Alright, buddy, borders, we're going to bloody North America, Canada, we've. Got 2 fields in North Korea. Today, Oh yeah, go go the Maple syrup. Today, we're on fire. That's it. I'd pancakes on the weekend too it. Was. I did too. There you go. Oh. Well, there we go. Alright, so big deal coming out of bloody Newmont divesting one of their non core assets to a company I've never heard of, but we'll know sheet loads of out of
them today after today. Ola, Ola Mining Ola, they've got a bit of a brand reputation out in North America. They've got a bit of a management premium associated with the money. They're well, they're they're obviously not big enough to buy all the new Mons non core assets. They've just bought one of them Ahead. We've got Spartan met results. Why not go into a bit of metallurgy and Sayona Piedmont? That's it walking down the aisle.
Take it away, boys. We'll start with Ola like you said, Maddie scooping up an asset muscle white from Newmont. So up in up in North America headline was up to an $850 million U.S. dollar deal 800 and few 810 rather being upfront with 40 contingents. So everyone knows Newmont, but why not share a bit of colour on all? I think to our North American audience, like you say, Trev might be quite familiar, but down under they're a bit of an
unknown entities. So they've got a producing asset, the Camino Rojo mine in Mexico and a development asset in the States, currently just producing about 135 oz per annum. Market cap 1.9 billion, actually bounced a bit on this deal. So the market kind of liked it. And like you say again, Trev, supported by the market, bit of a premium in terms of shareholders, peerless on about 10% of the company personally. Then you've got Fairfax, not the Aussie Media Group. Thank you for answering my
question I was about to ask. You also got Newmont as big shareholders and Agnico and then there's they're all pretty chunky shareholders and then there's a sort of trailing list of single digit percentage. That's a that's an attractive list of shareholders to have, which you imagine kind of, yeah, it gives them a bit of firepower when, when it comes to wanting to do a deal. Not that they raised equity
here, but yeah, nonetheless. Definitely mate and the last fun fact about Orla is that their non exec chair Chuck jeans. He ran Goldcorp from 2009 to 2016 so he would be quite familiar. That's a period in which Goldcorp was the owners of the Muscle White mine. So, so tell us about the muscle white mine. What are the metrics? The metrics, so Canadian Underground goldmine 6 point 2-3 grammes per tonne reserve grade.
The acquisition is based upon a reserve life that runs out to 2030. They're talking about an all in sustaining cost of a bit under US 1300. So 1270 is the the price that sort of quote there 200,000 oz per annum. In terms of the the processing plant, maybe 1.5 million tonnes per annum, although it currently only runs at 1,000,000 tonnes per annum and decent recoveries, not unexpected given the, the high grade we're talking about 96% historically is what they talk up.
It's also a FIFO operated mine, which is interesting in lot of comments you've made previously with regards to mining towns having sort of somewhat different cultures about how long they want the the mine to you know operate for and they these sorts of things. So it kind of it stands out culturally as quite a a positive type operation where you're not maybe entrenched with unions and other type of things like that.
Are they? So is it firefighters in as in expats or is it firefighter for Canada and America? Canada, Canada and US. Yeah, I'd imagine the majority just fly from other Canadian cities. Yeah, I did. I I I was watching one of the videos regarding the firefighter on the camp aspect to Australia. We're in the process of doing a camp upgrade right now. Sounds like that camp upgrade needs to be a bloody grounded camp upgrade, boys. The only way to go.
He's a no brainer right If you've got an old shit ass camp like I don't know if muscle ward have got mate if grounded do the upgrade. It's then considered a grounded camp. One of the best camps beyond a Newmont standard. You can't acquire, you know, an asset from a major like new Modern. They're not not give it a Tier 1 camp. No, mate, you got to put a bit of love into it. You got to put a bit of a Sicilian feel into the into the
camp. And look, Paul Natali, if you're listening mate, I've done a bit of digging for you in terms of Ontario builder recruitment if you do get. This gig, what did you? Find as of 2021 Canadian census, approximately 905,000 individuals in Ontario reported Italian ancestry. So about 6 1/2 percent of the population. And then of that there is estimated 10% of them are from the southern regions of Italy, notably Sicily. So there is potentially 90,000
Sicilians in Ontario right now. The grounded construction group could pick from to help build this camp. So anyone in Ontario that's just finished their building apprenticeship, give Paul Natalie an email. He's in the show. It'll give you a gig straight away. Grounded to go on International. Grounded straight, Ontario. Get on board. Can't wait, right? So what about the ore body, JD? So the ore is mined from a couple main sources.
The ore the the mine rather is, is pretty old now 28 years. So it's been going a while. Obviously you're getting a bit deeper and deeper, like a lot of these in Canada sits under a lake, uses a conveyor to get the order surface, which is the the the cause of a fire in 2019. That sort of happened early 2019, which was the same year that Newmont took over Gold Corp. That was a sort of $10 billion
script deal. So came into the the fold with Newmont, but the the mine was out of action for about a year and then it was actually disrupted quite a bit in 2020 due to COVID restrictions as well. So yeah, the company talks up that they use that time to work on other improvements, improve the infrastructure at the site. But yeah, what was out of action for a little while there, but 6,000,000 oz been mined here over its history, 1.5 million ounces in reserve. So I got a bit to bit to work
with. It's funny when you talk about the reserves and yeah, yeah, look at this one like it's actually not that deep. Looking at they'll bring up the cross section, the long section of the ore body like it's what friggin. Not steeply dipping at all. What is a bit about 12-13 hundred, I think. Oh, no, sorry, that's, that's not a it's only mine down to about 1000. But you look at that plunge, that's what we refer to as the plunge.
Like it's freaking flat. Like if you put it, compare it to, I'll show you the picture of Tanamoi. Like Tanamoi plunges at about 45°. This one plunges at like 30. So it presents a massive challenge for determining your reserves because what happens is as when your decline gets down to a certain point and the the all bodies plunging away from you. I'll try to keep your hands close so the camera remains focused. It's not going in and out when
it plunges away. You can't just fucking drill over there and get a good angle on the ore body to properly define it. They're long and they're intersecting at a freaking shitty angle. It's part of the reason it's always had a sort of six year, seven year, yeah. Which is 6-7 years and that's probably a function. Of course it's plunging. So much like the, the, the gold or per vertical metre is a lot higher, like 'cause it's like your body's gone that way
instead of that way. So what, So what they've got, what you've got to do with these cases to prove up your reserves is like pretty much put these massive fucking ven exploration drives out away from where you are to then get over the top of the ore body down there and get a better, a better angle. But it's a, it's a lot of development, those exploration drives, especially once you get to a kilometre deep and you got the, the, you know, thermal side of things and the auto
compression. So it's getting hot. They're a single head. And that's but and it's a lot of unnecessary capital to explore. But then your couple, you can kill two birds with one stone in terms of like another challenge with these plunging ore bodies is the ventilation.
So and they do mention it in one of the causes like maintaining the ventilation to death because one, it's under a like so you can't just punch a rise bore up through the surface to for your return airway system because there is water. And so you've got to keep linking your return airway up. But as as the mine gets deeper, so you go down the level. So you're over here and the bottom of your return Airways over here. You've then got to drive back that way to link that return airway up.
So it's a lot of ventilation Dr development, but I'm not sure if they do this. But what you what they could do is that with those big long exploration drives you use, you could then once you've finished exploring and then you go down to the bottom. You're then below then you could punch a rise bore up and use that exploration drive as you return airway later on. So like there, there is options to to do that, but it's just a lot different to a verdict.
A dead vertical. I remember at Warrunga Agnew, which was gold fields like it is fucking vertical. Like it is that day going down that decline. It is just a spiral and you'd be driving down there and just like fucking hundreds and kilometres it just it just a dead vertical spiral. Oh God, it would have been a pint. You imagine being on the decline Jambo, you block and I just get a fucking straight cut would be nice. I'd be doing you'd get good at doing turns. So yeah.
So I think ventilation keep maintaining that ventilation. I think they said with the conveyor it sounds like it was a crusher, so there was a hoist. There's winds, they call it a winds, but that's a hoist. So it sounds like there's a crusher with a shaft at some point that goes up from the bottom levels, hoist it up to where then the conveyor starts. So I think the conveyor is like a fixed starting point.
They crush it underground further down up to the conveyor, which it might be halfway up the mine or. Something I think I saw that in old pressure. And then it goes up the conveyor. So I think it sounds like they did a lot of work to. So then once I go below that, they would then track up to the crusher, crush it hoisted up to the conveyor. At least they're not tracking it out frigging from shit loads underground. And cause let me get this right
now. Even though even though it's plunging, it'd be still the same vertical distance up one in seven. Even if it's plunging, it's just a different direction. So yes, it's just the joys of a shot. But as I said, shallow plunging ore bodies, you've got a you don't have to do as much vertical development to get as much level development done because you because it's there's it looks like there's over a kilometre or so bloody or more of strike of all there.
So you get a shit load more level development done. You don't have to go as deep as quick, but it's very hard to define your body. I'll say they are assuming that it's just going to keep fucking going that way. I think Olympic Games the same. I think it's like, I reckon it's like a big friggin shape of a saucepan. It's just this handle and then this big thing and it's just flat and just goes for whatever. I think you're dead, right.
I think they're poked in a couple holes that sort of show strike could continue 3 kilometres. But again, it's a sort of cost thing of proving that out and they'll do that in in time, won't they?
Yeah. So don't don't get too deterred by reserves with these gold ore bodies, especially a bloody shallow plunging 1. I think that'll tie in perfectly with a bit of valuation chat later on and what what the management team is kind of thinking with a A6 year reserve and how they kind of think about that. Another thing I I watched a snippet from a presentation, It was done last year and it was about muscle white from obviously when Newmont owned it before today.
Yeah, it's just, I'll, I'll play the whole snippet and it's just something you can see how different underground mining methods, culture advancements are in North America to what we know in Australia. I'll play it all for you.
Let's do it. So some of those improvements we implement the jumbo bolting at Muscle White, that's been a big transition for us. We're in the process right now, but we've got we're getting a rid of the McLean bolters and we're using one tool, the jumbo to allow us to drill and bolt and advance the mine. That's unlocking a lot of potential for us and it eliminates pieces of equipment going in and out of the in and out of the headings.
We moved our blasting, we moved blasting to shift change. So we were doing a lot of blasting on shift, not very efficient. So we move that to to shift change. We're much more efficient and safer in our blasting processes. We're not having to move people in and out of the operation. And then we implemented early mine entry. We were losing probably 2 1/2
hours at every shift change. And so we implemented longer shifts, but we implemented early mine entry so we could get the mine ventilated out faster and get people working and get people the working face quicker. On the production side, we implemented Tele remote mucking. So no longer are we using line of sight mucking to to extract or out of the stoves. We're using Tele remote and we're looking to advance that to
potentially some automation. That now remember this is this is the world's biggest gold miner, Newmont and this was from the stuff they were doing from 2019 onwards. So they only just started balding and meshing with the twin boob jumbo. They were using the McClain Bolt rigs, I think they said McClain and I'll assume then a twin boom
jumbo to separately bore with. So that's obviously never how it's been done in Australia. Like it's always just been balding and meshing with the twin boom jumbo and then that bore and you're just getting more out of the one machine. So they've already just started sort of transitioning that in the past few years. Sounds like they were mid shift blasting, which for the development. So it's and for if that's happening and remember you got a
deep spread out mind. So it takes ages for people to get to work. So they'd probably knock off, go to like a crew broom, they'd blast everyone would have a feed, play cards and fuck around mid shift while they blast, wait for re entries to complete, then go back to work and then probably a few hours later knock off, go to the surface, do a handover on the surface, get the other shift down, then that mid shift blast and it's just a lot of time doing nothing.
So they finally got it to the stage where it sounds like the end of shift blasting, working through the whole shift and effectively probably double on the time down the hole. Because the only the only reason you would mid shift blast for development is if you have absolutely minimal headings in a mine and you've got one jumbo effective like and you just need to fire those heading straight away so you can get bogging so you can keep the development cycle going.
It's and you need to have a sometimes they do it in production mines when you've got you're trying to push an area down the bottom. You have an independent firing zone. So you'll have say your productions up here. Then you go down the decline, there'll be A tag board. And so to be down that bottom of the mine where all the developments going on, your tag on, there's a second tag you put on. You boys don't remember tagging on. Yeah, mate. So you'd have two tags you tag
on to that. And then if they want to fire that everyone has to tag off. So they can still be doing mining the Stopes and everything up here. But then you can independently fired down there. So you take a couple, but they're like mid shift blasting is what you do on portal jobs. So I like it. Spartan, for instance, they're punching those 3. The expiration declines at the moment.
Soon as that finished charging one, they're like, well, we can wait till end of shift or we go far right now, start bogging and that's when mid shift. So the fact you'd never do it in a in a big mine unless you've got it fully. So unless you've got no headings. So I would imagine a mine this big, you would have a, you should have a lot of headings because otherwise the mine just
has to stop work. So. It's like it's these productivity kind of losses relative to the Australian mining way, which was like the appeal for like the Northern Stars and the the evolutions to to to acquire assets over there, thinking they could just just easily kind of replicate the methods in Australia over there, right? But it just proved harder.
Easy to replicate the methods, but to workforce to go and tell mining culture that, oh, we're doing it this way now, we know you've been doing it this way for 30 years, You're wrong. We're right, doesn't that takes years and years to transition that and delicately to get them to come on board with that method that they think is oh fuck that we do it this way. And unions you're dealing with in places as well.
Yeah, yeah. And so it's, and it's not that when you're on the other side of the fence, it's like it's very hard to acknowledge that, oh shit, we are wrong. You guys are heaps better at this than us. It just doesn't work that way. So it takes years and years and years to get to change that culture. Another one was like that because I was talking about they were losing 2 1/2 hours every shift change. So I assume they're firing at ender shift 2 probably the
production stuff. And it says though they started early mine entry so it sounds like they weren't even getting lot the re entry crews to go down. Like usually you go you fire, then you'll go down half an hour after that and start checking all the gas levels and as soon as the gas levels are below the acceptable limits for the I think it's COI think it was Jesus, I forgot my gases carbon monoxide. I think they then you open that area, then you go deeper make sure and you gradually do it.
So like 2 and it like 2 1/2 hours plus mid shift blasting lot sounds like it wasn't much. The productivity was very low and that only sounds like I only recently introduced telly remote bogging. So they were using line of sight
bogger race like before that. So line of sights effectively you're looking at the bogger from a distance on the drive sitting on like a Turkey's nest or and you got a little hidey hole you can get into with a remote control watching it listening to it and then bogging it visually from could be bloody
a long way away. So it's like it's bloody it's a fine art for people to do it. But that I don't even know if that's even done in Australia anymore because there's been fatal incidents where people have been squashed by boggers because they're like there and might have been standing somewhere they didn't bogger might have got out of control or malfunction. I'm not sure. But there has been so pretty I don't even think it happens in Australia anymore. Telly line of sight bogging my
own small operations. I'm not sure so and the the telly remote, because telly remote bargains where you're in a Hut either underground or on the surface watching a bloody TV screen and you essentially got a little bogger simulator there and operating from there. And the the technology with that now is like I'll bring I'll show you the video here of the one of the it's the that's the same big order I'm on. It's one of one of the systems like you can map the path of the
bogger. So like they pretty much get the bucket, turn it, click a button and it automatically goes back to the stock pile based on the map that you've shown. So it doesn't hit the wall, just flies along in second gear and the operator just has to get the bucket and tip the bucket.
I think you can even order do that now and then they can operate multiple boggers in. Using one operator or they can have like, and then you can operate over shift change because when you're far and you can keep the remote boggers
down. Yeah, so all that technology's been pretty common over here, but it sounds like it's just even at a Newmont mine in North America, it's only just started really coming in. So just shows how different the mining cultures are underground from here and over there. So there is some. Don't mean to sound like a Dick, but just highlighting the obvious. Room for room for improvement everywhere where and that'll in the long run make them a bit more money if they can sort of
capitalise on those things. Hey, yeah. Just just do it our way, it's quicker. So let's talk about how they are paying for the deal. It's a pretty interesting financing, Trev. We sort of dug into this one. So like I said, US 810 upfront plus 20 million each if gold averages over 2900 over the the first year afterwards and over 3000 bucks an ounce over that second year after Closings up to 850. But we're now flash the sources of cash.
So how they're going to fund the transaction First up is 350 million, all US I'm talking about here a three year term gold prepayment. So essentially every month they will deliver gold to the facilitators of this gold prepayment, IE you're paying your principal down in gold, not cash. They call it roughly 150,000 oz or to go down and it's based upon the prevailing gold forward curve at the date. So imagine this is locked in when the transaction is agreed needs to be voted upon.
They want to execute this by Q1 of next year, next calendar year that is so the the prevailing forward price It will you know it's always sort of where the gold price is now and then goes up a couple 100 bucks right now it's sort of approaches kind of steadily 3000 ish dollars come three years time. So they call that about 16% of their annual production over the
next three years. You've then got a con note that makes up to $100 million of the financing that is convertible at Canadian 7 bucks 90. Their stock closed after that bump on the announcement at $6. This has a five year term 4 1/2% + a a bit of an attaching warrant. You've also then got a revolver for $150 million and a term loan for 100 million, both actually paying, you know, relatively little compared to some of the other smaller, riskier mining
companies we've seen. They're paying Sofa plus a margin which is about 3% depending on the leverage ratio at the time. Actually, I actually quite like how they they financed the deal. There's no, no equity collusion here, OK, maybe maybe the converts convert in an upside scenario, but yeah, no upfront equity dilution that's, you
know, positive. So if we're if we assume they're kind of paying fair value for the asset, right, Look at the look at the instrument doing the bulk of the heavy lifting and the financing, it's that gold prepaid where they're going to be locking in an implied kind of gold price for future deliveries based on the forward curve at that time.
Like you said, JD, the forward curve is sort of, you know, it's sitting above spot, it's well above consensus and and they're effectively locking in those prices with this instrument for the quantity of gold to be delivered into that prepaid. And I like that because none of the gold mining equities all are included here. You know, the market's not paying Spot gold price for them. They're paying kind of consensus gold price or, or you know, or maybe a little bit above that.
But it's a bit over 2000. Yeah, ish. They're not, they're not, you know, these the equities aren't reflecting Spot gold, they're reflecting a, a curve which trends sort of lower over time from a gold price perspective. But the financing arrangement here gets to lock in closer to, you know, higher prices spot future forward curve. So they, they get, they get, they get the benefit of locking in high prices despite the fact that, you know, the, the market's not paying back for the equities.
So I just, I quite like it. I'll play this, this snip to elaborate a bit from the M&A call. NPV on reserves only is $760 million at 2150 per oz gold and almost $1 billion at $2500 per oz gold. So if you if you take their word for it, they're paying $850 million including the contingents, which is probably about 0.8 times naval on their own kind of reserves.
Only scenario at Spot gold price of US 2600 ish today, the prepaid, you know they get to lock in some of the value upside from paying less than spot NAV and and they also get the benefit from Oz not in reserves like you talk about Maddie, if it just kind of keeps on continuing which you sort of expect your body to do. Fuck it up so. We should probably check in there is financing costs, it's not purely. By all accounts, the prepaid looks expensive like from the financing cost perspective.
It's just that, yeah, the utilisation of the instrument I quite like given what gold price has done in a short period of time and and what what kind of now you're always caught apprehensive in are doing pro cyclical M and AI think by kind of, you know, locking in the forward price via the prepaid instrument They're yeah protecting themselves from looking silly doing pro cyclical M&A, Yeah and not issuing a
bunch of equity too. So the gold price is sort of run, you think about what you can kind of utilise. The first thing you kind of think about is your equity if that's also run on the back of the gold price run. But this is a bit of a a creative way to to tap into that without diluting, yeah. We'll have to say, what do you think about the is it a bloody? Is it a good bang for buck? What sort of valuation they're putting on it?
So it depends what you flash. Like Trev said .8 times NAV if you use 2600, if you use which is the prices that Chuck down the model 2150 U.S. dollars, you're paying a bit over one times NAV. So you're paying pretty full value. Although the upside is that that is only on reserves and that is on a gold price 500 bucks ish lower than than where we are today.
So if if you're confident that and I'm sure the management team is confident that this mine is not going to stop in 20-30, it's going to it's going to keep going for a good while longer. And you're also, I mean, why would you be managing a gold company if you're not thinking the gold price is going to tick
along? Then if those things hold and importantly if those things, if that, you know, gold price holds true over the next few years, importantly as it sort of ties in with your financing, then you will see a bit of value. And then cream on top of that is all the other flows of being one of the standout bunch of names in in your jurisdiction and all those other things that you get. Yeah, jumping ahead a bit, Maddie, this is to that exact question.
I asked a a North American correspondent what what he thought and he told me these points. Definitely very full price at 1.1 times NPV at 5% discount rate at 2150 per oz. Is that the right number to use? I don't know, but he reckons that was expected because Newmont apparently had over 100 CAS signed for this sale process. So it was, you know, an attractive sale process. Yeah, all there is a midcap
dialling here. Given how well they delivered low cost Camino Rojo and asset they picked up for peanuts from Gold Corp. He reckons that all the guys will likely push for that. You know, my life out from a six years to 10 years in the in the next year or so. And he reckons, you know, full price paid.
But if if they can manage the grade decline and the sustaining CapEx, he reckons, you know they'll do, they'll do well out of it. The grade decline is an interesting one because I looked back 20 years to see what the reserve was back then and the the grade was a bit lower. It was 5.5 ish grammes per tonne, very, very hard to to find what the cut off grade being used. But today like I said before, 6.2 roughly grammes per tonne using a 3.8 grammes per tonne cut off grade going going deeper
and you know all that. But that has over 28 years remained pretty, pretty consistent. 96% recovery I think. I think if you look at like my Bush maths and looking at it like you look at the, IT looks like Newmont's put a bit of capital in it with the the crushing hoisting conveyor system.
So looks like in the, you know, one and half million tonne plan, existing infrastructure, 200,000 oz mine, potentially a bit over 2000 bucks Aussie all in sustaining and then paid what one point if we converted to Aussie to try and compare it to Aussie things paying paying what 1.3 billion, not all upfront effectively, that's all you compare that to a that's what Spartan that's going to probably need to be taken out for 2 billion. On it's push mass.
Push mass, Yeah. Yeah, it looks, it doesn't look too bad, no. It but it does look full value when you compare it to like the Tel Havron deal for example. But the difference is obviously the the dynamics of that sale process which gave heaps of leverage to to Greyland Gold. It looks, it looks full valued versus that, right? So that they talk about 150 million bucks free cash flow per annum at a 2150 gold price, everything remaining constant. And you know, you've got other potential.
You know, they, they talk a lot about optimising all those sorts of things. Definitely not meal constrained, you know, like, like most underground minds mine constrained. But there is the capacity given they can go up to 1.5 million tonnes per annum if they can do anything over the next few years to try and make that work a bit better. That's a bit more your your area, Maddie, but there is potential for them to push through more answers and get a bit more upside on on that front
too. So they're all those other little goals that they can sort of strike out for. Yeah, no, they and when I probably comparing it to Spartan might be the right thing in terms of Spartan, it's probably a lot going to be a lot shallower simpler because it's not 28 years, not as deep, not as not as hot. There's obviously the the North American aspect to it, trying to keep the cost down and keep the the delivery of those answers. But if they can, you know when you got the grade in your
recovery on your side like that. Yeah, I suppose looking as you said, they paid a bit more than Telfer and all that. But I think when we did the Telfer Avront deal, we're like, fuck, that's actually for what they're getting is a pretty good deal. Totally. Yeah, I mean. This is you can get a good deal off Newmont. They're going out. They're flying out the door. That's that's it's usually a good strategy to acquire assets that come out of majors, right?
Like that Northern Star, It's gonna look at what built then. Totally, you know, there's there there are exceptions to the rule, but in general it's a pretty good rule. And I I also heard that kind of compared to evolution buying Red Lake, you've got a much more de risked and and simple minor here and also a place where the unions are less entrenched than than you have in sort of Red Lake area too do. You know who else was on the CR? Oh, who? Who else had been in the process?
Yeah. Signed ACA confidential. Man, I don't know. Yeah, they're fine. That's why. That's why there was that. Why can't you be like magnetic and tell you everyone who's in the data room? They're more people like them. They had a bit of a a cheeky slide on value accretion. They. Did. I it's a bit of a funny one, given that the financing.
Yeah, complimenting them on buddy, you know, maybe maybe picking up an asset out of the major and you know with wishing him good luck, but I gotta gotta grill him on this slide. Not a fan of this slide showing how a creative the deal is on a per share basis. You fund your deal with debt. Everything's a creative on a per share basis because you got extra earnings, extra production, extra everything
without issuing a new share. Of course it's a creative you debt funded it. So I just I should? Slide in next to that like your net debt day, but or something like that just to show that it's not all one way. Exactly. Good M&A isn't, isn't about per share accretion, it's about sound, you know, weighing up the risk verse reward capital allocating accordingly for, for where you have no good, good, good risk for, for the good reward for the risk you're taking.
I think this slide does nothing to appreciate the additional business risk that you, you know it comes with adding leverage to your cap structure. It's just pointing a rosy picture. We expect nothing else from it bankers, right, That will always post the rosy thing. But but you know, I think we're you know, we're keen to see how it all comes along. I think it'll be an interesting
one to fall in nonetheless. The straight like the like the deal and the yeah, the stock was up like 9% or something. Yeah, something like that. What did I trade on again, Ola? The market, yeah, I think NYC as well as in Canada, yeah. Yeah, yeah. Interesting. Let's talk a bit about. Dick and boys. Metallurgy. Oh, that's. Right, Spartan chucked out some Met results. Ding, Ding, Ding to start. Oh yeah, true. So further, it's sort of most of it was from the top 450 metres.
So bring up the pitches and everything. Averaged 92.3% recovery for the over 15 Tests for the top 450. So 91.6% predicted recovery based on the grade of those regions and the predicted plant conditions. So they gave a lot of the MET test results and then I guess the predicted recovery based on the the way I interpreted the average grade of those areas and how the plan will operate. So which the predicted recoveries will lower than the test recoveries. So it was that's a passes the
sniff test you'd say. So gravity recovery sitting around 25 to 30% you can and you can see from the stages and the recoveries for each of those stages, the recovery did decline as they went deeper with so stage 4 recovery drops slightly below 90% and but I'll go into that later. It's these results are based on I guess stage 1 and 2 with 48 hour leach at 100 Micron grind and stage 3 and four with 48 hour leach with 75 milk Micron grind.
So we'll get in the grind as well because we're going below 75. Now remember Dale Garanga has an existing two and it's got existing infrastructure two and a half million tonne per annum mil. So which is run by the the jaw two big jaw crusher and a big sag mill. Yep, so they're going to have to do some mods to that which will get into what we think might that might be Yep look, the the fact I'm going into these met results in such detail. Spartan.
You can repay me by calling Steve Tarr from CRE insurance because and getting CRE to just make sure that existing infrastructure there right now is insured properly. Because on I'm basing a lot of a lot of what I'm about to say is based on that existing infrastructure that is in place
now. If something happens to it from either acts of Mother Nature or human nature and they're not bloody properly insured for it and they didn't take action with CRE, I'm going to be pissed off because all my assumptions of for nothing. So I don't want, I want that mill protected. It's a layup, Maddie. Yeah, I want CRE to protect it. So mate, don't piss me off. Call CRE Insurance. Maybe it's easy for me. I've got maybe your fair story for you involving involving
insurance and gas coin. Not not Spartan, but the previous yeah, I'll tell you that one off here, but CRE could have fixed that. CRE can fix anything. Gas corn would still be gone probably if CRE were. Off I could make a case that that would be possible. But are you taking into account how good Steve Tarr is when you make that case anyway? No, the positive thing for potential recovery improvements based on these MET results, and I'll bring up the graph here is this.
You can see there's a linear relationship between the ground size and the 48 hour tiles grade for the preliminaries, preliminary results I got for stage five and six, which is the deepest stuff, the honeypot, never, never. So yeah, So the overall recovery, it's and you can do it from the tables, you, you subtract that tile grade from the head grade and divide all that by the head grade. That gives you the overall recovery.
Essentially what's getting pissed, the shit they get compared to what's getting pissed out to tiles. So you can see for stage 4, so 7.2 -, .74 / 7.2 gives only 9.8%. So that was done at 75 Micron grand size. Now you can see on this graph based on these two preliminary tests on the deep stuff, the tile grade keeps decreasing as they grind it finer.
So at 63 Micron, which isn't we don't usually talk about 60, usually it goes 75 and then they start talking about like high pressure grinding roles and things like that. But I. Remember, Stewart is saying 75 was a bit of a. Yeah, jeez, I think it's the the rule of thumb where you sort of what you go down to. But at 63 Micron, the average recoveries were 92.2 and 92 1/2 percent. So they've, you know, added it looks like if they do grind at finer, they can get another
couple of percent recovery. So, you know, extra 2% recovery of 150,000 oz. There's 3000 oz, Yeah. More power though. There is more power. It does require more power, but it's after that power is consumed like. What's the benefit? Pouring an extra gold bar fucking doesn't cost anything more if you're pissing it out the tails. So it's a, it's a cost, it's a power to bloody revenue comparison that they'll need to make. Because marginally more grind media as well, hey?
Yeah. So you would need, well, it's a, it's a, it's a power thing, but it's a CapEx thing because to, to grind it down to 63, they're talking about doing test work to grind it down to 53. So if they can increase the cover recovery even more, so they effectively need a bigger ball mill. So you need a bigger, bigger ball mill which has more balls in it. And because it's bigger, it requires more power.
So it's all all going to be based, it's all going to be based off a kilowatt calculation at the start. It's like right, Are we going to grind to 63 or are we going to grind to 53? How big of a ball mill do we need to install with? I think ball mills run it. I think it's 30 to 35% ball charge. But if you got a bigger ball mill, there's more balls bloody in it to bloody grind the apps living piss out of it.
So now, considering what they've got already, and now I've talked about it before, is so that that ball meal has to go in that that need. They need that ball meal to grind it down to 53 or 63. That's a given. But considering they got the massive jaw crusher and the massive sag mill already, they've they've obviously got the two options to either so they can go jaw to the big sag,
then into the ball mill. From that there will there's scats that come out of the ball the the sag mill that have to be either chucked back into the sag mill or like a you need like a tertiary cone crusher. I think it is like to actually crush those scats down to then feedback into the sag. Otherwise you just got these fucking shop puts everywhere that you that are good fuck all. Or they can, you know, install to like a three stage crushing system to go into the ball mill.
So the existing jaw then to cone crushes Jowdry like cone crushes. That'll get it down to the 8 to 10 mil that is needed to then feed into the ball mill. So it'll be wiring up right, Because I'm pretty sure the the big sag mill they got would use a lot more a lot of power. So it's like, but it's there, it's already there. So it's like, well, is that the best option or? Is installing 2 cone crushes and having the three stage crushing system to go in the better option?
22 cone crushes first one SAG mill you got 2 bits of kit to maintain rather than 1. So it's going to be the that's going to be the way up. It's like you you would. I think I said it the opposite way in previous episode, but you'd think if they can go jaw to existing SAG, manage scats into a new ball mill, considering that existing infrastructure think that's probably the way they'd go.
So I think 3 stage crushing in the ball was the norm, but I think places like from what I've heard, Thunderbox, Mangari, they're going jaw to sag to ball. So interesting. Yeah. So considering it's already there, Spartan or whoever the fuck are going to mind this, whoever's going to own it, they'll make that decision in due course. Could have gone if they they raise 300 bucks when they're up at $1.50 they would have bloody helped them. They could have had all the money for it.
Then back of the back 20, up 10%. Today they went back to 2010. Yeah, yeah. And gold price ripped up so. Yeah, the more cash you raised, the less likely you are to get acquired to. But yeah, maybe, yeah, depends if someone wants cash. Yeah, most of them. Mine is a cashed up, aren't they? You just got a deal in there. And they shouldn't even be thinking about getting a quad or should be thinking about mining it Go mine right.
Say owner Piedmont set to tie the knot the most it's is it a bit of a oh fuck all those well the two of an AVL was it Australian Vanadium and TM TMT? Yeah. Yeah. Logical merger, yeah. It's one we were expecting, that's for sure. Totally. Yeah, I'm impressed by your metallurgy knowledge just gets better and better. Thank you. Thank you, Travis. Nathan Stordis is like a proud father. Yeah, this is so say owner Piedmont, they're they're tied.
They're not. And the, the, the details of the deal kind of emerged about about 30 minutes before we hit hit record. So, you know, we got to see what, what it all looked like. So they're, they're the deal is basically both of them, both companies are going to emerge with 50% each of of the merge Co, which is technically the head Co. We say owner, but like they're called on a merge Co, which means they're going to rename
the company I reckon. And it will be run by say owner's CEO at the moment, all all up, there's 150 million bucks of new equity in Australian dollars that is going to make its way into that pro forma entity in a, in a somewhat kind of complicated manner. Sale sale is launching like a well, they launched a $40 million capital raise kind of today. Piedmont is expected to to do similar sort of when you know the markets in the US open.
And then once the merger is effective with both with you know about 40 million Australian each of their respective things that the two companies going to merge. And at that point, RCF has this conditional placement where they're going to tip in about 69 million Australian as a conditional on that. Into the pro forma. Into the pro forma. Have you ever seen anything like this? Then another capital raise for another 22. Exactly.
Follow on. Yeah, potential follow on raising for another 22 1/2 to come where after that too. So yeah, have you ever seen that where both sides of a merger, both raising money to make a merger happen? I haven't. Seen both sides do it yet and but I have seen the conditional raises do do happen a bit especially with like you know private equity you'll see Aussie super do it from time to time in in mining companies, things like
that, but. Whatever the North American equivalent of 601 One is, colours light they would be so the brokers would be so happy over there. What is the 601 One equivalent in Canada? Don't know. There, there'll be something in Vancouver there. Love it. Yeah. So you got all this new equity coming into it. And there's some obvious benefits here, not least of which is just the simplification of of the North American lithium ownership dynamic, you know,
100% owned by the same entity. You don't have that weird off taking place which you know, it's just a a big drag on the complexity and and the way that investors sort of had any appetite for either of the companies really was this quite onerous off take depending on what the, you know, lithium price was at any point in time. This deal just tidies all of that up. So it just makes sense. It's overdue. What do you guys think of of
that component? Yeah, I mean, just to, to add a couple more points, Maddie, you mentioned Canada, but it's a bit funky, very North American focused. Headquarters going to be breezy. They're going to have. The primary at the moment, yeah. The primary listing will be ASX. That makes sense from a from a capital markets perspective with a secondary listing on the NASDAQ. So not actually the NASDAQ. Yeah, well, that's where Piedmont has a listing. So not actually Canadian listed,
but obviously a very. Tech fucking on the the. Tech exchange? Well is it hunting exchange? Lithium has a sort of Ave into EV's. Get creative. I mean, I think that sort of came about from a sort of Carolina. They've got an asset in, in the States there as well. So and then there's that a warrior interest as well that they they said about in in Africa, the pro.
Forma looks kind of more interesting with the yeah, you've got the other like Carolina got its approvals recently, you've got the yeah, the Ghanaian asset, which is again, there's some, there's momentum there and you've tied it up now. So the pro forma actually kind of looks interesting ish. Importantly though, there's going to be a bunch of kind of cash in there which buys them
time, right? In a depressed lithium market that buys them more time and also importantly introduces RCF as like a kind of 10% shareholder of the pro forma who is writing a big check, but also has the ability to write another big check if they need to buy more time in the future as well. Yeah, that that's important. What do you what do you take of their role in this, their involvement? RCF. Super interesting. Like yeah, honestly I find it really interesting.
I mean, like one of the really big wins RCF has had in recent history was, was when Altura was distressed and Pilgrim Minerals kind of snivelled it up right before the right before the lithium market turned. It was like a month before lithium market turned and RCF kind of cornerstoned big equity. Like, you know, big equity kind of cornerstone position there to help facilitate the acquisition of voucher.
So everyone really remembers and, and in like no time, it was like a three times money on money and like like 10 months from memory. It was just a huge win for for RCF and so everyone remembers that in the head. Big win for RCF that was like counter cyclical depressed lithium market. Big, big, you know, consolidation kind of equity like play for them. This looks similarish lithium markets beaten up the you know, there's two logical companies kind of coming together helps
them sort of buy more time. Hopefully the cycle picks up and makes the equity kind of look, you know, attractive over time. No one can really time when the market turns perfectly. But, you know, I'm sure, I'm sure everyone who's been a part of that deal is sort of thinking, I hope this is like the, you know, Pillbra gobbling up Altura sort of play. Yeah, and it's it's whoever can survive if there is a turn, it's like you start getting paid for Strider.
Why? And specifically on North American lithium, the asset, it was hindered by the by the structure it was in with the, the economics there and the sort of skewed off take and ownership. So yeah, hopefully this can, this will clear that all up and they can just focus on getting those recoveries out, getting yeah, getting the asset. They're still going to be losing free cash flow on it at the current lithium prices. But yeah, you know, they've got greater capability to last
longer in the cycle. Now what's happening with Mublin? Development asset, I mean, yeah, I. Mean on us Pardon. Definitely is, yeah. Permitting will be the the challenge. I mean, financing won't be a walk in the park in this market either, but permitting's been the big impediment. It's actually an attractive asset, but yeah, permitting's the big challenge there. Grade is much, much better than North American Lithium, though. Once in production, once not, obviously, yeah.
So, yeah, I mean they just need to get the costs down at North American Lithium to in the ballpark of the DFS that came out in I think April 2023 is right now they're nowhere near that. And also get the the revenue up. There's been a period of sort of qualifying the product and all those things. So just to make it, you know, go from a cash bleeding asset to something that's closer to break even, that'll be that'll be, you know, first item on the shopping
list. Very. Good, that's it. That's a wrap. It's funny that. What did you say yesterday, Trevor? Oh I'm so not interested in lithium anymore. The the the. Market. Yeah. The the future and oh, we've got a lithium deal. We'll see what comes to it. You know, it's a better time to do a deal than it was a year ago. I mean, more particularly if you if you ask. Yeah. Mate, I reckon I'll know who was behind that. Someone that moved over to North America recently. Interesting.
We'll share that one off air. He's a JC, he's a JC. He is indeed if. You're listening and you know who I'm talking about. You're a JC, Mr Person. Jay. Speaking of JC, he's been to a mining services absolutely jam packed. Every bloody truck and digger is full of a JCMMS grounded heading to Canada Crossbair. This is in the name Crowded construction, Yeah. Have we mentioned? That yet I. Don't know. Grounded control. There you go.
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