Anglo Tech Merger: The merger between Anglo and Tech is highlighted as the largest mining deal in over a decade, with Anglo shareholders receiving a $4.5 billion special dividend and targeting $800 million in annual synergies.
Market Reaction: The market responded positively to the merger, with Anglo shares rising 9% and Tech shares up 11%, indicating strong investor confidence in the operational synergies and strategic benefits of the deal.
Shareholder Activism: The podcast discusses the role of shareholder activism, particularly in the context of the Capricorn War deal, where retail investors have expressed dissatisfaction and are coordinating to vote against undervalued transactions.
Strategic Implications: The Anglo Tech merger is seen as a strategic move that could catalyze multiple expansions in the sector, with potential interest from other major players like BHP due to favorable capital intensity comparisons.
Regulatory and Geopolitical Challenges: The complexities of cross-border M&A are explored, including regulatory hurdles and the need for strategic positioning in key markets like Canada and the U.S.
Market Multiples and Valuation: The discussion emphasizes the importance of market multiples and the potential for acquisitions to be more cost-effective than organic growth, particularly in the copper sector.
Industrial Synergies: The concept of "industrial logic" is introduced as a more sophisticated way to discuss operational synergies, reflecting the strategic rationale behind mergers and acquisitions in the mining industry.
Future Outlook: The podcast anticipates further developments in the Anglo Tech merger and the potential for interloper interest, suggesting ongoing market dynamics and strategic maneuvers in the mining sector.
Transcript
Anglo Tech. This is a massive deal. You've got a merger of equals. Anglo shareholders are going to get a special dividend paid out. Four and a half billion US dollars for closing. They're targeting US $800 million in annual synergies. >> Kind of as big as it gets. The biggest announced deal in a decade in our industry. It's kind of it's phenomenal. This week is the biggest mining deal in more than a decade. JD, it's it's us two. We're going to talk about Anglo merging with tech, acquiring tech, however you want to frame it. These are two mining behemoths. And alongside us, we've got the wonderful James Nichols, who we've we've roped in uh today because he's he's got some expertise as it relates to some shareholder activism. And there's been like some really really interesting dynamics happening at one of the my favorite companies. I'm not very popular on the hot copper forum, I tell you that. But um yeah, but but but James, you're going to you're going to join us and um >> share share your uh your legal wisdom with with with all of us. You're a partner at Hamilton Lock. Yeah. >> So, thanks for joining us, mate. >> No. Well, it's a pleasure to be here. I mean, seems to me that this is a first. First for many. >> A first as in a first for you or a first for a lawyer coming on our show. >> Uh I think both. >> Both. Yeah. You're normally quite risk your time. >> You as a people. >> You as a people. Yeah. me as the self-anointed representative of the legal fraternity. >> Um, no, but I mean, yeah, so it's a first. You have had, you know, lawyers around the show, >> defamation lawyers, um, notably >> good friends at the show. Yeah. >> And there was that Harvey Spectre chap. >> Yeah. Yeah. Handsome fellow. >> He was pretty astute. >> He was pretty astute. He gave us some some good some good feedback on what fiduciary arts were all about back in the Leonora days. No connection to you though. >> No, not at all. Um but no no very grateful to have the opportunity to be here. Um it's nice to peer behind the curtain, see the proverbial sausage being made. >> All righty. Let's jump in. Like you said, Trav, Anglo Tech, this is a massive deal. It's the the way it's sort of come about the the history behind these companies, behind the deal is just sort of fascinating. So to sort of set the scene for people a bit less familiar, you've got a merger of equals. Anglo shareholders are going to get a special dividend paid out $4.5 billion US before closing. They're targeting US $800 million in annual synergies. And the the core reason why this deal has real sort of merit to it is Kawasi and QB an asset we actually spoke about last week on the show and the the potential synergies there. So the uh the market sort of liked it. Anglo was up 9%, tech up 11. Much more liking it on the sides of Anglo shareholders than tech, but it's a it's a pretty phenomenal deal. What was your first take, Dave? >> Uh mate, massive. These are two two mining behemoths. Both or each of them have over 100redyear histories behind them. Like very very proud companies in their respective, you know, countries where they they have either headquarters or or or assets. Um it's kind of as big as it gets in like like you said the biggest announced deal in a decade in our industry it's kind of it's phenomenal. Um the if you just look at the implied premium to tech once you account for the special divy it's you know it's roughly 12%. It's nothing in in the context of of things here, right? So, so hence the market likes it because there's also operational synergies as well like you talked about. They put up this slide and um you've got the ability to now now build a 15 km kilometer conveyor to transport high grade kalawazi or to feed the plant at QB and they reckon that can uplift you know copper production in the proformer by 175,000 tons of copper peranom. >> Actual synergies in mining. It's it's kind of amazing. actual synergies no premium merger like it doesn't have any of the hallmarks of a bad a bad top of the cycle kind of deal which you you do you do historically have seen when a major will will debt fund a giant purchase price of something and then go on to regret it. This is it's a it's a script deal. >> To cut to the chase on the interoper type question, it it makes it a um a tough deal to overcome, right? because the the the structure of of this one if you're going to come in and and pay sort of 30% plus on on top to take out a say a tech it's you know the the economics of that sort of outcome versus what what you're doing here as Anglo just super super hard to overcome. So I think that the risk to the deal on that side of it is is fairly limited and a huge amount of credit I think needs to go to Anglo for this from where they were 18 odd months ago sort of beaten up in the corner. Everyone sort of taken the mix saying they've sort of managed their assets poorly. They're in a difficult jurisdictions, difficult commodities, spread way too thin to kind of being the the kingmaker here in a way in a really interesting company that goes potentially from being valued like a diversified five to six times earnings to that elusive 8 to 12 times earnings that you get for a pure play copper company is pretty remarkable. And there's a a lot of things that need to go right. Like you see how much they talk about checking that Canada investment approval box here where management's going to be set up, the the listings, the governments. It's the the hoop jumping you have to do to get a deal like this over the line is enormous. Right. >> Yeah. Well, we'll we'll uh defer to to to James Nichols in a moment who's probably done a lot more crossboarder M&A than we'll ever touch in our lives, mate. But but in um yeah the way I kind of like evaluate some of that is um pro probability of an interoper I I I'll bring up this slide you can see here and it's it's basically shows the capital intensity of BHP's copper growth options in its current South America portfolio. So this this slide was in the in the deck that when they had an Escandita site visit in November last year and and like what you can see there the capital intensity of the majority of their copper growth within their organic portfolio, it's going to cost BHP north of $30,000 per ton of incremental um of incremental, you know, copper growth that they want to have in capital to just bring that online, right? And what so why is that slide so important when you look at the capital intensity of BHP's copper growth? because because the Anglo deal like it effectively values Tex um copper replacement value at about $34,000 a ton, right? Um that's that's that's well below what the multiples of Antifagaster and Freeport if you if you back out the you know the value per ton of copper production in those companies you're more in the realm of 50 to $60,000 per ton. So, so for BHP, like I don't think it's unreasonable to think that they'd be pretty interested in um in in wanting, you know, the incremental exposure to that that extra copper production because it's it's pretty comparable on par with their, you know, their own organic growth prospects, but you get that copper, you know, immediately. Yes, you have to sync the capital immediately as well, but you know, that's it's the way I look at it. it's still probably going to be cheaper to buy than it is to build just based off the the capital intensity and the multiples at play here with um with both tech and Anglo. So I think on a market multiples base it's cheaper to acquire than build. So on a market multiples base you should you should certainly have interest from the interlopers here to to to to have a crack. However the the the you know the intangibles are a lot it's really tricky to get a deal done here on the on the tech side. you've got to win over Keville who is supportive of this Anglo deal but you know would he be the same if it was to go to a major and he gets a smaller chunk of the pie and then um you've got that investment Canada process like you talked about and then on the Anglo side you've got all the complexities with the South African government which BHP is aware of this time around so >> more than aware of >> yeah my view is like um on valuation you should totally see you know interest from interopers I think the complexity is probably prevented from happening there's a $330 million break fee there but it's a $50 billion deal that's um it's not no way not not going to stop things in the in the scheme of things. It's a rounding error. >> Yeah. James, before we get you in on the on the sort of time frame, the the 12 to 18 months that they've pieced in, the one sort of final thought on what you've just said there, Trav, is that everything Anglo has done here to appease the the governments in particular, obviously the the Canadian government by having headquarters in Vancouver, having senior management in Vancouver, all those sorts of things are very hard for for a Rio or a BHB to achieve, which which adds to the kind of barriers around that. But if we zoom out to to what just getting this deal done, James, how do you kind of think about that 12 to 18 month time frame like that is a long time. A lot can kind of go wrong. You've been on the other side of the table for a lot of these uh talks. >> Yeah. So I mean like 12 to 18 months is a long time in the sun for sure. And um when you're you're thinking about if there are interopera risk I mean the duration for a transaction the longer it goes the greater the interloper risk the more time you know of commodity markets to change the more time you have biders to sharpen their knives um and particularly if you've got regulatory processes that start to go sideways uh you know for whatever reason including due to an intervention by a potential rival bidder. Um yeah, so I I I think the the time frame presents a real risk and it and it compounds the risks of failure to complete by virtue of some interloper. um you I mean what what the tech and Anglo deal you know doesn't necessarily achieve which is what is a huge dynamic that's in the market at the moment is this Americanization right so like people seeking NASDAQ exposure or some foot in the ground in the states just because they know that in order to have that slipstream in the new world order you need to have the backing of Trump and you need to have some form of kind of US support one way or another. So, you know, whilst this is, you know, a great deal in terms of, you know, reconnecting old Commonwealth countries, it probably doesn't quite solve for that. And I think that you might see, you know, potential rival biders that either have that benefit or are able to achieve that benefit probably stepping into the fold. >> Everyone everyone wants the the multiple of of Freeport, right? And why does Freeport have the multiple that they have? Well, yes, it's the the Americanization factor, but but it's also their primary listing is the NYC and they also have S&P 500 index inclusion. Why does that Well, it matters a lot in, you know, the whole world of kind like passive stuff. So, um, how do you how do you kind of get that? Well, I I was actually surprised to see in this deal that Anglo is going to keep the Y as a primary listing. My prediction is in time that will fall away. They've got to promise the world to all these different disperate countries, the UK, Canada, you know, South Africa, all at the same time. Yeah, we're going to keep investing blah blah blah. Nothing's changing. But then once once a deal is done and completed, like like LS is dead. Like let's just admit it, the LSC is dead. Anglo will leave the LSE eventually. It will happen. >> Yeah. I mean, I I had to Google it just before to to sort of see what the combined market cap of the LSE was because we've we've sort of paredited this line for for a little while now. It's still more than 3x times the ASX. So, we got a bit of a ways to go there. >> But the the trend of capital flying away is important. >> To to add to that point though, where you want to get index and listing has to be a primary >> Yeah. >> listing. So, it takes quite a few steps >> kind of get there. >> I'll make a brave call on this one. I reckon I reckon this deal catalyzes multiple expansion in the sector. It's like it's it's now like it's now like very clear if you want more attributable production of these commodities that seemingly care a lot about higher multiples need to be paid to get hold of them. Um and I actually you mentioned the call I tuned into that call 8:00 p.m. last night Perth time before the call starts the webcast is blasting dancing in the moonlight. I'm I'm not joking. Uh it was hilarious probably probably because that's what all the bankers and the lawyers were doing um right after the deal was announced. James other other than the wonderful precore music. Here's my other insightful takeaway. So if you want to sound intelligent talking about operational synergies, this is what you've now got to call it. >> Part of the strong industrial logic comes from >> the industrial logic of combining by the industrial logic of it. I think >> um the industrial logic of a transaction. >> Industrial logic. Yeah, I thought synergies had a had a pretty good ring to it. But it turns out you can also put the word industrial in front of synergies and it also sounds more intelligent. >> The most compelling industrial synergies in the industry >> mining assets with industrial synergies is one of the most most compelling industrial synergies available from the types of industrial synergies that we're talking about. >> Well, I mean asex traditionally had a problem with the word synergies. So perhaps you might see an adoption in the Australian market of the phrase industrial logic. Do they have a problem with the word synergies or they have a problem when companies just like say, "Well, yeah, we're going to have $80 million of synergies peranom based on nothing other than our thumbs are." >> Yeah. Well, I mean, synergies is the red flag, right? But, you know, they've got a problem with the numbers. >> Yeah, that's fair enough. Uh, all right. Well, yeah, that's uh that's I think we're going to have a lot to talk about in the future as this one unfolds. I, you know, I don't think it's beyond the realm of possibilities to see see things kind of um fire up from from here. and and I I certainly hope and I really hope that there's um there's involvement of an interoper and we have we have the making of a of a of a a real interesting situation on our hands to talk about over the next next 12 months. >> I couldn't agree more mate. I think we'll be speaking a lot more about this deal. Let's move on though to the Capricorn War deal. Give a a few sort of >> I can set the scene if you want mate. >> Set the scene for us mate. >> So we we spoke on the podcast. Capricorn came out with an agreed deal to acquire Warar late July effectively all script deal right and it was a market standard control premium 29% to to last 30 35% to the 30-day VWAP but if you yeah one of the points was if you looked at the time that Capricorn and Worar entered a CA like the stock had ripped it like you know effectively sort of triple the price since then so our shareholders were really quickly frustrated by uh by what they thought materially undervalued the company here they they kind of you know banded together and um in a in a in a loose way have come to the conclusions that they want to provide voting intention statements to vote to vote against the the transaction. A bunch of these have sort of appeared um online in in recent days and you know I've heard numbers sort of you know in that 16 17% of total total retail shareholders have actually submitted to the board um the voting intention statement to vote against the transaction. Now, the company hasn't acknowledged this yet, but you know, you can still piece piece together some of these things uh from the forums online and see see photo evidence of some of these um voting intention statements. And um I can flash some up on the screen now because that's how readily available they are. >> I can see you've rolled up your sleeves, James. So, I'm I'm itching to hear your take on this. >> Complicating the matter further. >> It's actually just a bit hot this morning. >> You get this special sits fund uh Trium Capital, they've popped up. This is this is M& right shareholding in Moridar. So kind of all of these like um pieces together, >> but they're just they're just that's just bumper charge, right? >> Yeah. Which is I know you love jargon. >> Yeah. Now, now you Well, and I know I know you love a a deal with kind of complex complex characters and um >> I don't necessarily love it. Just seem to to attract complexity. >> What the hell is going on here? Like >> Well, I mean, it it's something that we've been seeing probably an increasing amount of. Um I mean you know shareholder activism M&A is nothing new right like seen it time and time again you know think back to Nick Bolton Bris brris connect you know you think back to Solomon Louu country road David Jones it's a hallmark of basically any M&A market um you know even Petronis and Kin and uh Dassian Genesis and and then uh >> there's there's varying levels of sophistication with activism varying >> well yeah well that is and I I think that's the point is that you know nowadays we're seeing probably an increasing amount of this you know coordinated in quotation marks uh uh action by you know the retail contingent of the share register. Um we can refer to it as unsophisticated shareholder activism and not using unsophisticated in the sense of the word you know the pjorative but unsophisticated in the sense that um there seems to be an adoption of uh kind of large or institutional activist shareholder tactics um and seeking to to apply those in a similar manner but without you know necessarily informing themselves as to how they're doing or taking legal advice and um and that's giving rise to you know varied outcomes uh difficulties with the regulator and challenges with with how biders engage with them. >> It it's it's super interesting like I'm looking at war right now and I'm I'm trying to evaluate the probability of an uplift here. I I turned to JD today and I was like we might even buy some shares because it it feels pretty asymmetric at the moment. And why like why do I say that? It's it's purely because like these um these retail shareholders, you know, coordinating quotation mark not coordinating. Um >> they're having they're having an an influence in in the evaluation because you know you think 16 17 18% my god they could block the deal here like uh if they're serious about this voting intention. >> Yeah. and and look, you know, they're um they're they're looking back to previous transactions and seeing, you know, shareholders in similar positions achieving that outcome and probably thinking, look, if we just hold tight and, you know, face the front, we might get a similar um similar result. >> What previous transactions are you talking about? Well, I mean I it's hard to decipher specifically, but you know, um there is some suggestion that the peak shanki transaction that there was, you know, uh a shareholder interaction or engagement process that resulted in that uplift and not just the commodity market change. Um but you know other very clear examples um you know including something that we worked on a couple years ago was the technology metals uh merger with Australian venadium which I'm not sure if you remember how that played out but there was >> TMT AVL yeah was >> it was it the most logical talk about industrial >> industrial logic >> there's some great industrial logic between those two >> that was a project donuted by another project and they were fighting over access um so yeah you know it's no different to a JV consolidation >> but Um yeah, like more and more I think you're seeing um in these in in this M&A environment where acquirers are looking at buying not building um that you're getting these early stage exploration companies that are still in that real ramp up pay uh phase where they've you know they're running around doing road shows they're promising the world they've got a a collection of firm believer shareholders who really think that this thing's going to come off. um these shareholders are capital constrained. They're um overly committed. They think that, you know, this is their, you know, 100 mega um and so they're really reluctant to let go um at any particular price to be honest with you. But they're also not factoring in a lot of things. They're not factoring in the realities of building a project um which you know biders are obviously cognizant of. That's why they're acquiring these exploration companies. they're not factoring in the delutionary impact that will arise as a consequence of that project development phase. And so yeah, they are they're fervent and they're um committed. They're dedicated. They're looking at past transactions. They're adopting these playbooks and and seeking to go about trying to achieve a similar outcome >> with with with TMT AVL. you had a pretty lengthy list of of shareholders who effectively submitted a a voting intention to vote against the transaction. Now, the deal the deal still got done. There was an uplift, wasn't there? Like, how did how did how did that all come together? >> Well, there was, but it's important to kind of remember the specifics of that kind of particular transaction. I mean, I um I I actually brought in the uh the scheme booklet from the TMT AVL transaction. So, here you go. >> How many How many scare ones of these do you have? >> Probably too many. And I brought this in because there is a section in this um this booklet was this was the booklet that was released after the first court hearing um it included an experts report. Now this is an important piece. The experts report said it was not fair but reasonable but obviously still in the best interest of shareholders which the expert is yeah >> is able to conclude but it had this long list of shareholders um in there each holding you know between 0.0 0.1% and you know 0 um nine you know there was a couple of single digits in there but a long list of shareholders who'd basically been rallied um on this kind of social media forum um I can't remember I think they moved to Signal or something you really whichever one ASC's not allowed to enter um uh cuz you know ASIC can jump into your social media now >> really says as joined the chat >> does it actually no >> no no definitely I mean there's there was they got this um group, sorry, I digress, but they got this group called the ASX pump organization. I mean, if you're going to have a name for a chat, don't call it that. >> Um but uh it it said at the top as ASS as joined, you know, ASICH joined the chat and um of course they didn't believe it, so they kept talking. Um but no, ASICH is able to join kind of social media chats now. And because a lot of these, you know, Signal and WhatsApp for example, they're encrypted. They're deleted in 24 hours or 7 days. Um so regulators have a real difficult problem with kind of evidentary things. So they can jump in nowadays. Anyways I think um in the TMT scenario they were uh it was signal or something. They were coordinated but again they had circulated this basically um fill in the blanks style um truth and takeover statement saying you know my name is this I hold this many shares. I commit to vote in favor or vote against scheme. You know >> voting intention statement. a voting intention statement. But the thing is is that these kinds of statements, they're not intended to be filled out as a comprehension exercise. They're intended to demonstrate someone's um you know uh well-informed and well advised uh position. Um their awareness of the law um their awareness that they are indeed a market participant for the purposes of truth and tag of this policy which really only captures substantial shareholders. it doesn't capture the rats and mice or or non-professional and non-institutional shareholders. Um, so just because you write the magic incantation on piece of paper does not necessarily mean that it gives rise to some binding or enforceable uh position. >> So what did what did ASICH is that what ASICH came to the conclusion of in relation to the TMT voting inteious statements that said they were not or effectively not valid to be interpreted as an statement? Again, it puts the bidder in the target in a really difficult position because they get, you know, they've announced the transaction, they haven't released the scheme book yet. They haven't released the experts report, but they're getting, you know, 10, 20 of these kind of statements that a lot of the time they're filled out incorrectly or they're not effective. And they're forced to contend with, well, you know, do we have a disclosable event? ASICH tells us they're not enforceable, but we're getting all these kind of intentions from people that we can't identify whether they're shareholders or not. So it it makes it a really difficult scenario for the target in that circumstance as well as the bidder. But the bigger problem is is that the bidder and the target can't necessarily engage with these shareholders prior to the release of a scheme booklet and an independent experts report. >> Right? So all of these shareholders who are grumpy right now, the management board of of war are prohibited from like having individual conversations with them to an extent >> to a degree. I mean their hands are tied for sure. I mean of course if someone picks up the phone and calls the office you kind of got to speak to them but they can't be going on and you know laying out and extolling the great virtues of the transaction in an unbalanced way because ultimately then the court or as will have a problem with the fact that you know the booklet here is includes for and against really detailed reasons risks a whole lot of information and it cannot be reduced to a single conversation where the managing director tries to convince one shareholder five bullet points why they vote in favor of the scheme. So their hands are tied, they don't know who they're dealing with or how to deal with them, it can be quite challenging. >> Yeah. So even though even though ASICH basically says these voting intention statements from retail don't actually kind of qualify because because you you have to be a sophisticated investor in order to have a >> substantial shareholders technically. Yeah. So you have to have 5% or more. >> Right. Right. Well, the interesting dynamic with these like these groups are still bundling together. If if they if they think the way you describe, like, you know, they think the project's worth so much more standalone, even if there's not another, you know, value or creative option on the table, like not another acquirer or anything like that, but they think there's skyhigh value on a standalone basis, then they they may be serious about still voting no if the deal progresses, you know, at the current implied, you know, um, price or merge ratio or whatever. So then boards might still take them seriously and provide an uplift to to get the piece. >> Well, they have to be um dealt with or taken seriously at some point, right? And so I mean the way that biders and targets tend to to deal with these situations is that they've got to get the information into the hands of shareholders. They've got to say, look, you know, we know everything that's been said previously. This is why the deal makes sense. These are the risks of the deal going ahead. These are the risks of uh if the target remains a standalone entity. And so until they have that information, it's difficult to have a very informed conversation with shareholders. So they give the information to the shareholders. It includes an independent valuation that's separate to what the board's saying. That's separate to what the bid is saying. It's an independent assessment. Now, let's not go into your personal views regarding the veracity of independent experts reports. But >> shout out Bo who's doing this one, >> but >> but it it's got to be remembered that shareholders put a lot of value in an independent technical assessment and independent valuation. And so that's very important as well. And then of course if if even after that and and and and that was really the what what was the trick in the TMT AVL outcome is that it wasn't it was declared not to be fair. So ultimately it felt that a price increase was necessary and warranted in order to um convince these shareholders in addition to the information that was provided. So it it'll really pivot on how that comes out and you know that'll be really important to see. It would be important to see what the detail is in there, important to see kind of the risks to remaining a standalone entity. Um the other tricks obviously available to to biders is to come out and do best and final. And so that's what Sheni's done on on peak. They've done a price increase, you know, a modest price increase, but then they've come out and gone best and final. Um and ultimately, you know, shareholders do come to an economic rational position eventually once they final once the emotions been taken out of it, once everyone's settled down, once everyone's had a read. Um yeah, they tend to end up in the right place. >> So if like what would be your prediction, right, if there's um independent expert report, I think is due later this month and it says it says valuation's fair and reasonable, right? Do you actually think there'd be unlikely to be a kicker here? Well then then it then it will come down to an education piece on the shareholder base and you know it's not like insisting that they change their view but it's saying know these are the reasons for and against and you know if the experts form that view then surely it's open to the shareholders to come to a similar >> I reckon I reckon I reckon I'll take the other side you know if I reckon even if the independent expert report says that it's fair and reasonable there's it's still more likely than not that there could be a kicker purely because you'll aggravate that like these shareholders are already mad. They're upset. They're pissed and you tell them you tell them I've got to educate you on why your view on valuation is wrong. Look at the independent expert, they'll be even more pissed. They'll like um I'll revolt in a big way. So I actually think I think an uplift is is more probable than not irrespective of the expert. >> Yeah. And and look, I mean I don't disagree. I've seen plenty of uh situations involving kind of an irrational response. I mean, I remember it was uh the Nexus uh takeover by Seven Group Holdings. I don't know if you remember that in 2015. No. >> Had Don Valty as chairman of Seven Group Holdings and chairman of Nexus Energy. Um uh and managed to procure uh a a takeover bid that he said he wasn't aware of for for Nexus. Um and he politely recused himself. Um but that that takeover bid uh was announced uh or the deal was the merger was announced at the same time they acquired all the secured debt in Nexus and um I think they offered them 2 cents a share. It had been trading at like 6 cents. So >> Wow. uh cuz the debt was maturing and so they offered them 2 cents a share and you know faced with uh oblivion right faced with utter destruction and obliteration. Um shareholders still voted that down and so they went from essentially getting 2 cents uh a share to receiving 0 cents in the dollar. They went through a voluntary administration process. >> Wow. So yeah, there I mean particularly in circumstances which aren't handled properly or appropriately by the bidder or target, there's a lot of emotion and it's sometimes hard to unscramble the egg, unpick everything. >> At the end of the day, they're the owners of the business to a degree to a to a varying degree. So they can choose their own kind of fate. >> Yeah. >> And they're entirely entitled to do so. Um >> what what are the other types of activist shareholders out there? >> Yeah. Well, I mean, you've always got um like PE strategics who will, you know, be there. They're the kind of almost the M&A initiators or the originators. >> So, you had RCF in the case of TMT, AVL. >> Yeah. I mean, you know, RCF, um, Taurus, Aion, all these kind of groups, they're taking portfolio positions, um, with a view to, you know, maybe 10 year investment horizon. But there does come a point when they need to realize that value um, for for the LP investors, right? So, they're initiating M&A or looking for kind of M&A that makes sense that can kind of trigger an exit that's always going to be there. So there is a degree of activism from that kind of pre-existing committed capital. Um and that's that's always going to be there. That dynamic's been there for since dawn of time. You know there's green mailers, rival bidders. Um they're always going to be there too. Uh if you think about Hancock popping up on the register of Azour Minerals um when SK Herman made that uh proposal um and you know that they weren't looking to necessarily block the deal. They were looking for some way through and they managed to get there by um joint bidding there with with SQM. Uh I mentioned Petronis and Kin before you know they they've obviously got form in that area. form. Yeah, >> they do have four. >> And then, you know, as you're seeing on on Waridar and in in most transactions, you've got, you know, the arbitrage funds coming in out of the stock. >> Now, the degree to which they're activists is, you know, uh can be seen. So, you know, you've got people like Bazer and and other kind of more passive investors that are just looking to either, you know, pick the the arbitrage yield and and and try to make that out. whereas you've got others who are more fervent and engaged. They're going to give out statements of intention where they're going to vote favor or accept. So yeah, I mean there's a full raft of kind of shareholder activists that play in the field when it comes to M&A transactions and it makes for a pretty interesting chessboard. Uh but yeah, the advent of unsophisticated shareholder activism has been really interesting. >> Yeah. Yeah. Yeah. I'm I'm intrigued. I want to um want to be a part of it. I think you already are a part of it all the emails you're receiving. So >> if if these retail guys actually wanted to be sophisticated right now, what should they do? Like if they like what is a more thoughtful strategy? Should they should they like actually say we are organized? >> I mean to be perfectly honest with you, I'm probably not going to weigh too far into giving legal advice to the speaking. No, but I mean one of the great hallmarks of um of these kind of shareholder groups is the fact that they don't get legal advice. And >> you know if they if they were getting legal advice, they'd understand the veracity of some of these documents that they're passing around. >> Or if they were getting legal advice, they'd probably understand that um you know, the the the consequence of what they're doing actually gives rise to liability and exposure and to obligations. Associating in this way, if you're over 5% means you should be lodging a substantial holding notice. I mean if you look at was it Deutsch Balon and uh and Ken even acknowledge the fact that by virtue of their kind of joint position had a substantial hole. So um there's the one thing I'd probably be suggesting to shareholders who are looking to try to play in the space alongside u more sophisticated or kind of wellworn players is be getting advice. >> No, it's not going to happen. They might watch a few parties or >> Yeah. Well, if they were watching this one and hoping to get the inside steer, I apologize. >> I almost look at the camera for that one. >> I almost think the more irrational the shareholder base like the higher probability they actually have to agitate for an uplift as well like absent independent expert report like the more irrational they are like the better their chances here are. I'm drawn to the situation because of their irrationality. But but but but the thing is you're talking about what a disperate group of like 20 plus shareholders, right? And so doesn't take much for that number or that shareholder percentage to winnow and therefore them to not be as formidable as they once were. And the closer you get to the scheme vote, you know, if the companies are confident in the valuation, the experts report and the experts assessment, the shareholders are going to realize that if they take this thing all the way out to the line and they drop the ball, the share price plummets, right? What are they going to do then? Yeah. So the bluff calling the bluff thing that this is why the irrationality thing like I actually think a lot of them will think that on a standalone basis if the deal goes away that their shares will be worth more. Like I I do think a lot of them believe that. So I don't I actually I take them at face value that they will vote no. Um I don't I don't like I do think there's a proportion of people who will you know want to run the gauntlet and it's kind of a bluff until the last minute or whatever. But I I do think there's like a a sufficiently large like portion of people who like we we'll do what you described in 2015 like you know won't know like and um >> that was a very aggressive play by um by SGH >> and uh I think they thought well you know let's just pay 2 cents to to play and >> and see where this goes into a BA. They vote this down and yeah, sure there's, you know, the minor victory and maybe they're popping procco or whatever, but as soon as they get to the next cap raise, what's that going to be at? And you know, where does the price go after that? >> All right, James, now to the part where you're probably not going to give us anything because we're going to ask for your opinions on a bunch of corporate actions. And um >> I can't help myself usually, but I'm going to be probably quite restrained. >> Yeah, it's probably wise for business, but we're it's not going to stop us from asking you. Grade control, mate. We got to write rate a few things A to F. >> Yeah, we've got a few topics to get through. All right, let's start this one up going to the majors BHB and Rio. We're going to grade them in the context of how they're sort of looking following this Anglo Tech deal. So, take it any which way you like. Trev, do you want to kick us off? >> I think they've Yeah, I think I think it's an interesting thing to grade like those guys because tech Tech and Anglo were the two like they're the in the cohort of the majors. is the the the targets the most you know the targets in recent history we saw that when when when Glen core tried their luck at tech and we saw that when BHP tried their luck uh at at Anglay. So part of the scuttlebutt also regarding Jakob's departure of Riot Tinto was um yeah the fact that maybe the board had a a more progressive view on doing doing a big deal and one of the big deals that was on the table that could have been acted upon was was the tech opportunity and you know that wasn't of interest to Yakob apparently and then you know if you think of the same kind of dynamic with BHP they botched their attempt for for Anglo right so I think I think I think I have to rate both of them a C because um these are two two mining behemoths, B P B P B P B P B P B P B P B P B P B PHP Rio and um when you're a behemoth, you've got inertia and inertia is the energy of just being opportunistic in deal making. Both organizations um I think should figure out how how they can be more nimble to the big opportunities and act decisively. Like I don't I'm not going to not going to like rate them poorly for not doing a deal. like you know sometimes not doing a deal is the wise thing to do but but here we might have effectively a deal that they can't get in on which might mark multiple lows and they could have been opportunities for them to get um you know get access to the assets that that would have meaningfully move the dial for them. >> Yeah, I had a C for this one as well. M&A time and time again is value destructive in any industry let alone the the mining industry. might not be good for for business, James, but I think that's that's sort of grounded in in a lot of sort of history. The way I kind of see it, BHB is kind of interesting. Perhaps Mike Henry had one eye on on the door already given he's sort of signaled he's at the end of his tenure. And on the Rio side of things, they were clearly uh at a clash at the top level, hence Yakob sort of left. So, I had a C for this one as well because can't criticize a company necessarily for not doing M&A, but I think there is a bit of a risk that they they look a bit roofly on um tech in in particular. That said, it would have been pretty hard to get get a deal done. >> Care to chuck one in there? >> Well, I mean, it might be a C for now, but they might be allowed to reset the exam, right? You know, >> exactly. Exactly. You reserve your full grade until the end, but they're going to inevitably pay probably pay more than >> Yeah. I mean there there's for sale signs on both companies now and there's you know there's a an opening price. >> Next up Guinea they are demanding that Rio builds downstream of the processing or some sort of pellet plant in country. >> I was I was struck by some of these comments from the Ganaian minister Isma Nab. Here's a couple quotes. We want to build a refinery um in Guinea. That's our game plan. We're going to build refineries be it for Borite or for iron ore. said Guinea is like the west of Australia, like the pilgrim 50 years ago. We want to develop, we want to transform locally. We want to use this money to develop other sectors like agriculture, education, infrastructure. What do I grade it? I think it's a B. Um like I think I'd do the same if I were the Canadian government on this one. Um you absolutely want as much value out of of the process. I think it's you know like we Western Australia never got as far as um having having much like building downstream for our iron or exports. Maybe Guinea will have a a bit more bit more of a chance of uh capturing some of the value ad that comes from the the steel making process. >> He's definitely pushing the boat out, isn't he? I think he's um he's searching for more relevance since that transition from Biden to Trump. >> A lot of a lot of sort of interesting developments across Africa. I think the timing from Guinea is quite right. You know, they've they've incentivized $35 billion of capex in their country. That is like I think if we talk about every bit of gold capex we've ever spoken about in this show that combined doesn't even make up the money being spent right now to bring Simand do online. So it's it is huge and obviously they want a bit more of it. You you struggle to give it an A because I don't totally see that the benefits run down to the average Ganaian person just yet. But the the statements you read out there and the the broader speech that was given, you know, the the intentions were quite pure. Let's see if they can sort of follow through on this. I don't think Rio will be shocked by this either, though. And they've sort of signaled that they're going to do a study and look at a pellet plant and these sorts of things. So, we'll sort of see where it ends up. >> I got one for you now, mate. Um, surprise you with this one. So, Aloca suspending production activities at Cataby and um SR2 K due to subdued demand for mineral sands. So, Aloca stock fell 13% on the day on the focus charts you can see up mineral sands market is in a tricky place right now. Aluca is doing what they they need to do to restore market dynamics um to be a bit bit healthier in their ziron rout synthetic root kind of markets. But what's not obvious when you just look at they've got got $1.2 billion in inventories on their balance sheet. So that's this is this is finished product effectively that's just they've just been building up and accumulating because the market is not is not in a place where they can sell it for a a price that is higher than their cost. So they've just been building inventories. Um that's it's a it's staggering number staggering number. You know you know the market's pretty in a bad place just by looking at Luca's inventories at any point in time. >> Is this you stoking the market for Linus to make the bid? >> I think Liners should. I'm I'm all I'm I'm totally all for I think the uh I think the industrial logic of that is very um yeah so any any I I look into this one I give it a a B. Hands are tied. They're doing like supply discipline is required. Um you know they're doing what they need need to do and they're a big enough producer to have an influence here. >> Yeah. I mean it's not all bad because they have this quote unquote inventory. They can still meet their contractual agreements. It's not as if you just turn off the mine there and your cash flow kind of stops. Albeit not the best cash flows. So, >> it's it's cash positive in a sense. Obly the share price comes off massively, but >> they've already been showing supply discipline in the fact that they've clearly been selling less into the market by virtue of the fact the inventory has been building pretty substantially. So >> yeah, >> like it's just um yeah, >> the the real negative read through on this is these products the you know the titanium and the the pigment ultimately and the various other downstream byproducts uh you know they strongly follow demand for construction for building for paints for consumer goods around the world. So, it's a pretty ominous warning of the direction the world is going if demand for these things is is drying up and being awfully weak cuz it's traditionally just kind of followed global GDP in a sense. So, that's a bit of a dark cloud on on the horizon, but a bit out of our pay grade here. >> All right, Genesis received approval from the mines department for stage one mining proposal at Tower Hill. So, I read the announcement headline, got excited. Genesis got an approval to to relocate the train terminus. Tower Hill's underway, but it's not quite that. This is approval mine stage one which is just mining to the west of the train line there. There's there's actually an existing pit there as well and they're doing what they can without you know while the trading line is still there. They are advancing agreements with rail users to relocate effectively you know shortening the rail line as required for stage two and they're expected to be completed by the end of this calendar year. I rate it a B. Um I think things are moving in the right direction. Tower Hill seems to be on track. So >> yeah, I gave it an A. I think they they always had Tower Hill just far enough in the distance so the people didn't really bake it into the assumptions and didn't kind of care about it, but they're clearly moving one step closer and they've got big ambitions which they're um delivering on bit by bit and you know this is stage one. Stage two will will come in in due course. >> Do you remember they'll kind of get there? Remember back in the back in the battle for Leonora there like Genesis Genesis's original agreement well I say original but it was once they once they agreed to buy the project instead of doing the scheme and spin out. So in that in that deal there was it was like $60 million of Genesis shares back then they were a dollar each um 60 million in Genesis shares which were contingent upon first or being produced out of Tower Hill because there was the uncertainty. So that was a kind of contingent consideration part of the equation that disappeared when Silverle came in. They just they brought that forward to kind of compete with Silverlac's um bid and all all the likes. James Nichols, uh what do what do you what do you think of, you know, contingent forms of consideration and and I'll I'll even speak a bit more broadly than just contingent consideration, contingent value rights in >> Well, no, I mean I think you can call it contingeration. Let's not get involved in taxonomy. But yeah, I mean it it's an interesting it's always an interesting um proposal. I mean I talk about it a fair bit. I think any deal team uh when you're trying to come up with ways to bridge the value gap, you're always banding around these kinds of exotic forms of instrument that are going to solve the day and make everyone seem really smart. But before not, you've just agreed to either, you know, split the difference or, you know, bring forward, as they did in that that instance, the contingency and just pay it out. Um, that's not to say that there isn't there isn't room for these forms of instruments. I mean, indeed, they do what they're designed to. they put a value on some form of contingent liability or asset and try to um ascribe value to that or you know deduct it from the the overall purchase price. Uh it I just find it interesting that that kind of divergence in the the really small cap space when you've got these reverse takeovers and you're issuing basically almost 100% of your stock in performance shares or milestone shares. Uh and yet by the time you get to the takeover um the whole concept of of this as describing future value for upside disappears and no one's interested. So it just seems to me that there's this kind of cognitive dissonance. >> Yeah. >> Yeah. >> Beautiful. >> Sweet and sour deal. >> Sweet deal sour deal, mate. Oh jeez. I got I got an interesting one to kick off. You see this uh this back announcement with Jinder Lee. So Jinder Lee, owner of the McDermott lithium development project in the US. They came out with this announcement. They're planning to be part of this kind of dispack deal. Ginder Lee would effectively emerge as an 80% shareholder of this new co which would become >> still doing dispacks. >> Sorry, >> they're still doing dispacks. >> They're back. >> Yeah, these banks are back. It's >> 2025 is 2021. Yeah. >> Um yeah, so Ginder League would emerge at 80% shareholder of new co which would become NASDAQ or NYC listed and that would get 20 to 30 million US cash injection from the spa sponsors and new investors. So that that new code would effectively become the 100% owner of McDermott. The market response was so interestingly on the focus charts you'll see the stock shot up 50% to 75 cents. It's since peeled back most of those gains. Keep in mind like Ginderly is like a mere $40 million market cap right now. On the one hand you could you could see this transaction as like a way that they can raise double their own market cap with only 20% effective dilution. On the other hand, it's a spa. This is the best capital you can find for the project. So, I can't help but give it a C. >> I I gave this a sour deal. I thought I thought that's >> Sorry. Sour deal. Sour deal. Yeah. >> Yeah. Uh the the big headline US $500 million value ascribed to Ginderly's assets just made me laugh. The the whole kind of deal me a bit of a yucky feeling in a way. Not not totally to degrade Jinderly and how they've gone about things. You you sort of find the capital where you can get it. But yeah, Ginderly has kept like a a super tight uh register and share count for years and years and years. It is kind of an interesting step in the direction that that company's going, but Spaxs kind of give me an icky feeling. So, it's it's a sour deal. >> I can keep my uh deal assessments to my signal chat. So, >> get that as. >> All right, next one. We've got Alcoa. They gave $46 million to the private Western Gas. This is in the context of uh downstream aluminina uh business being incredibly energy intensive here in Australia, WA specifically, and them needing to source reliable lowcost energy, sweet or sour deal. >> Well, this is this is for like this Western Gas, they've got this equis project. They're basically just giving enough money to advance a bunch of studies and the likes and and they've foregone a little bit of of offtake should it actually eventuate to to development but development back in the day of this project was like penned at like five billion up to $5 billion price tag to actually develop. So it's know it's big big project and alcohol is doing something kind of interesting which is they're playing very early to in the in the development phase and to kind of get wrapped their hands on some degree of of uh of gas offtake and I've said this before on the potty like you can see it in the um independent expert report of the scheme booklet with with with AWAC and what with aluminina and and Alcoa a $1 per gigel change in the gas price has a $2.5 billion NPV impact on on AWAC operations. That's enormous. Um I expect I expect Alcoa to get really really active in this kind of like gas space because their their uh contracts all roll off with W gas all roll off by 2032. So they need to be recontracting urgently. >> Yeah. Very very sweet deal. It's good. It's not just lobbying and and meeting Roger Cook and the like. They're actually putting their money where their mouth is because 2032, like you sort of say, will be here before you know it scheme of getting these sorts of projects off the ground. This is very early stage. So, good on them. All righty. >> You mentioned a deal, mate, that uh had one of these non deal road shows involved. That was of course the um Aluminina uh non-deal road show one month before the deal was announced. So, the topic here is Mary Macka. They came out with a non-deal road show and it was only >> point AFR come out with a headline and saying they're doing a non-deal road show. >> It was only a couple slips later that the capital raise is revealed $80 million. Now this is kind of important for them because their uh their listing in on the ASX hasn't taken off at all. >> I don't think they I don't think they've got any no one's shunted their shares over or whatever like >> Exactly. So this is trying to kickstart it given that all the >> you need to do a cap raise for liquidity. Yeah. >> All the money was raised XC Canada here. The non-deal road show itself is the biggest oxymoron I think I've ever kind of seen. So sour deal on that front, but sweet for them getting the the ASX listing off. >> Yeah, mate. Um I I I just give AFR a sour deal. >> What are you doing running that story? Any views on that one, James? >> Oh no. I mean I'd probably rank you money of mine AR and then you know deal room. So >> yeah. Yeah. Well said. Well said. Well, >> yeah. You mean data room? >> Yeah, data room. >> I don't read the Australian. >> That's all right. Make a mistake about that. Um, Elemental Royalties merging with EMX royalties, creating a $1 billion royalty code backed by Tether. We talked about them buying the royalty last week. And, you know, not long after that episode went live, we found out they're merging with the mighty um EMX. This is this is just awesome. I give it an A. This makes heaps of sense. Um and like yeah like also coming together lowers the cost of capital having tether there lowers their cost of capital like it's going to be an inquisitive team. Um yeah really really interesting kind of capital behind it and uh scale kind of helps their their multiple >> totally this is absolutely a a sweet deal. I I would hazard to say that Elemental Royalties is one of the most interesting companies in the mining world right now given everything that's going on and how we spoke about the cost of capital last week and these guys are just checking box after box in making themselves a sort of more relevant company. So awesome awesome deal to to follow and good on them for for getting it done. Keen to see where it goes from here. >> I agree with a sweet deal. I know some of the people involved. >> Nice. >> Yeah. All right, last one. And this one is super interesting because we've spoken about New Foundland Land with a couple people and this company divides opinion. >> NFG NFG >> NFG. Someone told us NFG is a ticker that it should fit no effing gold. >> Anyway, they >> it divides opinion though. So people have a very sort of contribute to the one you've just laid out. And it's not every day that you see a developer come out and spend $300 million buying company. So I was a bit takenback by that, but once you sort of peel away and and look into the details of this deal. There's there's a bit going on here. So you think 180ks between projects can't really be synergies, but there kind of is because the dirt is super high grade. Both of them are relatively near-term to production. So the company being acquired, Maritime will be producing next year and new found the following year. And there's a plant that that Maritime previously bought. So there's a there's a fair bit going on here. Looking into the details on the um the hammer down asset that Maritime has. They were flushing through US750 gold price on that deal. So that that's a conservative gold price to run and in the context of that the cash flows which are meant to come online next year could be pretty handsome. So my initial take was sour deal but I think there's reason to give this one bit of sweetness. What do you reckon mate? Um I yeah I'm interested in in uh new new found gold purely because like that is it's been a mad underperformer. It was a super hype stock. It's come back to earth after the I think their maiden resource came out like three or four months ago. Um and it's just one of those like gold names where there must be something of value there. Now they've bolted on with this other thing. Um what like what can you actually wrap a mind plan around? It's pro its valuation is probably like it could actually be in the value area after being in in the not so value area historically and that's why I think it's worth doing some work on. I'll give it a sweet deal. >> Very good. All right. Last but not least, hidden gems. James, is there anything that has stuck out to you lately? Podcast, restaurant, holiday destination. Well, I mean, I I late late adopter of technology uh by all accounts, but I I did download uh Chat GPT 5.0 the other day. >> You're about to tell me that you're a lawyer. I just just don't chat GBT. >> No, no, no, no. I mean, I don't use it for professional purposes, but but my um it it did amaze me. I mean, we I'm off to Portugal next Thursday and uh and we're spending one day going out of Lisbon up to this place called Cra. It's got like four different palaces. There's, you know, Hannah Palace, Monserat, um Quintadel Regga, Relegare, and then um the Moorish Castle. And it's it's hard, you know, you're going out there for a full day, heaps of tourists trying to work out what to do, and you read online, and everyone's just complaining about the sandwiches. Um, so I I asked Chat JPD, I said, "Chpd, can you plan me an itinerary when I need to leave the hotel in a car to get up to CRA to to visit these palaces? Which ones should I prioritize? Should I go see all of them?" >> Uh, and I want to be home by this point in time. Anyway, came back, perfect itinerary, absolutely perfect printed. I mean, I haven't gone yet, so proof will be in the pudding, but um, at the same time, >> yeah, firm believer. Um, so yeah, high recommendation to download ChatgBT and I'll give you my recommendation on Centra when I get back. >> Keen to hear that, mate. There you go. >> Very much looking looking forward to hearing that one. How about you, mate? >> I do have an interview that I listened to a little while ago and it might be one of the best interviews I've ever listened to. Grant Williams interviewing Tony Deedon. I've listened to it a couple times. It's picturesque and the content is super ripe. It's probably a two-hour interview and the the the content is just so so rich. Tony talking about his investment philosophy kind of creating kind of enduring wealth in a very downto- earthth non-hyped kind of manner. Well worth a watch. We're chucking in the I've been pretty crooked the last week, but you know what? I'll shout out to Antico. The best loar just uh >> sponsorship, mate. >> Stops stops you from coughing. >> You've been chewing them like lollies. >> Yeah. No, it's just uh it makes you think you're not sick sometimes. >> Yeah. >> Yeah. >> Perfect. Good spot to to leave it. Thanks a bunch for joining us and and sharing your your loyally wisdom, James. >> Very welcome. >> Anything you wanted to talk about that we didn't talk about? >> No. If I think of something, I'll come back on. >> No, you're not. No, you're not. No. >> And a massive thank you to Focus, the platform by Maritech, Sanvic Ground Support, and IMAK. Get your tickets to the conference October 21 to 23 >> Now remember, I'm an idiot. JD is an idiot. If you thought any of this was anything other than entertainment, you're an idiot and you need to read out a disclaimer.
Anglo Teck Mega Merger… and a Retail Revolt
Summary
Transcript
Anglo Tech. This is a massive deal. You've got a merger of equals. Anglo shareholders are going to get a special dividend paid out. Four and a half billion US dollars for closing. They're targeting US $800 million in annual synergies. >> Kind of as big as it gets. The biggest announced deal in a decade in our industry. It's kind of it's phenomenal. This week is the biggest mining deal in more than a decade. JD, it's it's us two. We're going to talk about Anglo merging with tech, acquiring tech, however you want to frame it. These are two mining behemoths. And alongside us, we've got the wonderful James Nichols, who we've we've roped in uh today because he's he's got some expertise as it relates to some shareholder activism. And there's been like some really really interesting dynamics happening at one of the my favorite companies. I'm not very popular on the hot copper forum, I tell you that. But um yeah, but but but James, you're going to you're going to join us and um >> share share your uh your legal wisdom with with with all of us. You're a partner at Hamilton Lock. Yeah. >> So, thanks for joining us, mate. >> No. Well, it's a pleasure to be here. I mean, seems to me that this is a first. First for many. >> A first as in a first for you or a first for a lawyer coming on our show. >> Uh I think both. >> Both. Yeah. You're normally quite risk your time. >> You as a people. >> You as a people. Yeah. me as the self-anointed representative of the legal fraternity. >> Um, no, but I mean, yeah, so it's a first. You have had, you know, lawyers around the show, >> defamation lawyers, um, notably >> good friends at the show. Yeah. >> And there was that Harvey Spectre chap. >> Yeah. Yeah. Handsome fellow. >> He was pretty astute. >> He was pretty astute. He gave us some some good some good feedback on what fiduciary arts were all about back in the Leonora days. No connection to you though. >> No, not at all. Um but no no very grateful to have the opportunity to be here. Um it's nice to peer behind the curtain, see the proverbial sausage being made. >> All righty. Let's jump in. Like you said, Trav, Anglo Tech, this is a massive deal. It's the the way it's sort of come about the the history behind these companies, behind the deal is just sort of fascinating. So to sort of set the scene for people a bit less familiar, you've got a merger of equals. Anglo shareholders are going to get a special dividend paid out $4.5 billion US before closing. They're targeting US $800 million in annual synergies. And the the core reason why this deal has real sort of merit to it is Kawasi and QB an asset we actually spoke about last week on the show and the the potential synergies there. So the uh the market sort of liked it. Anglo was up 9%, tech up 11. Much more liking it on the sides of Anglo shareholders than tech, but it's a it's a pretty phenomenal deal. What was your first take, Dave? >> Uh mate, massive. These are two two mining behemoths. Both or each of them have over 100redyear histories behind them. Like very very proud companies in their respective, you know, countries where they they have either headquarters or or or assets. Um it's kind of as big as it gets in like like you said the biggest announced deal in a decade in our industry it's kind of it's phenomenal. Um the if you just look at the implied premium to tech once you account for the special divy it's you know it's roughly 12%. It's nothing in in the context of of things here, right? So, so hence the market likes it because there's also operational synergies as well like you talked about. They put up this slide and um you've got the ability to now now build a 15 km kilometer conveyor to transport high grade kalawazi or to feed the plant at QB and they reckon that can uplift you know copper production in the proformer by 175,000 tons of copper peranom. >> Actual synergies in mining. It's it's kind of amazing. actual synergies no premium merger like it doesn't have any of the hallmarks of a bad a bad top of the cycle kind of deal which you you do you do historically have seen when a major will will debt fund a giant purchase price of something and then go on to regret it. This is it's a it's a script deal. >> To cut to the chase on the interoper type question, it it makes it a um a tough deal to overcome, right? because the the the structure of of this one if you're going to come in and and pay sort of 30% plus on on top to take out a say a tech it's you know the the economics of that sort of outcome versus what what you're doing here as Anglo just super super hard to overcome. So I think that the risk to the deal on that side of it is is fairly limited and a huge amount of credit I think needs to go to Anglo for this from where they were 18 odd months ago sort of beaten up in the corner. Everyone sort of taken the mix saying they've sort of managed their assets poorly. They're in a difficult jurisdictions, difficult commodities, spread way too thin to kind of being the the kingmaker here in a way in a really interesting company that goes potentially from being valued like a diversified five to six times earnings to that elusive 8 to 12 times earnings that you get for a pure play copper company is pretty remarkable. And there's a a lot of things that need to go right. Like you see how much they talk about checking that Canada investment approval box here where management's going to be set up, the the listings, the governments. It's the the hoop jumping you have to do to get a deal like this over the line is enormous. Right. >> Yeah. Well, we'll we'll uh defer to to to James Nichols in a moment who's probably done a lot more crossboarder M&A than we'll ever touch in our lives, mate. But but in um yeah the way I kind of like evaluate some of that is um pro probability of an interoper I I I'll bring up this slide you can see here and it's it's basically shows the capital intensity of BHP's copper growth options in its current South America portfolio. So this this slide was in the in the deck that when they had an Escandita site visit in November last year and and like what you can see there the capital intensity of the majority of their copper growth within their organic portfolio, it's going to cost BHP north of $30,000 per ton of incremental um of incremental, you know, copper growth that they want to have in capital to just bring that online, right? And what so why is that slide so important when you look at the capital intensity of BHP's copper growth? because because the Anglo deal like it effectively values Tex um copper replacement value at about $34,000 a ton, right? Um that's that's that's well below what the multiples of Antifagaster and Freeport if you if you back out the you know the value per ton of copper production in those companies you're more in the realm of 50 to $60,000 per ton. So, so for BHP, like I don't think it's unreasonable to think that they'd be pretty interested in um in in wanting, you know, the incremental exposure to that that extra copper production because it's it's pretty comparable on par with their, you know, their own organic growth prospects, but you get that copper, you know, immediately. Yes, you have to sync the capital immediately as well, but you know, that's it's the way I look at it. it's still probably going to be cheaper to buy than it is to build just based off the the capital intensity and the multiples at play here with um with both tech and Anglo. So I think on a market multiples base it's cheaper to acquire than build. So on a market multiples base you should you should certainly have interest from the interlopers here to to to to have a crack. However the the the you know the intangibles are a lot it's really tricky to get a deal done here on the on the tech side. you've got to win over Keville who is supportive of this Anglo deal but you know would he be the same if it was to go to a major and he gets a smaller chunk of the pie and then um you've got that investment Canada process like you talked about and then on the Anglo side you've got all the complexities with the South African government which BHP is aware of this time around so >> more than aware of >> yeah my view is like um on valuation you should totally see you know interest from interopers I think the complexity is probably prevented from happening there's a $330 million break fee there but it's a $50 billion deal that's um it's not no way not not going to stop things in the in the scheme of things. It's a rounding error. >> Yeah. James, before we get you in on the on the sort of time frame, the the 12 to 18 months that they've pieced in, the one sort of final thought on what you've just said there, Trav, is that everything Anglo has done here to appease the the governments in particular, obviously the the Canadian government by having headquarters in Vancouver, having senior management in Vancouver, all those sorts of things are very hard for for a Rio or a BHB to achieve, which which adds to the kind of barriers around that. But if we zoom out to to what just getting this deal done, James, how do you kind of think about that 12 to 18 month time frame like that is a long time. A lot can kind of go wrong. You've been on the other side of the table for a lot of these uh talks. >> Yeah. So I mean like 12 to 18 months is a long time in the sun for sure. And um when you're you're thinking about if there are interopera risk I mean the duration for a transaction the longer it goes the greater the interloper risk the more time you know of commodity markets to change the more time you have biders to sharpen their knives um and particularly if you've got regulatory processes that start to go sideways uh you know for whatever reason including due to an intervention by a potential rival bidder. Um yeah, so I I I think the the time frame presents a real risk and it and it compounds the risks of failure to complete by virtue of some interloper. um you I mean what what the tech and Anglo deal you know doesn't necessarily achieve which is what is a huge dynamic that's in the market at the moment is this Americanization right so like people seeking NASDAQ exposure or some foot in the ground in the states just because they know that in order to have that slipstream in the new world order you need to have the backing of Trump and you need to have some form of kind of US support one way or another. So, you know, whilst this is, you know, a great deal in terms of, you know, reconnecting old Commonwealth countries, it probably doesn't quite solve for that. And I think that you might see, you know, potential rival biders that either have that benefit or are able to achieve that benefit probably stepping into the fold. >> Everyone everyone wants the the multiple of of Freeport, right? And why does Freeport have the multiple that they have? Well, yes, it's the the Americanization factor, but but it's also their primary listing is the NYC and they also have S&P 500 index inclusion. Why does that Well, it matters a lot in, you know, the whole world of kind like passive stuff. So, um, how do you how do you kind of get that? Well, I I was actually surprised to see in this deal that Anglo is going to keep the Y as a primary listing. My prediction is in time that will fall away. They've got to promise the world to all these different disperate countries, the UK, Canada, you know, South Africa, all at the same time. Yeah, we're going to keep investing blah blah blah. Nothing's changing. But then once once a deal is done and completed, like like LS is dead. Like let's just admit it, the LSC is dead. Anglo will leave the LSE eventually. It will happen. >> Yeah. I mean, I I had to Google it just before to to sort of see what the combined market cap of the LSE was because we've we've sort of paredited this line for for a little while now. It's still more than 3x times the ASX. So, we got a bit of a ways to go there. >> But the the trend of capital flying away is important. >> To to add to that point though, where you want to get index and listing has to be a primary >> Yeah. >> listing. So, it takes quite a few steps >> kind of get there. >> I'll make a brave call on this one. I reckon I reckon this deal catalyzes multiple expansion in the sector. It's like it's it's now like it's now like very clear if you want more attributable production of these commodities that seemingly care a lot about higher multiples need to be paid to get hold of them. Um and I actually you mentioned the call I tuned into that call 8:00 p.m. last night Perth time before the call starts the webcast is blasting dancing in the moonlight. I'm I'm not joking. Uh it was hilarious probably probably because that's what all the bankers and the lawyers were doing um right after the deal was announced. James other other than the wonderful precore music. Here's my other insightful takeaway. So if you want to sound intelligent talking about operational synergies, this is what you've now got to call it. >> Part of the strong industrial logic comes from >> the industrial logic of combining by the industrial logic of it. I think >> um the industrial logic of a transaction. >> Industrial logic. Yeah, I thought synergies had a had a pretty good ring to it. But it turns out you can also put the word industrial in front of synergies and it also sounds more intelligent. >> The most compelling industrial synergies in the industry >> mining assets with industrial synergies is one of the most most compelling industrial synergies available from the types of industrial synergies that we're talking about. >> Well, I mean asex traditionally had a problem with the word synergies. So perhaps you might see an adoption in the Australian market of the phrase industrial logic. Do they have a problem with the word synergies or they have a problem when companies just like say, "Well, yeah, we're going to have $80 million of synergies peranom based on nothing other than our thumbs are." >> Yeah. Well, I mean, synergies is the red flag, right? But, you know, they've got a problem with the numbers. >> Yeah, that's fair enough. Uh, all right. Well, yeah, that's uh that's I think we're going to have a lot to talk about in the future as this one unfolds. I, you know, I don't think it's beyond the realm of possibilities to see see things kind of um fire up from from here. and and I I certainly hope and I really hope that there's um there's involvement of an interoper and we have we have the making of a of a of a a real interesting situation on our hands to talk about over the next next 12 months. >> I couldn't agree more mate. I think we'll be speaking a lot more about this deal. Let's move on though to the Capricorn War deal. Give a a few sort of >> I can set the scene if you want mate. >> Set the scene for us mate. >> So we we spoke on the podcast. Capricorn came out with an agreed deal to acquire Warar late July effectively all script deal right and it was a market standard control premium 29% to to last 30 35% to the 30-day VWAP but if you yeah one of the points was if you looked at the time that Capricorn and Worar entered a CA like the stock had ripped it like you know effectively sort of triple the price since then so our shareholders were really quickly frustrated by uh by what they thought materially undervalued the company here they they kind of you know banded together and um in a in a in a loose way have come to the conclusions that they want to provide voting intention statements to vote to vote against the the transaction. A bunch of these have sort of appeared um online in in recent days and you know I've heard numbers sort of you know in that 16 17% of total total retail shareholders have actually submitted to the board um the voting intention statement to vote against the transaction. Now, the company hasn't acknowledged this yet, but you know, you can still piece piece together some of these things uh from the forums online and see see photo evidence of some of these um voting intention statements. And um I can flash some up on the screen now because that's how readily available they are. >> I can see you've rolled up your sleeves, James. So, I'm I'm itching to hear your take on this. >> Complicating the matter further. >> It's actually just a bit hot this morning. >> You get this special sits fund uh Trium Capital, they've popped up. This is this is M& right shareholding in Moridar. So kind of all of these like um pieces together, >> but they're just they're just that's just bumper charge, right? >> Yeah. Which is I know you love jargon. >> Yeah. Now, now you Well, and I know I know you love a a deal with kind of complex complex characters and um >> I don't necessarily love it. Just seem to to attract complexity. >> What the hell is going on here? Like >> Well, I mean, it it's something that we've been seeing probably an increasing amount of. Um I mean you know shareholder activism M&A is nothing new right like seen it time and time again you know think back to Nick Bolton Bris brris connect you know you think back to Solomon Louu country road David Jones it's a hallmark of basically any M&A market um you know even Petronis and Kin and uh Dassian Genesis and and then uh >> there's there's varying levels of sophistication with activism varying >> well yeah well that is and I I think that's the point is that you know nowadays we're seeing probably an increasing amount of this you know coordinated in quotation marks uh uh action by you know the retail contingent of the share register. Um we can refer to it as unsophisticated shareholder activism and not using unsophisticated in the sense of the word you know the pjorative but unsophisticated in the sense that um there seems to be an adoption of uh kind of large or institutional activist shareholder tactics um and seeking to to apply those in a similar manner but without you know necessarily informing themselves as to how they're doing or taking legal advice and um and that's giving rise to you know varied outcomes uh difficulties with the regulator and challenges with with how biders engage with them. >> It it's it's super interesting like I'm looking at war right now and I'm I'm trying to evaluate the probability of an uplift here. I I turned to JD today and I was like we might even buy some shares because it it feels pretty asymmetric at the moment. And why like why do I say that? It's it's purely because like these um these retail shareholders, you know, coordinating quotation mark not coordinating. Um >> they're having they're having an an influence in in the evaluation because you know you think 16 17 18% my god they could block the deal here like uh if they're serious about this voting intention. >> Yeah. and and look, you know, they're um they're they're looking back to previous transactions and seeing, you know, shareholders in similar positions achieving that outcome and probably thinking, look, if we just hold tight and, you know, face the front, we might get a similar um similar result. >> What previous transactions are you talking about? Well, I mean I it's hard to decipher specifically, but you know, um there is some suggestion that the peak shanki transaction that there was, you know, uh a shareholder interaction or engagement process that resulted in that uplift and not just the commodity market change. Um but you know other very clear examples um you know including something that we worked on a couple years ago was the technology metals uh merger with Australian venadium which I'm not sure if you remember how that played out but there was >> TMT AVL yeah was >> it was it the most logical talk about industrial >> industrial logic >> there's some great industrial logic between those two >> that was a project donuted by another project and they were fighting over access um so yeah you know it's no different to a JV consolidation >> but Um yeah, like more and more I think you're seeing um in these in in this M&A environment where acquirers are looking at buying not building um that you're getting these early stage exploration companies that are still in that real ramp up pay uh phase where they've you know they're running around doing road shows they're promising the world they've got a a collection of firm believer shareholders who really think that this thing's going to come off. um these shareholders are capital constrained. They're um overly committed. They think that, you know, this is their, you know, 100 mega um and so they're really reluctant to let go um at any particular price to be honest with you. But they're also not factoring in a lot of things. They're not factoring in the realities of building a project um which you know biders are obviously cognizant of. That's why they're acquiring these exploration companies. they're not factoring in the delutionary impact that will arise as a consequence of that project development phase. And so yeah, they are they're fervent and they're um committed. They're dedicated. They're looking at past transactions. They're adopting these playbooks and and seeking to go about trying to achieve a similar outcome >> with with with TMT AVL. you had a pretty lengthy list of of shareholders who effectively submitted a a voting intention to vote against the transaction. Now, the deal the deal still got done. There was an uplift, wasn't there? Like, how did how did how did that all come together? >> Well, there was, but it's important to kind of remember the specifics of that kind of particular transaction. I mean, I um I I actually brought in the uh the scheme booklet from the TMT AVL transaction. So, here you go. >> How many How many scare ones of these do you have? >> Probably too many. And I brought this in because there is a section in this um this booklet was this was the booklet that was released after the first court hearing um it included an experts report. Now this is an important piece. The experts report said it was not fair but reasonable but obviously still in the best interest of shareholders which the expert is yeah >> is able to conclude but it had this long list of shareholders um in there each holding you know between 0.0 0.1% and you know 0 um nine you know there was a couple of single digits in there but a long list of shareholders who'd basically been rallied um on this kind of social media forum um I can't remember I think they moved to Signal or something you really whichever one ASC's not allowed to enter um uh cuz you know ASIC can jump into your social media now >> really says as joined the chat >> does it actually no >> no no definitely I mean there's there was they got this um group, sorry, I digress, but they got this group called the ASX pump organization. I mean, if you're going to have a name for a chat, don't call it that. >> Um but uh it it said at the top as ASS as joined, you know, ASICH joined the chat and um of course they didn't believe it, so they kept talking. Um but no, ASICH is able to join kind of social media chats now. And because a lot of these, you know, Signal and WhatsApp for example, they're encrypted. They're deleted in 24 hours or 7 days. Um so regulators have a real difficult problem with kind of evidentary things. So they can jump in nowadays. Anyways I think um in the TMT scenario they were uh it was signal or something. They were coordinated but again they had circulated this basically um fill in the blanks style um truth and takeover statement saying you know my name is this I hold this many shares. I commit to vote in favor or vote against scheme. You know >> voting intention statement. a voting intention statement. But the thing is is that these kinds of statements, they're not intended to be filled out as a comprehension exercise. They're intended to demonstrate someone's um you know uh well-informed and well advised uh position. Um their awareness of the law um their awareness that they are indeed a market participant for the purposes of truth and tag of this policy which really only captures substantial shareholders. it doesn't capture the rats and mice or or non-professional and non-institutional shareholders. Um, so just because you write the magic incantation on piece of paper does not necessarily mean that it gives rise to some binding or enforceable uh position. >> So what did what did ASICH is that what ASICH came to the conclusion of in relation to the TMT voting inteious statements that said they were not or effectively not valid to be interpreted as an statement? Again, it puts the bidder in the target in a really difficult position because they get, you know, they've announced the transaction, they haven't released the scheme book yet. They haven't released the experts report, but they're getting, you know, 10, 20 of these kind of statements that a lot of the time they're filled out incorrectly or they're not effective. And they're forced to contend with, well, you know, do we have a disclosable event? ASICH tells us they're not enforceable, but we're getting all these kind of intentions from people that we can't identify whether they're shareholders or not. So it it makes it a really difficult scenario for the target in that circumstance as well as the bidder. But the bigger problem is is that the bidder and the target can't necessarily engage with these shareholders prior to the release of a scheme booklet and an independent experts report. >> Right? So all of these shareholders who are grumpy right now, the management board of of war are prohibited from like having individual conversations with them to an extent >> to a degree. I mean their hands are tied for sure. I mean of course if someone picks up the phone and calls the office you kind of got to speak to them but they can't be going on and you know laying out and extolling the great virtues of the transaction in an unbalanced way because ultimately then the court or as will have a problem with the fact that you know the booklet here is includes for and against really detailed reasons risks a whole lot of information and it cannot be reduced to a single conversation where the managing director tries to convince one shareholder five bullet points why they vote in favor of the scheme. So their hands are tied, they don't know who they're dealing with or how to deal with them, it can be quite challenging. >> Yeah. So even though even though ASICH basically says these voting intention statements from retail don't actually kind of qualify because because you you have to be a sophisticated investor in order to have a >> substantial shareholders technically. Yeah. So you have to have 5% or more. >> Right. Right. Well, the interesting dynamic with these like these groups are still bundling together. If if they if they think the way you describe, like, you know, they think the project's worth so much more standalone, even if there's not another, you know, value or creative option on the table, like not another acquirer or anything like that, but they think there's skyhigh value on a standalone basis, then they they may be serious about still voting no if the deal progresses, you know, at the current implied, you know, um, price or merge ratio or whatever. So then boards might still take them seriously and provide an uplift to to get the piece. >> Well, they have to be um dealt with or taken seriously at some point, right? And so I mean the way that biders and targets tend to to deal with these situations is that they've got to get the information into the hands of shareholders. They've got to say, look, you know, we know everything that's been said previously. This is why the deal makes sense. These are the risks of the deal going ahead. These are the risks of uh if the target remains a standalone entity. And so until they have that information, it's difficult to have a very informed conversation with shareholders. So they give the information to the shareholders. It includes an independent valuation that's separate to what the board's saying. That's separate to what the bid is saying. It's an independent assessment. Now, let's not go into your personal views regarding the veracity of independent experts reports. But >> shout out Bo who's doing this one, >> but >> but it it's got to be remembered that shareholders put a lot of value in an independent technical assessment and independent valuation. And so that's very important as well. And then of course if if even after that and and and and that was really the what what was the trick in the TMT AVL outcome is that it wasn't it was declared not to be fair. So ultimately it felt that a price increase was necessary and warranted in order to um convince these shareholders in addition to the information that was provided. So it it'll really pivot on how that comes out and you know that'll be really important to see. It would be important to see what the detail is in there, important to see kind of the risks to remaining a standalone entity. Um the other tricks obviously available to to biders is to come out and do best and final. And so that's what Sheni's done on on peak. They've done a price increase, you know, a modest price increase, but then they've come out and gone best and final. Um and ultimately, you know, shareholders do come to an economic rational position eventually once they final once the emotions been taken out of it, once everyone's settled down, once everyone's had a read. Um yeah, they tend to end up in the right place. >> So if like what would be your prediction, right, if there's um independent expert report, I think is due later this month and it says it says valuation's fair and reasonable, right? Do you actually think there'd be unlikely to be a kicker here? Well then then it then it will come down to an education piece on the shareholder base and you know it's not like insisting that they change their view but it's saying know these are the reasons for and against and you know if the experts form that view then surely it's open to the shareholders to come to a similar >> I reckon I reckon I reckon I'll take the other side you know if I reckon even if the independent expert report says that it's fair and reasonable there's it's still more likely than not that there could be a kicker purely because you'll aggravate that like these shareholders are already mad. They're upset. They're pissed and you tell them you tell them I've got to educate you on why your view on valuation is wrong. Look at the independent expert, they'll be even more pissed. They'll like um I'll revolt in a big way. So I actually think I think an uplift is is more probable than not irrespective of the expert. >> Yeah. And and look, I mean I don't disagree. I've seen plenty of uh situations involving kind of an irrational response. I mean, I remember it was uh the Nexus uh takeover by Seven Group Holdings. I don't know if you remember that in 2015. No. >> Had Don Valty as chairman of Seven Group Holdings and chairman of Nexus Energy. Um uh and managed to procure uh a a takeover bid that he said he wasn't aware of for for Nexus. Um and he politely recused himself. Um but that that takeover bid uh was announced uh or the deal was the merger was announced at the same time they acquired all the secured debt in Nexus and um I think they offered them 2 cents a share. It had been trading at like 6 cents. So >> Wow. uh cuz the debt was maturing and so they offered them 2 cents a share and you know faced with uh oblivion right faced with utter destruction and obliteration. Um shareholders still voted that down and so they went from essentially getting 2 cents uh a share to receiving 0 cents in the dollar. They went through a voluntary administration process. >> Wow. So yeah, there I mean particularly in circumstances which aren't handled properly or appropriately by the bidder or target, there's a lot of emotion and it's sometimes hard to unscramble the egg, unpick everything. >> At the end of the day, they're the owners of the business to a degree to a to a varying degree. So they can choose their own kind of fate. >> Yeah. >> And they're entirely entitled to do so. Um >> what what are the other types of activist shareholders out there? >> Yeah. Well, I mean, you've always got um like PE strategics who will, you know, be there. They're the kind of almost the M&A initiators or the originators. >> So, you had RCF in the case of TMT, AVL. >> Yeah. I mean, you know, RCF, um, Taurus, Aion, all these kind of groups, they're taking portfolio positions, um, with a view to, you know, maybe 10 year investment horizon. But there does come a point when they need to realize that value um, for for the LP investors, right? So, they're initiating M&A or looking for kind of M&A that makes sense that can kind of trigger an exit that's always going to be there. So there is a degree of activism from that kind of pre-existing committed capital. Um and that's that's always going to be there. That dynamic's been there for since dawn of time. You know there's green mailers, rival bidders. Um they're always going to be there too. Uh if you think about Hancock popping up on the register of Azour Minerals um when SK Herman made that uh proposal um and you know that they weren't looking to necessarily block the deal. They were looking for some way through and they managed to get there by um joint bidding there with with SQM. Uh I mentioned Petronis and Kin before you know they they've obviously got form in that area. form. Yeah, >> they do have four. >> And then, you know, as you're seeing on on Waridar and in in most transactions, you've got, you know, the arbitrage funds coming in out of the stock. >> Now, the degree to which they're activists is, you know, uh can be seen. So, you know, you've got people like Bazer and and other kind of more passive investors that are just looking to either, you know, pick the the arbitrage yield and and and try to make that out. whereas you've got others who are more fervent and engaged. They're going to give out statements of intention where they're going to vote favor or accept. So yeah, I mean there's a full raft of kind of shareholder activists that play in the field when it comes to M&A transactions and it makes for a pretty interesting chessboard. Uh but yeah, the advent of unsophisticated shareholder activism has been really interesting. >> Yeah. Yeah. Yeah. I'm I'm intrigued. I want to um want to be a part of it. I think you already are a part of it all the emails you're receiving. So >> if if these retail guys actually wanted to be sophisticated right now, what should they do? Like if they like what is a more thoughtful strategy? Should they should they like actually say we are organized? >> I mean to be perfectly honest with you, I'm probably not going to weigh too far into giving legal advice to the speaking. No, but I mean one of the great hallmarks of um of these kind of shareholder groups is the fact that they don't get legal advice. And >> you know if they if they were getting legal advice, they'd understand the veracity of some of these documents that they're passing around. >> Or if they were getting legal advice, they'd probably understand that um you know, the the the consequence of what they're doing actually gives rise to liability and exposure and to obligations. Associating in this way, if you're over 5% means you should be lodging a substantial holding notice. I mean if you look at was it Deutsch Balon and uh and Ken even acknowledge the fact that by virtue of their kind of joint position had a substantial hole. So um there's the one thing I'd probably be suggesting to shareholders who are looking to try to play in the space alongside u more sophisticated or kind of wellworn players is be getting advice. >> No, it's not going to happen. They might watch a few parties or >> Yeah. Well, if they were watching this one and hoping to get the inside steer, I apologize. >> I almost look at the camera for that one. >> I almost think the more irrational the shareholder base like the higher probability they actually have to agitate for an uplift as well like absent independent expert report like the more irrational they are like the better their chances here are. I'm drawn to the situation because of their irrationality. But but but but the thing is you're talking about what a disperate group of like 20 plus shareholders, right? And so doesn't take much for that number or that shareholder percentage to winnow and therefore them to not be as formidable as they once were. And the closer you get to the scheme vote, you know, if the companies are confident in the valuation, the experts report and the experts assessment, the shareholders are going to realize that if they take this thing all the way out to the line and they drop the ball, the share price plummets, right? What are they going to do then? Yeah. So the bluff calling the bluff thing that this is why the irrationality thing like I actually think a lot of them will think that on a standalone basis if the deal goes away that their shares will be worth more. Like I I do think a lot of them believe that. So I don't I actually I take them at face value that they will vote no. Um I don't I don't like I do think there's a proportion of people who will you know want to run the gauntlet and it's kind of a bluff until the last minute or whatever. But I I do think there's like a a sufficiently large like portion of people who like we we'll do what you described in 2015 like you know won't know like and um >> that was a very aggressive play by um by SGH >> and uh I think they thought well you know let's just pay 2 cents to to play and >> and see where this goes into a BA. They vote this down and yeah, sure there's, you know, the minor victory and maybe they're popping procco or whatever, but as soon as they get to the next cap raise, what's that going to be at? And you know, where does the price go after that? >> All right, James, now to the part where you're probably not going to give us anything because we're going to ask for your opinions on a bunch of corporate actions. And um >> I can't help myself usually, but I'm going to be probably quite restrained. >> Yeah, it's probably wise for business, but we're it's not going to stop us from asking you. Grade control, mate. We got to write rate a few things A to F. >> Yeah, we've got a few topics to get through. All right, let's start this one up going to the majors BHB and Rio. We're going to grade them in the context of how they're sort of looking following this Anglo Tech deal. So, take it any which way you like. Trev, do you want to kick us off? >> I think they've Yeah, I think I think it's an interesting thing to grade like those guys because tech Tech and Anglo were the two like they're the in the cohort of the majors. is the the the targets the most you know the targets in recent history we saw that when when when Glen core tried their luck at tech and we saw that when BHP tried their luck uh at at Anglay. So part of the scuttlebutt also regarding Jakob's departure of Riot Tinto was um yeah the fact that maybe the board had a a more progressive view on doing doing a big deal and one of the big deals that was on the table that could have been acted upon was was the tech opportunity and you know that wasn't of interest to Yakob apparently and then you know if you think of the same kind of dynamic with BHP they botched their attempt for for Anglo right so I think I think I think I have to rate both of them a C because um these are two two mining behemoths, B P B P B P B P B P B P B P B P B P B PHP Rio and um when you're a behemoth, you've got inertia and inertia is the energy of just being opportunistic in deal making. Both organizations um I think should figure out how how they can be more nimble to the big opportunities and act decisively. Like I don't I'm not going to not going to like rate them poorly for not doing a deal. like you know sometimes not doing a deal is the wise thing to do but but here we might have effectively a deal that they can't get in on which might mark multiple lows and they could have been opportunities for them to get um you know get access to the assets that that would have meaningfully move the dial for them. >> Yeah, I had a C for this one as well. M&A time and time again is value destructive in any industry let alone the the mining industry. might not be good for for business, James, but I think that's that's sort of grounded in in a lot of sort of history. The way I kind of see it, BHB is kind of interesting. Perhaps Mike Henry had one eye on on the door already given he's sort of signaled he's at the end of his tenure. And on the Rio side of things, they were clearly uh at a clash at the top level, hence Yakob sort of left. So, I had a C for this one as well because can't criticize a company necessarily for not doing M&A, but I think there is a bit of a risk that they they look a bit roofly on um tech in in particular. That said, it would have been pretty hard to get get a deal done. >> Care to chuck one in there? >> Well, I mean, it might be a C for now, but they might be allowed to reset the exam, right? You know, >> exactly. Exactly. You reserve your full grade until the end, but they're going to inevitably pay probably pay more than >> Yeah. I mean there there's for sale signs on both companies now and there's you know there's a an opening price. >> Next up Guinea they are demanding that Rio builds downstream of the processing or some sort of pellet plant in country. >> I was I was struck by some of these comments from the Ganaian minister Isma Nab. Here's a couple quotes. We want to build a refinery um in Guinea. That's our game plan. We're going to build refineries be it for Borite or for iron ore. said Guinea is like the west of Australia, like the pilgrim 50 years ago. We want to develop, we want to transform locally. We want to use this money to develop other sectors like agriculture, education, infrastructure. What do I grade it? I think it's a B. Um like I think I'd do the same if I were the Canadian government on this one. Um you absolutely want as much value out of of the process. I think it's you know like we Western Australia never got as far as um having having much like building downstream for our iron or exports. Maybe Guinea will have a a bit more bit more of a chance of uh capturing some of the value ad that comes from the the steel making process. >> He's definitely pushing the boat out, isn't he? I think he's um he's searching for more relevance since that transition from Biden to Trump. >> A lot of a lot of sort of interesting developments across Africa. I think the timing from Guinea is quite right. You know, they've they've incentivized $35 billion of capex in their country. That is like I think if we talk about every bit of gold capex we've ever spoken about in this show that combined doesn't even make up the money being spent right now to bring Simand do online. So it's it is huge and obviously they want a bit more of it. You you struggle to give it an A because I don't totally see that the benefits run down to the average Ganaian person just yet. But the the statements you read out there and the the broader speech that was given, you know, the the intentions were quite pure. Let's see if they can sort of follow through on this. I don't think Rio will be shocked by this either, though. And they've sort of signaled that they're going to do a study and look at a pellet plant and these sorts of things. So, we'll sort of see where it ends up. >> I got one for you now, mate. Um, surprise you with this one. So, Aloca suspending production activities at Cataby and um SR2 K due to subdued demand for mineral sands. So, Aloca stock fell 13% on the day on the focus charts you can see up mineral sands market is in a tricky place right now. Aluca is doing what they they need to do to restore market dynamics um to be a bit bit healthier in their ziron rout synthetic root kind of markets. But what's not obvious when you just look at they've got got $1.2 billion in inventories on their balance sheet. So that's this is this is finished product effectively that's just they've just been building up and accumulating because the market is not is not in a place where they can sell it for a a price that is higher than their cost. So they've just been building inventories. Um that's it's a it's staggering number staggering number. You know you know the market's pretty in a bad place just by looking at Luca's inventories at any point in time. >> Is this you stoking the market for Linus to make the bid? >> I think Liners should. I'm I'm all I'm I'm totally all for I think the uh I think the industrial logic of that is very um yeah so any any I I look into this one I give it a a B. Hands are tied. They're doing like supply discipline is required. Um you know they're doing what they need need to do and they're a big enough producer to have an influence here. >> Yeah. I mean it's not all bad because they have this quote unquote inventory. They can still meet their contractual agreements. It's not as if you just turn off the mine there and your cash flow kind of stops. Albeit not the best cash flows. So, >> it's it's cash positive in a sense. Obly the share price comes off massively, but >> they've already been showing supply discipline in the fact that they've clearly been selling less into the market by virtue of the fact the inventory has been building pretty substantially. So >> yeah, >> like it's just um yeah, >> the the real negative read through on this is these products the you know the titanium and the the pigment ultimately and the various other downstream byproducts uh you know they strongly follow demand for construction for building for paints for consumer goods around the world. So, it's a pretty ominous warning of the direction the world is going if demand for these things is is drying up and being awfully weak cuz it's traditionally just kind of followed global GDP in a sense. So, that's a bit of a dark cloud on on the horizon, but a bit out of our pay grade here. >> All right, Genesis received approval from the mines department for stage one mining proposal at Tower Hill. So, I read the announcement headline, got excited. Genesis got an approval to to relocate the train terminus. Tower Hill's underway, but it's not quite that. This is approval mine stage one which is just mining to the west of the train line there. There's there's actually an existing pit there as well and they're doing what they can without you know while the trading line is still there. They are advancing agreements with rail users to relocate effectively you know shortening the rail line as required for stage two and they're expected to be completed by the end of this calendar year. I rate it a B. Um I think things are moving in the right direction. Tower Hill seems to be on track. So >> yeah, I gave it an A. I think they they always had Tower Hill just far enough in the distance so the people didn't really bake it into the assumptions and didn't kind of care about it, but they're clearly moving one step closer and they've got big ambitions which they're um delivering on bit by bit and you know this is stage one. Stage two will will come in in due course. >> Do you remember they'll kind of get there? Remember back in the back in the battle for Leonora there like Genesis Genesis's original agreement well I say original but it was once they once they agreed to buy the project instead of doing the scheme and spin out. So in that in that deal there was it was like $60 million of Genesis shares back then they were a dollar each um 60 million in Genesis shares which were contingent upon first or being produced out of Tower Hill because there was the uncertainty. So that was a kind of contingent consideration part of the equation that disappeared when Silverle came in. They just they brought that forward to kind of compete with Silverlac's um bid and all all the likes. James Nichols, uh what do what do you what do you think of, you know, contingent forms of consideration and and I'll I'll even speak a bit more broadly than just contingent consideration, contingent value rights in >> Well, no, I mean I think you can call it contingeration. Let's not get involved in taxonomy. But yeah, I mean it it's an interesting it's always an interesting um proposal. I mean I talk about it a fair bit. I think any deal team uh when you're trying to come up with ways to bridge the value gap, you're always banding around these kinds of exotic forms of instrument that are going to solve the day and make everyone seem really smart. But before not, you've just agreed to either, you know, split the difference or, you know, bring forward, as they did in that that instance, the contingency and just pay it out. Um, that's not to say that there isn't there isn't room for these forms of instruments. I mean, indeed, they do what they're designed to. they put a value on some form of contingent liability or asset and try to um ascribe value to that or you know deduct it from the the overall purchase price. Uh it I just find it interesting that that kind of divergence in the the really small cap space when you've got these reverse takeovers and you're issuing basically almost 100% of your stock in performance shares or milestone shares. Uh and yet by the time you get to the takeover um the whole concept of of this as describing future value for upside disappears and no one's interested. So it just seems to me that there's this kind of cognitive dissonance. >> Yeah. >> Yeah. >> Beautiful. >> Sweet and sour deal. >> Sweet deal sour deal, mate. Oh jeez. I got I got an interesting one to kick off. You see this uh this back announcement with Jinder Lee. So Jinder Lee, owner of the McDermott lithium development project in the US. They came out with this announcement. They're planning to be part of this kind of dispack deal. Ginder Lee would effectively emerge as an 80% shareholder of this new co which would become >> still doing dispacks. >> Sorry, >> they're still doing dispacks. >> They're back. >> Yeah, these banks are back. It's >> 2025 is 2021. Yeah. >> Um yeah, so Ginder League would emerge at 80% shareholder of new co which would become NASDAQ or NYC listed and that would get 20 to 30 million US cash injection from the spa sponsors and new investors. So that that new code would effectively become the 100% owner of McDermott. The market response was so interestingly on the focus charts you'll see the stock shot up 50% to 75 cents. It's since peeled back most of those gains. Keep in mind like Ginderly is like a mere $40 million market cap right now. On the one hand you could you could see this transaction as like a way that they can raise double their own market cap with only 20% effective dilution. On the other hand, it's a spa. This is the best capital you can find for the project. So, I can't help but give it a C. >> I I gave this a sour deal. I thought I thought that's >> Sorry. Sour deal. Sour deal. Yeah. >> Yeah. Uh the the big headline US $500 million value ascribed to Ginderly's assets just made me laugh. The the whole kind of deal me a bit of a yucky feeling in a way. Not not totally to degrade Jinderly and how they've gone about things. You you sort of find the capital where you can get it. But yeah, Ginderly has kept like a a super tight uh register and share count for years and years and years. It is kind of an interesting step in the direction that that company's going, but Spaxs kind of give me an icky feeling. So, it's it's a sour deal. >> I can keep my uh deal assessments to my signal chat. So, >> get that as. >> All right, next one. We've got Alcoa. They gave $46 million to the private Western Gas. This is in the context of uh downstream aluminina uh business being incredibly energy intensive here in Australia, WA specifically, and them needing to source reliable lowcost energy, sweet or sour deal. >> Well, this is this is for like this Western Gas, they've got this equis project. They're basically just giving enough money to advance a bunch of studies and the likes and and they've foregone a little bit of of offtake should it actually eventuate to to development but development back in the day of this project was like penned at like five billion up to $5 billion price tag to actually develop. So it's know it's big big project and alcohol is doing something kind of interesting which is they're playing very early to in the in the development phase and to kind of get wrapped their hands on some degree of of uh of gas offtake and I've said this before on the potty like you can see it in the um independent expert report of the scheme booklet with with with AWAC and what with aluminina and and Alcoa a $1 per gigel change in the gas price has a $2.5 billion NPV impact on on AWAC operations. That's enormous. Um I expect I expect Alcoa to get really really active in this kind of like gas space because their their uh contracts all roll off with W gas all roll off by 2032. So they need to be recontracting urgently. >> Yeah. Very very sweet deal. It's good. It's not just lobbying and and meeting Roger Cook and the like. They're actually putting their money where their mouth is because 2032, like you sort of say, will be here before you know it scheme of getting these sorts of projects off the ground. This is very early stage. So, good on them. All righty. >> You mentioned a deal, mate, that uh had one of these non deal road shows involved. That was of course the um Aluminina uh non-deal road show one month before the deal was announced. So, the topic here is Mary Macka. They came out with a non-deal road show and it was only >> point AFR come out with a headline and saying they're doing a non-deal road show. >> It was only a couple slips later that the capital raise is revealed $80 million. Now this is kind of important for them because their uh their listing in on the ASX hasn't taken off at all. >> I don't think they I don't think they've got any no one's shunted their shares over or whatever like >> Exactly. So this is trying to kickstart it given that all the >> you need to do a cap raise for liquidity. Yeah. >> All the money was raised XC Canada here. The non-deal road show itself is the biggest oxymoron I think I've ever kind of seen. So sour deal on that front, but sweet for them getting the the ASX listing off. >> Yeah, mate. Um I I I just give AFR a sour deal. >> What are you doing running that story? Any views on that one, James? >> Oh no. I mean I'd probably rank you money of mine AR and then you know deal room. So >> yeah. Yeah. Well said. Well said. Well, >> yeah. You mean data room? >> Yeah, data room. >> I don't read the Australian. >> That's all right. Make a mistake about that. Um, Elemental Royalties merging with EMX royalties, creating a $1 billion royalty code backed by Tether. We talked about them buying the royalty last week. And, you know, not long after that episode went live, we found out they're merging with the mighty um EMX. This is this is just awesome. I give it an A. This makes heaps of sense. Um and like yeah like also coming together lowers the cost of capital having tether there lowers their cost of capital like it's going to be an inquisitive team. Um yeah really really interesting kind of capital behind it and uh scale kind of helps their their multiple >> totally this is absolutely a a sweet deal. I I would hazard to say that Elemental Royalties is one of the most interesting companies in the mining world right now given everything that's going on and how we spoke about the cost of capital last week and these guys are just checking box after box in making themselves a sort of more relevant company. So awesome awesome deal to to follow and good on them for for getting it done. Keen to see where it goes from here. >> I agree with a sweet deal. I know some of the people involved. >> Nice. >> Yeah. All right, last one. And this one is super interesting because we've spoken about New Foundland Land with a couple people and this company divides opinion. >> NFG NFG >> NFG. Someone told us NFG is a ticker that it should fit no effing gold. >> Anyway, they >> it divides opinion though. So people have a very sort of contribute to the one you've just laid out. And it's not every day that you see a developer come out and spend $300 million buying company. So I was a bit takenback by that, but once you sort of peel away and and look into the details of this deal. There's there's a bit going on here. So you think 180ks between projects can't really be synergies, but there kind of is because the dirt is super high grade. Both of them are relatively near-term to production. So the company being acquired, Maritime will be producing next year and new found the following year. And there's a plant that that Maritime previously bought. So there's a there's a fair bit going on here. Looking into the details on the um the hammer down asset that Maritime has. They were flushing through US750 gold price on that deal. So that that's a conservative gold price to run and in the context of that the cash flows which are meant to come online next year could be pretty handsome. So my initial take was sour deal but I think there's reason to give this one bit of sweetness. What do you reckon mate? Um I yeah I'm interested in in uh new new found gold purely because like that is it's been a mad underperformer. It was a super hype stock. It's come back to earth after the I think their maiden resource came out like three or four months ago. Um and it's just one of those like gold names where there must be something of value there. Now they've bolted on with this other thing. Um what like what can you actually wrap a mind plan around? It's pro its valuation is probably like it could actually be in the value area after being in in the not so value area historically and that's why I think it's worth doing some work on. I'll give it a sweet deal. >> Very good. All right. Last but not least, hidden gems. James, is there anything that has stuck out to you lately? Podcast, restaurant, holiday destination. Well, I mean, I I late late adopter of technology uh by all accounts, but I I did download uh Chat GPT 5.0 the other day. >> You're about to tell me that you're a lawyer. I just just don't chat GBT. >> No, no, no, no. I mean, I don't use it for professional purposes, but but my um it it did amaze me. I mean, we I'm off to Portugal next Thursday and uh and we're spending one day going out of Lisbon up to this place called Cra. It's got like four different palaces. There's, you know, Hannah Palace, Monserat, um Quintadel Regga, Relegare, and then um the Moorish Castle. And it's it's hard, you know, you're going out there for a full day, heaps of tourists trying to work out what to do, and you read online, and everyone's just complaining about the sandwiches. Um, so I I asked Chat JPD, I said, "Chpd, can you plan me an itinerary when I need to leave the hotel in a car to get up to CRA to to visit these palaces? Which ones should I prioritize? Should I go see all of them?" >> Uh, and I want to be home by this point in time. Anyway, came back, perfect itinerary, absolutely perfect printed. I mean, I haven't gone yet, so proof will be in the pudding, but um, at the same time, >> yeah, firm believer. Um, so yeah, high recommendation to download ChatgBT and I'll give you my recommendation on Centra when I get back. >> Keen to hear that, mate. There you go. >> Very much looking looking forward to hearing that one. How about you, mate? >> I do have an interview that I listened to a little while ago and it might be one of the best interviews I've ever listened to. Grant Williams interviewing Tony Deedon. I've listened to it a couple times. It's picturesque and the content is super ripe. It's probably a two-hour interview and the the the content is just so so rich. Tony talking about his investment philosophy kind of creating kind of enduring wealth in a very downto- earthth non-hyped kind of manner. Well worth a watch. We're chucking in the I've been pretty crooked the last week, but you know what? I'll shout out to Antico. The best loar just uh >> sponsorship, mate. >> Stops stops you from coughing. >> You've been chewing them like lollies. >> Yeah. No, it's just uh it makes you think you're not sick sometimes. >> Yeah. >> Yeah. >> Perfect. Good spot to to leave it. Thanks a bunch for joining us and and sharing your your loyally wisdom, James. >> Very welcome. >> Anything you wanted to talk about that we didn't talk about? >> No. If I think of something, I'll come back on. >> No, you're not. No, you're not. No. >> And a massive thank you to Focus, the platform by Maritech, Sanvic Ground Support, and IMAK. Get your tickets to the conference October 21 to 23 >> Now remember, I'm an idiot. JD is an idiot. If you thought any of this was anything other than entertainment, you're an idiot and you need to read out a disclaimer.