Hi all,thanks for the positive responses on the earlier post. Okay, beers drunk, kids fed, time to get back to shares!
I attended with 5 specific questions in mind:
1. What is the anticipated timeline (or window) for Abra financing to be announced?
2. Are you able to elaborate on the quantum of the “significant premium value for the concentrate” negotiated with IXM?
3. You have had some copper/gold hits at lower depths at Abra. What is the near term (1-3 years) strategy in relation to progressing our understanding of this? Do you have any inkling about what there could or could not be present based on other, similar deposits in the world?
4. How do you intend to approach the Jillawarra prospects over the next few years? (Jillawarra, = Woodlands, Manganese Range and Quartzite Well). What do you feel are the odds of hitting another Abra-type structure?
5. Are you able to shed any light on the current trading behaviour seen in the shares? The current churning and slow but relentless downtrend is a bit disconcerting!
I was the first to turn up I think, and I got to talk to Alex before and after the meeting, whereas Koldkathode spoke to Adrian. Kk and I did not connect, but fortuitously we covered both separately.
My questions 3 and 4 above were explained in the presentation and the earlier response, i.e. of interest, but secondary importance. (He mentioned only 7 drill holes through the Cu/Au section to date, i.e. huge potential remains in play there). The current focus is to bring Abra into production successfully. Similarly, I answered Q2 in the earlier post, nothing more to add here besides the deal is for 10 years which highlights the belief of IXM in the product.
Q5 is a bit unfair to ask a company person, as they are not making the market. Suffice to say they too are somewhat bemused at the behaviour of the share price, and cannot understand why. The theories in my earlier post are what they muse as possible reasons, as well as G1A being only 2 years old and so not well known by the market. Onspeed, your Q on Credit Suisse (CS) was not on my list to ask, so I did not. However, I suspect I would not have received an informed answer, simply because that would need to come from CS, not the company!
Q1 is, I feel, the key question. Alex was of the feeling the market was waiting for finance to be secured. Although there are no guarantees things will not go awry, he was very confident financing would be secured, hence the preliminary works on site. Although these works are being performed using shareholder money, he was quick to note that he is a shareholder and he would not wantonly waste the money! In terms of the time it has taken to secure finance, he stressed that banks offer lower rates but take longer to decide relative to other entities such as Taurus or Orion. Indeed, the banks have been complaining that G1A is pushing them to go faster than they want to! Also, serious bank work re deciding to lend happens only after the DFS. Anyway, things are progressing. They had 11 banks on the NDA, and had 8 allowed to progress to review the terms sheet they put together. Ironically, the sheer number of banks willing to consider funding has slowed down the whole process ("herding cats"). Importantly, G1A got to choose which banks got to progress, not the other way around. There have been 5-6 banks be allowed to progress to credit terms which is where were are currently. This is "going very well". The time it will take might depend on how many banks are willing to fund. Ultimately they want 2-3 banks in the syndicate. If they get more than that willing to fund, that opens up the opportunity for additional negotiation on the interest rate payable (which is currently looking around the 4.5% area). So the longer it takes, the better it could be for us! A deal in December might be around 4.5%, a deal in January might be indicative of a slightly lower rate. Although they would love to have it finalised in December at the best rate possible, it might slip to January.
Speaking of time, there was a time when they were looking at a Japanese government guarantee for some funding. They were looking at 0.7% less on 40% of the debt. Not bad, but the downside as they discovered during negotiation is that it will take 8-9 months to land, and they wanted to move quicker than that. They are still pursuing that in the background as an option to provide a step down on 40% of the debt in the future, but currently it is just the banks in play.
Other comments from the AGM
Impurities in concentrate: Alex highlighted the real value of the Abra material was that it was so pure relative to other Pb on the market (75% vs 45-55% Pb). Importantly, this means there is less impurities in the Abra material, i.e. greatly reduced disposal costs for impurity elements. This makes it valued for being able to blend with lower grade material in order for the combined concentrateto meet specification and thus be able to be processed.
They will not keep updating the feasibility study as the prices change. Rather, look at the sensitivity analysis in the back of the FS to calculate how the value changes with price etc (but current metrics add ~$100M NPV).
AGM preso, slide 14: pics from start of construction.
AGM preso, slide 15: pics taken ~ 2 weeks ago
AGM preso, slide 16: pics taken 'this morning'. Building = kitchen. More coming over next 2 weeks. Alex highlighted the value of having this facility (kitchen, dorms) ready for EPC means the constructor will know they have the facilities ready to go, so no hold up/concerns re getting them to start the work proper.
AGM preso, slide 18: Once financing is secured, they will sign the EPC.
Okay, that pretty much does it. I left feeling that a bit of patience will pay off, these guys are switched on and looking to do things right rather than quick. I believe!
Cheers!
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