Right. Eye money miners, very quick quarterly wrap up coming up as quick as bloody MMS can get gear on your site to start moving open pit dirt. That is how quick that is. Like we're doing this segment to highlight how quick they are because the gears there, the gear can be moving dirt probably lunchtime. Pressure's on for us to be quick. Yeah, yeah, I'm going to make it quick because I won't be as quick as them, obviously. Hey, boys.
Yeah, Travan JC had a bit of a special guest come in this morning to shoot the shit a bit. Yeah, we did. We had Jake. I don't. Know if you know it. Did you know him? No, I can't cross him. Jake Klein, executive chair of of Evolution Mining. He popped in the studio, had a bit of a yarn. He's one of those big thinkers in the industry. He's always got something a bit kind of, you know, out there that he wants to talk about.
A few talking points. And today we went in the the weeds of some of the, you know, very strange government policy decisions that we've seen out there, like the rug pool of Mcphillimy's and the implications that has obviously he's evolution outrageous, but was happy to talk about it, which, you know, I think was important also Australia's relationship with China and kind of the, you know, the the big theme of de globalisation, what that means for for a lot of the
industry. And then, of course, I couldn't help myself but ask about deals, future deals. So as. Joe predicted. He gave you nothing. I reckon there's something there, but I have to really listen. Right now let's let's RIP in. First off, cap off the rank ass Siona. Mate, Lithium Co Lithium, Yeah, I just thought I'd point out, you know, just wanted to point out kind of what stood out. This was just one of those ugly waterfall charts, not much. And it looks very good it.
Looked all right until you read what the item was. Yeah, yeah. You look opening cash, closing cash, oh, cash went up. So you think oh did they make money? But no, the ones that go down include group underlying EBITDA -18 million. But the thing that went up was this net working capital movement of 46,000,000. What they put that down to is customer prepayments and draw down of ROM inventory.
So you know it gets me a bit nervous because those prepayments are now future obligations that say owner must satisfy fire production and that and delivery bears real cash cost to the business and there's risk that that will be the loss making too. So yeah, I found it interesting that is some hedging as well. But I like from what I kind of pieced together, I think what they've done is that there's some short dated contango in the market.
They can actually get a, a, you know, a a bit of an uplift on selling kind of near term, near term inventory as a result of that. I wouldn't imagine it's it's too much, but. Yeah, it's certainly a limited hedging, so. Yes. And fun fact, I, I had someone tell me that that that Zion is going to have to spend 22 million this quarter on exploration to be to get the flow through financing kind of credits and all that sort of stuff. Yeah. Oh, chestnut. Yeah, right. Good summer.
But we're we're just going to talk about not the numbers, just shit that interesting shit in this Northern Star pretty flat. It was all pretty stock standard, but hedge book is interesting for FY20 6. As I, as I said in a call today, everyone starts talking about hedging in a rising gold price environment. And as I said, hedging never works in a rising gold price environment. It's pretty, that's pretty. Can't say it any more simpler than that. More about trying to guarantee
long term returns. Works great when you pick the top you hedge right at the top and then Phew, gold price forward. Sorry, because they've, they've got it to 2 million oz for FY20 6. But nearly you look at the hedge profile here, nearly third of that is hedged at an average price of 3150.
So it's just, it's funny when you look at the numbers like the effect on large scale producers like this, I like hypothetically let's say gold was 4100 or stayed at this level all FY20 6, they realised price would be a bit below 3800. So that's a hedge impactful. So almost $200 million just in that. So or it could go down and it's
and it's all good. So but, but you think, you think of an average realised price of potentially 3738 hundred when they were doing the KCGM expansion FID and everything, they would have taken that any day of the week. So it's yeah, it's just, that's what everyone talks about when the price goes up. You can see the declining grades and oz output at Karasu Dam a little bit back down to 2.6 for the underground grade. They did point out in the call that it was part of the mining sequence.
It's easy one to say, yeah, obviously a high higher open pit material move. Not sure if there were cutbacks or something, but like mill head grade back down to like bang on two grammes a tonne all in sustaining costs up 300 bucks an ounce 2100. Always wondering if this trend were to continue for lowering grades, increase of costs, would it get northern start of the point when they would consider off loading Karasu DM2 the logical buyer Amelius for their
Rebecca Rd project. It's. 2100, all in sustaining costs almost a 50% margin, Yeah, these days, so it could be worse. But you can get that, you hear in the episode later with Jackie. Well, this is when you should be selling assets, not buying them in a gold price environment. Well, I think you've got the the marketing challenge of not hitting 2 million oz then, yeah.
That's it, that's it And that that's why I guess and we always come back to that point of just seems like it's not never going to happen, but not in the short term that they're ever going to offline this. Yeah, yeah, playing the waiting game for sure. You've been tracking the declining great at John D Last time they reported too did. You so it wasn't too I looked it was 3 point. Three. OK. So yeah, yeah, that. Programme looked all right.
Yeah, it was pretty buddy. Yeah, it just doesn't as you say, JD to where you take 2100 at the moment. So you would it's, they're not going to go on and give it away, that's for sure. Because the bargaining chip they've got against Remelius is the the water infrastructure installed by Greenlands from the Southern Ball field. Interesting. That's right. Interesting. Tell me, Tell me about.
This well, like you could say that probably adding 100 million to the price tag like because you look at all the work that Greenlands did there at Carousel Dam, like the bloody redevelopment of the existing ball fields that like supply the ball pumps and the transfer pump station, right. Another example of generation 7 AI driven Tele telemetry and
leak detection systems. Well, that's like unparalleled, but how do you it's amazing the water and I've heard that the water pipes I install are like those BMW car tyres, effectively self healing and puncher proof like that is like just state of the art water infrastructure. So it'll be the first time in M and A history where water infrastructure will have such a large effect on the price tag and the outcome. I believe so. Could have been something else
to keep in mind. Could be in the poison pill. You know, we're gonna, we're gonna use Greenlands to just make all of this super jazzy and then they're, they're not going to pay up for what this is worth now as a result. Yeah, when you're not working over a poison pill, they're like a yeah, Yeah, they're like a panadine Fort. Oh, they just make everything better. It's definitely better, yeah. Definitely better.
It's definitely. Better right Metals X. Yeah. So, yeah, I think, I think it's been a bit too long since we've spoken about the Mighty Meadows X So worth worth a little chinwag again, they're trading around 43 cents. They're doing all right at the moment. Pardon me. So Renison had a record tin production quarter. So things are actually looking pretty good.
I'll just start quickly on the operational side of things, they mind two point or they produced rather 2.9000 tonnes of tin at all in cost around 30,000 Aussie per tonne. Now tin average about 47,000 Aussies that gives them about a $17,000 margin per tonne. Obviously Middlesex owned half of the the operation there. So about 1500 tonnes is their share and that kind of equals net cash flow of 24 ish $1,000,000 and there's a cut by the costs that aren't included
in that. That sort of runs at about $10 million per annum or two and a half $1,000,000 each quarter. So 22 ish million is the cash flow. The financials themselves aren't, aren't the cleanest because of the the JV structure, but those numbers I just said are the ones that matter. Cash flow was better this quarter than it was last quarter, which is also good to see, especially in the face of the tin price being about $2000 on average lower over this quarter.
And there's there's one other detail to kind of look out for you. It's kind of confusing when you read it at first. They report renison 100%, but they own half. So in the in the table that they show you want to half those numbers or just double check what you're kind of looking out for there on the repurchasing side of their their stock. Obviously it was a big deal four or five odd months ago when they announced the buyback, they bought back just under 10 million shares, so about $4
million. I don't think we need to go through again. They could probably do a bit more on that front, but we've spoken about that. One of the interesting things to look at though is they paid up to $0.40. So I'd be keen as the announcements come out day by day and they keep buying back the stock, whether they're going to go over that $0.40 mark or if that's the sort of internal limit they've got in place.
And just looking at the the valuation, so $197 million in cash, if you go through the the net receivables inventory on it and revenue and and payables, there's around about $18 million. So a bit over $200 million. You could kind of call that in cash market cap of 380 million that gives you an AV of 170 million gets a bit better than
that. They've obviously made an investment in First Tin and they've got a few other in investments in like Nico and a couple other companies out there that they mentioned in the quarterly. But like most things it's sort of screens cheap for a reason. They again talk about maybe they will do M&A, they're looking at base metals and a couple other things, but always a a super, super interesting company to keep tabs on.
Yeah, you look at operating operating cash flow, it's 22.7 million go to annualize that you get like yeah, ninety 90 million bucks. So that you know 91,000,000 annualised operating cash flow either you said 170 like net off the investments. You know, depending how you get funky with the the the Cyprian con note and how you want to treat that. We can we can just we can just call it an actual EV call it call it 150,000,000.
Find me lower sort of EV divided by an operating cash flow multiple and the ASX for for any company that has like a 10 year reserves life. I'll be, I'll be shocked, but I can save them for a while. It's like the big, the big risk is that they, they spend their money on something silly and that, you know, there's plenty of other risks that we've talked about in the past. But yeah, a. Lot of potential though. Next cab and taper, the Minari
scoping study. Yeah. So we, we won't run through all the numbers money miners can just sort of have a have a squeeze through that at their leisure. But there's a few sort of interesting talking points. I guess we we spoke a bit about it in the context of of great land infrastructure is one of those interesting talking points. The the roads are a bit cooked out there. They need a bit of work on them. Obviously.
The other key point to talk about is the, the fact or the question rather, do they need to build a mill? So they're analysing a 3,000,000 tonne per annum stand alone scenario here in the scoping study. Pre production capital is 300 million, about 1/3 of that goes towards the process plant. They've got about 90 of that going towards pre production mining capital. So that that is a sort of point of debate and other people in the area can sort of run their own numbers over it.
But the stock has had a pretty decent run of late. You look, you know, zoomed out the past couple months and the thing sort of 3X now. Obviously you got the great land deal happening in the vicinity there. You've got Antapen themselves signing off the deal with Rio over Citadel. That'll sort of net them 17,000,000 bucks in cash and then you've got gold price running, so 3.1 cents. They kept at about $130 million once they wrapped up that Rio deal.
Like I said, 17,000,000 that'll take their cash to 23 ish million leaves them with an AV of $110 million. There's also so that there's 4.7 billion shares outstanding 850 ish million options, 650 now well in the money now that the the stocks run up a decent bit. So if the the stock holds up at this level, wouldn't be sort of surprised to see about 14% dilution over the period. Sort of they've got staggered expiry dates from 25 to sort of 2026.
But yeah, I think that'd be a bit more dilution. But all like it's still pretty interesting to look at. And I think the, the real kind of chat to have here is like
what, what happens next? So we've heard a couple rumours that Great Land, oh, I think Antipa would put these ones out there that Great Land might use them to make their way onto the ASXI Think there's sort of various tax reasons and other sort of implications why that might not be the, the most sensible kind of way to go for Great Land to get themselves on to the ASX. Also sort of worth noting, this
is just a, a scoping study. I know it's in the area, but the, the numbers are ±35 odd percent. So yeah, I mean it's. 1-2 hundred percent since since the Greatland deal a month ago, which is, yeah, kind of remarkable, yeah. Yeah, I mean, in the in the, in the context of gold price running hard as well, maybe a few of these sort of juniors having a bit more attention put
on them. But it feels like all of a sudden a heap of people are looking at at that sort of Patterson province and, you know, maybe gold sort of developers or small caps more broadly, right? I reckon there's no mill getting built there. It's going to Telfer, that's just 100% certain.
Yeah, I reckon that that that did like whether whether there's a merger with Ireland or not, I reckon it all depends on like realistically what are what is the time frame you could actually get that that fade into the middle like other permitting challenges that are actually going to blow out. And when you've got a bit of a, you know, a fall off in the mining schedule that could be filled. Can you actually get the anti war in there at that point in time? If not, then wait longer.
Yeah. And I'd be good to sort of say where whether they kind of go like scoping study. The, the, the historical sort of timeline from scoping study to to getting something in production in, in racing times
is quite a few years. So we came to see if they sort of expedite things, Maybe they sort of skip a study phase or something like that and really start putting some of that that money they got in the ground and use some of the new found love to maybe raise a bit more in time and really hit things hard. Kind of say, I'm sure. Yeah, the conversations have picked up a bit of pace in in recent times in the boardroom there. I think it's you think it's
simple. You think right, they're just going to mine it, crush it, truck it to Telfa, no cyanide, no process, play it, no tailings management, anything. But speaking to a person like an MD going through the the same process at the moment, they think you think it's simple, but it's still waiting in line, waiting for the permits in the department to review it. And you're just like might take six months to for a movement to look at it even if it's simple.
So that's the headwinds those companies have got in our great country. Crazy. I mean, I do think these guys have plenty of work themselves that they they need to be done in the in their own time. But even when we get to that stage, yeah, it's just bloody hard work, right? Should we get into the? You have a good summary at the start. To Jake. Yeah, we actually talk a little bit about some of that, you know, government stuff going on. So you'll, you'll enjoy it, Maddie.
Let's do it. Let's go. Jake Klein, thank you for for coming. Last time we spoke was in, I think was in the front bar of Debos. Actually, I felt I was like, and here we are now you're sitting in front of our bar in our studio. Welcome to money of mine. We're yeah, stoked, stoked to speak with you again. Thanks, Travis. Really happy to be here, shows you the success you've had. We're now in a proper studio. It's very professional. I appreciate that.
Yeah. No, we, yeah, not, not in Kaggol anymore. But last time we spoke as well, you were you were pitching the merit of, of gold to be cool again. Gold is now cool again. It's very cool. So you know, keen, keen to keen to know what's on your mind again now that you know your your prophecy to make gold call again is actually true. It might be a bit too sexy. I don't know what your thoughts
are on that. Yeah. I mean, I think, you know, there's lots of reasons why we can debate why the gold price is going to go higher and I think it may well, but from a gold miners perspective, we're entering kind of a high risk phase for gold miners. This is the time, you know that gold miners have proven themselves when the gold price is as high as this to be poor custodians of capital, and I'd hate us to do that again.
So I think I'm nervous because the 4th $4000 gold price is phenomenal, but I think investors still remember the skies they have from the last time the gold price is high. The sector weren't good custodians of capital and we've got to prove them wrong this time.
Do you think, do you think the sector will be able to do that or do you think that, you know, human behaviour was just, it's just the way it is. People are short term instead of our short term motivated short term thinking and they want growth for growth's sake because they're incentivized on production targets or or whatnot.
I'm concerned because the narrative that we've heard from investors, even if you look at say evolution where it was, you know, we've been through a tough period for the last couple of years. We've had a decent couple of quarters. This last quarter was particularly good. We're making money and the narrative wins a little bit from some investors. You know well done, you've delivered, but how you going to grow now? And I think that's high risk
from our perspective. We just want to bank that money. If you look at Evolution and you think we're producing 750,000 odd ounces of gold and the gold price is $700.00 higher roughly than what we planned, we should have $500 million more cash in the bank in 12 months time if the gold price stays like this. And I think that to me is going to be the asset test from investors. Can gold miners convert the high gold price into money in the bank?
Yeah. Or you know, even more explicitly, can they convert it into returns to shareholders as a, you know, as opposed to a kind of, yeah, I think, I think the gold industry in particular has a tendency to want to want to grow via acquisition or, or or you know, expansion or etcetera, all these kind of other inorganic or organic potentials. But they don't often think about use of capital in in dividend, dividends and buybacks and
afterthought in industry. We have generally been put custodians of shareholders capital. When the gold price is high, we tend to spend it quickly and then realise when the gold price is low, maybe we spent it too quickly. So evolution is very focused on trying to be counter cyclical. That's what we've said right
from the beginning. You know, when the gold price is high, we should be banking the cash and that's what we're trying to do. Now the gold price is low and you've got potentially some distressed or motivated sellers. That's when we should be acquiring things. So I think my. Mantra is there is a time for deals and there is a time for making money and now is a time for making money. We had some questions for you as well, Jake, around just some some broader issues in the, in
the mining sector. You know, it feels like we're a bit of a crossroads here in Australia between where, you know, in action and trying to, you know, achieve these sort of green ambitions. And then, but actually, you know, developing and investing in the, in the mining sector and downstream capabilities and, and things like that. If, if there's inaction, it's going to cost us.
It feels like everyone knows that this is something we should be doing, but no one's really taking charge And there's not, doesn't seem to be a very long term view or approach or plan. Do you think we're getting the politicians are getting too caught up in politics? Is it the the private sector to drive? How do you how do you sort of think about all this? I think we're at a a fork in the road. We've become obsessed about
short term decision making. Maybe it's our election cycle, but there are very few things that we can agree on on a bipartisan issue and and a bipartisan approach. So if you think about it, the last 30 years have been incredibly successful for Australia. China merged as our largest customer. We've been selling iron ore and coal to China and they've had insatiable demand for it. You know, the got the, the, the iron ore price when I first started in the business 30 years
ago was 25 bucks a tonne. And Australia's producing about 120 million tonnes a year. And today we're producing almost a billion tonnes and selling it to China. And the oil price is $100 a tonne. So that's 33 times more in terms of revenue. The mining industry has delivered $365 billion in fiscal tax windfall to the government of Australia and that has put Australia, you know, at the very top of global GB GDP per capita rankings. We are a rich and wealthy
country. My concern is how do we future proof the next 50 years because our resources are going to get more difficult and challenging to mine. The world seems to have changed where globalisation is effectively over and China is has emerged as a very significant competitor in terms of resources. If you look at the companies that they've created, Zigene is a $67 billion company. This is a company that was a state owned enterprise 20 years ago and they have a very good
access to cheap capital. They very ambitious and they have very strong government support. And so if you're in Africa today and you're trying to secure ground in Africa, your biggest competition is going to come from Chinese competitors. It's one of the, yeah, one of the one of the few places a with excellent ore bodies, but where, you know, the Chinese are allowed to actually still still
acquire projects as well. Yeah. So if you think about it, I was involved in China in the in in the 90s and 2000s in a period of amazing collaboration and cooperation between China and Australia. It was like a sense that, you know, China's definitely going to integrate into the world and it it didn't happen and it hasn't happened. And China has used that period to create these companies, fortify itself and kind of go
almost on a separate path. Maybe they've been more successful than we have, but our incapacity of being able to think any longer than one election cycle seems to be a massive disadvantage to us if we're dealing with a competitor, strategic competitor, that is thinking long term and investing long term. 20 years ago feels like such a a different time as
well, right? Because that the when when you were running Sino gold, the yeah, this is an an ASX 100 company at the end which which had mines in China. It's kind of a bizarre thought these days that, you know, that sort of vehicle would even exist on on the ASX. Yeah, it was. I mean it was an amazing experience. It was crazy.
There are, it was formed by a few investment bankers from Macquarie in the 90s, myself and Nick Curtis and a couple of people, we went to China. We knew nothing about mining and we knew nothing about China. And Nick is an amazingly optimistic entrepreneur. He said, you know, do you think we can build gold mines here? And we think we must have been at a bar because we said yes and one thing leads to another and eventually Sign of Gold was formed.
Anyone like Jake out there thinking of bloody building mines in China anytime soon? That's bloody CRE insurance on the blower straight away. Jesus Christ. It took him some minerals to go on bloody do that didn't it? Saw no gold journey it was. A different time mate. No one, no one in Australia. He's going to be building a mine in China anytime soon, but they will still be looking in places where you need bespoke risk to be priced.
The new China's, I mean mate, Jackie must have had Steve Tarr holding his hand through that process. I can't think of any other way that you would have felt comfortable taking that amount of risk like some some sensational insurance breaking was in place. Like Tari, it's got Tari's name written all over it. Like as Pete, miners shouldn't be scared of international mining. You don't need to be.
You give Tari a call in CRE Insurance Perth headquarters and it is an international mining insurance expert and which means Australian mining. He can just do it with his eyes closed, blindfolded, facing the other way. The more bespoke the risk, the the more excited he gets. He loves, he loves the SO Derek stuff. But he still will do the boring Australian stuff. If you need. Him but he does it that quick it doesn't matter. CR insurance, give him a call. He run his eyes over your report.
Right now. Just let him have a look at yours. Free. Free. So back then the view like it was a real, you know, globalisation agenda, China was opening up to foreign investment, you know, like you know, the the investment community was trying to embrace that and capitalise on that. Was that the kind of? It was but kind of being or thinking we were smart Macquarie bankers, we were thinking about an arbitrage.
So if you think about a plan system, which China was at that time, where the geology wasn't really viewed from a market perspective. So answers in the ground weren't valued from a market perspective though, only looked at as units of production in a planned system. So we went to Ginchuan nickel mine, which is in the Gobi Desert. This was in 1994. And we were have one of the plates of that was served for dinner was a camel's foot, which we were told was a delicacy.
I'm still trying to get over it, but there are obviously a lot of three legged camels in the desert. But it really was a camel's foot. And we are being told in all seriousness by the president of this organisation who is wearing a mouse suit. And I think the ore body, it's, it's one of the massive nickel ore bodies in the world that their production crew minds one level every couple of years. And the development crew, you
know, develops 2 levels a year. And we kind of said, like, you know, how many levels ahead is the development crew? And he, we worked out, it was kind of like 12 years. They developed the mind 12 years ahead of where they're going to produce. And we kind of said why? And he said, well, you know, the development crew develops and the production crew produces and that's how it works. So they were really in a planned system at the time and we kind
of saw that as an arbitrage. You know, if we could get people to understand the value of what's in the ground, then there's clearly a a value uplift. I think what we underestimated is how smart China China was and how they weren't going to sit do what Russia did, which was privatise all of their assets and, and, and basically put it into private hands. They allowed us to experiment, I'd say on kind of B grade deposits and build the first foreign owned gold mines in China.
The safety standards that we implemented at our first mine, I think have formed the foundation of the National Safety standard. So people were learning, listening, utilising and yeah, it, it was amazing. But you know China today has learnt not only from US but from going outside of China and these companies like Zijin Jajin, Shandong Gold or formidable competitors. Yeah, wow.
So it's funny you went there with a view because you thought there was an arbitrage because they didn't know how to mine properly. But really, the Chinese were using you as the arbitrage to learn how to mine properly and apply it everywhere. Else, I think that's well said. We didn't realise it, but yeah, we thought we we were doing the smart thing. Yeah, yeah. And I guess in contrast to Australia and, and, and policy, you know, making and, and affecting policy here.
Do you think and just sort of in reference to sort of the Regis situation earlier this year with Mcphillimy's, do you think our government is adequately educated and informed about the the practicalities of mining and how mining actually works in order to actually put these policies in place and and affect them appropriately? No, I don't.
I, I think that was a terrible decision and I think it's something we've got to address that something so late in the in the process comes up and causes the project to approvals to be rescinded because NSW has one of the most rigorous approval processes in the world and Regis went through that only to have it overturned at the last hurdle by a federal decision.
So I don't think so. I think the other thing that we as a, as an industry need to do more of is educates, particularly E coasters, about the value that mining is contributing to this country. It only employs 2% of the workforce, but our contribution is in double digits. And this country just would not be where it is today without
mining. So I, I don't think we sell it well enough and I don't think our reputation is what it should be in decision makers who have, who have the ability to do to make decisions like this. I mean, the, yeah, the, the, the Regis ones like the, the standout, you know, but there's, there's other examples of sort of similar stuff happening here
in Australia elsewhere as well. And it, it, it feels like a complete disconnect from, you know, the, the big thinkers who set the policies or enact the policies versus what's actually required from a certainty perspective to make an investment decision. Yeah, I'd, I'd say that Australia's still, you know, once you have the permits and once it's approved, you can sleep easy at night that you own
the asset. You know, in China I had plenty of sleepless nights wondering whether I was going to wake up the next morning and we didn't own the asset. So it is a great mining jurisdiction, but I think we have the opportunity to make it greater and decisions like what happened with Regis detract from that. Yeah. Would you say Australia is getting sovereign risk? No, wouldn't I? I still think Australia is a great place to mine.
Yes, it may be becoming more difficult to permit, but I think again, we need to do more as an industry to educate E coasters. I have young adult children, you know, and their peers, they don't understand mining other than it paid for their schooling
and education, my kids. But I, I, I think we can do more to, to, to get them to recognise that mining is so critical for this green energy future that we're all talking about and committed to. Mining is critical to the success of this country and is part of the future of this country. And do you think that's also quite a large contributing factor to sort of the not the the talent pool that probably isn't growing as fast as it should be entering into the mining industry as well sort of
this wokeness in in some ways? Yeah, I do. I think it's terrible that there are fewer positions in universities today in the geosciences and mining engineering than there was a decade ago. That's that's terrible. It's not setting ourselves up for the future. If you think about opportunities in Australia, you think about, you know, what can we do to value add these metals that we're mining? Why are we happy to kind of ship everything offshore and have it
processed elsewhere? Education, I think is an opportunity for us to be the kind of the Ivy League standard of education globally. Same with capsule markets. If you think about resources and the fact that the tech space has grown so much that resources is kind of less relevant to a New York fund manager, but in this country, it's so important. We could be the epicentre of capital and debt markets for global capital raising. So I think there's a tremendous
opportunity. I'd love people in the tech space, young people who are thinking about the next breakthrough in technology, to be thinking about mining, but they're not. They're thinking about deliveries, you know, from pizza restaurants. I even think of it like, you know, if you're a young and hungry young person, you always want to be running in the direction where like everyone else is running away from. So way easier to compete in a small pond like.
Yeah. Well, you guys are have recognised that and have done an amazing job in building this business. So you know why and more people seeing the opportunity which you saw in the mining space to not necessarily be miners or or or or a mining company or mining contractors, but here's a is podcasting technology. Yeah, I think so. Media. Technology, you guys have done that and and you've created a business. So more people doing this would
be fantastic. Yeah, don't, don't encourage the competition, Jack. No, no, I did. I did. I did hear, I think Michael Vaughan was telling me on our way in here that he was talking to someone overseas who said yeah, they always listen to your podcast. Yeah. You mentioned the, the building out the sort of downstream capabilities or you know, those other pieces of the value chain which you know, certainly aren't as present in Australia compared to you know, China and other places.
You know, we've seen, you know, some companies make an attempt at it and it's just proved hopefully, you know, expensive and taken a lot of time and things like that, which certainly doesn't incentivise much, much others to go about it. But you know, it certainly needs to needs to happen. So do you think does the government sort of step in here? Do do private, you know, the private sector just need to just go for it? You know, how do you sort of see that going forward in Australia?
I don't think the private sector will just be able to go for it because at the moment those projects don't make the returns which private capital requires. So it needs some sort of government support. And there's a debate to be had as to where that government support should be. But fundamentally, if you think about, and this is a maybe a strange way to look at it, but maybe the paradigm has changed.
You know, in the in the 70s, Australia had a manufacturing sector that all got, you know, demolished really by China's emergence. And everything now is manufactured and produced in China essentially. But if if you think about technology in the next 20 years and you think about our aspiration, maybe we can actually deliver it on green energy, which should be cheaper
once it's been built. If you can provide cheap green energy and you can use technology, maybe manufacturing or processing, downstream processing is not as far out of reach as we think. But it requires a different paradigm and it requires a commitment from government to support that sort of initiative in things that really strategically are well thought through and then can deliver returns on capital. Yeah, I'm, I'm a, I'm a cynic on
that one. Yeah, yeah, I I just think that like history is littered with times where government has tried to, to prop up a, a sector that doesn't stack up in the private markets. And then you you are the lead to inevitable like subsidies that never end, like regulatory capture, all the things that don't actually create a competitive industry in the 1st place.
Think government should do everything they can to make the private sector returns better by investing in infrastructure that could, you know, reduce the cost? But I will perennially advocate that the government doesn't sort of, you know. So I think, I think, I think, I think that's a fairpoint. But so part of the infrastructure is this transition to green energy.
So if you think about all the commitments we have at the moment in terms of delivery of that green energy, I, I think we need to have a conversation about the time frames which people expect to be delivered and the cost of it, because we're talking about the replacement of a significant piece of national infrastructure.
At the moment we have federal targets, but the delivery of that federal target is actually is dependent on each state delivering to their target, which is not necessarily in aligned with the federal targets. So if you take the federal target, I think it's 43% reduction by 20-30. I think NSW is 50% by 2030. I think Queensland is 75% or 80% by 2035.
If you think about the Snowy Hydro projects, it started with a $2 billion budget and it's now at least 12, maybe 14, and who knows what it's going to cost to finish All of the projects to deliver those targets should have been started now, and none of them have. So if we committed to, you've got to build out 32 gigawatts of power, I think in each of the next three decades, and 32 gigawatts is a lot of power.
You've got to put transmission lines across a lot of Australia because you're talking about a dispersed grid. Just as an example, at Mount Rawdon, we're talking about this converting our project to a pumped hydro project. There's a transmission line of 27 kilometres which covers 15 land owners and it's taken us two years of extensive engagement with those land owners to get about 14 of the 15 on board. Yeah, it's not a hold out, but we can, we can take it around there.
But it's taken 2 years to talk about 27 kilometres of transmission light. My point is, is that there's only two ways that this that the energy can be funded either tax today. Or higher power price prices later, which is unacceptable. So, you know, we've got to pay for the infrastructure, we've got to agree who's going to pay for it. But then it should be cheap green power in the future. Should be, should be, yeah, Should be, should be, should be. But yeah.
And there's a, there's a trade off on the capital intensity of the infrastructure investment in the 1st place. Like, you know, if if we adopted A and and and nuclear strategy, then that's arguably less capital intensive. There's less transmission lines required. Yeah. And, and I'm all supportive of everything being put on the table. My, my issue at the moment is that we have these targets, but we have no real plan as to how we're going to deliver those
targets. And we don't understand how much it's really going to cost. Governments are there and, and just going back to your point, governments are there to implement and deliver that infrastructure. Now, you know, nuclear should be on the table. All of the stuff should be on the table and we should have a comprehensive nationwide plan, not a kind of target announced before an election with no understanding of how to deliver.
Yeah, while we are, while we still got you, Jack, I can't, I can't let you leave without talking about deals. Evolution is a, you know, a company that's got a reputation for being, you know, like a deal doer both, both acquisitions, divestments, you know, the whole works. And the company's been awfully quiet since the acquisition of North Parks. And, you know, like for it was about about 12 months ago that that acquisition was announced maybe December last year, December, December.
So yeah, nearly nearly 12 months. And there was, you know, like a bit of a shaky period in the market there share price, you know, fell off bad quarterly came out in in January, then gold rebounded strongly and kind of the the, the balance sheet sort of fears faded And you know, the business is pretty, pretty cash generative again and sort of happy days. Does that mean that you know
deals are back on the table? Not really because I think if, if we think in a kind of cyclical way, you know, now is not a time to be doing deals. The gold price is high, the copper price is high. There's no distressed sellers out there. They're anxious buyers. I think in this type of market, you've been better off being a seller than a buyer. But just going back to the North Parks acquisition, you know, we think it's it's an outstanding
deal. I think investors are starting to understand it. But it was a pretty bruising deal. Like if you're doing deals kind of cyclically, you know, people aren't cheering necessarily at the time you do the deal. So you really have to have some fortitude. And, and I was surprised because I thought it was going to be a really well received deal and it may have been a whole bunch of factors related to it, but it was a pretty tough deal to to get across the line.
Yeah, like when you acquired Cal, everyone thought you paid too much for that as well, right. And in time sort of Yeah, The, the, Yeah, the, I'm, I'm certainly guilty of this. I'm quite critical of, of, yeah, deals where it just like, you know, on a multiple perspective or even like on a, you know, you know, peanut perspective or whatever. It might appear pretty expensive, especially if it's a competitive sale process as well. I'm like, well, you have to pay
up for that. And then, you know, what I'm learning to appreciate of time is that the, the, the assets that have quite like a very long life, no expose himself to the the Super profit period of time and pretty prices like flex up and down and and pay handsomely thanks to that. And you have longevity through the cycle too. I think so. So, you know, I mean, Cal was actually bigger than our market cap when he bought it, but it was an asset that was really going to transform the company.
And we'd done the deal a couple of years earlier or a year earlier with Najib Sawiris in La Mancha and he underpinned the equity rise. And it was always with the strategy that he got involved to try and get this company into a better space. And Cal came along and I don't think we could have raised the $400 million if he had cornerstone it with the $100 million.
But just going back to kind of what deals make sense, we've always said, you know, we'll only do things that improve the quality of the portfolio and that are creative to shareholders. And I think each deal we've done has. But if you're looking at how do you create value in these deals, the easiest and best ways from geological discovery, because you're pretty much modelling what is there and you know, what is it that gets you that geological upside? And that's a geology call where
our team has been really good. And you know, majors generally put themselves in places which are geologically most prospective. And that's been our kind of hunting ground buying from majors that have established themselves. But maybe the asset has not been courted them and they've they've been a bit distracted and the
asset comes available. It's happened at Ernest Henry with Glenn call Cal from Barrack N Parks from Seymour and and all of them I'd put in that category where the real upside is through the discovery and the and the better geological setting then people understood because the asset has not really been
profiled. I mean, just going back to, you know, the analysis piece which you guys are, are are expert at, you know, one of the things which I think is, is challenging is that an NPV model always prioritises capital upfront and penalises long mine life in some ways. Because beyond 10 years at a discount rate in what 7% you're not really getting value for anything beyond 10 years.
And there's always, your model always looks better if you can bring forward capital and accelerate production, which I don't think is right from for the business. Kaepernick put out a, a, a, a, yeah, a written piece on that. Just that very point, I think. Last week I didn't see it. Yeah. But yeah, you're, you're right. And there's, there's the optionality pace.
Can you accept like what, what if you were just to purely maximise NAV on a, on a long life asset, then you get a NAV that's much bigger, but you're not going to, you know, all the cash flows come in, in a different phase of life. And there's, there's a bunch of factors. But the strategy of, of evolution has always been to like gradually over time make the portfolio have lower cost assets that have longer life. Yeah, everyone wants to do that
and not everyone does do that. The the, the, the, but part of that too is also divesting the assets that are in the portfolio that have the high cost and short short of life too. So we've divested of three of our assets Mandroy and which is coming to the end of its life as a gold mine and being converted to a pumped hydro is the only asset that remains from the original five that we started evolution with. So, you know, we have been happy sellers of assets.
We've always tried to keep some insurance to make sure that if we were wrong that we got paid for it. And and you know, Cracker, Edna, May, Pajinga or all assets which still pay us a royalty or some sort of upside given that they're still operating. And how do you find you between that sort of approach to your, your asset portfolio, how do you sort of balance that with the pressure from say investors and shareholders to say, oh, what's the next step?
How are you going to get bigger when getting bigger mightn't necessarily fit with the internal strategy? Yeah, it's a it's, it's an interesting one because I mean, I think, you know, the most important thing which is really difficult to do is to not listen to the noise and listen to your shareholders because they are the owners of the business, but try and not be distracted by the noise. You know, we've had this very clear strategy.
It's work. The challenge for us at the moment is that we've actually put ourselves into some really good assets where as you get better assets, the degree of difficulty in finding assets which are better than the assets that you have is increasingly difficult. And you know, that's the challenge.
So we see a lot of organic growth in our portfolio at the moment, right at the moment it's you know, if you think about the processes that are being run for assets and the values that are being obtained for the assets that they seem, they seem expensive. There's 11 like reflection I had when sort of going through the the the the history of deals of of evolution. And it's a shame we don't see like, you know, deal making is as as riveting as as this
anymore. But you know, even even the the initial deal which created evolution, a lot of ways you were at you were at conquest, which like I think when you joined it just had what the feasibility study on on Mount Carlton. You picked up a jingo, but then you know, you know, an interconditional merger with Catalpa, which had Edna May and 30% of Krakow.
But on the exact same announcement of that done this equity raise bring in, you know, New Crest as a major shareholder and you acquire the other 70% of Krakow from New Crest plus Mount Rawdon at the exact same time. You don't see, yeah, you just don't see deals like that anymore.
But and then over time, like in in evolution and this period of just like super funky deal making, like real funky deal making, you know, the the like La Mancha stuff like, yeah, all like all of that was like very funky. But then over time the deal like the deal making get gets a bit less sexy, a bit less sexy. You know, you're just buying stuff in sale process and all that sort of stuff. But that's just a comment on the whole market. Deal making is a bit less sexy now.
Yeah, I, I'm not sure. I mean, just going back to Conquest, I mean, we've had a really interesting time like so the, the reason we got involved in conquest is because it was a high, high, high sulfidation epithermal deposit, which had had a feasibility study done on it that used a Biox or roasting process and found that it would be uneconomic.
So we actually in China had built a very similar mine where we'd run out of money and we figured out that we could only sell the concentrate in China. So we sell the concentrate and one of our colleagues who is still in evolution ran the Zhang Cha Ling mine it for us in China or was involved in it.
And he went off to China with a few bags of concentrates samples from Mount Carlton and got us an off take contract which allowed us to build Man Carlton without any of the downstream processing, you know, the Biox. And we just sold concentrate, which was amazing because Man, Carlton made like $100 million for a few years until it ran out of gold. But yeah, I, I don't know. I think you know, what are the, the, the sort of attributes you need in a, in a, in a good deal.
You need a motivated seller. And probably at the moment they're not motivated sellers in gold and and copper, they're motivated buyers. There's. A lot of motivated buyers. Maybe in lithium there's some motivated sellers, but. We're not going into. Lithium, you know, you need a, a view on the geology.
And then, and then I think one of the challenges in the sector is I, I, I think people management teams have inertia about doing deals because everyone thinks that they're undervalued and the person approaching them is overvalued. And there needs to be a bit more kind of collaboration and boldness in getting deals done. That really makes sense for all
sets of shareholders. So in that, in that example, Catalpa, they had the 30% of of crack out, which had a right of refusal on the other 70% which came in from you guys. But at the same time Qatarpa was under like St Barbara had had bid for that a month earlier. And then yeah, you know, sorry, St Barbara not doing that deal, we're doing this one instead.
It's like three parties coming together thinking this is the best outcome and the pro forma sort of benefited everyone in a lot of ways who got to ride the benefit over time. Do you think there's less collaboration for those sorts of? Once again, that was kind of done with a major so new Crest with a counterparty.
I went to go and see when they bought Lahir and Greg Robinson listened and sort of understood that Mount Rawdon and cracker his 70% of cracker were not going to be cool and he kind of bought into OK, well, I loaned 33% of this new vehicle, but he said, you know, in order for it to get done Katelpa have this pre emptive over my 70%. So go and see them and get it
done with them. But he, he lends in and helped us get catalpa over the line as well, because once they'd endorsed it, a major, you know, I think it did have an influence. So he, he he was very supportive of the deal and, and created evolution. And Laurie Conway, who's now the CEO of the business, actually was the non executive director appointed by new Crest.
So I, I think if you're dealing with groups that, that understand how value is created, it, it can be done, but you need it, you know, you, you need to think a bit out of the box. And if you do everything that every investment bank banker walks in and says, you know, here's a great deal for you, you're probably going to end up in tears. I'm not an investment banker, but I've got a deal for you. Yeah, I'm always, always. I'm sure it's I'm sure it's at
the top of your shopping list. Anyway, Yeah, you like you've eat the East Kendana joint venture. You know, you've, you've picked up sort of Northern Star's share of that. Now surely there's a motivation to wrap up the entire thing with random tribune of these funky sort of strange and sex companies that are mostly bullion. Pretty sure they'd like yeah. Negative EV if you net off the actual bullion. Then if that fits in the funky category, it just sounds like a
purchase. Yeah, we own 20% of Tribune. I think that the, you know, the Tribune and Rand companies, you know, have been somewhat esoteric to investors their, their shareholders or on you know, not institutional shareholders. So I think we, we've gone with that and is, is to try and engage with them, collaborate with them and and maximise the value at, at the EKJV where the 51% owner of the joint venture, their material, that material
gets processed in our plans. So our approach has been to try and collaborate and maximise the value for both shareholders. Again, I think, you know, if you said is it a deal that I could genuinely say is accretive to our shareholders, I think based on value expectations, the answer's no and therefore unlikely to be done. So sorry. Oh. You would say that you got any more Ellie? No, no, that was, that was fantastic. Thanks for your time, Jake. We really appreciate it. Thank you.
Thank you so much for coming in. Thanks. Good stuff, Trav and JC, you know, fun random factor. You know that the term holy snap and duck shit got recently used in a corporate review meeting? No, really. Anyway, back to I've heard word on the decline. Anyway, back to Jake and Evolution. Good, John I trap. Yeah, it was. It was. Yeah, it was good. It was good. Yeah, it was pretty interesting. I did. I did enjoy it. I did enjoy it. What are you?
What are you? What do you reckon he gave you that you didn't think he gave you? On the deal front, well, you know what I was thinking when he said a deal can't be done with random tribute, but he accepted that they're trading at negative EVI don't understand how that works unless, unless the major shareholder or controlling shareholding interest actually just has stars in their eyes because like, yeah, you know what I mean? Like anyway. Who knows? Yeah, who knows? Who knows?
I know where. The mess of the best I can fit mine in contractor in the world. That's a fact. That's like there's no Rand or Tribune bloody cryptic messages there. It's like fact, fact, fact. Hey, what else is going on? Where's the bloody where's the sponsors going are? You testing me? I think we know them. We've got a couple others. We've got the. Grounded Construction Group, we've got cross boundary energy, we've got the Sandy Ground Support Division. GRE insurance that we mentioned
in the show. Greenland's equipment. McMahon Mining Title services, Strange earthworks at Haulage, Bloody cage drill just punching, arson and diamond dolls everywhere and our bloody beautiful friends at Spark. If you're an active sex trader, the information contained in this episode of Money of Mine is of general nature only and does not take into account the objectives, financial situation, or needs of any particular person.
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