally's spending like 70% of the time just trying to get those approvals done because that is such a big value driver. My, my sense is that it's probably more likely you'll see bolt on M&A around the, the JC mill of Mount Morgans around that area. And then you can potentially look at maybe a new mill at, at Gualia just to put the Tower Hill stuff through. And that's right there.

So longer term, I'd expect maybe maybe a new bills at Gualia, potentially a Red 5 takeover if there's still if there's a bit of value there and we can see the synergies and then bolting on some of some of the other deposits around Labour to interfere through that mill. Look, there's a lot going on

there. I think the thesis really is that it's not cheap on this year's earnings or next year's earnings, but it's one of the few Aussie gold companies with a good growth profile, which is severely lacking in space. Certainly back the team there, you know, we were with them on the journey through the Saracen days. I know how conservative they are and setting numbers.

There's just always some some level of upside and some things they're not telling the market there that always tend to just lead to small beats and small upgrades. And the execution has been second to none over the the period in the market. So that makes Genesis a really attractive proposition for us without needing to look at any sort of M and AI think they can easily get to 400,000 oz, you know, potentially 500 on what they've got.

And you look at the resource base there, there's 15,000,000 ounces in resource across that group with I think only three in reserves. So a high gold price, a bit more work in some of these other deposits. And you could see a lot of that kind of shift from resource to reserve and really build up that production profile. Sounds like they need bloody K drill to convert that bloody 13 million ounces of resource into reserves. A bit more pepperon needed. Get it up to indicated and

measured. Get it into reserves. The future of Genesis is hanging by a thread for K Drill to take. I can feel it. Mate, you know, get get some indicated answers, get some, get some more than 30 answers while you're there, get some measured answers. Mate, that might have 20 million oz by the end of it. Get some uncategorized answers in the mine plan. Actually, don't do that. That's.

Just Genesis either, fellas. You you think about all those explorers and as soon as Matt Gryphons, you know he's talking about them, All of them. I can already feel the phone buzzing for Ryan O'Sullivan. They all want to get taken out. They want Genesis to take them out. All they need to do is pepper in a few more holes. And who else would you rather have do it than Buddy K Drew? Yeah, and look, Ryan's been given a lot of love, but Drew Harvey's email is in the show notes.

Give Drew some love as well, and he'll introduce you to the team and you will get answers. That's all you need to know. And more answers, JD. More of a takeover premium. You don't have to worry about Drew not going hard at the footy mate. He he goes real hard at the at the footy go Australia. But how would that magic like that combination come together? Because now to be, you know, red, red fives are bigger market cap than than Genesis.

So that obviously creates some who's getting the premium. Yeah, no, exactly. And there's obviously a lot of other stuff in in red now with the Silver Lake assets and sugar zone in Canada. So I, I think it's just too difficult in the near term. I wouldn't probably expect that to to really happen. I think Genesis has got more than enough to to execute on over the next sort of three or

four years in their own plate. I would just think, you know if you look through the history of Saracen and Northern Star, the Big M and A, there was kind of a pretty very attractive prices, distressed assets coming out of large companies. They were kind of no brainers there rather than having to really pay up for assets. So I probably wouldn't expect anything huge out of Genesis on the M&A front in the new term.

But do you think, do you think they would do any mill upgrade or mill expansion at Gualia knowing that the most optimum case is getting that king of the hills massive new mill and possibly expanding that a bit? Could do. I mean, it comes back to my earlier comment that there's a lot of things that make sense in resources. And a lot of the time these obvious deals don't happen because of personalities that he goes evaluations.

So you get these situations where 2 brand new mills are built right next to each other when one could have done and that's just the way it is. But yeah, it it's going to come down to I guess the the relative share prices of people at a time whether any of that happens or not. Yeah, right. What are you and what do you

think about the M&A? So we're talking when you're talking about Hoover and UPS and around the Laverton and that sort of things like just literally pinching the few of the juniors to get a bit of extra feed and is, yeah, they're not, they're going to just sort of what would you say a bit more bit like Remelius historically before the Spartan thing, like just taking little dribs and drabs instead of big deals. I think, I think that's probably it.

I mean the one the one reasonable sized one there is magnetic which looks like a a very good deposit and and that could go through probably either the Granny Smith mill or through through the Daisy mill unless they go loans. So otherwise there are a number of other small junior sort of operators around there. The other, the other potential is that W Australia undergrounds could be revisited and that could could be more economic now given gold price and in a

different operator. So there's just lots of optionality in Genesis. I just think the five year plan they've laid out is probably unlikely to end up in that form in five years. I think it's a good base case, but there's a lot of optionality around other things, how they could, you know, reroute different deposits through different mills. And I think any of that's just pure upside to where the company's trading today.

Then if you, if you kind of look, look elsewhere in the the ASX gold landscape, if if there was ever, you know, producer that is just being easy for investors to sit and forget over the last like I don't know, eight years it's been Perseus, they've yeah, created tremendous value there and it makes a lot more cash than than other other golds when you look across the

board. What's, but what's the investment like case for, for holding it now after a period of you know, great operational delivery? Yeah. I mean, you say first, this is certainly get, I mean it, it does operate in interesting parts of Africa and there's always things going on in in different parts of Africa. There's lots of risk there is, that's true. But the operational delivery has been great, yeah. Yeah, no, well, that's the

thing. And actually, you know, to give credit to the whole African sector, the, the operational delivery has been far better out of African producers and has out of the Aussies over the last 5-10 years. You look at what Wax's been able to do, what Resolute's been able to do recently in Perseus, they've navigated very tough economic times, a very tough country risk over there to deliver great results. And I think that's, that's really shown through in the cash that generated.

Whereas you look at the Aussie producers and Aussie gold prices have been going up. The costs have been kind of going up in line with that. So there hasn't been that operating leverage come through Perseus today. I think the the Aucorp deal was very smart, done a very good time without much of A premium being paid. You know that that stock would probably be a lot higher today if it had kept trading. So I think they've done very well there. That adds to the growth profile.

I think you'll see some life extensions out of Edican, out of EARE, even Sisigre maybe. And then once you layer in nine Zaga on top, you're up to kind of 700 and seven 50,000 oz for a few years and it can be funded purely through through cash. The other benefit is that all court being a kind of underfunded junior had to go optimise around open pit underground, bit of a challenge in terms of how they were going

to mine that. Whereas process can probably come in, spend a bit more CapEx, take a big open pit, get more, get more answers through and probably a low cost base. So I think economically it makes a lot of sense to them as well. And the relationship with the terms of your government seems

to be pretty good too. Trades at three 3.4 times next 12 month EBITDA, which is yeah like and has been a better margin preservation than the ASX also then then the WA based Goldie's who yeah, Yep, command command a high multiple. But that's just the the way that the the market is willing to, yeah, I guess like reward the the geopolitical, you know, risk aversion. Matt, have you looked in in West

Africa? Obviously you've picked Perseus there, but Resolute's been a really strong performer of late and West African also in comparison with Perseus has a sort of great operational track record since they brought Sambrado online a few years ago. Have you looked into them and is like one of the reasons that they have a bit of a spread across a couple W African geographies the winner there? Are there other sort of reasons why?

Yeah, we have owned West three to Zambrado construction and ramp up did very well out of that stock. Resolute One is one that I've been following for 15 years without owning and then eventually pulled the trigger probably 18 months ago. Didn't own it up until pretty

recently. So it was a pretty good contributor for us. I, I definitely think Percy is having to spread across different African countries does help, especially when you look at the political landscape, the influence of Russia, some of the other, you know, activities going on in Bikini Faso and Mali, does see those countries a

bit challenged. I think people have the perception that the African risk is probably greater than it actually is. When you look through all the coups that happen, all the terrorist events in, in these countries, gold is kind of the one industry that just keeps going. The government doesn't really nationalise assets unless there's an ownership dispute. So if you've got clear ownership over an operating asset, that stuff through and production's been pretty consistent.

So I'm probably less worried about the political side, but it does. It doesn't help when you've got, you know, Mali building their own gold refineries and forcing everyone to sell to them. And what does that mean in terms of price? Mckenney's raised royalty rates harder to get money out of the country there. So, so they post Resolute and WAFF have done very well, still look fairly cheap, but processes the peak just because they've

got the spread. I think they're in more stable environments over there and and they've got the growth lever of Nine Zahu coming through, which I think adds a lot of value. Then there's the two premier undeveloped projects, Spartan and the Grey. And you own, you own both of them. And they're obviously like pretty, pretty different projects in almost every single way. Like what's, what's the kind of like the rationale for holding both? Yeah. Look, to be honest, it's, it's

stock specific on both of them. So again, with with gold, we're pretty positive on the gold outlook. But the reason we own these 4 gold stocks is because we like the stocks, we like the management teams. We think there's plenty of upside as long as the gold price kind of holds in line with where consensus is. So Spartan, we got involved in the, in the raising $0.40 last year. So we did miss, you know the 1st 300% of the run up, but that's typical for us.

We want to see some runs on the board. We want to see things get a bit dearest before we get involved. I, I do see substantial upside to where that is. I was up on site there a couple of weeks ago. The what's been underappreciated I think is just the value of the infrastructure in place there. It's effectively a new mine that only operated for a few years, ready to be restarted with

permits, everything in place. So just need to get some trucks and work out what they are going to do with the mill in terms of the expiration side. I think it's going to be important to see what the indicated number is at never, never out of this upcoming resource.

That really then drives thinking around how big production could be, how long the mine life is. You layer in pepper on top of that and you know, you can start to model up really attractive cash flows for at least a sort of 6-7 year period. So I still, I still think there's more to go there. And I the other thing with that story is that exploration decline will be a game changer for them. Once you're underground, they, they can drill twice as fast,

half the cost. So delineating those ore bodies will be a lot quicker and a lot easier. The exploration decline effectively ends in or never, never. So you've done your whole development. You can just start mining and then allows a bit of focus on some more regional targets as

well. And just given how that old gas coin, they just completely sort of misread the geology on that site, you'd have to think there's potentially more repeats of the structure and potentially more expression can be done there. So still very attractive to Spartan. I think Simon's done an incredible job. The mentality he's got running our company, the team he's built underneath them, very part of that Northern Star school. So he's certainly been been the

right man there. Degray is an interesting one. We took part pretty recently in the last placement of the dollar ten. The view there on Degray is that, look, that funding was probably a bit of a shock to the market. I think people probably expected the equity raise to be done after the debt had been locked

away. That was maybe the opportunity for us coming in being new to the register, just seeing that the funding now is effectively in place, provided they can convert this debt, which sounds quite likely, they'll have about a 2 to $300 million buffer on top. So there's not. Too many concerns about another raise or or anything for the next couple of years until they start to really get towards commissioning. But that stock really has just been left behind in the gold

rally. You've got 10 million oz resource, 500 five, 50,000 oz a year, production completely unhedged and the stock's gone nowhere. So to us that is a tier one asset. I think you you're obviously in the wrong part of the lesan curve now where you're financing and building to counter that.

You still do have some news flow to come out on studies around with Neil in terms of that maybe adding another hundred 150,000 oz. So by the time you get that through, you're at call it 700,000 oz a year for at least six years. That does become a very attractive asset, especially in a goal space where the majors and mid tiers have, you know, stable production assets, complete lack of growth, complete lack of new projects that have been built and very good cash flows coming through.

So it just seems like quite an obvious MMA target to me over the next couple of years. Because it'd be it's bloody risky if they try to build a 10 million tonne operation with a brand new company, brand new team. That's fucking recipe for disaster I reckon. Absolutely, no, fully, fully agree. I mean, I do think there's, there's been a huge amount of detail and a lot of work that's gone into those studies.

There's good people they've they've got on board who've who've built the projects in the past. You can manage that well. But look at great like the history of the, the gold space over the last four or five years in terms of bringing on new projects has been pretty tough. Building something that size with the pox plant up in the Pilgrim is not going to be easy. So I whether we own it into commissioning in 2-3 is time I'm not so sure about, but I can see some catalysts in the short term.

I can see a share price that's really like the gold price and I can see some potential MMA appeal out there in a in in the gold market that I think we're going to see a lot more in the next year or two. Odie Reckon's going to have a look at it. There's look, there's two that stand out for me. The first one is ACNECO. They've been up at conferences in the past saying there's kind of three premium mining destinations in the world of which one is WA and they don't have anything.

Wai believe they operate epoxy plan or two in their portfolio as well. So they've got experience there. So I wouldn't be surprised if they were if they were interested. And the other one is Gold Fields through kind of Gold Rd, they own half of Greer already. They own a stake in Gold Rd. I understand there's been some management changes in in Goldfields internationally and in Australia and they might have more of a growth mindset.

So rolling up gold road and degrade would potentially make sense at some point as well there. They probably, I don't think they've got the POC's experience, but do they at? Any of their operations? No, but I mean you can, you'd hope you can bring in people to, to kind of take care of that. I kind of look at SSR, the old Lassa when they started up Sherpa, the sulphide plant there. And I don't think they had any POC experience before, but that kind of commissioned really well

and and produced what it should. So I think if you've got the right people there, it's it's known technology. It's not as much of black boxes as people may think. Nothing that Nathan Stewart has can't fix. Bloody God, love me back back. Just to finish off on Spartan when you talked about the value of the infrastructure there and that and that probably bodes well for the Spartan investment

if they don't get taken over. But it's looking like more than not that Remelius is going to get them eventually. Well, they've got the foot on them at the moment, but do you think that actual infrastructure may not be used at all if Remelius takes them and they're gonna just send it all to checkers and maybe expand checkers to take everything instead of having Dalgaranga and checkers?

Yeah, it could, It could do I, I kind of haven't worked through the full mass and where all that that would go. I mean, having having the mill right there at Delgaranga is quite useful and also having just the flexibility around having multiple mills in the region would help. Remilius, I think they're going to build Rebecca as well. They might need to build there so they could move some

equipment down that way. I do think for Emilius, it does make a lot of sense to to have Spartan in their portfolio at some point. They've got two years left at Penny, which is really the cash cow in the next couple of years.

And then that production profile starts to drop off from the back end of FY20 6. I don't know what the expiration upside is there where that can be extended, but to have something like a a Spartan a plug in from FI 27 on would to me it looks like it could make a lot of sense to combine those two, obviously at the right price and assuming assuming it

can happen there. Given you're a generalist, Matt, I'd, I'd be keen to just pick your, your brain on, on the wider sort of things you're seeing in regards to labour inflation, cost inflation across the economy and how this sort of plugs into resource projects, whether that be through mining services companies or just, you know, construction bills. What are you sort of seeing on that front? Yeah, sure. So the labour pressure is really

heavies quite a lot. One of the things I do is actually track the mining services job ads for all the listed mining services supplies. I've been doing that for quite a few years now that the job openings really did peak around early 2022 when the labour shortages become the most acute as we're coming out of the COVID period. There was a lot going on in lithium, iron ore, nickel and that kind of thing. And since that peak 2 1/2 years ago, we've actually seen the job openings fall about 40%.

So that heat really has completely come out of the labour market. If you talk to the gold players, who generally are the marginal users of labour, like the gold companies get a bit squeezed in tight markets because iron ore companies, lifting companies offer much higher salaries, better working conditions, all that sort of stuff. There's much less of an issue in terms of staff turnover, absentees and that kind of thing.

So I think from an Aussie perspective, we're starting to see some better results flow through. I think there's much better chance of going, it's now being hit costs coming in on budget, just given that labour and that productivity side's getting a lot better. And across the economy generally we we're seeing that too. I mean, the building construction side, you've had this huge pipeline of residential homes, which is now coming to an end given home building and things through

COVID. So you're starting to see tradies and like free up a little bit. Some of the areas that are still a bit tied around hospitals, aged care, childcare, it's moving in the right direction. So that that sort of things has eased. I think the labour pressures aren't really there anymore. I don't think it's going to necessarily translate into a lower costs. You're still seeing wage pressure, wage rises going up three, 4% a year.

That will flow through. I think where people will get the benefit is on productivity, less in terms of recruitment, less staff absenteeism, less turnover that that should really help across the mining sector and just industrials more, more importantly. Madam, I'm kind of keen to, to, to peel into some of your, your energy stocks that you've got on

the on the oil and gas side. There's, there's our two year flag to us Cooper Energy and and Karoon, yeah, Karoon, Karoon, you know, screen sort of pretty, pretty absurdly, you know, load, load multiple at the moment. There was a recent activist campaign to yeah, prevent like for them to introduce this Capital Management framework and pay dividends. Looks like their cash flow is going to be, you know, quite,

quite attractive. But there's some, some doubt in the market that the, the, the board of management team are, are actually going to allocate that in a way that's best for shareholders. Do you take a, a, a view on, there on, on the Capital Management of Karuna? You just, you basically just look at the the value proposition, the cash flow and look at the multiple and just think this is as good a place as any to allocate capital right

now. Yeah, that's that's the main thesis really is just the cash flow that can be generated from these assets provided they are producing it at the rates they should. There's obviously been some challenges that both assets lately. I think, you know, playing devil's advocate, one of the reasons for the acquisition of the US probably was to diversify way a bit from the Brazilian asset, given some reliability issues there, which probably weren't well known to the

market, given it had a couple of good years of operations. the US being, you know, relatively small in terms of value accretion and and IRR probably just goes to the fact that you're coming from Brazil buying the Gulf of Mexico, you're gonna have to pay more and and those assets trade on on high multiples. So that that was always kind of the valuation differentially and why they were never going to get much accretion on that, that asset.

When I look at the activist campaign, I kind of do agree with it with quite a lot of that. I think as shareholders we do want to see Capital Management especially given where the stocks trading now if cash flow does what it should, it's on like you say absurd multiples in terms of free cash flow yields. I think a lot of that can be diverted to paying sustainable dividends to shareholders and

potentially share buy back. Certainly I'll be pushing the company to to buy back shares rather than do any more M&A at least to the levels. I do think though, if they can again, it's it's just about getting the operating rhythm, getting some good quarters out, showing the cash flow come through. the US had a bit of a false start, but the large part of the production downgrade there was actually on the gas side, just given the Henry hub gas price had fallen so low.

That's actually very low value in terms of the the volume that comes out of that. So it wasn't actually a big, it wasn't as bad as a headline rate. US gas prices have recovered a fair bit since then. So we may actually see, you know, top end of guidance.

So even upgrade just with gas coming back in, which could be good for optics and there has been a bit of exploration to success and a couple more wells that drilling now, which if successful, just kind of adds that, that great profile over there and could turn sentiment a little bit. So it's, it's, it hasn't been an easy one. I, I do think they're good operators. I do think Julian's a very good CEO knows the regions very well.

It's they've just had a few issues in terms of reliability and some other problems going on. But I don't think it's anything that that can't be solved or turned around and. Then and then Cooper different, different play. Is this like basically just the the East Coast gas crisis has a has a the obvious beneficiary of of that? Pretty much, pretty much the, the macro side in the East Coast gas market is pretty well known

to people. I don't think I'd be telling you anything to you there to say that, you know, there's a gas shortage coming up and spot prices are sparking in, you know, in Victoria when the weather's cold and the wind doesn't blow. So that's all very supportive of the gas price over the medium term. I think what's happened on Cooper, again, this is a company

I followed for a long time. We've only got involved in probably 6 or 12 months ago now that we've seen a lot of the negative catalysts come out of the way. The BMG decommissioning was a massive overhang on them that's done gone Orbost. I think they've made some some very good productivity improvements there coming from the the CRO they hired a year ago that looks like it's operating more consistently at high rates.

There's more they can put in the spot market that is actually quite accretive to earnings there. So I think that all bust asset as that just operates more consistently over the next couple of years. You see the cash flow generation profile of the group. The way I view Cooper is you had a, they've got a fair bit of debt at the moment, but there's very minimal CapEx to spend over

the next couple of years. If they do what they should do on cash flow, the debt gets fully repaid over the next two years and you're then the situation where they can start thinking about gross plants in the Otway Basin where they've got an extremely underutilised plant. They've got resources in the basin there that are kind of ready to develop and that could come to the mix kind of towards the back end of the decade. And I don't think that's being valued by the market at the moment.

I think essentially what you're getting at $0.20 is current cash flows with a bit of a discount, not assuming anything improves at all, boss, not assuming any of the growth projects work or have any value. And I think that'll probably be realised over the next couple of years. The one thing I would say though is oil and gas is becoming a big boys game like it is the cost of rigs, the cost of developments

is serious dollars. Now we've seen with Cooper that BMG abandonment programme blew out to I think $380 million at the end of it, and that's just to abandon the field that's not producing anymore. So I think at some point we need to see a bit of consolidation there. I wouldn't be surprised that ends up as part of Beach or one of those other players down there, but just think Oil and Gas is becoming a real scale game.

Matt, given given you're a generalist, how do you think about sizing all of these positions and and sizing the energy component, the materials component, the the mining services component as a portion of your portfolio? Yeah, good question. So we we generally earn around 40 stocks in the fund position sizes. We don't go below kind of one one half percent positions. We just want to have a bit of conviction and things.

And then the top end, some of the more stable industrial compounding type businesses can get up to five 6% positions. What we do, our process comes down to trade off between what the upside is, what the quality of the company and the assets are and the corporate governance and then overlying risk factors. So when we think about resources companies, the quality is generally quite poor, the price takers, there's a lot of exogenous factors that can affect results that are

completely out of control. They've got limited lives. So they generally score pretty poorly on that, that quality philtre. And then overlying some of the risks, again you've got commodity price, currency, whether political risks, you know, high capital spend, so score quite high on risk. So that generally means for us to resources companies are lower on the on the weights. We try to identify risks and and quality upfront and position

size appropriately for that. Some of the biggest stocks in the fund are you know, an example would be a defensive tech company that grows earnings 15% a year and has a 10 year growth runway structural growth driver where we can we've got a pretty narrow distribution of earnings. You can be pretty certain where they can come in and you can see them expanding into a bigger market over time.

Whereas something like a gold company, the gold price moving up a couple of 100 bucks or down a couple 100 bucks really can blow out the earnings and the cash flow. And that that's a struggle for us on earning certainty because we really do value the earning streams of these companies more than anything. Really interesting mate. The the I'll let you go, JD, because I was going to pivot to an overrated, underrated. Get mining services in there.

Yeah. Yeah, I mean, go for one of the two of the names that you sent through SRG. They do a lot of construction and sort of services work. And then PRN, you know, a more kind of traditional mining services name. What's the what's the thesis

there? Tell me how they fucking make money, Parenti specifically and how you analyse it because I do not understand it. Especially when you're talking like the big quantums of debt that they hold and bloody low margins and how do you get a bloody see the value in it? Great point. And look, I've been covering mining services stocks for kind of 16 years since I started the industry. And it's been a really tough

bunch of companies to cover. Like every year something blows up on a contract or there's too much debt or there's the work dries up. So it's been this kind of death spiral for a lot of these companies over time. What's been a big change over the last few years, and I think COVID and labour shortages really drove this, was a lot of these companies seeing the value they actually provide to clients and actually starting to charge a bit more for that and, and get

more favourable terms. So the pendulum's definitely swung back towards contractors. A lot of the contracts now are alliance style, you know, cost plus type things. You're not taking big fixed cost risk or risk on, on items that are outside your control. So that risk of blowing up on projects kind of isn't there anymore. For the most part. They they've also seen investors

want better returns. I mean, these things have been operating at 510% return on capital, which just isn't good enough for the amount of CapEx and debt they spend. You're seeing a lot of companies now moving towards 15 to 20% on the return side. So I think overall for mining services, that has been a big tailwind over the last couple of

years. I think there's probably more of a a rewrite in the sector to come as people just come back to the sector and see the quality of the earnings and the returns have actually improved and they're a lot more discipline on the on the capital side. The risk with that is there's not a huge amount of work around at the moment. So the contract has dried up a bit. Does some of this pricing discipline start to dissipate and it gets more competitive? You're the way it returns.

I think the other thing you've got to be aware of is mining services. Just a cycle of the pendulum swings between the miners and contractors. And at the moment we're heavily in favour of the contractors. But as soon as you start to have rental companies making 20% returns, contract miners making 20% returns, labour hire companies making those returns, by the time it gets to the miner it's almost so expensive. They just go, well, let's go

back to doing ourselves. So we're at a good point in the cycle now. I think there's still a bit more to go, but I'm getting a bit more weary on the medium term. Parenti is an interesting one. I mean, Barminco is by far the biggest driver in that business. They've been on the same journey as everyone else in terms of big CapEx, a lot of debt, a lot of new projects. They've really pulled back now to being more focused on returns, driving free cash flow

through that business. The guidance they've got, the FY24, which you should see the results in a month or two, are for free cash flow to be 100 million bucks. That's a 10% free cash flow yield. And then next year, you can probably get 150 plus debts, really been managed down to a very appropriate gearing level. And I think we're at the point now where you actually need a bit of debt in these businesses to drive returns.

So extra cash that comes out of these operations can be invested into good growth projects where they've got good tenure with good clients or we'll start to see capital returns. I think Parenti will probably reinstate a dividend they've got to buy back ongoing, which there's more to do there. So that one kind of has flown under the radar a bit. You know, you look at some of the other contract miners like in RW demands that have had big RE ratings, Parenti's kind of

got nowhere. I think the proof will be in free cash flow coming out, a couple of contract renewals which have been coming through which are positive. I think the market's kind of missed that one and that's that's probably a good pick for the next six months for.

US, yeah, I think and like bombing goes the interesting one because you could see where they were heading in terms of trying to, as you said, part partner with bigger companies probably on more favourable terms like they've just extended. They've obviously got a good partnership with Regis. The IGI ones really fallen off a Cliff with Cosmos getting canned. Nova's and Flying Fox and Nova and Forestonia are finishing soon so it's sort of opened them

up a bit. You might get the double whammy if they they're front runner for Spartan so that'll bloody help things along. But have you got much insight into how those contracts are structured? Like is there more less scheduler rates because I know, I know they wanted were at Agnew with Goldfields. I think that was full schedule of rates. I'm not sure about the other ones if there's much cost plus coming in yet or not. You'd know more than me.

No, sorry. Yeah, on the contract mining side, it is more schedule of rates. The my comment around the fixed price to cost plus is more in the instant construction jobs, which is the guarantee. So, yeah, sorry, I should have clarified that. But I, I think in terms of their contract book, they're they've had some issues with nickel mines and IGO coming off. So that's been a bit of a headwind.

There's been some renewals. There's there's some opportunity I think in Africa as well to grow in, in places like Botswana, even even Tanzania, some of some of the East and West African countries. So there is a bit of growth potentially there, but I would view that as being a lower growth proposition for the next few years, but more of a capital

return story. I think once you start, once the market starts to see the cash flow generated there that gets returned to shareholders in meaningful amounts. That probably drives the rewrite rather than. I'm not really expecting big earnings upgrades over the next few years for that one. They make more money in Africa, a lot of those companies than Australia. The DDH 1 acquisition, that's probably like, I know it's probably not as big as Barminka, but it's still a pretty big arm.

Now considering DDH one bought Swift before Parenti bought DDH one, how do you think that's going to be sort of value or creative eventually? Like as I know there was some knocks on that takeover by a lot of. Holders, yeah, it was an interesting one. I mean, the market probably hasn't had a favourable view of drilling companies quite a while now. A lot of them listing drilling, listed drilling companies have had issues over the years. It's super cyclical and and

provided a lot of challenges. So the market wasn't that positive on that one. I I do think it makes sense over time. I mean, they, they did have a small OS drill kind of fleet there, which there are some synergies and some costs they can take out. It gives them a, you know, operating base to utilise tax

losses in Australia as well. So from a purely financial sense, they've got a lot of tax losses in the parenti group in Australia bringing on a a big Aussie earnings base and DDH can utilise that and and get some better cash flow in the timing probably wasn't ideal. We have seen expiration ticked down. So I think there's that expiration side of it's probably struggling a bit. I'll probably say that, you know, I wouldn't be surprised that underperforms the acquisition case.

But having Swift there, having some of the, the iron ore business I think is called Ranger, which is a bit more stable in terms of production drilling that is that's a pretty good base to that business. And if and when the expiration cycle resumes, there's quite a lot of leverage there on the upside. And when that'll be, I don't know. I'd be kind of surprised how weak exploration spending and and junior capital raises have been given the Aussie gold prices at 3500 bucks.

But you have to think at some point the the rig start turning again and DH will be one of the beneficiaries. Can they definitely use the tax losses of Barmingo with the entity they bring in? Yeah, my my understanding is I can. Yeah, OK. Yeah, yeah. Interesting. Matt, you ready for overrated? Underrated. Well, here we go. Let's do it. All right, We'll, we've, we've JD and I have beeped out a big list here, So I reckon we'll we'll go with the the succinct

version. But if you you know, if, if any of us are just want want you to elaborate why, we'll ask why or if you feel the need to, to give A1 sentence of why, then then please Chuck it in there as well. Sure. All righty, overrated, underrated Matt Gryphon, you ready? Owning physical uranium or gold bars instead of the miners. Look, given I run a equity fund, I have to say that's overrated to be honest. It's been, it's been the best strategy over the last probably couple of decades.

But I do think we're at a point now where you get more leverage out of the equities and there's big valuation disparities there. Yeah. Participating in IPOs for mining companies. Probably overrated. We don't really do many IP OS in general. I haven't, yeah. A lot of the mining companies have listed kind of exploration size if it's too small for us anyway. So it's not a huge pipeline there for us. Passive investing's distortion on financial markets. Look, I think that's probably,

that's probably fairly rated. I think there is a fair bit of distortion and I think it probably does get overplayed a little bit. But in terms of active management, you know, if there is distortion from passive, it's it should be great for us because it just means there's more opportunities that that aren't being picked up. So potentially a positive tailwind. African risk as a sort of broader jurisdiction.

I think it's overrated. As I said before, I I think a lot of these African risks are kind of overstated, especially in the gold space. I just don't see too many impacts to gold mines over time. Iron ore staying above 100 USA tonne for the next 24 months. Yeah, interesting one. And I know, I know you guys did the thing at the end of last year where everyone's bearish fit for the US iron ore and it's still over 100 bucks. Look, I don't know. I know. Yeah, we're not.

We're not macro guys. It's hard to make a call. I've been probably a bit surprised it's held up so well. But given how weak China's been, if China does turn the corner and start to get more positive, you have to say probably, it probably does hold up to these levels. So maybe that's underrated, I guess. The the influence of the recent Aussie government funding on critical minerals and and downstream processing and whatnot. Yeah, I think that's overrated.

My quick view on that is I think the government's probably going to lose a lot of money on this stuff. You know, there's always money around for good projects, and a lot of these projects need government funding, need it for a reason, because equity markets and debt markets aren't willing to fund it. I don't really get the whole point of building out all this critical infrastructure in Australia or parts of the supply chain and not the full thing

without the operating base here. So overrated for me. Short selling. I think that's fairly right. I think shorties have a place we're we're long only. I think shorting's very hard. Probably not something I can do successfully. But I've got no issues with short sellers. I've got no issues with people taking different views to me. The debate's healthy, I think, at least in good markets. We've never met a short seller in Australia. No, they don't exist.

None. Of them, they're all everyone's long only apparently on the show anyway. We believe you. But Maddie? Yeah. Similar to the the iron ore question, what's your view on 6% SPOD being under or over 1500 USA tonne in let's say in two years time? Yeah. Look, I'm firmly convinced to view that lithium's going to be challenged for a while. So I think it'll be under. The views are based on a couple

of things. I just think hybrids are taking over from full electric vehicles and there's much less lithium needed. I don't think some of those Chinese supply sources like Africa or the pedilites really turn off necessarily where people think they're doing this. So I do think in two years we probably have a pretty tough market for lithium. Buying instead of building. Yeah, I think that's underrated in terms of I think buying over building is better strategy at the moment.

If you look at building, it is getting a lot harder. Permitting, native title, environmental, those timelines are just massively blowing out. So the value in having existing infrastructure there is huge. I think that goes to the starting point as well. And you look at some of these projects like Mick Philomise from Regis, which has just been caught up in permitting for so long. It's kind of destroyed the project. Like they built it when they thought they would be making

really good money now. But we're now at a point where the economics are challenged just because it's taken so long, the permitting and and the construction side's really blown out so a bit hard. How about going on site visits? Oh, underrated. I try to go to as many sites as I can. I think there's a huge amount of value in getting out there, seeing things first hand, getting a sense of the people on site, you know, the next labour management down, what sort of people are, what their

incentives are. And yeah, I think it's time very well spent. Is it sometimes detrimental but and clouds your judgement when you get the fluff fest up there? Yeah, but you get that meeting management in in an office anyway. You know, you've got to take everything with a bit of a grain of salt. In this industry, one of the things we do is just consistently meet people over time, go to sites.

Over time, you build up a track record of knowing people, knowing who you can trust, who's conservative, who's aggressive. And I don't think you get that from one side visit to one meeting. I think that's really something you've got to build up over time. Regis. Oh, resources, I'd say probably overrated. I I just see a bit of a challenge in terms of jigs and ending. I think they've probably got to acquire something given

Philomise looks a bit tough. So look, nothing against the team or the company, I just think there's better opportunities than gold at the moment. And the and the royalty climb. Yeah, yeah, that's hanging out too. Who knows where that goes. That's that's really interesting, the history on that one. How about sand fire? San Fi's probably overrated just on valuation. I think I really like what Brendan and the team have done

with that company. I think they've got got the operations humming build bringing on that Mathura project and ramping it up has gone really well. I struggle to see what the next level of growth is post FY25. So there's there's maybe some more M&A that has to happen there or or some other some other projects that come in. But I just think on a valuation perspective, we prefer metals acquisition vibe, investing vibe.

Yeah. Yeah, look, I mean, it probably has a space of people for us. We're we're very fundamental bottom up. We enjoy doing the models. I enjoy talking to people, getting as much information as I can. Sometimes you do have to get a vibe on things positive and negative, but 99% of what we do is hopefully backed up by facts and information.

Although it does reach a point where, you know, the sort of rule I think we operate on is if you think you've got about 70 or 80% of what you need to know, that's enough to invest. Doing that extra 10 to 20% of work does take a long time, is pretty hard, and you do miss out on opportunities. So you can get a bit of a vibe in there as well. Matey Griffith, if you ever need a vibe mate, I'll let you know what the vibes are because I'm a vibe. 100% vibe here.

That in a similar sort of vein of thought, Fintwit, are you a user? I'm not, but one of the other guys on the team is, I give it all of him. I'll try to steer clear, but I'd rather read like quality reports and annual reports and other things. But one of the guys on the team loves it. So he he's on top of that and he takes care of that for us. Capstone Copper. Look, I think, yeah, probably overrated again compared to Mac. I haven't. I've done a huge amount of work on them.

From a cursory glance, it's big, it's copper, it's got growth, it's ticks all the boxes. There have been a few guidance misses over the last few years and I'm just a bit worried about the track record on a few of the assets and especially given there's a ramp up phase coming on a couple layers. So that could present a few challenges. And it does screen as as recently expensive as well. So not one for us at the moment, but one that might look interesting at some point. How about Mada?

Yeah, maybe it's done an incredible job. It's hard to say at the moment. I mean it's, it's been such a good growth story. There's such a strong pipeline of geographies, different parts of business they go can go into my concern in the short term there is just around this labour shortage easing and what that means. I mean they've really been a bit beneficiary of that.

I think if they can get through the next 12 months and continue this growth profile, then that's kind of that set the business works, you know, there's no doubts in it. So I think there's a pretty critical period coming up. There are a few competitors trying to start up, you know, small internal type major divisions which might eat away

them a bit. And then it's just a question of do the miners start to see labour more freely available so use more of their own labour compared to using major a bit more. So it's going to be a very interesting 6 or 12 months ahead for them. I think that's really going to make a break the model and and whether it can keep trading on the multiples. It does ionic clay RAF deposits out of Brazil.

Yeah, interesting. Look, a lot of those are kind of early stage for us. So I've met with most of them. I haven't done a huge amount of work. If they work, it's probably very bearish for anyone that's not an ionic clay president, rarest producer, because there's so much potential supply at such low cost to come out of there that it might just suppress the price and destroy a lot of the

Hard Rock projects. Obviously, they face challenges in terms of permitting, ramping up CapEx, Rarest, it's not easy in terms of getting the processing all the downstream right. So depending how far they want to go on that track could be a bit hard. I'd probably say fairly rated risks are probably evenly balanced at the moment. What about what about the payability of those rare earths by China?

Yeah, that's another question. I mean, you know, recoveries, payabilities it all, it's quite no paid market rare earths, it's been quite difficult from an investment perspective. We, we don't, we have not held anything in space for quite a while. Yeah. It's just just too many questions, Sir. OK. For us, that whole space. Nickel mines. Interesting look. I'm probably pretty bearish on the nickel price.

I just think the whole trend towards LFP batteries has taken a bit away from the nickel growth story, as well as probably the the more bearish view on battery sizes with plug insurance. Nickel mines is interesting because I do own the resource and I think that's becoming an increasingly valuable asset because a lot of the stuff we're hearing out of Indonesia is that they're going to be resource constrained. So that becomes probably more valuable than what the market gives in credit for.

There's a lot of risk there in terms of Chinese ownership. Being in Indonesia just becomes a bit too hard for us at at the moment. AIC mines. Yeah, I haven't looked in too much details. One I probably need a bit of work on. I've heard good things about management and the operations, potentially one of those next year of juniors to come through

in the copper space. The junior copper market has been tough like those small scale producers have tended not to make any money even in good copper prices. So I'd have to check on their plans. But I think you need a bit of scale in that space to make money, but too early for me to make a call and it needs a bit of work on that one. The last one for me BH. PS Big bet on Podash. Yeah. Look, I don't know the first thing about being Podash, to be

honest. I follow Podash loosely when, you know, a few junior companies have Podash assets over the years, again, that that's a big boys game. It's a it's, it's a tough market to understand. It's kind of up here, sorry. Meadows X. Yeah, we've got a good history with Metals X actually, I've been down to Renison in the past. It's a, it's a great mine if you get a chance to go down there. We did make a lot of money back back on it probably five or six

years ago. We've missed it this time just given the the company's had probably some operational hiccups, which has meant we've we've kind of steeped clear. Haven't had a big view on tin really, but could be interesting. Yeah, I think that's probably underrating. Bloody beautiful. Awesome. She's wicked mate. Thanks for chatting with us. That was right in our wheelhouse. Loved it.

I'm always so impressed by the generalist investors that can talk in great detail across so many different sectors. So thanks for making the time and chatting with us, Matt. No worries. Thanks guys to be on the show. Appreciate it. You beauty. That was a fucking brilliant chat. I love, I love talking. I'll say it every time we talk about this sort of stuff. I love talking about shit I know a bit about. I'll repeat myself. That was what a bloody JC. Awesome.

It was great. Cutler Cutler partners to thank Hey. Yeah mate at the bloody top of the show we are great friends at Axis porn and tech Look at the look at the great hat the traps got on and who who else we have in the show. A bit of K drill gonna go bloody powder, Leonora and Laverton region and DSI keeping Kobar alive in the rest of the world. Also got CRE insurance. WA waterboards get wet solutions. Verify. Verify.

Mineral mining services Silverstone CRE insurance WA water balls mate and use a spark shark spark. Just mention them all twice. We'll say a few a few times. How good Spark and how good is JD and Trap? Hoodoo Hoodoo Go Australia Information contained in this episode of Money of Mine is of general nature only and does not take into account the objectives, financial situation or needs of any particular person.

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