Yet Another Value Podcast - Brian Laks from Old West on Tin's Alpha Potential

Episode Date: June 16, 2022

Brian Laks, partner at Old West Invest Management, discusses the bull case for Tin and why he thinks the world's largest tin miner, Alphamin, could present an alpha opportunityi.Brian's first appearance on Uranium and NXE: https://twitter.com/AndrewRangeley/status/1434879061961019396?s=20Tin market bull case video mentioned: https://www.youtube.com/watch?v=4Ro8uCD10-wChapters0:00 Intro2:20 Tin market overview4:00 What drives the structural increase in tin prices?7:25 Is there an alternative for tin?13:25 Tin supply dynamics20:20 What would it take to bring new tin mines on?24:40 Marginal cost of tin supply30:30 Why is today's tin price right versus 2019's?35:15 Alphamin overview41:10 Alphamin's expansion project44:50 The strategic review process52:00 Capital allocation and Alphamin's dividend58:45 Tin's terminal value versus coal1:01:30 Could China buy Alphamin?1:07:00 What happens if Alphamin doesn't sell?1:12:40 Why is the strategic review taking so long?1:16:15 Closing thoughts

Today's episode is sponsored by TIGIS. Understanding expert insights is table stakes for investors, and there's no better option than TIGS. I've been using them for almost two years to get up to speed on companies, and they've helped me immensely as an investor. TIGS also recently acquired BAM SEC, which adds a super fast way to access SEC filings and earnings calls and to incorporate financial data into my models. I run a monthly DeepDive series sponsored by TIGS on the blogs. I'll include a link to my cable deep dive in the show notes, and I'd encourage you to follow the link if you're interested in how expert interviews

can help you learn more about a company. Currently, anyone who signs up for Tigis gets free access to BAMSCC as well. So check it out. All right, hello, welcome to the yet another value podcast. I'm your host, Andrew Walker. If you like this episode, it means a lot if you could rate, subscribe, review us wherever you're listening. With me today, I'm happy to have on for the second time.

Ryan Locks. Brian is a portfolio manager at Old West. Brian, how's it going? Going well. Thanks for having me. Good. Great. Well, we are talking June 14th and I was telling you before. It feels like a train sent me, but I'm glad you could hop on the podcast and we could commiserate here. Let me start the podcast way to every podcast. First, a reminder for all of our listeners, nothing on this podcast investing advice. Please do your own work, do your own diligence, consults financial advisor. That applies to all of our podcasts, but I think we're going to be diving into the tin industry and some tin plays here. And the tin industry, you know, you hear 10 and you think, oh, that's got to be huge. But it's actually, these are very small

companies. The company we're going to be talking about is, uh, is the largest 10 player out there. And I think their market caps under 500 million USD. I don't have my mom. It's about a billion. It's about a billion US, Dave. So still very small. So please keep in mind that comes with a lot of extra risk. It's a Canadian company. So it's international. Lots of extra risk. So please do your indulgence. Then second with the pitch for you, my guest, you know, uh, this is your second time on the podcast. People can go listen to your first podcast on uranium and NXE if they want to listen to it. And I was actually just re-listening to some of it to prep for this podcast.

And I mean, you want to talk about hitting the ball out of the park on a uranium call and stuff. It was crazy. It's crazy how well the environment's played into that. And I know you think 10 is a similar situation here. So all that out the way, I'll just turn it over you. I think we're going to start with 10 and then dive into a specific company. But I'll flip it over to you. Why is Tin so interesting to you these days?

Well, you know, it is a real similar situation. I think a lot of these commodities that we've been looking at, some of the more niche metals, have a similar type of setup. I mean, it's, you know, years of underinvestment, supply shortages, forming, demand. That's there because of a lot of long-term secular themes, clean energy, you know, the energy transition, decarbonization. a lot of these things are driving demand for these specialty metals and the supply is just not there to catch up. And so what you get is shortages, rising prices, and the desire to bring on

new sources of supply. And so, you know, our job is to find where are these sources of supply? What are the valuations look like and how do we build positions in them? Perfect. Well, let me start. just high level. So 10, as you and I are speaking, the, the price of 10, I know it's not a super liquid market, but the London spot price of 10 is around 34, 35,000. I don't even know what that metric refers to is that what is the plus per time. It's per ton. Okay. So 34, 35,000 per ton. This is down from a peak late last year of 45,000. But if you, if you kind of zoom out, this is still a really high price, right? Like I got to use pre-COVID as normalized numbers. And pre-COVID, we were talking like 15 to 17,500 was about where it was trading. When it hit 20, people would be like, this is high price. So I just want to talk about like the price dynamics of 10 right now. What has driven 10 kind of two exits normal price where it's sitting today?

And like why we can talk about there was this great video you sent me all included in the show notes with the International Tin Association put out. So it might be a biased source. But they're talking about how they think 10 is structurally higher for longer. So I just want you talk, what's driven the price here? Why is tin? Why do you think tin is structurally higher for longer? Well, I think you mentioned COVID. I mean, that was a big part of it was you had a lot of supply constraints that came out of that. You know, the bottlenecks and the supply chain shortages were, you know, were big news. And really, that was on the supply side. The demand side,

you also saw a huge boost because everyone was working from home and you really saw a lot more demand for electronic goods. So probably just a little bit of background so people can understand. You know, the main demand for 10 is in solder, which is a conductive metal that's used in all electronics. And so whenever there was a huge increase in demand for, you know, you're working from home, you need a new laptop, you get a new cell phone, you can't travel anywhere. So everyone's supersizing all their all their electronic goods that really created, you know, brought forward a lot of demand and at the same time you had a lot of supply constraints that you know that really led the price to go on a huge run um that also occurred during a time of very

low inventories um in the industry historically low and so you saw the price yeah i think it more than doubled it was one of the best performing commodities of the last few years um and so naturally people started to say well how do we get more of this um you know anytime you know i say the cure for low price prices, low prices. I mean, the converse is also true. Usually when there's high prices, it invites new supply. The problem with the tin industry is there's just not a lot of new supply out there. There's a very low quality projects. There's just, there hasn't been a lot of money spent on exploration. And so you just saw the price go higher and higher without much supply response. It peaked out earlier this year. I mean, it really almost went parabolic after the

Russian situation. So, you know, that was, I think, probably the most extreme in terms of sentiment and enthusiasm on the shortage side. And then obviously there's been some factors that have brought that back down in the last few months. You've had, you know, China going into lockdown. You've had fears of recession. You've had higher interest rates. And so it's a bit of a push and pull. But for the most part, COVID really shook up the market on both the supply and the demand side. And so that's why I think you see a lot of industry observers say we might be in a new normal where prices are, you know, have reset. It doesn't mean they won't be volatile, but there may be a higher floor than there was a few years ago. And just on the demand side. So I know, again, what I know

about this industry is mainly from you. And there's a couple of other smart value investors who've been and tin and the videos you sent me but you know tin is using a lot of electronics i think a lot of people say if we're going to an electric car future tins used a lot in electric cars and stuff but my first question is you know tin is a relatively small commodity like is there a replacement for tin in these things where the price of tin goes from 35 000 per ton to 70 000 can you replace it with some other metal some other thing or is it just that critical inside a thing that it's unreplaceable. Well, I mean, there are some substitutes, but they're, they're inferior in a lot of ways. And, you know, in some respects, tin was the substitute. I mean, originally a lot of the solder was

made of lead or a combination of lead and tin. And so about 15 years ago, a number of countries and regions to say, well, you know, we can't use lead anymore for environmental reasons. And so that was really what led to a big step change in demand for tin originally. And so when you, So they were using tin as the substitute. Yes, there are some other things. I guess you could use, you know, maybe other metals. You could use silver. You could use there's some sorts of, you know, polymer type conductive adhesives.

But really, they're not as, the quality is not there. And so, you know, they might be furnish applications or, you know, yeah, I guess you could use silver. But, I mean, the price of tin goes. high enough that they're swapping out for precious metals. I mean, that that means that we've done pretty well in our in our tin investments. So yeah, I think there's a very low risk of substitutability unless prices get, you know, extremely high. And so that's one of the reasons that we actually like the investment thesis. And then the other kind of related part of that is, you know, it's a very small component in the final cost of whatever it goes into. And so the buyers typically aren't

that price sensitive. So, you know, there might only be a few. sense of it in your phone, if the price were a double or triple, and now there's 10 cents worth in a $1,000 phone, it doesn't really change the behavior of the manufacturer. So we like that sort of insensitivity. It's similar to what we talked about with uranium last time. Anytime you have that sort of inelasticity, it really helps you because it allows the shortages to, if they have to persist longer. I mean, it just means higher prices and there's really no, there's no offsetting effect on demand. Yep. That's exactly what I was going to say. The demand in elasticity, it's similar to uranium and that uranium, yes, it matters if the price triples on you, but in the grand scheme

of running a nuclear plant, which is the main use for uranium these days, like, that's a billion dollar fixed cost with nuclear engineers who are making hundreds of thousands of year. Like the grand, the cost of the uranium is such a small component. As you said with tin, if the price of the tin and the cell phone goes from five cents to 10 cents, it's pretty inelastic if you're Apple, like, okay, cool, we'll pay an extra five cents. We're making $500. It doesn't hurt the, it doesn't hurt the buyers that much. But you can imagine if you're a producer and all of a sudden, the price doubles, you know,

your profitability probably does goes up pretty well, you know, higher as well. So that's what we like about it. You know, and there's, look, I think all of these different metals that we look at, there's a supply component, there's a demand component, you know, some, some pieces are based on one or the other. We like when there's positive characteristics of both. And we think this is a perfect situation that does have both. So let's go over to, so we've covered demand. It's pretty elastic. It's in a lot of really growing verticals. You know, we mentioned cell phones, which probably they're not a hypergrowth industry, but they're still growing, electric vehicles. So we've covered the demand side. Let's talk supply side. What does the supply side of the tin industry look like? And let's

start with something. So like, where is most of the 10 in the world mind and coming from these days? Sure. Well, let me just, one last thing on demand. I mean, I know we talked to just mentioned cell phones, but really, you know, it feeds into all electronic devices. And so, you know, I listened. to the podcast you just did with, with Doug on semi-conductors. I highly recommend people listen to that as well. Thank you. Doug's fantastic. No, it was great. And look, semiconductors is a real big driver of this because that, you know, that's related to electronics demand. And so, you know, it feeds into a lot of these types of areas that are, you know, secular growth areas. I mean, it's not, it's semiconductors. It's, you know, 5G, automation, EVs, internet of things.

I mean, just the proliferation of electronic devices is only growing data centers. You know, you need a lot of, you need a lot more capacity to process, you know, when everything has a sensor in it and your washing machines talking to the streetlights, you know, that type of stuff. You need to have a lot more processing power. You need to have a lot more capabilities, a lot more sensors. Anything that's electronic like that is going to use 10. And so that's the fact that it feeds into those types of secular long-term growth theses is really what makes us prefer a commodity like that versus something that's more tied to, you know, just general economic activity, right?

I think that there's a little bit more resilience when you say, look, I mean, you look at where, you know, the end markets of these things, renewable energy. I mean, that's a long-term growth trend, even if there's short-term fluctuations, you know, the trend is still up. So that's just what I would lastly out on demand. And then supply you, your question was, oh, just on demand, I'm flipping through, again, the tin thing that you sent me. And it's just crazy. Every almost every market that tin is kind of associated with, they've got, hey, this is another one of those like up into the right markets. You know, again, you mentioned data centers. They've got, hey, if you think EVs are in the future, tin, there's twice as much tin in an EV car as an ice car.

Are they just over and over again, solar panels, all that sort of stuff. So it's crazy. But yeah, let's move to the supply side. And we can go anywhere with the supply side. But, you know, I guess the place to start is like, what, where is the supply of tin coming from these days? Well, so it's a very concentrated industry. So I think, you know, you look at the top two players are about half the market.

You go to the top five. It's probably closer to 80%. So it's extremely concentrated. And, you know, it's not the, it's not the easiest places to do business. I mean, the biggest producer is China, you know, for all the issues there. They've struggled to keep their production flat for a number of reasons. One is a lot of their production comes from the southwestern region of their country in Yunnan province. They've had some issues with power consumption.

There have been power cuts. That was last year. That was one of the big reasons for some of the. the supply shocks. They also import a lot of their concentrate to refine from Myanmar across the border. And so there's some issues there. Myanmar is actually the third largest producer. But so China's the big 800-pound gorilla of the industry.

That's one of the reasons that you've seen such fragility on the supply side is that they do have such concentration there and such a command of the industry. It's actually pretty similar to a lot of the other metals that we look at. And one of the reasons that you've seen the U.S., but other countries, you know, try to rebuild their domestic supply chains, it's just, it's difficult to have a command economy like that in control of so much of these critical future metals. You know, and I think it's a strategic decision on their part to make the investments there and to try to control these supply chains. And, you know, now that the rest of the world is really trying to achieve these sorts of outcomes and, you know, terms of climate goals and whatnot. It's really becoming an issue that they control so much of it. We saw it, you know, 10 years ago, 15 years ago with the, with the rare earth industry when

they cut off exports. And so it really is something to keep an eye on. Yeah, so they're about 30% of the market. Then you have the Indonesians. They are about 20% of the market. So those are the top two. They've struggled. You know, they were mining it onshore on one of their islands, and they've mostly mined that out. I mean, if you go online and you look at their onshore operations, I mean, it looks like a lunar landscape. They've completely just devastated the environment, you know, digging up this island for all the tin. They've been forced to move offshore, you know, to essentially dredging operations. And this is actually one I would encourage people to, you know, pull up a, pull up a video of the Indonesian offshore tin mining,

because it I mean it's it's like out of a movie they're in these rickety fishing boats they've got these kind of makeshift vacuum pumps and they're and they're they're dredging it up off the bottom of the ocean and everyone's upset with them the environmentalist the fishermen are mad and it just really looks like kind of an amateur operation and then you realize that it's 20% world supply so it just you know these types of things really are striking in that you know so much of a critical component of our, you know, future economy, you know, everything that's flowing into all these technical industries, you know, technology industries, um, is coming from such a fragile supply situation. Um, and then you have Myanmar as, you know, to round out the, the top

three, um, these guys, I mean, you can't really even make this story up. It's a, they kind of came out of nowhere, um, really only started producing in a big way. And, uh, about 10 years ago, um, group, very rapidly to become one of the top three producers. But since then, they peaked about five years ago and their production has been essentially cut in half. I mean, this mine, it's in a breakaway region of the country. It's controlled by a rebel army. You know, I mean, they had a coup.

It's really just kind of a crazy situation. They're also dealing with depletion issues. I think obviously the production has been cut in half. a lot of the easy easily mined stuff you know at surface has been mined out if they want to either maintain production or try to grow again they're going to have to go underground it's a much higher cost proposal um and there's just a lot of difficult you know they're in a very difficult operating environment um there was just a huge explosion there um maybe a month or two ago and so i mean you just you go one by one across all these across all these areas and it's crazy that

There's so much concentration, and yet all of these places are really dealing with challenges. And so, you know, that's what we like to see. We like to see a demand picture that is resilient, feeding into a lot of these long-term trends, you know, continuing to grow. You're seeing the growth rates increase from, you know, where they had been about 1 to 2% a year. You're seeing a lot of these new growth areas push it more to like 3% to 4% a year. You know, and if you do the math on that, you need kind of a big new mine every year. We just don't really see it on the horizon. And in fact, I mean, the supply side is struggling to stay flat, if not shrinking.

So that's where the shortages develop. That's what gets us very excited. You know, unlike the uranium situation where there was a lot of inventory and people were trying to get their hands around it, you know, how long they could essentially persist in the shortage state. you know, the tin inventories are rock bottom levels. I think there's only a few days worth on the exchanges. And so something's got to give. There are a few bright spots. I'm sure we're going to talk about one of them.

But these are the types of backdrops for the investments that we like to make. And, you know, we take a long-term time horizon. So we build stakes in these things and try to look at what does the supply demand balance look like, you know, a few years into the future. You know, is there a shortage? Who's going to try to fill that? shortage and you know we kind of go case by case to see um if there's any attractive investment opportunities yep now you mentioned so that's the current supply side right and it sounds like an

extremely fragile supply side 30% from china a lot from Indonesia and Myanmar like very fragile supply chain but if you were trying to solve that fragility as you said you said earlier the cure for high prices is high prices like generally prices go high so in oil people drill drill drill drill drill drill and it takes six months, nine months. So prices can stay high in the short term, but, you know, in the medium to longer term, the high price resulted in a ton of drilling to bring everything down to the marginal cost, close to the marginal cost of production. So my two questions here would be like, if somebody wanted to bring a new tin mine on,

how long would it take, where would that supply come, all that sort of stuff? Because I know the U.S. has 10 deposits. I don't know if they're great enough, but the U.S. has some deposits. If somebody said, hey, we're going to get, we're going to get 10 from the U.S. Like, how long would it take to get online? No, the U.S. doesn't have any 10. That's the real interesting thing. Google and the U.S. Department of Mineral Resources have lied to me.

Oh, what did they say? I mean, we don't mine it. We don't smelt it here. I mean, maybe they have some small ones. They've mined it in the past, but I think it's, it's, it's. Yeah, they say we don't mind it, but they say we have occurrences mainly in the state of Alaska, but yeah. That's right. So it's a small amount, but I mean, it's nothing that really is, yeah, I guess if the prices go really high, we might, you know, I might start digging in my backyard, but it's not, you know, if somebody wanted to bring a new tin mine on right now, like where would the most likely source of supply be? And kind of how long, what would the cost be to bring a tin mine on?

Well, usually, I mean, it's, it's very similar for most mining projects. I mean, one, you have to go through. One, you have to find it. Okay. So you have to do the exploration. that takes a while. If you hit something, then you got to prove it up and see how long you go. That's usually a couple years. Then you got to go through permitting. That can take a couple years. Then you've got to build it. That's another few years. And so, yeah, I mean, you're usually looking at five to ten years plus to bring all the new mine. There are projects that are out there that have already been defined. Those are the ones I referred to earlier. The interesting thing is, I mean, they're very low quality, low grade. I think that's been the the striking thing here is that the price of the commodity has gone up so high that all of a sudden

people are saying, well, wait a minute, you know, these things that we had previously written off as, you know, potentially junk, waste rock are now mineable and might actually make a good profit. And so we look at the slate of projects that are out there and that's mostly them. And yeah, it takes a few years. If you get the green light, you get the higher price. That's why I think, you know, there is a bit of a higher floor price here is that you look at the marginal project that's needed to meet this additional demand that's coming on. And there's not that really many good attributes about them. I mean, they're low grade, they're high cost, a lot of them are small. There's a few that are nice.

And those are the ones, I mean, we're going to talk about one today. But really, you know, if you have this. 10. I mean, it's mining. It takes a few years to build these things. And, you know, it's always over budget over time. So that's one of the things that we like about mining investments is that, you know, the supply demand a lot of times works in your favor because current production is always depleting your reserve base. And so not only if you want to maintain your reserve, you've got to go up and find replacements for what you've produced, but if you're trying to have any growth, you have to find additional reserves on top of that. And so you're always on this

treadmill. Meanwhile, the demand, you know, maybe there's short-term fluctuations, but if you're feeding into some of these long-term trends, the demand doesn't stop. And so I just think, you know, looking over longer time arise, since five, 10, 20 years, the prices of a lot of commodities in our view are going to rise because of that phenomenon. It's a finite resource, but demand goes as long as, you know, people live. So that's the first part of it. And yeah, I mean, how long does it take? I mean, it can take a few years.

The company we're going to talk about today, they have a little bit more of an accelerated pathway because it's a fairly simple operation they're doing. They've already built one of the mines. And the second one is kind of a look-alike. So they're able to do it actually pretty quickly. Yep. I want to go to Alpham in a second.

Let me just stick with the kind of global overall. what would the marginal, what do you think the marginal cost of 10 production is right now? You know, generally, if things are in equilibrium, the price is going to equal the marginal cost to supply. So where do you think the marginal cost of supply for 10 is right now? Yeah, well, so there's, I mean, I can give you a short answer and then a longer answer. The short answer, I would say. Hour long podcast, so go for the longer one. Every one do you want to do. The short answer, I'd say probably around 35,000 right now is a good,

is a good price for the marginal cost. but that's at today's level of demand, today's level of expenses, you know, I think really what you have to look at is, remember, if it takes a few years to build a mine, you actually have to say, well, what is the demand going to be by the time this mind comes online? Because that's, that's the demand level that you have to satisfy. And so your marginal cost, you might actually need a few other minds to start building today to satisfy that additional wedge of demand there. Like so, for instance, if demand right now is, call it 390,000 tons, well, if it grows, you know, three or four percent a year, you're looking at an extra, you know, 15,000 or so tons that's needed.

Well, I mean, one of the big mines that's proposed to be built in the next year or so is only about 7,000 tons. So you need two of those. And then, you know, it's going to be three years from now. So that's another, you know, 30,000 tons. So that's the kind of math you have to do and why it's not so easy just to say, well, what is the marginal cost? because that's sort of at a point in time.

That's the first thing I would say, which is, you know, what level of demand are you trying to balance? And the second thing is inflation. I think these, one of the things that's a big theme in the mining industry over the last year is cap-ex and off-ex inflation. So you've seen cap-x estimates have gone up, operating costs have gone up. And so whereas someone might have said, hey, I think I can build this project for X, and then my, you know, run rate cost is Y. Well, now it's X plus this and now it's Y plus

this. And we already saw just a few months ago, one of the 10 projects, it was actually a 10 byproduct project in Europe. They paused development. They said, hey, you know, we've had a cap X overrun and we're going to kind of review our options here. I think we've seen it in a lot of other commodities as well. And you see the, you know, shareholders bring the hammer down on, on these companies when they announce this thing. But it's just, this is the result of the inflation environment that we're in. And so, you know, any number I give you, whether it's 35,000 or 30 or 40, I think that's, you know, that's just going to be a moving target.

And I think it's going to be moving to the upside because I think, you know, demand is going to surprise people. And I also think that these things are going to just be more costly to build and they're going to take longer than people expect. Perfect. Well, I think we did a nice job covering the overall tin picture. Is there anything just on the overall, before we dive into Alpha and anything on the overall tin picture you don't think we've discussed that people should be thinking about

we should be kind of discussing no you know i think we did a good job i would just um i would just reemphasize that the demand centers that are driving this are more resilient in my opinion to general economic levels and so that is what gives us comfort i i know a lot of um people in the short term will point to things like recession risk or, you know, COVID shutdowns or, you know, a lot of these things that are more temporary in nature. And, you know, we have a view that, you know, the long-term trends are, you know, such that even if there's short-term cyclicality around that long-term trend line, we're still going to do well. And so, you know, I think when we're just from a more general level, when we're looking at these types of areas, you know, the long-term

picture is what tells us what to invest in, and the short term is what tells us when, you know, and so I think if you have fundamentals that are improving or haven't changed, but you have short-term price fluctuations that are going against that, we view those as opportunities because we're not necessarily playing the game where we're trying to predict next quarter's earnings and, you know, kind of get ahead and being nimble and trit and now of these things, you know, we're trying to build positions. These are multi-year type of investment horizons. And so we would look for that sort of cyclicality to either increase our positions or, you know, to increase our weightings if we want, if it looks like, you know, the short-term movements are such, but the long-term movements haven't, long-term fundamentals haven't really changed.

I think that's a perfect example of the environment that we're in today. I saw a lot of the questions that you had gotten from, you know, when you post that thing earlier were related to that. I think people are concerned that, you know, hey, how low can it go? You know, what's the, what's the downside? And, you know, I think our view is that, look, these things tend to overshoot both directions, you know, both in the upside. I think you saw that earlier this year. And, you know, they might overshoot to the downside. We can't really. really make a call on where sentiment is going to drive things in the short term. All we can really say is what is our long-term outlook and then, you know, make investment decisions based on that. And it's actually to our benefit when short-term movements go counter to what our long-term views are. Just last question on, I guess this is more short-term price driven normal. But, you know, why the price of 10 was, call it 17,500 back in 2019, and it's 35,000 today. And you talked about how there were short, obviously demand has grown

since 2019. You know, that's three years of lots of data center, cell phones and all that. And you talked about how some of this is short-term driven, but just like, why is the price today double from three years ago? And obviously inflation and all this can account for a double in three years. Why is the price now? doubled and going higher. Why is that more right than 2019? Like, wouldn't a bear would look at this and say, hey, you got a huge premium thanks to a bunch of different shortages and one-time issues, but why isn't it actually going back to the 2019 levels? Well, I think you're still at a shortage. And so the price will go up until enough supply comes on to meet that.

Let me try reframing that. I may have framed that poorly. Why in 2019? Because I don't think a lot of these trends have really changed. Obviously, demand has grown a decent bit since then, but no new supplies come on or anything. Why in 2019 weren't we seeing signs of this shortage? Well, you know, I mean, look, the 10 price was volatile. You know, it was 20 and, you know, bounce around. I just think you've had a decade of inventories being drawn down and drawn down and drawn down and, you know, maybe all it really took was the COVID shock to get the market to realize, you know, hey, let's pay attention. to the future supply demand picture.

I mean, look, we saw the same thing in uranium. Why was uranium spot price $20 for so long? And, you know, I think actually the inventory situation there probably played a bigger role like we talked about in the last podcast. But, yeah, I mean, it's hard to say. I don't know. You never really know what wakes the market up to let's pay attention to the future. I mean, look, I could kind of paint the counter,

which is why were tech stocks, you know, being valued at crazy. valuations in and all of a sudden now, you know, you don't know, right? I mean, there's these kind of environments that people are in where they have the tunnel vision and everyone's kind of comfortable and, you know, sometimes it takes a shock to realize that, hey, maybe we should look towards the future. What does the, what do these imbalances look like coming out? Maybe we, you know, we need the price signals. Because like you said, uh, if it takes three years or five years to build a mine, let's assume that, okay, we stay at $20,000, you know, throughout this, there was no COVID shock.

We're still at 20,000. It just means that that adjustment becomes much more violent and over a shorter period of time because 20,000 is not going to fix the shortage. Okay. And so that's why, hey, maybe 30,000 doesn't even fix it. I mean, you've got guys that are well respected talking about 50,000 plus is going to be needed. If you roll out a few years, when those adjustments happen, it's hard to say. But, you know, I think sometimes it takes a little bit of a shock like this to make the,

to make people, you know, realize what's going on. And look, we're talking about it right now. I mean, there's probably a few people listening to this, but it's still largely under the radar of most people. And so I would imagine that, you know, that's similar to a lot of the things that we look at. The fundamentals are there. A lot of time, the awareness is not there.

And so, you know, the reason we get in these things and we sit there for a long time is because we believe that when people come, look at it and start to do the math, they will come to the same conclusions that those adjustments need to be made. And a lot of times it's, you know, it could be a step change in the price level or it could be more gradual. You know, that's the funny thing is because of the lag time to bring on these minds, you'd think in a perfect world, you'd look out and see that coming and you'd gradually adjust the price level. But a lot of times it's just kind of people are, you know, asleep at the switch.

And then all of a sudden there's a shock and then, you know, reset to a new level. So I think there's a little bit of that that happened here. but it's hard to say. I mean, all I can really say is let's look at how much demand do we forecast. What is a price that we need to give an incentive for enough production to meet that? What is that number? And then let's look at all the projects that can fill that gap and how do they do if we get to that number? Because all the short-term fluctuations, whether it overshoots, undershoots, we can't really control that.

It doesn't really, we can't really make investment decisions based on that. And so, you know, we have to use these sort of theoretical price levels dictated by production economics to make our investment decisions and then, you know, just expect that over the long term, you know, the price will gravitate towards those levels. Perfect. Well, look, I think that was a greater view of the TIN industry. So let's turn to the specific way you're kind of playing this. And that's the company is Alpha Min.

The ticker there, I'm domestic. So I'll use the domestic ticker for people. it's a FMJF for people who are domestic. Again, not financial advice. This is a Canadian stock that's trading on. I can't remember if it's OTC or the pink sheets here in U.S. with that I gave you. But please, very small, very liquid, do your own work, quite risky. But with all that off the way, Brian, we've already gone through the 10 thesis overall. And I know that's a large driver of the Alphamon thesis, but I'll just ask, what is it about Alphamon in particular? Because I know you guys are concentrated. What is it about Alpheman in particular that made

diso play you wanted to kind of express your bet on 10? Well, I mean, we actually do have a number of different ways we're expressing the bet, but I think that this is a good one to highlight on because it's a very unique asset. I mean, it's the highest grade mind in the world. And, you know, or not order of magnitude, but leaps and bounds above the rest of the world average. I mean, it really is a freak of nature. You know, their reserve grade is around 4.5% and, you know, I think 1% is considered a good number.

I mean, a lot of the projects that you're seeing out there are much lower than 1%. And so, you know, high grade, great size. And remember, you know, the higher the grade typically means the lower the cost because you don't have to dig up as much dirt to get the same amount of tin up. And so really it's just a unique asset in that, you know, they've really, it's only started producing in the last few years. And the exploration results they've had are really just staggering. I mean, you know, the reserve grade is 4.5% but, you know, they're hitting regularly. You go look through the last few news releases on the, on the drill results.

I mean, they're hitting 10%, 20% they had a hole that was 40% tin. I mean, that's just crazy. It's, you know, it's more valuable than. than pure copper. So I think that's really what gets us interested. You know, I think just more kind of stepping back, when we look at all of these commodities, we really like to find these, you know, so-called tier one assets, which are, you know, either the largest or highest grade, because, you know, that typically translates into a lower cost structure. And, you know, when you have a cyclical industry where prices can fluctuate pretty dramatically,

you want to have the lowest cost standing, right? That's the, that's the, that's the, that's the, way to survive in commodities because when all of the higher cost operations go out of business during a short-term down swing, you're the, you can still make money there. And so I think that's a very interesting position to be in. They're extremely low cost. And like we said, if the marginal cost of meeting the total amount of demand is much higher, they're going to earn, you know, really substantial margins for the foreseeable future. You know, and even if the price does pull back, they still make a good amount of money. Now, you mentioned that these guys are the low-cost producer, which is great,

love investing the low-cost producer in anything. Can you just give an example, like how much does it cost to deliver a ton of tin for them versus the kind of average mine out there? Yeah, so their cost is around 15,000 a time. So, and that's actually at, that's it, that was at higher prices. So part of their cost structure is tied to the price of 10. So I wouldn't be surprised to see their costs this quarter come down a bit. There's also a component in there that they pay for marketing.

It's about 5% of the tin price. So, yeah, I mean, it's, you know, 15,000 is probably a conservative estimate. It may actually be lower. There are some offsetting things, of course, with maybe inflation. So call it 15,000 a ton. Yeah, I mean, and like we talked about it, the marginal cost is 35. I mean, there are other producers that are, you know, 25, 30. You can see that, you know, even at 30 or 35,000 a ton, they still make a very good level of

profit here. And it's not just about the profitability. It's the fact that no one cares about the sector at all or these companies. I mean, it trades at a very cheap valuation on the money that it makes. And so you have really a great combination. I mean, I think a lot of people, when we tell them that we're in these niche metal areas, they say, oh, well, you know, you must be in lithium, you must be in this or that. And really, it's, it's not enough to have just a supply shortage forecast into the future. I mean, you have to have good valuations as well. Otherwise, you know, it's, it's kind of a non-starter from an investment approach. So for us, that's the interesting thing, is that it's very low cost. It's extremely high grade.

it appears the grades getting better. I mean, what the, you know, these, this deposit, they've started to drill deeper into it to see what's below it and the grades are getting better and better. And so, you know, even though it has a mine life, you know, 10 or 15 years, whatever, whatever they've, you know, booked in their reserves, you know, if you listen to the management, the old CEO, I mean, they're talking about this thing is going to be probably producing for decades because they still continue to find new additional resource, you know, adjacent to their mine, below the mine. And remember, I mean, it's, it's a, they own about a 13 kilometer ridge here, the two mines that they have. have or the one that they have now and the one that they're building is only about a one to two kilometer stretch of that. So there's a lot of exploration upside here. I mean, I think this thing's going to be producing for a very long time. And the fact that you have that sort of scale combined with the fact that it's extremely high grade just makes it really a peerless asset out there. And that's why we think it's so intriguing. You mentioned they're bringing a

new mine on. I believe this is a ma'amma it's for listeners it's M-P-A-M-A-M-A which my domestic bias that is a difficult word to pronounce to sound up but I believe that's

Mapama South that they're bringing online average costs I'm just kind of looking at the press release which they put out actually earlier this year $15,100 per ton that's pretty nice versus a $35,000 all in cost How are you thinking about the expansion project that they're working on?

Yeah. So they're currently operating from Mapama North, which was the original mine. They're producing about 12,000 tons a year there. And it's roughly the same cost, around 15,000 a ton. So this Mapama South, which, you know, is really right next door to it. I mean, in fact, they now think if you, they just released a technical report on it, couple months ago. And they now believe it was actually one large deposit that was separated by a fault. And so it's really just a huge, huge freakish deposit of tin that, you know,

they're kind of developing in two parts. The good thing is, is a lot of the metallurgy the same. I mean, really, it is the same deposit. So they're building a lookalike plant right next store to it to process the ore from from Apoma South. And there's just a lot of, you know, synergies they can use. I mean, they've already built this thing. So there's a lot of learnings they have. It's incredibly cheap to build. I mean, I think their estimate is only about $100 or $120 million to build it. And if you do the math on 7,000 tons at 15,000 a ton cost and call it 35,000. I mean, you're looking at $140 million of EBITDA per year coming out of this thing at current prices versus 120 billion. I mean, the payback period is less than a year, right?

So incredibly high return project. I think they're being conservative in the ultimate grades they're going to get out of the thing. I think they're being conservative in terms of the recoveries they're going to get. They put in a fine tin recovery plant at their first one that was able to increased recoveries. So yeah, I mean, you know, they're going to go from call it 12,000 tons a year to 20,000 tons a year with this new, with this new adjacent mine. And, you know, I mean, run the math on this thing. You know, if your margins are 20,000 a ton, you're doing 20,000 times. You're looking at 400 million, you know, the market cap of this thing is less than a billion. So it really is incredible what's happening there and it's just a matter of you know I guess we can go into that

but it's a matter of you know what does it take for the market to realize this what does it take for you know the value to actually be realized you know the company initiated a strategic review about six eight months ago with that in mind I mean they you know we talk to management periodically they're kind of scratching their heads of why this thing doesn't get any love but um hey we're happy to kind of sit on these things at very cheap valuations. They started paying a dividend this year, given the cash generation. I mean, it seems like they can raise that pretty substantially and still be able to self-fund the mine. So it's just a, it's a really unique situation. We don't come across this stuff very often. And so, yeah, we think it's an interesting

part of the portfolio. Well, you beat me to my next question. So Alphamend in November declare, says, hey, we're looking for strategic alternatives. I think they specifically mentioned that the stock was undervalued and that's one of the reasons they were initiated and I can't remember for sure. But in November, they, alongside Q3 earnings, they come out with this, hey, we're doing strategic review. Anyone who's invested for long enough knows strategic reviewer generally means, hey, we're looking to sell ourselves. They have a major private equity group in here, I believe. But, you know, you and I are talking June 14th. It's been seven months since the strategic review launch. So I guess my questions are, why is it taking too long? And is this really an attractive

asset for an acquire? Yeah, so we'll take it in two parts. One, I think we have to remember that when they announced a strategic review, it wasn't just a sale. I mean, they were looking at all different ways to unlock value here, whether that was, you know, increasing the dividend. I mean, this was before they had announced a dividend, but paying a dividend, what level of dividend then should they be doing shared buyback, balance sheet restructuring, revenue prepayments. I mean, basically all different ways to unlock the value here because, you know, this thing started flowing cash fast and they knew what to do with it. And so a sale, obviously, was one part of that.

And there was a bit of a leak a few months ago that there was a sale process underway. And so I think a lot of people got excited about that, that that was one of the street one of the avenues of the strategic review, and it sounded like they were pursuing it, there were, of course, a lot of people that were unhappy with that because they think that the company is so undervalue that, you know, selling it now is essentially giving away a lot of the upside. Even if a buyer were to come in and pay a nice premium, you're probably not going to get a high enough premium to really compensate for the new mine that's coming on next year the rest of the exploration upside. So that sort of, um, you have a little bit of a debate going on,

whether, you know, that's really the best way for them to do it. Because yeah, I would agree. I mean, even if they were to pay double, um, what it's trading at today, I still think a buyer would be stealing it, given all that, all the potential upside there. Um, and then who would be a potential buyer? Well, a lot of people point to the Chinese, um, you know, their state own, They're short 10. They need more 10. They were actually looking at 10 assets a few years ago. There was a deal that fell apart for a 10 consolidation.

A lot of people will say, well, the strategic buyer like that is less concerned about valuation. Maybe they can pay a little bit more. I think the Chinese have shown that they're willing to be smart about locking up these types of assets. I think it would be a perfect deal with them. I saw that, you know, in that Bloomberg article that leaked the sale a couple months ago, they mentioned they were working with a bank that specialized, or not specialized, but had experience in selling these types of African assets to the Chinese. The Chinese, you know, are very comfortable operating in these areas.

So that's a natural fit. it's probably too small for a major minor to take a stake. I mean, the market cap's only a billion. You know, let's say what if it goes for two or even three billion, it's still kind of a drop in the bucket for most major miners. I think it might be interesting for some mid-tier miners. I mean, I think really the one that a lot of people point to is Ivanhoe, which has a big copper mine in the same country.

they're comfortable operating there. They ramped it up. And it's, you know, I think the, you know, the head of that company is a, you know, well known, well respected mining executive. He has a penchant for these types of tier one, you know, really story type assets. You know, they wrote a book about him. So that would be an interesting one. Potentially they may be able to even do it with stock.

You know, there's a little, what's that? What was the book? that they wrote that you mentioned? It's called The Big Score. It's kind of a, it's very popular in the, in the tin circles of, I'm joining the 10 community.

I'm gonna, I'm gonna buy that book. All right. It's, you know, what's funny is there's kind of a number of these books that float around and people are very, you know,

they're kind of, some of them are hard to get. They're out of print. And so it's, it's kind of a, it's kind of a unique thing to the people that follow the sector. But yeah, I know, the chief of that company, his name is Robert Freeland.

He's well known for a big nickel discovery back in the 90s. This is his next big project. I mean, it's a big copper mine. It's going to be probably one of the biggest copper mines in the world. It's incredibly high grade. It's very similar in kind of characteristics to what Alphamon is doing with their tin mine, which is why it might make sense for them to tie up. I think the only issue there might be that, you know,

if the private equity company that owns about 60% of Alphamon, they may not want to take share. So there may need to be some sort of cash component there. And the copper mine is still ramping up. So anyways, that would be sort of an ideal tie-up, in my opinion. But, yeah, I think one of those ways to go, either the Chinese or some mid-tier miner. But again, I think, you know, I'm kind of in the same boat. I actually, you know, would hate to see themselves for such a low valuation and just run it. I mean, the cash generation is incredible there.

Either increase the dividend or, I mean, I'd love to see a buyback given how much, you know, how high the returns are. But I don't know if the majority owner would want to see the flow shrink. I mean, I think the company's made a big effort over the last, you know, six to 12 months to really get out there, do more presentations, do more webinars. I mean, they're trying to increase the liquidity of the stock. Crazy thing is, like you mentioned, it's kind of the big gorilla in terms of, you know, a Western listed producer, and yet the mark caps only a billion, it only trades a couple million dollars a day. So there are some liquidity issues.

That's probably one of the reasons that there is such a big discount as most institutions can't really touch it. I mean, we're small enough for this thing. It's not really a problem, but, you know, I think it's just difficult. also that, you know, if you have an interest, you know, one, there's not a lot of interest in commodities, or at least there wasn't up until the last few years. And now you're starting to see generalists maybe come over, given that tech has started to crumble a little bit. And so, but when you see that move start to happen, I mean, a lot of times it's, you know, they'll maybe

do some oil and gas or maybe they'll look at some copper. And so we're, you know, we're really down the rabbit hole here looking at some of these niche metals. And I think it takes a little bit longer to get the general investment community on board. And then you have all those other issues that we talked about that, you know, potentially make it more difficult to invest in. You mentioned Alpha Man has started paying a dividend. So that lets me ask my favorite question on this podcast. Like, look, I know there's the liquidity concerns in terms of share liquidity with a major private equity owner owning half plus of the company. But, you know, the company, it doesn't take much to look at them, look at the price of 10 and say, oh, this

company is really, really cheap right here. They do have uses for the capital, both in terms of developing their second mind and they could buyback shares. And instead they pay a dividend. So I just asked like, why is this a dividend paying company? Well, a couple reasons. One, I think they are a bit constrained in how much they can spend on exploration. So, you know, they did increase their exploration budget to about $20 million this year. Look, they're in the middle of the jungle. it's on a very steep mountain you know they got a helicopter in a lot of stuff to the to the exploration areas it's not it's not easy um to spend you know to allocate a lot of additional dollars to that sort of internal internal growth the drill bit um they will self fund the mine and so that's a nice

thing i mean you know they made a hundred million dollars last quarter it's going to be less this quarter because the price is pulled back but um you know even even even at current prices like i said I mean, payback period is less than a year and they have plenty of cash. So they're going to allocate capital there. They're going to pay, you know, kind of ramp the exploration as much as they can. And then, look, I think the dividend part of it is that the private equity company has been in there for, you know, I think close to 10 years now. And they'd like to see a little bit of a return. That's probably one of the reasons that they initiated the strategic review is, you know, these guys have been in there for a long time.

I guess they're not forever. They'd like to see some return on their money. And I think a dividends, one good way to do it. And it's the fact that they're making money, you know, they have too much. I mean, you know, they went from, they had some debt. They paid it all off. And now that, you know, the coffers are are burgeoning, you know, essentially fast when they can spend it.

You know, every time I look at a cyclical or a commodity company and I talk to someone, they're like, oh, well, the time to buy them isn't when the multiple's low. The time to buy them from the multiples high. And everyone knows that's because multiples's high, earnings are depressed, blah, blah, blah, blah, blah. But as they look, you know, similar to what you said with Alphamon, the multiples are low, but they've been low for six months. And this is kind of a unique situation where because they've been so low for six months, cash flow is just gushing in. And these guys, you know, a lot of them had leverage. I don't think Alphamon ever had a ton of leverage, but a lot of them had leverage six months ago.

And they made so much money, they've paid down all the debt. So even if the cycle turns, like 10 years ago, cycle turned and you had bankruptcy risk, now you don't have any debt. So you really don't have any bankruptcy risk. And like for Alphamon, it just strikes me as they do strategic, they announce strategic all to November. Yes, we're fast forward to June and we haven't gotten anything. But guess what? Prices went parabolic from November to today.

They came out with a lot of cash. Like this is a much different company than it was even six months ago. Yes. I would agree with that. And I would say that it's not unique to the 10 company. I mean, I think you're seeing it in a lot of commodities. areas where the prices have run up because of these structural imbalances that have developed. I mean, look at the coal companies.

These guys are trading it like one-time earnings or something crazy like that. You know, they're doing all these buybacks. And yeah, I agree. That's sort of the generalism is don't buy these things that cheat multiples because that's implying that they're going to fall. And I would argue that that is the case in a lot of commodities where it's much easier to bring on supply, you know, historically oil had been that, have been that way, right? Assuming that I never wouldn't bring politics in it, but I do think one of the craziest

things is right now that we're not just encouraging oil and gas people to go drill, like drill as much as they can in a geopolitical crisis. But, you know, assuming there's no political interference, six to nine months to bring oil and gas online, to bring tin online, as you said, five years, to bring uranium online. And so that's why when we were talking earlier, I think the point to really think about is how long does it take to bring on new supply in response to high prices? If it's a short amount of time, then that rule of thumb might hold true because when cash generation gets high and multiples get low, it invites a lot of new entrance into the market

and they turn on the supply spigot and then the price crashes out. and that's why that truism is there. But so we look for areas where it's much more difficult to bring on supply because that just means that these low multiples can persist for longer. Yeah, you're seeing a real extreme case of that in a lot of the anti-ESG areas, whether it's coal, whether it's natural gas, oil, where the low valuations are there and they're continuing because there's no, the supply demand is broken. and you've just for various reasons are not able to balance that market there.

And so you see these returns persist for much longer. And hey, some of these really cheap valuations, you know, you don't need them to last that long to actually do extremely well in your investments. And so, yeah, I think that that heuristic breaks down a little bit if the supply is less elastic. And so I think that's what you see here in 10. and that's one of the reasons that, you know, yeah, I think that the valuations can get even cheaper. Look, the price has, does fluctuate on a short-term basis. The prices come down now. So if you want to extrapolate that, you know, whatever the current price out into the future is,

then yeah, maybe the multiple goes from, you know, three times to five times. Okay. So, you know, that's the, that's expensive now, I guess. That's the interesting thing to us is, you know, we're kind of operating in a bubble here where we think that's extremely expensive. And then we look at other areas in the market, like, you know, where tech was trading or some of these things. And, you know, I mean, a lot of those companies don't even make money. So the fact, you know, I think we're already a leg ahead that, you know, we have profitability here, whether it's two times, three times, five times. I think it's still going to be a very good investment. And yeah, that's why we're just focused on what is the long-term outlook, because if

if we're going to be in shortage for the next few years, I think multiples can stay low because you're going to just see continued upward pressure on prices. And the companies that are able to really produce at a low cost are going to see high margins persist. And not to why too much, but one of the things I like about like Alpha Man at three times earnings, five times earnings something, and you mentioned coal, which I think you can make a lot of money in coal, to be honest with you. But with coal, you're really taking a terminal value bet, right? Like, Right now, you got that this year, because of some really crazy stuff that happens, you've got the super normal profit cycle.

But I don't think there are a lot of people, outside of metallurgical coal, which goes into steel, I don't think there are a lot of thermal coal is going to be fueling a lot of energy and at least develop markets, you know, five years from now or something. But with tin, you know, you kind of have that tailwind behind your back where everything you said at the beginning applies. Everything it goes into, they're just making more of them. They're going to need 10 more as the world kind of gets more and more 5G. So you've got that nice tailwind.

So, yeah, you're paying three or four times earnings versus one time it's earning. And you've got to handicap all the odds and everything. But it's really nice to have that tailwind at your back is kind of what I agree. And we don't own any cool. I just watch it. I watch the discussions on it. I just think it's kind of fascinating that all of these areas that are, you know, the exact opposite of what the ESG movement. is pushing are doing so well. And I think a lot of it's part of that's part of the reason is that

you know, everyone has said, hey, we don't, you know, stop drilling for a while, stop producing coil, you know, you can't do this stuff anymore. We're going to this green future. And yet, you can't, you got to, you can't just move to one new, you know, regime without turning off the old one. The demand is still there. And so I think that was a big problem. The supply was constraint and that's why you're seeing these really high prices here. I think a lot of it's just a policy error. So we watch it, but yeah, I agree. I think that's a little bit trickier nuance to investing in those sectors is, you know, when do you hit peak demand? I mean, look, if peak demand doesn't come for 10 or 20 years, then that's one of the reasons that you can

actually do very well there because, yeah, I guess we're going to, you know, stop using these things eventually. But in the meantime, you're going to make a ton of money while you're sitting there invested in them and they're essentially paying back their market cap every year. But so, yeah, we kind of pick our spots. I like the fact that there are some of these secular demand trends behind this and the supply is just as fragile as any of the other areas. Two last questions before we kind of wrap this up because I'm cognizant of time here. First, you mentioned when we were talking about the strategic review, which, you know, I think is what gets a lot of of investors excited. And I think you look at this and say, hey, would it be great if they

announced they were selling the company for a 100% premium tomorrow? Absolutely. But you're here for the cheap multiple and the long-term tailwinds and stuff. But one thing you mentioned in the strategic review was a natural buyer would be China. Are there national security concerns? Like, this is a Canadian company. Obviously, I think the U.S. would have some things. If I was Canada or U.S., I wouldn't love China buying the world's kind of largest best tin mine, a critical research source. Obviously, it's in Congo's, but do you think China could be a buyer? Do you think there'd be national security issues there? Possibly. But I mean, it's listed in Canada, but the asset itself is in Africa. The company is based in Mauritius. And so I'm not sure

how the structure would take. I'm sure they would try to do it in whatever way would appease the regulators. Look, China has a long history of going into Africa and buying up resource assets. So I don't actually think there would be that big of an issue. There might be. I mean, I don't know why the U.S. would have any say in it. Maybe Canadians might, but it's not in Canada. I mean, it's listed there. So we'll see. That's an interesting question. Like I said, I would prefer at this price that they just don't sell and continue to operate. it because I'm hard-pressed to find, I mean, they'd have to pay such a high premium to really make it worthwhile to compensate you for the potential upside. Remember, I mean, they've only

really just, you know, hit the tip of the iceberg in terms of the ridge here. There was a really good presentation that came out in the last week or so with the former CEO who actually built the mine talking about that, you know, he thinks actually this is, you know, as high grade and large is this deposit is, he actually thinks there's probably something better on the rest of the ridge and that, you know, you're going to have decades and decades of production out of this. You know, we've spoken to the private equity firm. Their thoughts are that, you know, their exit strategy really depends if it's a tin mine or if it's a tin province, meaning, you know, multiple mines along this ridge. It seems like at least with Mapama South

coming on, I mean, that that ladder is actually really coming in, the play, they're just starting now to do some exploration on some of the other targets. And so, you know, we actually wouldn't really mind if they didn't sell. And they looked at other ways to do either capital return or to get the value up. Like I said at the outset, I mean, a lot of these things, the fundamentals are never really the problem. It's just a lack of awareness. So I mean, maybe it's good that we're doing something like this to get people to look at, to get look at the situation. I mean, like I said, I'm confident that when other people do this type of math, they'll come to similar conclusions that we have. But again, it's still really off the radar,

under the radar for most people. I mean, just look at the average volume. I mean, I think over the last year, it's less than $2 million a day. It's really quite absurd. So any type of any type of investment, I think that comes into this area and you could see a pretty nice valuation or rate there. And, you know, I think liquidity begets liquidity. You know, you get it a little bit bigger. They grow production, a little bit more funds come in and now, you know, it starts to hit these thresholds. We've actually talked to the company about potentially trying to do a listing in the U.S. We think, you know, giving access to more U.S. institutions. You know, their problem is you can't, I don't think you can just, you know, have a listing. I think you actually have to raise some money,

you know, do an offering to do that, and they don't need the money. So it would be almost unnecessary dilution there. And, you know, we said, well, I don't know, maybe you can pair it with some sort of buyback of other shares. I don't know. I'm not really a big financial engineer, but, you know, getting that sort of exposure to the U.S. group, there is real no U.S. listed way to play TIN. There's a, there's an ETF, I think, that allows you to, to, to, that trades physical, or at least it represents a sub-index of a commodity futures. But really, there's no way to play. I mean, you mentioned at the outset, the US OTC listing. But we think that would really help. And the other thing is, I mean, it's only a dollar a share. So I think there's

been talk of them potentially consolidating that, doing like a reverse split to get it more in the call it $5 to $10 range. You know, I mean, a lot of times we talk to about this idea to people and I say, oh, you know, it's a penny stock or what is it? No, it's a billion dollar company, but they just got a lot, you know, the pie is chopped in a lot of pieces. So I think there's some optics that can be done to make it a little bit more palatable. But really, look, the cash generation is there.

The valuation is there. That's what gets us interested. A lot of this other cosmetic stuff might help. But really, I think if they just continue to operate, continue to grow production and really show the quality of this asset, I mean, you know, I think, you know, if you build it, they will come. I think it's just a matter of time until more people realize what they're sitting on. Quick question I should have addressed earlier. I think I got a few questions from people that said, hey, if they don't sell, are they going to need to a capital raise or something? At current prices, at current both 10 and stock prices, I think the answer is absolutely not.

but I just want to confirm with you. I'm not missing. No, no, they don't. Like I said, they're making more money than they know what to do with. That's one of the reasons they're paying the dividend. I actually think they can raise the dividend pretty substantially and still be able to fund exploration and still be able to internally fund their second mind. In fact, I mean, you know, there are some people that think they should actually take on debt

strategically and just do, you know, like a dividend recap because, you know, they can support it. They have such a low cost that, you know, even if prices were to go down, I mean, why are they running debt free? I mean, maybe do a little bit of gearing on it. I mean, you could pay a huge special dividend. The fact that even if these lower prices, you know, I mean, margins today are probably around 20,000 a tonne. So you're talking about $240 million a year. In EBITDA, growing to, you know, call it 400 next year, you know, they don't have any debt now. Why are they running at such a low leverage level, especially since their cost structure is so low. I mean, yeah, they don't really have a hedging strategy. I don't really need to because I think that, you know, the price can come

down a long way before they hit break even. So they're willing to just essentially take that risk and capture more of the upside. And paying on a big special dividend, like if their private equity firm who's been in here for a long time, if they get some bids that they think really undervalue, the company or something, gearing up a little bit and paying a business special dividends, a nice way to get all their cost bases out or get a bunch of cash out the company so that they can sit and wait and not have to take a bid at 33% of fair value or something. And I know I've spent a lot of time in oil and gas recently. I talked to a lot of companies about this. Like, yes, I'd love to see you sell an asset for 2x the market cap. But if you think it's worth 5x, it might just be better

to hold it on the books, take out some hedges, take out some debt. And, just pay it all 60 shareholders, you know, like, you don't have to sell. I completely agree. And, you know, we actually have asked the company, why not use internal cash flow to buy out the private equity stake. I mean, I think that's been the big concern among investors is that they've been in, you know, private equity company's been in for a long time. They probably want some extra liquidity here, you know, a dividends one way to appease that. But, you know, is there any way to say, hey, you know, if their stake is worth, I don't know, call it, let's see what it probably worth about 600 million right now. You know, that's only really a few years worth of cash flow.

Why not whittle it down that way? I think it's a little bit challenging to, you know, do essentially a buyback of one portion of your shares outstanding. But I think there may be some ways to do that. But yeah, it's so funny. It's just so funny because when you talk to investors and I've had this, if there's a 60% private equity firm in there, they'll be like, oh, what happens? I don't know, the 60% private equity firm, like they're such a big shareholder, it's such an issue, blah, blah, blah. And then if they ever sold, they'd come and they say, the 60% shareholder sold, man,

that's a huge issue. What can I do? It's like, yeah, you can't really run. And so, yeah, we've talked to the private equity company. You know, and I think that was, because that was the concern we had, too, is, you know, is this an overhang? you know, are you guys, obviously they can't really dump it in the open market. I mean, it would be, you know, a couple of years it would take them.

But, you know, how eager are you to exit? You know, people are worried they're going to fire sale it in this process. But, you know, what they told us was that even though it's a big portion of the company's market cap, for them, it's actually a fairly small investment in the funds that it's in. So it's not really, there's no real urgency for them to, you know, have to. you know, get their money back on it. They like the dividend. And in fact, they said, you know, if it is a tin province, I mean, they're happy to continue to ride it and watch this asset develop. So that, that does give me a little bit more comfort. You know, everyone's kind of worried that, you know, hey, the clock is running up and they're going to fire sales thing to the Chinese

and, you know, everyone's going to get robbed and be sad about it. I don't think that's necessarily the case. Look, I do think just given how cheap the valuation is, any sort of sale that takes place, you know, in the near term is probably going to be given away some upside. So I'd much rather see other forms of capital return. And really, I'd just like to see other, you know, investors come in and say, hey, this thing probably shouldn't be trading at this extremely cheap valuation, especially given the quality of the asset, the growth profile. You know, it really is a unique asset in mining. And it plays into a lot of these trends. You know, we actually, people talk about, oh, you know, you're invested in this sector or that.

sector. We see parts of the tech, you know, tech and sector crashing right now. We actually think this is one of the best ways to play tech because it feeds into all of those long-term demand themes that people get excited about. You know, you hear, you know, art go on and talk about all the, you know, the crazy things that they're, you know, the future and what they're going to make all this money on in the companies. It's all going to be built on 10. Well, yeah. So, hey, here's a way to play into those same themes, but these companies actually make money. So, I think that's really what interests us here. And yeah, I think we'll see how it plays out, you know, short-term volatility notwithstanding. I think the long-term picture looks extremely strong

and, you know, we're long-term investors. So we just sit and wait. I think we alluded to it earlier, but just to make sure we hit it, strategic review announced in November. Here we are mid-June. That is a long strategic review. I don't think we've really heard anything on it. What do you think is taking so long with the strategic review this long? Well, so again, I would make the distinction that strategic review doesn't necessarily only equal sale. I think that's what a lot of people are saying. Hey, where's the sale? Where's the sale? Look, if you actually go read through the release when they announced it, it was all these different options. And so I would argue that the dividend itself was one of the outcomes of that. And they're probably going to announce

the next dividend, I think next month. They'll usually do it around when they report their kind of preliminary Q2 report. So we should get an update there. I think, they do have the ability to pay, you know, they're paying, I think it's like a 3% yield now. I mean, I'm sure it could be probably 5% to 10% and still be comfortable. But yeah, look, I think they're evaluating a lot of these things. You know, the CEO has done a number of presentations and he said, look, it's ongoing. There's no real timeline to it. We're just trying to find ways to unlock the value here.

You know, and to be honest, there's a lot of people that are probably happy that this strategic review is taking longer because they don't want to see it sold. You know, they just think that they're going to get robbed of it. So I don't know when it happens, you know, but we talk to the company periodically. So we get our updates and it sounds like, you know, they are running this thing like it's not going to be sold. They're just running it like it's a company that is going to continue to generate cash and they're going to try to grow and, you know, do all the things that a company does. so I'm happy and that's sort of a you know a back pocket option if someone wants to come in and make a swing at this I think one of the reasons that it's taken so long if it was the sale I think that was you know a lot of people were upset

hey it kind of leaked in April that they were selling themselves you know what happened they were looking for bids well one of the things that happened is is you know trying to lock down for COVID the 10 price a lot of commodity prices came down when you're already cheap and then the commodity price starts to go against you and the stock goes down even more. I mean, you know, if you're a buyer, you're like, oh, this is great. I'm going to, you know, throw some low balls out there and see we can steal this thing. I think that's one that shows that the companies and their financial backers are not necessarily looking just to fire sale this. I think they want to get full value for it. So it may actually be a good sign that they haven't sold yet because, you know, I mean, why would you sell when, you know, a bunch of commodity prices have

pulled back over the last few months? You know, there's all these fears when the long-term outlook is so good. So I don't know. I think, yeah, maybe if you were itching for a sell, I think there were a lot of people that, you know, on the news in April kind of jumped in, you know, merger archetype guys that were just looking for a quick flip. And maybe they were disappointed because they didn't get it. But if you really look at the long game on this thing, I mean, you know, they have a chance to create a ton of value over the next, I mean, years, years, maybe decades. And so, look, if they don't sell it, if they continue to run it, I think that's going to be just as good of a, just as good of an outcome. And I would actually hope that if they do sell it, they take advantage of a better price environment because, like I said, I think anybody coming in buying it today is probably stealing. on it. And just, we got a lot of questions. Just, I think we're going to have to wrap this up in a

second, but their average price, just to give people an idea, it costs them, call it $15,000 per ton to, of 10 is their cost. Right now, as we talked about the cost, the price of 10 is 35,000. If it goes to 30,000, if it goes to 45,000, like, these guys are profitable. This is a low cost mine. They're, you know, the price would really have to get hammered for the, you to even be talking about, hey, they're not just like minting money at cash levels. But Brian, we've talked about a ton, talked about a ton with Alpha Man. We talked about a ton with Tin. I think about time to wrap this up.

But I always want to give you the last thought, anything we didn't hit on Tin or Alpha Men that you wish we had hit or anything we kind of glossed over, you wish we'd hit a little harder. No, I think we did a good job covering both of those areas. You know, I just, last thing I would say is there's a lot of similarities between these types. of areas that we look at. I mean, I think you've really seen with this ESG climate, green energy, energy transition push over the last, you know, several years, just a step-changed increase in demand for a lot of these metals, some of them more specialty than others. There is a lot of concern about where the supply is going to come, come from for them. And so I think you could probably have the same conversation, you know, pull up the periodic

table and throw a dart at it. I think we could really have the same conversation in a lot of different areas. And so, you know, we still do have a big position in uranium. We own tin. We have other things that we like copper. I mean, there's a lot of these other metals that we like. And they all have a very similar sort of investment thesis. And so that's just something I would keep in mind is that, you know, we listen to people, you know, talk about all these different commodities and it's almost interchangeable, these supply demand stories. And so we think they're long-term, long-term themes, and we continue just to find the ones that we think are the best and build positions in them over time, and then we sit and wait. Like I said, I think the

fundamentals of a lot of these areas are not really the challenge. The challenge is having more of the investment community become aware of these situations. And I think that's how we really get paid for this is by sitting and waiting. And then, you know, whenever it else starts to come along, that the valuations get to the levels we think are more appropriate. Well, hopefully you're doing a good job of helping to get this story out. And hopefully this podcast is a small part of that. But, you know, Brian, I appreciate it. I'm telling you, you did the pre-call.

We did a pre-call on 10 last week. And I was like, this sounds exactly like uranium. It's such an interesting story. I think people should go check it out. And you know what? For a company, a billion is not crazy small. But I think their investor deck, if people want to go flip onto their website and flip through their investor deck. I think it does a really nice job of laying out the story,

laying out, hey, here's why tin's growing. I'll include a link to the video that you sent me that I think does a nice job of laying out the tin story overall. But Alphamins investor deck is really nice and has a lot of the basic stats that you're going to want to look if you're looking to look at this company. I'll remind everyone the last time, it is risky, though. Please do your own diligence, consult a financial advisor. But Brian Locke's from Old West. Thank you so much for coming on and looking forward to having you on for the third time. All right. Thanks, Andrew.