What the hell is going on with Bellevue?

Righto money monitors. We've got some gold fodder to bloody feed the episode today, bought to you by Quattro Project Engineering. Who else would you pick? Well, we'd pick seven others actually, but yeah. Not BBC mate, I've already picked Quattro. That that this is true but like I could pick any partner for a great episode because they're all great but. The stars have lined up for this one, though.

Quattro project Engineering. When you're talking about gold, talking about getting these projects, would that be underground or whatever you want? Quattro Project Engineering. Right. They're at Underground Operators Conference along with myself. In a couple of weeks they're going to have a big tent down and say G'day to Jeremy Palmer and the team about all your APC design engineer construct needs. Their friggin gurus. And he's about to give a bit of a guru analysis on gold Rd. gold

fields. Mate, I love a hostile. I love a hostile deal this is. When it's a big mob like that too. Oh, that you wouldn't think a guy hostile. It sends tingles down a spine. I'm frothing just thinking about it. I'm probably getting tingles. Outside so keen to talk about it. Oh, and of course, and tell you what, bloody action-packed yesterday on the Bellevue front. And we haven't got all the info yet, but obviously we're gonna give a what we know what we infer, and there's a bit

happening there. So that'll be the back half.

So right away, Goldfield's Gold Rd. we mentioned it briefly the other day, the article coming out. There's been plenty of news coverage and comments from executives involved in this. And boys, how do we want to map it out? Should we go through a bit of a timeline? Yeah, Maddie, run through a bit of a, a timeline because it's really interesting to reflect a bit on the there's like been a slight change in tone. I think we've picked up on, on how they're talking about it.

But you know, it, it came out earlier this week, but clearly the companies were in discussion. So run us through quickly how it seems from the outside things transpired. Yeah, like in the news stories, I think they've evolved a bit. Like there was questions at the start about no, like not being not engaging, but then there's like admissions of engagement and between the companies and like this is I guess what we know so far. So apparently on 7th of March, Mike Fraser, the head of

Goldfields, he sent the NBIO to Tim Necha at Gold Rd. chair. Yep. And then so that was followed by, and this is for all of Gold Rd. It's not like some people thought it was just for Grey. This is for to take Gold Rd. out now. This was followed by a phone call in a like guess a a week to consider the offer and at some point during that like

Goldfield's Gold Rd. rejected the NBIO and then their counter offer was what was disguised in the announcement that they wanted to buy 50% of grey air off Goldfields. And that's a pretty interesting counter offer, isn't it? Yeah, it's like. It's like, it's like not right there. It's not like we want more cash. It's like, no, no, no. You buy me, I'll buy you.

And so anyway, Goldfields to climb that counter offer, which I said in the announcement and then Mike Fraser from head of Goldfields, he apparently flew to Perth sort of 19th, 20th of March to friendly negotiated the deal requested and that was like requested by a team. So I was all like looked, sounded all right there and met on consecutive days which the West that was in the West Australian article as well. And they sounds like they got a commitment that they'd sort of

be back to him by Sunday 23rd. Yeah, which was previous just the Sunday just gone and here's there might have been a bit of stalling and nothing sort of coming back and nothing. And it got to the stage where Goldfields had a board meeting on the apparently had a board meeting on the Sunday and said they were going, it just wasn't really didn't look like it was

progressing towards an answer. And they essentially said they were going live with it tomorrow, which is when we, yeah, talked about it on the Monday just before the show. So that is what we think we know.

And the, the strategy is they've like gold fields themselves have disclosed the fact that they've, they've confidentially submitted this bid and this is the price and these are the terms. And, and as Duncan Gibbs will proudly tell the press, that's a bear hug strategy in the investment banking circles, which you don't, you don't see many of these. Like even in the yeah. Like I'm, I'm trying to think of the last one I saw in the resources space.

I thought metals X ones when they did that, when they when they talked about their one of, of green tech was sort of like a bear hug. But I actually just think it was a compliance thing. They weren't trying to pressure an outcome there. Yeah, yeah. Before that deep yellow Vimy is the last one I remember Oh yeah yeah which did lead to an outcome but I did think it would be worthwhile kind of just reflecting on the on the funkiness of of the joint venture like like this is an

obvious consolidation I mean look Gold Rd. have a non controlling joint venture interest inquiry yeah Goldfields is operator. Surely surely there'd been like plans that it's a logical consolidation. Why hasn't it happened before And I and I think it's just worth reiterating that no deal has has happened to date and I think a big part of that is the joint venture agreement included a standstill that prevented gold fields from acquiring any

further interest in gold roads. So in practice say gold fields wants to do a deal maybe historically maybe they submit an MBIO confidentially and gold Rd. could theoretically keep knocking them back over and over and and what gold fields like what are they to do in that situation? They can't they can't buy a private spike and kind of exert pressure and in instead gone away that you know, there's a stance to preventing them from from from doing that. So you want to do a friendly deal.

It's like the the you know, everyone wants to a friendly deal if they can do a friendly deal. And I've never seen gold fields roll out a hostile tactics before. So I I kind of thought that they were too neutral and kind of have it in them to to even do this playbook in some some respects.

But senior management at the at the company has changed in the last year or so. And maybe maybe if they're going about things differently now, you know, instead of accepting the stalemate that they're in because of the the standstill in the JV agreement, they're actually willing to get their hands dirty and roll out the public pressure that comes with this bear hug kind of hostile playbook.

Yeah. Well, and like it looks at the looks like from there and the efforts were made to make it friendly, like they flew over to discuss it. And like that if if you look at the timeline, it's effectively gone from that MBII being submitted, it's gone 2 and a bit weeks. Do you think that's is that a time you'd think, oh, this is going on too long now we're going to go hostile on this or doesn't seem to be too long. Time can kill deals, but I don't think that's how things played

out. I mean, I think the they put they put a number on the table and if if gold roads like response to that is this number is not enough. Well, clearly the discussions of the two days was well, you're going to have to tell me a number that is appropriate and then we can work from there and if. They they've obviously come over to negotiate.

Yeah. And if they haven't been given a number in that two days, like, you know, you're kind of just you're, you're just like, well, this a minor situation where I'm I, I like I'm, I'm, I'm kind of get a deal done because you're not going to give me a number to negotiate from. Yeah, that's it. It's a valid It's a valid reason to to to employ a bear hug if that's what's happened.

I, I found a very, very interesting the, if you look at, I'll bring the quarterly up just to one of the Gold roads previous announcements, you'll see at the bottom it says this release has been authorised by the board. And you look at the release about the this MBIO, it said this release was authorised by Duncan Gibbs, the MD and CEO, not authorised whether that's reading into things too much.

But the question is, Duncan being a, he had I think well over a decade of experience in as GM for Tropicana Sunrise. So he's been operational before. Whether he has his intention is like wanting to run a mine versus possibly other people on the board or shareholders that would rather take the cash and if there's any division there, I don't know, but.

Yeah, yeah. It's interesting to yeah to to think about the strategy Trevs you as you touched on the other day in light of how gold fields have gone about M and a very recently with a Cisco. Yeah, it is it. So you, you do the bear hug and then what you're hoping for is that there's a bunch of a bunch of Gold Rd. shareholders who were who were suddenly kind of like, oh, hang on, I want this,

this looks pretty good. And they pick up the phone and they put a bunch of pressure on the, the, the board and management of the company to meaningfully engage and negotiate a value of creative outcome here. And sometimes that's kind of needed if you're, if you're facing, you know, a pretty, a pretty brick wall approach otherwise. And, and I think it's, I think it's working like, and I applaud it from from gold fields.

You could you could I've read this one quote in the Wall Street Journal article where where Duncan is quite quoted saying that this was the only is this is the only offer received to it says goldfields has to date only put forward 1 proposed 1 proposed price, says Gibbs. There's been no to and fro here in terms of price discussion. It take it's take it or leave it, he said. And, and then that's going straight into a public arena. So I've read that.

And like Duncan's suggestion is that they haven't received a bid before. And while that might technically be correct, referring to the situation like right right now, this, this sort of period in time, I, I would find it like hard to believe that Gold Rd. has never received an NBIO from gold fields over the 10 years that the two companies have have been joint venture partners for. I'd love to to ask the question,

you know, to to people in the North Gold Rd. over the last 10 years, how many bids has has gold fields, you know, confidentially submitted, like how many MB iOS have kind of, you know, been tended to to a chairman over the period of the last decade? I'd love to know the answer to

that. And we we're not going to get an answer to that if we asked it, But I'll pose it not because I'm like, you know, like I, I know the answer, but but more because I'm doubtful that that Goldfield's plan I used to is to roll out a hostile playbook. Everyone wants to do a friendly deal, friendly deals, like way easier to get get done, you know, cheaper. It's it's, it's just like you don't you don't go hostile just because just to be a Dick.

I mean, maybe some people might, but it's, it's a bit like it's a. Anyway, all this is coming. If you want to, if you want to go hostile to be a Dick, you do it on Christmas Eve. Yeah, yeah. But they but they're like, I'll go through some of the comments in the the West and everything like because it's it's this is I assume it says Oh yeah, the chief of gold Rd. has accused. Yeah, yeah. So this obviously Duncan Giggs comments talking about goldfields at best a bumbling

joint venture partner. The stance they've adopted is very hostile and aggressive. It's a lowball price given it comes not long after a production downgrade at career and before an much anticipated underground mining study. So it's yeah pretty anyway. Well, it's not a friendly deal now after you slagging them in the paper, but they but the yeah, talking about opportunistic when it's like all time the degray outcome has been achieved.

It's all time high share price and Oh no, it's functioning the gold price, but it's it's just yeah, it's a it's I think it's it says something that the price hasn't got to the offer price yet. The share price. It doesn't mean I don't think it's cracked $3 yet. The. The the the points you make there, they're actually. 3 bucks today. They're actually valid points to make, like. I don't think that they're not valid points to make.

I I just think they kind of, you know, there's, there's yeah, a bunch of other contexts that makes you kind of, you know, yeah, wash, wash your, your eyes over it a little bit because it yeah, if there's, if there is a study to come out that I think there's more value than like that being in the public domain of course, let's you negotiate more value as well. I think that's a valid point to make, but the lack of engagement would be frustrating for for God Roy shareholders entirely.

Yeah. And I think it, but it's more their their their counter offer, which is like it's this like OK, take 3 approximately $3 seven per share cash or we are going to go down the road of debt capital raises and stuff to buy 50%. So as the the shareholders and which are like BlackRock 5%. Van Eck owns 9 and a bit that'd be, I think that'd be, as you said, very a bit of pressure going on about, hey, come on, is this the best thing for us?

Yeah, the the relationship Gold Rd. seems to have with it's investor base is like interesting to say the least. I mean, you guys remember the reaction after the rumours with them wanting to get a stake in the windfall asset last year and how the market kind of spat the dummy and stuff? Greenstone asset. Greenstone. Yeah, exactly. Yeah, Yeah, it's, you know the the market didn't like that they didn't like the company going

out and being keen on M&A. And so it doesn't seem like the most cordial relationship, but yeah, yeah, B And then to see what those and. Investors, like investors. There's not like huge sort of like active money there, if you know what I mean. Like a lot of it's the yeah, absolutely. The kind of passive captive passive ETS, passive, passive dumb kind of money in a lot of ways. Yeah, what the? The Cisco, the Cisco thing you mentioned windfall.

So this was this was the other point I wanted to to, to make on the the the context with gold fields. Why I don't think like they're the sort of company that's just going to go hostile without a reason. If you if you look at when they acquired a Cisco last year and this was late last year, you can read the information circular and Cisco super similar kind of like situation to to go Gold Rd. It was a 5050 JV with Goldfields. They bought it out of Cisco to consolidate the windfall

project. They upped their bid four times. So it was 5 separate valuations provided to a Cisco and that all happened behind closed doors never leaked. You know, there's no like that was just like meaningful dialogue. So it like golfers is clearly a dog miner in my eyes that is is willing to negotiate on value.

They just have to have a receptiveness on that negotiating in that negotiating dialogue is is is how I would interpret it. And especially when there's been a baseline set of 3 bucks 7 this is we're willing to buy this and go up a bit. Yeah, I'll fly over and see you.

But what what do you think about the the valuation? This is it. Is it opportunistic? Yeah, it's, I mean it's a super interesting question, right? Like obviously the, the value to to gold fields is superior to than anyone else because they are the JV partner. Maddie, if you, if you look at the price, we're talking about 3.3 billion Aussie, you've got the degray stake at like 870 ish million in there and then another call it 180 million in

cash. But I mean, we should probably pause on the Degray stake for a minute given like there's various assumptions in what happens going, going from there, right? Yeah, well, even the the structure it's just worth worth teasing out. So what gold food is offering is an all cash offer, but there's a fixed component and a flexible component. Fixed component is 2 bucks 27 cash. The variable component is another 80 ish cents. But that's variable depending on the implied valuation of of the

de grey stake, you know? Which is what Northern Star trades out effectively. Exactly. So they, they, they framed the premium in in a few different ways in gold, gold fields letter that they put out and gold Rd. they focus on this 28% premium, which sounds like, you know, not, not not huge, but that's the wrong way to interpret this premium. This is a 44% premium. You shouldn't be including the value of of the degrade shares

in your premium calcs. Yeah, just like no one wants to pay a premium on cash, you know, like you, you sort of like, you know, you're not paying a control premium on cash. Well, it's the same here with the Degray stake. Like the, the way that that Gold Fields has gone about this, it really just removes any, any sense of a strategic premium associated with that Degray stake.

And you should net that off. This is a, this is a, you know, a 44% premium and that's, it's kind of like a pretty, a pretty generous starting position in negotiations I would have thought. So, so they're, they're definitely they're effective. Are they effectively saying that they would pay Goldfield's approximately 2 1/2 bill for their 50% stake? So if they're if they want to. Call it 2.2 ish. Two point about 2.2. Yeah, and and Gold Rd. reflected that by saying we'll counter and

bid 2.3 for your half. Oh, did they say? Did they give a quantity a a a size that they they would put in? I'm pretty sure they did, yeah. Right. Oh yeah. Yeah, which was obviously bounced back by by Goldfields, but yeah, to what you said, Trevor. I think it is a pretty, pretty generous starting point on where the market had kind of been valuing Gold Rd. previously.

And yeah, and then talking about the Northern Star, there's obviously a few different potential ways that can play out assuming say Northern Star, it becomes Northern Star shares rather those degree shares turn into Northern Star shares. They have discussed in the past maybe an in specie distribution if they want to turn that into cash and look at M&A or something like that, which they've sort of been eager to do in the past. There's a tax implication as well. Yeah.

And like that's a Gray stake. I do think it's it's, it's actually a point that not, not no one's really talking about, I don't think. But there's the, the value of gold Rd. stake in degree as well, like 890,000,000, you know, plus or minus depending on, on, on any given day, if they, if they sold that stake at any point, there's a very chunky capital gains tax that they're going to have to pay.

And on my, my Bush math numbers, that tax is about $150 million in tax that they'd have to pay on the monetization of, of that stake in degree. And no, no gold fields like in their, in their offer, they, they are generously haven't even applied a deduction in the variable component of the offer for gold Rd. of the tax that would be payable here for them to to monetize it, right? They're actually, they're going to pay 100 cents on whatever the value of the degree stake is,

even though for gold Rd. if they were to, to monetize that there is a, a payable tax. I think what's actually realizable is what you get after tax and that's kind of what's gonna be attributed shareholders. They were, yeah. Yeah, if they were to sell the shares. Precisely so you know for gold Rd. think about what that means for for them in terms of like you're comparing your different alternative strategies and and what Gold Rd. pen was. Oh no, we'll monetise our stake

and we'll buy you out. Well, OK, so now, now you've, you're actually you're having a punitive impact on, on your on your value because of the tax implications there. Then what he's kind of tabled to you.

It's. And if, if gold Rd. were to achieve like a a like for like outcome on just the, the, the see through value situation of, of that offer to pay 100 cents on it, which is, which is what you know, Golden fields are saying they'd have to sell the stake for like 20% higher than degrade shares of trading right now. And no one's going to buy the strategic static at a 20%

premium. And, and I think like it's, it's actually quite a clever thing that the gold fields have done because I've really just like pulled the pin on the on the, on the argument that there's any kind of, you know, premium or strategic value sort of associated with the, with the, with the degree stake there. Yeah.

Yeah, yeah. And I mean, if we expand the conversation on on valuation, just going beyond that that stake and look at the actual cash flows that the business does, because I think, you know, I find this the the most interesting part of it. Like we're talking about a company that did like $90,000,000 in free cash flow in 2024. They haven't knocked the lights out in, in terms of cash flow in recent years and obviously they can point the finger at Goldfields for that being the

case. But yeah and and maybe there is additional synergies and that the the cash print is a bit better if it's all in one case. But if you look at 2025, they're guiding to 170,000 oz at Aussie 2 and a half, $1000 all in sustaining costs. So. That's their half, half, half of the project. Yeah, that that's their half which they maintained guidance despite the the incident that sort of happened a month or so ago. So they've they've held that.

But if you do kind of back of the envelope that's like $200 million in in cash flow before other kind of expenses. So like we said maybe like two 2.2 ish billion it it looks pretty, pretty reasonable on those sorts of grounds. And to be clear, they've given their three-year strategy and they've flatlined production. So it should maintain the same

level for the next three years. We'll see what kind of cost do they did say kind of through 26 they should improve a little bit once they've done done a bit of strip and and a few other bits and pieces. But yeah, you then need to go one step further and and think about growth, right, Because the open pit is going to be mined to 2032 as it currently kind of stands. And there's all this discussion

about the underground study. Now this is a, an all body that runs in the, in the low 1g per ton type thing, you know, maybe 1.31.4. There's an, there was previously an underground resource there that stood at just under 1.6g per ton. The, the overall ounces in the underground component were reduced last time they came out with their R&R statement because they dropped the pitch shell a bit deeper given the kind of friendly gold environment that we're experiencing at the moment.

But I mean, maybe one more for you, Maddie, where do you kind of see a 1.58g per tonne ore body, you know, being mined underground? Do you see that as feasible? I mean, granted, this is like a twenty 30s type discussion and maybe the the environment is a bit friendly and we can, you know, forget that 2G per ton. It ticks lower and lower, but it's yeah, it it seems to be rather at the at the low end in in my view. What do you reckon? Yeah, it's, it's all a all a scale thing.

I know you know the, the narrow. I think, I think it was Bryce talking about it on the AI chat talking, talking about how the all the open pits have been discovered in mine and everything's going on underground. It's, it's, you'd notice a lot of the exploration now, like there's shit loads of open pits because grades are everything's there and it's now being mined at much different prices. So all our grade calcs that we used to do just don't make sense

anymore. Cut off grade gets lowered. Yeah, it used to. It used to be 4G had to be 4G for an underground, 2G for an open pit. And now that's just halved. So you can I, I don't see it as out of the realm of possibility at all by 20-30 that you could make a, a 2,000,000 tonne underground operation at 1.6 and B significantly profitable, but with the scale of those ones requires a lot of capital to get it to that stage. So 20-30 could be printing cash by 2035 for instance, to develop

the infrastructure. Yeah, and and you, but you want to be a bit conservative as well, right. Like you guys remember the the M and a discussion we we recorded just a, a couple of weeks ago and all the deals around 2012 that were there were people factoring in what the gold price had done in the last year. You know, re redoing the, the block models and everything and the, the pitch shells and everything and things reversed very quickly. You know you want to be relatively conservative.

It's it's a big, it's a big consistent ore body too. It's not. Like yeah, I was about to ask, is it a bit chunky? It's not like narrow fame where you've got all that dilution, all that sort of stuff. So the great on a you know, vis a vis you know. Yeah, yeah. And you're and you're just, you're getting absolutely, you're just getting better bang for buck for your infrastructure that you have to put in. You can monitor at a higher rate.

So you know, yeah, you can, yeah, you definitely take you you're better mining 2,000,000 tonnes at 1.6 and 1,000,000 tonne at 1.9 or two. Like it's just just lower grade, but just more of it that can better cost. So yeah, no, it's definitely yeah these. Yeah, they are. My historical knowledge is good. Fuck all these days because the prices are so different.

The there is a bit of a kicker in there as well from about next year, as soon as like they've hit that 2 million oz that has come out, the ore body gold Rd. is going to get a 1.5% royalty. So that does make their their half quite a bit friendlier. That's that's a nice to have thing that was in the deal a while back. So yeah. And and to to round out on where the the broker community and where consensus kind of sits like they're trading close to

1.1 times NAV. So, you know, you can always make the the argument and heaps of people make it that the consensus process flushed through is way below where we are. And and it doesn't factor in the optionality in in all bodies like this that are a Long live and staff so. Would that not include the underground yet, like and because there's no MPV on it? Or, or there'd be a there'd be. A. Because we put. It on yeah, yeah. Yeah, Yeah, they'd be talking about it.

And this goes back to what I sort of said at the beginning about the change in tone from leadership at at Gold Rd. There's, there's been a focus I think in, in the past couple days on on value and we can chop out a snippet from a recent article where you hear Gibbs saying all of the correspondence in communication has been around value. And that kind of ties in with their counter proposal, doing it in line and saying, hey, we can buy you for the same amount

you've pitched. That makes you really think about the value of what you've kind of put forward to us, which I think is fascinating, right? Big pivot, big pivot like so you read read gold roads initial response to the to the bear hug from from gold fields. And it was, I thought it was a poor letter if they were trying to negotiate on value. It seemed like a, you know, a reasonable letter to write if you're trying to say fuck off. But there.

Was seemed like a great one if you want to burn the bridge. Yeah, exactly. So it was like if you were trying to negotiate on value in that letter, what you would say was, you know, we received a lowball offer from Goldfields. It it, it included no, no, no value attributable to our 100% owned assets. You know, Gilmore or whatever they, they're called included no value for our strategic equity positions in like Yandel and whatever else they own, right?

Things like that. You would include and you would try and at least frame a discussion of like why it's such a lowball. And then that gives you some ground to stand on in negotiating further. If you want to negotiate, you kind of be sort of explicit about how much you've been undervalued and why to some extent. But, and, and we didn't see any of that. And now the Wall Street Journal article, like there's, there's talk of, of value.

We're open to, we're open to, to, to, to discussions at the right price, like those sorts of like things there. And I just interpret that as like go, go for the strategies worked. Like you know, if, if you've, if you've changed the, the messaging in a short period of time, maybe maybe shareholders have picked up the phone and, and said, come on, that's it, it's time to do the deal. Yeah, because that that's none of that would. Come out public. Yeah, that's it.

None of it would have come out public if it was negotiated in the 1st place. Could have stayed by and closed doors for three months. Ever. Yeah, yeah. Yeah, yeah, maybe he's not. The and the likes got in, got in the ear of Duncan and said hey, you should actually pick up the phone and have a a productive discussion. Big old Evie's been on the blower a bit this week, actually. The other part. Trav you.

That, that, yeah, like so there will be obviously existing shareholders, but then you get your M&A ARB funds that get excited here as well. And if, if they buy a meaningful enough stake in Gold Rd. knowing that a deal is possible, well, all of a sudden you might have five, 1015% of your your register in a short period of time is now the M&A AAB funds who guess what, guess what they do, they exert the pressure to say, all right, time to get this deal done because that's my,

that's my risk. That's that's my AB, yeah. 100% because if you look where the share price opened when it first got released and it came out in the afternoon and then it started trading, I want to say like 2 sixties, two 70s, and now we're talking about it touching on three bucks. So the belief in the market that a deal kind of gets done or another bid comes in or whatever has clearly risen as well, which is pretty noticeable. Yeah, I couldn't believe how far

away it was on the first day. Like it wasn't even in the ballpark. It was like. Well, I think that's just speaks speaks to like how outright their rejection was initially. Yeah. And it's, it's, it's not, there's no, it's no certainty here, right. There's like a lot of, there's a lot to play out. So yeah, yeah, the, the, the risk if you were playing the ARB, there's a lot of risk of

deal completion here. But yeah, the, the more M&A are funds by interestingly enough, the better your odds of closing the deal happen because you've got collective pressure to apply. Yeah, I do want to. So what? What are the? Defence bankers playing at then. So I'm going to, I'm going to kind of have a bit of a hypothetical here, if you would, if you're being really cynical and hypothesizing, what if, what

if Gold Rd. you know, had bad intentions and, and, and wanted to do something to, to stay it's own company at the expense of maximizing shareholder value by doing a deal. What could they do? Right? And if you wanted to do that, what you do is you'd buy something kind of crap and pay too much for it. You'd enter the scheme implementation deed, pay too much and and what you would do is you as the acquirer structure that scheme implementation deed such that there was no fiduciary

out for you, the acquirer. And then all of a sudden it's a poison pill, right? You're not attractive to to gold fields anymore because you just pay too much for something they didn't want. And there's no way to interlock it because there's no fiduciary out for for Gold Rd., the acquirer. It's only if it gets voted down by the target. Yeah, yeah, yeah. So it's a, it's a, it's a bit of a sinister thought, but you can

never rule these things out. And in fact, JD, when you when you did your M and a disasters kind of episode earlier this week, like there are a couple of things in there that very well may have just been intentional bad deals to be poison pills for for a similar kind of rationale. So that I'm entertaining it. It's a possibility here, but I don't I'd like to think that it

wouldn't be a possibility. I I will say though, if this unlikely but dark scenario does play out, it'll obviously open up, you know the board to a lot of criticism, not just because of the blatant opportunity cost of a of a decent deal with Goldfields now, but also because of hypocrisy. If it did happen. Do you guys remember the very first time we got into the weeds on fiduciary outs? I'll probably didn't remember because I didn't understand it.

So we all got up. We exploded a fair bit in the The Battle for Leonora. Definitely didn't understand. And when we when we started the podcast, like the Battle for Leonora that we got tangled up in, it was the asset deal. But let's not forget the very first iteration of the deal with Genesis. It was actually St. Barbara acquiring Genesis, renaming to Hoover House and there was a spin out. For nation medals. Phoenician medals was going to be Atlantic and Sambarian and

why I bring this up? Saint Barbara's chair of the board at that time, Team Netschha. Gold Roach chair right now, Team Netschha. And in version 1 where St. Barbara was the acquirer of Genesis, guess what was in the scheme implementation deed a fiduciary out for Saint Barbara. So and these these are not like ordinary to slip in as the acquirer like these fiduciary outs for the acquirer are are not customary.

So this was probably insisted upon by by say Barbara by it, but maybe by Tim is kind of what I'm saying, but I don't know. But yeah, so it's like, if you why would you, why would you be part of a team that insisted on a fiduciary out for the acquirer in that situation then? And then and then this is in a in a sinister world, if, if gold bro did something bad like this, not not put a fiduciary out when you're when you're buying, when you're buying something, stay alive here.

So it's just I'm getting, I'm getting like 5 steps ahead and I don't want to don't want to, you know, put anyone under the under the microscope when they literally have done no actions to to warrant it. But if in a really dark hypothetical world where where gold Rd. you know went the boys and people were out, they bet there better be a fiduciary out in that scheme. Implementation did, otherwise it'd be be inconsistent. Yeah.

Is there. So are you thinking that the the tone is when you said the latest article talking about value, do you think we're sort of leaning towards possibly a bit of shareholder pressure towards Gold Rd. Engaging and getting a deal done for cash. Just opening negotiations again, I think is the the kind of first step and in any case, I think that's that's better for the relationship given that they are JV partners overall so.

Can they? That's the they can't put a lower offer in, But yeah, they can only because it's like, hey. You can. I don't think it'd be received too well. Well, it's like, hey, yeah, thanks for the comments. In the paper was 3 bucks, 2 now Yeah. Yeah, well, it's kind of, it's kind of interesting, right, Because it's like if you're gold fields, you don't actually need to do DD. This is your asset. Like, yeah, what Like it's not like you're trying so that they're comfortable with the

asset. It's it's, you know, all they need is a bit of a bit of receptiveness. There's no the conditionality here. It's like it's they've got net cash, they can pay for it. It's not going to be really conditional on technical DD because they know the asset better than anyone. So it's, it's, I think odds are here that a, that a, that a deal gets done. Yeah, yeah. And you could argue on the DD front that Goldfields might know the asset a bit better than Gold Rd.

Oh gold gold. Is it just his cover? So I'll. Give him some credit. You see the detail with goldfields giving them after the after the the bid, the draft version of the underground study. Oh, no, I didn't say that, actually. Yeah, that's interesting. Yeah. Juicy. Little detail, yeah. Yeah, yeah. I don't but. Plays into the opportunistic framing that that Gold Rd. put forward.

But how many around that study, like how many times have you seen like a, an underground study come out for a big existing operation and it'd be like, holy shit, the value it's flying now. Hardly ever like not like when WAFF release a underground study, it's not like it materially moves the price and value.

I just, I just don't think it's gonna be that big of a thing about, Oh no, once that comes out, it's going to be a $4.00 stock, not $3. It doesn't matter the share price, you're 100% right, but it does matter in the machinations of the 11th hour deal value negotiations because you're, you're arguing with them and, and you bring out your spreadsheets and you're like, look, look at the MPV here.

And then all of a sudden if you can show a bigger MPV then it gives you and like it. It's funny, right? I, I think this is like out in, out in the abyss. You can you can find this out, but like a deal that is clearly been a disaster was Igos acquisition of of western areas

at the at the 11th hour. It was actually after a deal was agreed, there was another uplift provided to kind of get the deal done because there was some hold out shareholders and there was some argy bargy on the value of Mount good which was sort of

like a not even a mine. This is just like you're trying to value this like, you know, potential call option if nickel price went to the moon and you know, actually added like a, you know, a pretty meaningful value uplift based off your argument that that this thing has some value, which is clearly not going to be mine for like 50 years. Yeah, with my nickel, nickel's gone. It's gone from mount good to mount shit. Oh, Speaking of, Speaking of IG Howard, I'd like Cosmos is just

getting flooded again. Like just, I don't know if that's yeah, just after all that decline rehab and everything to get back down there and re establish it in the shaft and infrastructure and everything. It's just in the water up there is apparently a bit. Here you go. So I was just going to corrode it all again. And like, all that effort and sounds like it's just written off, properly written off. Like if you're going to let the water back in, yeah. Probably someone they can call

if they had the cash. Well, Jada, you're a bloody Are you a Vosan shareholder still? I actually am, yeah. Yeah, Ding, Ding, Ding. But talking about like a, you as a shareholder probably should be interested in M&A opportunities like this. And this wouldn't be a poison pill situation if Vosan started getting attacked by someone wanting to buy them. What if they buy WA water boards? That's like that's that's not

like you're just you. If you're looking to buy someone crap, it's not them because they are the bloody gurus in Australia for anything related to water drilling. That'd be a probably a good. I'll read it from here. Vice Arm provides end to end water solutions to miners and infrastructure players. Do you have a water board drilling expert like James Harrington in your team? I don't know, perfect. You can buy him. You can buy him. He's not that. Good. It's not the same.

He's not the same. He's not the same he. Is he is for hire like if you need someone to do expert or boring for? You mate. Voice art, mate. Tell you what Gerald, I want to see Gerald James on The Voice Arm website. Listen, he. Key management personnel. He shouldn't be surprised with the job he does that the phone's been buzzing off the. Hook. You just deliver those sorts of results for companies all across WA and what do you reckon, Maddie? I reckon the M&A offers just flying oh.

Mate if you converted James Harrington into a fly rat it'd be 6000 litres a second. He's that good. He's unreal though. Whoever's on defence for Gold Rd., if they want another client they should get in touch with James I reckon Gerard. James loves M&A, right.

What about what do we got? We're going to go gold sector M and A, I think. Yeah. I thought you should just or do you want to do that after thing just because that might tie into gold sector M and A? Let's do it. Let's talk Bellevue. Yeah, so this is oh mate, in the lead up to this and even after all this, it is still there's longs and like not longs like, but in terms of thinking it's like on up, they're prime for a

takeover target. Now they're going to be getting looked at like they're it's still such a a divide, yeah, between what's happening, but far out. So I'll, I'll go through, go through what's happened. What we know buddy, what we can infer. As I said at the start, Bellevue went into trade and hold on the 26th yesterday, just before the end of trade, and it was, oh, the bloody wording. I tell you what.

Process of review and verification of gold production outcomes which may result in downward adjustment to its production guidance process and review and verification. I don't know if it's verification, talking about what's been produced, if that's needs verifying, or I don't know. Just frigging the. The wording was was curious. Very curious like. Ambiguous. Yeah. And it just that it intends to make an announcement regarding

production guidance for FY25. So it doesn't alluded to any other future growth guidances or predictions, but whether that comes or not. So they and this was just after when we covered at the start of the week when they cancelled the UBS Roadshow MD had to fly to sight the stock come off from what was it about The thing is about $1.30 down to the dollar.

Dollar teens and then then this comes out and then also due to the linkage develop yesterday, as soon as that trading halt come out developed at a big dollar in, you know, up near the share price had started lifting again and they're going from, you know, 33 teens back down to the two 80s on the back of that. So I'll show you the you can see the graph here. It was just boom that about just before 3:00.

So and and look, the friggin rumour mill was flying around yesterday regarding Bellevue and develop. So, but I'm not not going to share rumours because of who freaking knows, because but the develop did come out with a

statement today. And you'd assume on the back of like what happened to their share price due to the them having the Bellevue contract, which is a very and I suppose everyone's like just the the magnitude of it in terms of yes, it's develops only source of revenue at the moment, like the mining services, but they're just anything around that contract. Like there's six jumbos there like a lot of gear on lines for and everything. So it's obviously a a risk anything with that contract.

But they've come out and essentially said there's well, the summary is there. They've got the contract until end of calendar year 25. They've got the option to extend it for a further 12 months at their sole election. Bellevue. Bellevue has the option. Bellevue Gold can extend the contract. Yeah, yeah. Sorry. Yeah, yeah. And then it says the relationship between developing Bellevue is very strong in all

areas. And they've said that mined physicals for the March quarter are forecasted to be 20% above the December quarters results. So we're assuming that means development and production and Bellevue Gold is up to date with all payment terms associated with the mining contracts. So that was putting a pin in the rumour mill. Pretty much every rumour mill is about those things.

So yeah, so I'll go go through like I'll fucking tell you what, I've just beat me head against this to be honest, because when you look at the yes, there was that reserve downgrade previously. Like it was the reserve was 6.1 grams a ton for the underground. Like there's a very small open pit portion, but 6.1 grams then got downgraded to 5g per ton when they sort of changed the numbers a bit.

So I thought think of 5g and then and when I say reserve, it's don't just look at the stopping grade. Like you know how they say like you when you mine more development or you obviously down drop the mind grade, but the the reserve is calculated taking into account all the development ore as well. So it's not just a dilution on the ore body and everything. It takes into account the fact that all these drives go in and go on the wrong pad and the

start comes then. So that's all taken into account in the reserve grade. Yes, If you don't have the correct ratio of development and production going, you might be skewed on in quarters because that means your grade is technically lower than the reserve grade because you're taking more development or ahead of time with the staffing. But it should, it should balance out that you should be hitting your close to your reserve grade.

No, but it depends on depends on where it's distributed as well. Like it could be like you could have a very high reserve grade, but it's concentrated in an area that you're not mining for two years. But it's a, it's sort of the the baseline that probably everyone's looking at to see if the mine is performing based on the reserve grade.

So are you looking at, are you looking at the reserve here? Because because Bellevue's announcement is talking about verification of production and then and then develop says that they they hit they hit kind of 20% more target. So you're thinking, well, if if it's not, if it's not like development meters and it's a a downgrade than it is a could be a reserve issue. Yeah, OK, well and it's so they've said they've said they've got the physicals they're 20% above. OK.

So that means I can predict that production tons and development tons are above what they got last quarters, which means they should be getting enough dirt on the ROM pad for them to process. And but now they're coming out with a production downgrade, which is answers. So the only thing that can be lower than anticipated is the grade and you, you just look March and June 2024 like that. Mine grade was 6g and 7 grams. So that was that was above reserve grade.

September 4 1/2 went below December then went down to 3.7. They did say that they're going through outer edges of the ore body, yada yada. But you can just predict, OK, it appears the, you predict the grade isn't going to be a significant improvement on the December quarter if they're whether this is just related to Q4, not Q3. But they, they did say it was back weighted. But it, it just appears at the moment that the reserve grade

isn't coming to the forefront. So, and, and you can't say that there's 2 two ways that that could happen. Either the, the geological modelling is incorrect or what's coming out is not correct. And you just look at how much infill drilling they've done, like, and the hits of it, like they're just, you know, I'll bring these up just like sensational, it's always been a stand out of like quality of intercepts. Like just, you're looking at like 1.6 meters at 244g per ton, like 6.2 or 20.8.

Like, yeah, the there's a lot of infill drill and the gold is there, but if you look put the underground mining hat back on and of of running out of years, I can do this because I'm starting to forget all of it. But if you just look at the photos they put up of this, that appears to be the ore body in between the pink lines and it appears to be vertical, but it's on the right hand side of that development drive.

So to effectively mine that with the and stay within the dilution parameters and the recovery of that gold, that a vertical or vine needs to be in the dead centre of the drive. And, and look at chops and changes all the time. You can't get it perfect all the time. And you do your best to then turn the drive back onto the ore. But then you look at look at the next one, same. It looks pretty, pretty vertical. Same thing. It's sort of it's in the right hand side of the drive.

So to actually mine that, like you, the only way to mine that, like the first step you do is stop. You have to strip out the right hand wall, get the oil back into the middle and then continue on. Then you've got the room for the long oil drill to fit the boom in. Drill a parallel hold of that because at the moment you can't, you can't drill a parallel hole to that all body on the right hand wall because you can't drill a vertical hole up the side of a wall. It just cannot happen.

And the way to recover it is like, yeah, there's a potential you sort of fan it out to compensate for it. But there's a risk that you leave some gold in the ground and the fan out will bring in more dilution just because you and you leave a lip on the on the on the where you got all the

waste on the left. Like if you sort of mine that you leave a lip there and then that just has it sometimes tendency to fall in and create more dilution and just sort of mines to the shoulders, usually at the bottom. But this is hard ground. So maybe, maybe not. But I guess the the interesting thing I found on that is if you see that white cross on the middle of this Bellevue 1000, there's a white cross that says 1.5 down 2.5, right?

That is a laser cross. So that means that that I'm assuming that that means that drive is on laser survey control. So you put the laser in you can see it says D 15.5 S. The laser is 15.5 to the face and you shut you get says based on where you are and where the next cuts going. This is the direction you got. But this isn't an all drive. I've never worked in a narrow van gold mine that has all drives on survey control.

It's always the process is yeah, mesh the heading you scale the face, bogger comes in cleans it up. J OS go down there. They map the face and say give you a skunk line, like say right, 1m right or straight half a meter right, yada, yada. And just to know that you're staying on the ore body, it just, it looks like they're on survey control and you're following the laser, but you're not. The ore can like you can have minor faults that shifted a meter within a cut.

And if you keep following that survey line, the ore is just not in the middle. And then there's a risk that when you mine it and you're not stripping out to get it back in the middle, there could be gold being left there And you that, that, that's the only thing I can think of of why this grade isn't performing because everyone's, oh, the grade isn't there. And I'm like, well, based on the drilling like, and the sign off and the GI modelling like the,

you assume the gold's there. Just think there's a risk that it's not being mined. Right. That'd be a better, that'd be a better downgrade if it was kind of reserve issue. You know what I mean? That's like that's like a short term issue rather than a long term issue, right? Yeah, I don't think it's Yeah, yeah, it's like that's I'm happy to be corrected. But yeah, why would why would a, why would a mine choose the survey control instead of the the Geo process? Faster. Faster. OK. Yeah.

So it could just be, yeah. Yeah so the, the, the issue with having geological control is like cycling, especially when you've got 6 jumbos you got if you've got multiple headings on Geo control, you've got only a fixed amount of geologists going underground and there could be two headings ready right at the same time and two jumbos ready to go into them individually. But the GI can only go to 1. So they've got to go and map it could take, you know, depends 1020 minutes could be more.

They've got to wash it down, paint it up, get the samples, then they've got to pack up, drive to the next one and potentially one Jumbo has to wait. And when you're development constrained, like it appears, as I said, you've got 6 jumbos that are mine, that's 1,000,000 tonne more and that's a lot of development capacity. So it's a development constrained mine putting it on lasers, just like Bobby goes in, cleans it up as soon as he walks out, Chucky laser in markup and you're into it.

So there's no, there's no hold UPS. It's best for development. But yeah, these are the I'll show you this picture like the next one, like you can see arm and 1176. So it's lying over and it's in the shoulder. That's exactly where it should be because that's how you get the angle to drill that. That's the that's where it should be. Same as this next one here. You can see the survey dot that that one's the real thick Dakin one that's lying over and it

goes into the shoulder. But yeah, when it's vertical, it needs to be in the middle. So just gone off the photos they put up. That's my yeah. Excellent insight, Maddie. That's. That's super interesting. That's a theory, whether it's bloody accurate or not true or not. But yeah, just going off what I've seen, yeah.

Super interesting. I think that's a, that's an awesome sort of segue to finish up on, on valuations across and combining what we've spoken about today, because on that one, there's, you know, there's not too many gold miners that have had the, the last year share price wise that Bellevue have had, right. So that leaves them in a situation after we see this news come out.

And if it is what you've said, Maddie, it does to me appear like a fixable thing whether whether people have different views on, on who kind of fixes it. I'm sure they kind of will out there in the market. I'll I'll caveat with like that this could be one. I got no proof that they didn't strip out the walls on those pictures there and get it to the right point and, and fix it and, and it could be just one possible thing among many things that has contributed to this. So it's.

But for sure, let's just say it was a tutorial, not a accusation. 100% I still, I still think you know it Le it leaves other management teams out there in the in the market potentially thinking that, hey, maybe we can do this better, right? And if you look at the, the universe of Aussie midcap miners and how they're kind of traded and the, the, you know, the cash flow that they should generate over the foreseeable future, Bellevue might might screen an opportunity versus the rest of them.

So. Yeah. Well, I think what if we did the numbers before I think you know say they get a below buck and people start thinking what $1.50 or should do a takeover target. I think once you what do we say? I think once I clear the hedge, clear the hedge, book the debt plus buying 1/2 bill, it's about a $2 billion deal to do it, but it's. That's less than yeah, that's less than yeah, 5050 odd percent of grey air.

And less than Spartan and this all this development is there like you're at the ore you're producing. You might just need 3 like it might be a quarter or two of like maybe getting development ahead or bitter and a bit of capital to go to new areas. But like you're there, the infrastructure is there. It's bloody good infrastructure.

I mean, so it's been yeah, they reckon it's a good side in terms of like the mill and like it's brand new, like it's it's and that's where the other side of the arguments come from, from people like they're just they're they're a target as well because it's a walk up start to. Potentially like walk up start to what, 150 to 200,000 oz, they'll come out of halt, they'll sell off on a downgrade and then they'll be a buyer buying the buying the dip who thinks that that they're a

takeover target. Now, yeah, I wonder, like, do you think it's a function of? I think it's pretty tightly held register, like it's like there's no, there hasn't been any evidence of a strategic that's come on unless they're sub five at the moment. But you, you would God, you'd think in the 90s that someone would be looking at a 20% stake somehow. Potentially.

I mean, yeah, because it's because if it's a short term thing and you'd like, it's a better capitalized miner with diversified cash flows who can reset expectations, reset, you know, guidance, clear the hedge book, all those short term pressures, which which can, you know, be be detrimental. Like there's upside there. It's hard to outbid someone with synergies. And so it's like you look in the region who's got big synergies here.

And I know it's weird to say synergies because this thing has its own mill, but if you're sending 6G dirt down the road to Agnew or to or to or to Carousel Dam, I mean, those are like. Thunderbox. Sorry, sorry, Thunderbox. It's like a, you know, 6,000,000 ton random kind of operation. Much lower processing costs. You don't even need that meal. I think so. And you can rot it down straight

away. Yeah. And this would be an if someone got like interested, this would be like an opportunistic kind of things like having a cash offer. Not many no one really has much cash to like the mid tiers are all hungry and stuff, but and they're making good cash but but like this is still a big ticket to pick up unless you're a big player. Northern Star explicitly can't do anything right now because the the materiality threshold in

the scheme implementation date. I think it's like I can't do any deals of up to a billion dollars or something like that. I'll be on beyond a billion dollars. And then, yeah, Gold Fields is clearly preoccupied with Gold Road right now. So yeah, maybe they maybe they detour. Yeah, yeah. And like, look, this you could, you could track this dirt pretty far. Like remember they toll traded it at Leonora. But I don't see like Genesis being thrown around as well. Just I think Raul's done his

counter cyclical investing. I don't can't seem taking a swing at something like this at the top of the cycle unless it got pretty a lot cheaper. Never say I never got. I was fucking wrong about everything this week.

I said goldfield wouldn't do anything, but it's like, but this this will be a mine that will go for a long time like this is, but it it appears that it's just I'll I'll be very interested to see if there's two 250,000 oz production growth target that they doubled down on on the back of guidance

downgrades. I think people just want to see that pulled like just just commit to a 200,000 oz operation at 2 1/2 thousand all in sustaining or something and that will print will print cash in the future and just a bit more realistic on the on the growth. I think it's just once it just needs to be tidied up. But yeah, but obviously pulling that target will be get the stock hammered a bit.

But yeah, we'll wait and wait and see for I think it's it says it's coming out a whole Friday. I've heard Monday. I think if it's Monday, not Friday, there's probably going to be a bit more substance, a bit more content in the announcement, possibly needing a bit extra time, but. We'll say that I think that's a that's a good spot to leave it. A lot of gold chat. Buddy, we're a very pro cyclical podcast at the moment. We are reflective of the the

interest in the market. People want to hear about gold at the moment. Yes, brought up there'll be shit loads of gold underground operators. Probably everything will be about gold there. 100 bucks off. Bloody like they're those tickets flying out the door mate. GRX now I'll do them around the other way next time. Global resources innovation Expo deals for cheap tickets there on in the show notes as well.

Breezy in my now what do we got Partners, Mineral mining services, Grounded, Samba, ground sport, CRE insurance, catering, WA water balls, Sweep, Quattro and Cross boundary energy. Thank you very. Much information contained in this episode of Money of Mine is of general nature only and does not take into account the objectives, financial situation or needs of any particular

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