The Gold M&A Wave Has Started (Hedley Widdup)

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A favourite guest is back – Hedley Widdup of Lion Selection. Leading one of the industry’s sharpest specialist mining investors, we …

Transcript

Travis Ricardo, we have a fan favorite. We have Headley Whitup joining us again for a fantastic discussion. We're talking goldies. We're talking big deals in the mining space. We're talking about the companies that he is most excited about across the boards right now. What he's doing with the portfolio, how he's thinking about deploying the capital that he has, the the part of the cycle in which we're in, IPOs, deals, all these sorts of things. I always I always want to ask Headley about just offbeat obscure companies and he very candidly gives me like tells us what he really thinks which I threw a few a few of them at him but we start the conversation talking about the very topical Vault Regious merger. At the time we were recording this I'm like I'm I'm certain that Vault was not trading above terms. Right now, if you're watching, Vault Reges relative share price. Vault is trading above terms, which is a bit more indicative of a different take of what than what I had at the time. >> And this was only recorded a couple days ago. So, enjoy it, money miners. Before we jump in, we got to talk about the great Sanvic ground support. Don't we Trev? >> Absolutely, mate. I in fact, I can't stop myself talking about the great Sanvic ground support. I have to I have to hold myself back because I'm elated thinking about the great Sanvic ground support. >> You know what I find myself doing? just going on Derek Herd's LinkedIn page and just seeing the latest R&D that they're doing. They're coming out with new types of bolts all the time. They're coming out with new sensors and these sorts of things to keep mines safe underground to make sure the industry keeps ticking and pushing ahead. >> You know what's around the corner, mate? Christmas in July. Now, we normally tell money miners to get their Christmas orders in for Sam. Christmas in July is not that far away. In fact, you know what? There's always someone's birthday around the corner. Mother's Day, Father's Day, all those all of those are opportunities to get your Sanvic ground support order in. Couldn't have said it better. There's a lot of supply chain disruptions as well as we know across the world. So, you'd be prudent to get that order in ASAP. Go Derek Herd and go Sanvic ground support. onto our conversation with Headley Whit. >> Headedley Whit, we are joining you in Melbourne and we um we're fresh off we're fresh off some some relatively big news in in the gold M&A space. A deal that kind of took took us by surprise, probably took a lot of people by surprise because it wasn't the the perfect marriage, but was a big marriage nonetheless. Vault and Regis tying together uh creating a plus10 billion dollar ASX behemoth producing circus at 700,000 ounces peranom but no regional synergies. What is what is a what does a script deal like this mean in the context of the framework that you know you look at the mining landscape? >> Yeah. Well, first of all, welcome to Melbourne Trev. I know JD you come here fairly frequently but um we're obviously all dressed up in our Melbourne woollies so uh you know you're here. Um yeah, interesting deal. Uh I don't think there's been any secret that um there'd been sort of various levels of acquisitive interest across the gold space and there's always names that you see pop up and then there's always names that kind of pop up and then get eliminated on the basis of oh well I think they're actually looking to be taken over rather than um so you know it's fascinating when you can think of one company uh I'd say Regis has been fingered as being involved in most of the processes for companies or projects and you know that had a that had a knock back in New South Wales. So, they probably thought that would have been in their production profile by now. Um, to be picking up production obviously makes sense with their strategic plan. Um, and it looks as if they've gone through a great many things. So, you know, to land on established production and and pull in the whole of Vault, which I think I mean, I've always wondered, I don't want to get yelled at by anyone, and that can happen sometimes when you talk about some companies, but uh I'd wondered whether there was a succession plan that they just weren't getting to. And this makes perfect sense. >> What do you think they were really going to do? Like was there ever really a succession plan there? >> No. >> No, I don't think they had a succession plan. I think they'd announced that they needed one, but they didn't have one. Uh and you know, recruiting is hard. Uh promotion is hard in terms of deciding exactly who and uh you there's always certain characteristics that you want to fulfill when you put a person in a seat. So uh you know, and maybe maybe that was part of the challenge. So, um, it's not to say that getting taken over is a fresh start, but it probably just obliviates the need for all of that to take place. >> It it felt glaringly obvious at their AGM last year, I think three or four months after they made an announcement finally on succession planning, that it wasn't mentioned. Not not once did it come up during the AGM. How many times has there been the need to replace a person at the top of that organization whether it was Silver Lake or Vault and it was like Luke's going to move on and then doesn't move on. It just I'm sure that that's come up more than once historically. Uh >> and whether that's been rumored or announced, I can't recall, but um you know it's >> so I it's always hard to know what's going on behind the scenes there. And uh why do you keep staying when you've said you were going to go? I I don't know. So um >> yeah, but it's like I mean it's a defensible outcome. You do a deal like step off stage, right? Maybe you know maybe it's in the best interest of shareholders the deal deal terms. Yep. >> There there's a premium um even though it's a you know merger of equals kind of vibe >> but but um the question I have is like is this is this the sort of deal that like really makes sense? >> What does it say about the characteristic of deal making? Uh yeah, I mean there's been a lot of things which have seemed quite synergistic like Spartan and Romelius coming together when they were both next door neighbors. Um made a great deal of sense. Uh you know you you always find things when you peel back the covers I think of assets and grind sizes and mill suitability and things like that but being so close together I'm sure there were you know that you're not going to find regional um synergies anywhere unless you're right next to each other. So to see uh a scatter of assets coming together into a bigger scatter of assets um does raise the question doesn't it? And I guess uh you know you can streamline corporate processes but I don't think that really strips too much out of a business. I think what it says fairly clearly is that there is companies in the space that just have a desire to be larger production output larger cash um growth uh and larger market cap. And >> you normally want to improve the quality of your portfolio through a deal. At least that's like a a sensible line of thinking or maybe maybe in this case like you say it's just about size for size sake but what does it also say about like I I actually think they're they're not too dis like in not too dissimilar situations both Regis and Vault they've they've they've both kind of got um yeah formidable production profiles no denying that but they've got kind of unanswered questions about their reserves as you look out into the future on their cornerstone assets being um you know coffin and and juke undergrounds and throw into that um you've got uh like sugar I think of sugar zone and McFillamies as analogist even though they're not from a production potential production perspective but you know like sugar zones being this kind of like ancillary project in the distance that maybe comes um back and I think it is coming back in like 12 months time um in a better way and then McFillam is like you're waiting an event that will be a really good project but it needs capital and time. Yep. Um, I don't know. I just think they're in similar situations and um, instead of Yeah, instead of a a deal that revitalizes the longevity of their reserves, they've kind of just it's more of the same. And what's the opportunity cost of doing that? It's it's not moving on some other undeveloped project. And I'm not saying that there is some magical beautiful project that they go buy, but you know, you've long talked about the um the the stage of the cycle where the developers just get bit up. Yep. And that's not what this deal is. Well, I think um when you run out of medium-sized companies to put together, uh you know, acquisition then has to turn its sides very squarely to the developers. So, you know, I feel that's probably a step towards that because if you've run out of you know, really synergistic things to collect around yourself, you start to think about how you can build value by adding to the portfolio. So uh I wouldn't I wouldn't say that it's always hard as well with M&A to put yourself inside the boardroom, put yourself inside the discussion with major shareholders and and what what are you achieving through a deal whether it's the combination of uh vault and regious or whether it's um you know company X acquiring surrounding company Y or something like that. you know, there are always hidden things which you're probably never going to see and you'll you'll see the headlines, but there's all sorts of things beneath this the surface. And I would be guessing that, you know, from one of those companies perspectives, it probably answers a succession plan. It it puts them in a strong uh managerial sense to say, well, here is, you know, there's an established track recorded leader um who will manage the combined business into the future. So, that's I would say that's probably a tick. Um, and you could probably also say that for something like McFillamies, for example, and I'd say that's a little bit different to Sugar Zone in that Mcfilamies is in Australia, Sugar Zone isn't. Um, it it it makes it a smaller part of the greater portfolio. So, it's optionality still sits there, but with the acknowledged challenge of, you know, you need some political things to either settle down or change direction completely. Um, for that to be developed, and I'd say they've still got a great hope that it will one day be a mine, you just need time. um over all things uh it needs time and and probably a healing and and just uh an an engagement and a serious engagement that can get you to the starting line there. So for that optionality to play out I think sitting within a much bigger portfolio makes a lot of sense there. So I think it probably ultimately protects the value of something like McFillam is a lot better than sitting inside uh just you know the size of what Regis was which is a a well-established company but I think the scale helps there. Um but then how does that turn to the developers? Well, I suppose the question is could Regis have acquired uh anything which is at development stage which would be closer. Um I think there's always a risk here that uh a mid-tier let's call it a mid-tier. I mean the global mid tier is very different to the Australian mid tier. Most of what we talk about as majors in Australia are mid-tier companies on the global stage. um you know they're they're juniors to mids uh in the Australian space and for for them to be purchasing a a development situation. They probably need a step change from it at the moment. Um it's not to say that um it's not to say that they have great development options of their own, but they've been very disciplined in building cash, maintaining margins. Uh, so for them to bite something off, um, there doesn't seem like there's too much left of a Romelius being able to purchase a West Musgrave, for example, which is just very high-grade, rapidly developable, instantly adding to their their inventory. Um, I think for them to go after an acquisition from here, it probably needs to be in the 2 to four million ounce realm and it needs to be able to fit into their portfolio to say this will be a dominant part of the future rather than just an accretion around the edges. And and when it comes to accretion around the edges, I mean, we've seen Australian mid-tiers vending those sorts of projects as well. So, that adds a really interesting dimension, I think, to what the mentality must be. Um, and as far as M&A might look into the future, >> I think what they what they I think Regis is like what's their deal rationale here? Um, I I think it's like they're they're counting on this giving them more capability to do the deal that they really want to do, which is buying the other 70% of Trop and and potentially the rest of Anglo Gold's Australian portfolio. Yep. >> And that's the that's the deal that they can do aggreatively because they've got the they've got the roofer on 70% of TROP. So, you know, they don't they're not going to have to blow their brains out because of that, you know, wonderful dynamic. However, >> can they get there on value? Well, well, it was in Jim's own words on the on the call that this gives them more capability to to do something um to do to to do bigger things. And I think I think that was a a comment that maybe things fell over with Anglo in their pursuit of that and maybe that will come become available in the future. But to just get size for size sake to do more capability I hope it pans out and I hope that you know other parts of the portfolio don't the capability in the interim you know >> yeah I uh can recall when that speculation about Regis 4 Tropicana was in the media um and I was part of a small audience that was listening to Albert Alberto Cronin maybe a week or two later and >> Melbourne Mining Club was it >> uh he spoke there but um he he did a round of institutional meetings things as well. Uh, and someone asked him about the speculation and it was like it was the kind of thing that you would kind of expect just to be put to bed straight away. Oh, look, you know, I can't comment on whether we're going to sell it or not. Um, if we do, the price has to be right or something like it was nothing like that. The response was kind of more along the lines of, well, clearly there's some leakage from our partner. Um, and it was so it wasn't like no, we're not talking about it. No, we're not going to deal. It was so I, you know, I made me wonder about how that kind of thing fell over. And so then to extend your um your line of reasoning there, you know, if this is to put them in a stronger position to be that acquirer, uh maybe being a bigger company will help because uh Anglo vending into something is going to feel a lot better about it being a uh a much bigger company with a more versatile cash flow and st supposedly stable balance sheet from size. So >> one [snorts] of the hiccups you know in in in that whole dynamic I think is Anglo's current credit rating is is tied to a certain percentage of their portfolio or certain percentage of their earnings coming from you know what they call these you know tier one jurisdictions or um you know their bond holders calling tier one jurisdictions or whatnot. So until until the Nevada development project, which by the way looks phenomenal, um comes into production, then then there's a a reluctance to actually part ways with Australia because of what the implications it can have to their their credit rating. >> Well, I think there's been a whole host of originally South African producers which have been very very keen over the past 20 years to expatriate their production, uh broaden their portfolios into places like Australia and the states. Uh so yeah, you could see that hesitancy. In fact, I think someone went on to say, well, if Tropicana is for sale, how do you feel about the rest of your Australian assets? Uh and I can't remember the exact response, but you know, it was quite well reasoned in that they look at each of their projects in a different light. And I think there was a barb in this which was that uh you know, your your production in Australia is being fed at something like 80% of the um the process capacity. How do you feel about that? And and he was like, I'm not I don't care about process capacity. I care about cash flow and cash flow into the future and it was kind of like the rest of what we have in Australia we are very very solid on. So, um I I don't know. I think simply reading um you know, [clears throat] I'm sure that Regis would be enthusiastic about those assets. And I dare say that if you took a um let's say a Romelius or a Northern Star operating attitude to something like um a Sunrise Dam um you may actually be able to find external laws to feed to it as well, which might change the face of that. It seemed like Anglo had a completely different perspective of how they wanted to operate it and were completely comfortable with it. So, didn't get to explore it, but you know, I'd say it'd be um it's always it's always fascinating to try and get in the heads of those people that make the decisions, but never easy. >> You mentioned Romelius there. They had Edna or have had Ed on the on the chopping block for for some time, but they seem to have change their tone a little bit. What do you think is going to happen there? [laughter] >> Good question. If someone's been Gunner and then not Gunner and then Gunner and not Gunner, um you got to say they'll probably just keep doing that. Um I think I mean if I step back and think well what has changed in that time Edna May has always been a fairly challenging asset. Um I remember seeing Jim Escu who'd been the the chairman of Evolution um and then lead independent director of Evolution for a long time. Um and he used the expression that it was the runt of the litter. uh and he only justified being so rude about it in that he calls himself the run of the litter in his selection of brothers and sisters. So, you know, he was the smallest even though he's quite tall. So, not to be nasty about an asset, but uh it had been difficult in that um it's not high strip, but it's very hard rock and it's a large pit. There's a big waste moving exercise to to expose the rest of the inventory. And I think Ramilius had pushed right up against that decision before the gold price had really run. Um they brought in Tampa which was a you know quite a troublesome takeover and I and I think that part of the world just sort of has a bit of a fence around it of everything's a bit prickly and difficult in terms of how Romelius has experienced it would be my guess. Um so do you want to reinvigorate that asset? Well maybe because gold prices moved so significantly since they sort of got to the end of that road. um having looked to sell it uh the people who are in the area uh and there are people with growing inventories who I think probably look around and go where are we going to feed this could we deal on that that process facility um it it it's really mixed messages as to whether or not Rmlius is there so I suspect it comes down to a number which is probably a bit too high given the value that Romelius probably sees in it for others to accept and you know anything that they might propose might be a bit too low for Romelius to look at. So, one of those tricky ones because when when a project isn't producing, well, its value is really somewhere between scrap and uh and being reinvigorated. Um, and I I suspect that Edna May has undeniable value given that there are minable reserves there or, you know, minable inventory in someone's mind. >> There's a bunch of gold under the plant. You just got to move the plant as well. [laughter] >> Yeah. Well, you got to be careful when you move something too much. It's not a demountable. Uh, it came from Big Bell initially um and sat there in the weather for a very long time. So, and I think that was probably some of the teething issues that Evolution had in the early days of the asset was putting something back together that was a Macano set had been the shed for too long. So, um I'm sure it's been, you know, brought up to spec, brought up to speed, but uh some of that pain will be flaking off again by now. So, um a reinvigoration of that could or a movement maybe you're better off saying what are we best doing in this part of the world. I mean, there is value in having a tailings dam and a and a process facility. uh it it may be that something new uh would be a little bit more expensive but last for a lot longer but then there's a question of where does the rest of your inventory come from? There's attractive things in the region you could probably truck to it. So that's a big decision even for a Romelius to say well to make that work do we need M&A um or can it be done just on what we've got and you know it's an M&A decision whichever way you look at it. it's sell and walk away possibly for a number which we're not comfortable with or it's buy something in order to make it work. I'm guessing a lot here. So, you know, don't mean to be unfair to Zeppy there and what he thinks of the asset, but uh you know, I wonder if it's in that limbo land because it it probably has been a tough period of time for making decisions about that one. It's um it's a funny time for the yeah like the the ASX gold universe landscape and it feels like you know the the new the new and emerging cohort of developers. Um there's there's something kind of like more subscale about their nature than we've seen in the past and maybe you don't need as many ounces in order to actually have very profitable business these days. We need to rethink conceptually what that means. But but there's a a limitation or at least in in the minds of you know the incumbents who who maybe aren't even attracted to to buying these opportunities um because maybe they don't fit their scale criteria or whatnot. Like you know if you if you look at the the meakers of the world or the medallions of the world like um who are who are you know the the emerging kind of next tier of uh gold producers current and future. Do you think that they're they're capable of being relevant enough to be acquired themselves? >> Yeah, it's an interesting one, isn't it? I think you got to think about location as much as the scale that they're at. Um, and they're both quite different stories even though they're fairly similar sized. Um, >> I'd probably add New Merches to that discussion because >> Yeah. >> And it's and it's probably a little bit topical in that part of the world. Um, I mean, New Merches has generated really strong cash. >> Yeah. >> Um, >> West Gold must be kicking themselves. >> Can we come back to that? They they parade they parade it like um but [clears throat] yeah I do I do think that the opportunity cost is what no one talks about. They could have bought it. >> Yeah, >> they could have but I mean West Gold has been selling ounces which are surface mining things and >> they've got agreements tied to them that they make money off the processing. So it's kind of like a well we've eliminated every single bit of downside on those ounces. They're not going to anyone else. >> Yeah. We know we'll make this much margin when they come back to our mill. >> Yeah. Um well New merch was different than that they never sold those ounces but I mean my my thought was uh a company like a new merchant doesn't own a mill has had a market cap which was quite phenomenal come back a bit now but it's still considerable and you compare that to some of the development class of companies which are talking about having you know 2 million ounce reserves at some stage uh and new merchants's probably got the cash flow to make a meaningful difference to um to the size and scale of what could be developed there. I mean, you could you could sort of say, well, their oyster uh is most of the development class uh if they if they chose to um to have a look at it and who knows what's on their mind, but I mean Mika as well um as a producer and before the gold price started to waver was sitting there was it like 650 mil market cap um with an operating team uh with an operating mine. Um, so how would they consolidate and I I suspect that either you do it in the district with things which are immediately going to feed your mill and it's not a large facility so you don't need to buy much to extrapolate your mine life. Um, given that that hadn't happened doesn't mean they weren't working on it but uh, you know hadn't got to it. I I suspect they probably had a similar opportunity maybe not quite so large scale as new merch but to to be thinking about could you actually deal up in terms of asset quality um the risk attached is that it's undeveloped but you know we might be able to solve some of the financing risk there um and when I think about that from a say a medallion perspective um they're not sitting in the merch which is already dominated by existing producers so having to pinch the scraps from between them or or go earlier stage in order to get access to something to bolster your own plan. Um, you know, they're sitting in the Forestania area with their their processing facility. They're bringing ore up from uh the south coast of WA and the reason I hesitate is because in our portfolio there's a Ravens Wood and a Ravens Thorp. And every time I speak it, I get them mixed up. So, it's Raven's Thorp coming up from the South Coast. >> Um, I mean, they're going to have a trucking model. Um perhaps they get to a stage where they go well there's there's actually enough around forestania that we could start thinking about how we process the stuff on the south coast differently. But um you know as it stands uh if they get into production successfully and doing a great job so far will they also be rewarded with a market cap which says this is just the logical acquirer of a lot of things in the district and there's I think there's a lot of opportunity around there. Um, you mentioned scale before, Trav, and I I can't think of a time, uh, or that I can recall anyway, where someone coming up with 200,000 ounces or even dealing on say 150 or 200,000 ounces and saying, "I'm going to make money out of that because I'm going to get this mining contractor to dig it up for me, and I'm going to get this trucking contractor to take it over there, and I'm going to get sell it to that mill owner, and I'm still going to make cash flow out of it." It's the gold price which has enabled that and it's the mill owner's lack of inventory uh that can be brought forward quickly which has enabled that and so it's you know it's a first. Um is that a long-term business model? Well, I think we've seen how hard it is. Uh there's a number of stories that have shown that you know you can lose gold, you can leak margin quite excessively um through doing it. And there's others which have been successful and I mean you've got to take your hat off to the new merch situation where that has enabled them to say well um that might have been a a way which wasn't historically the the most glorious way to do it but it's generated cash flow heaps of it and now we're you know we can take on other things and and diversify from there if we choose to. So uh I that that has been a fascinating way that the gold uh market has evolved. So what does that mean in terms of um development of new assets? I mean it's also probably moving into a new paradigm for financing, right? Um 10 years ago you'd go straight to the Australian commercial banks. Um I think their appetite for financing gold in Australia has been tempered by a number of the deals which they've made which had soured. Now whether that's the assets fault or the hedgebook's fault, you know, there's been varying contributors, but um we can see appetite from um streaming companies, royalty companies. There's been some big notable deals uh in Australia and whether the Australian market lunges towards that, it's undeniably a competitor in the financing space, which you know adds a a great deal of competitiveness. Um, and in fact, I mean, we've seen bond financing come into the space as well, which I think is fascinating for a development stage company. So, >> Trav, I got a quick one for you. You know, in the mining space, getting the rock out of the ground is one thing, but getting the best price for your product is a whole another thing. And the awesome team at MetalsHub are solving this problem. Be it the lithium space, the tungsten space, the cobalt space, you name it. A lot of people are flying blind out there. And Metals Hub is addressing that. Well, it's because those like these niche commodities like what what even is the real number? What is the real index? And producers are are selling because there's ambiguity. They're not getting, you know, the full margin they can for their product. MetalsHub changes that, mate. And it completely makes sense why. And you're already seeing some of the big guys move forward and adopting it. Think of Liontown, Albal SQM. They're moving their sales towards the MetalsHub platform. >> It's true. And we know people in the mining space, they don't want to be the first mover. So you can have confidence with a lot of other players doing it already. Not just the lithium giants. You're seeing it across different commodities. Like I mentioned in the graphite space, you can take Northern Graphite as an example as well. They're jumping on Metalsshub. They're running structured bidding events. And effectively, they're running a digital auction to get the best price for their product. >> Auctions maximize outcomes. I learned that one in economics. Removes the guesswork, JD. So stop leaving money on the table. Start trading with the same sophistication as these guys. You've got to be on the platform. You can check out a master class on their platform done with the team at limetown as well at metalsshub.com/moneyofmind. The financing landscape is ever evolving. It's it's always changing and always has been that way. Another interesting one is MGX and Tanmai what they've done in a slightly different part of the world up in the Northern Territory. And interesting with MGX bringing a big balance sheet to to the table. keen to hear what your thoughts are on on how that kind of progresses because to the point of of scale that could be pretty decent scale to it come online smoothly. >> Yeah. Well, I I think I mean Tani has been one of those ones which people have been sitting there wondering about for a long time sort of dominated by a little company and had various companies deal in. Uh I can remember a presentation long long time ago at Diggers and Dealers now where Peter Cook got up to speak and he'd just been stiffed on a deal uh in the Tani by Northern Star who'd sort of trumped I maybe not by too much but um and his expression and hats off to Cookie because he has a a long list of marvelous expressions and I I wrote this one down at the time and he just said we'll let sunshine be the disinfectant on that one. [laughter] I've got no idea what that was intended to mean, but uh it was extremely memorable to hear him uh sort of say that quite um I don't know about bitterly, but you know, in the way that Cookie is capable of saying, "Let's just uh you know, we'll we'll just remember that forever, won't we?" Um, so it's it's an asset which has obviously got some appeal because it had had the West Gold of the day uh with Cookie at the helm and Northern Star of the Day uh with Bill Bman at the helm uh looking at it and um and now you've got Mount Gibson in there who I think for a a long while had been generating a cash pile from a you know a difficult iron ore asset which they've made a fist of um and determined to move into base or precious metals um at their own declaration. and they've, you know, they've put a few chips on the table. So, I'd say they've looked at a lot of things. Um, I think there's probably an allure of gold for them as well. It's an unusual company in the way that it's owned and probably some of the influences come through pretty strongly there for the strategic nature of being able to produce gold. Um, so I dare say that's that could have a bit to do with it as well, but strikes me as a company which definitely brings operating capability. Um, they're quite confident about about that. uh and you know they've got financing capability to be able to be patient and persistent with an asset which has probably confounded a few others uh over the journey and I think it probably does require some uh some patience. So >> there's some refractory ounces there, some oxide ones too, but lots of refractory ounces there. >> Um this theme of refractory ounces being uh being cool again is is is uh it's it's back. It's a maybe it's a bull market thing, but it's back that you know there's no ounces that are uh >> yeah completely untouchable anymore. Um you know Roxy's marching ahead and they've got a formidable inventory. There's no denying it. But but uh but uh um uh you know the inventory requires some alternative processing that you don't always see. And they're not the only ones. There's you know this is this is uh this is this is the new the new era. >> Yeah. Yeah. Yeah. >> Are you more open-minded about refractory deposits yourself? >> Uh [sighs] when we assess the risk of a project, uh we work right through can you can you create a product? Can you make a product? As in can you separate the interesting thing from the rock? Um and can you sell the product? So and there's a there's a big difference between just having a product and being able to sell it. So and I think in the refractory space that has moved considerably over time. the threshold of what you can what you can capably sell cuz for a lot of refractory projects uh the approach has been to use flotation to to float sulfide um it's often rich in arsenic which makes it difficult to transport difficult to sell um you can blend that but you know if you need if you need to be susceptible to blending you need someone else's product which means you cop the discount they cop the premium so I think that has always been a bit of a challenge that I I I get the impression that appetite for refractory sulfide concentrates uh is is pretty reasonable and that's probably driven by the gold price more than anything but um the ability to transport it to people who can smelt it and refine it is still you know the thing. Uh so uh we we still are a little bit circumspect on looking at refractory projects and it's you've got to separate yourself as well in the kind of investor you are if you're the kind of investor and this is what we are that we would invest and and our base case expectation is that we will still be there when they move into production and hopefully you get the rerating and through the d-risking to that point. Um there's an alternative uh which is that you say well this has got a really nice promotable story it's got a strong promoter up front. Um, and that's a good reason to invest, but then you're needing to pick your exit point with a little bit of market timing and other things. And we've we've always found that difficult to do. I mean, it's easy to look back at something and say, well, uh, when Rox's management changed and, uh, the the story promotion changed a bit and they they basically just said, "Right, we're dewatering. We're going into this. We're financed and we're going." The stock responded positively. Um, but that doesn't derisk it. Uh, it it would have been a good trade. The question mark still in my mind is how's it going to look? What are the problems going to be? What are the challenges going to be? And there are always problems and challenges developing a new gold mine. It's not a rock specific thing. Um it's something that we've got a little bit less confidence on is refractory. Now um good technical people and sufficient balance sheet can probably get to the point where any of those challenges have a little bit less of an effect on share price. Um so you know I I wish them the best and I I really salute the way that they're going about it. we we look at a lot of refractory things and sort of have that that concern. And I I suppose as well when you're talking about risk in a project um if you turn on a a gold mill and I remember Peter Bamford um who was the engineer that originally sat across the development of Andy Well under door um and I said to him how long is it going to take you to commission the plant like from the point where you're you're confident that everything works. So then you put in gold bearing material. How long does it take you to get a gold bar out? And he said three days. I think it took a little bit longer than three days, but you know there is not a long residence time. So from the point where you take a ton of ore out of the ground and bring it to the surface and crush it, put it in the process facility, uh it doesn't take you long to turn that into a very marketable product. And you know, we've said before that you could take gold out onto Colin Street and sell it. Probably gold dust better than gold bars. doesn't mean I don't know how you get liquidity for that on Colin Street but um a concentrate is a completely different marketing situation. So uh you know it is something that's going to have an upfront payment maybe when a truck goes out of gate uh and then there's going to be a rectification that takes place trailing payment perhaps um adjustment for price along the way uh maybe 3 months later. So you know that always comes into our working capital concerns with a refractory project uh because it means you need to set it up much more like a base metals mine than than like a precious metals mine. So I suppose that that enters our thinking as well. So presented with something which is a copper project versus a refractory gold project. I I suspect we'd probably lean towards the copper project. >> Working capital the the scourge of the the mining company that nobody ever gives gives enough credit to. >> Well, no one sees it until you fall flat on your face. So >> yeah, silent killer. What are you most excited about in the in the exploration end of town right now? >> Oh wow. Uh we got a couple of things under our belt in exploration that are quite early stage. Uh and there's and then there's I suppose a a couple of others in our portfolio which are also exploring. Um, and it's I'm sorry I always tend to talk my book with those kinds of questions cuz it's just I know them far better and you know the reason we're excited is cuz we're owners as well. So I suppose from our portfolio um we're we're invested in quite a uh we've got quite a large percentage holding in an unlisted company which is an exploration company. It's called Plutonic. that company has uh conceived an idea of a new district which has been unrecognized and it's basically formed by uh younger eastern Australia being pushed under the older western rocks and this happens very close in this case to the Northern Territory Queensland border. Um the rocks at the surface are just boring sediments but there are quartz veins sticking out which have small amounts of copper and gold in them. Um and they shouldn't be there. They shouldn't be in the Geioena basin. So, what does that all mean? Um, we're going to drill uh six holes this year and and hope to find out. So, the reason I'm excited about that is whilst it's incredibly risky, it is absolute frontier stuff as far as exploration goes. Uh, if there is gold and or copper that comes out of a diamond drill hole in that desert in this year, then it puts a new district on a map. Um, and that, you know, as far as I've never been too much of an exploration pur Puritan as in, you know, we've we've got to spend as much money as we can in order to kill these projects and we'll definitely find something. It's I'm I don't want to see anything wasted and I don't want to be drilling holes just to uh just to kill a project. This has got great fundamentals to it for the stage it's at. Uh, and the outcome is huge. So, we're not looking for 50,000 ounces out there. We're looking for a new district. And if there's a new district, then it could have multi- deposits in. So, that's one. um probably two others in our portfolio and I'll be a bit quicker about them. Um Sunshine Metals uh is something which we've been involved in for a few years now. Um backed them when they bought a almost complete base metals resource and what they've done is made really sensible additions in the Charters Towers region. Um Charters Towers is a prolific medals district, gold and base metals. Um, and I think if you mentioned Charters Towers in Perth, people would probably wonder which part of the gold fields it was in and they just think about the wrong goldfields, right? So, it's up near Townsville. >> It's got a famous history in it in its own right as well. >> Yeah. Oh, there's some fascinating stories from that part of the world. >> Um, and Sunshine has done a great job of pulling together some I mean really interesting things there. So, they have a base metals largely resource at Liontown. It's got a very distinct gold only portion and they went looking for a place they could toll treat it and some maybe other surface resources. In doing that they found a thing called cibble which looks a lot like pingo. Someone on hot copper branded it chachingo because in buying something for $125,000 it added about 50 million bucks to their market cap. Um and that looks I mean that's an incredibly exciting project but it now sits within a an almost producer. They're marching towards smallcale production from their their gold owners zone. >> Being the first asset for evolution for those and does see them buy the front end of a plant pretty recently. >> Mount Moss which is right next to Cibil/chachingo deciding whether you take the nickname or the real name. >> Yeah. So there's a bit of trucking involved. Uh but and it's a small scale startup. So but the interesting thing is you dig a little bit of gold out of the ground at Lion Town. Um, and in doing so, you leave an open pit, a portal, underground access, and you've mined an underground panel, and that's right next to the rest of the VMS resource, which is about 6 and a half or 7 million tons. So, um, they they'd have a capitalized underground mine. So, whatever it cost you to get underground, is it, you know, 30 million bucks to do all of that and establish a site, that's done. So, if you then wanted to finance the the zinc, copper, gold mine, um, you can take that out of the capex. uh they would also then have a a processing footprint. Um and you let's say it takes them three or four years to get to the point of saying this is what we'll do with the VMS. Um do you develop a process plant next to it? You've got time to permit that if you want to. You've also got the option to be trucking to Mount Moss, which interestingly has um I mean there's 4% copper and 8 or 10% zinc kits on that license. So um the thing that's always intrigued me about Damian Keys and his team is that they have been really really good at taking reasonably datari um projects and pulling it apart and putting it back together. And often it just looks so much better when they follow the instructions um to to to rebuild what's in the data set. So he was he was one of the geos. I don't know who was the go. Uh I I say it was Damian. Uh there was probably others involved that um did the same thing at Penny West which ended up getting sold to Romelius would have been worth a fortune now. Um but it sold for a fortune compared to where it started and and what was invested in it. So I got a lot of time for the team there and I think their geological capability is pretty special and yeah look so I'm very excited about Cibil as that part of the um that project. It's unusual that you see a a company which is on a development trajectory and also has a you know could you double the value of a producer by discovering something. Um there's not many that I can think of. So Sunshine might be one that that fits that bill. Um and the last one I'd mention is Kernbury which is in New South Wales. It's been quite quiet, but uh you know, we we continue to sort of prod and talk to the management and uh you know, they have a portfolio across New South Wales which was painstakingly pulled together. Um it's like three or four companies in one. Um the issue really is you've got all these opportunities, what are you going to do in terms of working on it? So, um I think they've I think they've got to the point where they've done enough to get their heads around all of that and I'm looking forward to what that means in 2026. So then the fascinating thing I suppose about all of that is um Plutonic very early stage. They got to acquire all their own data themselves. Kunterbury sits off the back of a lot of work which has happened in New South Wales. They don't have to establish a tectonic model. They're just they're just there done great ground acquisition and and Sunshine it's more about using all this old data pulling it apart and reinterpreting and then coming up with the prize at the end hopefully. So they're three very different scenarios. Um, but you know, equally exciting along the way. >> Can I can I ask you just just going to Charles Towers, it's a region I don't understand very well, but I just remember being so intrigued at City Gold. What is the story there? Like that resource can't be real. Um, well, I've never done due diligence on City Gold to the extent [laughter] that you can pull it apart and put it back together again. But uh yeah, like it's an awful lot of ounces that are very high grade that doesn't seem to have gone anywhere. Um >> is it is is it directly under the town? Like I mean, but it's not like a real I mean that jaw has got to be a joke. >> Well, cuz you got to have a probable a probable like >> I I could give you a very different answer if we'd been sitting around a campfire um having beers for 3 hours. >> This answer needs to be one which is public. [laughter] >> I mean I mean the >> take the cork out. just smash the top. >> The market thinks it's a joke for the market cap. It keeps, you know, that's the Yeah. >> Well, look, there's a couple of things I'd probably say. First of all, um the licenses that they have, I think, are undeniably mineralized. Uh >> there is a I've stood not at the portal, but I've stood at the fence looking through the gate to the portal. Um and it's, you know, it's been there for a very long time. So, there's been there's been material mind there for a very long time. They own all the ground uh there. So big tick. Um the drilling that's been done, there's some quite deep drilling. I think it shows that the system persists. The modeling and modeling is always something where you know geologists will give you an answer that's you know variable. Um my answer if I was to model that would probably be a lot more conservative than the answer that they're giving. Um but whatever you think of it uh you know there are jo requirements. They're overseen by regulators and the regulators don't seem to have come up with too many complaints. So, um, you know, if anyone wanted to peel the top off that can, I'm sure there'd be number of worms that had come out. But, you know, until someone does, I suppose we'll wait to find out. I I got to tell you though, I mean, I would I would love to see an aggressive exploration budget applied to that. Um I think if there was an opportunity to do that uh in a complete reset um and you know bring in bring it to a situation that is capable of applying a very serious balance sheet to it um I'd be very enthusiastic to see what would happen there. >> Yeah. So so these these pingo analog type of deposits they're epiothermal deposits right? Yep. >> So >> city gold not >> city gold knot. No. Okay. And the the the other one that's kind of just got a renewed lick of paint is um GBZ Resources. Have you been following that that one? >> Yeah. Yeah. Well, that's that's epiothermal mineralization and uh >> is it Twin Hills? >> Yep. Uh and >> there's another project as well. Um, >> so for a very long time >> and I think I mean we looked at that project uh that set of projects ages and ages and ages ago and it was one of those situations where you go well >> that looks geologically interesting but I'm just not getting led >> to water as the horse wants to be. >> Yeah. Um and and I think you know whenever you assess a company and you might have a fairly strong technical view that's positive but you ask the question of um the last few times that this team has tried to raise money it just hasn't worked. So how is how is getting invested now going to going to see a different future. There's plenty of good projects inside of structures which don't work for them and and people often sit as the filter there. um and they could be very good technical people but just have not managed to raise money and it's a lot easier to raise money in a market which is buoyant as well. So you know the first time around for that company I think it probably had a couple of things that were just holding it back or not allowing it to float as as readily. Um it's got a great team now who I think understand marketing very well and they've done a great job of that but they're also technically strong and they're bringing all of the technical elements to light. They look as if they've done their own mild reinterpretation. I mean, they haven't had to change the world, but um they they were able to refinance or the situation was able to be refinanced. Uh such that you removed a a pretty significant um debt obligation via a con note and straighten out the whole balance sheet so it was just straight equity. I think there was a lot to like about it at at exactly the right time. >> It had nearly a 10x run after all of that. Pretty wild. >> Yeah. I I saw it happen and thought, gee, you know, silly me for not thinking uh you can put 12 million bucks into something and it just goes 10x like that. Um >> that was when you get rid of the cone. >> Yeah. Yeah. Well, I mean, it it's it suggests, doesn't it, that if you have enough of a balance sheet of your own and you can fix someone else's balance sheet, you may very well be able to bring the market to bear on it. Uh I I don't think it's going to be that easy over and over again, but um you know, it it suggests that it was probably held back by its balance sheet. Yeah, the Apollo group have a bit of a kick to them as well. They know what they're doing. >> They give it a definite stamp of approval which I think a lot of people would follow. Um, >> and I, you know, in this market I we do all our own technical due diligence. So, we we don't sort of go, oh, do they like it? Do they like it? But there are a lot of investors around that probably follow that lead quite strongly. Um, and in a market as when it took place, you know, those investors were sitting up waiting for something like that. And uh I think I believe the raise that took place was quite tight. So you know there was there was no room for anyone that was any any any longer than well arms length is that I suppose if you were closer than the elbow you might have been okay but anyone outside of that range just had to buy on market and there was a huge number of them wanting to do it all at once. So >> while we're talking about maybe unc unconventional places where where there are these you know gold fields that people maybe overlook um I've got I got two others I want to ask you about. First is is Northern Territory. Bit of renewed interest, bit of activity. Panaffrican acquiring Emerson after taking the JV partner before that. Um there's still a bit to play out in that area. Namely, uh PC2 or P like PC gold, their recent IPO as of late last year. Um they've got, you know, formidable inventory themselves. And then you've got Agos's um land which they inherited from from Kirkland. Uh but they've been reluctant to kind of part ways with all of that kind of to potentially play out and then overlay it. There's um Petronis I think have got yeah some some of their own ground in that area too. >> Yep. Yep. >> PNX medals now. Is it Petronis? >> Petronis was PNX. >> Well I uh look I I I don't know if I can speculate on Petronis' strategy. Uh lots of people have tried and failed. So yeah. [laughter] Um I PC gold is an interesting one because that was >> uh that was a gold exploration asset that was held outside the market for a while. Um >> pretty strong uh centralized leadership. So Ash, you know, has he's a he's a bust through kind of manager and uh I really admire that about him. um and he'd managed to to push the money into it in order to prepare for a good listing that then happened at the right time and he was able to uh come up with a a good you know trail of news flow to follow it as well. So >> million ounces. >> Yeah. Yeah. Well, I mean it was an asset which I think a lot of people had looked at and gone I'm struggling to get the interpretation to work and [snorts] um the way that something is presented in a public document can often leave a lot out. So, you know, cut off grades for, you know, how people show an intersection as here's a drill hole line and here's the red intersection. And if all you're trying to do is join red bits together, it can often not work. But if that red bits made at like a 1 g cut off, you know, where it goes to 0.1 could be quite significant. Um, I'm not saying that that's exactly what's happened there, but I think they've done a great job of um database reinvigoration. Straighten everything out, get your inter right on your own. uh and they've done a great job of aggressively exploring that and then adding dimension to it. But the other thing which I think has worked really well for them and it it's not across the board with gold companies but uh they recognized that there was a a reasonable um I'm not sure if nugget effect is the right word to use here because that can be a bit of a a moniker for gold projects but there is the presence of some coarse gold within that deposit. Um and being origenic and vein hosted that can often be the case. Um so going from a I mean if you drill a hole and if it's if it's roughly the diameter of a coffee cup uh what you then do is have that if it's diamond core that half diamond core goes to the lab you crush it and you take a tiny little aloquot which is about 30 g. It's 30 g from something which weighed about 5 kilos to start with and that's what you're trying to represent um that meter of sample with. um if you can do that with a much bigger portion of the sample uh and this this new Chrysos um technology, it enables a much bigger um sample to go in. Um they've been able to achieve higher grades across a number of uh the intersections there. So I I think they're actually anticipating that they're going to be able to demonstrate a higher grade, whether that's across the whole deposit or just parts of it. But certainly the effect of that coarse gold's been interesting. The thing that strikes me about the Northern Territory uh is it's a big big wide open area very very lowly populated uh in terms of you know overall head of population. It has some fascinating instances of mineralization and it has some worldclass scale uh to it. Um it doesn't have a lot of mines but you know you wouldn't say that it's got a long tale of little shitty operations and then a few okay ones and then one massive one. It's much more like that long tail has just been forgotten and it's it's pretty pretty interesting thing. So, um when something pops up there, it's fascinating. Aging crowd though, right? So, um I reckon if you were to confront Ash and say, "Mate, how do you reckon you're going to go about processing all of this?" I I think his eyes would light up at the thought of being able to get access to the Agniko facility. Um Agniko is a company which, you know, they're absolutely flying. Uh they've done really well from acquiring things. I don't know what they thought they were getting when they acquired Kirkland. Uh I'm pretty sure they were after the detour project in Canada and not necessarily Fosterville, but they got Fosterville um as part of it and we probably understand that quite well in Australia. Short mind life, very high grade is probably the way they looked at it. Um and you know that's turned out to be the case. But then they also got um the NT assets and it's like what do you do with that? To be a good corporate citizen uh they started rehabbing and there were some pretty serious I think surface liabilities that existed there. Some pretty murky looking water. They've done a great job of uh coming over the top of that. But then how do you sell an asset that you've invested 150 million bucks or whatever the number is of rehab? How do you get rid of that? And do you turn it over to a junior? So I've heard people say slow to make decisions. I reckon I'd be pretty slow on that decision as well. Um, but you know what? If if ash only had half a million ounces, I'd say, well, you know, might have to wait a while. That's building into an amount of ounces, which might start to help to convince um the vendor of a big process plant that that it's worth doing. >> They tend to they tend to retain optionality as well, like they you don't see them selling very much. >> Yep. >> In fact, >> ever. You know, they um they don't need to sell and they retain that optionality for as long as possible. Albe it, you know, think if you speak to PC gold, they'll, you know, they'll they'll be pretty buoyant about the prospects of of getting hold of that mill, I'm sure. Um, so who knows which way it goes there. >> Well, I think longterm the logic makes a lot of sense. If there was an inventory there attached to that process plant that was only sensitive to gold price, then I'd say, yeah, I can see where the twiddle is and I can see what the challenge might be for Agnico. I think challenge more is that they've partially rehabilitated just to you know draw a line through liabilities. Good move or responsible move. Um the inventory there I think is quite tricky. Uh there is a you know an estimation issue which would require a lot more drilling to be able to say that's going to work if we ever decide to make it work. The fact that they've left the process plant standing um suggests that they see that optionality. But I'm not sure that it's something that it's just as easy to say we'll wait until that inventory is economic that will mine it. So I think you know that logic probably leads you towards the the conclusion of well if there's someone else that this can be bolt together with and ag benefit as a shareholder. I think that's the kind of thing that they could understand. >> You mentioned Fosterville um the other unconventional well not unconventional but the other gold goldfield I do want to ask you I mean we're in we're in Melbourne. Um it'd be it'd be it'd be foolish. me not to ask you about. I'm looking at Southern Cross Gold and they got a market cap like $2.8 billion. That's that is remarkable for an undeveloped gold project anywhere. Um I'm just I'm just not familiar with the the asset, not familiar with the project, but I look at that market cap and think there's a lot of value that needs to be backfilled to eventuate into something that's worthy of that kind of market cap. >> Well, is it there? >> We could we could go for a look. I mean, we could get in a car and we'd be we'd be back for your 2:30 appointment. Um [laughter] it's um it's not far from the Hume Highway. Uh you drive up to Kilmore and u Mike Hudson is um he's a fourth generation Kilmore boy. Um I mistakenly introduced him to someone as the pope of Kilmore which was a very insensitive thing to say to someone who is staunchly Protestant, [laughter] but silly me. Um Mike uh Mike's done a fantastic job of um investing in drilling uh bringing investors along for the ride. And I mean they do a fantastic site visit as well. So they you know they really help people with their understanding. Um and I suppose the the keys to value in that project and being undeveloped you you need to make a speculative leap of faith with any undeveloped project. Um and I guess I' I'd quote my father here in terms of a caveat at the start that the market will pay a lot more for something it doesn't understand than something that it does. And it's a lot easier to understand a mind that's making cash than one that's undeveloped. So, >> um >> I think the key to value with that project is going to be um monetizing gold and antimony. Uh and it that's easier said than done, but with a big big market cap, you have a presence. You give yourself a far better chance because you can fund so many more things. Um mining geometries uh is something which I think is they're going to get their grips around because they are going underground. I saw that they they're putting in a decline. they've brought on a chief operating officer, so they're getting mine engineers over the fence there to um uh to help them to understand it. I think um one of the things which probably a lot of Australians struggle with with that story is that they've taken much more of what you'd probably call the North American or the Canadian approach, which is just keep drilling. Um and there's been some very very successful stories in the Canadian market. There's one called Great Bear sold for billions of dollars um yeah recently and its >> serious amount of ounces. Yeah. To Kin Ross. Um, Kin Ross is putting their own assessment in place, but that was sold without a resource. Um, and I think Southern Cross has been very good at attracting shareholders to it. Um, >> an expiration target, but not a resource. >> Well, by de by demonstrating that you can continue to generate high-grade uh results. >> I think that's what's led to it. Um, and you know what, it's easy, I think, in this space to say on my assessment, the value equation there doesn't work. And I'm not saying that about >> sub many times. has been wrong many times >> and and this is the thing right um something like a well we saw Sirius with Nova Ballinger and Sandfire uh with Degrus when they made those discoveries and you know unambiguously um valuable bodies and we can say that with the benefit of hindsight so not going to foot put my foot in any potholes here those guys could raise money handover fist they got their equity away before they got their debt uh and they they both did fantastic jobs of just lunging into the market opportunities that were thrown at them. And because their market cap went up so quickly, it took the risk of financing out of everybody's minds. And it just made it so easy for that's probably a bit flippant. Um for bankers to look at it and go, well, you know, we could agree to our debt, but are we just going to be a lever for them to then go and raise their equity? And if if you've got 150 million bucks in the bank, which I think Sandfire might have at the time that they took money from the A&Z, well, no, there's no risk um from from that perspective. Um so, you know, Southern Cross, I think, probably benefits from that. Uh and if if you had to scrag a deposit of any geometry into production, you inevitably benefit from having that higher market cap. So, you know, anyone who's in it, anyone who's concerned about risk, anyone who's concerned about how that all works out, um, if you need, you know, X of capex and X of working cap, they'll be able to raise that plus 20% on both sides to make sure they're well funded. Because I think we all realize the, you know, one of the first potholes you can fall into as a developer is um, uh, are you going to have enough money to do it? Because if you need to raise money just before you pour gold, you you're going to do it at a share price you'll always regret. So, um, so I know that's an ambiguous answer and I and I don't know the answer. I actually haven't spent much time on it partially because, um, every time I've had the opportunity to look at it, I look at the market cap and just go, there are so many things that I need to look at that are worth a fraction of that and that's that's where I need to be spending my time. So, but then having done that, you know, I think we were offered at a 500 mil market cap. Well, it's clearly performed quite strongly from there. So, you know, feel a bit silly about that. Um but but I haven't been able to spend enough time on it to to really have a look at how it stacks up. Um I I'm actually doing a a trial of one of those threedimensional um AI platform softwares at the moment. So it's one of the ones I thought I might um just use as a test case there to twiddle around and develop my ideas a bit better, but I should have done that yesterday rather than tomorrow. >> You're pretty methodical about how you you put your capital to work and you're still relatively cashed up. Where do you think given given you think a lot about the the mining cycle where you're going to be with regards to your cash balance in a year's time? >> Yeah. Uh so we probably extrapolate a line which is the cash balance line um from where we started to you know at what stage in the cycle do we want to be at a at a minimal level of cash and and what are our options around that? Uh because as a as an investor we we don't want to ever raise money. We're not we're not going to have to. Uh certainly not with the amount of cash we've got at the moment, but um if we ever did have to, we got to have a really good reason. Um so you you don't want to run out of money and you don't want to get to the point where you don't want to sell anything. So there's also a bit of a comp complexity around how LIC's raise money and that um share price and NTA need to be very close together. If they're not, you either way, you're just going to look at the equation and and say let's not. So, um, we started in 2022, let's say, with about 75 million bucks that was investable. Um, we've put away 53, I think the number is at the moment. Um, and we still have 38. So, we we sold a couple of things along the way which came out of the legacy portfolio that happened last year. That took us up by about 12 or 14 of cash and we we dividended a little bit more out. So, we we've managed to prop that cash position up. Um, so I I would say in the coming let's say 12 months and I know we're almost we're four months into 2026 now. I would have said that by the end of this year or let's say mid next year we'll probably have deployed another 20 of that 38 and I dare say that that'll be equally uh between what's already in the portfolio and a few new things coming in. So that's the ideal. Um I mean I know a lot about and won't speak about uh what is immediately in front of us in terms of opportunities. um and what that could mean for investing. And I could talk about it in terms of, oh, I think we're about to do this. The thing is that um even if I think we're a week out from doing something, that could turn into 6 months or it could turn into a no. It often does right at the last minute. So, um you know, notionally speaking, we'd we'd like to drain that by about 20 this year. Still leaves us with, you know, between 15 and 20. Uh and I I think that's more than enough to be going through what might be 8 9:00 at that point in the cycle. And part of why I think that's probably more than enough is that there's two maybe three things in our portfolio which have enough strategic appeal that if if gold M&A becomes a thing um I'd say there's a reasonable chance of something being taken over which would probably provide 10 15 maybe 20 back into our portfolio depending on what it is and and pricing and things like that. So uh you know if we got that kind of a bolstering then we're we're back to the cash balance that we're at. But ideally um our model is through the boom phase to kind of do most of your deployment before nine o'clock which is sort of halfway between the start and the finish. Um and then to be starting to look at exits that you might need to put a bit more effort into instead of just going oh well it's come to us let's do something when you're between 10 and 11. Now, we think we're at seven at the moment. So, we're still very much in the deployment phase, but I think the rules change a bit for us. When you go from the the 3 to 6:00 quadrant to the 6 to 9:00 quadrant, it's kind of like you're saying, well, we're finding more exceptions than the rule um in order to invest. Whereas 3 to six, most things are priced at a level which is attractive. It's it's more finding the very best things that you can. And it's asset quality that you're worried about. all of a sudden you start to worry about pricing and when you when you balance that against asset quality, you're probably making smaller investments and seeing how they go rather than putting fives in as a start. >> I'm very keen to move into 8 9 10 11:00. >> Yeah, good fun. >> I was wondering if we're going to be there by now, but um you know, when Donald Trump started acting in Iran, it probably slowed everything down. But that's that's also I mean I don't think Iran is a good thing. I think it's horrid, but as far as what's happened in the market, we had such an aggressive start to a boom cycle. I don't think we've seen that happen before. And that was unsustainable. It was bound to pause for some reason. >> January was wild. >> Yeah. >> Yeah. >> Chaos. >> Well, I I've never received so many term sheets in January before. >> It was kind of like a >> Everyone's on holiday, >> don't you know? [laughter] >> Still January. >> Go away. Come back. Come back in a week. But um yeah, we did more due diligence in January on things that we thought were going to be February and it was like we just need to hurry up on these things. And you know, fortunately um everyone was back from their breaks and things like that. But I I got back to work on I think it was the 5th of January and I thought to myself uh I've had a nice 3-we break. Um I'm going to I'm going to work four days a week during January. Just take a few more leave days and make them into longer weekends. Didn't happen. I I worked six days a week through January instead of four. So, uh, and I think there's a lot of people in the market who were the same, just trying to keep up with everything that they had to assess. Um, and then we had, you know, that the the sort of well, I suppose when risk comes in, micro caps suffer. So, pricing's come a long way back to what we think is pretty attractive. >> Awesome, Headley. It's always fantastic to chat. Appreciate you making the time for us in your neck of the woods. >> It's been a pleasure. Thank you for coming to visit Melbourne and uh, like to take you out to lunch. >> Looking forward to it. Let's get some lunch. >> Definitely. >> Always great to chat with the man himself in the flesh, Headley. Big thank you to our fantastic partners, Sanvic Ground Support, and MetalsHub, who we had in the show. Also, our thanks to Introlinks Focus, the platform by Market Tech, and Exceed Capital. Hudoo, money. Now, remember, I'm an idiot. [music] JD is an idiot. 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