Righto Muddy Miners, Thursday, nearly the bloody weekend. It's the last day of the week for us. And it's nearly the time that new shit's coming out for Axis Mining Technology.
Oh, exciting. Within the month, I can feel it. I can feel it and I'm excited and you'll be hearing it about here first. I know, probably other people have heard it, but like, Jesus Christ, I can't wait. Axis, get on it.
Trusted advisor, through our survey instrumentation. Getting a bit sleepless at night, Matty. Oh, mate.
So excited. Mate, oh. I'll need to get an MMSJV so I'll get eight hours sleep. People will understand that tomorrow.
You'll understand that tomorrow. Right, what have we got? We're revisiting MinReds a bit. The poor bastards continue to get hammered on the share price, $31 today. Far out.
Bloody times. The tide can turn very quickly. Coronado also hammered today. Yeah, a bit more of their own kind of doing there. Did get whacked around by some weather events, so it's come off the back of a production downgrade.
GC, you're getting into the world of bauxite. Going to Queensland, Matty. Metro mining. You are diversifying away from the merchants, and I love it.
I diversify. I love it. And that's a diversified ETF.
Mount Catlin. Mount Catlin proposes care and maintenance next year. So, right, let's lead her away.
Minres. Bring up the spark chart. I think we've got a spark replay of I guess what's happened to the stock.
But, yeah, $31 today. Yep. Oh, Jesus Christ, considering the highs of $80-odd last year. Yeah, I think it touched $90. Yeah, it was pretty it's a fall from grace, but that's leverage, right?
I was just keen to have a bit more of a chinwag because I just think it's the most captivating mining stock at the moment. Like, you know, this is Yeah, I mean, we're watching in real time sort of billions of dollars of market cap kind of just continue to kind of come off seemingly each day or whatever. Yeah, the poor Mr. Ellison on paper has, I think, gone from, yeah, one and a bit billion down to 600 million.
The equity. The equity value of Minres. It's just huge movements. Yeah. It hasn't sold any, so it doesn't matter to you, sell it.
But just on paper, yeah. Yeah. Big move.
And I think a few things have happened since we did an episode last week on Thursday because that was the day that they had the earnings call and earnings results sort of went out the evening before. The things that have happened since, namely, share price pelted like 30% lower since the pre-earnings close sparked us pretty that was a story there. Second thing I think that's happened since then, if you were reading Bloomberg last night, you would have seen Bloomberg run this story. It says, traffic euro struck $400 million cash for iron ore deal with Minrez. Now, it's not often we're actually onto a scoop before the excellent business journos at Bloomberg, but in this case, the readers of our daily email, the director special would have read about this eight days before Bloomberg because we put the room in our word on the decline section in the director's special.
So just a reminder to any of the listeners out there or viewers out there that haven't yet done so, if you want to get... big scoops while there's still rumors before their Bloomberg news articles, then pause the podcast right now. Head to moneyofmine.com, put your email in there, click the confirmation email that comes your way, and you'll get our rumors in your inbox every single morning before they are news. I still love Bloomberg just in case they want to buy us later.
Get the relationship good, you know. The other thing that's happened in the last week is Iron Ore's sort of brief bounce is unwound. It's, um...
It's, you know, down US $10 a tonne in kind of no time at all. You know, about US $92 a tonne for the 62% fines spot market on the index there. Because it briefly cracked 100 again, didn't it? But not for frigging long.
Yeah, and you had the it was even like Chinese media describing the bounce as irrational. That's kind of how it was interesting to see that sort of commentary come out. And I think like It's important that there's a couple of things.
I've got to set the record straight on from last week's episode. Number one, I made the unforgivable error of fucking up my currencies, a fireable error in banking that one. So if my numbers were a bit off to those who were really in the details, it's because they were off.
And, like, for example, one of the claims I made was the gross drawn debt was equal to Minresa's market cap in equity sense, which... which was not right because I had in my head that that was US dollar denominated and scratch that. It was Aussie dollar denominated.
Well, in their financials. But kind of interestingly, since the the, you know, since last week's episode and as the share prices continue to fall off, that claim's not too far from the truth now. If you threw in the $1.8 billion payables into that kind of gross debt mix, which is a bit cheeky, then yeah, you're kind of, that claim kind of stacks up now, which yeah, kind of didn't a week ago. But the far more important thing though is, than just, you know, that silly kind of ratio is just...
minres's ability to service their debt right like that's what kind of that's what the market kind of cares about is they're going to be able to are they going to be able to service their debt and they're going to be able to generate the free cash flow to um to you know to be this big big growth kind of mining stock story that you know that they sort of envisage for themselves and and i suspect the share price movement of the last week has had a lot to do with with re-calibrations in this respect sort of estimations from buy side and the street um um just just in relation to this I think everyone seems to be so bearish, I and all, kind of all of a sudden too. And that's just kind of everywhere you look. Everyone's just talking about how bearish they are. I and all kind of sort of all happened at once pretty quickly there. And I've seen some numbers in the street forecasting.
Min's peak net debt to EBITDA to reach 6.8 times in FY25. It's pretty hefty. But you can imagine just how sensitive. like that ratio is to any changes in commodity price because that hits your actual EBITDA at the end of the day. And I think finally, I thought it'd be worth just sharing a couple of tweets I've seen the last few days.
You know, there's a fair few kind of doing the rounds. You've got Emmanuel Dat, he posted today, never underestimate how quickly the market can rage quit an over-leveraged cyclical when the tide goes out. So is that saying like when it is? When it turns, it turns freaking quickly and destructively.
Yeah. I mean, his point there is an over-leveraged cyclical and I think that's a fair characterisation because the leverage is what it is, peaking at whatever, 6.8 times if that number's right or whatever. Just because there's so much debt in there, we know leverage amplifies the upside when the times are good but also...
amplifies the downside. And that point's kind of teased out in this next tweet from David Berthin-Jones. He goes, what it looks like when the balance sheet is more your problem rather than just the commodity price moving around. And this is a really interesting chart because sort of indexes, you know, Rio BHP, Champion Iron, FMG, Deterra, Minres, all to the 62% kind of fines price. And, you know, you can kind of indexes them all since sort of 2022. And it's...
it's pretty stark what you can see there is like this just absolutely kind of amplified downside response in the latest kind of um trend downwards in the in iron ore price and that's just that's leverage to the downside yeah how much do you reckon is it what are you what are you attributing to the the thoughts that they might have to capital raise to get themselves out of it being is there a a bit of that being attributed to the sell-down as well? What's the talk on the street? I mean, maybe. Like I don't know.
If your first port of call is a cap raise, you probably look to address some of those sell-down opportunities that we discussed last week as opposed to cap raise straight away. So I don't necessarily I just think it's like everyone's looked at the earnings numbers and everyone's kind of been thrown off guard. One, kind of all the operating cash flow was basically just trade payables build up.
Two, there was a lot to be said for the lithium kind of real production numbers and all that sort of stuff and how that's unfolding. And I think three, the realizations on the production at Onslow was probably lower than people were expecting. Just like what realization were they getting on the index compared to what people were factoring in and kind of how does all that flow in?
But more than any of that, it's just... If iron ore price goes down by 10% in a week like it did, well, someone that's got six times net debt to EBITDA ratio peak, whatever, it's going to go down by a lot more than 10% because you leveraged. I think you should add 0.4 was the CapEx number.
What they still need to spend, 1.95 billion Aussie over the FY25 was also substantially higher than what people had estimated. Yes. Yeah. Yeah.
And there's... Yeah, there's like a bunch of other considerations too. Like they're not immune from kind of fluctuations in FX as well. I mean, the debt's denominated, a lot of it's denominated in US dollars.
What happens if demand for iron ore kind of rolls off a bit? Then what does that do to the Aussie dollar? And what, you know, when their costs are denominated in Aussie dollars, what does that mean for MINS as well? They can kind of cop it up from a few different angles if, yeah, if iron ore demand sort of...
Peters out for an extended period of time. So look, all eyes on them. This is, I maintain, the most interesting corporate story.
Would it have to, this would have to be one of the more critical points of their whole, not too up on the Minrest long-term history, but this would have to be one of the most critical times in their existence. Well, they've been the size they are for sure. Well, you think of just the, what is it, plus 20% return on capital, invested capital for so long.
They've obviously grown, grown, grown, grown. But, yeah, this is a point where it's just really flipped. I'd love to know if there was any other time in history of min-res when they're under this sort of pressure relative to the size they are. Does it have to be up there? Yeah, they've never really been.
been of this scale as a company sort of grows. So if you frame it like that, definitely. I'm sure any company over a 30-year history is going to have points that are touch and go, especially in a cyclical industry in which we're in.
But they've become more and more the owner of mines rather than just the person with the contract to operate them. So that puts them at more of the whims of the cyclical prices. What do you think is their first, besides selling down those lithium stakes that are doing nothing? What about on the project level?
What do you think their first ports of call are to potentially sell some to get something? What do you think their first bits are? I know you mentioned it in the call.
Yeah, if I were them, like I wouldn't. I actually think I'd get max value by packaging all the lithium together and selling down 49% of that. That's what I'd do, like the whole lot. As opposed to at an individual asset level. Exactly, yeah.
Just call it lithium. And then. It kind of sets you up to the ability to down the track even, sort of spin out your remaining kind of controlling interest in that lithium business and things like that where you could get a re-rate on that. But yeah, I would do a minority sell down of the entire lithium business. I think that would get max value.
Is that easy enough done when you've got JVs with Albemarle and Ganfen and then you're getting a JV on your side as well? It's not easy. Make it a big... complex oil to show it's not easy but it's happened before like you'd be the talus and you'd be the tian chi sorry exactly talus and yeah with the 26 you'd be the tlaa exactly become the tlaa yeah you create dominant party partner in that though yes as we've learned is important yeah yeah yeah tlaa becomes you know what minres lithium australia today and then yeah minres own 51 of that yeah oh but the very way they you The random one to lift the bloody market cap for them is a bloody big humdinger of an exploration discovery.
That would change the bloody thematic. Probably just need to bloody get drilling. And every driller that could do it is going to be at the 80er Drill 24 conference.
Let's bloody put a bit more positivity into it. Perth, 15th to 17th of October. It's not far away.
Oh, mate, I cannot wait to be in a room full of drillers. I'm going to get a full-sleeve tat when I rock up. Mate, you want to see the latest and most exciting drilling technology going around? You want to know who the who's who are in the drilling industry? Mate, all going to be in one room.
We're going to be there. We're all going to be there. Axis is going to be there. Kdrill's going to be there. You can meet Rhino and Droober.
Mate, bloody CRE Insurance is going to be there. Like, it's like a bloody sponsor field day for us. Money Mine Festival.
Money Mine Festival. Mate, I think I'm even doing like a pre-start in the morning on the mic and maybe some panels after lunch. The lunchtime post-lunchtime panels might be interesting after I've had a few pints with Droober.
But, mate, link is in the show notes. Get your tickets 15th to 17th of October, and it is going to be a corker. Can't wait.
Love it. Oh, it's very exciting. Cheers, Adia.
Oh, I love a good conference. I'd rather the conference not to be in Perth, maybe. But anyway.
Very nice. And I'm, as we know, ding-ding on Mins as well. But moving right on from that, it's a bit of a second. I thought you were going to say Adia.
No. All righty. All right.
Unfortunately, not more positive news. We need ads to make it like. Like just lift the spirits. It's just the energy. Ali will be talking about something a bit more positive in a moment, but we're going to talk about Arcadium Lithium first.
Obviously, owners of Mount Catlin following the deal. Merger of mergers. Exactly.
Well said, Matty. So. Yeah, unfortunately, Mount Catlin is going on care and maintenance. I think the writing was kind of on the wall after what Paul Graves, the boss there, said around about the time of diggers, just sort of indicating that these lithium prices really hurt. So the timing of care and maintenance is after they've completed stage three mining and oil processing, which will come in the first half of next calendar year.
So there's no word on how many jobs are going to go. They've sort of said that they don't intend to close Mount Catlin. This is care and maintenance.
There'll be more details coming at the investor day on the 19th of September, I believe. But just, you know, we send our thoughts out to all those affected by this. Obviously a pretty tough time for Ravensthorpe and obviously the broader mining community right now. Yeah, especially Ravensthorpe considering first quantum shut as well. Yeah.
Now this one. And, you know, this was how quick it can turn. Like they were considering like.
doing underground feasibility studies or starting to look down that road for Mount Catlin and it goes from potentially going deeper to care and maintenance. It's fucking Jesus Christ. I remember looking at how much the independent expert valued Mount Catlin on when they did the deal. It was something like US $600 million or something like that.
Yeah, wow. It was wild because what did it have, four odd years of mine life or something like that? Yeah, plus the potential to go deeper.
Yeah, yeah, of course. So I think they're actually going to. continue to do that sort of stuff in the background, but that's not helping anyone right now. They did wrap a couple of numbers around it.
They said this expects to increase net expected cashflow over 24 and 25 by cumulative approximate US 75 to 100. So I guess that kind of gives you an indication of how much money was going out the other way prior to this decision. I think, you know, taking a step back from Arcadium and looking at the, at the lith industry more broadly, it is interesting. We're seeing a bit of a supply response. now across the industry. So the numbers were very up and down at Mount Catlin.
Over the calendar year 23 is 240,000 tonnes, 5.3% spod. FY24 was sort of circa 130,000. We've seen, I mean, Rez, we were talking about just before Mount Marion that their 50% is going to come down from 220,000 tonnes to 160,000. So there was a step down there.
But on the other hand, we've seen Pilgang Gora that's going up to 820, 5.2% stuff. So that's a sort of 120,000 ton increase in the market. Green bushes we're talking about, another sort of roughly 100,000.
So those ones, you know, in WA, they kind of sound like they're netting themselves off, but you've got also Mount Holland adding a few more as they ramp up. So things are kind of happening. You know, there are, you know, a supply response, but it's definitely not even across the board. Definitely not what I would have expected to happen with prices coming off over 90%. I think there's unfortunately still a bit more to come.
You've got, you know, we haven't even mentioned Kathleen Valley still coming online. Yeah, so they haven't even started stoping yet. I think they've got their open pit all they're running through at the moment. I think they produced 10,000.
First shipment, that's going to go out next month. That's just got announced yesterday. Yeah. I reckon looking at that bloody 10,000, the stockpile of spot. Just for when you think about the whole thing, what they would have went through to get that fucking flotation working and just everything, just to see that pile of dirt, you'd be like, oh, thank fuck it worked.
Like, good on them. It's a bit of a win worth sort of celebrating, but they've got a lot of work ahead of them. They need a few things to go in their favour. But that's the thing, 130,000 tonne here, not really moving the needle in terms of what's coming out of the market. As you said, I think if there's going to be a supply response and curtailing, there'd be a lot more to come to actually affect things from pure supply.
Absolutely. And as we'll get into the-Then there's the demand side too, right? And like it's easy when things are dire, it's kind of easy to forget that the demand story for lithium is still like as far as comparing all the commodities, it's still like really freaking like got a tremendous forecast growth rate.
Oh, yeah. So, you know, the demand can catch up to supply. and catch people off guard on the other side of things, but it doesn't look like it's in the short term. Yeah, yeah, and it's like who can survive?
It's about surviving because as soon as you go into care and maintenance, it's the restart. You can't just turn it back on. Yeah, not that easy.
And you've got to retrench people, then you've got to re-recruit, and it is such a fucking hard, big decision to make. I reckon Arjun Murthy, who we spoke with a couple of weeks ago, he sort of put it in the best words I really loved. how he sort of expressed, obviously talking about oil and gas companies, but just the concept of fortress balance sheet and you want that defensibility when you're in a cyclical industry and that really stood out as a takeaway from that one.
Yeah, Pilbara Minerals. Yeah, and for people. Yeah, I mean, West Farmers have got a big balance sheet as well for Mount Holland.
Pilgrim Minerals is that good they're still expanding, a lot without dilution. Yeah, yeah, exactly. How's that picture as well, or the graph rather, in the city report that came out the other day as well basically saying-The cost curve? Yeah, basically saying at current spot prices only green bushes kind of marginally makes a bit of money and no one else does.
Yeah. Yeah. That's crazy. That's such a flat cost curve now. You'd have what's making money, green bushes and stuff out of the Atacama.
I think people will be keen to hear a bit more and we actually spoke a lot about it in an interview that we're going to chuck up tomorrow and, yeah, one of the key elephants in the room that we haven't spoken about is what happens to lipid-like production out of China and that we don't know. Something could happen on that front and it speaks for a large portion of... supply and you know as minres again case in point things can move bloody quickly in in commodities well and the consensus was it's still gone lapidolite production yeah still shitload of it yeah be surprised like who would have thought that one a year ago that they'd still be churning out at 700 roughly bucks yeah that's crazy i think there's a there's a couple other takeaways that are kind of interesting as well uh one perhaps a bit of a smaller one but nwh or that's the the that's the ticker, but NRW, the contractor, they signed just a year ago a $332 million three-year contract there.
So if you do just a bit of rough maths on their EBITDA margin, that is a $7.5 million loss for the calendar year, a bit more given they're not too far into it. So that kind of is roughly a bit under 5% of their EBITDA for, you know, if you look at the FY24 numbers. So it's a bit of a hit.
They actually haven't. mentioned anything about it. I guess they kind of deem it immaterial at this point in time.
And the other point that I wanted to talk about is wage pressures, wage inflation or deflation now across the mining industry. And we'll flick up a chart here that I came across that I think is really interesting. You can really see that wages are starting to go the other way. It's a trend that's really turned since sort of 2020, 2021 period. It was only going up.
And then... Very sharply, it's pulled the other way. And I think there's a few second order effects of this that we will see.
But, you know, first and foremost, hopefully that allows the mining companies to have a bit more breathing room and see themselves through the downturn. I think I was speaking to some, I was speaking to a project manager for a mining contractor actually the other week and asked this specific question. I said, is the ball getting back in your court yet for wages?
Because, you know, when there was that... uh deficit of workers and you know people and it was happening i think when i left like before i left and then it kept going where you know people are getting paid insane amounts of money to go to a new job and just that was how you attracted people was paying more to get them from somewhere else and once you're at that level it's hard it's very hard for the companies to just say we're just cutting wages across the board and takes a because then you just people might leave for somewhere else But it's at the point now where, you know, people are coming into, it's like, look, you're not as financially important as you once thought you were, Sunshine. So you're going to be going back down to here because you're getting paid this, but you're performing at this level. So the power has gone back to the contractors and the companies, not the actual workers, which is just a cycle that will go on for the...
Forever in time in mining, but that will, yeah, as you said, there's usually a bit of a delayed response, but then it sort of, but it can happen just so quickly when it turns the other way. So, yeah. And it can be, you know, it's a bit grim to think about, but it can be wage cuts across the border. It can be a lot of job cuts.
So there's a few ways to kind of frame it. Yeah. And then, but then when you got the job cuts and you got more people applying for jobs, you've usually got the. you can get them for cheaper. Yeah, exactly.
And pick the cream of the crop too. Yeah, exactly. One of the takeaways I had even listening to the mid-match call this week was like hearing the apprehension that Chris has in laying off, like, you know, skilled labour because it's the consistency of the same person rocking up to the same site over a long period of time that drives the efficiencies. And so, you know, yeah, I think that just speaks to the more friction. that there is when it comes to putting an asset on care and maintenance and things like that.
Oh, shit, yeah. And I think like the min-res. Looking from the outside in, I think min-res is like it's a bit of a go-getter culture.
There's certain people that work there. It's not a bloody I think it's a bit different to BHP. You're expected to go there and bloody work.
So when you lose those people and then you have to ramp up again if you can't get those people and it's retaining that quality is so important for longevity. But when you're in the not survival mode but like really sensitive times like this when you're fucking like, yeah, what do you do? So. Yeah.
Oh, fuck being a bloody mining contractor. Jeez, that's even worse than bloody owning a mine, I reckon. Far out.
Oh, I can't bloody. Do you reckon Mount Catlin would get snapped up? I was going to ask you that one, Matty. What do you reckon? No.
Would they pivot? Would they pivot? Yeah.
That's probably not a bad idea, actually. Rayvo. Bit of infrastructure there.
You can repurpose infrastructure. How would you go about it? No shame in pivoting to gold or uranium. Or antimony. Or antimony.
Mate, well, okay, if you're going to go or niobium, or you could go, fucking everyone's chucking a resource of that out at the moment. Buddy, get K-Drill to start peppering holes down there. Assay for everything. I think that's the best chance to revive.
The full elemental chart. Full elemental bloody analysis. Just bloody Arcee and Diamonds, K-Drill ripping them in there.
I reckon K-Drill could be integral for the rebirth of Ravensaur. Wow. I think. Go bloody and pinch first quantum.
Pinch bloody first quantum one down there too. Nickel, usually gold around nickel. Just start peppering the joint.
I think the only way for us to get out of this glut is. K-Drill exploration. The money you'd save employing K-Drill down there, you can, you know, you pick up Mount Catlin.
Yeah, exactly. Go bloody, they're at Drill 24 as well. Go bloody, go meet.
We're actually selling free tickets. Come have a pint with me, Druber, and Rhino Sullivan. I'm doing an event.
What a bloody honour. Come meet the guns. Absolute GCs of blokes. RC and diamond drilling experts.
Go K-Drill. Get them down at Ravo. Righto.
Ravo. We're trying to get the bloody ads to keep some positivity. It's slowly increasing as the show goes.
JC, Borksite. Borksite. Jeez, I love Borksite.
Love it. Borksite in Queensland. So Metro Mining put out an operational update earlier today saying they achieved a monthly record of around 700,000 wet metric tons of... bauxite shipped last month.
So for context, Metro is a bauxite producer in literally the most far north point of Queensland possible. What, near like Cape York Peninsula, is it? Yeah.
Yeah, right. Yeah, so right up there. And they started mining their bauxite hills mine back in.
2018, about six years ago. Even the bauxite's probably dehydrated up there. They'd be sweating that much. Probably. Jesus Christ.
Oh, Jesus. They get a bit of rain here and there up there as well. Yeah, they get a pretty mean wet season up there.
And so this increase is largely a result of the fact that they've expanded the operations there. So now that a lot of this has been put in place, all these sort of key expansion components around. screening capacity and transshipping capacity resulted in this increased production capacity. So August was 13% higher than last month and 29% higher than the same time last year.
And so far they've shipped just shy of 3 million wet metric tonnes for the year. And all those expansion components they've put in to operate at a 7 million tonne per annum rate. Essentially, they've been fully integrated now and either operating at or very, very close to a nameplate, which, I mean, the timing of this is pretty great as far as the commodity price is concerned.
I mean, bauxite prices, the Yossi benchmark price is up 48% since January 22. And you can see here, this is sort of a bit of a chart looking at their daily shipment. sort of rates from 22 and 23 in those sort of grey lines. And then now this calendar year, 24 in the orange sort of as they've been moving up there.
Ali, give us a bit of the back story because Metro is a really interesting one. They had a... you know, as we've kind of said in the past, it had leverage on both fronts, you know, and it's been, it's been quite a journey, but things have really started to swing in their favor lately.
Hey. Yeah. A hundred percent. So, uh, during COVID they had an absolute shocker of a time. Um, because as we remember all the shipping rates, ocean freight rates were just going through the roof, um, almost doubling in some cases.
Um, but then you had Australian balk site prices, essentially. flat for 2020-21. They had a pretty leveraged balance sheet. They had to do a few save raises and debt extensions and convert this and that to equity.
It was just pretty full on. I mean, look at the spark chart here. They went from sort of as high as 12 cents to mid ones very, very quickly. But things started to turn around from about last year.
The ocean freight market was up. prices really come off. They've sort of stabilised now.
And as we sort of said before, bauxite prices have increased a fair bit since two years ago as well. The market's really tightened there and, you know, the story when you talk to the very few bauxite experts out there and aluminum experts is that, you know, a lot of what China had brought online when they, you know, became kind of superpowers in the whole. aluminum complex sort of depleted and that's why they kind of had to go to Guinea and and you know even go out there to start bringing in bauxite was because their domestic reserves are you know coming higher and higher cost and fewer and fewer of them. No 100%. Hence the fragility in the system now.
Yeah and I mean even in this graph here you can see the the Guinea sort of benchmark prices for bauxite sort of experiencing you know pretty similar hefty gains as well. And then even as far as Metro is concerned, I mean, they actually achieved their guidance last year, just shy of 4.6 million tonnes shipped. They announced FRD, final investment decision, on the 7 million tonne expansion, as we said, sort of through expanding the sort of transshipping and screening capacity.
That's all sort of fully commissioned and ramping up well now. They have... revised shipment guidance for this calendar year for 6 to 6.4 million tonnes and that was sort of reduced down a little bit due to sort of a bit of an extended wet season at the start of the year. Their balance sheet has sort of been progressively cleaned up.
I mean they raised 45 million dollars in May earlier this year to it was essentially called a equity for debt raise. So now they've got about... $13 and a bit million cash, total debt $88 million as at the sort of 30 June quarterly, and that's made up of Nibari debt, sort of shareholder loans, and also a Nibari royalty as well.
And Metro's sort of indicated a lot in their sort of quarterlies and recent presentations that it expects to reduce net debt by another sort of $22 million this half from operational cash flow. And that sort of made me actually sort of... go back and look at the numbers, sort of how they've been going recently.
So they've been making a small site, EBITDA, the last few quarters. And the last half yearly they just put out for 30 June shows they're not operationally cash flow just yet. And you can see here this is an extract from their quarterly as far as the pricing.
costs, things like that. And then the half-year report also shows sort of in the notes section there, contractual maturities of non-derivative financial liabilities. Basically, what do they have to pay? What liabilities do they have to pay within the next year? And they've included sort of payables in that as well.
And they're saying that they expect $109 million to go out the door within the next year. So to... 30 June 25, which is a lot of money for a company that's not yet operationally cash flow positive. So that's super important for them the next couple of quarters, sort of to make those requirements that they've outlined in their half yearly. The expansion capex side of things, I mean, that's sort of pretty much all spent now.
So they should have a pretty clear runway as far as investing, you know, sort of cash outflows. And Metro sort of reckon, you know, they're at a cash generation sort of inflection point now and they're sort of targeting like a 15. $1 Aussie buck a tonne site EBITDA for this calendar year or $18 for next year. For context, the last few quarters just on the rough numbers saying they're generating around $4 a tonne of site EBITDA. So is it similar to like it's a bit of a sentiment play at the moment, like similar to an Oribanda?
It's like that hasn't really hit the mark yet, but it's like if all the ducks line it. end up in a row that should start going on? I feel it's very much, yeah, it's a sort of a sentiment and a bit of obviously leverage to the commodity price sort of play as well.
And reducing their costs. And reducing their costs as well, you know, with the expansion too. So my takeaways from it is I don't think they're out of the woods yet, but production's going the right way. Bork's up pricing is going the right way.
The balance sheet is better, but it still makes me a little bit nervous. But the next two quarters are so critical from a cash flow perspective, which will go such a huge way to sort of show people how well the expansion to 7 million tonnes is working and also from obviously a cash flow perspective to sort of really get that net debt a fair bit lower. Because, you know, we certainly don't want to see another equity for debt raise like they did earlier this year. So it is very much, you know, at an inflation point. So, yeah, keen to see them get it under a way.
Yeah, good in the weeds, JC. Mate, you're venturing out of the comfort zone, taking on bauxite. Bauxite.
Step out of the Murchison. So proud. Oh, good.
Bloody, there might be some up there. Who knows? Any bauxite in the Murchison?
You'd know, wouldn't you? I'll check on Wamex after. Check on Wagons. I think you'd want it much closer to the port.
Get that logistic. Oh, yes. Companies like Metro are the sort of like, yeah, the type of company that, you know, some people can, who are really good kind of resources stock pickers, they look for companies like Metro where they've got a busted up balance sheet, you know, kind of poor operational like delivery history and all that sort of stuff.
But then. If they get the commodity cycle right, also if they're reducing costs at the same time, you know, via some expansion, those can be pretty transformative kind of moments. Oh, 100%. And even.
Hence, like, look at what Metro is off its base, off its low. It's just kind of phenomenal. And some people are really good at picking those sort of moments and they're kind of some of the lowest risk kind of, lowest risk in quotation marks sort of, yeah, returns that you can make in our industry. Yeah, because it's really, I mean, like, exactly like you say, Trev, I mean, from the mid ones where it was, or low twos where it was for a. For a while, it sort of got up to the, you know, fours, fives and sixes in, you know, in the last, last few months, which I mean, that's, that's pretty good in a few months if you're looking at it from a returns perspective.
And, you know, they've still got a bit of a journey to go as well. So it could be, you know, potentially even more assuming things, you know, go well and as planned. So it's pretty forward looking, right?
A lot of people were starting to anticipate that. Yeah. Hey, I think we're at the woods here. Yeah.
It reminds me of St. Barbara back in the day when I think they went down to about five cents. It's great. And they had the Solomons and there's another one and like, but it was like, they've still got Gualia.
And once they flogged all that off, it went, there was some, there was a truckie that dipped in like a good chunk of money and became a millionaire, bought it five or eight cents. And then it went back up into the two bucks and then became St. Barbara again after that. But like had that honey period where it was just had Gualia and it fucking ripped. Yeah. It's a great analogy.
I should have been on it. All right, we're going to finish. One day I'm going to get one.
You will. One day. One day.
We're going to finish on a, you know, a bit more of a downer note after Metro, which was much more of a positive story. But Coronado was a fairly big news out today that the stock got hammered on the open 15 or 16%. down straight away.
And again, it's more problems at Currah. That's been a bit of a problem child for a while now. And it was a downgrade. So they downgraded production, I think, 7 odd percent to 15.4 million to 16 million metric tons of production.
And of course, on the back of that, you see costs jump up. So costs jump up from 105 to 110 bucks. That's mining costs.
Obviously, you chuck on all your royalties. Everything else on top of that, but that's a 10% jump on that front So I think if you were to do a bit of a you know Relative or comparative sort of chart Coronado has just had a terrible sort of time. They've got assets in different continents and of, you know, varying degrees of successful, you know, in operations over the past few years. And Curra has firmly been one that's pulled them down a lot of bad weather and sort of flow on effects. And they've spoken about, you know, idling the fleet, you know, all these sorts of things, which might be short-term good, long-term bad, all these kinds of things to sort of give them a bit more wiggle room.
But it's been, it's been pretty tough out there. So CapEx is still a... decent sized number. They kept that the same.
You can see in the thing we'll flick up here that that stays between 220 and 250 US for the financial year. They did say they're going to probably come in at the upper end of that one with some work being accelerated into calendar year 2024. They also spoke a bit about organic growth projects at Buchanan and Currah as well. So you've got Mammoth Underground.
Buchanan, by the way, is the one over in the States. And they said they remain on. on budget and on schedule. So there's a, um, a bit of positive news there. And yeah, I think the last detail to kind of note, which is something we've seen with almost every Queensland coal miner, there was more sort of scathing words around the, you know, quote unquote, extreme royalties that have been, um, hitting all the miners over there.
And that language hasn't really changed over the past year and a half. And I don't expect it to, but who knows if we're going to see any sort of, you know, changes on that front. Here's a bloody question without notice, a quiz.
Another one where you see significant rainfall. You think North Queensland, like rainfall. You get a lot of rain there.
And then the royalties. If you could pick where to have a mining project in Australia, taking into account rainfall, like seasonality, access to water, the quality of water, native tidal, ease of operation, where would you pick? Good question, eh? Wow.
Like Kalgoorlie, for instance, like water is a challenge there. Yeah. Like you go down South Canbowda and that, like the salinity of the water is an issue and the amount of water.
Mate, look at the merchants. It's actually green bushes. Oh, that's what I was going to say. Green bushes.
You couldn't build it today because it's in a national park. Yeah, exactly. Exactly. But in terms of like.
Probably seasonality. I assume they got a lot of water. It's also the right commodity, right? You're not going to get a cold Queensland type tax on lithium. I think that, buddy, I suppose that Murchison, Leonora, Leinster area is probably not too bad.
Not too bad. But then, God, we've even seen native title becomes an issue there as well. That's pretty difficult.
That's probably an issue everywhere now. You go up north, Pilbara, you've got the potential cyclones. Cyclones.
Yeah. The operations you're doing up there are just such massive, you know, open pit operations which come with their own sort of challenges, native title and the like, you know, permitting and all these sorts of things. Green bushes.
I wouldn't go to New South Wales. No. As much as I love the place.
Well, the question is very much what would you do in 2024, right? Because things change over time. Maybe South Australia. What's that?
There's a couple of those mines that are right next to the Barossa Valley. I mean, that's pretty cool. Hillgrove got it up. There's one there that's, yeah, it's too close to town. There's a gold scoping study on one of them.
It's too close. Probably too close. You never get permanent kind of thing. Yeah, yeah, and I think there was a bit of, yeah. That was a really good question, actually.
I'll agree. That green down south, south WA, I reckon that might be the spot. Maybe Ravensthorpe. Ravensthorpe. I have heard that the Black Cockatoo is a big issue if you're trying to build a mine down south now, even though I think it could be hard to get.
The whole environmental process could be tricky. Yeah, yeah. This is bauxite that, you know, scales many, many tens of thousands of acres.
Yeah. So I think we're a stat. And Taz...
Tasmania, that's pretty tricky. Unionised as well, I think. Victoria, that's bloody hard from Poo.
It's like, Australia's bloody hard. We're struggling to find. I'll go on the Murchison. Let's go to Murchison. Go to Murchison.
I'm trying to think of an island somewhere. New Caledonia. What islands are there?
New Caledonia. That was the nickel one, wasn't it? Was that nickel in New Caledonia at one stage? One stage right now.
Go get some. They had the protest there this year. Go get some bloody phosphate over at Nauru. Yeah, I was going to say the islands off South America, off Chile and stuff, they were just bird shit that were mined for...
as long as they could be. Yeah. There were gold mines for a little while before it all disappeared.
Go Brazil. Maybe Brazil's the new hotspot. Forget Australia.
Why choose Africa? It's just cheaper. Yeah.
You've got to be specific about your country. So I think we've come to the conclusion mining's hard. Mining's pretty hard.
Good sum up. Good sum up. Well, it's not hard to call Axis.
No. The phone number's there. It's in the show notes. It's just bloody.
Call Sean. Sean. He's a guru. Knows everything about drill hole orientation and instrumentation. He's a legend.
And you can see him at ADO Drill 24. Oh, mate. He's going to be flying. Oh, I cannot wait. Cannot wait. And speaking of ADO.
ADO. Australian. Drilling Industry Association.
That's the one, J.D. I was just testing you. And MMS, Mineral Mining Services, verified.
DSI Underground. DSI Underground. Silverstone.
Stop scrolling too fast. CRA Insurance. Greenlands Equipment.
K-Drill. YouSpark. And Hoodaroo. Hoodaroo.
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