with regards to velmin velman is one of the again non-prescriptive codes that relates to the valuation of a mineral asset similar to jork there is the velman code which is australian and there are also international codes that are that are not australian as well there was a there was a canadian code called simval there's a south african code called samvail they're broadly similar much as george is broadly similar to the canadian i-43-101 resources and reserves reporting code so velmin is is a code a again a principles-based code by which uh by which companies report the value of mineral assets and the value of mineral assets is usually reported at key events key events being in singapore an ipo or obviously an rto requires a venom code compliant report mergers acquisitions material divestments etc may require a development compliant code successful due diligence does not necessarily result in the transaction occurring successful due diligence results in the right thing happening and the right thing happening could be to not conduct the transaction the right thing happening could be to change the transaction the right thing happening could be to proceed with the transaction as it was envisaged etc etc and there are many instances of transactions not proceeding where that was the right thing where transactions being changed and that being the right thing uh and of course where ahead investments that being the right thing as well the multi-disciplinary approach that i mentioned before can involve lawyers accountants and geologists and engineers however it depends on the size and scale of the due diligence it can involve an enormous number of parties in addition to to those three groups so due diligence requirements obviously vary depending on the type of mineral asset for which a transaction is being muted for an expiration property the due diligence might be simple and here for a producing property the due diligence might be complex well what would be the differences uh for a mineral exploration property the the due diligence required might be over a over a tenement concession area only there might not be any assets within the company at all apart from the town and concession area so for example there might not be any any plant and equipment there might be very few employees it's quite often that in early stage projects is quite often that there are no material contracts there's no debt there's no staff and so so really the fact exercise that goes into an early stage exploration project an investment into an early stage exploration project can be light on it can be checking the ground and checking the the ownership structure checking the legals and that can happen in weeks and costs thousands only and and can be done quickly alternatively for a producing project due diligence can obviously take an extremely long period of time and can be extremely expensive if a company has lots of material contracts if a company has lots of staggered and tiered debts the company has lot lots of equipment lots of lots of things to check then obviously the checklist is far greater far far longer and it's obviously a far more complex process and indeed such a process would also go beyond just legal commercial and technical for a very complex due diligence there would also be there will also be perhaps political there would also be perhaps uh community and social due diligence to be checked um there would be other things as well what do we actually want to know from a legal perspective uh well the first question there might might seem a bit obvious and a bit silly and a bit funny but you know sometimes the answer to that is no or sometimes the answer to that is not necessarily in the way that it has been presented to us the key things that we that we want to understand and have answered in our legal due diligence are those key questions there but let's go back to what a tenement is and what a concession is a a minial tenement or a mineral concession is a right to exploit it's a right to exploit it's not the ownership of the land it's not the ownership of the ground and there are most countries have varying stages and levels of those rights so there might be a a right that is an exploration rights and then that right grants you the right to drill holes it grants you the right to explore grants you the right to walk around drive around map and take samples very importantly take samples from the ground but of course that doesn't necessarily confer any economic right to you that exploration right is usually then upgradable to an exploitation right where the exploitation right then grants you permission to dig up the ground transport what you've dug to a processing facility process what you've dug into something sailable transport that saleable product somewhere else and get the revenue for it provided that you're complying with the laws and you're doing the right thing of course well the the legal part of due diligence is understanding how those rights in that country work understanding that those rights are transferable and conferable to you if that's what the investment is um an understanding or it could be understanding how those rights are going to affect you if something doesn't go quite right if something doesn't go quite to plan and you don't want to end up as the asset owner but maybe you do for example in the case of a debt instrument if you're loaning if you're if a and if an entity is loaning money in uh and for whatever reason the project doesn't go well the security of the debt is the project itself so it's a project finance linked product in some way and that doesn't get and that doesn't go well and repayment is not possible well then the lending entity ends up with the asset well banks aren't mining companies so how is that going to work and indeed you know is the project therefore then worth what it is uh you've you've lent the money for it so those are the questions that need to be looked at and need to be fact checked in in the due diligence process now of course there's more um that's just that's just the that's just the short version of uh future permits is also something that's worth understanding in our legal due diligence future permits uh for example you may have the rights for exploration or exploitation for a mineral for a commodity over that area but what other permits are required for example if you want to build a processing plant and that processing plant wants to use water do you need a water and if you do how easy is that to get do you need electrical permits do you need working permits do you need employment permits i mean sometimes yes sometimes no social licence to operate is always something important and the the relationship of the project to the local community is very important to understand and very important to have understood by the potential investing party so what do the local people think of the project do they want it to go ahead what is their understanding of it their understanding of it is that it will employ everyone and it will make everyone's life better that's that's one thing if their understanding of it is that they'll all be relocated and they'll all be shipped out of the area and you know told to go away well that's different understanding of it but but the investing party having the knowledge of what the local community's understanding is in the project is important because it might be different to what the project proponents understanding of what the local community thinks in the in the prospectus in the ipo offer dock um there would be a statement of the name of the tenant the name of the concession the number of the number of the concession the size of the concession so in hectares or square kilometers but it's usually hectares there would be its location um there would be surrounding tenements that sort of information would be reported because it would be reported in the independent technical report which is part of an ipo offer dock and then you hop on google maps and check that it's actually there or then what yes i mean that's not necessarily something that a retail investor would do on a regular basis shouldn't shouldn't be required but that's certainly possible to do with regards to with regards to legal i mean you know one one would hope that the company's appointed lawyers have you know done their due diligence and thoroughly checked such issues with regards to commercial due diligence can uh can the development uh of the tenement actually take place so okay the exploitation right uh exists and therefore eventually provided the feasibility study comes back good and the joint resources are okay et cetera yes we can then develop the tenant well yes we can legally we might be able to technically that's great um but um are we actually going to make any money out of it if we are going to make money out of it um what are the taxes rates rents royalties minimum expenditures etc so with regards to that bearing in mind that a tenement or a concession is not the land ownership it is the right to exploit well you have to pay for the right to exploit so generally concessions have rents which are paid in some way to a local government and royalties which are generally paid in some way to a federal type government some tenements also have uh sorry some countries also impose what's called a minimum expenditure so some countries uh say to tenement holders as part of as part of what comprises a tenement holding they say you must spend a minimum amount of money on this concession per year so you know you know for a very large concession you might have to spend a million one hundred thousand dollars per year for example uh that is a way of the government um extending a level of control to say well we don't just want people to come along and create hundreds of thousands of millions of hectares of tenements and then just sit on those hundreds of thousands of hectares of tenants and not do anything with them if you have a minimum expenditure then you know there's value being added or created along the way within the tenants financial encumbrances committed contracts that could be there could be some sort of lean on the tenement or concession itself or it could be uh on on within the company that owns it if the project does not have resources or reserves if it's a more greenfields project if it's if it's an earlier stage project well what do you think is there that's that's that's because because that's the rationale for for investing um if there's no drug resources then we would be investing because we think there might be drug resources or equivalent at a later point in time well what do we think's there if and if the answer is well we think there's nothing there but potential sure that's still something good to invest in if you're if you're a believer in potential but of course there's just a different there's just a different risk factor um there's just a different set of disciplines involved in assessing that infrastructure a very important consideration particularly for particularly for bulk commodities so infrastructures are obviously a far more pertinent consideration for iron ore or coal than it is for gold or diamonds if i have a gold or a diamond mine and i need to ship out my my batch of gold or diamonds that i've just produced then i can do it in a briefcase if i'm a coal mine and i need to ship out the hundred thousand tons of coal mine of coal that i made this month obviously i'm gonna need a lot of briefcases in what order do we do things do we do the legal due diligence first and make sure they own it and then send a bunch of geologists and engineers to site to check everything or do we do do we send the engineers and geologists to site first to check that it's to check that there is something there that we even want to think about and then check that they own it after well the chicken and the egg question can be asked again and again and i would think that that a prudent organisation's progress all phases of due diligence in the stepwise manner so a little bit of legal a little bit of commercial a little bit of technical phase one done let's move on to phase two a bit more legal a bit more commercial a bit more technical phase three