good day money miners we've got a exciting chat here with the king of copper Ahad and speaking of the uh the kings of Industry use access mining technology the kings of drwh Hall orientation and surveying give sha a call they always pick up the phone not good enough JD it goes like this access M and Technology of the trusted advisor and drill all survey instrumentation you need more access in your life because you just know exactly where everything is in space thank God you popped up Maddie I'll hand it back over so let's get into let's get into some copper now thanks for coming on no worries I'm going to say the same thing I say every time I come on here you're only as good as your last performance so if I bomb here you'll never see me again you're putting the pressure on yourself there so we've been uh we've been planning actually this this copper chat for quite a while it's an exciting one for for so many different reasons there's so many uh big companies small companies analysts you know buy side sells side that are just bullish about copper and it's a it's a super interesting space you got diff from a geological perspective different deposits you've got you know from the the smallest miners to the biggest out there looking for these uh these projects it's probably the most reported about Metal I'd say you know Bar None out there so I'm very excited and I think the kind of logical place to start this discussion is EXA there just talking about th those demand projections that we're seeing MH how the world is kind of going to get there whether those projections are in fact going to eventuate so you know plunking that all on you I want to kind of hear what do you make of this whole you know there is a complete Dar of copper projects out there kind of discussion point I mean I think um as far as Commodities goes I I don't think there is a higher premium in any commodity right now for finding a significant deposit than copper I I think that is yeah like and and a lot of that is driven by the demand and and whether you believe the demand uh curves like the timeline of the demand curves all of those things uh you can make a rational argument for both both of those sides right like we are definitely going to use more copper are we going to use it as quickly as some people are projecting you know probably maybe uh you like copper is kind of directly tied to infrastructure and some places it takes a while to build infrastructure so I don't think it's going to um yeah like you can make a rational argument that some people's projections are aggressive you can make an argument that some people's projections are conservative but in the end I think you know like to your point that um there is I think no other commodity that has the uh an actual as well as a perceived premium tide to finding a deposit that will that will uh that will be a company maker or you know like a return significant value I I I don't think we need to sort of flesh out the the kind of Bulls side of it too much I think the the audience you know very well understands that that is the the widely held view but I'd love to hear from you and we were speaking about this before we recorded today the kind of contrarian take and there there are a few of these out there there's a few of these sort of takes emerging MH and I think the yeah so the so the current view is that you know we're not finding enough copper deposits um and that's going to create this a gap in the supply demand that we're going to have um and that's true you know like we are definitely not finding new copper deposits at at at the same rate that we were say 10 years ago or 20 years ago um I guess one of the contrarian views that that we talked about and I guess is the it's kind of the the thing that we wanted to talk about here is that the sexy bit is I think everyone says that we should make new discoveries but there's a there's a like a body of work that's going to come out and it's not my body of work it's by two people named Richard Shi who's uh was a consultant under Minx Consulting another guy named Petro G who works at the center of exploration margeting at Ewa um and their study will be uh it's an upcoming paper in a journal called geosystems and Geo environment so that'll come out later this year but Richard will also present this work at imar if you're going to imar you can go watch his talk uh I think it's called what's the real story of copper and I guess what they've you the work that they've done shows that if you look at existing assets those the the resource growth on these existing assets is actually uh meeting the copper demand that we've had since since um 2010 till now so so the resources on these existing assets so we're talking about mines that are already in production um you know like we call them delineation projects you know so they're delineating more resources or adding more resources to the inventory um and that has delivered twice as much the amount of copper as new discoveries have in the last uh or since 20 2010 right so in the last decade or last 15 years now you know they've delivered twice as much on existing assets as they have now in that Paran of what we talk about you know this is say call it brownfields discoveries or um you know expansions really yeah like uh resource expansion drilling um and so there so there's a few things and you know like sometimes we call it exploration upside you know you have a resource and then you drill it out and it becomes double the size but the initial resource was what you built a mine on um so you know so so new discoveries haven't quite filled the demand that we've had in in the past and they're not likely to fill the demand that we will have in the short term either because if you make a copper Discovery now you it's probably going to be 10 years if it's substantial copper Discovery or mine for it to come into full production and 10 years is probably pretty aggressive like it'll probably be somewhere on the order like 12 to 15 years that realistically that you can kind of put it into production and I think I think QB is the the case and point that a lot of people have in their mind and that was 29 years off the top of my head from when they first discovered it in I think 1992 to when it comes online and that's right and there's a lot of these I mean the Lost brones is another Ang one that was stuck in development hell you know kind of like that Hollywood term of development hell for like what five years I think it was um it still has challenges now uh resolution is another one you know it's been stuck in this thing for decades uh several you know Supreme Court cases on that stuff and the these aren't you know I mean Chile they're developed countries you know but it's not the quote Western World we're actually talking about and there's been a lot of you know arm raising about what's going on in Australia in the past couple weeks and what's been going on in in Canada for some time y now but can we just knuckle down for a moment on on what's really holding up these these projects so I mean to start with it takes a long time to draw them out and actually get a solid understanding right yep and then and then following that you've got the same as in Australia you need to get native title right you need to get government approvals water is a big challenge Are there specific areas that you think are or challenges that are underweighted by by the market at the moment that just take a long time uh for for for like I guess large I guess it's more a poy type question um yeah so I think that the the two major challenges in poy tend to be usually Community or environment you know like they they tend to be an environment I'll use the bucket term like water being one as well because again if you're taking water from One Source Source you're probably affecting someone else's ability to use that water somewhere else um you know so things like Pebble pebble is a really big copper deposit that's been stuck in Alaska because it's close to an environmentally sensitive area yeah um it has native title concerns as well um but I feel like yeah like we're kind of getting into a point now where uh community and uh environmental issues um I think we understand the risk with uh land access or native title but I think we probably now starting to understand that environmentally uh and community-wise how these things can can be affected and that's and that like the environment is I think just a function of that when you build these big Minds like yeah you can go to Google Maps and look at how big uh Escondida or chuki Kamar are you know like they affect a significant amount of real estate on this Earth so so the chance that you're going to affect the environment in a certain way or community in a certain way it's just higher when you're building such a big thing yeah yeah and sort of anecdotally your experience in in Africa can you comment on on development timelines as they sort of compare with with Latin America um yeah that's a good question uh I mean Latin America I think it's probably becoming harder because um you know particularly in Chile um you know air the water is a issue the other is like you know anytime you're building something on the side of a mountain that's four or 5,000 m high is problematic as it is heard a thought um yeah like just from a labor force like you know like if you're asking people to work at 4,800 M or something like that you know like there's a whole another problem that you have to manage um in Africa it's been I don't think the development challenge is is as big uh but it's just more jurisdictional in that you know like the the government is not as stable as in places like Chile um so it's always a trade-off you know you trade off the fact that you can develop things really quickly because the government is happy to take your development and and the revenue that comes out of it uh but then the government um you know like it may not have the same residency time as your asset does and so how you how you kind of play with that actually on that um jurisdictional risk side of things and we sort of touched on this um in our chat with John ronsky as well uh do you think there's also a bit of another reason why there's a lack of copper discoveries in the last decade is because perhaps more of this sort of copper Prospect it is in these risky jurisdictions and and mining companies are too scared to to go there and commit the dollars and and tap into that yeah completely I think um you like if you're you company like BHP Rio you angalo yeah like your appeti to go into places like the drlc is probably low you know like that's why you see companies like ivanho that go into these places and and they find a Chinese kind of uh s soe that becomes partner with them because their risk appeti is different um so I think that's definitely the case where I mean I think you know like part of the cannibalization of Assets in places like Chile and South America is because everyone wants to kind of work there and so you know so everyone's kind of fighting over the same uh you know like same assets it's a red Ocean Blue Ocean kind of thing yeah it's red ocean there fixed uh assets and everyone's kind of fighting over them and so the risk appetite for people to go and you know explore where others aren't I I don't think is as high as it's probably been in the past do yeah do you think that's going to change over time we we had a discussion with um shepo and a former Investment Banking analyst out of South Africa and he was very Pro the development of places like Zambia maybe a bit less so DIC that's probably one step further in its challenges for a a BHP or one of these sorts of companies but do you see a world where BHB is in Zambia for example yeah I think so I mean if like to be honest if you're serious about copper you're going to have to go to some of these places right now yeah I would Advocate that your whole portfolio shouldn't sit in in know in a jurisdiction like Zambia but I think you should be able or you should be willing to take that risk you know to go into these places you should be willing to take the risk into to go to like places like irania or you know like PNG and things like that um because you like otherwise you're you know it's kind of like um to some degree it becomes a no some game you know like you're fighting over the same asset so so if you're happy to pay the premium to kind of push someone else out of the way you know like a BHP could probably do that right like they could pay a higher premium and and and push other biders out of out of that kind of race but that's not a strategy that's going to work for everyone you know like the text or the anglos you like these guys wouldn't be able to go compete against the real big Majors if they really had to get in that fight so to to pull the uh the chat back on the path of where discoveries have sort of happened and where expansion in Copper production has happened in the past few decades I seen you've you've put a chart here which we'll Chuck up on on the YouTube talking about the uh the changes in cut off grades and um you know specifically as it relates to some of the biggest operations in the world just a handful of these operations can change the landscape or add a huge amount of production in a in a real Global sense so can you can you kind of talk us through and like what the takeaways are from your perspective yeah yeah you know so you can put this graph up and this is again from Richard sh's work uh you know so he had this graph where he looked at the top 12 P fre mines in 1929 uh and then he showed yeah like so at that time in 1929 they had 50 million tons of contained Copper at that time yeah so so 3 billion tons at 1.5% copper right and so then you go to today with like and today was 2008 in that time um and you know see these same mines now have more than 6 61 billion tons of6 right and so and that is purely a function of them dropping the the cut off grade and so my earlier comment about you know like existing assets have um provided twice as much as uh twice as much copper inventory as new discoveries in the last 15 years you know one of the things that people will argue is they say well is that just a drop in the cutoff grade now from 1929 to now that definitely is a drop in the cutoff grade you like we were mining probably 1% copper or 1.5% copper then uh and now we're mining you know substantially lower grades um but when you look at this inventory over the last 15 years that's been added on existing mines that hasn't been due to cut off grade now that's been at pretty much the same kind of average grade that these mins have had for for the whole time so that's not a function of people just dropping cut off grade and just making the resource bigger um that's a function of them just finding this similar material they're mining but just more of it and the and the point of it was that if you look at these top 12 mines in 1929 I think it's like eight or nine of them are still in production now right so like you know so for example Bingham Canyon is still in production chuki Kamar is still in production moreni yeah El tenente morency um Miami yeah so a lot of these are still still operating and this kind of goes back to I guess one of the other things that you know we'll kind of get into is that like why do big companies look for these things right it's because they exist for 100 years and you can keep mining them for for essentially you know 100 years and because you'll keep finding more more material you like for example in this chart that Rich has made like you know you look at it and you go so the total uh resource in 1929 in these top 12 mines was 50 million tons and so from 1929 till now we have mined 136 million tons of copper out of those so so we've mined three times the amount of resource that was listed you know in 1930 1929 right I was just going to say quickly for the benefit of the money miners as well just explaining what what a cutoff grade actually is as well uh yes so so cut off grade in it's like layman's terms is basically your economic threshold uh above which you think you can make money so um so if a cut off grade you know like if you read it if it says 1% what you're effectively saying is that any or material below 1% copper is something you're not likely going to make money on so that's your economic line uh and so as copper prices have increased that line drops as well so you say if the unit value of one ton of copper increases you can then mine lower grade material because you're getting a higher unit value out of it right um and the example of this is like yeah like things like diamonds or gold are high unit value so you can mine less gold for exactly the same economic payoff as mining something like copper perfect so I'm very keen to go down the uh the path of um m a and what uh the the major companies are looking for and you know felo these sorts of things that we've seen lately but to round out on the the point about the the shortage you know the the big question out there like are we going to have a shortage what is the kind of consensus you come to perhaps not I mean you can maybe break it up into a short medium and and longer term time frame I mean like so like I mean Richards and Petr work shows and in the short term um existing assets will fit and will fit any copper demand we're going to have now that doesn't mean that they're going to like fill this demand forever right like resources are are finite resources you know they're not renewable uh so at some point they will hit a line where we're not going to M them anymore and they're going to shut down so so so my my point is that we don't need it's not that I'm not saying that we don't need new copper discoveries I'm just saying that I think we have to be a little bit realistic about that our copper discoveries that that this kind of rhetoric that's out there now that we got to go and find new coer discoveries are they really going to fill the demand that we have in the short to kind of medium term you like I think that's unrealistic but we do need new copper discoveries to fill the medium to long-term kind of demand that we're going to have of copper going forward do you think copper recycling will have any material sort of impact on perhaps feeling that more medium to longer term shortage um I think it will you like it recycling I think if you look at kind of like when recycling programs work and how they work I think recycling programs work when your demand is kind of fixed to some degree right like so you can you can recycle material and you can fill the the fixed demand that you're going to have going forward I think recycling will never really be a substantial thing if your demand keeps increasing right because yeah like you like and also um I mean I think JD you made the point right like a lot of copper goes into infrastructure so in order to recycle that that would suggest that you have to take down infrastructure to to use that in new infrastructure and what we're saying is you like we don't have the amount of copper infrastructure we need to build more so I'm just not sure recycling is ever going to be a substantial amount in in that sense you can't recycle your way to growth which is yeah exactly like yeah I mean like the recycling will I think fill the void and I think it's it's a good thing we should do um if that means we have one less copper mine in the world because we can recycle enough copper to to fill that demand then I think we should um and universally I don't think we recycle oh yeah like we're not very good at designing things in a way that we can recycle Metals efficiently um but I think yeah definitely we should go down that path but it's never going to be more than a like a small slice of the pie really all right so so let's talk about the exploration strategies of the major Miners and you know following on I guess we can talk about why specifically they are always looking for these poery style projects and maybe you know you can throw in a couple critiques of the way in which they size their bets or maybe why they're opting to to buy thiss um build projects themselves yeah so they um I mean so you know like as a kind of a general view you know like there are several copper deposit Styles you can go for um and it and I find like you know as someone that kind of views this Market or has to comment on it I find that it seems to be very like a bodal distribution right that you know Majors only go for very very select deposits like yeah like they will go for p free deposits and for people that don't know like you know what we mean by P fre P fre are you know like these large kind of high tonnage you know big deposits but they tend to be lowish grade you know like you're talking about like half a percent to a percent copper uh if a py deposit tends to be bigger than that you know it's quite a unique kind of deposit in its sense um and for you know like for anyone that's a parttime geologist you know po free deposits are essentially things that formed in volcanoes Once Upon a Time so yeah so that's kind of like their link um so yeah so majors are like predominantly only really looking for po frees and these large sediment holer deposits like the copper belt in in Africa and there's a fundamental reason you know these things tend to be really big and they tend to have a great profile that they can mine these things for like 50 or 100 years and and so majes aren't interested in Copper deposits that are say small but high grade um you know so like things like what sandfire kind of goes after things like that out in Spain you know these tend to be high grade but quite small uh doesn't mean they're not economic you know they're quite economic but they're not going to have the like the Mind life that that interests a BHP or something like that sure um and so yeah so I think it's you know like over the last kind of I say like 10 20 years I think there's been like a very um like quite a divide in the industry in that sense you know like yeah like we were talking about this you know there's not a lot of copper MERS now now you know they've all been swallowed um so you have this kite like dichotomy like you know Mages will only look for po frees in a certain type of deposits and they're only interested in those assets and then there's Juniors who realistically can't build a big po free mine at like4 or5 billion capex so they'll go look for these small things yeah like and then that's kind of divided the market really really clearly I think yeah I mean it it sort of seems to come from a place and this is probably far too blunt an assessment but bulk Commodities tend to to make serious money and you know smaller operations yeah you know perhaps they're a bit more cyclical is one way to kind of put them but you look at all the majors and it's it's I or and it's cing uh cing and thermal coal least it has been for a long time that's right and I think you like you can understand like you know a company like BHB really for it to kind of add the the gravitas that it wants inside its organization yeah it really only goes for both Commodities and my view is that I think Mages really look at Copper as a bulk commodity yeah right so so they go after assets that fil the that fill their kind of bulk commodity view of the world right they're not looking for things that have a mind life for 10 20 years they're looking for something that you know will will exist for 50 years or something so we're talking about po free um what other sort of styles of copper deposits are out there sort of for a for the non- geological minds and sort of what why why are they sort of what are the differences between that those and a poor free as far as um you know the grades and scales and sort of Economics you can expect from each of them yeah so that's a good question um yeah so po fre tend to be like I said yeah it's kind of like um like a Continuum right so like P will be at one end you know they tend to be really really big um you know kind of lowish grade uh they usually tend to be not very yeah like they don't tend to have a lot of uh elements in them so they tend to be the copper or there'll be copper gold or copper Molly something like that um which which makes them easier from a processing point of view because you don't have to figure out where all the elements are going um and so you know sediment hosted tend to be on on the same spectrum that they they can be really big they can be also small uh that's a Genesis kind of thing like how they get formed but they tend to be usually copper or Cobalt you know like and they don't get a lot of other elements attached into them so they the the Africans the DRC the yeah and you like they yeah and they kind of fit I mean like the Central African copper build is kind of like the type example of them uh but there's also like the Koopa shifa which is one in Poland um yeah so they tend to be this big um deposits that can be mined for a long time as well and then we've got the uh you know uh the Spanish examples the the matses riotinto the original sort of project right yeah that's right so they tend to be more these deposit style called VMS or Volcan volcanogenic massive sulfides um and they tend to be like much higher grade usually on that Spectrum uh but they tend to have other things you know so they're often lead or zinc uh associated with them silver gold you know like all of these things kind of come in um so they tend to be smaller you know metallurgically usually a little bit more complicated um yeah like they they're a little bit harder to find as well because they tend to be a smaller deposit to find um so you what you find is like you know they they're the deposits that you know smaller to mid- tier kind of companies go after uh companies that can't spend you know billions of dollars building a mine and that's the other thing yeah like sediment hosted and P free you know the capex required for them from the economic side it's almost always a billion plus that you know you're kind of looking to build um and then you like you have other things like you know some people Target copper deposits which are associated with with Nickel in in mayic intrusions you know like that's another end member um so some people Target them but that's like you know most people don't do it primarily they're looking for nickel copper and pges and that that type of stuff that they find there Olympic Dam type iocg yes the other one yep yeah so ocgs are another where you know like there's some some icgs that can be Min almost like a bulk kind of operation and so so again majors are interested in them um I think a little bit of that is um you know Majors go in them like particularly BHP go into them because they hold Olympic Dam so you know so it's a deposit style they understand uh they understand the processing of it they understand the complications of it so you know so they go down that path um but so like I said like you know some to answer your question there's deposit Styles like icg sent hosted poy that sit on one then which are capex intensive you know usually lowish grade but High tonnage um and then there's another Spectrum which is more the VMS and carbonet hosted and a few other deposit styles that fit in there and they tend to be higher grade but much smaller but very low capex intensity great that's good summary so I want to Pivot the uh the conversation briefly to commodity price forecasting and I guess this layers in with what we' um initially discussed we're we're pretty critical on the show about anyone's uh kind of ability and I mean we just just listening to calls this week you kind of heard it you know I think Chris Ellison said on the minr call I've got got no idea where lithium is is going I certainly didn't think it was going under a th000 bucks a ton and yeah you can you can kind of see that across the Spectrum even some companies who pump a phenomenal amount of money into into the research side of things get it wrong and you showed me this this fascinating chart which again will will pop up on the YouTube about long-term copper forecasts you know I think they're kind of clumping together uh a whole bunch of analysts sort of forming a consensus view but what's your sort of takeaway and how you think about companies forecasting the the price of Commodities uh yeah I mean I think um as a general statement I think we do it pretty badly um I think and that's not not just commodity price forecast I think if you look at forecasts of other Commodities like oree juice and things like that you know like similar problems exist in in that space as well is that generally most commodity forecast tend to be really good in the short term but they tend to be horrible in the long term and and it's just because yeah part of that I I think I mean this is just my opinion part of that is I think some Commodities don't really have a relationship to supply demand curves they have more of a relationship to the Futures that people are investing in them and speculation of what they think the future price of certain Commodities is going to be I think that's driving commodity price more um but the challenge for I think mining companies is that I mean the reason why I always like showing this graph is that you know when I worked in companies we looked at consensus Price Forecast religiously right and we would use those as a way of deciding whether we would build things and then when I see this graph which you guys put and just to explain it yeah in that graph the black line that you see is the actual Couer price and the colored lines that you see that end up in the dot are the consensus Price Forecast of what people thought was going to happen over the next 5 years all right so just as a general reference the black line is what was the actual price and if you connect all the dots that you see the blue dots that is what people thought was actually going to be the copper price yeah in the future uh and so you see that there's absolutely no relationship offset by about five years it's a consensus price forecast like for example on the graph you can look at like you know look at December uh 2005 so just after that you know the the price was nearly $5 per pound and the forecast had predicted a couple of years before that it would be close to $1 right like that's not really like a sound mechanism to actually develop you know like whether you should go ahead with a decision to build things or not um but you know we used to use these things as like you know like gospel like you know we not not touch these things at all and then when you go and look at this I mean you go actually our ability to predict this stuff is horrendous you know like we're we're going to be out by a factor of five like yeah that's not really a good way to kind of operate business pretty scary thing right cuz I mean this is one of the main tools companies are using to make decisions on you know whether to develop things or not and most of the time it's wrong yeah no no no that's what right and so um so yeah so the I guess I guess I don't have an alternative to what you can do right like I wouldn't put you on the spell like that yeah and and so this so this is where I think kind of the problem comes and to back to you know one of the topics we talked about is why do companies are like why are they buying assets that are say producing Now versus buying things that could be put into development is because you don't know what the future kind of looks like yeah so so it's much better to buy something now and you know that the price is probably going to be right for the next year so you know what what you what you're kind of buying and how you can kind of optimize and then go and then and if that works financially I think then yeah you hedge on on the price in the future doing something and and you can then make the uh the alpha that you want on that by the time the sales process is closed most that that year is kind of gone and then it's all yeah up in the air I mean there's like also examples like you know like the you know there's like a classic example um of when BHP sold its Co asset in I think is in Colombia you know like and gleno bought it you know like and by the time that the deal actually got finished you know gleno had made so much money out of out of just the Cal price moving that they could just sub like they could pay for the purchase of the mine through just that Year's worth of uh price movement and and the revenue they got out of what a champagne problem to have cuz I was going to say actually while we're on that as well I mean uh I mean that's also sort of you know one reason why we we're seeing a a lot of people you know uh buying rather than you know SL building discovering um and we saw you know the recent Maneuvers with you know the BP in Anglo and then it went you know BP London and and the foo assets as well um do you see that sort of continuing going forward like that that focus of you know sort of um you know buying rather than building and and discovering yeah I think so I think I think there's more risk in developing these big assets um and I think some of it is perceived but some of it is is real yeah like I think it's hard to build these things um it's hard to build them on time you know without having cost blowouts and things like that as well uh and there's plenty of those you know stories around the traps um so I think you know so companies I think are now you know like probably happy to pay a premium to pay for something that's already in production that that that they don't have to worry about how how they're going to make it work and they can expand it along the way and that kind of goes back to the you know the research that Richard and Petro have done which shows that yeah like when an asset is already there it's it's much easier to grow that resource base and add it into uh into production rather than have to go find a new mine and go through the permitting process of building it and doing all all of those things as well so yeah so I I think people will happily pay a premium Now for something that's already in production it makes the felo example particularly interesting because the the the stab they had at Ango was for producing assets but the filo one is you know very firmly development that yeah that's right so I mean would be interesting to see how that goes along like you know I mean yeah like I'm not completely of with what uh felo has done from a permitting side of things or whether they've gone down that path uh but I think that's more of a play as well like you know you've got uh a number of substantial deposits close by so if you can kind of put them together you like that kind of gives them the scale of operation that probably a company like BHB is looking for so I think it's more of a play and you know like how can you kind of put all of these things together um so you're not completely dependent on one asset kind of working you know you can kind of make them work in in a hub kind of model on on the point on commodity price for forecasting once more do you do you think this is something that people from other Industries would kind of look in at the the mining sector and just not be able to wrap their head around how you know you can't control you know p in your P * Q yeah equation or you can just be so horribly wrong in in forecasting I guess it just hones in focus on controlling your costs but that should be Staple in any in any kind of business but I mean do you think there's sort of gaps like that that lie in in other sectors that perhaps I just haven't spent too much time looking at well I mean yeah like I kind of say this I mean one of the most challenging things about the mining industry is that the companies are price takers they're not price Setters you know like they you know like if you're you like if you're Apple you can kind of set the price of your consumer goods to some degree and and you you can back it up with some level of marketing and things like that um yeah like if you had gone to set to to say to someone that you could charge $2,000 for a phone you know like prior to the Advent of smartphones like people would have thought that's ridiculous right but but they have created the the marketplace I think now that that you can kind of do that you know whereas Commodities you know like you as a company it's very few companies that get to set their own price right so I mean companies like gleno can kind of benefit from the commodity trading point of view on the other side but but you're fundamentally not setting the price for Gen for a good reason you know like yeah you know otherwise it would be a monopoly kind of set up which which which wouldn't work for anyone I suppose the uh the kind of saving rce or one of the the factors that the mining industry has in its favor is that there's probably a lot more continuity like if you're if you're getting a worldclass i operation yeah you know the the set of companies that had them 50 years ago still around whereas the set of top tier tech companies as your example was is completely different that's right yeah yeah I mean I think that's um I mean that's a really good point in that you know like I mean this is where I think this is why people like these long life assets as well like you know they exist for a long time um you it's hard to replace them as well like you know if the pillur didn't exist you like it' be pretty hard to replace that amount of RN or com coming from like you know like 10 different kind of uh kind of Minds as well and that's also I think you know like this is maybe more of a like a personal point of view is that I just think you also if you're the executive of a company like BHP you know like it's I would think uh it's much easier to have one or two kind of Assets in your in your portfolio that produce rather than having 20 assets that you have to manage and and like produce the same amount of copper like you know like operationally and logistically that's a much bigger problem than you know like I much rather take something like Escondida and just have one copper asset that runs for a long time rather than have you know like 20 assets that produce the same amount of copper but you know at different stages where you got to D this thing out you got to expand this thing you know that's I think a much more challenging kind of operation as well for a large company I'm just tuning in light but does armad mentioned verify yet he's always been a Serial verify mention he has I is there a verify model for ES data how good that is I've seen the one for for Kamala that's pretty yes yes but yeah that's well if it's good enough for Kamal Kola it should be good enough for Escondida but and as he didn't he say like once in a one in a 100 Year Discovery yeah one one in a 100 year you know and if you got people like you know Robert fredland using it why aren't you why why aren't you trying to find the next Escondida with a verify model uh escandor verified model would started small it's grown into escandor verified models grow proportionally to how much you drill and find you know what means in Spanish what does it mean hidden verify I it means hidden yeah it does yeah yeah cuz it's like 500 met below the surface unlike you out love for verifier which is not hidden so prevalent explain your story simply use verify use verify and go get an eson dor IND here and the verify AI to actually find these hidden deposits yeah yes email Grant and even better go have a beer with Grant cuz he is a GC if you're in Perth as well Nathan oh big KN they're all over they're all over the world yeah yeah you'll see them at bloody IG and everything they're just everywhere go verify yeah I think it's a it kind of reflects on the the management and the CEO and how they are in their head space and how they think about things it was interesting to listen to the the call with Brendan Harris at sandfire an a similar view to to you there talking about not wanting to develop black but unless it you know reaches substantial scale because it adds another time zone there's a whole another Workforce a whole another office and you know it's kind of refreshing to to hear that it's yeah like you said it's so much harder to have all these moving parts around you actually hone in on on BHB for example and it's perhaps not as confusing as people may initially think you know you've got 2third of the revenue in or yep then you've got COC and coal now and you've got copper and there's bits they're trying and they're sinking money into to poish here and there but they've done well to to simplify the kind of narrative in the the story I I think that's the adage right you know do do less but better right like you know like really know the businesses you're in and I think that's that's that's a much more effective strategy and I think this like simplification also I think leads to why you know like to your comment about like geographical spread I think you know this is why also people uh concentrate on certain geographies or certain deposit Styles maybe is because it's it's much better like you know you remove degrees of freedom you know like so if you're a company like BHP or you're Anglo you know like you're in Chile you know like there's not a huge incentive to go take on the risk of like trying to develop something in in the DLC or like subsaharan Africa or things like that you know like geographically you know you probably concentrate and become a little bit more conservative because you know that jurisdiction you know the way of how to work with parties and things like that you know like why Complicated by trying to take on you know like 10 different jurisdictions um see yeah so that I think realistically if you're a business you know you want to take complexity out of your business so it makes total sense why you want to do that I I want to dive a bit deeper on on BHP so you know Olympic Dam has been there since they took over Western mining 20 some years now and then they've pulled in the the Oz assets and they've recently For the First Time come out with a resource at Oak Dam so to start with what were your thoughts on the the resource that that came out there um I mean to be honest I think it was probably a little bit lower grade than I thought it was going to be um yeah like I know they have a high grade component but I thought that high grade component would be a bigger portion of the overall deposit uh the overall deposit is is quite big it's it's um you know that's probably the size of Deposit they would probably look at as a at a minimum um but I think at that depth you know like it's probably needed to be a little bit higher grade um but they it probably still get developed you know like as an asset you know maybe in the BHP world that asset loses money but overall the business would probably do really well out of having having something like Oak Dam in there yeah and and for those curious the the numbers that sort of came out were 1,340 million tons at 66% copper with. 33 G per ton in gold and the and the old body was starting at 650 M sort of depth something like that yeah around that 6 700 met kind of depth um but this is where I think you like the you know there's some synergies in how um there's some Synergy in BHP taking over Oz because Oz is going through the process of developing cartina which is roughly the same depth yeah it's roughly the same grade profile as well um so yeah so they're going to probably learn their lessons there so hopefully Oak Dam should go a lot smoother because you know like they they've already kind of learned that lesson and have that uh corporate knowledge to to how to mine Oak Dam you talk about Synergy from an IP sort of sense there right yeah because I I mean yeah like a BHP probably as a company you like they they're pretty good at large open pits you know like they're not um I don't think they have many assets that do large underground you know like bulk kind of mining um yeah so that's where that expertise from from cartina will kind of come in of an apply the learnings there yeah that's right so um it makes sense right like yeah like yeah uh they're the same deposit style same like geological domain really it's going to have probably the same level of complexity so so it makes sense I think de I think underground I think DSi and I think of like the deeper you go the more concentration you need of DSi bolts in the ground to keep that Bloody joint humming right bloody DSi set up a factory in a bloody South Australia with all this shit happening you know how deep o dam is oh it's Prett pretty deep million bucks a drill all isn't it every every drill hole was like a yeah kilometer deep but I think the body is like 750 oh mate there's going to be millions of bucks worth of DSi B and mesh going in that joint because who else would you buy them off I don't trying to think no I can't think of anyone it's just a thank God we've got him thank God thank God we've got DSi in Australia go Australia go DSi go Derek herd get on the front foot BHP and so what are your thoughts M on uh sandfire position of Mets and that sort of whole Spanish region as well um so this is like you know like stemming off from our conversation like if you're a company like sandfire like you know like what type of assets could you go and buy in in the copper space you like you're probably not going to be able to buy like you know an Escondida or or or something like that uh you're probably not going to be able to buy something like Oz you know like the assets they have so so I think you like Mata kind of fits you know like if I had to recommend an asset that that sire would have to buy you know that's the type of asset that that you would probably go for uh along with um the company that they bought in Botswana mod you know like so you know so they kind of fit in that right kind of profile very different price tags that I know I know um so yeah so I mean I guess Spain is you know like um from a geological point of view you know Spain is like it's the the belt is called the Iberian powerite Bel you know it's been mine since like the times of the Romans um you know it's where Rio Tinto kind of became riotinto um and so so yeah so riotinto spent quite a lot of time exploring that part of the world uh they didn't find anything big uh you know they found L Cruis but it probably wasn't the right size for them so they sold it um so there's been a lot of discoveries along that along that belt you know there's about eight to 10 kind of decent discoveries that were had but they're not at a size where you m is going to go in and and attack him so I think they're the perfect kind of area for for a mider like sandfire which has growth aspirations to kind of go and go and take over um so I look at like you know like why would you buy matsa you know it's probably worthwhile to buy matsa where you have a processing kind of Center as well so you don't have to go down that path then once you have the processing center it's the old kind of wa gold adage that you know the person that has a milk and then have gold from all these small things kind of coming through the old H and spoke model um so that's I think maybe the like yeah I'm I'm just saying this as a external uh person that that's I think maybe their angle is that you know get a foothold get a keystone kind of anchor and then a lot of these kind of other deposits start becoming live because you you you are the only party that they can sell to are are you surprised that we haven't seen any of that consolidation yet or is that just a factor of how much debt sandfire kind of took on and the fact that they might need to just you know uh balance the the fin of things I guess um yeah like again assuming that they would prob predicted copper price to have peaked by now so so they would have been able to kind of go and and you know like either pay off the debt so their balance sheet looks better uh or be able to go and and transact on these things um so maybe they're kind of holding the powder dry until you know the market kind of allows them to to expand as quickly or as aggressively as they want and actually on that consolidation uh sort of strategy as well I mean do you think um you know sandfire as I say or just more generally a mid- tier is perhaps the more capable sort of size company to do that sort of regional consolidation than perhaps a major yeah I just think um yeah know like the major would it would be too it wouldn't be cost effective for them to do like a lot of these small things um you know like even thing like you know things like um yeah like when even a company like WMC couldn't kind of hold cambala together and like even those assets kind of became too small for a company like WMC uh WMC at that time was probably a mid tier you know like maybe a upper tier kind of mid tier but um you so I think they're just too small like you know there would be so much lost between the the seed cushions for a company like BHP retarder put all of that stuff together um that just wouldn't be worth it for them there was also speculation back on sandfire that they would uh scoop up comical um yeah they ruled themselves out relatively early in the in the process there but um the company that's ended up buying it MMG y I think you have experience with back in in the mid sort of 2010 so have you did you make an assessment at the time of what you thought of the the price they paid the the asset and these sorts of things yeah so I think um I mean you're right like I I would have predicted if they had gone after like a company like mod they would have gone after some of the other assets there as well um yeah like I'm not sure exactly why they didn't I mean I think I think they could have gone for it um yeah like the MMG asset is maybe not the same um same level as as the mod assets so so maybe they would have gone for that like they went for the the best thing they could go for um but yeah I'm not sure like I think you know like that's also another space you know there's a few deposits there that found in that belt you know like they've grown significantly since then you know like so someone can come along and kind of put that that together um but the general view that I have is I think yeah like in principle I think it's easy to say people should go and kind of put these things together but I think the you know like the timing of when like the deal window for all these assets kind of aligns you know it's kind of like the Swiss Cheese model right like all the holes have to kind of align and I think that's that's sometimes a little bit hard unless someone goes and is ultra aggressive uh and is happy to pay premiums to kind of get deals done because they know it'll it'll kind of amalgamate and and and there'll be the benefit down the line how do you think about you know given you got a A few years of experience on on me that the timing of you know acquiring the assets as well as getting the financing done to to develop it if we're talking about acquiring it yeah asset so I think one of the risks that's kind of coming in now is that yeah like as a development um timeline blows out you know the risk you have is that if if you if you're developing an asset and you miss uh a commodity price boom then it's really hard to get that that money back you know like o over the time so I think that's why you know people are aggressively going after assets that are already in production cuz then when you know it's much easier to expand a mine and you know like can mine more while you're sitting on the asset than having to worry about trying to get a government to hurry up or you know like like trying to push environmental permitting through when when kind of the price is kind of booming as well so you so there's always these like Windows where I think people are happy to pay that premium in m&a because they know that you know like when the the market flips you know like they're in the perfect position to kind of you know like take advantage of that price uh price spike that comes along and one of the classic examples of this is you like when when BHP bought WMC you know like like for all intensive purposes BHP wasn't buying WMC for for his nickel assets you know but they bought it you know the deal was done in 2004 2005 and then 678 was probably one of the the biggest nickel booms we've ever seen so you so at one point nickel West was probably making more profit than other parts of uh BHP just by pure like not coincidence but yeah it wasn't probably something that they had planned for nickel to go to $50,000 per ton and you and just be creaming money out um see yeah so the you know so like the the numbers that I heard is like you know during that time um the the nickel business would have like far outp paid any of its cost for trying to buy that business business at that time just over a couple of years and that was purely because all those assets were in operation and all BHP had to do was syn the capital to expand them and they did that pretty quickly pretty aggressively and then you know they were kind of Off to the Races one one Rion we haven't spoken about uh is is Mongolia with obviously the OT being the the flagship asset in the area there now that's got a a long and interesting history with with Ivan hoe and then turquoise and Rio Tinto what are your thoughts not on OT itself but on juniors in in the area mhm uh in Mongolia you mean yeah in Mongolia um I mean I think that's um I think that's a classic kind of case of your question in that yeah it's probably a Terrain that uh majes are probably not going to go into so it creates a space for juniors to go in um and and you like that's I think the part where the really um aggressive kind of Juniors that are happy to go into those terrains you know they can kind of do that work um and and that's where I think their space kind of fills in really well is that they're happy to take that risk you know like they don't really have much on the line so they can kind of go and do that stuff um and so the question really becomes is you know like when a junior finds something that's bigger than its boots like what are they going to do with it like are they going to be able to raise the money you know like if you're a 100 million like market cap Junior and you got to build a mine for $2 billion like how how you going to how does that work yeah like how you going to do the even the like 60/40 debt kind of equity thing like how you going to do that like you're just going to blow the company up if you go down that path so so I think you know like sometimes you know like I I think it's like you know sometimes Junior say they're going into elephant country to catch elephants but you you got to be careful because if you catch one like what are you going to do with it are you going to get paid for it on on the the theme of you know Junior's rolling the dice in in molia is it kind of to assume given the the depth and the scale of these um you know elephants that you're you're looking for that expiration is a bit more expensive not to mention the the remoteness and and all these sorts of things is it harder to kind of roll the dice yeah I think that you know like this is kind of I guess a dichotomy right like juniors are are not the best agents to go explore in these areas because um you know it's remote it costs more you know like especially if you add in the depth component you know that cost more as well uh a junior company that has to that has no revenue and has to raise that money to go and and search for things that are expensive you know like are they the best entity to go and kind of do this work um so yeah so in reality the best entity for to do this work would be a major you because they you like they can go spend this type of money and then it would be a rounding era in the stationary budget right so um so yeah so there wouldn't like nobody would care this happened um you have to roll the dice a lot of times to Bear the fruit which is hard to wear yeah that's right so and this is where I guess I'm I'm a little bit critical about when when Majors sometimes say that they're looking for these you know when they say they're looking for an Escondida or something like that um is that I think I I think like genu like genuinely like we've had one esita discovered in the last 100 years right that's probably not a great thing to go and explore for you know like what you should look for is slightly smaller things that could probably become Esco data right and then and that's a strategy that Rio is kind of adopting now you know they look for tier 2 like large tier tws and they're hoping that they become a tier one while they're working on it along the lines just beat it into shape and make it a tier one asset over time yeah yeah or or like you know like market conditions change and from like it becomes an economic tier one right where where you can kind of mine it and then and then pass it on uh but then you know like that kind of conflicts with with the strategy of having a mind that can just you know look exactly the same for 50 years you like that's a problem for them I like that an economic tier one yeah not a geological tier one no because I mean once you found the resource like yeah like the resource relatively doesn't change right like it's it's it's fossilized a long time ago right it's just our our economic perception of it or our ability to mine it and all those things that that change over time you know so the resource is the resource it's like yeah know if it's 1% copper um yeah like there's not much you can do to get it to 10 % right like like it is what it is do you also think it's a bit of a you know let let explorers do what explorers do well and then you know when it comes to that inflection point of oh the multi-billion dollar capex bill has come come through because they've discovered this big thing then that's that's a time for these big guy or mid tiers or major s to to step in basically yeah completely I think um I think it's like you know there a fundamentally different skill set I think to go and do like Grassroots exploration as opposed to mind development you know like I wouldn't Advocate people that are good at doing Grassroots exploration to go become mind developers and I wouldn't Advocate mind developers to go to Grassroots exploration you know like there fundamental drivers in that in that sense um so I think like you know so companies that have historically been really good explorers you know they tend to be explorers you know they tend to hold on to that kind of uh kind of moniker uh whereas you lot companies tend to be really good at building you assets and building mins and running them you know like they're probably not the best agents to go go and explore in certain areas um so I think there there has to be that kind of dichotomy uh it's just a question of how do you incentivize each party along along the path like how do you in incentivize Juniors to do that uh and how do you incentivize large companies to to accept that you maybe they're not going to be the best Explorers so they should create an environment where other companies Juniors do a better job but they still get to benefit out of it have you got thoughts on the the framework that we discussed with with John ronsky his aggregator kind of model is that something you spent time thinking about yeah yeah quite a bit um yeah like I think I mean I think John's model is um is probably the a good jumping off point right that the you like and John's model really comes from the part of view and you know like him and I have had these conversations a number of times that you like and we've had these conversations on this show as well is that the funding model doesn't incentivize people to go find things and then the appropriate time frame or to actually find the right things either right because Juniors can't raise the the amount of money that they would realistically need to go find something all right so um so yeah so if you could take that funding imperative out of their hands and you could fund them appropriately then you could get to a point where they they could hopefully be better what they're finding and you find this in you know like this is not a novel idea like you find this in the startup World about and and and most of the VCS or accelerator programs that are really good at at taking companies through you know they fund companies all the way to an appropriate point for them to develop their product you know they don't go we're going to give you a million then you know come back to us in a year we'll think about whether you're doing things right or not and then we'll give you some more you know like often the best accelator programs are like you know we buy a story we not going to give you $5 million to go execute it now if you crash the car along that way that's okay we take that risk on but you know we're kind of incentivizing you to get all the way to the end of your your kind of product line yeah and also taking the uh the appropriate amount of bets right if you if you look at like I don't know y combinator or something like that when you're taking two batches of whatever it is 20 twice a year I mean I did the number so like y combinator has probably got to be somewhere around 4,000 companies now that they invested in right um I mean that's over a long time but still you know um and they yeah out of that I think they were at last time you I counted there was somewhere around the 3,000 Mark 3200 Mark or something like that um and they had done 11 unicorns a billion dollar companies out of that you get one strip one Airbnb a few drop boxes and those of companies and it pays for but that but that yeah like and you and you talk to people and why I combinated you know that was their strategy they were going to take a lot of bets like that was the whole model and that means that we're going to burn a lot of cash along the way as well uh but along the lines you know they they have made far more back by just taking a lot of bets yeah we've sort of seen that in the mining world to some extent with bhp's explore program which you've sort of spoken about before but I mean could you also say that playing out more with um Majors or mid tiers uh doing strategic Investments or JVS or you know something along those lines into juniors and sort of having the exposure having or some sort of smaller level of exposure and then sort of wanting to take that further once you know safe something's discovered or something gets to a more economic size then they can sort of step in and and take it from there yeah and I think um I mean I think there's people that have done that you know like a company like South 32 at one point I think had so few people in its exploration Department that that's the model that they had to use you know they they worked with other companies um you know they funded them to do the work and then it got to a point where it looked interesting enough for them then they would kind of take over um so yeah so people have done those um as a as a general statement I'd say people haven't done it um at enough of a scale or for long enough um to actually see that kind of fruit come through um and like why combinator has been running for it's been like 12 years or something now right so they've done it for well over a decade consistently yeah even even longer I think yeah I think so I mean like it's at at least a decade old right like it's got to be more um and you so like you said you know they take two cohorts every year you without fail they fund them you know they go down that path and and if you look at you know like the early years you know they didn't have much success for for a while you know because they have to get their own ecosystem of how they're going to help Founders to kind of go down that path and and so I think you know like one of the things um that we haven't been very good at doing here is that I think people do it for a while while but then when they don't have early success I think it's harder to maybe justify running them and people end up bailing out of them so um so I think yeah like maybe a bit of residency time in those would be good as well yeah it's fascinating how many sort of things could be learned from a process like that like it's very structured in that they always took 7% I forget what the exact number was might have they pay you I think it's like I mean these numbers might be change now but they pay you $125,000 to get 7% up front depending on what stage of company you're in and if you meet a certain hurdle then they'll put in another amount which is again for another 7% you know so all of these things are kind of fixed along the way and then they pass you on to the the set of growth investors and they they make that sort of connection that's quite simple yeah I mean the the idea of a group of these sort of wealthy individuals as well as endowments and everything to potentially come into the mining industry and and change the game and you know another feature of them being private companies is is another attribute where you see the the markup in valuations is you know a much smoother line you know it might be an artificial line Y but it it's another potential learning that could get investors more comfortable with that's right with mining so yeah I mean this is like I mean like you know to back to like John's kind of aggregator model this is something that you know like I think him and I both agree with is that I think some of the early Capital will probably be better to be private you know like um I think it's hard for junior companies to go and do you know such such risky things things um and and have to like you provide market news and all all of that type of stuff you know like I think that ends up being maybe a a distraction not just in their execution but also financially ends up being a distraction in the amount of money they raise and things like that as well probably not the best use of their Capital as well yeah I mean I think yeah like I mean it's not the best use of their Capital if they're not appropriately funded you know like if they're raising you know $3 million for say three years you know like half of that money is probably going to go into listing costs and all all the other things that they have to do you know like auditing and all of that stuff you like is that the best use of of kind of like money in that sense um and yeah like and there's people that have looked at you know like how companies have spent money and what you find is that you know in a um in an environment where capital is uh not that available you know like the the part of the company's cost that get Cuts is the ingr spend you know the rest the stuff has to be a baseline cost that has to be maintained keep them going yeah so then you know so in times where Capital when when people think capital is least efficient because and then they take it away from the market you actually incentivize the companies to become even more inefficient because now they're just spending that money to just survive for the next little while the the time as well the amount of time that a a geologist running these companies might be spending on the road trying to drum up more Capital if that could and it's you know there are similarities of private companies they still need to raise money and stuff but the amount of flow on benefits and we do have a lot of the things that the US have we have got wealthy people a phenomenal super annuation system here we have the mining expertise yeah it'd be uh I mean the one fundamental difference again is obviously is that the amount of like the quantum of money that it takes to get to a decision Point as a junior expiration company on a project is quite a lot more than what a lot of startups can do right um so yeah so that like Al understand that you know that especially if you're like a technology company that does a SAS product like a software as a service product you know like you're talking about a few hundred, to get to a point where you could have a product that you can take to Market and and and do that you know like that's probably not realistic in in expiration you know you're talking about a few million dollars to get to to at least a minimum kind of output um and so you know so to back to John's kind of model that's that's part of the reason the aggregated model was that it's like you know if you know you're going to have to spend this much money to get to a like a realistically conceivable proof of concept or or key decision Point like yeah why wouldn't you try to make that money as as efficient as possible rather than wasting half of it on listing fees and all this other stuff that goes on beautiful Amad I think we almost solved all of mining's problems there but um yeah thanks again for for coming on it was great to chat about copper and I'm interested to see what we chat about next time sounds good thanks a lot for having me again cheers man also a huge thank you to access mining technology mineral mining Services verify smack power and Technology DSi underground Silverstone C Insurance greenlands equipment Krill and use a spark chart while you're at it h money miners H the information contained in this episode of money of mine is of General nature only and does not take into account the objectives financial situation or needs of any particular person before making any investment decision you should consult with your financial advisor and consider how appropriate the advice is to your objectives financial situation and needs