What we learned from Buffett’s letter + An insiders view of the lithium opportunity

Bryce: [00:00:13] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing. Whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. If you are joining us for the first time, welcome and thank you for becoming an Equity Mates. If you are still getting up to speed with the basics, check out our Get Started Investing podcast. But let's crack on. My name is Bryce. And as always, I'm joined by my equity buddy, Ren. How are you? 

Alec: [00:00:42] I'm very good. Bryce is very excited for this episode. There is one time of year that investors all around the world mark on their calendar, and that is when Warren Buffett releases his annual letter. 

Bryce: [00:00:56] Huge. He's been doing it for the last 58 years. And they are a cornerstone of the investment industry's rating each year. And then in the second half of this episode, we're sitting down with managing director of Ioneer Bernard Rowe, which is a US based Lithium and Boron producer, to get a bit of insight into the lithium industry and how Ioneer is very close to two productions. So if you're interested in lithium and investing in lithium stocks, stick around for the second half of this. But Ren, yes, Berkshire and we've got some exciting news.

Alec: [00:01:33] Well, we've I think we've said it a few times on the podcast, so at some point it stops becoming true. I'm still excited for it. Yeah, it's still exciting. We are going to the Burke Hathaway annual general meeting, fifth and 6th of May in Omaha, Nebraska, something that we've wanted to do for years and we're really pumped to be able to do it, get to sit in the auditorium, hopefully ask a question to Warren and Charlie there. Charlie is now 99. Warren is 92. I think he'll be 93 by the time you're over there. And they've got the stamina to sit at a lectern in front of, what, tens of thousands of people?

Bryce: [00:02:13] Yeah, I think about 40,000.

Alec: [00:02:16] That's more than you got to at a bomber's game. 

Bryce: [00:02:18] Absolutely not true. 

Alec: [00:02:21] And they answer questions for six and a half hours or something. 

Bryce: [00:02:25] Back to back questions. There are 11 microphones and I think like ten or 12 questions per microphone. So, yeah, over 100 questions. 

Alec: [00:02:34] So we're going to be elbowing people out of the way to get in there and ask a question. 

Bryce: [00:02:37] Yeah. If you have an idea of a question that you would like us to ask, hit us up. Contact@equitymates.com We get the opportunity to submit some ideas for questions. Those that are considered to be of broad interest will be chosen. So we would love to get up there and ask Warren and Charlie a question, so please hit us up. Contact@equitymates.com. Similarly, if you are heading over yourself, we'd love to catch up for a beer over there. 

Alec: [00:03:00] So the Buffet letter is out. Bryce We've both read it. It was a shorter one this year. Ten pages. What was your biggest takeaway? 

Bryce: [00:03:08] Oh, I mean, the first page he just lists out every year, the return for every year, and its performance against Benchmark. And it's just fascinating reading. Just saying some of the years he shoots the absolute lights out some years he absolutely bombs it and just gets pumped by the end. Yeah but then the final two lines, the second to last is that over 58 years, his annual compound growth has been 19.9%, .8.8. Phenomenal. And then if you put that in terms of percentage increase in stock price from the moment Berkshire listed in 1964 to now 2000 to the end of 2022, the stock is up 3,787,464%. 

Alec: [00:03:59] Yes. Oh, wow. 

Bryce: [00:04:01] And oh, my goodness. 

Alec: [00:04:03] Compare that to the S&P 500 with dividends reinvested. And I respect a fund manager that makes their benchmark the accumulation index, reinvesting dividends rather than just the index. Yeah. In that time, the S&P 500 with dividends reinvested has returned 9.9% compared to Buffett's 19.8%. And that overall is 24,708% compared to that three and a half million that he said. 

Bryce: [00:04:35] It is unbelievable, Ren. An amazing track record over 58 years. My second biggest takeaway before going into a couple of a few of the nuts and bolts and and from yours, it's just the fact that he's consistently educating in every single letter, consistently preaching the same message in every single letter and the way you rate it. He never assumes that the investor knows too much, if that makes sense. Like he will tell you what a share buyback is and why how it actually works. And delivers value in the 58th letter when he's been doing it for 58 years. Assumes that it could be the someone's first time reading this letter. He tells you what they do as a business and what it means to be buying businesses for the long term. Like he could have given up on that 48 years ago. But the fact that he does it time and time again, I think is just a real testament to him in understanding who is shareholders are and who is reading these letters and his role in educating us as retail investors. So I just find that great that he's not trying to like show how ridiculously smart and complicated everything is. It's just simple to read, he explains. Jargon. And I like that.

Alec: [00:05:53] Yeah, it's good.

Bryce: [00:05:55] What about you? 

Alec: [00:05:55] So I think the importance of time is something that we always harp on about. But Warren had this line that just really stood out for me. I've been investing for 80 years. More than one third of our country's lifetime. 

Bryce: [00:06:09] Our country's. Yeah. 

Alec: [00:06:10] America. Well, 1776. Yeah. 240 odd years. And he's been investing for 80 of them. A third of the time that America has been around. He's been investing. Well, okay. Well, I found that more interesting than you, obviously. 

Bryce: [00:06:26] I'm just. I'm just putting that into perspective because he we know the stats that the overwhelming majority of his wealth have come in the last ten years of those investing years, really

Alec: [00:06:37] So he crossed $1,000,000,000 in wealth in his fifties and he's now over 100, started. 

Bryce: [00:06:43] It's like 7%. 

Alec: [00:06:44] More than more than 99% of his wealth has come over the age of 50. Mhm.

Bryce: [00:06:51] It's amazing. 

Alec: [00:06:52] One other thing that I want to talk about and I think we should try and coin a term for this because the investment industry doesn't have a term for it at the moment. He was speaking about the value of time and speaking about how the dividend that he gets paid annually from some of his companies is now getting close to the purchase price that they paid. Yeah. And this we should coin a term for when the dividend that you get paid is higher than the price that you paid for a stock. So, you know, you bought BHP for $10 a share and now the dividend is $11 a share.

Bryce: [00:07:28] Just how it would wind up? 

Alec: [00:07:29] Yeah, well, I mean, like for a lot of long term investors, that would be.

Bryce: [00:07:33] The total sum of the dividend or. 

Alec: [00:07:36] Just the dollar amount that you get from the dividend is more than the dollar amount you paid for the share. Right. And you laugh but you know like an Australian investor so BHP is paying the biggest Australian company for more than 50 years. Yeah it was top of the index in 1948 and Australian those there would be plenty of older Australians that have bought BHP for less dollar amount than they get paid in dividend now. You know it's split adjusted all about. 

Bryce: [00:08:05] Yeah, maybe I haven't done the stats on it. 

Alec: [00:08:07] But it just feels right. You know. 

Bryce: [00:08:11] I could have floated the ten bucks. Who knows? 

Alec: [00:08:13] Its market value was like 80 million in 1948. Yeah. It's now like 200 billion. Yeah. 

Bryce: [00:08:19] I know what you're saying. 

Alec: [00:08:20] Yeah, Yeah, that's good. So to put that back in context for Warren's letter, he writes that in 1995, they completed their purchase of American Express, spent 1.3 billion to buy their share. They now receive $302 million a year in dividends. So they haven't quite flip to the purchase price, but they're well on their way. Coca-Cola. They also coincidentally spent $1.3 billion bought, finished buying their stake in 1994. That's probably also something to pause on. They spent seven years building their stake. Coca Cola. You don't have to buy everything all at once. Yeah. So 1.3 billion they spent to buy the shares, they now receive $700 million a year in dividends from Coke. So, again, they have a little bit huge. But there's got to be a term when you flip it.

Bryce: [00:09:18] The flipped dividend. 

Alec: [00:09:21] We'll take this offline. 

Bryce: [00:09:23] I think the other numbers to point out there, Ren, is what those investments are now worth. Coke was an investment of 1.3 billion. It's now worth 23 billion and Amex was 1.3, now worth 22 billion. So not only are they pumping out incredible cash dividends year on year for Bourke Shire, but the capital growth on that as well has been pretty phenomenal. 

Alec: [00:09:42] Yeah, and Buffett had a line in the letter. The weeds wither away, insignificance as the flowers bloom and it's an important reminder that we all have some duds in our portfolio. Buffett has some duds in his portfolio, but over the long term, if you let your winners run, as he's done with American Express and Coke and a number of other companies, the the bad investments start to look a lot less significant and start to take up a lot smaller slices of the pie chart as the great companies just keep compounding a lot. 

Bryce: [00:10:15] Yeah, I think one of the other takeaways from that point was around his commentary on patience, and he was essentially saying that he believes the position Berkshire is in now at the moment is the result of only a dozen truly good decisions. And if you kind of average that out over the 58 years, he's essentially saying one in every five years, I would make a good investment decision that resulted in where we're at today. And we know he's one of the ultimate two when it comes to being patient, not swinging at everything and truly waiting for those opportunities to come. So, again, something that he's been talking about year after year after year. 

Alec: [00:10:57] So Bryce, one surprising thing for me, Berkshire Hathaway is the largest owner of Paramount. 

Bryce: [00:11:04] How much they. 

Alec: [00:11:05] I didn't know him. Now, for people who are unfamiliar with Paramount, the streaming service Paramount Plus bought the media company that most people have probably seen Paramount movies. They also own a number of TV networks around the world, including Australia's Channel Ten. Berkshire just doesn't feel like the kind of company that Buffett would be investing in. But I went on ticker and had a look. They list out the ownerships of different companies. I also kind of just assumed that Vanguard and BlackRock were the biggest owners of every company these days. But no, I was wrong. Looking at ticker, Berkshire has $2 billion worth of Paramount Plus shares. Vanguard is second with 1.2 billion. State Street is actually third with 700 million. So they're a mess there in 15% of a streaming service And cable TV giant. 

Bryce: [00:12:05] You're right. It's not something that I would have thought would be in his portfolio, but in the grand scheme of things. 2 billion. Pocket change.

Alec: [00:12:13] Yeah. Now we should mention. So ticker is our go to source for dada t i k dot com slash Equity Mates. A Bloomberg terminal costs $20,000 a year or you can get exactly the same data on ticker for $180 a year. But Bryce, you don't even have to pay $180 because we've worked with the guys at ticker to offer the Equity Mates community 50% off if you use the code mate 15 at checkout in the month of March. 

Bryce: [00:12:43] Absolutely. It is an incredible platform at an incredible price. If you're looking for incredible data, at the end of the day, you're right. Move over. Bloomberg. 

Alec: [00:12:52] So in Buffett's letter, he writes that they're the largest owner of eight of the 500 S&P 500 companies. 

Bryce: [00:13:00] I think he goes further. He says eight of the 128 that earned over 3 billion or whatever. He's essentially saying scrap all the others. There's 128 good ones that are earning epic cash.And we own eight of them.

Alec: [00:13:13] American Express, Bank of America, Chevron, Coca-Cola, HP, Moody's, Occidental Petroleum, and Paramount Global. 

Bryce: [00:13:22] Yeah, not bad. Not bad. 

Alec: [00:13:24] I've got one final takeaway, which is that at 92, Buffett can still get mad. But have you got anything. 

Bryce: [00:13:32] Is this it The accounting. 

Alec: [00:13:35] Buybacks in accounting. Yeah. 

Bryce: [00:13:37] Yeah. No, I look, I look for me, I was interested around how he was framing the role or how they think about the role of the chief executive officer. No doubt a lot of people are thinking. Warren In 93. Charlie in 99. What's the succession plan? And he gave a bit of insight into how their CEO is always the chief risk officer, a task that he believes is irresponsible to delegate to anyone else. And the future CEOs have to have significant part of their net worth in Berkshire shares bought with their own money, which I thought was good. Good good alignment. 

Alec: [00:14:12] And but bought with your own money is an important point because it's not just CEOs being issued.

Bryce: [00:14:17] Options. Yeah.

Alec: [00:14:18] Which does seem to contradict some of his buyback stuff, but we'll get to that then. 

Bryce: [00:14:23] He just finished a line after that that says at Berkshire there will be no finish line. And so I just thought that was nice as a shareholder to be like, when we're not here, this machine is just going to keep on going. So yeah, I thought that was nice. There are a couple of words of wisdom from Charlie as well that I thought were just nice little one liners too, to put on your desk or write down in your phone. Firstly, you don't need to own a lot of things in order to get rich, and you have to keep learning if you want to become a great investor. When the world changes, you must change. Which I thought was telling. Given how much that they've had to change as investors and take positions in things like Apple and airlines and railroads. But anyway, I thought was a great letter. Not very long. What's your final close out? 

Alec: [00:15:08] So Buffett gets angry. He gets angry about accounting standards to begin with. And this is something that he's had a crack at for a number of years now. And we've seen a number of especially high flying tech companies report things like adjusted EBITDA, which Buffett hasn't lot. And he also has a real problem with some changes to accounting rules that make him report changes in stock prices as part of his earnings number. And he talks about how managers can manipulate the numbers to beat Wall Street estimates. And he says, quote, that activity is disgusting. It requires no talent to manipulate numbers. Only a deep desire to deceive is required. Bold, imaginative accounting, as a CEO once described, his deception to me has become one of the shames of capitalism. He's mad. Yeah, yeah, yeah. And then he doesn't stop there. When he talks about share buybacks. He also writes, When you were told that all repurchases are harmful to shareholders or to the country or particularly beneficial to CEOs, you are either listening to an economic illiterate or a silver tongued demagogue. 

Bryce: [00:16:22] Anyway, we will put the letter in the show notes publicly available, as are all 58 of his other letters for you to go in and read it. It is great reading and this year's wasn't too exhausting. It wasn't very long. Now, on the other side of the break, we're sitting down with, as I said, managing director of lithium producer Iyanya Bernard Row. So stick around for that fascinating interview. But we will be back on the other side of this break. Now, before we get into it with Bernard, a very quick reminder that we are in the last few days of our sale for the Value Investor program. It is on sale. It closes on the 8th of March. You get $100 off with the coupon code mates at checkout, and it's a course that helps you learn how to research any company. You get valuation templates, there's HD videos, ASX case studies, there's webinars available. We've done it in conjunction with Owen Raszkiewicz from Rask Australia. It's only $399. It is well worth it if you're looking to upskill as an investor and understand more about valuation. It's an incredibly comprehensive course that really, yeah, is a really good tool to help you understand more about valuation. So link in the show notes, get $100 off with the coupon mates at checkout, but now let's get stuck in with Bernard Ryan. Bernard is a geologist and managing director of Ionia, a US based Lithium and Boron producer, which is listed on the ASX with Ticker I. An opponent has more than 25 years international experience in mineral exploration and mine development. And with lithium such a hot topic in the Equity Mates community today, we are incredibly interested to understand more about the industry and the role that Ioneer plays. So Bernard, welcome to Equity Mates. How are you? 

Bernard: [00:18:07] I'm very well, thanks, Bryce and thank you very much for the opportunity to join you. 

Bryce: [00:18:11] No worries. So before we get stuck in, this episode is part of the ASX CEO Connect Equity Mates is proudly working with the ASX say Connect, which brings listed companies and investors together. We interview some of the key CEOs from these events for you to hear more about their business, vision, strategy and latest achievements. It is not a sponsored episode. We are really proud to be partnered with the ASX. Their next webinar is tomorrow, Tuesday 7th of March. There is a link in the show notes. If you would like to hear from more CEOs such as Bernard. But Bernard, as I said at the top. Lithium is a hot topic, particularly in the Equity Mates community. You can't get away from it. We've got some amazing lithium producers here in Australia and for good reason, given what lithium is doing and allowing us to achieve for the for the long term future of our planet. But I want to get your view and help us understand how we should think about Iron Neo versus all the other lithium miners and producers out there.

Bernard: [00:19:12] Idea is pre-development, so we're not yet in production, but we are getting very close to being commencing construction and then into development. So our project is a greenfields project. There's only actually a handful of producers in the world today and if you take out the large companies like the Alba Miles and the Two Arms of the World, it's even smaller group. So, you know, we're not yet in production, but we're moving very close to being ready for production and construction, and we're expecting that we will be in production in 2026, around that time. Now, the second thing I would say that makes it a standout is the size and scale potential of the deposit. So it's very large, it's scalable, it's going to be in production for a very long period of time. And the third thing is that it's in the United States, which sets it apart because, you know, the United States has only one lithium operation today and it's the second largest car market in the world. It's going to need a lot of lithium, and yet it produces very little of its own. So there's only a couple of projects like ours that are very advanced that we'll be producing later this decade. And that's very makes it our project very, very important and critical to the US carmakers like our partner Ford, but also to the US government who are doing things to try and build out a domestic supply chain all the way from raw materials in the ground to a battery in a car. And we're going to be an integral part of that. And that's what makes our story so exciting. 

Bryce: [00:20:58] Yeah, right. Just to go back there, what's a greenfields project? 

Bernard: [00:21:02] So a greenfields project is where we refer to mining operations. These are the greenfields or brownfields. Okay. So a brownfield would be where there's an existing mining operation and you know, you're, you're doing work to extend the life of that mine or exploring in the near vicinity. That's a brownfields greenfield is where you're going into an area where there is no existing mines, very little known about the area. And you are essentially, you know, discovering something and then taking it into production for the very first time. So, yeah, Green versus brownfield. Yeah, right. We are greenfields. Albemarle, for example, have got multiple lithium operations around the. World. And they would if they were finding something next to one of those other mining operations. We would call that a brownfields project or discovery. 

Bryce: [00:21:57] For those that are still trying to understand a little bit more about the industry and the importance of lithium, can you perhaps talk us about why you're so excited about the prospect of lithium over the next sort of decade or so or plus and a bit about the supply and demand dynamics of lithium right now? 

Bernard: [00:22:13] Lithium is one of the critical materials for energy transition. So it's actually not just about electric vehicles. It's about lithium ion batteries and the role that they are going to play in energy transition across the board. So that includes, you know, the storage of renewable energy, static storage of energy, you know, power poles and things like that in homes. You know, it's a whole range of energy solutions that require lithium ion batteries. That said, by far the major growth component over the next decade and more is going to come from the transition to electric transportation, whether that be cars, trucks, buses, etc.. So it's a critical material for that. There's no real substitute for know battery technologies and battery chemistry are going to change, but lithium will stay as that common component of those batteries as we, you know, further advance and make more efficient lithium ion batteries for electric car batteries. So, you know, lithium is not going to disappear in terms of supply and demand. I'll always like to just put some numbers out to put it into some kind of perspective at the massive imbalance between supply and demand and or more and more importantly, growth in demand. So when I started working on this project, which was in 2016, the global production of lithium was around 300, 350,000 tonnes around that sort of level. Okay. Today, only six years later, it's double that. It's more like 600, 700,000 tonnes. So world production has doubled and world demand hence has doubled in a very short space of time now. And the industry has struggled to keep up with that. And, you know, and that's why we see volatile pricing, because right now prices are very high and that's simply because production has not been able to keep up with demand, even though we're talking about still fairly small tonnages of, you know, 600,000 for the entire world. We haven't been able to keep up with it. And then the price then reacts or responds. And we're seeing lithium prices of, you know, 70 and $80,000 a tonne a few months ago. It's come up a little bit now. That volatility in the price is all about supply imbalance between supply and demand. And you're going to get that that's going to continue when you've got such dramatic growth. You know, sometimes the supply is going to overshoot the demand and then other times it's going to undershoot and then you're going to have price hikes, spikes and price troughs. And we saw that two years ago. You know, the pricing fell sharply, but it didn't last long and very quickly spiked again. Most groups now estimate that by the end of this decade, the world's going to need somewhere between three and 4 million tonnes. So from 600,000 or 700,000 today to three or 4 million tonnes in six, seven years like that, that is a daunting task. And some people actually put it at even higher numbers than that. But I think most now concur that it's going to be at least three or 4 million tonnes. Okay, so you've got this incredible growth in the commodity world. You just don't see that sort of growth in commodities. 

Bryce: [00:25:46] And so when we did a bit of a deep dive on lithium over the summer and, you know, there's a difference between where some of the biggest deposits of lithium are in South America versus where the biggest lithium producers are currently being. Australia, Canada, you know, some now starting to pop up in the US, yourself included. How long or what's the longer term picture in terms of getting from 700,000 a tonne to 4 million? Do we need South America to come on? Where's that going to come from? 

Bernard: [00:26:25] Yeah, we absolutely. We need it from everywhere. Okay. There will be, as they say, no stone unturned, really, because you just won't get to three or 4 million tonnes unless you're, you know, technically producing it from all the regions where we know it exists today. And lithium is a bit of an unusual sort of commodity sector because, you know, you've. Got the deposits which are producing the raw material, but a lot of the value add happens away from the lines where you are refining and purifying and then ultimately incorporating it into the precursor material that goes into a battery. So so for example, South America actually produces a lot of lithium. Argentina and Chile. And they have been for 50 years. Okay. But they do very little refining of that lithium and incorporating it into the cathode in South America. It gets sent somewhere else. And Australia is even more it's even more a factor. I think Australia now produces something like 60% of the world's lithium from mining spodumene, which is a hard rock, the mineral in a granite like rock. But we actually don't refine that at all in Australia. We're just starting to do a little bit of it now, but it's small scale compared to what? So 60% of the world's lithium, you know, you're talking about three or 400,000 tonnes comes from Australia. But nearly all of that today goes to China and it's in China where it's actually refined and it's a significant value add because what leaves Australia in a ship is 6% lithium alloy, two out 6%, so 94% of it is waste. Okay. When it gets refined in China, which is a very energy intensive process by the way, it requires a lot of heat, which then as a result requires a lot of energy, but that's 6% goes to 99%, so you're having an incredible value add happening when you are refining lithium. Yeah, right. That doesn't happen with some other commodities, but it does with lithium and the refining is very much centred around China today. 

Bryce: [00:28:46] So it is going to own end to end process as well. Will you be refining? 

Bernard: [00:28:52] Yes, we will be. And so this is also what makes our deposit very special. You mentioned the boron, which I know we'll get to in terms of a processing. It's the boron that makes a big difference. And it's the fact that when we mine the lithium, it's in a rock. Okay, So we're digging up a rock and we're crushing that rock, and we are using a leech solution to extract the lithium out of the rock and the boring. We make material that will be 99% pure. We have no intermediate step where we are producing minerals, a mineral concentrate that gets shipped somewhere else. That doesn't happen in our deposit and it can't happen in our deposit just because of the mineralogy. So raw a lot. Rich, we call it sedimentary. Lithium is very different to the spodumene of Western Australia that I just described. It's also very different from the brines of South America where they are pumping saline water from below surface that has lithium in it and then they're evaporating it, whereas somewhere in the middle, if you like. But it's very different than both of them. And a huge advantage is that automatically you must produce high purity material at the site. You don't have an option to make it concentrate of a mineral that's low purity and send it somewhere else. That's just not going to happen. Yeah right now the process and it's the nature of the deposit. 

Bryce: [00:30:19] Ioneer is not only lithium but it is boron. Now is that a strategic decision or is it just because, as you said, the nature of the deposit where you are currently exploring has both elements in it? 

Bernard: [00:30:31] Why are we producing Boron? It's a simple answer, and that is that the deposit has both lithium and boron in it. And it's the uniqueness of that lithium boron or as we call it, our or that if we want to extract lithium, we automatically extract boron. And it actually is the boron minerals in the rock are the reasons why we can process it like we can the very, very rare deposits. In fact, there's only two large lithium and boron deposits that we know of anywhere in the world. Rhyolite Ridge is one, and the other one is called Yara, and it's located in Serbia. And that's it. I mean, you know, there are some other boron deposits that are got a little bit of lithium, and there are some lithium deposits that have a little bit of boron. But in terms of the concentrations that we're talking about, there are only really two known in the world now. So from that perspective, it's fantastic to have it there that it makes this process different than everybody else's. It's not doesn't require new technology. It's using existing technology to extract it. So the risk around technology is very low and we've anyway done a lot of test work and. Piloting, etc.. But it is more than that because the boron has got value, so we got to produce it anyway. What are we going to do with it? Well, we will sell it and we will produce something like 150 to 170000 tonnes a year. So quite a lot. But this material is worth somewhere between 700, 800, $900 a tonne. We will be producing something like over $100 million a year of boric acid from this lithium operation. But that means that 20 to 30% of our revenue comes from boron and that that's $100 million and that $100 million is actually enough to cover about 75% of our costs. Wow. So if you know, you can think of it as a bonus cream on top or you can think of it as a credit that you can use to offset your costs. And we think of it like that because it means that we can make very cheap lithium if we use the boron to pay 70, 75% of our costs. And I can tell you there are very few other lithium deposits in the world that have a co-products, not a by-product, but a co-product that's worth $100 million a year and more. It's almost unheard of. So again, it makes this deposit very unique and very special. [00:33:19][167.5]

Bryce: [00:33:19] I want to turn to the investing side of things because everyone sitting at home is probably getting super excited about the fact that you've got a line of credit of 100 million a year coming from Boron and allowing you to to reduce your cost. So before we talk about financials, often it's really hard for the Equity Mates community to know when is a good time to start thinking about investing in things like exploration companies. And often you might say that a company is exploring and the price can be a bit volatile, but you miss a lot of the upside by the time you actually start mining because a lot of the value has kind of been created in the exploration process. So what are some of the things that we should look for just broadly when it comes to understanding and analysing a company in the phase of exploration before it hits its production sort of six or ten years later? What are the key elements? 

Bernard: [00:34:17] It's a measure of risk. Okay. And as you de-risk an exploration project, then you will get an uptick or rewriting in the value of that. So you're continuously looking to de-risk. So there's market risk, there's process risk, there's permitting risk. And and and one of the big ones at the end of all of that is funding, you know, can a project be funded? And, you know, you asked me before about the definition of greenfields exploration. Well, I can tell you that by definition greenfields projects are much harder to fund because funding something right beside an operating mine, especially when you're the company that runs that mine where you've got revenue, is a much easier task than a company trying to fund something that's effectively a start up in the mining industry. You're looking for the steps that the risk of project, the deposit itself, you know, you've got to drill it out so there's some geological risk and you need scale. You know, at the end of the day for a modern mining operation, you need it's all very well to have grade, but you need a certain scale of the size of the deposit, in other words, so that you can mine it not for two or three years, but for ten or 20 or 30 years. You know, that makes it much easier to then get financing. And, you know, and lastly, and there's a lot of technical and feasibility studies that get done along the way that companies do a scoping studies, pre-feasibility studies, feasibility studies, but ultimately it culminates in harmony and financing. So they're the things you want to be looking at, you know, de-risking, you want to be looking at the geology, processing the products that you're producing, how are you going to sell them? Who's going to buy them, What are they going to pay for those things? Do they meet specifications? And then ultimately around, you know, you need the mines, permit it and you need them and you need them to be funded. We're well and truly down that path. So a greenfields project has to tick all those boxes before it actually gets the funding. So we've obviously taken them, we've put the funding in place and we're really just finishing off the federal permitting process with a view to be in construction early, sorry, fully permitted early next year and then commencing construction during 2024. Yeah, right. Which would mean. Production in 2026, two years to build. Wow. You have to take into account the overlay of this volatility in the lithium space, because what you'll see is, regardless of whether you're a pre-production company like us or a much earlier stage company that's just going to have deposit in their drilling holes, but they haven't de-risk any of the other things or all the way through to a producer like an Albemarle or a live. And um, you know, a lot of companies that have been around for a long time, all of us. Okay. I have to put up with, if you like, the ups and downs, the volatility that is created by the fact that the lithium price is fluctuating because of these supply demand imbalances that I talked about earlier. That's just the nature of the business. And it's a bit more volatile in the lithium space just because of that. If you compare it to, say, copper, for example. But that creates an opportunity. 

Bryce: [00:37:47] I love it. I'm sure you're going to have a fair few people hitting up on your website after this episode to find out more information. But, Bernard, thank you so much for your time. It's been a fascinating conversation and I'm sure a lot of people listening have taken a lot from this today. But thank you so much for your time. 

Bernard: [00:38:03] My pleasure, Bryce.