Tawana 2018 AGM Notes
Firstly Robert read out his opening remarks, which can be found at the start of the
AGM presentation announcement.
Presentation
Mark Calderwood then ran through the presentation. Below each slide i have put some of his comments i thought worthy of noting.
Its important for me to express that its great to have experience and depth on the board particularly with Bob and Marks extensive mining experience, both with 30 year careers in mining, and my long career in exploration (less so in mining), Its key that the board has quite a lot of depth.
With the merger we will end up with new institutional shareholders and will be more appealing to the general market in Australia in terms of funds.
First shipment was at 6.3% Lithium. It’s a high quality product - low iron, we came in at .5% Fe2o3. There is probably one other mine in Western Australia that has done that to date and that’s Greenbushes.
The shipment process is working and we have received the payments, the process is only going to get smoother as we move forward.
Tantalum offtake is still not signed yet, we are going backwards and forwards on it, its coming along. There has been no rush on our side to get it in place, the Tantalum price is very high at the moment, unexpectedly high – over $100 a pound. PFS was only done at $60 a pound. Hopefully we will get it done in the next month or so.
We will produce more than the 600,000 pounds in 3 years but we have other buyers chasing us for Tantalum product as well. Not only does Bald Hill produce a high quality Lithium Concentrate it also produces a high quality Tantalum Concentrate.
The plant was constructed by Primero, they did a really good job. Its already running at nameplate, we had it running at nameplate very early – we had it beyond nameplate. What we thought was a 4 month ramp up for the plant we have probably trimmed of a month that, we are pretty close to full run rate now.
The mining is going well, we are moving over 30,000 cubic metres a day on average, we are into the main Ore body now. So we are in the process of getting the mine and the plant bedded down for operational phase.
The other good thing about our product is it has a very low mica content. Its not a requirement but its quite useful for our offtaker and keeps our product at the top end of the market.
The reserve upgrade is coming some time this quarter; there has been a lot of back and forth with the mining engineers and getting the paper work sorted out so it can be released on both the ASX and SGX at the same time.
If we get enough drilling done we will have another Resource and Reserve upgrade probably QTR 4.
The reason we focused on the area in the slide is its where we had the existing mining license. We are in the process of a mining license application to the west of that area and we are applying for one in the east as well. That will allow us to drill out more resources into those areas; the urgency has all been inside the existing mining license, that’s what supports the operation at the moment and will for a number of years to come.
The area on the slide is probably about 3% of the tenure. We haven’t done a lot of exploration to date for 2 reasons, 1. To preserve cash and 2. Because we haven’t had the space in the camp. We are going to try and get some more exploration done in the second half of this year and I would imagine ramp up significantly next year.
We are looking to put in a Fines circuit, how we do that is still up for discussion. The plant is performing so well that we are looking at the different size ranges we can treat with the existing plant, we are looking at taking up the top size and down the bottom size so that we produce less fines. And then we are looking at ways we can increase the production throughput rates, so both increase production in the coarse DMS and how we build the Fines Circuit.
We are producing a lot of Tantalum pre concentrates at the moment from the DMS circuit, more than we expected. We are about to start processing them in the next few weeks to upgrade them to marketable concentrates and going forward look at ways of increasing our Tantalum production from Lithium Ore as well as looking at the refurbishment of the Tantalum Plant. Tantalum overall only makes up 10%-15% of our revenue but in the early years it could make a little bit more than that.
The Cowan Lithium Spin Out, everyone will get to hear a bit more about that. A notice is imminent for the details on the spin out and the dates (voting dates and record dates etc). The merged TAW/AMAL will put some funds into the spin out.
The big benefit is it gives focus to the more greenfields exploration, we have so much near mine exploration to do for Bald Hill anyway, it will give some life in Cowan Lithium to go of and chase some of the targets we haven’t even looked at for a year. So it will give us a double bed in the game in terms of what we can find in the belt. Tawana/AMAL will look after Cowan Lithium Co but at the same time Cowan Lithium Co will be free to take other projects and do other things.
Its probably fair to say we produce the best DMS concentrate ever in WA, Greenbushes produces a better product but its not a DMS product it’s a fine flotation product.
Its not expensive for us to upsize production because it’s a pretty simple process the DMS, its not a high consumer of energy, its not a high consumer of inputs.
This quarter we will have the reserve out, its quite advanced we are just trying to finish it off.
We will start providing more details as we complete studies on the second DMS circuit and the Fines circuit, which will probably be all put together anyway. We are just trying to work out what the best way is to take the production level up.
As mentioned there is significant Resource upside, since we got started we have only done about 12 months of exploration, that’s the key to keep in mind. We fast tracked as we said we would do a year ago knowing that we haven’t really drilled it properly yet. And it will be some years before we finish drilling that main area of Bald Hill.
Resolutions
All resolutions where passed and no questions where asked in relation to them.
Q&A
Q: You mentioned 4th quarter for the merger, any reason it will take so long?
A: It could be September it could be October, it comes down to whether the SGX view the transaction as a major transaction or a substantial transaction. Its just bureaucracy.
Q: The Resource upgrade you said Q2, so that could mean by the end of June
A: Correct, so within the month but I would expect a lot earlier than that.
Q: We seem to be sitting on 44-45 cent, do you think that is going to be ongoing
A: I guess there is a couple of drivers to the share price, one is reserves – I think that will help but most the market probably knows its coming anyway. The Merge will help but steady production will be a key driver to the share price, so we are in production but haven’t declared commercial production yet and can’t call it steady state, a lot of people will be watching that very closely – the production rates going forward over the next couple of months.
Q: You have raised $50 million a few months ago, if the Reserve upgrade is big enough will it be used for the Fines and second DMS?
A: No that money is not allocated for that capital expenditure, we have got some other sustaining capital items to spend money on including the Tantalum Plant, Tailings Roads and other things still to finish of. Its also for working capital, we are pre striping waste in advance. So we are mining more waste than the life of mine average, life of mine average waste is 8.3 to 1 and we are mining at double that rate at the moment. Now that will enable us to have large quantities of Ore coming on-stream in about 12 months time, and that leads into those opportunities that we can look at for a second DMS which wouldn’t take us that long to build, but we are reviewing all that stuff at the moment.
Q: At the old Tantalum plant, was the product sold?
A: It sold a concentrate to Greenbushes which Greenbushes then upgraded and blended with their product and sold. It ran from 2002 to 2006, it stopped after Greenbushes went broke.
Q: Was it a material amount?
A: Yes, it produced I think 800,000 pounds of Tantalum Pentoxide and its been known for its high grade concentrate and its low radiation levels. So the fact that its low radiation levels for what is normal for a Tanatalum product enables us to take it up to 25% concentrate and not have any shipping issues. Hence it can go to Europe or it can go to Japan. The last parcel Alliance produced was a 25% concentrate which it sold to Germany, to the same people – so they know their product.
Q: What impact on the stock liquidity are you expecting the merger to have?
A: Well AMAL has good liquidity on The SGX and I expect we will have reasonable liquidity on the ASX. And because we will effectively be an ASX300 company there will be some good volume associated with that, once the re-balance happens.
Q: In terms of strip ratio and scheduling is there a waste removal schedule or capital estimates for me to look at?
A: There probably is something in the feasibility study but it would be out of date now. We are moving/need to move about 900,000 cubic metres a month so that’s 2.5 million tonnes of material a month and we produce on average in the next 2 years 150,000 to 200,000 tonne of Ore. It is higher at the moment but it becomes a lot of Ore at the back end of the existing stage 1 pit. But as we finish of the stage 1 pit we will then start mining the expanded pit. The bottom line is the first 12 months you move more dirt and then after that it settles down to roughly the long-term strip ratio.
Q: Am I right in saying that the $880 per tonne that you get is lower than what Galaxy gets?
A: Correct, ours is an FOB. They pay some commission to Mitsubishi I believe for handling their product, its very close but we got a 2 year price and I’m happy to take a little bit less for a longer period.
Q: In regards to the merger, why did we peg it to AMAL’s share price instead of the other way round?
A: At the time we considered the different options of which way to go and in all fairness it worked out easiest to go that way, there was also the SGX limitations. And their stock used to trade at a premium to ours and after they had the management issues that some of you are aware of it swapped over but I would see that as balancing itself out going forward and shareholders will end up with the Spinco shares as well.
Q: If we go ahead with the second DMS, can you please clarify if the Burwill offtake actually covers the output from that as well?
A: The Burwill offtake provides for 50% increase on our minimum numbers that we have allowed for. The fines circuit would be covered by the existing contract but a second DMS would probably exceed it, so we would have to sort out what we do with the excess product, whether its an extension on the existing contract or a new one.
Q: Where do the JSE holders stand with the new merger
A: Its yet to be resolved, they have exchange control regulations which restrict investment outside of South Africa so we will need to work through that with the JSE and the Reserve Bank of South Africa
Q: Has the issue of bunding the opencut pit been considered to prevent flooding?
A: The pit actually starts on top of a hill so its actually an extremely low risk from a flood point of view – currently.
Q: Is Cowan Lithium going to be the spin off name?
A: Yes and hopefully that gets pushed through to the market in a reasonable time, we don’t want it to stay unlisted for too long.
Q: On that, are you looking at spinning it of as an IPO?
A: Yes
Q: Will existing shareholders get the opportunity to get additional shares in the IPO
A: You will get some shares through your existing holdings obviously and then we will cross that bridge when we get closer
Thats it
Meeting went for roughly 1 hour.
Thanks go to
@captjohn @Haplo and others for asking all the questions.
Please note i have written everything as it was said or as close as my notes and memory would allow and tried not to have my opinion or sentiment towards Tawana either way in this post, i look forward to reading everyone else's views though.
