Righto buddy, borders, we got some action in the lithium, MMM and a lithium is back. We're heading a bloody Brazil and Brazil is not out of the question for an Axis mining technology piece of equipment to head to. Just 'cause they're Australia, mate, they were mate. They Brazil, North America, they will go anywhere to make sure you know exactly where those drill aisles are going on AGC.
They're the Mr 305 of the drilling world that is Mr Worldwide. Trusted international drill advisor Prestige. Well, what? What? What? Oh, I love it, JD. How are you, Cobba? Bit of action today mate. I'm excited. No, no sort of scratching around post quarterly's of things to things to read about, talk about or whatever. We got plenty going on. Ali, you've gone deep as well. Oh, jeez. Yeah. Not now we've we're going to West Africa with.
Everything starts with P. Everything's paid today, Pilbara, Perseus, Predictive, it's all happening except Vlad. They get to miss out. But no, I'll, I'll be touching on the Perseus strategic investment in predictive as well later on. Oh. Good, good to have you back on the desk. Jason back on the desk talking. To the desk a bit. I've got a bit of shit going on in buying closed doors on the desk anyway. We'll get You are the desk man.
You are the. Desk. I am the desk learn about our goes right right. Let's rip it Pilbra Pilbra minerals. They've done a doing a deal. Latin resources are J, so you're a Ding Ding. Ding Ding on Pilbra. Pilbra. Yep, long or short. Lol oh that's not good. No, I'm not sure. Unlucky. Unlucky today though. Yeah, right. Let's little bloody Jada you've you've done the leg work here, mate. Rip through the deal. What's going on? Who's who? Give it to me, baby.
Alright, bit a bit of a lay of the land for people that haven't been in as much of the weeds as we have. So obviously Pilgrim Minerals buying Latin Resources all script deal 0.07 Pilbara shares for each Latin resource share.
Now there you know, it wasn't too far off the speculation we had just last week guys in, in that there was an all script deal being readied by Pilbara. But you know, given the, the relative share price outperformance from Pilbara, that's not a a massive surprise on on anyone sort of part. The deal values Latin Resources at $0.20 per share or $560 million market cap, $540 million enterprise value using a $2.85 Pilbara share price. So things have come off a little
bit since then. The Pilbara share price is off 5% today. So you know that that value has come down a little bit. You can reword that in, in another sense and call it 6.4% of the combined entity is going to be given to Latin resource shareholders in in other sort of ways of describing the deal. They've put it forward as a 57% premium to the 10 day V WAP or a 32% premium to the 30 day V WAP.
So pretty straightforward scheme that we're talking about here needs standard approvals as you see on, on the ASX for two ASX companies. Not as complex as we saw for the likes of Azure with that kind of dual track structure that was being operated to kind of fend off the the likes of Gina or Chris or whoever might interlope in the deal. And the last bit just on rounding out what the deal is all about is the major shareholder and board have given
their approval to the deal. That sort of speaks to 13% of the shares on issue at Latin, and you've got other instos there, including Regal, Waratah and a couple of institutions out of Brazil. Yeah, it's isn't funny how simple of the deals are when there's not as much competition and the market's down. Very astute, Manny. Doesn't have to be as funky. JD mate, this is the definition of counter cyclical and this why This is why it's so interesting.
Give us the mate, you're the lithium market expert. I'm not so sure about that mate, but we're chatting just, we were chatting just yesterday and just sort of trading messages about the, the state of the lithium market. And obviously it's got everyone in the specific sector up in
arms. And then, you know, more broadly in the, in the resource sector that we are, everyone's got, you know, eyes fixed on it and seeing where it's where it's going to pull out a couple prices because it's still a very opaque market. And again, these can be just prices pulled off one or two contracts that have traded or one contract and a couple people confirming. But Platts have said 6% spod is changing hands at US770A tonne
fast. Markets have said 800 U.S. dollars a tonne, that's for, that's for 6%. Remember most of the people we talk about aren't even churning out 6% product. I've also seen hydroxide priced at under 11,000 USA tonne and carbonate at a bit over US 11,000 a tonne. So the same kind of disclaimers go, it's an opaque market, not much as trading hands. What we can sort of say is that we've heard a lot of people talking about inventory buildups that goes right the way through
the supply chain. And of course, on the back of inventory buildups, you see the prices get whacked. We've seen the same thing happen with copper in the in the past few months. Supplies have increased right up as the demand from China has pulled off a bit and prices just get whacked on the back of it. Yeah, right. JD, tell us a bit about Latin. We haven't spoken about them for a while. We are obviously did when it was frigging lithium mania last year.
But we better revisit it, mate. Lots happened since then. They've expanded a lot from where they put it. Initially that put a study out sort of into last year, something like. That as well. PA, preliminary economic assessment. That's right. September, September of 2023. I think we actually spoke about it at the time. So who? Else spoke about it. JD. This is what we do, isn't it copper? The Mining News Centre, that's
right. So to, to give people a bit of scope, we're talking about the, the Salinas project in Minacias in Brazil. So as Pilbara very keen to stress that's a, that's a mining region and it, it should be known to a few people out there given there's ASICS companies with interests out there, not to mention all the, the majors got valet and what not operating out there.
The project itself, 78,000,000 tonnes at 1.24%, most of that 70 million tonnes of that is at Colina and the remainder sits sort of in another deposit 12 kilometres away. And of that 70 million tonnes, most of it sits in measured and indicated. Very, very high percent measured and indicated which is. Yeah, yeah. So we saw a, we saw a resource upgrade to your point there, Maddie, in May of this year. And the, the, the real change there was the increase in confidence.
So you, you know, you do more drilling, tighter spacing and all that sort of stuff. And that lifted the confidence that lifted the amount of tonnes that were in the measured and indicated categories up quite substantially. They did use AUS 1200 dollar pitch shell to, to, you know, sort of give them a bit of a guide and put it in a model. It's an open pit project that we're, we're talking about.
So kind of keep that one in mind as we run through the numbers, as you kind of get into as well, Maddie, on the actual mechanics of the, you know, production and the project that they've put forward. So the I guess the financial metrics to give you I'll give you a breather for a tick JD suck a couple of these mate. Please do it. So MPV 3.6 bill at an 8% discount rate, 100% IRR. But that was using 717 hundred bucks USA tonne spot.
So obviously considerably below that now, but we're not mining it for fucking four years. So US $253 million CapEx or US 300 mil if they were going to do phase one and two together. So I'll see and this is for DMS only that's and we'll we'll get into that for this project and we'll talk about the neighbouring projects that have had a bit of success with it. So. Yeah, that's, that's a great point. And that ties into a lot of the the theories that people have out there as to why Pilbara
might be gone for this one. It is interesting to note on the MPV comment that you make there, Maddie, one of the analysts, the Baron Joey analysts asked near the end of the call today about this sort of, you know, the the financial metrics of the deal and it making sense and how they're paying for it and all this sort of stuff. And you know, you highlighted the fact that running through the spot prices gives you an NPV
of less than 500 million. You're paying more than 500 million for the company right now. Obviously there's a lot of caveats to that. They're they're paying in script and all these sorts of things. But it was just interesting to highlight the sensitivity of the project to the the to spot prices versus the future projections on the lithium prices. But I'm sure we'll get into that much more when we get into our
thoughts on the deal itself. Yeah, and they're not like the General I think didn't Dale said it. We're we're not mining this until the price is deemed fit to do so, right? Yeah. Exactly, so right production side. So they were going for about half a million tonne of spot 5.2%. So mostly a 5 1/2 percent product with ASC 3 product as well. Whether they do like a that SC3 if they sell it or they just stockpile it and then put a float in later on similar to
what Greenbushes did. I, I actually think it, it's a good point, Maddie, you raised, I actually think listening to the way they spoke about it on the call, they'll move away from this in time. And they're trying to simplify it because, yeah, I think they'll just focus on that 5.5% product. And I think you just got to got to take a lot from this PEA with a grain of salt because a lot
has kind of changed since then. And a lot of the rationale is Pilbara coming in and being able to use their core competencies to make the project better than the numbers that are highlighted in the initial study. Yeah, yeah. So as you said, JD big open pit and high strip ratio 18 to one because it's like really it's all like stacked. You'll see it. It's all these like sort of stacked lenses. It's not like a big, bloody massive humdinger. But they're saying coarse grain
spot. So DMS processing only so. Yeah, I think the the the geology is a great point, Maddie, how it's kind of stacked. And there were a few questions again on the call in this one. You know, everyone can kind of see that, the analysts can see that and they're a bit alarmed by it, especially when you throw around terms like tier one. That has got to be the most overused term in mining. Everyone knows it, but it still happens. Anyway.
Analysts were quite critical of how it all hangs together and you know that this wasn't exactly highlighted in the presentation that no surprise, but there wasn't cross sections like that in the slide deck today. But you know, Latin aren't hiding it. You can see it in the the resource upgrade that came out in May. We'll we'll chalk up a couple images so you can see now and obviously we're not geologists, but it's pretty clear that that is harder to mind.
You said Maddie in 18 to one strict ratio there again, they said on the call, they're going to try and pull that down. They think that, you know, they're confident that they can pull that down. They've remodelled it with the updated numbers because the the preliminary economic study only used the initial resource. So that's only 30 odd million tonnes. That's much smaller. They've done a lot more work, a lot more drilling since then. So things are already looking quite different.
I'd also give Pilbara a bit of the benefit of the doubt here, given that they've, they've got a lot of experience with this. You know, there are similarities to the ore body that they have at Pilgangura. They've also integrated all sorting. They've, they've commissioned that at Pilgangura and you know that they have spoken to there being less concerns around the host rock.
It's not as problematic as we might see at other operations out there, but you know it, it is a challenge that they're going to have to overcome. And you know, one more thing working in their favour. We spoke about with another project earlier in the week, but they have cheap hydropower here. So it makes processing just a little bit cheaper given that you you come your nuisance circuit, the energy going in is one of the biggest costs when it comes to to processing.
If you're getting, you know, if you're paying four or five cents a kilowatt there, then you know the the costs are a lot more friendly than they might be in other parts of the world. Yeah, well, we've seen it with our own odds that building or a lot the internal docs within the Spodgerbane ore body like it's something this this sort of stuff is what Pilbara have
always dealt with essentially. Now the all sortings come in, which is I'm not too up on it, but I assume the more you do something the better, more reliable it can't becomes. So yeah, yeah. And then that's what'll need to be need to be used here. You just got a shit load of GI's marking the shit up in the pit. Probably the other important thing as well is you know, this is obviously still all at a PEA
stage, right. So but and you know, the projects change a fair bit, the lithium mark has changed a bit since all of this was was put out. But it'd be very interesting to say what a assuming this all does go ahead, what a Pilbara branded feasibility study would look like on this. Yeah, no, I've heard, I've heard water mightn't be as simple as as it seems over there. Yeah, that's a, that's another point to, to look at the
comments in the initial study. I went back and had a read they were, they were fairly muted on that Maddie. They they spoke about pipe and water from 2 dams in the area. They also spoke about having a a water recycling plant as part of the the study off the top of my head that was going to cost them 30 or 40 million bucks. So they talk about that from an ESG lens, but you could be a bit cynical and say they need the water that. Yeah, exactly.
Yeah. So the the other big point I think we have to talk about is the permitting timelines. And you know, not just as it's applicable to Latin and the project here, but what the read through is on the permitting timelines of projects around the world. So we'll flash up the slide that we were chatting about internally earlier. And you can see that these guys mark this as as attractive as it comes in terms of the speed to
permitting. They used the example of Sigma Lithium and that went in, in roughly sort of four or so years from the first permitting. I think they had 16 months in in construction. Yeah, I'll bring, I'll bring up the I'll bring up the timeline off off Sigma's website. So like DFS in 2019 and I think started construction 21 finished Commission in Q123 and achieve commercial production April 2023. So that's lot from from DFS to
and they're in at 9 plate now. I think they pumped out so they're predicting about I think it was 200 and 270,000 tonnes spot per annum for stage one. They pumped out 53,000 in Q1 this year. So again, they're DMS only. So like when you ask about like and that's the the whole thing is like, is this DMS only a reliable processing option? And where has it been? Because I saw what happened at
like call lithium. Obviously mount Catlin when they were going through the finds had really shitty ass recoveries. Mount Marion. That's effectively DMS only because the floats there, but I don't think they use it part of me. So you look at I think Sigma's the the poster child for DMS only and they from what I've heard, like I don't think they disclose it, but one analyst says they get around 65% recovery DMS only and then obviously have fines coming out as well.
I'm not sure if they sell the SC3 or not, but if you look, if they so if you can get, I think effectively if you can get 60s for DMS only look at because pill Gangora got 72% last quarter, but the quarter before that they got 65% recovery and that's, that's with flotation and everything.
So and yeah, we all know how long it took to ramp up the flotation, the extra CapEx. So Sigma's DMS only option, which was, you know, two years from construction to bloody commercial production, you'd take, you'd take 60% mid 60s recovery any day of the week. Like if you, if you can maintain them consistently through the life of mine for the less CapEx. So compared to putting a bloody flotation in, fucking around with it for a year or two and just to maybe get another 5%
recovery, maybe 10%. And the speed to market? Is Oh yeah, yeah. So this, you know, if the if this is if Sigma's operation to go by, which is frigging 100 KS down the road probably looking like that's the way it's going to go. Yeah, I think it's a a good point, Maddie. And you can see in the study they they modelled in for the 5.5% grade product 67%. So they're they're aiming for in and around the area.
You said on the point of permitting, it's it's super interesting the speed at which they were able to go from permitting all the way through to actually producing product. I think, you know, it'd be, it'd be awesome if the Western world, not that you know, Brazil is in a developed country, but places like Canada and places like Australia could learn a thing or two about a project like Sigma, which is not a tiny project, you
know, it's decent scale project. If they could learn a thing or two about how we can get our projects online just a little bit quicker in, you know, the same kind of responsible way, I think. But I think like North America, it's whether the regulatory agencies want to get it online quicker, it's up to the Cree like the the natives like that's the they're the people that are trying to you've got to convince to be pro mining, which is. Yeah, you you need buying on a lot of parts. It's not.
Very, very delicate. Yeah. Take, take phones away from everyone. They'll start bloody thinking differently. It's like you're grounded here. You lost your phone for a week. Bit of parenting there, right? What do we think of the deal? There's plenty of varying opinions going around. There are mate, there there are quite a few different opinions. I mean, like anecdotally, I'm not sure about you guys have probably heard a few more negative comments than I have
positive. I mean I. I I heard more negative this morning. They've become more positive through the day, people. Have like digested. Yeah, they're like, yeah, maybe, yeah. I mean, what what I'd kind of say is first of all, you can't slag them for being pro cyclical. So I think it's it's pretty awesome and it's pretty rare as well that we talk about counter cyclical deals. So that's a pretty awesome thing
and definitely to all the. People the polar opposite of Extrada buying Jubilee and the nickel market crashing a week later. Polar opposite, unfortunately. Is vagina buying azur? Again through yeah. And I mean that there are people, you know, still slagging them about the timing. And I just kind of, you know, go back to those people and say nobody knows when when lithium's going to turn around. People were saying it's going to be up, you know, in at least, you know, over 1500 for years
and years and years to come. And now people saying it's going to be below 5 or 600 or whatever, 700 for the rest of the decade as well. So, you know, you take all these things with a grain of salt because it's super, super hard to predict where commodity prices are going, but they're roundabout in in the right sort of ballpark of doing a deal at a time when the commodity price is down over 90%.
Remember when it remember when it shit itself at the start of the year, JD and like talking to the talking to everyone on the desk and everything. The consensus was it it could be 6 to 18 months before it's sort of all stabilises and inventories drop and we might say something again and we're effectively only six and a bit months into that. That's right since it was the highest. So like, it's still a. Bit to go.
Still a bit to go. Could it could could turn around soon, could be still more to go. But as I said, it's fucking significantly. These equities are significantly cheaper than they were frigging 6 to 9 months ago. Yeah. Yeah, one of the what? Sorry, I was just going to say one thing to add to your point earlier, JD, is I think people forget that, you know, Pilbara aren't doing some sort of merger of vehicles here where they're diluting, you know, a shit tonne of their capital to get this
asset. It's barely 7% of the enlarged group, right? And it's an, you know, it's a call option on when things do get better. It adds what? What was it, something like 30% to their production profile. Potentially 50%. Or potentially. 50 right? Right.
So I, you know, if I'm an investor, which I am, I'd rather them do a deal now and have the call option and exercise that when they're ready, the market's ready, etcetera, rather than buy something at the top of the market at, you know, something equivalent to their market cap. And then, oh, then the lithium price, you know, crumbles in this set.
And the other side, obviously it's not as as simple as that, but that's, that's just one view purely from a a, a call option or shares on issue dilution perspective. And look, if you're a Latin shareholder, like you wouldn't think so. This game's going to go. If it goes through, it'll go through by late November, early December. Like if you're holding Latin shares at bloody in the low teens, like, would you expect the lithium market to recover 55% by November, December?
Probably a bit of a bloody bet. I think Friggin, you know, right, things are going possibly, not likely could happen, but you'd be, you'd be taking the Pilbara Piper right now and that gives the funding solution to develop Salinas. So you're not like there's no, no big debt, no big debt, no big cap raise needed. You're getting a 55% premium, you're not getting diluted anymore. And yeah, so it's, I think it's a good deal for the Latin shareholders at the time of the market right now.
I think, I think you're spot on with with I think 20 million in cash when I last looked from the the latest quarterly, you know, you could you sure as bet before the end of the year, they would have been diluting again back on on Pilbara to to round out the thoughts on the deal there. One of the knocks that you know, is pretty genuine is that they're obviously now no longer a pureplay WA producer. They're exposed to a different part of the world, assuming the deal goes through.
And maybe that does cost them a bit of their premium valuation. People mark it down slightly because it's Brazil. You know, there's been a few companies that have gone over there and they've struggled a bit. It's not everyone's kind of cup of tea. So that that one does hold a bit of weight to it. And interesting to hear on the call that Dale was not really eager to talk down any further inorganic growth. You know, he wasn't out and out saying, no, we're not doing any
more M&A. So it was just interesting the the wording on that, on that front. Yeah, I think I think it's the end of because it's early. So as you said, they're not really, it's not like they're going freaking balls deep into it right now, right where bloody we're going to start building, we're going to start doing this because obviously when that happens, like with the different time zone, like it's you're not, you need extra teams.
It's a lot of extra, lot of extra work to like start working in two jurisdictions. But I don't think they're going to be pulling the trigger too quickly. It doesn't sound like they'll do can do much for two years, to be honest, in terms of progressing it towards being built until they are confident of a of a price recovery. So. Yeah. Like like we said before the call it, it was initially flagged to to be producing by 2026.
That's just not going to happen. That was also kind of factored into brokers models that this would kind of come online. So, so you know, one other way of looking at it is that there's sort of supply coming out of the market or expected supply coming out of the market. They were very firm in saying that they're going to bring this one online when the time is right, when the market can absorb the tonnes that they're
going to produce. And yeah, you're going to get people marking down the the value of this in the portfolio of, you know, projects and assets that Pilbara have. That was going to be the case if they took on any undeveloped deal. Yes, there's going to be a fair bit of CapEx that needs to be spent down the road, but at least that's in the hands of Pilbara now, right?
They can hopefully get the permitting done much sooner than they would in other jurisdictions and they can choose when they can go forward with it as opposed to being handcuffed until 28/20, 9:30 because of whoever Maddie, like, like you kind of say, whether that's the the government or other sort of shackles that you have in getting the project
online. And it's been given and it's been given to them resource ready like a shit load of drillings being put into this, hence why the measured and indicated level of the resource. Like probably too late to now because it's been so much drilling done a drill like a drill for equity arrangement with K drill, but probably could have saved a bit of capital previously if they did go down that road. But doesn't really matter now because they're getting bored anyway.
So don't Jay. So it doesn't mean any other mining companies out there in the gold fields can't like get in early now and give old Drew Barbie a call to maybe talk about, you know, the exploration drill and maybe drill for equity AJD. Hang on mate, these guys are going to have to do a bit more. You know, I mean, there's plenty of companies out there, but you want to turn this all into into a reserve one day caterer is the the team you want.
Well. And look, because it's a pretty simple process, like you, you know, drove his numbers in the show night. You give him a ring, he'll pop down, come have a couple of pints, talk some drilling, talk opportunities. Before you know you'll have a mill mineral resource filled with RC and diamond holes, but he of the highest standard, all on the back of having a point with Droba. And a great mate. Just a mate, he's a friend for life that follow. That's right JD, what about Sigma?
So we talked about Sigma, the, I guess you'd say the OG lithium producer in Brazil. Yeah, Sigma is an interesting right, because they've been kind of shopping themselves with a, with a for sale sign hanging out the front for a while. It was, you know, you know, very explicit in, in how they were kind of promoting it for a while. It hasn't happened yet. Obviously the the stocks come off quite a bit like it has with every other lithium stock out
there. But I mean, you, you took a dive into what they're actually churning out at Sigma there. Why don't you run through that and then we can kind of cover if if there is something down the track with projects tying up together? Yeah, like that and that's I guess the comment going around is like right, is this a bit of a stepping stone to a bit of further consolidation in Brazil?
Like look Sigma, they're looking to expand or said they're about two 50,000 tonne per annum at the moment or 270. I think it was looking to expand for phase two and throw it up to 766,000 tonne of spod per annum. So like, yeah, so and then you got Selena's PEI forecasts like, you know, 4 to 500,000 tonne of
spods. So combine that one day with Sigma, like there's over a potentially over a million tonne of spod coming out of those two projects in Brazil, in addition to Bill Gangora potentially expanding to 2,000,000 tonne in the probably the far future beyond the the P-1000 level. So like that's the, that would be the biggest fucking spot
producer in the world. That's like shit, like if all that piece together, if that's like the long term plan, it's that's becoming yeah, it's that's whether they're doing this to like think, right. Either way, either we do something now so we don't get bought by Rio or something. We have to get bigger to make ourselves bigger and more defensible. Yeah, I mean it, it's a super interesting point you raised Maddie, the the idea of expanding pill Gangura and whether that is actually what
they should have prioritised. I'm sure that's what a few people are asking at the moment. So obviously they chucked out the study for P2000 not too long ago that a CapEx of 1.2 billion as we kind of ran through there was hundreds of millions of dollars that were not included in that 1.2 billion.
So it was, you know, very capital intensive, obviously adding a lot of a lot of tonnes, but it didn't receive the warmest reception from the market at time just sheerly because of that price tag and because of the fact that they were talking about expanding again in an oversupplied market. Now you have to think they've obviously compared to the the
two here. And if you, if you look at it kind of crudely, we're talking about half a billion Aussie to buy Latin add in, call it another half a billion in CapEx, half cash, half paper and you're potentially getting 500,000 tonnes per annum at 5.2% down the track, You know, all up a billion. It it does on, on those kind of metrics, again, very, very kind of rough and timelines are a bit different and all these sorts of things, but one does look a bit more appealing than the other. Yeah.
And this is probably like the, the smaller bite that they've taken here, I think was probably the lowest risk option for them. So the market didn't burn them for so called bad M&A. Like it's not I I don't think you can never call counter
cyclical M&A, bad M&A. Bad M&A is the jubilee example that we gave before like buying something at the top of the market like, but you know, that's what the you know, the the high short interest was in place likely for you know, the natural lithium hedge, but also the potential they were going to do a deal and they have but it's not I just said six and a bit percent shares on issue. It's not fucking. Yeah, it wasn't. It wasn't a sweep at Arcadian or
something. No, in saying that it was, I think people were still sort of surprised, like, oh, Latin, like they're thinking, oh, but why not a, you know, a payment or or something like that. But I mean, we'll probably go through that in a bit more detail now as far as, you know, even like a line town or Wildcat or something, but which are bigger. But you know, each of them have got their own sort of things to to look at as well, which, you know, on paper might look more interesting.
But as far as ability to execute is a bit of a different story. Well, like Wildcats probably you got, you know, I mean Rose sitting there with 20%. So that's just difficulty straight away. Longtown, you got Gina sitting there, so that's difficulty. Paymate. You got Trudeau sitting there. Oh. Big truths. Well, yeah, paymates the that's the interesting one because everyone's oh, Pilbara should buy Paymetal Pilbridge should do this site, buddy.
But if you look at well, that's why I'm up together Latin verse payment payments market caps currently sits a bit below 700 mil Aussie was frigging 2 1/2 billion. So that's how much that one's come off so similar premium to this. That's like a what, one point one $1.2 billion deal probably if you look at the ore bodies, probably a lot more lithium at Shaka Chewy Wana. Is that how you bloody pronounce it? You. Gave it a crack, Matty.
That's the main thing, Shaka. Chewy Wana and and a lot thicker like you'd you'd take the ore body over the Latin one. But as you said, look at Sigma's timeline DFS to commercial
production four years. So getting, getting a bit of a foothold in Brazil, which is just is, is such a low lower barrier to entry to get a project permitted and built compared to Quebec. That's just unfortunately how it is. And for the, for what they're going to spend on it and the amount of spot to come out of Salinas, if, if it's, if it's delayed a bit and it's not, it's not going to be that hugely impactful on Pilgrim Minerals. I don't, I don't think like 4 or 5004 or 500,000 tonne.
So it's not going well. And it's like 100,000 tonne less. They're already going to be producing a million now to pill Gangora. So it's not like a massive material bloody impact if it doesn't ramp up. So it's just like combining all that. It's such a lower a lower risk option and but then gives them the opportunity to potentially inorganically grow with Sigma as well. And I think that's just the bet they're making. They've they're betting on Brazil versus Quebec.
Yeah, I think that's a that's a good analysis to to kind of make those, those permitting timelines just really, really stand out. I don't and who knows if payment would have actually done a deal with them at at at this stage. So look ex Pilgrim minerals Ken Brisden he's he's just moved over to Quebec because he came on as payment top dog start of
the year. So if you look at his actual bloody, you know, if I'm running a bloody mining company, I'm thinking about right, how do I make money out of this? But it's pretty, pretty bloody self set. That's yeah, that's what I'll be doing. So a. Couple opies to reprice. If there's a change of control he pockets 2 years salary so that's about a mil plus another up to a mil for the short term incentive bonus. So two years worth. So you know to like you wouldn't sneeze at 2,000,000.
But his real money is in his options. So he's got 450,000 Opies at 9 bucks 78. So they're well out of the money. Well out of the money, their share price is 4 bucks 43 and then there's another 450,000. I think they're priced about seven. It was based on the price of when he came in. So I think they're about 7 bucks. So even a 60% odd premium at today's payment price on top of what it is like they might be just in the money, but he wouldn't make much out of it.
So his, his incentive is to wait for a lithium turn around and probably in the meantime keep drilling progress, the bloody traditional owner relationships and the permitting and and all that sort of things. Unless there's a freaking turn around and a huge offer that comes their way. So I couldn't, I couldn't say. I'm doing a deal with Pilbara at the moment anyway. So they might have asked and he said no. Well, good mate, cheers.
Yeah, I, I think you spot on in in your comments there, Maddie. When you when you compare all the options out there, taking in everything into account, it kind of makes a lot more sense that Latin's the one they went for. Obviously it was unexpected to to me and a few others though. What do you what do you think about all script JD when they got shit load of cash there already? It just makes sense.
I think look at the relative outperformance with Pilbara and every other company out there it, it just makes perfect sense. The the cash is precious. When you're in a cyclical market and you're in a downturn, you don't want to waste that. So I think that's very much the the right decision. Yeah. And like just cause Pilbara share price down as you said relatively it is done a lot better than everyone else. So you could say technically their script is still overvalued in a lithium market.
So yeah, get it out. It's all relative. All, all relative bloody. I think that's it. I think we've covered. Bloody just, that's everything you need to know, I reckon. There were a few other comments, you know on on the call and in the presentations and stuff about sort of diversifying themselves geographically, being able to sell into other markets, you know, perhaps less mature markets in in Europe and in the US. That's a bit of a tweaking of the style.
You know, obviously they've they've got off take that goes to Asia right now that all changes. Yeah, I think that that's kind of interesting. But I think we've we've covered most of the kind of key details behind the deal there. Yeah, good stuff, Good stuff. I'll I like it. I like it. Go to Africa now. Yeah, finally. Like we've always been saying fuck when, when everything's cheap, when's people going to do deals?
And it's happening. Pilbara have had frigging cash for ages, even though they haven't used any of it for this. But I reckon it's like being a pretty disciplined approach. So yeah. Yeah, interesting to see the market. Goes to 200 bucks a tonne but. For now. For now, it does. Not go the mining industry. They're all buggered anyway if that happens. Mate. They might as well go out swinging, yeah? Exactly right, JC, Onto the peas. Onto the Peas, Perseus and predictive.
So we saw aftermarket yesterday. Perseus made a strategic investment. Let's put the inverted commas around that, our quotation marks rather in a predictive discovery. Apparently you know it already. Was so word on the word on the decline actually, actually and I think this is I don't know if he's knew this. So tell us what what sort of sparked this investment was that I think Perseus got wind that MMS were being looked at to go actually do the mining services contract in Guinea for
predicting? Heading to Guinea? Yeah, so they've, they've thought, fuck, we better pounce on this before this thing runs away, 'cause mate, once the desk gets rolling, like, like she can just go. You know the power of the desk. Oh. Mate, the algos just start bloody the things just it's like a tornado. So mate, 'cause it's probably on the back of the what MMS have done for Black Cat at that miree project. Like have a look at this first. Or delivered two months ahead of schedule.
Look at the fucking dirt flying into those trucks. Geez, you don't see that often. It's normally, you know, 10 months behind set schedule. No, if all the bloody analysts listening like mate, you Chuck that in your model, pull the first production forward two months in your cash flow time value of money that is worth millions in the future, Chuck it like the discount rate like freaking unbelievable.
So pretty much if you want to, if you want to get your first or at least two months ahead of schedule like MMS are the time to do it. So MMS and look at this and look and it's materially converted into a investment in predictive by Perseus. So there. You go. Are you going, are you going to go into the first thing we saw about this Perseus predictive thing? I'm going to say I'm going to save that fun fact for right at the end. That fun fact the the one on the iris screen?
Oh. Oh no, that one's, that one's coming very, very soon. Yeah, that's in. So I'll look. Forward to that one. So first, so first let's let's set the scene right. So for those who don't know Perseus, there are roughly 3 1/2 billion market cap Aussie listed African gold producer. They produce over 500,000 oz a year between three mines, Edican in Ghana, yeah, Oray in Cote d'Ivoire and Sissingwe in Cote d'Ivoire as well. So here's a map of where they
all are. They also have the Myer Sandgold project, which is previously known as Block 14 in Sudan when they acquired Orca Gold back in 2022. Unfortunately, there was a, you know, big outbreak of hostilities in Sudan last year, which has been a pretty big set back for the project there. So Perseus have sort of deferred. ID until the situation sort of settles down there. So they're just at the moment it's a very low level drilling and study sort of activities
there. More recently though, they've been in the press for acquiring O Corp for about USA 150 million bucks and they have the Nianzaga asset in Tanzania and they did that deal earlier this year and that was a bit of a competitive process. Oh, the Battle of Nianzaga. The Battle of Nianzaga. Silver Corp. Yeah. So good times. So that's got a 2.6 million oz, all reserves, around 2 grammes, all the key licences are granted.
They did ADFS of a couple years ago showing a production profile of of about 234,000 oz per annum over 10 years. That's a bit of open bit and underground and at the time at this mind you this is at a a gold price of US 1750 an ounce. It had a post tax MPV five of US 618,000,000 and a CapEx of US 474,000,000. Now just pop that in the back of your mind for for for later. Yeah, so.
Bit over one to one. Yeah, bit over one to one, which again for for single asset companies and you know if your market caps a lot less than the CapEx can create a bit of difficulty. They're trying to get funding. I can see you're building up a narrative. I'm building up the narrative. We're going on a journey, Matthew. So there's an updated feasibility study being prepared by now.
The Perseus team who owned Nanzaga expected later this year, doing a lot more drilling, feed studies, all of that. FID is expected at the end of the year and targeting first gold in early 2027. There's also the CMA Underground. They've got a Yayari, which is a key growth project for them. They're starting a portal sort of mid next year with first production anticipated mid 2026. First first ever underground mining coat for that one is that that was from our episode the other week.
They have to, like Perseus Help and Cote d'Ivoire developed the regulatory regulatory framework around Underground Morning 'cause it's never been done good. On you. Good on your Perseus. Go Perseus. Go Australia. Go Cote d'Ivoire. Go West Africa. So and stepping back on more the, the, the corporate level, Percy's made almost US $500 million in cash flow in the last financial year. And they've got a history of achieving or exceeding guidance since 2020.
So the last four years and they've got US 587 million in cash and bullying and no debt. And I mean, look, look at this graph here, right? This is shows their sort of production profile over the last four years and their realised gold price and all the sustaining and that margin between the gold price and all the sustaining has just continued to to grow in. You know, we know, we all know, we've talked about it quite extensively, the cost inflation environment we've been in recently.
And now look, it has ticked up a little bit, but you know, relative to the gold price that's super, super impressive. So now let's move on to predictive. They're about 1/2 a billion market cap company listed on ASICS as well and they're a W African gold developer and their main asset is the bank and gold project in Guinea. So they've got 85% of that and Guinea, you've got the balance
of that asset. So they actually put out a maiden mineral resource on that only three years ago of 3.65 million oz. Today that resource stands out just sharp, 5.4 million ounces of which 77 percents indicated. And they also put a a maiden or reserve out earlier this year as well of just over 3 million oz mostly open pit, but some
underground as well. They put the PFS out on bank an earlier this year in April, which outlined a 12 year my life, almost 270,000 oz a year at 1.8 grammes per tonne per of gold. To give some context, this is about 30,000 ounces more than Nanzaga, which Percy has just acquired, and 50,000 oz per annum more than Wolf's Kiaka, which is currently in construction and development. So this PFS showed it of an MPV 5 which I hate in MPV 5, but let's just roll with it in West Africa.
In West Africa in. Guinea, West Africa in a high interest rate environment. Just anyway, I'll just get too upset you and that's that and that's at spot you. 2300 US gold price is US 1.4 billion CapEx of US $456,000,000 and that's for a five and a half million tonne per annum plant. Now they say in their presentation, oh, you know, it's a really low capital intensity per oz, but I think the better
measure is MPV to CapEx ratio. I'm very much a firm believer it's always margin over oz. Doesn't matter how much you're doing, as long as you're making money off them, that's all people care about. Unless you'd be HP and Rio. They don't. They they love they love 10% IRS. Oh, that's stunning. So if you do do an MPV CapEx ratio, this is mind you at spot, it's around a three times ratio. So 456,000,000 US CapEx is currently a fair bit more than the predictive market cap.
So again, this is a little bit analogous to all Corp Nans Argo when they put their study out a couple of years ago. Obviously there's there's still a lot more work to do on that to optimise it, convert more of that inventory from resource into reserve, leveraging some some of the grid power in Guinea which they reckon could save another US 100 bucks an ounce on their all. Sustaining what's the timeline they have on, you know, the next three or four steps?
Yeah, so. The the timeline is second half of this year. They're expecting their sort of approvals of their exploitation permit, which was essentially like a mining permit, then ADFS sort of the year after construction in sort of 27 and then production in 28.
But arguably the most important thing for Predictive now is securing this exploitation or mining permit given the assets location in what's called a peripheral zone of the Upper Nigeria National Park. So have a look at this map here. So it's like it's a real grey area job, isn't it? It's in. It's right on this fringe. Literally right on the fringe, right? Just makes it bloody. It'll be just annoying.
Yeah. So I mean look it's you can see in the top right hand corner there where North East bank and and bank and central are. So they're on that right sort of peripheral area there. So Predictive actually put a bit of a detailed announcement out on this back in 2021, but essentially that peripheral zone mining of mineral deposits is not permit, not permitted at this stage. However, there are precedence in Guinea for mining permits to be granted in environmentally sensitive areas.
The submission of the PFS early this year and they also submitted their what's called an environmental and social impact assessment to the Guinea government is a really important part of securing this permit, which as we sort of said earlier, we're anticipating sometime in the second half of this year. Yeah, right. So they're they're obviously not taking a full swing at them, but they want to be in the game. They got their foot on the
throat now. 100% So now if we're taking that context into what was what was announced the other day. So Perseus appeared to have taken a bit of a leaf out of the Remelius playbook with a 13.8% strategic investment in predictive. So they acquired about 325 million shares at $0.21 per share from JB Boynton and other entities linked to the investor and the driller, roughly about a $68 million Australian outlay for Perseus.
Persis also have an additional almost 3 1/2 percent economic interest or about 81,000,000 shares in predictive by way of cash settled equity swaps, which brings their sort of total interest, if you want to call it to just over 17% if you include the swaps. I've got a question. Yes, what the fuck is a cash settled equity swap JC? I feel like this is that moment in the Big Short where they pan to someone else to explain a really complicated. Finance to Where's Margot Robbie?
Where's? Margot Robbie Oh Jay. So I had to, I actually had to find a friend on this one because it is it is a bit of a complex 1 to explain simply. So essentially what it is, is an investment bank, you know, like a, you know, Citibank or Baron Joey or JP Morgan or whatever, holds the shares on their own account and has legal title to these shares on behalf of a client who has a contract with the bank that to essentially get economic exposure to the shares
without physically holding them. The clients in this case, Percy will say, hey, he's, you know, IB over here, here's cash, can you and here's an agreement. I want, you know, so many PDI shares, the bank holds, acquires them and holds them on the bank's account. And Percy's has that economic exposure to those, those PDI shares. So the voting rights of those shares actually sit with the IB.
But there's typically when I mean saying IB, I'm referring to investment bank, but typically there's some sort of arrangement that where the bank would sort of just, you know, abstain from voting or just vote with whatever the proxy says and and things like that. So I think, I think it's the way and I think we talked about it in the Remelius Spartan thing when they were trying to figure out where all those bloody
shares went. So they can, they can effectively hold 9.9% of a company without being touted as a notified to be a substantial shareholder 'cause they can have 4.9 and a bit in their own name and not be as substantial. Then they can have say 4.9% on swap and say they've effectively got 10%, but no one knows they're a substantial shareholder yet. No, that's right. So it's probably is is that? So Perseus have had a. 3.45% swap in place prior to this stake.
Yes, that's right. So. So they've been on the register effectively. Yeah. So it's, it's, it's a super common way where you can sort of build a position in a stock a little bit more on the down low. So covert op, a bit of a COVID op, and we'll get into that a little bit more later as well. I think it was funny when you I actually read that. What is a cash settled equity swap? What? What the hell is that? But I just know it as swap. Yeah, they just say, ah, we got
them on swap. Got them on swap. That's what they say on the desk now. You're all in on the lingo, Maddie. Oh I love. It right, So what a so we we saw something very interesting yesterday afternoon, the execution of the block trade itself. So now look, everyone, everyone's all had moments of stuff and shit up at the office. It always happens where where no one's gonna be into it. But this was just a classic case of fat fingers on the keyboard, right?
This is a carton. This is what you define as. That's a carton. I think it's probably about six cartoons maybe so not once, but twice if you look, have a look at this. Let's have a look at the first screenshot here. What do you say is the problem, Maddie? OK, so that's that's Perseus. And so there's, which is trading at $2.48, but then there's been an attempt to block trade 294,000,000 shares at $0.21. Yep. And then the sort of further one later now obviously. And they tried again.
Then they tried 17.8 million at. That didn't work, so they quickly reversed. Yeah, Yeah. So they quickly reversed them, thankfully, and then put them in the right company, which was Perseus acquiring predictive shares, not Perseus buying Perse. Yeah, Anyway, predictive buying person. Oh God, too many pays. So they got. For him, there it was. A pays. Probably buggered that person up. It's just too many. Pays. It's too many pays. Oh God, that would have been.
Imagine the yelling. 'S Oh, I'd be a bit scared, but so they got there eventually the the the block trade got executed and we saw very properly after that the announcement come out on ASX about the strategic investment. But Maddie? But if you, if you, if you look into the weeds there Ali and and I'm sure you did the digging you can, you can see that there was a bit of action going on going back a few months now, right? No, that's right.
So this is, we'd seen sort of back in the appendix of the change of substantial holder notice Percy's had been sort of buying small parcels of predictive on market since you know early April this year. But even prior to that, they'd been building their swap position from as early as September 23, sort of building that up sort of steadily till till June of this year to where they've announced it at about 3 1/2 percent. They've got on swap of
predictive as well. So who's who are they buying the shares of? Tell us about this character. OK this. Is interesting. So there's, there's again in the, it's all, all the juicy stuffs in the appendices, Madam Jade. So in that appendix, there's, there's three sale agreements in there. And from what I can tell those sale agreements in those terms, they're effectively, you know, replicas of each other as other than the, you know, the sellers
themselves. So the first one, we've got Jamie Boynton, 59 million shares of Predictive BPM Investments, 28 million shares of Predictive, which Jamie is a sole beneficial odour of. And then you've got roughly 225 million Predictive shares held by Capital Limited. Jamie Boynton is the the chair of capital, which is they're a London listed drilling company around 300, three, 150 million market cap. He's also a major shareholder according to the last annual report, about 10% of capital.
And then, as an aside, Jamie is also a substantial holder of Weir Gold. So Jamie Jamie's got a big guard. On he's got a bit going on. So with respect to the capital component of of this sale, he's recused himself from all dealings with those particular
shares. So the, the, the board's sort of dealt with that separately, but he for his as far as his personal shares with in his own name and in BPM, he's essentially accepted the the same terms as negotiated by capital for, for those holdings looking at capital actually made an announcement around the sale of their PDI shares. There's sort of applying a lot of those proceeds to reduce debt levels and sort of recycle through the business. And Predictive is also a drilling client.
Of capital God now this was the next bit was very interesting that I've never seen before in the sale agreement yeah so. There's some, there's some interesting terms in there which I hadn't, I didn't think was super common until it was sort of pointed out to me. A few other examples, but the key ones in there is there's a profit share. So I'm just going to. Clock MMS.
Yeah, like, yeah, just like MMS. So I'm going to, I'm going to group the three, the three sellers into a group here just for the sake of explaining the term.
So the sellers and Perseus have got a profit share arrangement whereby they will share 5050 of the profit if Perseus sells any of the acquired shares in PDR to a third party, whether that's you know, privately as part of a third party change of control transaction and this sort of condition or clauses in place until the 31st of December next year.
There's also a call option. And so if Perseus makes a takeover offer for Predictive prior to 31st December next year at a price greater than $0.21, which is what they acquired the shares for, then the sellers can acquire back those shares they sold and accept the offer. At the price they sold them for. I think so, yes. And then or cancel the call option for a cash for equal to the premium.
So I think the way I understand that is essentially what this means is these sellers maintain some level of upside optionality in the event that Perseus or some other third party deal occurs at higher than $0.21 by the end of next year. Yeah. So they're like, right, If you want a strategic position in predictive, the only way you're getting it is my shares. But it's on these conditions, if you sell them, I get half the profits.
And if you take them out, take us over, I'm going to get the same upside as I would if I kept them. Yeah. Look at you. Oh boy, knees all over it. I like him. Take Me Out for dinner, Copper. Yeah, Interesting, right, buddy? Jesus Christ, you say? I can see why you freaking needed to go for a walk. You go on date comma. Go on date. So what's so like Percy? This has happened pretty quickly after the frigging all Corp transaction. No, that's right.
And, you know, as far as what it means for Perseus, you know, if they wanted to go the full way, I mean, you know, they've they've they've said actually what we should have sort of flagged early as well that there's no, you know, subject to the whole usual tease. And there's no current intention to, you know, make a takeover offer for predictive. They're not currently in discussions with the predictive all the rest of it. But should they want to go ahead
and do that? I mean bank hand sort of fits perfectly into that sort of. Percy's targeted portfolio of, you know, a 200,000 oz plus producer high margin asset in Africa, as we sort of touched on at the start, you know, Percy's focus for 25 and 26 would still be that, you know, CMA underground at Yarra and the construction me in Saga with first Golden 27. So you know, they've got plenty to keep them busy, but assuming you know, they did do a deal
with Predictive, you can envisage, you know, maybe a 28 or 29 sort of sort of first gold for bank can and you know a production profile, you know, approaching 750,000 ounces. I think it's, it's like it's first in, first in the door at the moment. Like I think there's a bit happening now. Everyone's like, right, Companies are thinking everything's cheap enough to start getting a bit up and now look at what we talked about today. No. 100% it's time in the
market. JC it's time and fired up. And I mean, I think as far as you know, why they've structured it this way and you know, perhaps they've learnt some lessons about the sort of the silver court back and forth for all court, you know, so sort of let's calling it doing a Remelius, locking in a stake now, locking in the optionality now. There's absolutely no as we've just said, they've got plenty going on in the next few years. So there's no need to rush to act now.
They can take over predictive if they want later when they're ready or if someone else bids, they can make their life difficult to and or you know, sell into their deal, outbid them whole raft of options. It gives them sort of approaching it in this way and in this structure as well. What about for predictive? Do you think it's positive or negative? I think it's very positive. I mean, it's just sort of, I mean, the whole Percy's predictive thing is, is not awfully new.
You know, people sort of pitch that idea multiple times. But I sort of made that, you know, a bit of a more, you know, a bit more of reality now. I think it's honestly a matter of when, not if for a predictive takeover. Whether it is, you know, Perseus, you know is logical, it could be someone else. I think, I think this does the only negative is that it might be a disincent.
Disincentive is that a word? Disincentivize competitive tension just got, you know, once they once they got the foot on it, it's like, right, that might just deter other companies having a crack because they're like, fuck, we're going to waste all this time. And Percy's have already got the stake and the the power over it. So that that's that's one is so they're sort of bit from column a bit from column BA little bit, as you said, that the logical company take them anyway.
So it's like if they could have sat there with no one going for them. No, that's right. That's right. And I think the, the important thing of you know, or the more probably the interesting thing of why now, you know, banking is, is still yet to receive it's exploitation permit, which like we said it's we're expecting later this year. Persy is taking an interest in them now sort of probably months before they're expecting.
This permit surely indicates some level of confidence that that that permitting will be received. I mean, I imagine Perseus would be pretty sensitive about geopolitical risk given what happened in Sudan last year. So they'd definitely be doing the homework. But still, it's never a guarantee. Till the till the fat lady sings. Like they're looking at the work they're doing is like holy snap
and duck shit. It can set them up for the future if they get this gown and Zaga gown in addition to their existing operations and diversifying themselves across Africa. Making the plays now while the market's getting hated a bit, which is explorers and developers are getting hated, but that might start changing soon. So getting in now is probably a fucking good move. Would you call it another counter cyclical plane? Oh, that's. Counter cyclical at a record high gold prices which is
freaking weird. Yeah, what do you reckon, JD? I think we we might be stretching the counter cyclical term, but you're dead right. The the junior end or the smaller end of the market's been beaten up To your question Maddie on do you think it's positive when you asked Ali before you know, you asked that question to the market out there and you can see the answers are pretty emphatic. Yes. You know 18% up is the share
price reaction today. That's you know, what does that add another 100 or so million on to the on to the market cap. You can see people are pretty excited and you know, I, I thought there'd be a little bump. I'm, I'm surprised it's up kind of so much given that, like you say, Ali, you don't know when it's going to happen. Is it going to be 6 months, 12 months, two years? But the conversation around Perseus has changed quite a bit
now. I think it was only 6 odd months ago, Maddie, we were chatting about Perseus and we were like, shit, you know, this is this unfortunate stuff has played out in Sudan. What are they going to do for growth? Now all of a sudden they've got all court, you know that, that that's all gobbled up, that's done and they've got their foot on another one. So the narrative has changed in, you know, a relatively short amount of time. Bloody good work, JD.
Good work, JC. That was freaking in detail, I think. Yeah. Did you get deep? And you're like, shit, Now I'm like, what have I? Done. Now I've got to commit no. I've I've got too far. Oh God. But I did come across actually, actually one other point I'll just quickly mention before as
far as what it means for PDI. This is again super analogous to the All Company and Zaga example of, you know, a single asset developer trying to, you know, spend a lot of CapEx for what seems to be a great asset, but their market cap, you know, is, is far less than that that CapEx bill. So have having that asset in the hands of someone like a Perseus, you know, who could fund that out of, you know, cash flows or debt or something, you know, less dilutive than equity is
another positive point. But I'd like to close on a bit of a fun fact. You beauty. So this is an extract from a predictive announcement a couple of months ago. Look who PDI appointed as their CEOCOO. Does the name look familiar? All Corp. Who owns All Corp now? Say it was. Read into that what you may, but I thought that was a little interesting too. Good work JC. Good digging, right? Good work time. Good night JD. We've got a RIP snort coming out tomorrow.
JD has got hold of ex head of research and a previous director at Goldman Sachs. Wow, to come on Yeah, and talk in everything global energy. In the big. Apples from stateside. That's it. It's a freaking group. Stored up. Nah, good stuff and thanks to Bloody Axis Modern Technology for servicing the whole world with drill aisle survey instrumentation. Also MMS verify spec power and technology, DSI underground, Silverstone, CRE insurance,
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