2019 AGM: summary and analysisHI ho, Maggie brethren all. Popped...

2019 AGM: summary and analysis

HI ho, Maggie brethren all. Popped out of the sauna a while back to attend the AGM, leaving Katie, Kylie, Kirstie, Kandy, Chystal, Kristy, Misty, Missy, Miffy and Big Mike the Retired NRL Prop to keep the steam levels high for my return. Down nearly 1000% from our graphite era high and it was always going to be an interesting clan gathering, so I suspected I’d need a good birching on return. I’m not an obsessive share price watcher but I don’t live on Mars, either. I was hoping to get a good chance to assess how the Board is travelling with it all. I wasn’t disappointed, and as I noted immediately afterwards, I’m happy with everything that came out of the meeting.Before you all start throwing rocks at me on this forum, especially those who are not happy at all…let me give you my take on it all, in the manner of AGM’s past.

Disclaimer

What follows is my good faith summary of and some thoughts on the AGM. The usual disclaimers apply:

1.None of what follows should be regarded as official company information in any way, shape or form. It’s my best recollection of events, based on some notes (less comprehensive and ordered than usual, because it was a very dynamic meeting) and my memory, which is far from perfect.

2.Where I ‘quote’ any Board or Executive statements, it’s NOT verbatim, or in any way authoritative. It’s just a paraphrase, in the best faith I can manage. If in doubt and/or you want official company information, go direct to the company. You should check and double-check everything from the horse’s mouth for yourself. In my experience the company is open, fast and professional in its response to all shareholder queries.

3.IAW HC ToU, none of this should be construed as investment advice in any way, shape or form.

4.Happy to engage in amplification where I can, and to some degree debate…but please: I don’t have the time or energy to get involved in pointless argy-bargy about the relative merits of my investments versus yours. I’m also not going to get drawn into slagging off any of our Board or Executive. I’m a Magnis investor, a big believer and supporter, in it for the long haul. I wish you the best in your decisions, too, whether you’re a spec stock day trader, a tech chart guru, a miserable shorter, or Warren Buffet. Everyone should DYO, make your own calls. I wish you nothing but GLA, especially if you’re in the speculative new energy space. We’re all in this together, folks.

My skin

Without wanting to bore anyone with pointless narcissism, I’m currently a modest-level, five-year retail SH with no connection to the company or its office-holders beyond the unremarkable casual acquaintances you develop as an investor in a small speculative concern, if you’re engaged, available to attend meetings like this, and diligent in doing your own research by direct communication with its public interfaces. I hold a few hundred thousand shares and like most of us I’m thoroughly in the red with them just now. I’m no big $$ swinger, breth, just another retail investor hoping to hang in there and watch my modest Magnis stake build into a nice retirement add-on, without cooking the planet while I’m at it (so my teenage kid’s kids can have nice air to breath and clean beaches to surf at, too). Of all the new energy start-ups around I still reckon Magnis is the ‘Standard Oil’ speccie of our times to hitch a ride on. Could be I’ll end up having ridden the wrong horse, but that’s the game we’re all in. If I wanted a quiet investment life I’d have bought BHP. Like, you know, the three whole shares I could afford.

The formal business

Held on Halloween (boo!) at the BDO offices at 1 Margaret Street in the Sydney CBD, attendance was solid - I counted a shade under 100. The usual glossy Annual Meeting Presentation, available online and also covered in MD Marc Vogts’s Presentation/defacto Q&A later on. The Chairman declared the meeting open at 9.30 sharp and handed over to Director Jacobs to conduct the Resolution formalities. In keeping with AGM rules the opportunity was given to ask questions and engage in discussion for each one, and plentyof that ensued. Before I get to it, the resolutions were all carried, most with overwhelming majorities.Some however were less supported than others, and these also generated the most discussion. Accepting the Remuneration Report overall was about 90% for, 9% against.Re-electing the Chairman was similar, about 92 for, 7 against. And the Consultant Issuance instrument (Res 6) was passed 90/8.8%. The results are online, double check them at will. I'm miles from infallible!

The themes of most of the questions and then discussion over the Resolutions seemed to me to group around three strands:queries about re-electing the Chairman (in the context of what at least some SH see as a lack of any significant progress IAW the company’s strategic framework); queries about what some see as a lack of clarity and transparency regarding Remuneration Committee processes and particularly performance metrics associated with the issuance of options; and queries about what some see as a lack of clarity and transparency in the use of the facility to issue options to Consultants. The discussion between SH – really just three or four, in particular - who articulated their concerns to Director Jacobs, with other office-holders contributing,was too dynamic to record accurately, but some of the general questions/responses were:

SHQ (shareholder question):what are the performance metrics attached to all these options?

Concern was expressed at the perceived lack of clarity regarding both the number and the selected strike price of the various options Resolutions had granted.A few SH pointed out that the company’s strategic advance – lack there of – against its own stated ambitions demanded a rethink of the use of Options as part of its incentivisation package. There was an implicit suggestion that more concrete performance metrics should be included.

The Chairman dealt with the core of the concerns by reminding SH of the mechanism and the philosophy underlying option issuance in non-revenue speculative stocks. In the absence of any meaningful capacity for – or the fiscal prudence of -benchmarking Board and Executive performance against harder operational KPI’s, Options remained the optimum current mode of remunerative incentive. The Chairman pointed out that Options are worthless to the recipient – and can thus have no impact of SH dilution – unless and until their strike price is exceeded by the SP, or at the very least, is within financially-viable proximity of doing so. Inherent in a strike price of, for example, 0.70 – set when the company SP is in the teens - is the recognition that any reward-worthy performance will be reflected in precisely the advance of the strategic plan that will have lifted that SP to 'strikeworthiness' ie it will have equally benefitted us all. Put another way: the Options issued at this AGM will only represent a reward if the share price inherently reflects one being due.

A later query about the possibility of adding an additional (hard) timing metric to these Options – the securing of project funding by the strategy’s ‘aimed-for’ timeline aspiration – was rejected by the Managing Director as adding counter-productive, unworkable complexity to an incentivisation approach that he had often witnessed work to optimum effect, in his long experience in many different companies. He noted that adding set hard dates for operational outcomes in the inherently uncertain pre-construction/producing phases of any project, to Options that already carry a time-based expiry date anyway, simply risks adding unrealistic and diffusing distractions to clear-eyed, disciplined Executive decision-making. Recently plenty of Options have been allowed to lapse, the Chairman noted, the point being that these had turned out to be represent neither a reward to those to whom they were issued, nor any dilution of registry holdings.

It was during this discussion that one older shareholder pointed out that for him time pressures were pretty relevant, since obviously he was hoping to realise a decent return on his investment before he dies. The MD acknowledged his point but also noted (accurately) that the bloke seemed to be in pretty good shape. Marc Vogts wasn’t being flippant, but it was a reasonably firm yet empathetic way of reminding everyone of the nature of speculative investment: that there are simply never (nor can there be) any time ‘guarantees’ on how long speculative projects will take to get going - or in fact will ever get going at all. And thus, those of us who do take the punt on them just have to understand and accept that inherent risk, and factor it into our own investment choices and decisions, including any timeline imperatives that may obtain to each of us.

Analysis/comments:This aspect of the discussion threatened to get bogged down in teaching everyone how to suck eggs. SH all know how Options work. Magnis has used this particular incentive device to excellent overall effect in my time as an investor, particularly in the context of careful husbanding of limited cash resources. I am totally comfortable with its continuing feature in our remuneration array. I’m no spring chicken either, and, sure, this time last year (and the year before, etc) I was hoping to be a lot further advanced at ‘the next AGM’ than it turns out we are. What matters to me is where we are now, however, not where we hoped we’d be now a year ago, and whether or not I still think we are heading in the right strategic direction, including how our funding prospects now look. This is speculative investment, breth. The anxiety about ‘when’ our investment is going to make us all rich is understandable, but it’s just not the way this end of the stocky works. If the company could guarantee exactly ‘when’ our SP was going to take off, they’d have ASIC knocking on their door first thing tomorrow, because the only time any speculative company can ‘guarantee’ its registry anything on SP is when it’s naughtily breaking a whole lot of rules. Suck it up, or invest in the flannel-slippers-and-pipe end of town.

SHQ: please explain the thinking and the processes ofthe Remuneration Committee.

OK. As much as it pains me to air less than crispy-cream-starched linen publicly, it would just be coy not to acknowledge that things got a wee bit awkward when a few SH sought to drill down into the working of the Remuneration Committee. It became apparent that there was a lack of clarity among the Board here, with brief uncertainty about who was on it, and whether or not it had even met, in determining the various package resolutions. It transpired that the Remuneration Committee had met, but on an ongoing and informal basis, throughout the year.The Board did acknowledge that this perhaps wasn’t ideal, and Director Hosking made a clear commitment to addressing this and tightening governance a little here.Fair enough. And it also has to be said that there seemed to me anyway to be an element of ‘ambush’ to some questioning, with SH perhaps asking questions to which they clearly knew the answers, with the deliberate intention of embarrassing the Board. I could be wrong, but it needs to be flagged as a possibility at least, for SH to consider for yourselves.

Analysis/Comment.While not ideal to contrive these kinds of public confrontations – especially at a time when the Board is seeking funding, the company is tight for operating cash and the SP is especially vulnerable – the core of the concerns were not altogether illegitimate. One of the key functions of AGM’s is indeed to give SH the opportunity to add some ‘recalibrating’ perspective to internal governance procedures which, in a small speculative concern juggling a lot of balls in the air, can easily become looser than they should be, purely as a result of resources being stretched. The reality for Magnis is the same as for all speculative companies seeking to develop a global strategy. Individual Board and Executive members are busy pursuing disparate multiple strands of activity, often widely dispersed and administratively and logistically disjointed. Missing dotted I’s and crossed T’s in governance matters aren’t uncommon, and are in no way automatic hanging offences. In my view while briefly a bit uncomfortable for the Board, it was perfectly healthy here that SH discussion resulted in a clear commitment to keep a closer eye on routine processes and procedures, and tighten them if/where prudent. No-one ducked any of the concerns expressed, and overall I thought the Board response was reassuringly frank, and procedurally solid.

Equally, IMO, all SH need to keep this in mind: it will be hurting only our own interests to regard what was really a fairly contrived ‘gotcha!’ moment as anything more. I have no concerns overall about the standard of governance at Magnis. Anyone who does should – and I presume that all do anyway, right? – simply be diligent in your individual communications with the company. Doing this should allay any fears that you’re somehow getting ‘ripped off’ in any way, if that is your concern. Ultimately if you think you’re not getting your money’s worth from our team, you have the option of selling. That’s not advice, btw. It’s just a statement of the blindingly obvious.

SHQ:Some specific querying of particular Remuneration (Consultancy instrument)

The above analysis also applies to a couple of queries from a couple of SH about specific Remuneration elements. Bluntly, queries were expressed in the general discussion hubbub about consultancy payments over the last year to Director Tsegas, and consultancy arrangements involving the Chairman, via the contractual arrangement we’ve maintained for a long time now with our IT/Support provisioner Strong Solutions. Part of this hubbub included a request by a couple of SH to read out some specific questions that a non-attending SH had submitted to the office.In response to this the Chairman was firm in pointing out the company’s legal obligations wrt to this highly irregular request. The questions weren’t read out; the Board assured SH that the individual SH’s queries would, as ever, be responded to in the more appropriate, direct and indeed good governance-obliged manner.


Analysis/CommentMy position is crystal clear on this sort of ambush. If you have an awkward question that you want read out ‘publicly’ at an AGM, then you should attend and ask it yourself. That is precisely the point of AGM’s. They give unhappy investors – those who can be bothered to show up – the opportunity to air their grievances like adults. It’s a fair, equal and transparent mechanism and there can’t be any compromising of it by Boards or Executives. Whatever the concerns of the SH the impact of seeking to get ‘someone else’ to air them by-proxy served only to make the whole exercise look pretty cynical, however well-intentioned the SH might or might not have have been. No-one – absolutely none of us – gains from any AGM contribution that fosters innuendo, rumour or suspicion. This space – the speculative new graphite/battery energy sector - is already snidely and destructively competitive enough. All just IMO, on long-view reflection, and FWIW.


The wider general question – value-for-money when it comes to speculative stock Boards and Executives – is a legitimate one, but it’s worth keeping in mind that investors see very little of spec stock day-to-day operations. The work that is actually done, 24-7, by this or that person on the payroll. It’s truly shooting yourself in the foot with a speculative project to conclude that a lack of strategic progress equates to a lack of work done, effort expended or performance obligations met. In our case, any SH who has even a bare acquaintance with the terms and conditions that Director Tsegas has played a key role in securing for our Nachu strand in Tanzania over the last several years of local disruption, or the totality of the strategic context we are developing that is in no small part due to our Chairman’s clarity of vision and focus, should seriously reflect on whether public ‘implied nit-picking’ of the kind we glimpsed at the AGM is either justified or – the real point – constructive going forward.I’m a strong supporter of our team’s efforts to date and very comfortable with what we’ve paid for it, and how we have done so. Again: if you have a different view you have the option of investing elsewhere.

Substance of the company’s disposition and going-forward strategy

At this point – as was the case for most of us at the AGM – I’d much prefer to move on from governance, remuneration, progress against past aspirations and value-for-money quibbles. It was in my view really unfortunate that so much – too much - focus and time was lost to these aspects, when really what matters is where we sit and where we are headed. As I said in my introduction, the nature of this AGM's ‘Q and A’ session was less ordered than in the past, and thus, my note-taking and ability to pass on to non-attending SH’s a clear picture of what we learned was degraded.That’s a pity, because once he was able to move us beyond these early discussions, Managing Director Vogts conducted the main Presentation with a great deal of clarity, coherence and focus. For all the doom and gloom of a share price that’s clearly hurting just now, in fact the company and its prospects are in great shape, and entering a truly exciting phase of development.This is especially the case given the broader strategic investment and energy sector climate, on which I’ll say more a bit later. For now, let me suggest only this (not advice, just my view): long-suffering shareholders who decide they can’t just hold on any longer would be departing the dance floor just as the band is warming up.


Three immediate key strands

As the Annual Report and the Presentation made clear there are three key elements of activity in the immediate future, within the wider context of our global aspirations, and I’ll limit discussion here to those. The online Presentation adds ‘prospective’ battery plant potential in South Africa, Europe, India, Vietnam and the Middle East to these, reflecting our longer-term global network ambitions, but for now the focus is on developing our projects in Tanzania, New York and Townsville.


Nachu graphite mineEarly in his Nachu update the MD popped up a slide of local workers clearing Nachu access and community diversion roads, and used it to make the following point, which reflects his long experience in Africa.Particularly given the last few years of mining sector change there, it’s absolute critical to ensure that the company maintains a local ‘social license’ for the project that will eventually commence. By this he meant the careful maintenance of good faith with the community that will be most impacted. This includes – during the period of relatively little more substantial work as we seek funding – maintaining a local workforce, giving them paying jobs with our company, making real and ongoing now the greater promise of what’s in prospect down the track. He noted that ‘we could probably have done this work in a few days with dozers’, but extending the work more widely serves the purpose of sustained community engagement, buttressing trust and reciprocal enthusiasm for our mine. This isn’t simply a box-ticking exercise in CSR and PR, it’s a hard-headed and encouraging indication that we are absolutely approaching Nachu as a long-termproposition. We ARE going to dig our exceptional-grade graphite up, and we are determined to do so in a way that is genuinely of benefit to Tanzanians, too. (Again Director Tsegas's role here has been pivotal.)

Although it might seem from a distance to SH that ‘nothing much’ has advanced on Nachu, that is anything but the case. Land compensation was completed in January, and the Presentation sets out what we are hoping to advance in the next six months – funding, obviously, but also finalisation of terms, EPC processes, water and gas arrangements, and resettlement village construction. The intention is to commence construction in Q1-2 19-20. Ambitious, of course, and utterly dependent on funding. At various times the MD acknowledged the funding contingency inherent in all this, resolutely resisting any ‘guarantees’ beyond that the company will continue to pursue every possible option with utmost professionalism.

Analysis Anyone who demands or expects more than that with respect to Nachu construction getting going at last is simply not being realistic. Building a mine from scratch in a developing economy with a thus-inherent degree of unavoidable sovereign risk isn’t like buying an investment property in Sydney or Melbourne. You can’t just drop into the bank and get a loan. You’ve got to make your project’s case and then fight that case daily, demonstrating to potential funders not only the fundamentals or even BFS viability. You have to show your serious long-haul intent and capacity to de-risk future contingencies, and the patient building of our trustable presence and intentions in Tanzania is a crucial component of that. Those local Tanzanians aren’t just building us a road, they’re helping us build a permanent mining presence.Frustrating as the sliding timelines for Nachu construction and production may have been – and may continue to be for some time, for that matter – the only way to get a big project like this up and producing properly and productively for the long haul is to take exactly the amount of time that it takes you. We all know how vast our tenements in Tanzania are. We all know vast will be the feedstock appetite of our ambitious global battery factory network, and the world’s appetite for its output, if we can get it up. I see no reason to rush Nachu, and every reason not to simply for the sake of our current share price doldrums. Marc Vogts has done a bit of mining in Africa in his time.He knows how to do it to very best effect, including exactly long that needs to take.


SHQ/discussion. There were queries about the mix of funding, as ever. Again all the possiblities – debt, equity, mixes etc – would appear to be being pursued. The company was circumspect about details and I make the point (again) that the ‘Q and A’ bits were more muddled than usual, SH’s tending to blur the lines between the three ‘live’ project strands, when discussion of funding progress was addressed in particular. The general anxiety tended to be about funding for ‘anything’, and for that reason anyone who can add more specific Nachu funding information that came out of the AGM would be welcome to do so in the comments.Some SH were of the view that we should focus on funding Nachu first and foremost, since its metrics (as a ‘simple mine’) were in their view more ‘backable’ from the POV of the finance sector than our ‘grandiose but abstract’ global battery aspirations, as inherent in the Townsville and New York strands of our immediate activities going forward. To this the Chairman pointed out quite unambiguously that, overwhelmingly during recent and ongoing interaction with possible sources of funding, it is actually the battery side of our strategy that is regarded as the more fiscally attractive.

AnalysisHere I’d urge SH to keep their eyes very firmly on the rapidly shifting parameters and metrics of the wider energy investment climate. Since 2013 over US$8 trillion has been divested from the fossil fuel energy sector. The IPCC estimates that ‘decarbonising’ the global economy (in line with its preferred target of limiting CC to 1.5 degrees) will demand $2.5 trillion a year over the next 15 or so be spent in new energy generation and distribution projects. By all means sneer at the greenies who drove up to Queensland to protest Adani, or the kids who hit the streets last month…but the stark reality is that the global big money has already long made its own ‘greenie’ strategic shifts. The world is awash in cheap untethered cash looking for somewhere with a post-oil/coal investment future to land, and storage batteries is one of the key places they will do so. Is already doing so, including now here in Australia. AGL isn’t some tree-hugging, Elon Muskish maverick. It’s a big fat real going-concern energy company, and on the same day of our AGM it plonked a big fat wodge of real hard cash smack into the exact investment space we’re looking to grab our place in, too.

Be under no illusions, breth: Nachu’s first-rate graphite and the supply chain optionalities and independence from China it adds gives both our immediate projects and our longer-term strategy a big edge in many ways, but the thing that is going to make you rich are the batteries into which Magnis Energy Technologies bungs it.It’s all in the name. Pay attention!


Which brings us to New York and Townsville.

New York

It may well have been my failing again but I didn’t take away a whole lot on New York that isn’t already fairly well available via the Annual Report and/or known already. (Again, please add your bits to flesh the comments thread).The key things were assurances regarding our partnership with C4V and our contractual IP entitlement. On this Vogts noted too that the Gen 2 iterations of our battery tech would be rolling into application/customer testing phase by the end of the year, which is a reminder that while the technology in this sector is hugely dynamic and competitive, we are absolutely not standing still. The obvious AGM celebrity factor inherent in the presence of brand new Nobel Laureate Director Whittingham shouldn’t make us think that we are only looking backwards when it comes to battery tech. I later had the chance for a good chat with Stan – I’m a science grad and a bit of a tech nerd – and he is absolutely not resting on his newly-awarded laurels, either. He is still actively engaged at Bingham and at one point of the AGM pointed out that he is ‘on the record as having said that lithium ion batteries will remain dominant for at least the next ten years’.As more and more lithium-ion battery projects at large storage scale lock into place throughout the world in the ‘new energy paradigm’ (including its investment metrics and dollar-down commitments), there’s a vanishingly small likelihood that, given our binding relationship with C4V, we are ever going to be ‘blindsided’ out of the race by some new technological Eureka! moment before we even get going. Again, watching the sector more widely and observing the huge commitments now being made in large-scale battery storage is a clear indication that all the other renewable energy components that will doubtless also form part of the new energy future – an interlocking array of hydrogen, solar, wind, hydro and other technologies – are both still evolving, but in any case will all demand extensive battery-integration anyway.


Analysis/comment:I’ll say it again: be in no doubt it’s our batteries and our battery-making plants that are going to make you rich, not (simply) our graphite mine. On this, a SH query on our battery equipment assets in storage in New York got the assurance that we are securing/maintaining them prudently and well, and the $71 mil asset valuation of earlier this year was also confirmed, and acknowledged as a very useful tool in our funding pursuit there. It was stressed that securing NY funding demanded a collegiate approach, by the way, given the IM3NewYork consortium, but also that the broader investment climate in NY State, with its aggressive emissionstargets and its hugely pro-renewables governor (a money-down established supporter of both C4V and the IM3 project), is growing quickly and increasingly fertile. The next six months (or so..?) will be about getting funding and then engaging contractors for plant development, with construction aimed to start 9-12 months beyond locking in those $$’s. Predictably again some SH wanted guarantees; predictably again (rightly, thankfully), neither our MD or the Chairman could or would give any, beyond assuring SH we are working hard on all and any angles.

It was the Townsville project which, to my mind at least, yielded the most information and also, I think, the most fruitful potential for real advance over the next little while. This is not least due to the speed at which the Australian energy policy environment - and the CC debate - is accelerating into new territory, finally changing everything you think you know about investing in energy companies here very, very quickly.

Townsville

The MD confirmed that the Feasiblity Study had been completed and formally submitted to the Queensland government for further evaluation. The Board indicated (in response to a SH query) that on balance the more fully-fleshed version submitted for internal consideration is probably (though not definitely) unlikely to be made public by the company. (There are now authentic commercial-in-confidence issues in play, which ought to be cause for great SH contentment.) We know that there’s an election next year, and despite the disappointing dog’s breakfast of the higher-level political posturing on issues like Adani and the future of thermal coal in that state that dominated the Federal election, there is no question that our FS will now be the source of serious contemplation by all Qld political parties. The MD noted that what the FS does is change our Townsville investment metrics considerably.

Comment:The submitted FS opens the door properly on game-changing government support, whether that’s NAIF, ARENA or even CEFC mechanisms. The way government funding processes work tend to be slow-slow-slow-slow-slow…FAST.The importance of those 2,500 jobs in construction and 1000 ongoing which our FS projects will not be lost on the Federal government in particular. The other key findings - $3 billion CAPEX, 20% return, $2.5b OPEX but 80% materials – may seem a little scary at first glance but they are concrete and they are bankable andthat is the point. This is a now a ‘live’ project with a whole bunch of ready-offered solutions to seriously big political problems in Queensland, chief among them the need to reconcile REAL jobs (not vague and remote Adani ones) with urgent and electorally-visible Climate Change action (bushfires everywhere, in November!).In my view Townsville has always been a ‘political no-brainer’ – for either party - and this FS and the fast-changing times now makes its desirability on just those terms alone absolutely clear.

Equally important in the last few months theMD notedhas been the NAB coming on board as funding lead. Like everyone else the big banks are going through an agonised process of wrenching their comfortable fossil fuel economy lending metrics into new territory. Plenty of them have taken some hits in the last 5-10 years of transition, for example on Galilee projects and the over-developed gas export infrastructure projects in Qld that longer-term are starting to look in danger of becoming stranded assets (IMO). The banks recognise that a national organic battery industry is guaranteed to rise here. Australia of all countries needs big batteries – with our huge unwieldy national grid, the vast amounts of Distributed Energy Resources nowplaying havoc with energy market/price parametersandfrequency/stabilityandcost-distributionandnew growth expansion funding. We’re also awash in sun and wind and empty space to put big, ugly but clean RE generation projects in. The smoothing-out piece of the jigsaw puzzle is batteries. Lots of them, and big ones. What we are going to build – starting in Townsville – is looking more and more bankable every day. Our graphite (and its mine-extraction terms), our processing, our IP (and future IP) and our independent supply chain optionality gives us an authentic edge of the kind that serious cash can make real, very quickly.


NAB clearly gets that and, although cautious, is dipping its toe squarely into our mix. This is well beyond significant to only Townsville's prospects.


On Townsville the MD ran through what the Preso does. In particular he said that splitting the project into three phases of 6 GWh makes it less daunting both in funding and also delivery terms, without degrading the ROI attractiveness. Phase one, pending money, is currently looking at construction in Q3 20 and then operations in Q3 2022.Again, the predictable queries about timing guarantees were meet with none, just assurances that all avenues were being pursued.



SHQ of Director Smith.At a point hereabouts a SH asked Director Smith about Aqualand’s investment intentions, specifically asking whether they’d consider increasing their position, given their access to capital, perhaps even in some direct project funding capacity. Things were getting towards the back end of a pretty chatty morning by now, and I can’t recall exactly the context. But the SHQ also made reference – or had secondary reference made to by someone else – the departure during the past year of Director Ulrich (and others). The query was along the lines of presenting their ‘lack of remaining faith’ in the company, wondering out loud why they’d reached that position, and probing Director Smith’s/AL’s current thinking in comparison to that.

Director Smith’s considered and minimalist reply was a ripper (again I stress thatthis is only a paraphraseso please do not regard this as verbatim), to the effect that the nature and size of the capital requirements of projects like Townsville ‘may seem large’, but the changing nature of the marketplace in this space meant that ‘the capital is there. It may not be as easy or as fast to come by as some SH may like, but the capital is there’. As for the departure of other Directors mentioned, Smith noted that naturally it wouldn’t be proper for him comment specifically, particular since these events were before his time, but ‘clearly they’d each come to hold a view about the prospects of the company and its strategy that compelled them to depart.’ He added that ‘Such is not a view which I or AL share at this point.’

CommentAgain, a paraphrase only (apologies to Smith if I’ve misrepresented it). That’s as I recall his response, and it's why I clapped it, too. Plenty of other SH’s joined me, it having really struck a chord, not just in content but in its measured, understated but unambiguous style.In my view it was a very disciplined but powerful leadership response from a Director with a fair bit of experience and understanding of how great big chunks of investment money function, move around, land. It doesn’t necessarily mean anything in terms of imminent capital injections or funding deals, but it was absolutely - in my mind - an affirmation of what really counts in your Board in these moments: real skin in the game, and a prospect, at least, of more remaining open to being added.


IMO Magnis Energy Technologies is anything but stalled in the doldrums, even if its share price might currently be.


Conclusion/final observations

That’s about where I should leave it, I think. This summary isn’t as comprehensive or coherent as other ones I’ve done, for the reasons I’ve said before. Apologies all. There’s no doubt a lot of substantial info-bits and pieces I’ll have missed, not least because the meeting at times became a little disjointed and decentralised – ie multiple discussions, all going on at once. Please do add value to the thread by adding in any specific details you can remember yourself.

Overall as I said I was more than happy with what I took out of the meeting, even given the earlier less pleasant aspects of it. On balance I even think it was healthy and not totally illegitimate for some SH to air what are clearly grievances they’ve nurtured for a while. Fair enough. But also, in my view…’enough’ now, too. Let’s focus on what really matters.This is actually an exciting few months coming up, and a crappy share price is relatively unimportant given the rapidly improving climate for and securing of funding for our projects.

On the SP point more broadly, I’ll close by reminding fellow SH that we have much, much more Board and Executive exposure in our registry to its ups and downs than most specs, both directly and via Options. Aligned with discussion earlier, you have to recognise that however badly our ticker might be ticking at the moment, we’re all largely all in this together, Board, Exec, T20 and we keyboard mums-n-dads. Any time I get glum about my 200K being in the red I ponder what it’s like being millions of shares in the red. And then, by the way, I take a look at a fellow-sector stock like Syrah, into which not just retailers like me but big grown-up banks and funds once jumped with premature glee…for as much as $6 a share, in some cases.


The reality is that we’re all hurting a bit in this sector just now. Ultimately you can watch the Share Price obsessively if you want, but it’s really missing out on the broader picture: what’s going on in the global energy economy right now is a genuine, once-in-a-lifetime disruption. The only way any company can survive through such times and thrive beyond them is to have its long-range strategy in place, a steady, focussed and committed team at the helm, and the capacity to just keep operating while they develop and develop and develop it. Until one or two or sufficient pieces of it are funded and going, sufficiently enough to get the remaining – thrillingly fast - ‘cascade of viability’ started. That’s why we back the specs, brethren. Because we’ve got great big investment stones and great big investment ambitions…but not a great big stake to play with! That’s certainly the case in my case, anyway. Besides: the Blue Chips are boring, eh.

For me the 2019 Magnis Energy Technologies AGM confirmed the quality of our strategy and its fundamental delivery assets: a quality graphite tenement in a patiently-nurtured, supportive local setting and deftly-negotiated to be mined at absolutely first-rate contractual terms; excellent processing techniques and supply chain optionality; contractually-secured sector-leading battery IP with ample scope for future sector-leading upgrading; and two strong options for absolutely-feasible, now-bankable battery factory projects that will, when activated with funding, serve to set that strategic ‘cascade of viability’ underway.

The manner in which they handled this AGM – dealing openly with awkward questions, being responsive to legitimate isolated concerns while resolutely maintaining procedural control and focussing on the more substantial issues of interest to the vast majority of SH’s there – also confirmed to me yet again the quality of our Board and our Executive team. In Marc Vogts we have a truly first-class Managing Director in particular, and our Chairman continues to preside over a Board that now boasts an impressive diversity of experiences and skillsets, beautifully balanced and bespoke for the ambitious global mission we’re seeking to achieve.

I head back for a celebratory rum and a good hard lashing in the sauna entirely comfortable with my investment, Maggie brethren, and increasingly excited about the path ahead. Please keep in my disclaimers, DYOR and GLA as ever. And may I wish all in this crazy, infuriating, brilliantly-prospective new energy investment sector – MNS holders and non-holders alike - nothing but the best.


Hang in there for justbit longer, breth, and we’ll all be rich! Cheers.