A "way too early" but let's start the conversation poll question from the koala...

Fast forward 6-12 months...Blackwater is running well

Whitehaven bids $4-5 billion for the Anglo Coal business and let's call it...

$3 billion new debt
$1 billion of price contingent
$1 billion from cash / new equity

Do you as a Whitehaven shareholder worry if the equity is issued at >A$10/sh?

1/n Reason the koala is pondering this is:

1) BHP views were made clear in Miami

2) Gary is dialed in

3) If not Whitehaven what proven western operator can keep Gary honest?

If the world's views on coking coal are evolving as they appear to be...

Wouldn't you be happy issuing 150MM shares (A$1.5 billion) to basically LBO Anglo Coal?

It's not "BMA" or EVR, but...Anglo Coal + Blackwater/Daunia is a beautiful set up

You end up back at ~950MM shares (not including th 30MM of earn out that will never be issued)

BUT...you now have Blackwater, Daunia, and Anglo Coal in the portfolio

2/n

The koala thinks Anglo American $AAL.L should "sell the company" but only accept bids where everything but the copper business is spun out in a NewCo to Anglo shareholders

And the acquiror takes on all capital gains tax liability risk going forward in Chile (not like Anglo will have any assets to claim against)

If you read the tea leaves, even if you think copper is $4.50-5/lb or higher per year on average today through 2030 the koala suspects you know the marsupial is right

In fact, if Duncan & the board did this, arguably the bids if you use a Freeport $FCX multiple on attributable EBITDA (see what the koala did there) would value Collahuasi, Los Bronces, Quellaveco & Sakatti at >GBP20/sh aka...the unaffected share price of Anglo American

This was going to be a long form but the drop bear says whatever, let's send it...time to talk strategy for Anglo even as the koala suspects they fend of $BHP 1/n Lets look at Freeport 1Q24...

You can see consolidated EBITDA is >$2.2Bn but "attributable" is $1.24 Bn

Copper up but so is gold and...sorry but all the gold is in Indonesia

This was realizing $3.94/lb copper & $2,145/oz gold...w/e though...

Core point is this... 2/n

Might long form this thought but true cost of capital for marginal 3rd/4th quartile producers is actually 1.5-2x the cost of equity, and that’s why everyone gets LT in steep cost curve commodities like iron ore and lithium prices wrong, it’s much higher 1/n Because there will be quarters or even years you are fcf negative, so bank credit isn’t available, but you also need the cash on hand to fund those periods of burn

Means the first year of a windfall doesn’t go to shareholders but to replenishing the “rainy day” fund 2/n

The koala's head hurts reading this report from @CruxInvestor because we aren't provided a simple year by year model just a bunch of LOM tables and then the occasional bar chart but alas we must peservere through horrific presentation sometimes in the eucalyptus tree

And while this analysis was a headache to read, the koala fully disagrees with it.

So let's have some weekend fun ripping this apart drop bear style and defend the honor of AlphaMoon $AFM.V
1/n Let's old school thread this...struggling to reconcile this forecast production plan with this from the PEA

When the maiden RE at Mpama has 4.27MM tonnes at 2.47%

Since ROM head grade is 2.21% that implies 11.7% dilution, so 4.27MM tonnes is actually 4.77MM tonnes, 468ktpd, that's 10 years

That's aggressive resource conversion math by the marsupial but...10 years versus... 5 full years and two half years? (The red bars)

How...why?

2/n

Many many thoughts and ponderings in the eucalyptus tree after this initial pilgrimage to a new part of the world

1/n If you are a big mining house, Friedland, or Lundin…the Saudis are keen for those sorts of well established trophy/world class assets

If you are not, it’s a different game

2/n

It'll never happen, so you know what, let's talk about it

Let the koala tell you about an SPV it would love to do but could never raise the money for because its for a public equity

Let's talk about the hypothetical Warrior Met Coal $HCC Poison Pill SPV idea

1/n Not going to get into the valuation, Blue Creek, etc

Lord knows we've talked about that before...

TLDR - $200/t met LT with Blue Creek, $8-10/sh EPS until way beyond the horizon

Let's talk the NOLs

2/n

Seeing a lot of discussion on subbing ali for copper. A couple quick takes for the koala:

Price ratio required on a spreadsheet for it to “make sense”? 4 to 1

Mechanically it is a little more complicated

Practically would create several new issues 1/n A simple google search will touch on the mechanical parts so let’s focus on the practical

The surge in ali demand would not be serviced by scrap recycling but new primary 2/n

Where do we start with this one?

DBG $dbg.v tries to play the scandium card and the koala goes drop bear, a tradition unlike any other…1/n

https://twitter.com/MiningGrade/status/1628393791366262792

The koala has heard mgmt team’s verbally say what the range of targeted recoveries are based on similar deposits/peers but never put in a news release until met work empirically proved it. Metallurgy is show don’t tell. Btw, how did they come up with that recovery range? 2/n

This will become the new untouchable Pebble if Panama auctions off the concession again...late night eucalyptus thread time...

Cobre Panama moves >400kt material PER DAY 1/n

bloomberg.com/news/articles/… For context, an 90MM tpy iron ore mine like S11D is ~275ktpd BEFORE waste...this is one of the largest earth moving exercises in the world and IT IS IN A RAIN FOREST!!!

Maybe can count on one hand the companies that are capable of stepping in here

2/n

So let's role play the "super tax" whether its coal price or EBTIDA/NPAT margin based and just strip away the populism and get to the real talk for that is the opportunity

As a koala long energy producers, BRING IT THE FUCK ON! 1/n

https://twitter.com/OneMoreif/status/1599616250770255874

The world requires a certain amount of energy to function economically and just practically. And oh btw, that goes UP with economic growth despite innovation and thrifting (aint Jevons paradox a bitch, aint the koala right guys?)

And for the first time in over a decade...2/n

Just DM this to someone but random koala though on NIL - Notre Dame and Stanford should be winning EVERY national championship in 7-10 years with NIL in place and the koala will tell you why...1/n Imagine if every 4 or 5 star who signs with those schools gets a $250k NIL package (the alums of both schools should REALLY pay attention) and an understanding if it doesn't work out they are an NFL draft pick, the alumni network will step up for them launching their career 2/n

Alright alright, we got the eucalyptus tea brewed, we have one of the Koala's go to modeling playlists cranking...it's time for a Whitehaven Coal $WHC.AX valuation thread

First let's start with our 6 scenarios...1/n

https://twitter.com/thebiglong9/status/1587729257370984448

Also let's highlight a couple assumptions here:

Have cash costs sliding as energy crisis "resolves" through the decade

30% cash tax rate

14MM equity tonnes per year through FY2050 (yea Gunnedah open cuts, etc.)

2/n

Decided to wait until it was Friday after the close to send this from the eucalyptus tree. Let's have a weekend to digest this. Will not be linking to the thread in question, but let's talk DBG CN, the koala's favorite punching bag & let's talk the scandium flouride mkt 1/n First, DBG is out with news saying they've recovered 89% of the scandium in tailings into "solution". Got to love a phase 1 metallurgy when recovery really only matters when after all steps you have a marketable/payable product. Stock up >50% this week on the news 2/n

After overnight thought, the koala thinks the Cameco $CCJ/Westinghouse deal has great narrative momentum so the stock is a long here for a trade

But in 5-10 yrs, when we look at this, there is a reason E&P, refining, & steel companies are not owned by Auto OEMs & vice versa

1/n

https://twitter.com/YellowLabLife/status/1579949776002777089

The one key pushback to the koala's longer term observation which is TOTALLY VALID is "dude, look at CCJ EV/EBITDA & P/NAV, buybacks don't make sense, neither to dividends. If you got a growth multiple, use it or lose it."

So Tim & the Professor are using it
2/n

Ahead of this tonight, the koala wants to share two images. First is the simple "back of the eucalyptus leaf" WHC $WHC.AX model for FY23 & then for fun... 1/n

https://twitter.com/nyetjgoldblum/status/1569136592077598720

Using those same parameters, extrapolate out FY24-27 with the established capital alloc policy (20% NPAT in divvy, rest in buyback up to 50%, and koala has allocated last 50% to buyback as well) & pretended stock didn't move, what's implied NEWC to get same FCF yield each yr 2/n

A little summer Friday eucalyptus

What do you call a jr explorer that hasn't published a technical report in over 11 yrs?

The koala did a double take when it realized it wasn't even on Hat

Company has raised C$17MM in the last 10 FY yrs, C$19.9MM including the recent raise 1/n 2015-22 screenshots (Feb YE)

2/n

Fair Q, the koala wouldn't bet on it (but let's see) and here is why...it's eucalyptus thread time with Professor Koala everyone!!!

Let's talk about the greatest greenfield coking coal asset in the world no one knows about - the Dominion Coal Blocks

1/n

https://twitter.com/Edark94/status/1558066955613093891

Two parcels of land the government kept while giving everything else to CP as incentive to build the railroad...and that the Canadian federal govt still hold today...Parcel 73 and 82 right in the heart of the Elk Valley 2/n

Okay, wrote it, deleted it, but let's do this in brief

99.5% of scandium reports to flotation tails according to Doubleview & the scandium is in clinopyroxene and amphiboles

Go look at how you get scandium out of those minerals 1/n You are talking about slag, about pyrometallurgical processes. This is an entirely different flowsheet from the one that gets you a copper concentrate out of a porphyry

There is plenty of literature out there

They still don't know how to recover saleable scandium 2/n

Know the koala is going to chum the waters here but been flipping through the Mako Mining latest production report, 1Q22 results, and 2021 FS/MD&A...why in the world is this company buying back stock? Looks more likely it needs to issue equity...1/n To be clear, no position in the eucalyptus tree and openly discussing it b/c its so illiquid no point shorting, but think this is a great example of where a buyback just for the life of me doesn't make sense. So worth a discussion 2/n

Current eucalyptus question list for Teck:

1) Given the Steelmaking Coal Resilience deck and Don's comments at BAML, is a coking coal selldown off the table barring an insane valuation being offered? 1/n

https://twitter.com/thebiglong9/status/1533940225004666884

2) Given the cash generation at these coking coal prices, and Don's commentary about the buybacks suggesting qtrly updates/reviews, is there a soft target for YE net debt? What is it? 2/n

So the koala & @RaisingTheBAR47 are discussing US nat gas pricing and why aren’t we seeing production kick up materially 1/n Koala: why, how?

RTB: it’s not rigs, it’s well casings, it’s oilfield services…you can’t get it if you want

2/n