Exploring Mining Podcast

We have been huge silver bulls since 2009, but be very careful here: lots of financial engineering going on. Jane Street not only added a record 20.6MM shares of SLV in Q4, it is now also the biggest holder of SLV

Bitcoin used to be the first risk asset to get nuked on geopolitical conflict: not any more, in fact it is outperforming gold since the start of the war. Regime shift?

Officials say escort missions likely won’t begin until the threat from Iran is reduced—a process that could take a month or more even as U.S. strikes target Tehran’s missile and drone capabilities.

A few reflections on seeing the district for the 3rd time $BHP $LUN.TO 1) The brokerage analysts that covered BHP were there en masse. This was in some respects the big reveal for them as seeing is believing. And as in the past, the District showed well. Pros: it’s been well planned out and lots of flat open space to lay out the plant etc Cons: high altitude and can Argentina deliver the skilled labor (and how fast can Vicuña train it) for an operation this size? But where else do you get these quantities of copper gold silver at these grades? 2) Phase 1 (Josemaria) is locked and loaded minus we need to see the Class 3 cost estimate You wouldn’t do Phase 1 if you didn’t have the optionality of Phase 2 and 3, but there are several years to optimize those phases versus what is in the PEA 3) The Koala has always been skeptical how Lunahuasi may fit into the Vicuña JV (why would they need it) but came away from this trip recognizing with all the optimization work being done or planned on the three different domains of oxides for Phase 2, there could be merits to putting Lunahuasi material through the plant to supplement Josemaria ore during phase 2 and ramp of phase 3 to smooth out production profile. The Caserones/LH deal announced at the beginning of the site visit sort of lays that future out where NGEX becomes a Lunahuasi pure play some day But Vicuña doesn’t need to formally do that deal until Josemaria is running probably in the Koala’s opinion 4) The Lundin Group should do the infrastructure vehicle for Phase 3 themselves in a separate public vehicle when the time comes to do it in 5-10 years. There will be almost infinite demand for a vehicle funding several billion of infrastructure linked to a mining operation that will use it for 70+ years where you clip a 5-7% real return + inflation The infrastructure capex shouldn’t be a concern IMO 5) If you didn’t get experience with Ron Hochstein when he delivered Lundin Gold, absolute eye opener on this trip as the head of Vicuña Clearly has both Lundin and (more importantly) BHP buy in and energized to deliver phase 1 6) This is now a 10-15 year journey to phase 3 commercial production, it’s going to be a rollercoaster as cycles cycle but not many opportunities to deploy this level of capital at these return levels with optionality That doesn’t matter to the typical fund manager but if you are a BHP holder and you want them to be doing growth projects of materiality (if they do any projects), this is one of a short list of opportunities in those parameters in the next 5 years 7) The Wheaton - BHP silver stream at Antamina sort of is the unspoken “break in case of emergency” option if Vicuña ever needed third party capital 8) One thing the koala will be curious to see is how Chile, Argentina, and Vicuña agree on how material put through the roaster is transfer priced and thus taxation is set, but plenty of time to sort that out That’s all for now