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Welcome back to the Rate of Change with York Wealth Management. As

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advices to some of the wealthiest families in the country, the Rate of

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Change is a podcast designed to help you in the pursuit of building

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long term wealth through the insights of some of the brightest minds in

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asset management. I'm your host Murdoch Addy and in today's broadcast,

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we're speaking with Todd Warren, a partner and head of research for

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Tribeca Investment Partners. Tribeca is a global investment manager

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with multiple strategies across equities, credit, carbon and global

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natural resources. Join us as Todd unpacks strategies in which he

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specializes in. These include the listed resources fund TGF, the

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unlisted main fund, the Tribeca global natural resources strategy,

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the 2050 strategy, the Kimberly Syndicate, which specializes in

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diamonds, and the nuclear energy opportunity strategy, which is

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currently having its time in the sun, averaging 40.96% over five

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years, 34.9% over three years, 35% over the past year, and averaging

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31.43% for the past six months. For me, I really enjoyed hearing Todd's

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thoughts on what's currently driving global resources, where he

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sees global resources going, and how they're investing in specifically

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what companies in all commodities in carbon credits, natural gas,

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coal, iron ore, steel, copper, uranium and diamonds. Before we

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get into the conversation, please remember this podcast is made for

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entertainment purposes only, and not to be construed as any form of

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advice. I encourage you to listen to the disclaimer at the end of

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this broadcast and to keep your feedback coming. You can reach me

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at mgatty at ywm.com.au. So with that being said, I hope you enjoy

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this conversation as much as I did. So sit back, relax and enjoy it.

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Todd Warren, welcome to the rate of change with York Wealth

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Management.

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Thank you for having me, Murdoch. Pleasure to be here.

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We'll have to thank Adam Curtis for that fantastic event at Seed

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Partners for us connecting. That was quite enjoyable. Yeah, well,

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turn out.

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It was a great turnout. Excellent turnout. Now that the Seed guys

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do a great job. You know, very supportive of, you know, trying to

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get our story out there. And, you know, at the end of the day, you

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know, resources is not everyone's favorite flavor at all times. But,

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you know, we're trying to convince people otherwise.

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Absolutely. So for people that aren't familiar with yourself,

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Todd, you know, who's Todd Warren, and how did you get into

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financial markets?

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Yeah, so I've been for my sins in financial markets for, what do

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we now closing in on 30 years, I joined what was then First State

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Fund Managers, part of State Bank New South Wales back in 1996.

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And that was in the throes of being consumed by colonial at the

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time and becoming colonial first state and spent best part of 23

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years there, doing doing resources for most of that. And

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then joined Tribeca about four years ago now, to, to again, work

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on the resources business here.

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How big is Tribeca? If anyone jumps onto the website, you can

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kind of get confused that you might be looking at a gigantic

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investment bank, but there's, you know, obviously, and there's

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also resources as well. So what's the business model? And

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you know, who is Tribeca?

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Yeah, Tribeca has been around for about 25 years now. Originally

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started out managing with a small cap Aussie equities focus.

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But the original DNA was really to offer niche or specialist

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products that are difficult for others replicate now, you know,

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25 years ago, Aussie small caps was that things have obviously

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moved on a little bit. And that's, you know, not an uncommon

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offering these days out there. But, you know, the DNA still

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remains true. And, you know, we continue to focus on those niche

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products. So, you know, we launched a global resources

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offering where I sit, what are we now nine, nine years ago,

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2015. And also offer some, some, some other products like there's

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an Aussie equities, one to 30 product run by Jim Belew, who

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you may have seen, she she's quite high profile, we offer

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Asian credit, Asian infrastructure, and then some

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other more niche parts of the resources world. We offer a

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nuclear energy opportunities fund, which is, you know, having

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a nice little time in the sun now with, I guess, resurgence in

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interest in nuclear power, we have a decarbonisation strategy

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of 2050 strategy. And then we offer a Kimberly, Kimberly

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diamonds trust, which is only investing uber rare Kimberly

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diamonds. That's a good intro summary. So why don't we crack

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into, you know, on the resources side? So how many funds in the

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resources space, which you oversee? Yeah, so well, as I

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said, we launched our the global natural resources, I guess the

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mothership about nine years ago, and that's a that's a go

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anywhere, anywhere in the resources spectrum really, so

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hard commodities, oil and gas, traditional energy, new energy,

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or indeed soft commodities and into the ag space. And it's a

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long short product and a global mandate. We also have as I

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touched on that nuclear energy opportunities vehicle been

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running now for what we now almost six years. And that

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focuses on nuclear energy and uranium miners, developers,

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explorers, and of course, new technologies associated with it.

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We launched our 2050 strategy in 2021. And that is very much

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focused on decarbonisation related investments. So there's

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a crossover with our resources strategy being the, you know,

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the ability to invest in the enabling commodities, but then

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also spreading into other aspects of the decarbonisation

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systematic. And then as I say, the the Kimberly diamonds trust,

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which is about 18 months old now. And that's just very focused

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on, as I say, uber rare diamonds, Argyle diamonds as it

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happens. And we call it Kimberly diamonds trust. And we're

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happy to have a carbon credit capability as well. And carbon

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credits, of course, has had some good times in bed.

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It's kind of like my brains is going, which one do we pick

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apart first? But look, let's start with something that you

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know, everyone's gonna want to know what's happening with

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uranium, copper, gas, all the fun stuff, right. But I think we

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should definitely touch on carbon before we forget about

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that, because that there is incredibly interesting,

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considering the amount of

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input and the government had essentially forcing and

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creating an industry which benefited some and then destroyed

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other businesses. And then, eventually, after they input it

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in about what a period after that they proceeded to change it

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all over again. So everyone that invested money, a couple of

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friends that did this, everyone that invested money, they moved

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the goalposts. And it was incredibly difficult for them to

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pivot for some of these people. Luckily, they were, you know,

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came out okay. Do you mind giving a bit of color around

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what's happening in that space? That'd be and what happened?

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Yeah. How long have we got? It's a complex space. So maybe just

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to give a little bit of background and some some sort of

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carbon 101 first. So every carbon credit is equivalent to

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one ton of carbon. And then if you look at the carbon trading

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markets, there are two types of carbon credit, there's either a

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compliance market or a regulated market. So the Australian carbon

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credit units, the ones you're referring to are the Australian

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government regulated carbon credits. And there are similar

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types of regimes in countries all around the world. The most

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mature, liquid, deepest, broadest market is the European

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market, been around for a long, long time. And they are the

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European allowances, the EUAs. And all of them, regardless of

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what price you see quoted are all, as I say, equivalent to a

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ton of carbon. But importantly, you can't fund across markets.

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So if you're a European emitter, for example, and you've got a

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carbon price of 60 euros a ton, you can't come into the

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Australian market and buy an Australian carbon credit unit,

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an ACU for 35 Aussie dollars a ton and take it back to Europe

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because the rules are different. And the regimes operate quite

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differently. There's also then to add some complexity here is

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there is a voluntary carbon market. And that is a whole

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other kettle of fish again, where you want individual

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developers and individual projects. And it's a bit akin to

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an equity market where you're picking stocks, but it is an OTC

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market, over the counter market, pricing is very opaque, and

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liquidity can be very limited. So you need to wear your big boy

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pants when you're in that market. With regards to your point

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about what happened in the Australian market. Yeah, that's

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we can peel back a layer of the onion there. You'll recall that

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this was a program or a regime set up by the Abbott government

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originally. And that's probably a key point to focus on

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initially, given the extreme skepticism under which that

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government viewed carbon emissions. And then, I guess,

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again, to provide a bit of color to why or how, you know, what

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what drove the shift in the goalposts, as you pointed out,

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we were approaching a federal election at that time. And there

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was a some criticism has been leveled at the regime by some

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architects of the regime. But then also, there was this store

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of credits that the government had built up. And they, in one

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fell swoop, push those into the market. And that is the problem

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about of trying to operate in a market where you are at the whim

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of government regulation. And it's not just carbon, for that

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matter, you know, there's all sorts of examples of government

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regulation, you know, distorting markets. But yeah, as you

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pointed out that that through the Australian carbon market

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sideways, we went from sort of mid $50 a tonne to $30 almost

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overnight. And then of course, we were approaching the federal

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election, which of course was won by the Albanese government.

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And they swiftly announced a review, the Chubb review of the

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Australian carbon market. And that then created more

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uncertainty and concerns, or erosion of confidence really, of

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the Australian carbon market, because there was the

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expectation that they would put the cleaners through the market

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and make some wholesale changes, roll forward. And actually, what

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they didn't do was make wholesale changes, what they

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actually found was that the market was actually reasonably

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well structured, required some tweaking around the edges, and

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there will always be those sorts of tweaks in any nascent market.

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But what we've got today is, you know, the Chubb review,

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established, or recommended, at least what they call the

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safeguard mechanism, which have been rolled out now. And that's

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actually a very similar market to the European markets, what's

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called a cap and trade market where you set a ceiling of

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emissions for the biggest emitters in the economy. And

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then they are required to reduce their emissions every single

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year, in the Australian case, by 4.9% every single year. If you

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are able to do that at a faster rate, you generate a credit that

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you can then on sell to someone who's not able to reduce their

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emissions fast enough. And that's what creates that that

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trading opportunity. Not a straightforward market, and there

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will continue to be people who criticize the market. But by the

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same token, you know, we need to put a price on carbon. And this

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comes back to the whole, I guess, theoretical argument

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around carbon credits. At the end of the day, human behavior is

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changed by a hit pocket imperative. It doesn't matter

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how altruistic, you know, we want to be. At the end of the

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day, 99.9999999% of us will only shift our behavior if there's a

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hit pocket imperative, there's an economic imperative to do so.

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So that's where we need to have a price on carbon. And ultimately,

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our view is that price of carbon will or needs to continue to

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climb to drive shifting behaviors.

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You're not wrong. I think we need an entire podcast

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conversation purely just on this topic.

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To paint a picture because no one can see the chart. You

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mentioned a couple of numbers there. What's the price done?

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And what's the price currently trading now for carbon credits

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in Australia? Yeah, so that's Europe.

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Yeah, the generic Australian carbon credit trades at around

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about 3536 Aussie dollars a ton. So I mentioned some numbers

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earlier, you know, when the Abbott government was created,

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the price ran up to, you know, peaked out in the 50s. And then

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of course, we went into the last election, and the price had

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collapsed to under $30. So dipped well into the 20s. Post

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Chubb review, as I say, we've now managed to climb back well

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into the 30s. And you can paint a pretty good argument as to why

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it should continue to climb. There is more confidence in that

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market today. And there is a growing realization that there's

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a structure in place now that is more sustainable, and should

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drive a more stable and increasing market.

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Obviously, you can paint the picture on why this is a good

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thing. The question I always had in the back of my mind is how

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can you play a game in a sand pit, you know, when kids on the

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other side of the fence just go, why the hell are you even playing

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that game? And then you know, other people are like shaking

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your finger going, No, no, you must play our rules. It's just

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like, hold on a second, mate, in life, you know, it's not black

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and white, life's gray. So how do you deal with big ugly

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gorillas like China, Southeast Asia, they go, that's very nice

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that you know, you feel this way. But you know, we're just

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going to keep doing what we want. And other people may say

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that, look, what's happening in Europe, the farmers, you know,

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the European Union, WHO, pushing down these draconian, as you

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said, you know, government regulations on how things should

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be done. And it gets to potentially to a point where this

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businesses can't operate. And the one that always, you know,

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flashes back in my mind, since I grew up in Sydney is, you know,

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King's Cross, King's Cross used to be the place where everyone

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used to go out and have a bit of fun when a couple of guys or

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girls sat in the back room and goes, hold on a second, there's

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a huge amount of land sitting right there, which we can't

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access. How can we remove them without physically doing force?

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Well, hold on a second, if we just put a cap on when these

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people can party and sell alcohol, then these businesses

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are going to go bankrupt, and we'll be able to come in and

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pick it up for a song. So I'm just curious in your opinion

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with carbon credits, because I do see the, you know, the

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benefit for the world. And I do understand that. But if kids, or

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sorry, other countries aren't willing to play the rules, that

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a larger globalist thought process is, then what's the

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point? Yeah, like using the farming analogy, is this a

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business ploy by the top elite to essentially reduce the asset

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prices to force businesses out because they can't afford it and

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then come in and picking up assets? Or is this generally

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done to essentially improve the world? That's, if I've phrased

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the question correctly, but I've been thinking about this for

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years.

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Yeah, it's, it's, it's very complex. You're absolutely right.

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And the, the easy, easy answer here is to do nothing. And sit

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back and say, well, we are Australia, and we are, you

254
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know, a pimple on the ass of the world, excuse the French. And

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we don't matter. You know, what we do actually doesn't matter.

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Because as you say, you know, when you've got the world's

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biggest economies behaving very differently, then, you know,

258
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ultimately, what what we do doesn't matter. What people I

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think fail to recognise is that there's a couple of things going

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on here. Number one, I mean, actually, China does have a

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carbon market happens to be the biggest by by tonnage in the

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world. I did not know that. How interesting. So they do have a

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carbon market. But also, I would point out, and this is this is

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another factor here, which is often pointed to is that, you

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know, the Chinese continue to build out their thermal coal fire

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power. They do. Yeah, that's, that's, that's a fact. But what

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they're also doing is they are investing more than anyone else

268
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in renewable energy, and nuclear power and hydropower. The fact

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is, they've got, you know, one of the world's biggest

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population bases, so they need every solution. Now, the other

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aspect here, of course, is, who are we? And this comes back to

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your point about, or question at least regarding, is this just

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employed by the elites to suppress, you know, the the the

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those beneath them? Very philosophical question for this

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hour on a Friday morning. But look, the reality is that, you

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know, that is a very relevant question. And it's why the

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entire, you know, ESG, broaden this out to an ESG conversation.

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It's why ESG perspectives and investment has had to progress

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from the simple ESG 1.0 of just turn off all the thermal, you

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know, fossil fuel, consuming power, power generators, that's

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not realistic. Who are we to say that, you know, we in the West

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have, you know, gone through industrialization and developed

283
00:18:51,960 --> 00:18:56,280
our economies, and you in the developing nations? Well, good

284
00:18:56,280 --> 00:18:59,560
luck. You're not allowed to burn fossil fuels anymore. Well,

285
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that's not realistic. But what we can do is, and this is where

286
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the COP conferences, the climate conferences that take place

287
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every single year, you know, this year was in the Middle

288
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East COP 28. A couple of years ago was the very high profile

289
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COP 26, which occurred in Glasgow. These conferences are

290
00:19:21,560 --> 00:19:26,200
bringing together of all the world's leaders, both at a

291
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political level and at a corporate level, to try and

292
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navigate this very issue. And it requires very significant

293
00:19:34,680 --> 00:19:38,640
investment by developed countries in developing

294
00:19:38,640 --> 00:19:45,440
countries to essentially address this very issue. So that may be,

295
00:19:45,480 --> 00:19:49,920
you know, the investment in renewable power or nuclear power,

296
00:19:49,920 --> 00:19:52,840
whatever it might be, by the West into developing countries,

297
00:19:52,840 --> 00:19:56,760
who are we to say to Bangladesh, which sources 100% of its power

298
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from thermal coal? No, sorry, you've got to turn it all off.

299
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And, you know, if that was, this is observing the ESG 1.0

300
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perspective, you know, that they would be very quickly be

301
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plunged into horrendous economic circumstance, people would die,

302
00:20:13,840 --> 00:20:18,880
millions of people would die, either by starvation, or some

303
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other consequence. So look, there's there's a bit much bigger

304
00:20:22,520 --> 00:20:24,720
picture. And as you say, this is probably a whole other podcast

305
00:20:24,720 --> 00:20:25,280
entirely.

306
00:20:25,960 --> 00:20:28,520
You know, I was actually thinking about it, obviously, you

307
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know, anyone can go have a look at the website, you know, look

308
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at the numbers, you know, see the results, you know, we just

309
00:20:34,320 --> 00:20:36,600
we can just get into what's happening with prices and all the

310
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fun stuff. But I, after having this conversation, I think we

311
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keep going on this path, because the question that I think is the

312
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most interesting is what drives behaviors, right? So if people

313
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can get anything from this conversation today is I would

314
00:20:53,040 --> 00:20:56,680
love to I'd love to hear your thoughts on, you know, why

315
00:20:56,680 --> 00:21:00,400
things like SG, you know, have been created, you know, it's a

316
00:21:00,400 --> 00:21:03,000
great question. There's always the question, is this good for

317
00:21:03,000 --> 00:21:07,600
the people? Or, you know, is this money driven? Or at the end

318
00:21:07,600 --> 00:21:11,400
of the day, is this purely power driven, right? And if people can

319
00:21:11,440 --> 00:21:14,800
and the thing with resources is resources are cyclical, right?

320
00:21:15,480 --> 00:21:18,800
And they're cyclical on the basis of basically demand and

321
00:21:18,800 --> 00:21:21,600
supply the basis of all fundamental markets. So the

322
00:21:21,600 --> 00:21:27,400
question is, what is driving the demand and supply is potentially

323
00:21:27,400 --> 00:21:29,520
the fiscal policy created by these countries that you

324
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mentioned like Bangladesh. So the question then becomes, okay,

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00:21:33,240 --> 00:21:36,720
why has SG been created? Like, here's the question. Do you think

326
00:21:36,760 --> 00:21:43,080
SG was purely created as the West's means of trying to wean

327
00:21:43,080 --> 00:21:47,760
themselves off Russian gas, and, you know, off that reliability

328
00:21:47,760 --> 00:21:52,760
of the Saudis? What are the four the four largest gas deposits

329
00:21:52,760 --> 00:21:56,920
in oil? What is it Saudi Arabia, Russia, gases, Moselle's Basin,

330
00:21:56,960 --> 00:21:59,760
and the states not as much and then we've just found some in the

331
00:21:59,760 --> 00:22:03,720
Betelgeuse basin, right? So using that as the geography.

332
00:22:05,080 --> 00:22:09,720
What else is the West's options if we go to war? Wow. You know,

333
00:22:09,720 --> 00:22:12,720
I mean, like, it's just, look, I find this quite interesting,

334
00:22:12,760 --> 00:22:16,080
because if you understand the landscape, the global players,

335
00:22:16,080 --> 00:22:19,520
and how this all works, that potentially investors may have

336
00:22:19,520 --> 00:22:22,920
an understanding of why these cycles occur and where to

337
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allocate and why these markets like carbon credits potentially

338
00:22:26,080 --> 00:22:28,440
exist, not the fact that they currently exist and how to play

339
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them. And I'd love to hear your thoughts. I don't know where we

340
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start in this, but

341
00:22:31,680 --> 00:22:36,960
yeah, it's very down right. It's it's an interesting rabbit

342
00:22:36,960 --> 00:22:37,200
hole.

343
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Need a couple of scotches and cigars for this one. Sorry, it's

344
00:22:40,360 --> 00:22:42,160
not an idea. I should have done it in the afternoon.

345
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Look, I mean, ESG has been around a long time, right? It's

346
00:22:46,400 --> 00:22:50,240
just that it's become a bit of a catchphrase in more recent

347
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years. And it as a resources investor. These factors are

348
00:22:57,000 --> 00:23:01,120
factors you have we have had to consider from day one, it's just

349
00:23:01,120 --> 00:23:06,080
there wasn't a there wasn't an acronym that described it. And

350
00:23:06,080 --> 00:23:09,800
somewhat frustratingly for us as resource investors is that there

351
00:23:09,800 --> 00:23:16,040
was this ES and G acronym, but really, it was capital E, small

352
00:23:16,040 --> 00:23:22,040
s small g. And and particularly being driven out of Europe. Now,

353
00:23:22,640 --> 00:23:28,280
you know, the ESG drive really manifested itself in its

354
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simplest form in, you know, sell or avoid, you know, the

355
00:23:33,960 --> 00:23:38,480
investment in fossil fuels. Now, obviously, in my opinion,

356
00:23:38,480 --> 00:23:44,920
times, you know, there's been this, you know, realization of

357
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being reliant on certain geopolitical players for their

358
00:23:49,040 --> 00:23:53,920
natural resources is is probably not wise. But that's sort of

359
00:23:53,920 --> 00:23:59,120
been it's become it's become a separate issue, not because of

360
00:23:59,120 --> 00:24:02,280
the ESG factors. But I'll come back to that if you if you'll

361
00:24:02,480 --> 00:24:07,440
humor me for a moment. We've been openly critical of the

362
00:24:07,440 --> 00:24:12,360
divestment push of many players in the market to say, well, you

363
00:24:12,360 --> 00:24:19,400
need to, you know, activating the activist with super funds, or

364
00:24:19,400 --> 00:24:23,240
companies to divest their thermal coal assets, for

365
00:24:23,240 --> 00:24:27,720
example, selling a thermal coal mine doesn't make it go away.

366
00:24:28,200 --> 00:24:33,840
Indeed, all it does is drive it into the hands of private equity,

367
00:24:33,840 --> 00:24:39,360
state owned entity, and essentially players who have

368
00:24:39,480 --> 00:24:44,520
zero concern for or cares for the environmental consequence of

369
00:24:44,520 --> 00:24:52,160
operating that asset. So pushing the HP or Rio Tinto to sell

370
00:24:52,440 --> 00:24:57,480
their thermal coal mines is actually a negative outcome for

371
00:24:57,480 --> 00:25:02,120
the environment. What should be driven is, is to get into the

372
00:25:02,120 --> 00:25:05,360
companies and say to them, right, you're going to operate

373
00:25:05,360 --> 00:25:07,280
this thermal coal mine, and you're going to do it to the

374
00:25:07,280 --> 00:25:11,120
best of your ability. And when it's life has expired, you will

375
00:25:11,120 --> 00:25:15,360
close it down. And we will be watching over you like a hawk to

376
00:25:15,360 --> 00:25:19,200
ensure that your remediation liabilities are met in full, and

377
00:25:19,200 --> 00:25:22,040
that the communities are not suffering as a consequence, but

378
00:25:22,080 --> 00:25:25,640
just handing that mine the keys to that mine, to a private

379
00:25:25,640 --> 00:25:30,440
equity outfit, or to a state owned entity who will continue

380
00:25:30,440 --> 00:25:34,760
to operate it indeed, probably for longer than a BHP or Rio or

381
00:25:34,760 --> 00:25:38,720
whoever would operate it is not a good outcome for anybody. So

382
00:25:38,960 --> 00:25:45,240
to our view, that's where the ESG 1.0, which frankly was, as I

383
00:25:45,240 --> 00:25:48,400
say, a negative outcome, is progressing needs to and is

384
00:25:48,400 --> 00:25:53,520
progressing to a two or 3.0, where, for example, portfolio

385
00:25:53,520 --> 00:25:56,720
company of ours, Glencore, Glencore cops a lot of criticism

386
00:25:56,720 --> 00:26:02,520
for look, ills of their past, no doubt, but also because they

387
00:26:02,520 --> 00:26:05,240
continue to be a thermal coal operator. They're actually one

388
00:26:05,240 --> 00:26:09,200
of the best coal operators in the world, and have made

389
00:26:09,440 --> 00:26:11,680
actually more aggressive commitments around their scope

390
00:26:11,680 --> 00:26:18,000
one, two, and three emissions than BHP or Rio Tinto. That to

391
00:26:18,000 --> 00:26:19,000
me is a better outcome.

392
00:26:20,680 --> 00:26:25,280
Yeah, it still blows my mind how holistically the government

393
00:26:25,280 --> 00:26:28,040
is trying to keep the coal market going. I mean, it's

394
00:26:28,040 --> 00:26:30,680
still a very, very, very, very, very, very, very, very

395
00:26:30,680 --> 00:26:33,560
difficult to keep the coal market going. So I think it's

396
00:26:33,560 --> 00:26:37,440
important to keep that in mind. How policy can essentially

397
00:26:37,440 --> 00:26:40,120
dictate markets. And the funniest thing, I'd love to hear

398
00:26:40,120 --> 00:26:44,080
your thoughts on coal. As you said, China hasn't stopped. And

399
00:26:44,080 --> 00:26:46,160
then it was like, you know, we're decreasing the mines in

400
00:26:46,160 --> 00:26:49,880
Australia, but what is the volume of coal being exported

401
00:26:50,120 --> 00:26:53,840
from Newcastle through to China? Hasn't that increased?

402
00:26:53,840 --> 00:26:57,560
Yeah, it's actually increased. So the reality is, if we're

403
00:26:57,560 --> 00:27:00,200
talking about oil and gas, we're talking about oil and gas

404
00:27:00,200 --> 00:27:03,680
being exported from Newcastle, which is a very high quality

405
00:27:03,680 --> 00:27:06,240
thermal coal that comes out of Newcastle, you know, 6000

406
00:27:06,240 --> 00:27:13,120
kilocal thermal coal, then burning, you know, high ash,

407
00:27:13,160 --> 00:27:18,280
low energy content, Indonesian thermal coal or Chinese

408
00:27:18,280 --> 00:27:23,360
thermal coal. Look, the reality is, it will continue to be

409
00:27:23,360 --> 00:27:27,200
oil and gas. You know, the governments around the world, to

410
00:27:27,200 --> 00:27:32,960
your point of our policy, beat up on oil and gas producers. But

411
00:27:32,960 --> 00:27:36,560
at the same time, they then subsidize the fuel costs for

412
00:27:36,560 --> 00:27:40,560
the consumer. So hang on. If you want to change behaviors, it

413
00:27:40,560 --> 00:27:43,520
comes back to the point I made earlier, you've got to change

414
00:27:43,680 --> 00:27:48,320
the fiscal impulse of doing so, make it more expensive to burn

415
00:27:48,320 --> 00:27:51,480
fuel, people will stop burning it if it's too expensive to do

416
00:27:51,480 --> 00:27:57,160
so. So you know, like putting it putting a tax on or, you know,

417
00:27:57,320 --> 00:28:01,200
increasing the impost on the oil and gas producer. That's not the

418
00:28:01,200 --> 00:28:04,160
way forward. In my view, in Australia, and again, let's

419
00:28:04,160 --> 00:28:06,600
let's just be down the rabbit hole for a moment on gas. You

420
00:28:06,600 --> 00:28:08,880
know, we've seen gas prices start to climb and you know, the

421
00:28:09,000 --> 00:28:13,360
so called East Coast gas crisis, which is by the way, the slowest

422
00:28:13,920 --> 00:28:19,280
moving train wreck you've ever experienced. We've seen this,

423
00:28:19,280 --> 00:28:22,720
this has been coming for years and years and years. And gas

424
00:28:22,720 --> 00:28:25,960
prices start to spike. And what does the government do? Instead

425
00:28:26,000 --> 00:28:28,880
of saying, right, we've got to let it spike, because that will

426
00:28:28,880 --> 00:28:33,840
actually slow consumption. We're going to cap it at $12. What does

427
00:28:33,840 --> 00:28:40,240
$12 do? It actually constrains supply and encourages demand.

428
00:28:41,440 --> 00:28:44,680
It's quite the opposite of what we're trying to achieve here. So

429
00:28:44,680 --> 00:28:50,160
it all it does is force actually a more acute problem from a

430
00:28:50,160 --> 00:28:56,640
power perspective. But here in Sydney, Sydney, we've had power

431
00:28:56,640 --> 00:29:00,200
rationing a couple of weeks ago in this office building, I sit

432
00:29:00,200 --> 00:29:06,520
in the CBD of Sydney. Now, I don't recall that occurring too

433
00:29:06,520 --> 00:29:10,720
many times in the past. And this this was not a stinking hot day.

434
00:29:10,720 --> 00:29:14,320
So that to me is actually pretty worrying about the pathway

435
00:29:14,320 --> 00:29:18,320
forward. And yet you've got what you've, you've started me off

436
00:29:18,320 --> 00:29:22,000
now. You've got situations. This is half the fun of it. Like, I'm

437
00:29:22,000 --> 00:29:24,880
actually letting you talk, I just want to jump in and go, what

438
00:29:24,880 --> 00:29:27,040
about what about the Australian government's done to

439
00:29:27,680 --> 00:29:31,000
international money? Right? You know, and then we can go into

440
00:29:31,000 --> 00:29:36,160
like, and I'll, since we're on gas, I would love to hear all

441
00:29:36,160 --> 00:29:38,640
about your thoughts on the Beedaloo base, because I believe

442
00:29:38,640 --> 00:29:43,760
you got a holding in Tamboran, right? That there, in my

443
00:29:43,760 --> 00:29:48,400
opinion, is potentially one of the best unsung assets will

444
00:29:48,400 --> 00:29:52,400
solve all our problems. But I've been watching that as if you're

445
00:29:52,400 --> 00:29:56,120
watching your favorite, you know, TV show like The Witcher or

446
00:29:56,120 --> 00:29:58,560
something like that go into the hands of Disney and just get

447
00:29:58,560 --> 00:30:01,280
completely ruined because someone that's never read the

448
00:30:01,280 --> 00:30:03,560
books or watch the movies or whatever, who's writing this

449
00:30:03,560 --> 00:30:06,000
stuff just doesn't care because they want to put their creative

450
00:30:06,000 --> 00:30:08,800
spin on it. And it's a goddamn train wreck. And you're just

451
00:30:08,800 --> 00:30:12,520
hoping that someone's gonna jump in and save this, you know, for

452
00:30:12,520 --> 00:30:15,360
the good of the country. I don't know how else to explain it.

453
00:30:18,600 --> 00:30:24,200
The dreams of the Beedaloo, again, are not new. You know, I

454
00:30:24,200 --> 00:30:27,240
can cast my mind back to meeting Falcon Oil and Gas.

455
00:30:30,080 --> 00:30:35,480
Poor 10, 12 years ago, when they were planning to, you know, put

456
00:30:35,480 --> 00:30:41,200
their first wells into the Beedaloo basin. What, of course,

457
00:30:41,200 --> 00:30:45,960
there are a few challenges, not least being the location is

458
00:30:45,960 --> 00:30:49,760
extremely remote and will require not inconsiderable

459
00:30:49,760 --> 00:30:53,080
investment in infrastructure to bring, you know, any gas

460
00:30:53,080 --> 00:30:59,280
molecules discovered or produced to the market. What we've had

461
00:30:59,280 --> 00:31:03,400
more recently, and as you say, with regards to Tamboran and

462
00:31:03,400 --> 00:31:10,120
their recent news, you've actually got a well result that

463
00:31:10,120 --> 00:31:15,800
that is for the... What was the result? So they've drilled a

464
00:31:15,800 --> 00:31:23,680
well, which is delivered on a 30 day sustainable flow rate of the

465
00:31:23,680 --> 00:31:29,600
equivalent of, well, it was a 500 meter horizontal well. And

466
00:31:29,600 --> 00:31:31,960
in the global scale, that's actually a very short

467
00:31:31,960 --> 00:31:36,280
horizontal well. And sorry, I'll take a step back. Traditional

468
00:31:36,280 --> 00:31:38,840
wells are drilled vertically. More recently, the

469
00:31:38,840 --> 00:31:42,400
unconventional way of drilling wells and what's really been

470
00:31:44,360 --> 00:31:48,640
rolled out and developed significantly in the US and

471
00:31:48,640 --> 00:31:53,480
Canada is horizontal drilling. And that way, you can obviously

472
00:31:53,480 --> 00:31:57,240
expose a much more significant component of rock to extract

473
00:31:57,240 --> 00:32:01,640
more of oil or gas. These guys have drilled a 500 meter

474
00:32:01,640 --> 00:32:06,840
horizontal section and fractured the rock. And they've delivered

475
00:32:06,840 --> 00:32:10,520
3.2 million cubic feet of gas a day on a sustained flow rate

476
00:32:10,520 --> 00:32:16,120
over 30 days. For those of you who... That means absolute

477
00:32:16,120 --> 00:32:20,200
gobbledygook. This is sort of the first time we've got what

478
00:32:20,200 --> 00:32:24,480
could be an economic flow rate from these wells. These are

479
00:32:24,480 --> 00:32:30,080
expensive wells. But if you were to drill and complete this

480
00:32:30,080 --> 00:32:37,040
well using cutting edge, the best rigs, the best completion

481
00:32:37,040 --> 00:32:41,440
techniques coming out of the US, the ultimate aim is to drill

482
00:32:41,760 --> 00:32:45,840
something like a 3 kilometer, 3000 meter horizontal section,

483
00:32:46,720 --> 00:32:51,200
frack it considerably, and then deliver something in the

484
00:32:51,200 --> 00:32:56,000
vicinity of 20 million cubic feet of gas a day. Now, that is

485
00:32:56,000 --> 00:32:59,760
more in the realms of some of the most prolific gas basins in

486
00:32:59,760 --> 00:33:05,040
the US. And that's really what you need to prove up the

487
00:33:05,040 --> 00:33:08,640
economics of this basin and indeed justify the build out of

488
00:33:08,640 --> 00:33:11,120
the infrastructure to bring those gas molecules to market.

489
00:33:11,600 --> 00:33:17,040
What Tamburin have got is quite significant investment from

490
00:33:17,600 --> 00:33:20,720
some large US players. And that's really what they've done

491
00:33:20,720 --> 00:33:25,440
really what's been the game changer is applying the best

492
00:33:25,440 --> 00:33:28,720
rigs and the best techniques to enable this to occur.

493
00:33:29,840 --> 00:33:34,160
Yeah, I should probably disclose that one of the assets when all

494
00:33:34,160 --> 00:33:38,640
the assets with EP 136, you know, I helped finance getting

495
00:33:38,640 --> 00:33:42,080
all that up and running. So I've been financially embedded in

496
00:33:42,080 --> 00:33:46,000
this thing for a while, watching it all play out. Again, it makes

497
00:33:46,000 --> 00:33:49,280
a lot of sense. But I think the thing Australians don't

498
00:33:49,280 --> 00:33:55,600
understand about gas and the Americans get completely is how

499
00:33:55,600 --> 00:34:00,080
many how much capital is required to the life of this,

500
00:34:00,080 --> 00:34:03,040
like people just expect I gave you $50 million or $60 million

501
00:34:03,040 --> 00:34:05,680
raise or he's 80. You're good to go, right? And say no, no, no,

502
00:34:06,160 --> 00:34:10,240
no, no, no, no, this, this, this thing here is potentially a

503
00:34:10,240 --> 00:34:14,160
half a billion US dollar project that actually benefit from a

504
00:34:14,160 --> 00:34:18,160
bond. But, you know, the equity markets are what the equity

505
00:34:18,160 --> 00:34:20,640
markets are. And, you know, games have been played. And,

506
00:34:20,640 --> 00:34:23,520
you know, people want equity and assets, and then you find

507
00:34:23,520 --> 00:34:28,480
yourself in a dilution trap. So I'm just, which is challenging.

508
00:34:29,040 --> 00:34:32,320
But I definitely like what the guys are doing there. Look, from

509
00:34:32,320 --> 00:34:36,000
your from your thoughts. How much money do you reckon they

510
00:34:36,000 --> 00:34:39,760
need to get this thing up and running? Because like, as you

511
00:34:39,760 --> 00:34:43,040
said, it's a it's a glacial pace for the East Coast gas

512
00:34:43,040 --> 00:34:47,120
situation. But we're going to need it. And I can't see

513
00:34:47,120 --> 00:34:52,640
anywhere else that has that amount of gas to consistently

514
00:34:52,640 --> 00:34:57,360
supply Australia. Yeah, look, I'm open to your thoughts. So

515
00:34:57,360 --> 00:35:00,080
obviously, I'm a bit biased, but I'm just curious. Since you've

516
00:35:00,080 --> 00:35:04,640
or since you're also invested in it. Yeah. Well, I mean, right

517
00:35:04,640 --> 00:35:10,640
now they got the $50 million in the bank. This, what they call

518
00:35:10,640 --> 00:35:15,040
their pilot project is a six well program, plus a 35 kilometer

519
00:35:15,040 --> 00:35:18,160
spur pipeline to connect it with what's called the Amadeus

520
00:35:18,160 --> 00:35:23,360
pipeline, which flows up to Darwin. Good questions to what

521
00:35:23,360 --> 00:35:26,320
they'll need. These are expensive wells, you know, they

522
00:35:26,400 --> 00:35:32,400
know, and you you need big rigs with big pressure pumping

523
00:35:32,400 --> 00:35:37,200
spreads to complete the wells. Realistically, you know, if you

524
00:35:37,200 --> 00:35:39,520
drill them all on a pad, which is what they're planning to do,

525
00:35:39,520 --> 00:35:42,560
you know, six wells all from the same pad, and then you can

526
00:35:42,560 --> 00:35:46,160
probably get away with spending something in the vicinity of

527
00:35:46,160 --> 00:35:51,920
$150 million. That's gross. That's gross. Now, bearing in

528
00:35:51,920 --> 00:35:56,960
mind that Tamburin are a SNCC under 40% of this asset, so

529
00:35:56,960 --> 00:36:02,640
they are the operator and and own about 40%. So, you know, in

530
00:36:02,640 --> 00:36:07,040
a best case scenario, they have the existing cash in the till,

531
00:36:07,040 --> 00:36:10,160
and they will be able to raise some debt to do so. So, you

532
00:36:10,160 --> 00:36:14,080
know, as Joel Riddle, the CEO said the other day, the

533
00:36:14,080 --> 00:36:17,840
exploration phase is over, and we're now into development. I

534
00:36:17,840 --> 00:36:22,320
genuinely hope so, because it's been a pretty long road to this

535
00:36:22,320 --> 00:36:26,480
point. And, look, let's be honest, you know, the company

536
00:36:26,480 --> 00:36:30,080
have not done themselves a lot of favors by largely over

537
00:36:30,080 --> 00:36:33,280
promising and under delivering and having some operational

538
00:36:33,280 --> 00:36:37,920
issues. I think the reality is that the company is not

539
00:36:37,920 --> 00:36:41,600
going to be able to do that. I think the reality is they will

540
00:36:41,600 --> 00:36:45,600
come back to market for more equity to fund the pilot. And

541
00:36:45,600 --> 00:36:48,400
at what point, I mean, not immediately, as I say, they got

542
00:36:48,400 --> 00:36:50,640
$50 million in the bank, so they can fund the next capital

543
00:36:50,640 --> 00:36:54,400
wells. But the likelihood is there will be some some more

544
00:36:54,400 --> 00:36:57,200
equity required, but they'll be able to get some debt.

545
00:36:57,200 --> 00:37:02,240
Yeah, the good old fashioned equity raise, A, B, C, D, E, F,

546
00:37:02,240 --> 00:37:04,720
G, and no one knows when it's going to end. The other thing

547
00:37:04,720 --> 00:37:06,880
which I can't find it very interesting, you know, we're

548
00:37:06,880 --> 00:37:09,600
talking about infrastructure. And, you know, absolutely,

549
00:37:09,600 --> 00:37:11,680
let's pivot into other commodities. But the

550
00:37:11,680 --> 00:37:15,440
requirement which people don't see of, like I said, gold mine,

551
00:37:15,440 --> 00:37:17,760
you know, if you stick in a gold mine in Kalgoorlie, and you

552
00:37:17,760 --> 00:37:19,680
find a tenement, well, there's already infrastructure around

553
00:37:19,680 --> 00:37:22,160
20 kilometers down the road, you literally just roll it in,

554
00:37:22,160 --> 00:37:25,360
pay the bill, and off you go. The Northern Territory is like

555
00:37:25,360 --> 00:37:28,560
virgin land. There's nothing there. I think the government

556
00:37:28,560 --> 00:37:32,080
gave them what Tamborin a $1.5 billion grant to essentially

557
00:37:32,080 --> 00:37:35,680
build a terminal right next to impacts. Yeah, that's the plan.

558
00:37:35,680 --> 00:37:38,720
Can I even come through like this is a thing with I'm

559
00:37:38,720 --> 00:37:40,640
speaking a lot of the international money, right? As

560
00:37:40,640 --> 00:37:44,320
in, there's promises. And then so people are happy to back

561
00:37:44,320 --> 00:37:47,360
these plays, but then the governments or the greenies

562
00:37:47,360 --> 00:37:50,960
again with politics, as we were discussing before, just moves

563
00:37:50,960 --> 00:37:53,600
the goalposts. And then people are standing here in Australia

564
00:37:53,600 --> 00:37:56,880
just going, can we just have a view for 10 years, we can make a

565
00:37:56,880 --> 00:38:01,680
plan. Well, hurting all Australians, you're touching on

566
00:38:01,680 --> 00:38:04,720
obviously a massive issue here, and not least of which was the

567
00:38:04,720 --> 00:38:07,040
challenges that Santos face most recently with their Barossa

568
00:38:07,040 --> 00:38:14,800
project too. And we need, to your point, desperately some

569
00:38:14,800 --> 00:38:20,640
clarity on the government stance here. And indeed, the

570
00:38:20,640 --> 00:38:25,280
regulations, the rule book that these companies need to follow

571
00:38:25,280 --> 00:38:28,160
because the problem that has clearly surfaced most recently

572
00:38:28,160 --> 00:38:33,920
with Santos Barossa project was that they observed all the

573
00:38:33,920 --> 00:38:37,040
rules as they were written in the rule book. And then the

574
00:38:37,040 --> 00:38:40,720
court came along and said, yeah, no, rule book doesn't apply.

575
00:38:40,720 --> 00:38:45,440
We need a new rule book. So there is, it becomes a laughing

576
00:38:45,440 --> 00:38:48,720
stock, really. Australia has become a laughing stock

577
00:38:48,720 --> 00:38:55,200
globally, in terms of, you know, shifting goalposts. And no

578
00:38:55,200 --> 00:38:59,760
company will invest in Australia with that sort of

579
00:38:59,760 --> 00:39:04,080
uncertainty overhanging them. So, you know, I think what

580
00:39:04,080 --> 00:39:07,760
ultimately has come to pass with regards to the various

581
00:39:07,760 --> 00:39:12,640
appeals that were lodged by the Environmental Defenders Office

582
00:39:12,640 --> 00:39:16,800
with regards to the Santos Barossa development have been

583
00:39:16,800 --> 00:39:24,640
thrown out. And it does pave a pathway forward for development,

584
00:39:24,640 --> 00:39:29,040
whether it's Santos or, and this is the bit that's, I think,

585
00:39:29,040 --> 00:39:36,240
many have missed here, is that were Santos to be precluded

586
00:39:36,240 --> 00:39:42,640
from laying the pipeline for that project, the reality is

587
00:39:42,640 --> 00:39:46,480
that what it does is affect every offshore activity, not

588
00:39:46,480 --> 00:39:51,760
just pipelines. And what do I mean by that? I mean offshore

589
00:39:51,760 --> 00:39:57,200
wind farms. I mean power cables for said offshore wind farms.

590
00:39:57,200 --> 00:40:02,480
Any offshore activity would be similarly impacted. And I don't

591
00:40:02,480 --> 00:40:06,320
think the agitators on this were really taking that into

592
00:40:06,320 --> 00:40:12,400
account. But how do you plan to build any mine, any commodity,

593
00:40:12,400 --> 00:40:14,800
like to essentially... Yep, you need...

594
00:40:14,800 --> 00:40:19,200
And how do these policies being created when everyone knows

595
00:40:19,200 --> 00:40:21,520
the problem that we have, essentially a supply problem

596
00:40:21,520 --> 00:40:25,200
across the board in many different areas, copper, uranium,

597
00:40:25,200 --> 00:40:28,480
natural gas, how is it anyone think these policies are

598
00:40:28,480 --> 00:40:32,720
actually helping? Or again, are these... I just want... Look,

599
00:40:32,720 --> 00:40:36,000
we haven't had a war for how many years now? Nearly a

600
00:40:36,000 --> 00:40:38,960
century. I'm just wondering if there is like the matrix,

601
00:40:38,960 --> 00:40:41,520
there's actually a war going on, but we're very happily in our

602
00:40:41,520 --> 00:40:45,520
little baths watching TV and it's going on quietly in the

603
00:40:45,520 --> 00:40:50,480
background. It's an economic war. I'm just wondering what is

604
00:40:50,480 --> 00:40:55,680
happening and does it benefit some countries for these

605
00:40:55,680 --> 00:40:58,880
infighting or internal civil war and policies to occur and

606
00:40:58,880 --> 00:41:02,080
doesn't expand and then assets get bought cheaply? I'm just

607
00:41:02,080 --> 00:41:05,760
wondering what is really happening? You're moving into...

608
00:41:05,760 --> 00:41:09,280
It can't be stupidity driving this thing to an extent,

609
00:41:09,280 --> 00:41:13,280
surely. The supply issues we face, as you say, with regards

610
00:41:13,280 --> 00:41:19,200
to, pretty much name the commodity, right? Yeah.

611
00:41:19,200 --> 00:41:26,080
Significant. Not least because of the reticence of the

612
00:41:26,080 --> 00:41:33,200
companies to invest, but it has never been more difficult to

613
00:41:33,200 --> 00:41:41,280
permit a new mine anywhere in the world. Now, that comes down

614
00:41:41,280 --> 00:41:45,520
to some factors which are very appropriate. The

615
00:41:45,520 --> 00:41:49,040
science and the knowledge of the environmental impacts is

616
00:41:49,040 --> 00:41:54,080
higher, so we should properly assess all of those said

617
00:41:54,080 --> 00:41:59,120
impacts and ensure that they are addressed appropriately. But

618
00:41:59,120 --> 00:42:03,440
by the same token, when you get mired in issues like Santos

619
00:42:03,440 --> 00:42:09,520
have, when the rule book gets thrown out the window, then

620
00:42:09,520 --> 00:42:13,520
you cannot expect, regardless, frankly, that the

621
00:42:13,520 --> 00:42:18,240
commodity price companies to invest in new supply if the

622
00:42:18,240 --> 00:42:21,760
landscape is so uncertain. So when you've got a situation

623
00:42:21,760 --> 00:42:25,760
like that, it creates significant supply challenges.

624
00:42:25,760 --> 00:42:30,240
And this is part of our entire argument around what we feel is

625
00:42:30,240 --> 00:42:36,960
a real golden age developing for many commodities because

626
00:42:36,960 --> 00:42:42,080
traditionally, as you say, resources have been very

627
00:42:42,080 --> 00:42:47,600
high-quality, and we can say resources has, has, was, and

628
00:42:47,600 --> 00:42:52,400
will be a supply and demand driven economics 101 sort of

629
00:42:52,400 --> 00:42:56,800
environment or industry. But the problem we've got today is

630
00:42:56,800 --> 00:43:00,800
that the supply response to high commodity prices is no

631
00:43:00,800 --> 00:43:05,920
longer straightforward. And to put it in perspective, the

632
00:43:05,920 --> 00:43:11,360
traditional rule of thumb for developing a new mine was that

633
00:43:11,360 --> 00:43:15,680
seven and ten years from first successful drill hole to first

634
00:43:15,680 --> 00:43:18,560
production. That was your rule of thumb. Obviously, there's

635
00:43:18,560 --> 00:43:22,240
exceptions to the rule. That seven to ten years today is

636
00:43:22,240 --> 00:43:26,080
more like fifteen to twenty. So you find something today, you

637
00:43:26,080 --> 00:43:29,200
will not see the fruits of your labor for fifteen to twenty

638
00:43:29,200 --> 00:43:37,280
years. Now, if you are a board member or a management team of

639
00:43:37,280 --> 00:43:41,760
any company, there's a real likelihood that you're not

640
00:43:41,760 --> 00:43:44,720
going to be in the job in fifteen to twenty years. Indeed,

641
00:43:44,720 --> 00:43:49,040
we criticize boards for being in place for that long. So who's

642
00:43:49,040 --> 00:43:50,720
going to commit to that sort of project where you're not going

643
00:43:50,720 --> 00:43:54,960
to see the fruits of your labor? This is the huge

644
00:43:54,960 --> 00:43:57,520
fundamental issue we face with regards to new supply of many

645
00:43:57,520 --> 00:44:00,240
of these commodities. But how do you invest that way? Because

646
00:44:00,240 --> 00:44:03,360
I'm looking at your portfolios. You've got a small caps farm,

647
00:44:03,360 --> 00:44:05,440
which I'm assuming you're probably taking new issues, new

648
00:44:05,440 --> 00:44:07,360
things coming up, great asset. And then you've got the larger

649
00:44:07,360 --> 00:44:11,440
caps, you break it up, right? But how the hell do you look at

650
00:44:11,440 --> 00:44:15,280
potentially supporting, you know, someone, you know, goes

651
00:44:15,280 --> 00:44:17,200
find something on the land, needs money to get out of the

652
00:44:17,200 --> 00:44:19,440
ground and then you just go, sorry, mate, it's just not

653
00:44:19,440 --> 00:44:28,400
commercial. How do you invest in this climate? With challenge.

654
00:44:29,280 --> 00:44:35,120
Look, there's a typical curve that resources investment

655
00:44:35,120 --> 00:44:38,960
follows and share price charts follow. You know, there's the

656
00:44:38,960 --> 00:44:44,000
initial, you know, boring what appears a flat line, you know,

657
00:44:44,000 --> 00:44:49,120
on the chart of, you know, very small company trying to raise

658
00:44:49,120 --> 00:44:52,080
money from family and friends to go out and drill their first

659
00:44:52,080 --> 00:44:57,280
hole. They then get a sniff and they might come around and

660
00:44:57,280 --> 00:45:00,480
raise a bit more money to drill the next holes and you start to

661
00:45:00,480 --> 00:45:04,240
get some excitement and you get that excitement curve run up as

662
00:45:04,240 --> 00:45:09,680
as, you know, that arm waving period goes on and there's the

663
00:45:09,680 --> 00:45:15,040
hope and dream that you found something career making. And

664
00:45:15,040 --> 00:45:22,880
then you go through the long drawn out period of delineation

665
00:45:22,880 --> 00:45:25,040
where, you know, your drilling isn't actually adding to the

666
00:45:25,040 --> 00:45:28,960
size of it, it's just proving out what you've got, doing your

667
00:45:28,960 --> 00:45:35,760
studies, you're proving out the size of your resource, doing

668
00:45:35,760 --> 00:45:37,760
your feasibility study to see whether it's actually economic

669
00:45:37,760 --> 00:45:40,640
to dig it out of the ground, going through the funding

670
00:45:40,640 --> 00:45:43,680
process, getting the funding to build it and then going through

671
00:45:43,680 --> 00:45:46,960
the build. And ultimately, it's probably going to cost you more

672
00:45:46,960 --> 00:45:50,880
and take you longer. And then finally, you know, after you've

673
00:45:50,880 --> 00:45:55,040
gone through this long, you know, boring, horrendous slide

674
00:45:55,040 --> 00:45:58,880
down, you go into production and you start generating cash

675
00:45:58,880 --> 00:46:06,400
and then you're up and away. And that's a very typical life

676
00:46:06,400 --> 00:46:13,040
cycle of a resources company. It's not easy. When you sound,

677
00:46:13,040 --> 00:46:15,840
it just sounds like there's an expression running around,

678
00:46:15,840 --> 00:46:19,520
which I don't like, which is you will own nothing and you

679
00:46:19,520 --> 00:46:22,880
happy. Meaning we'll own everything and then you work for

680
00:46:22,880 --> 00:46:26,320
us. So what I'm kind of hearing here is, and you're seeing it

681
00:46:26,320 --> 00:46:29,840
quite a lot, that people, well, and look, it's great for

682
00:46:29,840 --> 00:46:33,280
companies like Santos and the big entities that, you know,

683
00:46:33,280 --> 00:46:36,240
have the capital, have the means to and have the connections

684
00:46:36,240 --> 00:46:40,560
to get things done. It just also means that unless you have

685
00:46:40,560 --> 00:46:43,440
those connections, those resources, great projects, which,

686
00:46:43,440 --> 00:46:46,400
you know, people need to actually go about their daily

687
00:46:46,400 --> 00:46:50,880
lives, might not be there. And hence the supply suffers. I

688
00:46:50,880 --> 00:46:56,800
suppose it is a game is three or four day, you know, chance of

689
00:46:56,800 --> 00:47:00,720
the largest scale I played by grand masters. So I always find

690
00:47:00,720 --> 00:47:04,640
it incredibly interesting. And I remember, I remember the

691
00:47:04,640 --> 00:47:09,440
comment. The best taken, right? Yeah. So that's the other way

692
00:47:09,440 --> 00:47:14,080
of thinking about this is ultimately, you know, big

693
00:47:14,080 --> 00:47:16,960
companies will take over small companies if they've got

694
00:47:16,960 --> 00:47:22,000
something worth acquiring, and then they end up building the

695
00:47:22,000 --> 00:47:26,400
mine or at least expanding the mine. That's also the

696
00:47:26,400 --> 00:47:30,080
typical thing. So when we think about building a portfolio, you

697
00:47:30,080 --> 00:47:34,320
want to have, as we think about it, a barbell approach. You

698
00:47:34,320 --> 00:47:38,320
have at one end of that barbell, you have your big liquid

699
00:47:41,120 --> 00:47:46,000
cash flowing entities that have a large diversified portfolio

700
00:47:46,000 --> 00:47:49,920
of assets that reduces the risk. And then at the other end of

701
00:47:49,920 --> 00:47:56,000
the barbell, you have those earlier stage, higher risk, of

702
00:47:56,000 --> 00:47:59,280
course, but not, you know, companies who are trying to

703
00:47:59,280 --> 00:48:02,640
find or develop, you know, the next big thing. Now, if it's

704
00:48:02,640 --> 00:48:06,400
good enough, they'll get taken out, they'll get before it, you

705
00:48:06,400 --> 00:48:07,920
know, it really sees the light of day.

706
00:48:09,040 --> 00:48:12,640
Well, this is actually quite fun. For the small caps in the

707
00:48:12,640 --> 00:48:16,000
small caps, do you take new listings in that portfolio? Is

708
00:48:16,000 --> 00:48:16,960
it a different fund?

709
00:48:18,800 --> 00:48:22,640
Okay, so when you're looking at a new mine coming on to market,

710
00:48:23,440 --> 00:48:25,840
we've discussed a lot about gas, let's say, we've even got

711
00:48:25,840 --> 00:48:29,120
into copper, Dr. Copper and our friend gold. So when you're

712
00:48:29,120 --> 00:48:31,200
looking for a new project coming on, I think there's a

713
00:48:31,200 --> 00:48:34,080
couple of IPOs where there was three IPOs recently, one was

714
00:48:34,080 --> 00:48:37,600
copper gold, I think far northern's resources is about to

715
00:48:37,600 --> 00:48:41,520
IPO up Queensland way, there's a couple projects coming on.

716
00:48:41,520 --> 00:48:46,000
What do you look for when you're looking for a new listing in a

717
00:48:46,000 --> 00:48:46,880
copper gold play?

718
00:48:49,360 --> 00:48:52,800
So really depends. So for example, most recently, you've

719
00:48:52,800 --> 00:48:56,560
had metals acquisition corp, right? So yeah, that's, that's

720
00:48:56,560 --> 00:49:03,520
a somewhat unusual IPO in that they have an existing mine, the

721
00:49:03,520 --> 00:49:08,560
CSA mine, which is Cobra. And that is a actually a very old

722
00:49:08,560 --> 00:49:13,120
mine, which they acquired from Glencore. So to come to market

723
00:49:13,120 --> 00:49:17,280
with what's actually a very mature asset is quite unusual.

724
00:49:19,040 --> 00:49:21,840
Having said that, you've also had 29 metals come to market.

725
00:49:21,840 --> 00:49:24,960
Now that work that was actually a sell down by EMR private

726
00:49:24,960 --> 00:49:31,200
equity of also a portfolio of relatively mature assets. The

727
00:49:31,200 --> 00:49:34,240
alternative is, you know, exploration or development

728
00:49:34,240 --> 00:49:38,800
plays, you know, companies who've got tenements, they're

729
00:49:38,800 --> 00:49:41,920
drilling or develop looking to drill out, and they're raising

730
00:49:41,920 --> 00:49:48,480
the money in the IPO to go and pursue that exploration. But

731
00:49:48,480 --> 00:49:51,520
they're quite different risk profiles. So you know, whereas

732
00:49:51,520 --> 00:49:57,280
metals acquisition corp, per its name, has a strategy to, you

733
00:49:57,280 --> 00:49:59,600
know, as they've bought a mature mine, they will more than

734
00:49:59,600 --> 00:50:03,840
likely buy other producing assets to build out a portfolio

735
00:50:03,840 --> 00:50:08,640
of producing assets and, you know, gradually reduce, you

736
00:50:08,640 --> 00:50:12,960
know, single mine risk within that portfolio. It's got a

737
00:50:12,960 --> 00:50:19,440
management team who've got a track record of buying troubled

738
00:50:19,440 --> 00:50:23,040
assets and turning them around. So that is their their

739
00:50:23,040 --> 00:50:27,120
MR. But yeah, so as I say, otherwise, you've got a

740
00:50:27,120 --> 00:50:29,760
management team that might have a more of an exploration bent

741
00:50:29,760 --> 00:50:35,280
and they're looking to develop or build out an undiscovered

742
00:50:35,280 --> 00:50:37,760
portfolio. So it's very different. But what you're

743
00:50:37,760 --> 00:50:42,480
looking for is the skill set within the management team.

744
00:50:42,480 --> 00:50:48,320
You're looking for a clear line of sight, you know, a catalyst

745
00:50:48,320 --> 00:50:53,200
pathway for news flow and you're looking for obviously

746
00:50:53,200 --> 00:50:56,960
appropriate funding for the business model. In the case of

747
00:50:56,960 --> 00:51:02,320
an exploration play, you want them to have sufficient rope to

748
00:51:02,320 --> 00:51:06,320
go out and drill a number of wells, not just one, because

749
00:51:06,320 --> 00:51:10,080
it's the classic case of, as you touched on earlier, you

750
00:51:10,080 --> 00:51:15,200
know, fundraising, A, B, C, D and E. You don't want to be

751
00:51:15,200 --> 00:51:19,360
that sort of living hand to mouth scenario where good news

752
00:51:19,360 --> 00:51:22,000
actually gets sold because the market knows that you're just

753
00:51:22,000 --> 00:51:25,280
going to be passing around the tin yet again to fund the next

754
00:51:25,280 --> 00:51:30,800
well. So you want that relative degree of funding comfort to

755
00:51:30,800 --> 00:51:32,400
enable a company to pursue a strategy.

756
00:51:32,400 --> 00:51:36,000
So for my understanding, you simply for the listeners, the

757
00:51:36,000 --> 00:51:38,880
the two main things you're looking at is essentially to

758
00:51:38,880 --> 00:51:43,040
pick up a cash flow asset spun out from a legacy business that

759
00:51:43,040 --> 00:51:45,360
they can potentially work better and then utilize that

760
00:51:45,360 --> 00:51:47,280
asset, which might be a bit more expensive than margins on

761
00:51:47,280 --> 00:51:50,080
their list. It's got cash flow and then looking at a number of

762
00:51:50,080 --> 00:51:54,320
bold out on acquisitions for businesses to beep everything

763
00:51:54,320 --> 00:51:56,720
up, they have a good team that can essentially streamline it.

764
00:51:56,720 --> 00:52:02,000
And then secondly, I suppose startup is a good way of

765
00:52:02,000 --> 00:52:05,440
thinking and then startups incredibly exciting finding a

766
00:52:05,440 --> 00:52:09,280
unicorn. But the problem with startups is cash flow and

767
00:52:09,280 --> 00:52:12,240
runway. So whether or not they can get where they need to be

768
00:52:12,240 --> 00:52:14,640
with the cash in the runway, which they have. That's right.

769
00:52:15,280 --> 00:52:19,360
Right. Excellent. Okay, so one comment I remember you saying

770
00:52:19,360 --> 00:52:22,240
it's seed partners is true. And I've been thinking about it.

771
00:52:22,240 --> 00:52:26,160
When from bottom of a crash of a cycle to commodities, is it

772
00:52:26,160 --> 00:52:29,920
generally true that that normally goes up 10x? I remember

773
00:52:29,920 --> 00:52:32,560
you saying that, like if you're looking at lithium, is that

774
00:52:34,560 --> 00:52:36,960
the top after crash on the run up?

775
00:52:36,960 --> 00:52:41,840
Look, it could be all of that and more right. And it really

776
00:52:42,560 --> 00:52:49,120
depends on so equities will trade much greater multiples

777
00:52:49,120 --> 00:52:52,560
than the commodity itself. But if you look at lithium as an

778
00:52:52,560 --> 00:53:01,280
example, bottom to top in the thousands of percent, literally

779
00:53:01,840 --> 00:53:07,920
the moves and look at Azure, that was one of the more

780
00:53:07,920 --> 00:53:11,600
spectacular things I've ever seen to go literally 12 months

781
00:53:11,600 --> 00:53:17,920
ago, talking about an exploration play for lithium and

782
00:53:17,920 --> 00:53:23,520
trading 20 cents to being taken out of something approximating

783
00:53:23,520 --> 00:53:29,200
$4 within about six or eight months. It was spectacular.

784
00:53:30,640 --> 00:53:32,720
Now, there are a number of factors going on there. Number

785
00:53:32,720 --> 00:53:35,280
one, you obviously had significant success with the

786
00:53:35,280 --> 00:53:45,120
drill bit. You had some very deep pocketed strategic investors,

787
00:53:45,120 --> 00:53:48,720
shall we say, who were playing a long term game. And the asset

788
00:53:48,720 --> 00:53:51,760
was located in a jurisdiction which is very mining friendly.

789
00:53:51,760 --> 00:53:55,920
So it ticked a lot of boxes. What you've obviously seen

790
00:53:56,640 --> 00:53:59,760
interestingly as well is that it all occurred in an

791
00:53:59,760 --> 00:54:02,960
environment where the lithium price was going through a

792
00:54:02,960 --> 00:54:06,320
significant correction. So that's what made it even more

793
00:54:06,320 --> 00:54:14,160
extraordinary. Now, this goes to my point earlier about the

794
00:54:14,160 --> 00:54:17,280
cycle that commodity companies go through. What you've actually

795
00:54:17,280 --> 00:54:20,320
seen with the lithium market is because it's very nascent in

796
00:54:20,320 --> 00:54:24,160
and of itself. It was on its knees and it's actually not

797
00:54:24,160 --> 00:54:31,120
that long ago. It's mid 2020 and the lithium spodumene

798
00:54:31,120 --> 00:54:36,560
concentrate, 6% concentrate, was trading sub $400 a ton. Now,

799
00:54:36,560 --> 00:54:41,440
it's come back to something approximating $1,000 a ton now

800
00:54:41,440 --> 00:54:44,080
and everyone's wringing their hands going, oh my God, what's

801
00:54:44,080 --> 00:54:47,200
going on? No one's making any money. Well, need I remind you,

802
00:54:47,200 --> 00:54:51,440
it was 40% of today's price only a couple of years ago. Now,

803
00:54:51,440 --> 00:54:55,360
in between times, it spiked significantly to thousands and

804
00:54:55,360 --> 00:54:58,720
thousands and thousands of dollars a ton. So yes, to your

805
00:54:58,720 --> 00:55:03,680
point and your question, commodities can go many, many,

806
00:55:03,680 --> 00:55:08,720
many X, particularly these more nascent commodities, but the

807
00:55:08,720 --> 00:55:14,720
equities will do that on steroids.

808
00:55:14,720 --> 00:55:18,320
Yeah, and I'm just looking at the lithium carbonate price on

809
00:55:18,320 --> 00:55:26,960
December 21st, 2020, it was like 26,381. It peaked November 7,

810
00:55:26,960 --> 00:55:35,920
2022, roughly at 610,000. It's 20X. Now, it's down to 98,500.

811
00:55:35,920 --> 00:55:41,360
I suppose and look, a lot of people listening, you know, just

812
00:55:41,360 --> 00:55:44,080
like you know, we've seen with many other investments, you

813
00:55:44,080 --> 00:55:46,960
know, after, you know, one hour pay later, everything rips up,

814
00:55:46,960 --> 00:55:50,400
it's all it is and goes again, Sam is commodities probably

815
00:55:50,400 --> 00:55:53,120
substantially more. So what part of the cycle is lithium and

816
00:55:53,120 --> 00:55:59,360
how far away do you see? How long do you take before lithium

817
00:55:59,360 --> 00:56:02,640
turns starts the climb back up again?

818
00:56:02,640 --> 00:56:08,400
Yeah, look, it's at a very interesting juncture right now.

819
00:56:08,400 --> 00:56:11,920
To say you've seen it pull back significantly to the extent

820
00:56:11,920 --> 00:56:15,280
that, you know, we are definitely into the cost curve.

821
00:56:15,280 --> 00:56:19,440
There are lithium miners out there today who are not making

822
00:56:19,440 --> 00:56:25,040
it. They're losing money. Now, obviously, what the reason we

823
00:56:25,040 --> 00:56:28,960
got to this point is because there was a supply response,

824
00:56:28,960 --> 00:56:32,720
particularly out of China, and all that low-grade material

825
00:56:32,720 --> 00:56:36,720
that was coming out of China was brought on very quickly. And

826
00:56:36,720 --> 00:56:42,480
at a time when the demand for lithium is still really at its

827
00:56:42,480 --> 00:56:48,080
relatively early stages. Obviously, you know, I'm sure

828
00:56:48,080 --> 00:56:50,640
your listeners well know what lithium is used for. It's used

829
00:56:50,640 --> 00:56:55,680
in batteries. And we are still at the relatively early stages

830
00:56:55,680 --> 00:56:59,920
of the build out of batteries, specifically going into

831
00:56:59,920 --> 00:57:06,240
electric vehicles primarily. But what we've got today is with

832
00:57:06,240 --> 00:57:09,360
the pullback, there is some supply rationing starting to

833
00:57:09,360 --> 00:57:13,120
occur. We are seeing some interesting responses out of,

834
00:57:13,120 --> 00:57:16,080
you know, particularly those more marginal tons in China,

835
00:57:16,080 --> 00:57:19,920
what's called the Lepidolite supply in China, which is very

836
00:57:19,920 --> 00:57:24,160
low-grade supply and actually has a very significant

837
00:57:24,160 --> 00:57:28,240
environmental footprint, which is conveniently forgotten by

838
00:57:28,240 --> 00:57:33,360
many in the EV camp. But what you've got is that supply

839
00:57:33,360 --> 00:57:38,880
response starting to occur. The concerns have been that demand

840
00:57:38,880 --> 00:57:43,440
has moderated or will moderate, particularly in China, being

841
00:57:43,440 --> 00:57:46,880
the biggest producer of electric vehicles. That's

842
00:57:46,880 --> 00:57:49,520
actually seeming like it might hang in there actually for

843
00:57:49,520 --> 00:57:52,960
2024. So we've seen the prices come back. The equities have

844
00:57:52,960 --> 00:57:56,960
pulled back significantly and it's looking increasingly

845
00:57:56,960 --> 00:58:00,640
interesting from an investment perspective to really start

846
00:58:00,640 --> 00:58:02,800
getting involved, particularly when you've seen, you know,

847
00:58:02,800 --> 00:58:06,480
companies like Pilbara with extraordinary short interest.

848
00:58:06,480 --> 00:58:09,840
It's certainly right for a squeeze. Yeah, PLS and mineral

849
00:58:09,840 --> 00:58:12,240
resources are quite interesting. You can watch them closely on

850
00:58:12,240 --> 00:58:14,880
their trading behavior. The mineral resources has been

851
00:58:14,880 --> 00:58:19,920
swinging substantially from like low 50s up to 71. I think

852
00:58:19,920 --> 00:58:25,200
technically it's on a climb again, but they also have iron ore

853
00:58:25,200 --> 00:58:28,080
assets. Actually, that's what we haven't touched on, iron ore,

854
00:58:28,080 --> 00:58:34,400
which is, you know, in PLS and resources. What's your

855
00:58:34,400 --> 00:58:38,320
thoughts? What's happening with iron ore? So this comes back to,

856
00:58:38,320 --> 00:58:42,560
this is an interesting one, right? So iron ore is actually

857
00:58:42,560 --> 00:58:46,720
one of the few winners of 2023. You know, obviously in that

858
00:58:46,720 --> 00:58:52,320
presentation the other day, the biggest win for us by an

859
00:58:52,320 --> 00:58:55,840
absolute country mile was our uranium exposure. But within

860
00:58:55,840 --> 00:59:02,080
the Australian market context, if you were an iron ore producer,

861
00:59:02,080 --> 00:59:05,200
you were one of the few places which actually made money

862
00:59:05,200 --> 00:59:09,840
through 2023 because frankly speaking, the price remained far

863
00:59:09,840 --> 00:59:13,120
stronger than many expected. Now, why is that? You know, the

864
00:59:13,120 --> 00:59:16,960
expectations were for weakness because, and again, coming back

865
00:59:16,960 --> 00:59:20,320
to points I made in that presentation, there's a

866
00:59:20,320 --> 00:59:24,400
perception out there that the Chinese economy is heading to

867
00:59:24,400 --> 00:59:29,600
hell in a handbasket. And now part of that is because of the

868
00:59:29,600 --> 00:59:35,600
challenges of the property market in China. And I, you know,

869
00:59:35,600 --> 00:59:39,120
there is no easy way for that property market to solve its

870
00:59:39,120 --> 00:59:43,840
challenges. It is structurally, significantly challenged and

871
00:59:43,840 --> 00:59:48,320
will take a long time to fix. But where the market, I think,

872
00:59:48,960 --> 00:59:54,000
got itself into a bit of a negative spiral was the

873
00:59:54,000 --> 00:59:56,720
expectation that the Chinese property market was the only

874
00:59:57,360 --> 01:00:00,800
driver of steel demand. And therefore, with that

875
01:00:00,800 --> 01:00:08,400
negativity, you know, all pervasive, it led to perception

876
01:00:08,400 --> 01:00:12,320
or at least expectation that the demand for iron ore would be

877
01:00:12,320 --> 01:00:16,240
weak as well. What actually transpired was that Chinese

878
01:00:16,240 --> 01:00:20,880
steel production actually ended up being still over a billion

879
01:00:20,880 --> 01:00:26,480
tons a year. The reality is that there's, you know, the iron

880
01:00:26,480 --> 01:00:30,800
ore supply market is still obviously controlled by a very

881
01:00:30,800 --> 01:00:35,040
small number of players and the cost curve is very flat. So

882
01:00:35,040 --> 01:00:39,920
obviously, you've got BHP, Rio Tinto, Fortescue and Vale as

883
01:00:39,920 --> 01:00:44,160
the listed players who are a very, very significant component

884
01:00:44,160 --> 01:00:50,400
of that market. With that, steel production remaining fairly

885
01:00:50,400 --> 01:00:54,000
robust and the fact that there wasn't significant supply

886
01:00:55,120 --> 01:00:57,920
coming into the market, actually the price remained

887
01:00:57,920 --> 01:01:01,840
relatively high. Now, the other aspect which drove some

888
01:01:01,840 --> 01:01:06,960
ongoing build out of the requirement for demand for steel

889
01:01:06,960 --> 01:01:11,920
in China was their infrastructure build and that

890
01:01:11,920 --> 01:01:16,560
ongoing requirement for steel in that build out. So it's not

891
01:01:16,560 --> 01:01:22,480
just property related. And the reality is, look, do I think

892
01:01:23,280 --> 01:01:27,760
Chinese steel is a high growth market? No, I don't. But what's

893
01:01:27,760 --> 01:01:31,200
been more interesting actually in recent times and it's sort of

894
01:01:31,200 --> 01:01:34,320
I think caught many market participants by surprise is

895
01:01:34,320 --> 01:01:40,480
actually the rise of India and India's demand for iron ore to

896
01:01:40,480 --> 01:01:45,920
build out there, feed their steel mills is significant.

897
01:01:46,320 --> 01:01:48,720
Can we dig into that a bit? Because I have my knowledge on

898
01:01:48,720 --> 01:01:52,320
what's happening in India with the growth. I hear snippets,

899
01:01:52,320 --> 01:01:55,040
but I really haven't gone down a rabbit hole on what is

900
01:01:55,040 --> 01:01:57,600
happening with the growth in India and as you said, the

901
01:01:57,600 --> 01:02:02,400
demand for resources and do you think that's what's driving, as

902
01:02:02,400 --> 01:02:07,440
you were saying before? Yeah, I do think it is a reasonably

903
01:02:07,440 --> 01:02:10,320
large driver, certainly from the marginal perspective, that's

904
01:02:10,320 --> 01:02:16,880
sort of the new additional demand tons. Estimates are that

905
01:02:16,880 --> 01:02:22,800
India, producing somewhere over 100 million tons of steel

906
01:02:22,800 --> 01:02:26,400
today could grow to 500 million tons in the next couple of

907
01:02:26,400 --> 01:02:29,760
decades. Now, a couple of decades is a long term, but the

908
01:02:29,760 --> 01:02:36,960
reality is this growth, the hope, shall we say, that's sort

909
01:02:36,960 --> 01:02:40,800
of sat around India seems to be perhaps finally manifesting

910
01:02:40,800 --> 01:02:44,160
itself. Obviously, the population base of India is

911
01:02:44,160 --> 01:02:54,000
very significant, very similar in scale to China and where

912
01:02:54,000 --> 01:02:56,640
people sort of looked at that privacy and thought, well,

913
01:02:56,640 --> 01:02:59,520
that's the next driver of growth. The reality has been

914
01:02:59,520 --> 01:03:04,240
that the constraint, ironically, on Indian growth is the fact

915
01:03:04,240 --> 01:03:08,720
that it's a democracy and you don't have the ability, it's

916
01:03:08,720 --> 01:03:14,000
not a command economy as China is. But what's happening now

917
01:03:14,000 --> 01:03:20,400
with India, very interestingly, is this ugly law of big

918
01:03:20,400 --> 01:03:23,440
numbers. So if you think about Chinese growth rate,

919
01:03:23,440 --> 01:03:29,840
when you're growing at 5% from a billion tons of steel, it's

920
01:03:29,840 --> 01:03:35,120
50 million tons. When you're growing at 5% from 100 million

921
01:03:35,120 --> 01:03:39,120
tons, it's only 5 million tons. So just to give you some

922
01:03:39,120 --> 01:03:42,000
feel, that law of big numbers, that's why it becomes

923
01:03:42,000 --> 01:03:46,400
exponential. So India has some iron ore of its own and

924
01:03:46,400 --> 01:03:50,240
historically has sourced the lion's share of its iron ore

925
01:03:50,240 --> 01:03:53,600
domestically. But as their industry is growing, you get

926
01:03:53,600 --> 01:03:57,040
that marginal ton has to be imported. And so suddenly you've

927
01:03:57,040 --> 01:03:59,600
got a new player in the seaborne market who wasn't

928
01:03:59,600 --> 01:04:02,640
really there before. And they're looking for high quality iron

929
01:04:02,640 --> 01:04:05,920
ore. And interestingly, they're also looking for met coal. So

930
01:04:05,920 --> 01:04:07,600
I was just about to ask you what's the other commodity

931
01:04:07,600 --> 01:04:11,920
they're looking at? Met coal is a big one. So you need the

932
01:04:11,920 --> 01:04:17,840
best quality met metallurgical coal, the steelmaking, and they

933
01:04:17,840 --> 01:04:23,200
will be very strong participants in the seaborne

934
01:04:23,200 --> 01:04:25,200
market for that as well.

935
01:04:25,200 --> 01:04:28,240
Yeah, that demand doesn't sound like it's going away. It just

936
01:04:28,240 --> 01:04:31,200
sounds like it's building quite a lot.

937
01:04:31,200 --> 01:04:35,120
It is and it will continue to. I mean, obviously there's, you

938
01:04:35,120 --> 01:04:42,000
know, around steel, there's the work being done around so-called

939
01:04:42,000 --> 01:04:46,400
green steel, whether that's sourced using hydrogen, or

940
01:04:46,400 --> 01:04:51,440
I think what's more likely is, well, you get the build out of

941
01:04:51,440 --> 01:04:54,400
the electric arc furnace production as opposed to blast

942
01:04:54,400 --> 01:05:01,200
furnace, but utilizing pellet, so very high grade pellet, so

943
01:05:01,200 --> 01:05:05,600
what they call direct injection pellets. So that's what will

944
01:05:05,600 --> 01:05:10,320
probably occur in the US and in the newer mills being installed

945
01:05:10,320 --> 01:05:12,800
in other places around the world, they'll go to EAFs and

946
01:05:12,800 --> 01:05:16,960
so your carbon footprint of these high grade iron ore

947
01:05:16,960 --> 01:05:21,440
pellets is far lower than traditional blast furnaces.

948
01:05:21,440 --> 01:05:27,360
Yeah, that's fascinating. So with the energy to, well, the

949
01:05:27,360 --> 01:05:30,240
population is getting bigger across the world, so everyone

950
01:05:30,240 --> 01:05:34,720
requires more energy. Obviously a number of countries want to

951
01:05:34,720 --> 01:05:39,360
go ESG, but what I find always fascinating about policies

952
01:05:39,360 --> 01:05:42,960
which come out is you've heard of the rubber band expression,

953
01:05:42,960 --> 01:05:46,720
right? Something gets so pushed down because emotionally, you

954
01:05:46,720 --> 01:05:49,200
know, people are standing on a soapbox shaking their finger

955
01:05:49,200 --> 01:05:52,480
going, you shouldn't do this for moral and ethical purposes,

956
01:05:52,480 --> 01:05:57,280
but then smart money just proceeds to wait and be patient

957
01:05:57,280 --> 01:06:00,320
and they love it because if things get pushed down

958
01:06:00,320 --> 01:06:03,680
substantially below when they should be and then it snaps back

959
01:06:03,680 --> 01:06:08,960
so aggressively. Yeah. So it's a lot of money, and it's

960
01:06:08,960 --> 01:06:14,560
a lot of money, which must be incredibly fun to invest in.

961
01:06:14,560 --> 01:06:20,640
It is, and you know, for us really the

962
01:06:20,640 --> 01:06:23,840
best example, recent example of that is uranium.

963
01:06:23,840 --> 01:06:26,880
And that's where I wanted to go to. That's kind of where I was going to.

964
01:06:26,880 --> 01:06:31,200
I really want to, look, why don't you just give exactly what you said

965
01:06:31,200 --> 01:06:33,440
and just say partnerships and explanation of what's happened to

966
01:06:33,440 --> 01:06:36,160
the world of uranium because that was fascinating to hear your

967
01:06:36,160 --> 01:06:41,760
thoughts on the landscape of uranium. Yeah. So look,

968
01:06:41,760 --> 01:06:44,960
uranium has faced, you know, no shortage of headwinds, right? You know,

969
01:06:44,960 --> 01:06:52,240
certainly post-Fukushima most recently, which as it happens is 13 years ago now,

970
01:06:52,240 --> 01:06:58,080
you know, 2011 when, you know, Fukushima occurred and that

971
01:06:58,080 --> 01:07:01,840
really damaged obviously the appetite for nuclear power

972
01:07:01,840 --> 01:07:08,720
globally. But what you've got today is this growing recognition that

973
01:07:08,720 --> 01:07:12,080
in order to decarbonize our power generation

974
01:07:12,080 --> 01:07:18,240
network, we can obviously pursue renewable power,

975
01:07:18,240 --> 01:07:22,320
but the reality is that we do need a very significant

976
01:07:22,320 --> 01:07:27,680
base load support for that, you know, the intermittency of renewable

977
01:07:27,680 --> 01:07:33,040
power that nuclear power can fulfill.

978
01:07:33,040 --> 01:07:36,720
And this sort of growing recognition around the world is

979
01:07:36,720 --> 01:07:39,600
really sort of finally come to light, you know,

980
01:07:39,600 --> 01:07:44,160
whether that is in the US where, you know, the Biden administration

981
01:07:44,160 --> 01:07:48,640
obviously came to power on a very significant decarbonization

982
01:07:48,640 --> 01:07:54,160
related platform with the intent of actually decommissioning

983
01:07:54,160 --> 01:07:57,440
all their nukes. They very quickly realized that

984
01:07:57,440 --> 01:08:01,280
they were never going to achieve anything like their decarbonization

985
01:08:01,280 --> 01:08:05,120
goals if they were to do so. So they have completely suspended all those plans and

986
01:08:05,120 --> 01:08:08,880
indeed we've seen in the last 12 months the

987
01:08:08,880 --> 01:08:13,600
first new nuclear power facility open up in the US

988
01:08:13,600 --> 01:08:19,280
in decades. In Europe, you know, you've seen nuclear power added to their

989
01:08:19,280 --> 01:08:24,400
sustainable finance taxonomy after much debate and hand-wringing, of

990
01:08:24,400 --> 01:08:27,520
course, led by the French who are obviously very big

991
01:08:27,520 --> 01:08:32,800
supporters of nuclear power. In China, they are building more nukes

992
01:08:32,800 --> 01:08:36,400
than they ever have and indeed globally we are now building more nuclear

993
01:08:36,400 --> 01:08:42,480
facilities than we have since the 1970s. What this means is that in a market

994
01:08:42,480 --> 01:08:47,040
today that is roughly 180 million pounds of demand,

995
01:08:47,040 --> 01:08:51,840
we are supplying that demand with about 130 million pounds. So we're 50 million

996
01:08:51,840 --> 01:08:56,240
pounds short. Now where that has been filled historically

997
01:08:56,240 --> 01:09:00,400
was from decommissioned nuclear warheads

998
01:09:00,400 --> 01:09:04,480
for a long period of time and of course stockpiles that built up post

999
01:09:04,480 --> 01:09:08,880
Fukushima, so more recently. But what you've got today is this, as I

1000
01:09:08,880 --> 01:09:14,320
say, this realization that nuclear power has or needs to be a component

1001
01:09:14,320 --> 01:09:17,600
of our power generation fleet from a carbon

1002
01:09:17,600 --> 01:09:21,760
perspective. But the reality, and this comes back to the point around

1003
01:09:21,760 --> 01:09:25,200
permitting new mines, there's still significant

1004
01:09:25,200 --> 01:09:28,400
nimbus going on, whether it's regards to where these nuclear facilities are

1005
01:09:28,400 --> 01:09:31,760
located or indeed where the mines are located.

1006
01:09:31,760 --> 01:09:35,120
And we just don't have the ability to build supply

1007
01:09:35,120 --> 01:09:40,160
quickly to meet that demand, which is why you've got a situation where

1008
01:09:40,160 --> 01:09:44,240
the commodity price, and we've been banging on about

1009
01:09:44,240 --> 01:09:48,240
where we thought the upside occurred here in uranium.

1010
01:09:48,240 --> 01:09:54,880
And well, to be fair, we were too early. We were talking about this

1011
01:09:54,880 --> 01:09:58,880
and watching the uranium price go the other way on us.

1012
01:09:58,880 --> 01:10:04,160
But what we've seen more recently is the uranium price run,

1013
01:10:04,160 --> 01:10:09,680
well, it was trading not that long ago, so $30 a pound, going back a couple

1014
01:10:09,680 --> 01:10:13,280
of years. Just recently it tipped into three

1015
01:10:13,280 --> 01:10:18,000
figures, over $100 a pound. And the reality is we still

1016
01:10:18,000 --> 01:10:23,840
have a paucity of new supply coming. So we think there is still

1017
01:10:23,840 --> 01:10:28,720
significant upside to come here. As I touched on earlier, it's been a

1018
01:10:28,720 --> 01:10:32,400
tremendous investment space for us through

1019
01:10:32,400 --> 01:10:37,120
2023, as a lot of the market came to the

1020
01:10:37,120 --> 01:10:41,280
realization that maybe there was a thematic here to invest in.

1021
01:10:41,280 --> 01:10:45,840
And we were already set. And as I say, I've been talking till I'm

1022
01:10:45,840 --> 01:10:50,400
blue in the face about some of the favoured names in our portfolio, and

1023
01:10:50,400 --> 01:10:53,440
thankfully that's played out. But when you're seeing the...

1024
01:10:53,440 --> 01:10:55,840
What are the names in the portfolio in uranium?

1025
01:10:55,840 --> 01:10:59,840
Yeah, so we have a bit of a spread. I mean, within the global resources

1026
01:10:59,840 --> 01:11:02,800
portfolio, our biggest position has been BOSS

1027
01:11:02,800 --> 01:11:06,800
for a few years now, listed here in Australia.

1028
01:11:06,800 --> 01:11:10,560
Done very, very well. Actually had a nice little pullback

1029
01:11:10,560 --> 01:11:14,160
since the start of the year, touched $6 a share, came back to about

1030
01:11:14,160 --> 01:11:17,120
$4.50. We've been buying some more just in the

1031
01:11:17,120 --> 01:11:21,920
last week. We think it's like any

1032
01:11:21,920 --> 01:11:26,400
surge in markets, there will be periods of consolidation,

1033
01:11:26,400 --> 01:11:30,000
and that's what this is right now, and just provides another

1034
01:11:30,000 --> 01:11:33,280
opportunity. But BOSS, in Canada, the biggest

1035
01:11:33,280 --> 01:11:36,960
producer, Cameco, is a good go-to. It's the

1036
01:11:36,960 --> 01:11:41,760
biggest listed producer in the developed world,

1037
01:11:41,760 --> 01:11:46,480
and has a very diversified portfolio now, because they're not only in

1038
01:11:46,480 --> 01:11:50,960
uranium mining, they're also in enrichment now, having acquired Westinghouse.

1039
01:11:50,960 --> 01:11:56,400
So they're working their way down the value chain. But that

1040
01:11:56,400 --> 01:12:00,320
is a great go-to name for, I guess, a long-

1041
01:12:00,320 --> 01:12:04,240
only investor who wants to be able to sleep at night

1042
01:12:04,240 --> 01:12:06,960
without significant risk in their portfolio.

1043
01:12:06,960 --> 01:12:10,160
Outside of that, Paladin, also here in Australia,

1044
01:12:10,160 --> 01:12:17,040
also approaching production, restarted at their facility.

1045
01:12:17,040 --> 01:12:20,320
Not dissimilar to BOSS, is just about to start up.

1046
01:12:20,320 --> 01:12:24,320
And then in the US, we have a company called Energy Fuels.

1047
01:12:24,320 --> 01:12:27,360
Now, Energy Fuels is listed both in the US and

1048
01:12:27,360 --> 01:12:30,960
Canada, and they have the only operational,

1049
01:12:30,960 --> 01:12:34,560
fully permitted, and operational uranium mill

1050
01:12:34,560 --> 01:12:37,680
in the lower 48. So it's a highly strategic asset.

1051
01:12:37,680 --> 01:12:40,960
They can actually process not just uranium, but also rare earths.

1052
01:12:40,960 --> 01:12:44,880
So it's a bit of a double threat, and generating

1053
01:12:44,880 --> 01:12:47,920
lots of cash flow whilst they build out their

1054
01:12:47,920 --> 01:12:51,680
upstream mines as well. What are your thoughts on Deep Yellow?

1055
01:12:51,680 --> 01:12:54,800
Because it's a situation how there's just so many companies around, you can't

1056
01:12:54,800 --> 01:12:59,040
have all of them, or you'd be specifically, like say,

1057
01:12:59,040 --> 01:13:02,800
I see always here we've invested in the past, Deep Yellow. I was just curious in

1058
01:13:02,800 --> 01:13:05,920
your thoughts on that company. Well, run by

1059
01:13:05,920 --> 01:13:10,560
a bit of an icon, frankly, in the uranium space, John Borschoff.

1060
01:13:10,560 --> 01:13:14,320
He built Paladin into a highly successful

1061
01:13:14,320 --> 01:13:21,840
uranium miner back in the last cycle. Deep Yellow are making real progress.

1062
01:13:21,840 --> 01:13:25,440
Mulgill Rock making progress. We do actually own

1063
01:13:25,440 --> 01:13:29,760
Deep Yellow in our Nuclear Energy Opportunities Fund, so the

1064
01:13:29,760 --> 01:13:34,640
uranium-focused fund. And yeah, look at on valuation, it

1065
01:13:34,640 --> 01:13:38,080
actually looks pretty good. It's not as richly

1066
01:13:38,080 --> 01:13:41,200
priced as a Paladin or a Boss, but by the same

1067
01:13:41,200 --> 01:13:46,080
token, not as well progressed. It's not as mature, but

1068
01:13:46,080 --> 01:13:50,960
it's not too far behind. If we lean into the expression, nothing goes up in a

1069
01:13:50,960 --> 01:13:54,240
straight line, and also the point you're making before that, you know, from bottom

1070
01:13:54,240 --> 01:13:57,360
to top, there's potentially 10x or more, or

1071
01:13:57,360 --> 01:14:00,480
just a bit less. I'm just looking at the uranium price,

1072
01:14:00,480 --> 01:14:04,560
US dollar pounds, which on the 9th, March 2020,

1073
01:14:04,560 --> 01:14:08,560
was $24.37. So let's say a flat line for a number of years there,

1074
01:14:08,560 --> 01:14:13,280
around 24. So he hit 104 in today's trading in 95.

1075
01:14:13,280 --> 01:14:18,800
So I suppose, what's that? Nearly 4x has gone up.

1076
01:14:18,800 --> 01:14:22,960
The way, I suppose, maybe to look at it is,

1077
01:14:22,960 --> 01:14:28,560
and I touched on before, the demand and supply of uranium. What is

1078
01:14:28,560 --> 01:14:32,560
currently the demand? What is the supply? What's the difference?

1079
01:14:32,560 --> 01:14:36,000
And how long do you reckon that's coming around for? Which I would assume

1080
01:14:36,000 --> 01:14:40,720
would probably drive this price, potentially for years to come.

1081
01:14:40,720 --> 01:14:44,560
Talk to, so my colleague, Guy Keller, who runs our uranium fund, the

1082
01:14:44,560 --> 01:14:49,040
Nuclear Energy Opportunities Fund, he makes a very valid point that,

1083
01:14:49,040 --> 01:14:54,960
yes, we've had a run to 100, but we are dealing with a market that

1084
01:14:54,960 --> 01:15:00,560
has a deficit yesterday, today, and tomorrow.

1085
01:15:00,560 --> 01:15:06,560
And that deficit today is around 50 million pounds on 180 million pound market.

1086
01:15:06,560 --> 01:15:10,800
I touched on the fact that we've been feeding that deficit with stockpiles

1087
01:15:10,800 --> 01:15:14,560
for a number of years now, but those stockpiles are being whittled away.

1088
01:15:14,560 --> 01:15:19,200
Those stockpiles built up in Japan on the back of Fukushima

1089
01:15:19,200 --> 01:15:25,120
are largely whittled away. And part of that is because they are

1090
01:15:25,120 --> 01:15:29,040
starting to, they're accelerating their restart program as well. So,

1091
01:15:29,040 --> 01:15:37,520
Japan has 50 odd nukes, and they suspended most of them on the back of Fukushima.

1092
01:15:37,520 --> 01:15:42,480
But interestingly, you've got a situation where there was significant pushback

1093
01:15:42,480 --> 01:15:48,640
from their population. And when the most recent

1094
01:15:48,640 --> 01:15:58,000
president was elected, he came to power on one of his platforms being restart of the nuclear facilities.

1095
01:15:58,000 --> 01:16:05,120
So, we've chewed through that stockpile. And it's exactly the reason why we've seen

1096
01:16:05,120 --> 01:16:12,000
prices really start to jump, because we just don't have the fat in the system anymore.

1097
01:16:12,000 --> 01:16:16,960
And uranium is not the only one with a very low stockpile. And we talk about stockpiles

1098
01:16:16,960 --> 01:16:23,840
being very low for a number of different commodities. But yeah, so that's the scale of the deficit today.

1099
01:16:23,840 --> 01:16:30,880
Look, there's the supply response that is brewing,

1100
01:16:30,880 --> 01:16:37,200
whether it's BOSS or Paladin. But on the flip side to that coin, you've got

1101
01:16:37,200 --> 01:16:44,400
the other very large producer of uranium being the Kazakhs.

1102
01:16:44,400 --> 01:16:51,040
The Kazakhs updated their production guidance for 2024, and they cut 10 million pounds from their guidance.

1103
01:16:51,040 --> 01:16:56,960
So, it's not doing too many favors to the supply response. So, you need every extra

1104
01:16:56,960 --> 01:17:05,680
pound that BOSS can deliver or Paladin can deliver. And meanwhile, the demand scenario

1105
01:17:05,680 --> 01:17:11,840
continues to strengthen. As I say, coming back to my point about the renaissance of nuclear power

1106
01:17:11,840 --> 01:17:17,600
and governments around the world starting to recognize the upside here. And what's important

1107
01:17:17,600 --> 01:17:25,280
is it's not just an upside today or next year. This is going to take years and years and years

1108
01:17:25,920 --> 01:17:32,320
to build out that supply. So, there's this sort of growing inventory of new demand

1109
01:17:34,000 --> 01:17:39,200
that's coming down the pipeline that will require constant feeding for many years to come.

1110
01:17:41,040 --> 01:17:46,160
Well, one of the biggest things, wouldn't you agree, is this whole ESG thing. You can't just say,

1111
01:17:46,160 --> 01:17:50,080
no, you have to stop using fossil fuels. It's like, okay, cool. What do we use?

1112
01:17:51,840 --> 01:17:57,360
Where's the energy going to come from? So, I suppose to that point is, I suppose the thing

1113
01:17:57,360 --> 01:18:01,440
that drives myself nuts and a lot of other investors nuts is you read about information,

1114
01:18:01,440 --> 01:18:06,240
as you said, you're too early. I completely understand that. You read information coming

1115
01:18:06,240 --> 01:18:11,200
through the news cycles and saying, you see the pattern, you line yourself up, do your research,

1116
01:18:11,200 --> 01:18:16,640
you make a bet. And you're like, yep, this is going to play out six or 12 months. Well, fast

1117
01:18:16,640 --> 01:18:25,120
forward how many years later. But maybe one way to potentially put that concept in front of our

1118
01:18:25,120 --> 01:18:34,320
eyes, I'll make it more understandable, is how many nuclear power plants do you think globally

1119
01:18:34,320 --> 01:18:40,720
in the process of being built? And then secondly, how long does it take to actually build one?

1120
01:18:42,480 --> 01:18:45,760
Because then you don't mean because they come and go, hey, we're building 50. It's like, okay,

1121
01:18:45,760 --> 01:18:51,680
that's great. But you know, when will that be used? Because that happens after it's completed.

1122
01:18:51,680 --> 01:18:55,680
It does depend on the size of the facility, right as to how much that they consume,

1123
01:18:56,240 --> 01:19:03,680
and how long they take to build. So, you know, rough rule of thumb, you know, most of these are

1124
01:19:03,680 --> 01:19:10,240
give or take about a gigawatt. You know, that's a rough estimate of how big these are. And they

1125
01:19:10,240 --> 01:19:16,560
consume about 500,000 pounds. So, you know, if we're building 50 to 60 today, you know, that's

1126
01:19:16,560 --> 01:19:23,280
another 25 to 30 million pounds of demand on an 180 million pound market. So there's your rough

1127
01:19:23,280 --> 01:19:30,800
numbers of additional consumption that's coming into the market. Now, they do take years to build,

1128
01:19:30,800 --> 01:19:39,760
years to build. But so too does any major power infrastructure. Snowy 2.0, I'm looking in your

1129
01:19:39,760 --> 01:19:49,760
direction. But the other interesting piece here, and this is also, I guess, a bit of a new

1130
01:19:49,760 --> 01:19:53,920
development in the nuclear space is the small modular reactors, which you may have heard a

1131
01:19:53,920 --> 01:20:03,680
little bit about. So small modular reactors are, as I say, you know, smaller in scale than a

1132
01:20:03,680 --> 01:20:10,160
traditional nuclear facility. So as I say, if a typical nuclear power plant is around about a

1133
01:20:10,160 --> 01:20:18,320
gigawatt, these small modular reactors might be two to 300 megawatts. So much smaller in scale.

1134
01:20:18,320 --> 01:20:24,240
How much land does that smaller take up? Like, I'm just trying to get the size like,

1135
01:20:24,240 --> 01:20:32,160
Yeah, so if you think about, as I say, and they're modular, so the idea being you can

1136
01:20:32,800 --> 01:20:40,400
stack them up next to each other. But a small modular reactor of that scale, sort of two to

1137
01:20:40,400 --> 01:20:46,160
300 megawatts is probably going to be about the size of, you know, have a footprint of say,

1138
01:20:46,160 --> 01:20:53,440
half a football field. Oh, they're not that big. Oh, no, no, no, no. That's tiny. That's it.

1139
01:20:53,440 --> 01:20:59,440
Half a football field. Yeah. Including the stands or literally just the touch load, touch load.

1140
01:20:59,440 --> 01:21:05,600
That's right. Yeah, it's actually a foot so it stands. But yes, so much, much smaller.

1141
01:21:06,640 --> 01:21:10,800
And the theory being that I asked that question, because in my mind, I'm literally thinking like,

1142
01:21:10,800 --> 01:21:17,760
it's the size of like Allianz Arena. Massive like the old Telstra state. Yeah, so they're much

1143
01:21:17,760 --> 01:21:21,920
smaller. I mean, obviously, you have, you know, the support infrastructure around them, but they are

1144
01:21:21,920 --> 01:21:27,920
much smaller in size. So they can potentially become like the electrical power grids kind of

1145
01:21:27,920 --> 01:21:32,800
running around the city, you can actually just slot them in. Well, that's so they become,

1146
01:21:32,800 --> 01:21:41,040
you can obviously position them closer to your users, or you can have them set up for very

1147
01:21:41,040 --> 01:21:48,320
specific purposes. Now, you think about the longer term future here of what this might mean.

1148
01:21:49,920 --> 01:21:56,960
There's, for example, in China, the contemplation of having, you know, SMRs that just feed, you

1149
01:21:56,960 --> 01:22:03,280
know, individual towns or communities. And, you know, one of the other resources that is

1150
01:22:04,160 --> 01:22:11,920
going to be more and more strategic and short in supply is water. So if you have an SMR,

1151
01:22:12,560 --> 01:22:22,080
you can use your SMR to power your desalination plant, provide municipal heat for your local

1152
01:22:22,080 --> 01:22:32,720
communities, and obviously provide your clean carbon free power to power up your lights and

1153
01:22:32,720 --> 01:22:39,600
the like, whilst also feeding your electric vehicles that you're going to be driving around

1154
01:22:39,600 --> 01:22:46,560
your local community. So that, you know, this is obviously somewhat distant at the moment, but

1155
01:22:46,560 --> 01:22:52,160
the reality is that any power infrastructure is expensive. You know, the argument we have in

1156
01:22:52,160 --> 01:22:59,200
Australia that nukes are too expensive is frankly built on old science. And you can't tell me for a

1157
01:22:59,200 --> 01:23:06,240
moment that, you know, as I say, Snowy 2.0 is going to be a cheap endeavor, I mean, started out as a

1158
01:23:06,240 --> 01:23:10,800
$2 billion endeavor, and now it's 12 and it'll be more. How does that make any sense that you make

1159
01:23:10,800 --> 01:23:16,320
electricity because obviously dams work, but then some genius figured out how you let's pump it back

1160
01:23:16,320 --> 01:23:21,760
up again, then run it through a second time. That makes no sense. Like, clearly the energy cost of

1161
01:23:21,760 --> 01:23:26,640
the time must have been incredibly cheap. Do they factor into the commodity prices?

1162
01:23:27,840 --> 01:23:37,680
It's just, it's just, it's pumped hydro is conceptually interesting. Where your

1163
01:23:37,680 --> 01:23:42,480
utilizing obviously your power generation from solar or whatever during the day when it's not

1164
01:23:43,200 --> 01:23:50,640
being consumed as much to pump your water back to the top of your reservoir. And then when

1165
01:23:50,640 --> 01:23:55,200
you don't have solar power and people want to, you know, sit at home and turn their lights on,

1166
01:23:55,200 --> 01:23:59,600
you then generate power from, you know, allowing the water run downhill through your turbines.

1167
01:24:00,560 --> 01:24:05,120
Conceptually, it makes some sense where this, I mean, $2 billion, I mean,

1168
01:24:05,120 --> 01:24:11,280
$2 billion was never the right number is the first comment I'd make. But also they play out into it

1169
01:24:11,280 --> 01:24:16,880
without the appropriate studies being completed to understand the geological challenges they were

1170
01:24:16,880 --> 01:24:21,760
going to encounter subsurface. So part of the issues they faced is that, you know,

1171
01:24:21,760 --> 01:24:27,040
they're putting these massive tunnel boring machines into the ground and hitting all sorts of

1172
01:24:27,040 --> 01:24:33,920
you know, subterranean ground, which has been very, very difficult to navigate. So it's slow

1173
01:24:33,920 --> 01:24:41,680
them down or cost them more, you know, or both. So, you know, I'm not here to tell you that nuclear

1174
01:24:41,680 --> 01:24:50,160
power is extraordinarily cheap, but don't for a moment tell me that, you know, it's outlandishly

1175
01:24:50,160 --> 01:24:56,320
more expensive than the alternatives. No, look, I really appreciate your thoughts on that. Because

1176
01:24:56,320 --> 01:25:01,360
again, like, this is one thing, obviously, a number of podcasts discussing uranium, as you mentioned,

1177
01:25:01,360 --> 01:25:06,720
uranium, people immediately think of, you know, a mushroom cloud, or, you know, Chernobyl, or

1178
01:25:07,200 --> 01:25:11,920
what happens in Japan, but their fault lines, they're all technology. I don't know if you've

1179
01:25:11,920 --> 01:25:15,520
seen the videos that people Chernobyl and they're looking at the, you know, the

1180
01:25:15,520 --> 01:25:21,760
the layout, those things look like I don't know the movie Apollo 13, you know, with Tom Cruise,

1181
01:25:21,760 --> 01:25:25,840
the tech, you know, the buttons are the size of your thumb or two thumbs.

1182
01:25:25,840 --> 01:25:33,280
Yeah, right. Actually, a little tidbit for you on Fukushima. You know, the the modern perception

1183
01:25:34,160 --> 01:25:41,120
out in the public is that, you know, the ground shook, the wave came through and, and the

1184
01:25:41,120 --> 01:25:47,680
nuclear reactor blew up. Well, what actually occurred was that, you know, this was, you know,

1185
01:25:47,680 --> 01:25:54,400
a 40 year old reactor that was built to withstand the mother of all earthquakes, and it did as it

1186
01:25:54,400 --> 01:26:03,680
happens. What was the issue is that the operators, TEPCO, had positioned the backup power units,

1187
01:26:03,680 --> 01:26:10,560
the diesel generators in the basement. And they were able to do that. And so, you know,

1188
01:26:10,560 --> 01:26:16,480
now they were advised, they were advised to put these generators on the roof, but they didn't.

1189
01:26:16,480 --> 01:26:23,680
So when the wave came through, the mains power operating the cooling systems failed. And that's

1190
01:26:23,680 --> 01:26:29,680
when the diesel generators should kick in. But they were flooded. Yeah. And that's what led to

1191
01:26:29,680 --> 01:26:35,680
the failure. It was the diesel gensets that failed the, that failed the cooling system. Now, if those

1192
01:26:35,680 --> 01:26:40,880
diesel gensets were on the roof, as they were designed to be, we would not be having this

1193
01:26:40,880 --> 01:26:46,960
conversation. Now, do you know how many people were killed as a consequence of, of the meltdown at

1194
01:26:46,960 --> 01:26:55,680
Fukushima? No. How many? Zero. Zero. People who died in Fukushima died as a consequence of the

1195
01:26:55,680 --> 01:27:04,240
earthquake and the tsunami. Not what happened at Daiichi 1. Well, that makes a lot of sense. But

1196
01:27:04,240 --> 01:27:10,480
the other thing people discuss is nuclear fallout. So the deaths and the consequences, you know,

1197
01:27:10,480 --> 01:27:15,760
down the track. So I don't know if that's been measured. That's what terrifies people. And the

1198
01:27:15,760 --> 01:27:19,680
other little fun fact that people don't realize in Australia, South Australia, that's where they're

1199
01:27:19,680 --> 01:27:25,360
essentially tested the nuclear bomb. Correct. And people do not know that. Exactly. They all stand

1200
01:27:25,360 --> 01:27:29,440
there with their sunglasses on. Yeah. And they go, oh, this is a nice drive. It's like, hold on a

1201
01:27:29,440 --> 01:27:34,720
second. Why my kidneys not working anymore? Yeah, it's, there's far worse radiation, background

1202
01:27:34,720 --> 01:27:41,040
radiation out there in that part of South Australia, right? Yeah. There is in Fukushima. But also,

1203
01:27:42,560 --> 01:27:51,360
a long haul pilot has much greater buildup of radiation in their system than anyone living in

1204
01:27:51,360 --> 01:27:57,920
the Fukushima district. Absolutely crazy. Look, I'm just conscious of time. One last question is,

1205
01:27:57,920 --> 01:28:03,840
what are your thoughts on where copper is going? Because, again, none of the supply problem, but

1206
01:28:04,560 --> 01:28:07,840
it doesn't have to be as extensive. What's your thoughts on Dr. Copper?

1207
01:28:07,840 --> 01:28:14,480
We're usually bullish on copper. You know, the reality is with copper, you know, obviously

1208
01:28:14,480 --> 01:28:24,400
copper being used extensively in wiring, as the world electrifies, we are going to need so much

1209
01:28:24,400 --> 01:28:30,000
more copper. It's not funny. Now, whether that's to do with wind turbines or solar panels or electric

1210
01:28:30,000 --> 01:28:37,280
vehicles, the reality is we consume so much more power just in our day to day, let alone shifting

1211
01:28:37,280 --> 01:28:47,040
to electric vehicles. What do you think is driving, you know, the usage of Wi-Fi, internet, data

1212
01:28:47,040 --> 01:28:57,120
centers, the AI surge? I mean, just the build out of the use of AI on a Google search platform will

1213
01:28:57,120 --> 01:29:02,320
lead to a multi-factor increase in power consumption of Google. Multi-factor. I'm not

1214
01:29:02,320 --> 01:29:08,160
talking about small percent, I'm talking multi-factor. Now, we need to generate a huge

1215
01:29:08,160 --> 01:29:12,000
amount more power in order to drive that. How do you do that? You need to consume an awful lot more

1216
01:29:12,000 --> 01:29:20,880
copper. So conservative estimates are that copper consumption, copper demand will rise to about 30

1217
01:29:20,880 --> 01:29:27,600
million tons a year by the end of this decade from about 23 million tons today. So let's assume

1218
01:29:27,600 --> 01:29:33,760
that's a million tons additional demand per year between now and 2030. The world's biggest copper

1219
01:29:33,760 --> 01:29:39,840
mine is Escondida run by BHB and Rio Tinto. It produces around about a million tons of copper a

1220
01:29:39,840 --> 01:29:45,760
year. And declining, by the way, because grades are declining. Now, the replacement cost of Escondida

1221
01:29:46,320 --> 01:29:52,880
is around about 25 billion, maybe more, maybe $30 billion today. So we need to be spending $25 to $30

1222
01:29:52,880 --> 01:30:03,360
billion every single year between now and 2030 on new copper supply alone. Now, early on in the

1223
01:30:03,360 --> 01:30:09,280
podcast, we talked about management's reticence to invest in new supply. Name me a mining company

1224
01:30:09,280 --> 01:30:16,640
who's investing $25 to $30 billion a year at the moment on new copper supply. It's not coming.

1225
01:30:16,640 --> 01:30:22,800
It's not happening. So the point being, there've been the bears out there on copper say, yeah,

1226
01:30:22,800 --> 01:30:29,920
yeah, but we've got a few big new mines that are coming or are in ramp up, whether that's Kamauka

1227
01:30:29,920 --> 01:30:38,400
cooler in the Congo, or it's mines in Chile or Peru. We're adding about a million tons.

1228
01:30:38,400 --> 01:30:43,200
Between last year and the end of this year. Well, that's great, except there's nothing else in the

1229
01:30:43,200 --> 01:30:48,240
hopper. So what else is going to be delivering on that 30 million tons in a few years time?

1230
01:30:48,640 --> 01:30:53,840
We've got no stockpiles left. So the reality is the copper price has to go higher to ration demand.

1231
01:30:53,840 --> 01:31:01,680
Yeah, because you can't have negative stockpiles. That's just not physically possible. So what has

1232
01:31:01,680 --> 01:31:09,920
to happen is the price needs to rise to ration that demand factor. So how do you get exposure

1233
01:31:09,920 --> 01:31:14,880
to that? Well, you need to invest in copper producers, not just hopefuls, but producers.

1234
01:31:15,760 --> 01:31:21,680
And for us, you invest in the big diversified players like Glencore and Tech, or you invest in

1235
01:31:21,680 --> 01:31:27,200
pure plays, big pure plays like Freeport, or in Australia, you've got Sanfire, or even Metals

1236
01:31:27,200 --> 01:31:33,840
Acquisition. But you need copper exposure in your portfolio, because there is a massive structural

1237
01:31:33,840 --> 01:31:39,280
squeeze coming. Someone just needs to figure out the infighting when it comes to Bougainville and

1238
01:31:39,280 --> 01:31:43,200
get that copper gold mine up and running. And I think it will solve a lot of the world's problems.

1239
01:31:43,760 --> 01:31:46,640
Yeah, well, let me imagine, Timmy wants to go to Bougainville.

1240
01:31:47,760 --> 01:31:52,160
I can name a couple. I've been chatting to them, but you can get the people on board,

1241
01:31:52,160 --> 01:31:57,920
but then there's just too many interests and it becomes very, very, very challenging. Look,

1242
01:31:57,920 --> 01:32:02,320
I normally finish on what keeps you up at night, what gets you out of bed in the morning, but you

1243
01:32:02,320 --> 01:32:10,160
mentioned Congo. I was listening to Joe Rogan and he interviewed a guy who actually physically went

1244
01:32:10,160 --> 01:32:15,520
there. And I suppose it resonated. I just want to hear your thoughts on Congo and Cobalt specifically.

1245
01:32:16,800 --> 01:32:22,080
We walk around town, everyone lives well, looking at electronic devices. I kind of think

1246
01:32:22,080 --> 01:32:26,960
of one electronic phone that doesn't have Cobalt in it. And I think about all these people,

1247
01:32:28,160 --> 01:32:30,960
shaking their finger going, you can't do this, you can't do that.

1248
01:32:33,520 --> 01:32:41,520
Meanwhile, plastic straws, plastic bags, don't get me started. But I hope I don't finish. Actually,

1249
01:32:41,520 --> 01:32:46,240
I don't care. I'm just kind of over it. Meanwhile, they're on their phones tweeting about it and just

1250
01:32:46,240 --> 01:32:57,040
being a pain in the ass in my French. But do they understand that Cobalt is artisanally mined in the

1251
01:32:57,040 --> 01:33:03,680
Congo? And if you read Google or whomever it is, they never specifically stay. It's kind of like

1252
01:33:03,680 --> 01:33:08,080
hidden behind a number of layers of where it specifically comes from. So I suppose my two

1253
01:33:08,080 --> 01:33:14,080
question is, what percentage is actually coming out of the Congo? I think there's a number of

1254
01:33:14,080 --> 01:33:21,280
Cobalt mines in Australia. And are you exposed to Cobalt? Is there a solution to the Cobalt problem?

1255
01:33:21,280 --> 01:33:27,520
I'm just curious what's happening there. Because people discuss ESG at length in their portfolios,

1256
01:33:27,520 --> 01:33:32,240
but people don't realize that one of the biggest things that they invest in everything's got

1257
01:33:32,240 --> 01:33:37,120
Cobalt in it. And there's women with their babies on their back getting cancers, pulling this stuff

1258
01:33:37,120 --> 01:33:43,920
out of the ground with their hands. And it's not discussed. Yeah, you've hit upon a

1259
01:33:43,920 --> 01:33:49,440
key issue here. And that's it's an endless frustration and why supply remains a challenge

1260
01:33:49,440 --> 01:33:55,040
for many commodities. And that's that ignorance of where these commodities are coming from.

1261
01:33:56,640 --> 01:34:02,960
To your point, there's many agitators that just will happily tell you that all mining is bad.

1262
01:34:04,240 --> 01:34:09,200
And as you say, spread the word about the latest protest on their mobile phone.

1263
01:34:09,200 --> 01:34:12,400
Forgetting that, yeah, of course, mobile phones, unfortunately, don't grow on trees.

1264
01:34:13,760 --> 01:34:21,840
So yeah, look, it's a key issue. And it's a challenge that will, sadly, continue to be faced.

1265
01:34:22,880 --> 01:34:27,840
With regards to Cobalt specifically, yeah, the reality is that the DRC is

1266
01:34:29,120 --> 01:34:35,440
a bit of a geological anomaly, where there are primary Cobalt mines. Cobalt typically is a

1267
01:34:35,440 --> 01:34:42,000
byproduct. So it comes as a byproduct, often of copper mining. And so, for example, in Australia,

1268
01:34:42,000 --> 01:34:48,320
it's a background commodity to, in some cases, other copper mines. So we do produce some in

1269
01:34:48,320 --> 01:34:56,320
Australia. But you're right in that some of the Cobalt that comes out of the DRC is, shall we say,

1270
01:34:56,320 --> 01:35:02,880
not exactly ethically mined. Now, that's not to say that all of it is like that. There's

1271
01:35:02,880 --> 01:35:10,800
Glencore, for example, does mine Cobalt in the DRC. And this actually goes to a bigger

1272
01:35:11,760 --> 01:35:15,600
point and something that some mining companies are looking at ways of developing is essentially

1273
01:35:15,600 --> 01:35:22,080
having a bit like a blockchain attached to the tons or pounds of the commodity that you produce

1274
01:35:23,120 --> 01:35:27,840
that enables the end consumer to be able to trace those parts of the

1275
01:35:27,840 --> 01:35:38,720
end consumer to be able to trace those pounds back to some sort of responsibly produced source.

1276
01:35:40,000 --> 01:35:46,320
It's still a work in progress, is the bottom line. But this is where pressure needs to be applied

1277
01:35:48,320 --> 01:35:55,840
upon the OEMs, whether it is the Apples or the Samsungs or the Fords and the Teslas and

1278
01:35:55,840 --> 01:36:03,920
the and whoever else who are consuming or utilizing such commodities. The onus is on them

1279
01:36:03,920 --> 01:36:10,080
to also source their product from a responsible source. And that will drive, do a better job of

1280
01:36:10,080 --> 01:36:17,200
driving out the unethical suppliers. It probably should, in all honesty, I quite like what you're

1281
01:36:17,200 --> 01:36:23,520
doing at the Kimberley syndicate with the diamonds. But again, what's his name? Titanic, our friend,

1282
01:36:23,520 --> 01:36:29,680
that did our blood diamond. He's named Leonardo DiCaprio, right? You know, he's shown a lot on

1283
01:36:29,680 --> 01:36:34,240
blood diamonds and everyone has blood diamonds. That's like one diamond. Everyone's got such an

1284
01:36:34,240 --> 01:36:37,440
upper. And I think the reason why people have such an upper when it comes to diamonds is because

1285
01:36:37,440 --> 01:36:42,080
every little wife is wearing that on their finger. And every husband wants to, you know,

1286
01:36:42,080 --> 01:36:46,080
get engaged and give her one. So it's a constant reminder that they're looking at this rock on

1287
01:36:46,080 --> 01:36:50,320
their finger. What I'm just find fascinating is everyone's got a problem with that. But meanwhile,

1288
01:36:50,320 --> 01:36:55,360
they're tweeting about that they're taking the photograph with their phone of it just makes no

1289
01:36:55,360 --> 01:36:59,680
sense. Anyway, but you know, maybe we'll get there in time. Look, Todd, I really appreciate your time.

1290
01:36:59,680 --> 01:37:03,920
This conversation is fascinating. It could be here for another hour and a half. But look,

1291
01:37:03,920 --> 01:37:09,200
if anyone wants to learn more about Tribeca partners, investment partners, and what you do

1292
01:37:09,200 --> 01:37:15,200
in the funds, where should they go? And how can they find you? Yeah, you can find us online.

1293
01:37:15,200 --> 01:37:21,040
Obviously, the Tribeca investment partners is if you Google search Tribeca investment partners,

1294
01:37:21,040 --> 01:37:28,720
you will find us. Tribecaip.com is our website. And you'll find all the material on all of our

1295
01:37:28,720 --> 01:37:35,920
product offerings. We are well, we believe, you know, a pretty entrepreneurial outfit,

1296
01:37:35,920 --> 01:37:41,040
we do offer very niche products that we think are difficult for others to replicate. We've been

1297
01:37:41,040 --> 01:37:46,400
doing this for a long time. You know, we've been around a long time. And you know, we are all

1298
01:37:46,400 --> 01:37:53,040
believers in the product, you know, I'm a big investor in my own fund. And all the portfolio

1299
01:37:53,040 --> 01:37:56,720
managers are you know, we think that's really important. We've got alignment with with our

1300
01:37:56,720 --> 01:38:05,280
investors and feel the feel the good times and and the bad. Well, it's been great having you on. And

1301
01:38:05,280 --> 01:38:12,640
I really appreciate your insights. And I hope everyone has enjoyed that because it's quite

1302
01:38:12,640 --> 01:38:19,440
eye opening. The wide world of resources. It's it's been a pleasure to be on here, Murdoch. I

1303
01:38:19,440 --> 01:38:24,240
apologize, I can talk underwits me with a mouthful of marbles when I get started. So you know, but

1304
01:38:24,240 --> 01:38:29,520
it is a topic I'm pretty passionate about. Hopefully that that comes across. But you know,

1305
01:38:29,520 --> 01:38:34,080
that's what you get with with Tribeca, you get passionate people. I love it. All right,

1306
01:38:34,080 --> 01:38:35,600
have a great day. Thanks, Murdoch.