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AGM 2017: Summary and Analysis, page-6

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Northen_munky

10,530 Posts.

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10/12/17

11:21

Post #: 29514998
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Originally posted by Trommel ↑

Part 3
Bear case study:
View attachment 872645

Mid-range case study:
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Bull case study:
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AGM continues

At this point FP turned attention to the remaining two battery factory developments in Magnis’s expanding battery-energy supply chain presence.

Dr Stephan Spruck: “Germany depends on the automobile industry”

Here FP introduced Dr Stephan Spruck (SS), who has been engaged by Magnis as our ‘European and Middle East Consultant’ for the ongoing negotiations in Europe. Given his background he’s doubtless also playing a key role in the Imperium3 project in that ‘country in the Middle East’. SS’s company Mastermind Consultants is in Dubai, and for many years he occupied senior executive roles for Aston Martin based there. He appears to have considerable experience throughout Europe, the Middle East and Asia.

SS briefly re-iterated what UB had to say about the opportunities inherent in the EV-expansion in Europe. He noted that Germany relies fundamentally on its automotive industry, in both an economic and therefore a political sense. One in every ten jobs in Germany arose from the sector, and the German government has earmarked about a billion Euros for the EV-battery industry, as part of bulwarking its future; across Europe, the number is towards 5 billion. This in turn carried with it immense ‘future supply chain’ implications, with the German government, he said, particularly ‘frightened’ by the current global dependence on China for graphite. Like the US, European governments have declared it a ‘strategic commodity’.

The result SS said was a very fertile environment for prospective battery-energy sector entrants, who are able to bring to the table anything that will help create alternative supply lines. Magnis Resources is well positioned in this regard, he said, and this was already being borne out in the two supply deals we have successfully negotiated.

TerraE Holding Gmbh Battery Plant – Supply of raw materials
In August Magnis announced the signing of an MoU to supply ‘raw materials’ for a planned 34 Gwh production output across two new Gigafactories locations in Germany, aiming for initial production by the end of 2019. The TerraE consortium consists of 18 major German companies and institutes. At the time the TerraE CEO noted the importance ‘…for TerraE to secure material supply long-term with strategic partners’.

GigaFactory North Rhine Westphalia

In October the company announced an MoU signed for a 30GWh LIB Gigafactory and recycling plant integrated to one of Europe’s largest industrial clusters in the Emscher-Lippe region of Germany. This project is a North Rhine Westphalia government-backed Public Private Partnership with WiN Emscher-Lippe GmbH, whose members include energy and chemical giants such as BP, EVONIK, E.ON and SABIC. Here Magnis is to source ‘raw materials and associated technologies’, and ‘assist with general project development and management’.

SS noted that detailed negotiations on both were continuing well and that he was optimistic the company would announce some initial phase government funding in the near future. He was not able to give an indication of when binding supply contracts would be signed but in response to a SHQ on the role of Nachu graphite (in terms of our negotiating power), he saw absolutely no reason to doubt that such would occur well ahead of projected production timelines. “You have the high graphite quality, and the mine production timeline fits…” He also noted the growing source/supply flexibility in Magnis’s corporate repositioning.

SHQ: On the role of home storage (ESS) in the expanding European demand.

SS heartily agreed that in Europe, quite aside from the expected EV side, the additional demand pull from home storage batteries would be a significant – and unpredictable – demand factor.

By now it was getting towards midday and FP suggested it was about time to wrap it up. Before he did however he introduced an incoming appointee to a ‘Marketing/Investor Relations’ role.

Travis Peluso: Selling the new story

Travis Peluso (TP) is already known to many SH, as a long term, significant holder. He has an extensive background in consumer, investor, business strategy and corporate relations, with a focus in telecommunications, including various key roles at both Telstra and Optus. FP said that in recent weeks TP has joined the company investment presentation team, as the focus on locking in more significant funding has intensified. FP commended his communications skillset, something several AGM attendees who’d experienced TP’s contribution to the company’s recent corporate pitching enthusiastically confirmed. As FP said, we are now at the point where the overall strategy is well in place and the growing array of individual projects within it are crystallising into reality. The added capacity to synthesise ‘the Magnis Story’ clearly and concisely that TP will provide is very timely.

AGM Informal Presentation and Q&A concludes
Finally, FP again thanked all for attending and reprised his opening remarks: that this is a ‘hugely exciting’ moment for the company, in its new guise: both energy-graphite mining company and battery-energy technology company. The key, he repeated, is that the two roles are fundamentally linked and in fact inseparable, and the success or otherwise of any company seeking a lucrative role in ‘enabling future energy’ will turn upon its Board and Management recognising that fully, and repositioning their company deftly, ahead of the full impact of the energy marketplace disruption now quickly approaching.

Our Chairman concluded by noting simply that he felt more confident every day that Magnis Resources has done, and will continue to do, both superbly.

A few final thoughts:

Post-AGM: The corporate ecology continues to ‘fill out’

Since the AGM there have been a few further developments in keeping with what we learned there. We have had:

An update on Tanzania: The company announced that it had met with government officials, who expressed their continued backing for the Special Economic Zone arrangements, commending Magnis’s continuing public support for exactly that (entirely-understandable) Tanzanian desire for in-country value-adding and industrial development, which lies at the heart of their dispute with Acacia. It’s hopeful that regulations arising from the law changes will be finalised by year’s end, which, given our ongoing ‘constructive dialogue and relationship’ and the modest differences in our existing arrangements anyway, gives confidence that Nachu clarity isn’t far away.

Expansion of G sourcing/supply/binding offtake potential: The same announcement underscored the company’s actively expanding role in the overall graphite supply chain, reporting it had identified ‘multiple potential sources’ and ‘multiple opportunities’ (including for ‘binding offtakes’), for the provisioning of high-quality graphite supply, for both battery anode and non-battery speciality uses. There is in particular ‘strong interest from a number of parties seeking to source Jumbo and Super Jumbo’, and the company expected to be able to ‘report on binding off-takes shortly’. FP noted how ‘This strategy of diversification significantly derisks Magnis and gives greater optionality.’

25,000 ktpa Sales Agreement with World Group: The Announcement last week of a 3-year sales agreement with World Group subsidiary World Plastik ve Petrokimya ve Sanayi ve Ticaret, for 15,000 tpa Super Jumbo and 10, 000 tpa Jumbo, with Magnis able to supply from either Nachu or other suitable sources, and ‘at overall prices that exceed those in the 2016 BFS.’

The just-recent update on North Rhine Westphalia, including the additional information of a Magnis ownership stake.

Again, all this is entirely consistent with the unfolding corporate strategy as outlined at the AGM: flexibility and agility in seeking multiple supply chain entry points, creating diversity, depth and width, constantly de-risking.
Political certainty in Queensland/Townsville FS: The re-election of the Palaczszuk government confirms the $3.1M for Townsville FS. With the political landscape now settled, and given the ALP’s support for the project and the clear electoral signal about Adani’s coal/rail project in the strong Green vote, Townsville’s public funding prospects are likely enhanced further.

Developments to come: What news in the near future? A few possibilities:

- Public funding, say for FS, for German factory project/s
- More details (DFS/term sheets?) for the NY battery sales
- Announcement of Imperium3 gigafactory project in ME
- Clarification re: Tanzanian MDA
- Further graphite sales/source/supply deals
- Update on Rosatom
- Funding announcements!

Again, any/all these would fit well into the strategy outlined at the AGM.

Summary: Magnis Resources on track to Enable Future Energy

It’s a hugely ambitious vision. And we’re a speculative junior graphite miner in Africa! Why would the Board attempt such a transition? And why is our ASX share price less than half now what it was at its to-date peak, before the company set out to shift corporate gears like this?
As longs, the second question has never interested us much, just as MC and SP fluctuations have never been a Board obsession. For what it’s worth we think that the ASX has simply yet to recognise the scale and scope of the energy-market disruption ahead, and thus the implications of Magnis’s steadily-accumulating recent Announcements. We think the graphite marketplace remains stuck in the past, wedded to the old metrics. We think investors only need to look at the tenacious SP/insto support of sector leader Syrah, with its lower quality ore, to get a sense of that. We think that for all the speculative obsession with it in recent years – and for that matter lithium, and now cobalt – most graphite sector participants and observers have yet to see the ‘big picture’, regarding either the disruption to the old marketplace at hand, or what assets a company will really need to thrive in the very different, hi-tech, graphite-battery-energy version that lies beyond it.

We think Magnis Resources has accumulated those assets:

1. A start-point graphite ore of the highest purity with flake size distribution maximising optionality, within a sustainable, ethical mining project
3. Environmental/dollar-cost competitive, IP-protected concentrate processing
4. Integrated, competitive, IP-protected value-adding to anode feedstock
5. IP-protected, material & cost-competitive electrochemical optionality
6. Organic, interactive, ‘joined-up’ company control of 1 – 5, maximising the ability to remain at the leading edge of fast-changing supply chain
7. Wide, heavyweight corporate footprint, to maximise embedded presence

We think so, anyway. But as holders, we would say all that! So: DYOR. And GLAH. Thanks a bundle for reading right through, good karma to all holders of all stocks in this sector…and remember: it’s only money! At the end of the trading day, brethren all, there are far more important things in life.

DISCLAIMER REMINDER: Please re-read those we noted at the start.

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Crackin' stuff Trom..Thanks for the effort very much appreciated...

MNS on the cusp of a wave......

Laters..

MNS Price at posting: 43.5¢ Sentiment: Buy Disclosure: Held
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