Sunday, July 19, 2015

Bronte Capital is hiring a graduate

We are a small growing hedge fund based in Bondi Junction Sydney Australia making our third external hire. We run our portfolio long-short with longs being (mostly) traditional value investments and shorts being (mostly) an assortment of stock promotes, frauds and failures.

The successful applicant will work mostly with me as a graduate-trainee stock analyst. As we run global equities international travel will be involved.

This blog has a global readership but unfortunately I have to restrict applicants to people who already have a legal right to work in Australia.

The primary requirements are that you are (a) very bright, (b) interested in the investment process and (c) most importantly curious. The job will give you endless opportunity to be curious.

We would like some business experience - however we are very willing to hire straight out of University - and we are happy to delay your start date until you finish your coursework.


Bronte Capital does not feel like a traditional financial firm. Our stock selection criteria are non-standard, our dress sense is casual (to a fault), and we are situated above a shopping centre and not in the central business district. Our hours are highly flexible (though often quite long).


Our dream candidate has a ridiculous list of skills and we understand that nobody will have all of these. However we are interested in candidates who have some of the following:

(a). Curiosity - especially about the workings of business and technology. Our interests are very diverse. If you are curious about what determines jet engine efficiency that is interesting to us. If you are curious about how hair dye is marketed that is also interesting to us.

(b). Competent science education. We would prefer a science based degree to a finance/economics based education (even though our ideal candidate has both). What we really want is a bullshit detector - and that can be numeric (as in the numbers make no sense) or scientific (as in that is flat nonsense and here is the falsification) or a combination of both.

(c). Languages. We are a global fund but we have shortcomings in some jurisdictions where English is not the primary language. We have a Mandarin speaker in the team already. However German, French and Japanese would be looked on favourably as we lack these skills and they would be useful.

(d). Enough computer skills to handle the odd largish data project (though our first hire also had considerable computer skills).

(e). Demonstrated interest in the investment process.

We are grade sensitive. Unless you have at least a handful of Distinction grades in a variety of subjects you are unlikely to get the job. We do not require high grade averages. Someone with a handful of High Distinctions in subjects in which they are interested and otherwise pass grades might be a good hire so long as their interests overlap with ours. Curiosity - even in grades and subject selection is valued.

Pay will be competitive. Bonuses are possible depending on a combination of your performance and our performance.

Applications are due by Friday 14 August. Please send these to the email address in the blog and make the subject "Job Application". [I will sort email on that subject.]


Process explained: I will be sorting the applications on the weekend of 15-16. We will offer a largish number of very short interviews in the following two weeks. If you can attend in person that would be better but is not compulsory. Skype is acceptable.

With the last position I interviewed about 40 people but most interviews lasted only five minutes at which point we told the candidate we did not think it would work out. We preferred less conventional candidates and so we chose to interview widely (and reject readily). We don't want you to take it personally (and it most certainly was not meant personally as many fine people applied).

Less conventional candidates however are encouraged to apply. This process will at least give them a hearing that they might not get from a recruitment consultant.

A handful of short-listed candidates got second interviews. We expect to repeat that process.

Negatives working for Bronte:

To be entirely fair to applicants we should spell out what we believe are the negatives working for Bronte.

The first is that this is a very small team. If you want a large organisation with wide scope this is not for you. You will be trained well but it will be a narrow training as we cannot hand you from department to department giving you a feel for how big organisations work.

The second negative is that being a small organisation you are inevitably "long" us as we will be "long" you. There is career risk. This can be good and bad. If you do well and we do well it might be very good. If either of those things don't play out this might wind up being a bad career choice. We are fairly sure we will do well - but that is a decision that you are going to have to make and a risk you are going to have to take.

Thursday, July 2, 2015

Sirius Minerals: Financing will be a serious challenge

Sirius Minerals has just received approval for their polyhalite (potash) mine under the North York Moors National Park.

The stock was up about 50 percent yesterday and the market cap is now about half a billion pounds.

Now they have the small matter of financing the mine, building it and operating it to specification.

It is a big project. Here is the corporate video:

The mine is roughly 1500 meters deep and workers need to descend by very long shafts.

The video proposes mining with continuous mining equipment (long-wall coal would be an analogy - but coal is never mined that deep).

Longwall equipment is expensive to maintain.

The rock at York Potash looks pretty hard. Moreover deep mines have all sorts of problems (eg the rock in the wall simply explodes as it is depressurised) and the mines are usually fairly hot.

Deep mining is - usually - difficult and expensive. Hard rock leaves high maintenance costs. [Polyhalite is 3.5 on MOHs scale, a lot harder than coal but not truly hard.]

Still, according to the company and its feasibility study this will be a very low cost mine. The feasibility study gives costs as follows:

Yes, that is USD36.9 per tonne in operating costs. Net of processing at port the cash costs are USD24.9 per tonne.

Now I like to compare this to iron ore operating costs.

Iron ore is pretty simple to mine. It comes in large open cut seams, you don't do much to it and you load it onto trains and then to a port. Moreover it is done on huge scale - hundreds of millions of tonnes per year - which tends to lower cash costs (per tonne) dramatically.

Still York Potash estimated cash costs are about the similar to the West Australian ultra-large very low cost iron ore mines. [The linked Sydney Morning Herald article questions the viability of iron ore mines at prices around $35 per tonne.]

Sure some iron ore mines have lower cost than that - but the cash costs cited here are consistent with mega-scale open cut mining, not mining 1500 meters underground. The cash costs that York Potash suggest are in the range of the lowest cost large scale open-cut mining operations in the world.

The management of Sirius came from Fortescue - a giant Western Australian iron ore mine. So they must have learned something about low cash cost mining.

I am just wondering how they do it. Because without a reasonable explanation as to why this is just so cheap I am not buying it.

Count me out of the financing. Financing and building something that cheap to run is going to be a serious challenge.


PS. There is a mine (Boulby) owned by Israel Chemicals operating about the same depth in the same area. The cash costs are likely to be in the mid-200s per tonne.

PPS. If you want to understand the challenges of mining hard rock really deep this Wall Street Journal story on mining in South Africa is instructive. [The proposed Yorkshire mine is about a third of this depth and probably in less brittle rock so the WSJ story overstates the problems that York Potash might have.]

This South African mine has thousands of staff and removes 6,400 tonnes of hard rock per day. By contrast York Potash intends on removing 35,000 tonnes per day at much lower costs.

Still this is what the WSJ has to say:

A deep mine is a truce that will always break. Mining at depth makes rock unstable. Every day at Mponeng mine they detonate 5,000 pounds of explosives. Every day they take away 6,400 tons of rock. The laws of compressive force dictate that the rock will try to close the spaces left by mining. To prevent this, engineers backfill stopes with rock and concrete. They reduce rock stress at the mining face, "softening" the rock before they blast it by drilling complex patterns around the blasting holes. In one deep mine they "fool the rock" by drilling out six-foot horizontal slots above the stopes. Since stress propagates through rock, but not through space, the empty spaces hinder the transmission of stress. 
In tunnels, yard-long rock bolts anchor the unstable rock on the tunnel roof to the more stable interior of the rock mass. Patterns of rock bolts inserted in clusters are said to "knit" the rock together. Wire mesh and sprayed concrete stabilize the tunnel walls. Seismic sensors in the mine detect tremors at the first twitch, warning men to leave the rock face. 
Earlier the article indicated just how much force rock explodes with:
Some of the rockbursts had been so powerful that other countries, detecting the seismic signature, had suspected South Africa of testing a nuclear bomb. 

Whatever, despite extreme depth and the problems that arise Yorkshire Potash will not be expensive to operate. The feasibility study suggests this is all going to be done for open-cut mine cash costs.


For mine opponents there may be no need to lament the decision to mine. With this sort of financing and engineering requirement I suspect the York Moors National Park is fairly safe.

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