I've spent the past four days slowly chipping away at what is definitely my longest post, and perhaps a HC record. It has so many images in fact, that I've had to split it into four separate posts due to a limit on attachments.
So, with that in mind please don't reply on this thread until all four posts have been submitted, as I would prefer for them to stay in a row.
There are a bunch of disclaimers and facts I would like to make clear before you read any further. Firstly, and this goes without saying, nothing written is investment advice. It is an unprofessional opinion piece based on my own personal beliefs and understandings. All information has been collected to the best of my ability, however nothing written in any of the four posts should not be relied upon as fact. Some material may also seem familiar, as I have used some content from previous posts of mine.
I hold no qualifications to provide legal or financial advice and everything should be read with that in mind constantly.
I hope those of you who are new to NSL learn a lot and that I help set you on the path to discover a lot about the company and some of the amazing achievements they have made over the past few years.
To me, NSL is more than just a company, it's a life-changing opportunity and not just for shareholders.
Who is NSL Consolidated?
Sean Freeman is the Chief Operating Officer who lives in Perth but spends most his time over in India, where for a long time he has single-handedly managed operations of the company’s existing infrastructure. I have had the pleasure of meeting Sean -three times and exchanging the odd text and email back when things were quieter. He is undoubtedly an honest and hard worker and an all-round great guy. Sean has been with NSL for the past eight or so years.
Mr Srinivasu Panchada joined NSL in January 2017 as Chief General Manager Beneficiation and Pellets. Srinivasu has both a masters in mineral processing and bachelors in mineral beneficiation. He joined NSL directly from BMM Ispat and will have undoubtedly brought with him a wealth of knowledge that has enabled the company to overcome any issues experienced during commissioning and provide guidance towards improving outcomes.
Dan Little was hired in October 2015 as a dedicated Project Director to oversee the everyday Kurnool operations, in conjunction with the construction, commissioning and smooth transition to operations of the wet beneficiation plant. I unfortunately haven’t had a chance to meet Dan yet, but am looking forward to the opportunity one day. He has a wealth of experience having worked on some massive projects in the past and has been working hard from day one with NSL.
Cedric Goode, the Managing Director and Chief Executive Officer, also lives in Perth, and spends more time here than abroad. However, in addition to trips to Andhra Pradesh, Cedric has made several trips to China over the past few years, working to put together company changing deals, the latest with EPC contractor Xinhai. Cedric has been with NSL for the past eight to nine years.
About Andhra Pradesh
In February 2014, The Andhra Pradesh Reorganization Bill was first introduced, providing for the reorganization for the State of Andhra Pradesh. As of June 2014, the state split into two states, Andhra Pradesh and Telangana. The reorganization of the state posed large problems for both states, as the long and difficult process of splitting both assets and people began.
Andhra Pradesh are extremely lucky to have the Honorable Chief Minister Nara Chandrababu Naidu in charge of their state (leader of the Telugu Desam Party), who played a vital and significant role in turning Hyderabad (now in the newly formed state of Telangana) into an IT capital of the world, coining the slogan, “Bye-bye Bangalore, Hello Hyderabad”.
With huge growth in IT exports, the state capital experienced massive growth in infrastructure, employment and educational institutions, putting the city on the world stage. This is the exact kind of growth Chief Minister Naidu has been working to replicated in Andhra Pradesh since bifurcation in 2014. He has been very successful thus far, with the state of Andhra Pradesh undergoing significant growth across all sectors, becoming the fastest growing state in Southern India.
The state government of Andhra Pradesh have made transparency a top priority, much to the desire of foreign investors. Additionally, the state government have undertaken several initiatives to curb illegal mining, support demonetization to remove fake currency and implement fast and visible approval processes to stamp out all forms of corruption.
What is unique about NSL Consolidated
NSL Consolidated is obviously unique, as the only foreign company to own and operate iron mines in India. Not just the only Australian company. The only foreign company. That is out of the 195 current countries in the world today. However, this is not their only unique quality.
There are three qualities that I feel make NSL Consolidated truly unique and that’s their commitment to helping the local community, their commitment to respecting the culture of that community and most importantly, their commitment to the safety of all workers.
NSL are truly bettering their local community. Not just to tick a box of corporate social responsibility, but actually make the lives of those around them better.
The company’s commitment to the local community is evident, as per a company announcement released on the 23rd of August 2016.
As per announcement:
"NSL representatives have actively engaging with Principals of the surrounding primary schools to gain a better insight into their functions and standards, and to get a different window into the needs of each community. During this time, Company representatives have been assisting with teaching English in schools, exposing students to e-learning, and understanding future directions for education in the District.
One critical and successful example of the engagement process came from the local school at Muddavaram Village. On discussion with the Principal at the school it was discovered that there was no running water available to the students due to a broken pipeline. NSL staff were able to complete repairs and the school now has safe access to fresh water.
The Company has also been engaging with the local hospital at Betamcherla through bilateral visits and workshops. For NSL this has practical benefits, such as allowing for detailed emergency preparedness planning and first aid training for staff, whilst the medical staff were notably impressed with NSL’s systems, processes and induction methods, which they hope to roll out in their hospital.
Although the Company is under obligations to ensure compliance to stringent environmental conditions as part of the licence to operate, it is always seeking to move beyond environmental compliance and take a position of leadership in this arena. One small measure showing this depth of commitment has been in the conduct of a regional borewell survey and monitoring program.
The Company has been gathering data from 20 borewells within a 5km radius of the plant location, monitoring depth variations to water table and various water quality parameters. Understanding the nature of the water table and seasonal changes through the monsoon will allow better utilisation of this resource, and is linked to the drive for productivity improvements for the local farmers."
The company’s commitment to respecting the culture of the community is evident, as per a company announcement released on the 6th of May 2016.
As per announcement:
"Importantly, in India the Company celebrated the official launch of the Phase Two wet beneficiation plant project with a Puja (a prayer ritual performed by Hindus to celebrate an event). The Puja was attended by approximately 130 people from the Company, village elders and regional bureaucrats."
The company’s commitment to the safety of workers is paramount to management and has been a large hurdle over the years, at they have worked to implement a safety culture in a society where safety is practically non- existent by Australian standards.
As per announcement:
"NSL was proud to announce the achievement of a major safety milestone for the Company during January, with the team on site passing 250,000 hours without a Lost Time Injury.
This was even more special in that it was achieved during a complex construction and commissioning project.
The team took time last week to celebrate this significant event, with a team lunch, safety awards presentation and recognition of the growing safety culture on site."
What have the company achieve over the past three years
On the 10th of February 2015, the company announced their participation in the Australia Business Week in India. This was of great significance, because it put Sean Freeman, in the same room as several large steel company’s and most importantly, Indian state government representatives.
Within six days of participation, the company announced a signed offtake agreement for NSL Consolidated’s first 200,000 tonnes of future Phase Two 58-62% Fe wet beneficiation plant fines product between the company and BMM Ispat.
The fact that this agreement is yet to turn be converted into actual sales is disappointing, but the creation of the agreement signified that larger Indian companies were now becoming aware to the existence of NSL.
In June 2015, NSL announced that they had officially signed an MoU with the Andhra Pradesh Mineral Development Corporation (APMDC), which is a massive state owned enterprise. This MoU covered the collaboration for the beneficiation and value addition or iron ore within the state.
To summarise 2015 as a shareholder, it was full of potential but met with relative disappointment. Not because the company did anything wrong, but because they still didn’t have the funding or relationships to unlock the giant potential sitting right under their feet. Either way, it was a much better year than some of the previous.
Once we reached the start of 2016, things finally started to change in a big and noticeable way.
The company announced another MoU with the state government of Andhra Pradesh. This time however, it was a bit more specific about what they wanted to achieve and this time the agreement was directly with the state government, as opposed to being with the state owned APMDC.
The company attended the Andhra Pradesh Investment Summit, during which it executed an MoU overarching to the previous MoU signed, this time covering the mining, beneficiation and pelletisation of low grade iron ores within the state.
Overall, the intention of the MoU was to support the company’s 5-year growth strategy in Andhra Pradesh and the basis of which would position the NSL to be producing in excess of 8 million tonnes per annum of iron ore in the newly formed state.
The MoU also includes the construction and operation of a centralized pellet plant. This agreement had/has the potential to also realise the generation of 1800 jobs directly associated, and an additional 1000 supporting jobs. It’s safe to say, they state government was and still remains a fan on NSL Consolidated.
After the signing of the MoU, the company began working closely with the government of Andhra Pradesh on the approvals of additional land grants and power grid connections. The additional land, would allow the company to expand its Phase Two wet beneficiation plant further.
In mid-March 2015, the company appointed Design Tribe as the lead engineering services for the beneficiation plant. The two companies have worked closely over the past three to five years in India, and were selected for the provisioning of civil, structural, mechanical, electrical and instrumentation engineering services.
As part of building up the new state of Andhra Pradesh since Bifurcation in 2014, the state government have set about to grow the state into one of the best in the country. Luckily for NSL, this has resulted in plans to build a 28,000-acre Industrial park only 30km away from their operations, plans which are now taking shape with several foundation stone laying ceremonies having taken place.
The state government confirmed in March 2016 the granting on land for NSL’s future pelletisation plant, in addition to creating a bypass road, with officials visiting the site to discuss future plants.
In March, Cedric flew over to China and signed a groundbreaking Phase Two wet plant agreement with Tier One Chinese supplier Huate Magnetism, one of China’s premier global suppliers of beneficiation plants.
NSL Consolidated walked away with a 25% cost reduction and longer payment terms, reducing upfront costs and the overall cost than previously anticipated for Phase Two.
Within weeks, Huate Engineers were on the ground in India.
In late March 2016, the state government assisted the company in executing a Binding Heads of Agreement (HOA) with the local Lessee of the mines entitled AP26 and AP27, which would see a A$1 royalty per tonne paid to the lessee.
By April, the first of three shipments were in route from Qingdao Port in China to the Southern Indian port of Krishnapatnam.
As the shipments began to progress, so did the payments.
By May 12, the second stage of equipment was ready to be shipped.
Too be continue in Post 2...
NSL Price at posting:
2.4¢ Sentiment: Buy Disclosure: Held
(20min delay)