Notes from the AGM (sorry for the wait!)

Hi all,

Apologies for the delay on this. After initially posting a few brief notes from the BAR AGM a few weeks back, and subsequently being moderated (!) I was a little dissuaded from posting any more. I then became swamped with work and it all seemed like old news. However, I've since decided that it is in fact worth doing as the BAR AGM turn-out was small, and seemingly no-one attended the CNJ AGM to be able to post anything about Mt Thirsty AGM discussions on that forum.

As such, below are some notes from both the Q and A’s the BAR AGM, and from a coffee-chat I had with Gary Berrell (Barra chairman) and Gary Harvey (Barra geologist) after the AGM. I also said a quick hello to the new technical director Sean, and asked him about his background – he seems like a confident and personable chap with a heap of the right experience...

I have only documented the most interesting parts of the discussions, and will leave my notes as-I-typed-them to give a sense of conversation flow (apologies if a few bits are doubled-up on what I have previously posted).  To avoid getting moderated I have been careful to seperate my notes. The bits in quotation marks are what the directors actually said, or as close as I could get to capturing the conversation – typing while listening and talking. The bits in brackets like [this] I have paraphrased to summarise the conversation, and then there are a few notes from me. There are bound to be parts of the conversations which I have interpreted incorrectly as we discussed a lot, so please treat all of these notes as a a broad indicator of the discussions, and do give Barra a call to check on any specific points, and on the validity of what I’ve documented if you are at all incredulous. Barra directors are easy to get hold-of, and they are always helpful.

Cheers,
Solarbat

Overview:

Presenting at the AGM were all of the BAR directors, and Sean Gregory, the new managing director/technical director and CEO was also present in the audience. The formal part of the AGM lasted ten minutes or so, but was followed by a presentation (now online) and a heap of questions and answers, then coffee and biscuits.

Most of the questions at the AGM revolved around the scoping study - why metal recoveries results were different to what was expected, and Mark Creasy’s PlatX – would there be an amalgamation etc, etc. My questions for Gary and Gary mostly concerned the MtT SS (why such high capital costs, and how is the JV working?), and gold projects (what’s next ).

In general I came away once again impressed (I was at the AGM last year too) by what such a small company is doing, and with the scale of opportunities in Mt Thirsty and gold. In particular it was good to learn more about the gold projects and the momentum building towards becoming a gold producer. My renewed feeling is that most investors (including myself) have had their eyes firmly on the Mt Thirsty project, but that Barra’s gold projects are greatly undervalued (and fair enough – they have been difficult for the market to value).

I think the really big news for Barra is Sean Gregory’s appointment as managing director and technical mine-planning and development lead. This is a step-change for the company. To put things in perspective, day to day operations at Barra has been just two people: Gary Harvey - a geologist mostly working on gold projects, and Gary Berrell - the chairman with background in investment banking, running the company and leading the Mt Thirsty project (along with Gary Harvey, other directors and CNJ). Sean has been brought in specifically to plan and develop mining operations (both gold and cobalt), I think he has the experience to make it happen, and he’s also got a LOT of options at stake if he does a good job.

Key questions and answers as I typed them up while listening.

Q: What is Sean Gregory’s role?

Director Grant Mooney. “…The last few years Barra progressing without technical management – CEO with mine development experience etc….Gary B has been doing a great job in maintaining the company, but Barra needed a technical director….this is a fundamental change in how the company has been operating..."Barra is now moving into mine planning...”. Garry B: “Sean also has experience in mergers, join ventures…” [Sean will be working on both the development of Mt Thirsty and Barra's gold projects, both planning and development. It is unclear how CNJ will make up for this extra heavy lifting being done by Barra on Thirsty, but there will likely be some quid pro quo from Conico. marketing and publicity would be helpful...]

Q: Scoping study – results not as expected. Why?

Gary B: “Mt Thirsty scoping study – must be viewed as ‘base case’…metrics will improve greatly…”

“…almost all  [of the scoping study] was outsourced…it will stand up well to scrutiny because the work is of a very high level and is much more detailed than a regular scoping study…[helping PFS to move very quickly down the track]…. actual Scoping Study [as opposed to summary released to ASX] is 303 pages long…”

“…metallurgical understanding is now very advanced…”  [I.e it’s now a question of tweaking the process – adding additional reagents to extract more, but core approach locked-in].

‘Extraction will get better for both cobalt and nickel.…this will significantly improve base case NPV’. ‘ …we know exactly how to improve extraction [just needs to be replicated and proven]…” Solarbat note: in recent CNJ/BAR video directors stated that Cobalt extraction likely to reach 80% and Nickel 35-40%, and that nickel could in fact become revenue = to cobalt.

On higher than expected Capex:

“…plant cost roughly $100Mil…so not much more that the $70Mil predicated [a few years ago] and a larger through-put than the $70Mil estimate [But investors confusing plant cost with total project cost [the recent $212 Mil]. Solarbat note: seems like the previous $70 Mil figure was not clearly-enough explained as only plant cost…

[due to requirements of ASX scoping study] “… JV needed to have 35% tolerance on some costs – which equated to tens of millions of  “…fluff…” in the SS, and well as other costs such as ‘Owners cost’ [anticipated cost of raising capital which would likely not be needed with off-take partner who pays for construction…so if JV goes down debt path. Broadly, the directors indicate there is a large amount of fat in the $212 Mil SS estimate]

Q: Is the JV in talks with Mark Creasy’s Platx (which owns the rest of the Mt Thirsty resource)?

Gary B: ‘We work well with Mark…there have been discussions with Mark [but so far no resolution] …there have been multiple discussions about merging the separate vehicles [the JV and Platx]…but we believe the current plan is the best way forwards for now…”…during discussions with potential partners the JV hasn’t been an issue at all [so off-takers un-phased that the project is jointly owned by BAR and CNJ]  …”

Director Jon Young/Director Grant Mooney: “…all parties [JV and Platx] agree that Mt Thirsty will eventually be developed as one plant, one operation…[but not ready to amalgamate yet]...would be too dilutive to IPO…. better to raise MCap value [via upgrading nickel and cobalt extraction] and move project forward [before any structural change such as an IPO]...”

Q: Can you please tell us more about the recent drilling at the northern deposit at Mt Thirsty?

Gary B “…that deposit is fairly new… [not yet sure how large it is]… ..Mark has done some drilling his side... it’s a work in progress. [What the JV can say is that] …the main [central part of the] Mt Thirsty deposit is, in size 2/3 owned by JV, 1/3 owned by Platx…”

Q: what does the ideal funding model look like for Mt Thirsty?

Gary B “…funding options – all on table. Key driver – minimise shareholder dilution. ...offtaker will be heavily involved…ideally they pay for work upfront, with quid-pro-que for later cheap price…”

[Side point] “…offtakes partners have shown themselves not to be so interested in equity in the JV on the ASX – they just want a guaranteed supply and a known price….” [hence a partner paying for mine in exchange for guarantee of supply at a good price may be more likely path]


Regarding gold projects:

Phillip’s find:

[We have recently] “...had a consultant overview the entire data set for Phillip's find [+ build 3D models]… [This is good for] ...for future planning – taking all the information out of [geologist] Gary H’s head..."

"....33,000 from 3 small pits recently [last 5 years? Need to check this] could easily do this again..."

“…All pits have been re-mapped – key structural plunge zones identified…”

[Now plan to] “… aggressively drill PF pits to see what’s further below them. All are open…”

[Also] “… 10km of new untested strike – shallow oxide targets – at ‘Truth’ target area at Phillips find…”

[G+G seem confident, about finding half a million ounces between both projects (from recent review of all sites)]


Burbanks:

“…five priority targets at Burbanks – all potentially huge, all need to be better understood…” Solarbat note: see AGM presentation on this work - 3D visualisation.

“…continuing recently purchased Burbanks decline ramp to access Mainlode is likely to be economically viable - affordable because it can be done while mining gold along the way to pay for the work …[the basic plan is to extend the decline ramp to access level 8, then use it to get a mobile drilling rig underground to drill Mainlode = much more cost effective than drilling all the way down from the surface]…”

Discussions with Gary Berrell and Gary Harvey over coffee:
Q: Why is manganese not included in the Scoping Study?

Gary B “At present the processing plant cost outweighs return…” [However this could be re-visited].

Q: The market clearly didn't buy the scoping study, so given JV is so positive about it, what are you doing to prove the market wrong?

Gary B: “…building on the base case…[New MET tests for cobalt and Nickel] three - four months for test results…expecting significant improvements, especially in nickel extraction…we know what the results will likely be, we just can’t say yet because not yet proven to be replicable…” Solarbat note: see figures suggested in video.

Q: If the Mt Thirsty resource grows, would the ideal be to extended life of mine or increase size of mine?

A: Will be a mix of the two - increase throughput + extend mine life.

Q: The JV’s other nickel sulphide mineralisation – viable at increased Nickel prices? Next steps here?

Gary H: “…expensive to research [drill] – on backburner for now...” [but possibility of potential buyers doing a JV with Barra to pay for the resource exploration]

Q:  How will the two JV companies continue to work together?

Gary B “…relationship going very well…. talk daily with CNJ, meet every week…everything managed together….forming one company – an IPO – would be far too dilutive at this stage....much better to build MCap of both companies so in an amalgamation [of Thirsty ownership, JV and Platx...] shareholders get more value…

Q: What’s next with Barra’s gold projects:

[… exploration of key zones identified on Burbanks graphic and studying Birthday gift opportunities. Kidman recently developed two new stopes (horizontal tunnels) to near mining stage. Barra to explore viability of re-starting this work, plus possibility of a shallow oxide pit near Main Lode – in between Main Lode and Birthday Gift…]

Gary B “…a few million spent was spent on Birthday Gift [by Kidman since it was sold by Barra]…additionally it now has JORC for 95,000 ounces!”

END

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