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Vimy Resources (VMY) - Strong Refreshed Uranium DFS. Excitement Muted

September 23 2020, 14:06 GMT+01:00

Vimy Resources (VMY)

  • ASX: VMY
  • Shares Outstanding: 777.39M
  • Share price C$0.04 (23.09.2020)
  • Market Cap: C$27.986M

Uranium, Uranium, Uranium: the mystery that is Uranium, investors are forever trying to solve... What sort of exposure can Vimy Resources offer them? Vimy Resources is a uranium developer that is based in Perth, Australia. Its primary focus is on the development of its flagship uranium project, the Mulga Rock Project. Mulga is situated about 290km Northeast of Kalgoorlie in Western Australia.

Why is this significant? Mulga Rock is, quite simply, Australia's largest advanced uranium project, and the DFS, released in January 2018, confirmed this. However, the refreshed DFS, released in August (uranium companies have had a lot of time on their hands), exhibits decreased cash operating costs over the life of mine of 7%. Other encouraging highlights for this uranium play include a 20% reduction in capital cost, now down to $255M, and an AISC, $31.22, an 8% decrease from original figures.

Mulga Rock is shaping up to be a low-risk, open-pit uranium mining operation that could produce 3.5Mlbs of uranium pa for 15-years. It could well be one of the few uranium projects to get financed and could well be sitting at the uranium negotiating table with the utilities once $55/lb uranium contracts finally see the light of day. However, the market hasn't responded to this refreshed DFS with any kind of excitement. We wonder why?

We Discuss:

  1. 3:54 - Company Overview
  2. 6:23 - Opinions on Macro: What are Utilities Waiting For?
  3. 13:31 - The Disconnect Between Spot & Macro, and its Impact on Share Price
  4. 18:54 - Mining Uranium in Australia
  5. 21:39 - Process of Becoming a Miner: Money & Time Required
  6. 24:32 - Raise of $5.5M: Allocation & Reasoning
  7. 31:03 - Environmental Approvals Granted: Easy Sailing From Now On?
  8. 32:59 - Renewed DFS Results: $55 Contracts Coming When?
  9. 39:03 - Big News, No One Cares: Convincing Investors of Future Success
  10. 43:58 - Alligator River Plans and Timeline
  11. 46:50 - Impacts of the Weakening US Dollar: Any Concerns?

Matthew Gordon: Give people a 1-minute overview of the story, where you're at today.

Mike Young: Vimy - we have the Mulga Rock deposit and we also have an exploration play in the Northern Territory called Alligator River, but Mulga Rock is our main game. Back in 2018, we published a Definitive Feasibility Study, which at the time we were very happy with, the market seemed to like it. 2-years have passed, and we decided we would review that study with a view to getting costs down if possible. Late last month we released what we call a DFS refresh. We didn't look at any of the technical matters of the DFS, we just had a look at some of the commercial matters, and we can talk about that in more detail.

We've been doing a lot of work on that; very detailed, deep dive. It's been very good for our team to do it; the results were very good. We're very happy with the results. It's a much better project economically. As I say, we'll get into those details. And then to forward the project, we mandated KPMG as a corporate advisor to help us find partners for both those projects: Mulga Rock is a big project, where our market cap currently is, we may need some help to get up and going, but that's not to say that if conditions improve quickly and our market cap recovers, we could certainly do it on our own. We have the capacity to do that. Finally, some very important environmental management plans were approved by the State government, these are the foundations for the rest of our secondary approval, so the door is now opened to moving towards production. While that's all been going on, we've been monitoring the Uranium market with Scott Hyman in America and keeping very busy in front of all the utilities, waiting for the day they start contracting again.

Matthew Gordon: US utilities, people seem very, very reliant and dependent and look to US utilities’ behaviour. What do you think is holding them back?

Mike Young: Certainly, COVID combined with the refuelling cycles they have in the spring certainly kept them very busy. We know from our discussions with the utilities that they had to manage COVID; the safety of their people was their highest priority, which should be no surprise, but they had to manage COVID. One of the things about the refuelling cycle that happens each spring and autumn in America, because that's the sort of shoulder of the seasons in terms of electricity demand, there is a group of specialists who travel from utility to utility, carrying out a lot of the work. And because of COVID, that process was slowed down or delayed. Notwithstanding that, Excelon actually had a 14-day refuel, which I think was one of the fastest ever done. But the rest of them, COVID did add complications.

On top of that, you had other external issues that have been going on: the remnants of Section 232, the Nuclear Fuel Working Group, the Russian Suspension Agreement, and finally the Iranian sanctions waiver - all of these things were causing uncertainty. There was certainly no mood for the utilities to dive into the market. When prices were lower in ‘17 and ‘18, they were building up their inventories and we saw that the inventories in 2019 remained flat, so they've been managing their inventories; a little bit of carrying trade, not much. One of the major utilities closed off an RFP last week. In TradeTech this week, they're talking about 3 more utilities coming out.

It was really interesting; we had one of the utilities on a conference call here in Australia and somebody pointed out to the fuel buyer, there's a shortage of Uranium this year. We're mining far less than we're burning. Prices will go up; don't you guys worry about it? His exact words were, I remember committing it to memory because it was beautiful, ‘We worry about tomorrow's problems when we get to tomorrow.’ That's really quite telling because that tells you how the utilities think. They don't think like commodity buyers, they think people who are buying something for a process, so they're just buying stock for their process. When you do the maths, the difference between USD$35 p/lb and USD$55 p/lb is USD$0.125c per kilowatt-hour, that's the difference. They're not going to spend money to put Uranium on the dock and have it sat there when they could be using the money for other things. There are a lot of competing interests for the chief nuclear officer in terms of maintenance, they want to buy at the lowest price possible, of course, but the decision they now have to make is, do they want to be the first guys in at USD$50 or the last guys in at USD$70? That's what it's going to come down to.

You had Brandon on a couple of weeks ago. He was talking about how the utilities buy in a spectrum of prices. This imaginary price, there’s no price, there's no benchmark. This is a spectrum of prices. For people like us, we want to jump into that spectrum, and that's why we spend so much time with the utilities - to make sure that when they ask us to jump, we are there jumping.

Matthew Gordon: Excelon’s 14-day refuelling period. What's your take on that?

Mike Young: There's certainly an element of that. They certainly wouldn't be saying, we're going to do this if they wouldn't follow through. You wouldn't want to be playing poker with Excelon. Happily, in America, you would have seen the Democrats have, well, I wouldn't say they've gone pro-nuclear, but they've gone technology-neutral. The best you get from a lefty in a pro-nuclear stance is ‘technology neutral’. After 49-years, the Dems have finally said, we need to look at nuclear. I think America is seeing a sea change. You can look at the statistics out of California: by closing their nuclear plants they've got rolling blackouts. They were held up as the poster boy for renewables, and that's clearly not working. They're suffering the same problem as Germany: high energy costs and unreliable power sources.

My view is yes, they are threatening to close some plants down. They are facing asymmetric government subsidies because when the wind's blowing it takes the material and electricity from the windmills and that is a form of subsidy. What they're asking for is a level playing field. On a level playing field, nuclear does compete. It is competitive.  I don't know what's going to happen, but I hope that those plants stay open. If they do close, there's still a market there. It's not a huge hit. We're seeing growth in other parts of the world, predominantly China, the Middle East. there is net growth. Uranium has to go somewhere. Our preferred market is the US, but with KPMG coming on board, we're looking at other options. We're looking at perhaps partnerships with off-takers that we could explore, certainly not in America - they just go for straight Uranium sales. But that's certainly something we'll look at. And certainly, KPMG has got a very wide mandate.

Matthew Gordon: Do you not get frustrated with the inaction in the marketplace? Where do you think the disconnect is for your company?

Mike Young: It's a really great question; the word disconnect is very apt because, in one of our previous presentations, we do show the historic share price and metal price from 2015. About 3-years ago, it did disconnect. I put part of that down to market fatigue. We are our own worst enemy in terms of predicting the future. None of us got it right. We were predicting a nuclear renaissance 2-years ago. We got that wrong. I think people are getting tired. Certainly, all of our peers suffered the same general disconnect from the price as we did, but you are right - we haven't performed as well as our peers. It is frustrating when you look at the news flow that we're putting out, look at the DFS refresh - it is frustrating. Part of the problem is people do spend a lot of time looking at the spot price.  Mike Alkin and I have done that to death, you're flogging a dead horse there telling people not to look at it because that's the only handle they have.

With respect to the supply-demand, a demand-supply imbalance that we're seeing this year, the fuel that they are burning in the reactors this year, they acquired that 4-5 years ago. The biggest problem with this market is there's a huge temporal time lag and all we can really do is just keep on doing the things we said we were going to do, keep delivering on our promises, and unfortunately, wait for that existential event that then catalyses the spot price that seems to catalyse investment. Now, anyone who can see past that and is a long investor, obviously, they're going to look at someone like Vimy, they're going to look at the DFS. When you're looking at our All-in Sustaining Costs, we are now competitive with the high-cost Kazakh operations in terms of All-in Sustaining Costs. Anybody looking around going: gosh, where am I going to put my money for the best leverage? Vimy is in a very small club. You look at the team and you've got a bunch of people who have built mines before. Yes, I get frustrated and that's why I cycle so much. You can actually plot my frustration by the number of km I do every week. Cycling is a good release and there's lots of pressure. I want the share price to be higher. We're certainly doing everything we can to do that. But people have to buy the shares, and I’m happy to take advice, Matt, and you've seen it all.

Matthew Gordon: What's the pushback that you're getting when you're going out doing these virtual road shows at the moment?

Mike Young: The biggest question we get is both approvals and contracts. There are no questions on the viability of the project, on the risk of the project. Very few people ask about that. They always ask, when are you going to get contracts? And those are people who understand the market and who know that contracts are going to drive what we do. They do ask why is the spot price is so low, and the other questions about approvals? That's why the announcement on the conditional management plans was so important.

Matthew Gordon: What are the difficulties being a Uranium miner in-country? What do people like Julian Tap have to manage on a weekly basis?

Mike Young: In Australia, you've got different States and each of the States, well, they run the mining in the States. Mining is not a federal issue. Uranium - only the export license is federal, and that's not political. That's just done through bureaucracy and it’s very simple to get. Western Australia has a Labour government. They are against Uranium mining. Before, projects, Toro and we, which had received ministerial approvals before the election from the LP1, they're allowed to proceed. As getting the approvals recently shows they're not holding us up in any bureaucratic ways. They're allowing the process to go through. In fact, the Labour party in Western Australia is a very broad church, also the leadership group, I happen to know for a fact, are actually technology-neutral, which is the euphemism for a left-wing person who is pro-nuclear. Then you go to Queensland which has a ban on Uranium mining, New South Wales is looking at allowing Uranium exploration, so each state is different.

Australia has a long history of anti-nuclear activist, the reason for that is the British did weapons testing in Australia, so people conflate nuclear power with nuclear weapons, which is wrong. But when you're looking at emotions and ideology, there is no wrong and right. There's just belief and not belief, so that's got a lot to do with it.

Yes, it is more difficult. Gold would be easier, even Lithium would be easier these days. But when I first looked at Mulga Rock and first got involved, it was the sheer size of it, the sheer simplicity of it that attracted me. I knew it was going to be difficult and that's why I brought Julian Tap on board. Julian is working through the approvals. He only works for us part-time, we don't require his full time and we do want to keep our costs down, but he's a very important part of our process and the way that he moved these environmental management plans through is brilliant. He'll do the same for our works approval and our mining proposal.

Matthew Gordon: What is next?

Mike Young: There are 3 things you need when you start a mine here: you need your mining tenure, which we have - very important to highlight that we've got mining leases and what are called miscellaneous leases for the entire life of mine. Very important. You sometimes need a native title agreement. We don't have a native title claim on Mulga Rock. That was something we didn't need. We are literally on allocated crown land, the only other place in the world that has that is Antarctica, and there's not a whole lot of that in the world. That was another big tick. And then the third thing, of course, is ministerial environmental approvals, and we have those. Then what happens? It's like if you build a house on a block - you have to go to the council and get permission to build a house, there's a bit of toing and froing about how many windows it's going to have and toilets and whose yard you can see into. We've gone through all that. Then you have to get a building permit if you want to put a deck up, a garage - there are just permits for everything. And that's the stage we're in. We're in the building permit stage now, but before those permits could be done, we needed to know what the environmental limitations were for our emissions: Co2 emissions, tailings, the water we use, the spraying we use for anti-dust, our re-injection bore field, all of that is covered by environmental management, plants, everything, soil, the whole thing. It's very, very complete. In fact, if people are looking at ESG and buying Uranium, there aren't many countries in the world, maybe Canada and ourselves that have the environmental standards required.

As an aside, that is something that really frustrates me about environmental groups; rather than fighting us and trying to stop us, and letting them buy material from another country where the standards aren't as high, they should be joining with us and making sure that we are mining at world's best practice.

Now we have these environmental management plans, we can now move to the mining proposal, which in that proposal site, we are going to mine like this, and we will stay within the limits that have been imposed by the environmental management plan. That's the stage we're at now, we're moving forward with the works approval and the mining proposal.

Matthew Gordon: The question was: how much money, how much time?

Mike Young: The money is just manpower. It's really Julian working 2-days a week. That's how much money it is. We also have a young woman who has just returned from maternity leave, she'll be helping join us as well. She's fantastic. environmental engineer. It's just desk time, so it's not that extensive. Timing-wise, we're hoping around 6-months to get those approvals done.

Matthew Gordon: Why raise AUD$5.5M? What are you going to do with AUD$5.5M?

Mike Young: Part of that was certainly the refresh, that was expensive. That was engineering time. We didn't do any more test work, but as I said, it was a very deep dive and we had several people from engineering working on that. Because we have mining leases, we actually have quite high rents and rates. We spend about AUD$2.2M p/an on government rents, rates and charges because we have those mining leases. Now, without those mining leases, we wouldn't be getting off the ground because that was the secret to getting the approval from this government. Then we've got some activity on the ground at Alligator River where we were hoping to do some RC drilling this year. Unfortunately, one of the heritage surveys was delayed for family reasons of the people up in-country. COVID has certainly slowed us down, but we have a very good COVID management plan. We actually have people on the ground up in the Northern Territory so some of the work will go into that. With that money, we would hope that we won't be going back to the market, certainly this financial year is our goal. Then I would hope that the market has recovered. We're announcing contracts and that the share price is much, much higher before we have to go back to the market.

Matthew Gordon: What was that debate you had at board level?

Mike Young: We did have that debate, Matt. What we were getting back from people was people were getting tired of seeing a raise every 6-months. They said, get one done, get it out of the way, get some clear air, get your balance sheet healthy. Because, as you say, you don't know if the utilities are going to come back this year. I suspect, well, I know for a fact we're getting close. Or you don't know if they're going to come back in a year. You just don't know.

Going back to the market every 6-months was getting very tiresome for people. The money came out of the blue. We were actually approached by a group out of Melbourne - GK Capital Partners who said, look, we've got this money in the tin. What do you think? And because we had the money there. Most of our existing shareholders put in, some didn't. That's their decision. We've got some new shareholders on board and we took the view, let's get the balance sheet firmed up.

Matthew Gordon: Did Andrew Forrester put more money in?

Mike Young: He didn't follow his money this time, which is good because we would have had to pare a bunch of people back.

Matthew Gordon: What would be the reasons or conditions for you to do that?

Mike Young: This financial year.

Matthew Gordon:  When does your financial year end?

Mike Young: June 30.

Matthew Gordon: You also said that you know utilities are coming back saying, was that Scott's work or why do you say that?

Mike Young: The way the market works is the utilities put out RFPs, but between the RFPs and utilities, there is a lot of off-market work that we do. Having Scott in the States, we didn't see COVID coming, but having him in the States has been a godsend. He has 30-years in the industry, this is a relationships market and rather than us spending years and years getting to know and trust the utilities and vice versa, they're dealing with a guy that they've been working with for 30-years. We get a lot of intel through Scott, a lot of insight with RFPs that we've actually submitted an obviously failed; we haven't announced any contracts yet. We do get feedback on what the thought process was as we went through the RFPs. They refer to the big 5: Uranium One, Cameco, Orano, BHP and Kazatomprom. They call them the big 5, and then we come into the next tier. That's the sort of feedback. 

You were asking me earlier, am I frustrated? Yes, I'm frustrated, but I know what the utilities are telling us so that kind of sustains me. I'll be frank: there's a big Gold boom going on right now. And with my experience, people saying, hey, would you like to run a goldmine? The fact of the matter is that I can see the finish line here. I can. Yes, the tape might be moving away a bit, but there's a tape there. You had Brandon on recently, he was also talking about the same thing: the fact that utilities have to come back. When you look at the All in Sustaining Cost curve, they have to pay between 55 and 75 to sustain that production. When you're armed with all of that and you have this deep inside knowledge of the market, you keep going.

What's interesting is when you see guys like myself and Brandon Munro, Duncan Craib, guys who've been in the industry a long time, we have this sudden boom going on and guys like that - easily hireable - not leaving, because we actually believe it as we have that innate knowledge of the industry. I wish I could put a tinfoil hat on me and a tinfoil hat on the investors and say, here, this is what I'm thinking. This is what I know. Then they'd say, oh, yes, I'm going to buy some Vimy. So yes, I have a very strong belief in this sector because of the amount of time we spend inside it.

Matthew Gordon:  What are you saying? Is this easy sailing from now?

Mike Young: They are certainly the hard bit. They were the ones that were very detailed, I'll give you an example: we were having discussions about how far from the road we would monitor for overspray from the plume from spraying on the road to keep the dust down and how often we would sample, how deep the sample would be. It was detailed, and only a guy like Julian could deal with that.  I would have been dropping the F-bomb, but Julian is hugely intelligent. He's infinitely patient, and to be quite honest, the guys in the department of water and environmental regulation, they were fair. They were asking the questions that needed to be asked and we responded, and we got the management plans approved.

Matthew Gordon: You've got no concerns about your ability to get the rest of the approvals that you need to get into production?

Mike Young: There are no political decisions. The approvals process is a bureaucratic one. Having seen ‘Yes, Minister’, that might put the fear of God into some people. But we've got our own Humphrey here with Julian. We've never felt that the approvals would be a dead stop. We know they take time. Western Australia is extremely busy right now. Julian does work for some other companies, one of whom is doing Potash, and he's finding that the approvals process there is pretty much the same speed as it is for us. We're seeing nothing that indicates that there's a resistance to our approvals process. We're in the same queue as the Gold miners, the Lithium guys, and we're just marching forward.

Matthew Gordon: What are the key assumptions that you've changed?

Mike Young: Firstly, and importantly, I'll talk about the things we didn't change. In 2019, Marcel had just joined us. Marcel has a lot of experience in project management, and he said, and we agreed that we should do a review of the DFS. We had some gentlemen come in and review it. And what they found was that the mining strategy and schedule and the metallurgical flow sheet didn't need to change. They felt that the work that had been done was world-class. The fact that we'd done pilot plants for both the pits and the metallurgical flowsheet, they said was absolutely outstanding. What they did see though, was that the owner-operator model that we had for the mining fleet, which we had done in the DFS to reduce operating costs considerably, the owner-operator model didn't work and they felt that we had too many people on site. They looked at our staffing, I'll give you an example: we had 27 people working in the lab, and as it turned out, we didn't need that many. They went through it with a fine toothcomb, gave us a bunch of recommendations. We basically went through with the engineers who did the original DFS so there was no competitive tension and went literally line by line. I remember seeing a line in a spreadsheet with USD$4,000 a year for faxes, obviously, that's come out. But where we got the most savings was on the mining fleet. Where we were going to buy a new mining fleet to the life of the operation, we're now looking at buying refurbished equipment from an earthmoving contractor that did the test pits, who is based here in Western Australia. They actually are 1 of only 2 earth-moving contractors in Western Australia who have the workshops to refill the equipment. What that means is we'll be buying equipment much cheaper upfront, then we buy new equipment or newly refurbished equipment during the life of the operation, out of sustaining capital, which is in the All in Sustaining Costs. They'll also come on board and they'll do a cost-plus. They'll operate the equipment, even though we own it. It's basically a hybridized owner-operated contract model, and it's really the best outcome. The fact that we saw these guys come to site, dig the 2 test pits profitably for them. They were by far the cheapest contract that was tendered, and they did a fantastic job and they were happy with the outcome. That's an outstanding result. That's about 60% of the savings.

The rest came from changing from an EPC model to a hybrid EPC-PCM where we'll actually have an owners’ team. Some of those overheads you get with an EPC model have been reduced. Then the fact that we were able to change the manning levels. We were able to make the airstrip shorter because we'll go with airplanes rather than jets. The camp size comes down and you have a whole bunch of accelerating things flow on from that. Then there were rats and mice; pipeline costs and things like that, that we managed to come down and steal. You get 20 or 30 things where you're saving USD$1M, that starts to add up. That meant that the capital came down by AUD$100M - from almost AUD$500M to below AUD$400M, which is about USD$253 so that was an outstanding result.

Matthew Gordon: What's your breakeven price?

Mike Young: AUD$3675 is breakeven. If you put that price in our model, the NPV is 0.

Matthew Gordon: Do you see that happening anytime soon?

Mike Young: We introduced in the DFS refresh, we introduced a new term because we know this industry loves acronyms, which is the ‘VWC’ - the volume, weight, and contract price. We're going to have a spectrum of prices: above and below USD$55. Some people see the price going to USD$65-70. Certainly, there will be utilities buying at that level, or they're not going to get Uranium. As a salesman you always go in, you might go in with a lower price upfront, if you get one of the big utilities coming in, you might offer them a bit less than USD$55. But we do know we're getting close.

Matthew Gordon: How much longer will you have to try and keep the lights on until the market moves?

Mike Young: The problem is you just don't know. We talked about this before and we've been saying for 2-years that we'll get it in the next 6-months. We'll get it. I'll give you my honest answer: I really don't know. We have talked to these guys. We know exactly where their heads are at. One day they're going to pop up and say, yes, we'll take that. Thank you very much. We've got 3.5Mlbs we need to get rid of. Let's say we do 75% of that, you're talking about 2Mlbs and a bit. You don't do 2Mlb contracts. You do 200,000lb contracts. We're going to need 10 contracts spread across. Let's say from now till June 30 next year, we're writing contracts. Let's say by June 30 next year, we're at a point where we can start looking at funding. That takes another 6-months, you're in construction by the end of ‘21, you're in production by the end of ’23 - that's our working calendar at the moment. And obviously, it is continually existential and that is frustrating.

Matthew Gordon: What are people nervous about with you that I'm not getting?

Mike Young: I'm not getting any feedback. That's the thing. The feedback I'm getting, we did a stakeholder perception survey and there just was no bad feedback.  They liked the team, the project, liked what we're doing - tick, tick, tick. And this is what gets me; I don't know if it's just the rats and mice, day traders. It frustrates me when you see companies buy a piece of moose pasture in Wyoming, go out there with a scintillometer, take some readings and their share price goes up 25-50%. I don't know – exactly - what do you do?  You don't want to go spend shareholders' money, drilling holes up in Alligator just to generate results. That's a great asset for a partner to come in on, and let's get a partner in there and get them spending the money and get the good results. That is the temptation: to go get a rig, go drill at Alligator, get 10m at 2%, announced that result - that's just the big sugar hit. As you'll discover, when you start riding a bike that sugar lasts for about 15-minutes, right? You need sustainable value, and we’re doing all we can, I've done this before, and it's worked and it is frustrating.

Matthew Gordon: What have you got in your armoury to get out there and tell people that you are going to be able to get into production?

Mike Young: I don't agree with that. I don't think there's anyone out there, certainly of our major stakeholders who don't believe we can get this into production. That's not the feedback.

Matthew Gordon: talking about other people investing in other Uranium companies and not you.

Mike Young: That's a good question. That's one of the reasons why we're pivoting the message. For the last 3-4 years, we were thought leaders in the Uranium space. That's how we met, there weren't many people out there talking about the macro. Then that space started to fill up with some very good people who were spending 100% of their time on it. Like Mike Alkin - you've come in with your Uranium show. You've got Dustin Garrow. From the States. You've got Brandon. So that space is filling up with some really good, really smart commentators. Obviously, that's not working for us, so the pivot now is, let's talk about Mulga Rock. Let's talk about how it shapes up against our peers so people start looking around and going, well, who's going to be the next Uranium mine? You go, there’s not many. Here's one that's sitting there with an All-in Sustaining Cost that's comparable with the high-price Kazakh operations. Those are the things we need to hammer home. Those are the things we need to get out there and say to people, this is real. This will happen. You're going to see new messaging from us,  and that's the armoury. The bullets we've got now in our gun with the refresh there, it's a pretty powerful message to be out there talking about.

Matthew Gordon:  You've just talked about bringing a partner in so what's the plan for Alligator River?

Mike Young: The plan with Alligator, if you wait for free cash flow, you're years away from doing anything with Alligator. There is a good deposit up there at Angularli, which was at the same level of study and approvals as Mulga Rock. There's no doubt you'd be minding that one first because it's smaller, cheaper, you'd be underground mining that very quickly. We want to progress alligator. It's a great target but we don't want to dilute and just be an explorer. We want to be a developer. We have two choices: 1 - we just let that be until we have cashflow or when we go out and do some work. We do have an obligation to the Aboriginal people up there to do work on the ground because there is a cash flow for them. There is a certain amount of, I hate the term, but license to operate, to get on the ground. It's a good target to bring someone into. We certainly wouldn't go beyond 49% for a partner coming in. We'd want to maintain operation and control because it is a good asset. That's why we've hired KPMG - to explore those options, to give us the options. We're not going to have somebody come in and undercut us on that. We have an internal valuation on that based on the Scoping Study that was done, that's the valuation we'll stick to. If somebody comes in and wants to earn in, we'll let that happen, that way you can accelerate the process. 51% of something is a lot better than 100% of nothing. That's really the plan for Alligator.

Matthew Gordon:  When would you look to start those types of conversations and where would you be looking?

Mike Young: KPMG, we need to get into the data room, we need to start putting items together then we'll go from there. Timeline - I would think weeks and months, not months and years. But certainly, we want to start getting some nibbles before Christmas. Absolutely.

Matthew Gordon: Are you nervous at all about a weakening US dollar?

Mike Young: The US dollar, the AU dollar is always tied to commodity prices, with strong Gold and strong Iron ore, yes, the price of the AU dollar is going up. Gold booms and ore booms don't last forever. I've lived through, probably, 4 Gold booms since I've been here, 2 Iron ore booms. We've looked at long-term price, that's the long term from ‘23 onwards, we've set it at USD$65. If the price stays at USD$70 that reduces our NPV by about AUD$170. So yes, it has an effect on the project. Obviously, it doesn't change the US numbers, but again, it's one of those things I just don't know. Right now, our dollar is strong because we're seeing historic Iron Ore prices, historic Gold prices. But they certainly don't last forever.

Matthew Gordon: Mike, thanks very much for the update. It's been a while. Things are moving. Great news. Well done. Stay in touch, pick up the phone, let us know as things happen.

Mike Young: Thanks very much, Matt. You are a great service to our industry and we really do appreciate the work that you do.

Company Website: https://www.vimyresources.com.au/

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