All very positive, biggest turnout yet with at least 25 people in attendance. Sorry if I took up all the air in the room with my questions.
As usual a disclaimer, my notes were particularly poor this time as I felt a lot more rushed with additional people in attendance. Don't take anything I have written or interpreted as investment advice.
Drinks on me at The Windsor, South Perth at 7pm tonight. Please come along, all are welcome (as long as you hold a share or option haha)
1. What is our cash position likely to be like at the start of 2017?
Very confident we will be in a good financial position starting 2017. There are still at least AUD $6m worth of options that are yet to be converted, so it's looking good.
2. Are the 1mtpa expansions indicated in the investor presentation likely to be funded by cash flow alone or do you think you will need additional finance to achieve them?
Ideally the plants will be funded through a combination of cash flow and any money remaining from option conversions. They do not envisage at this point in time they will require additional finance outside of this.
3. If all the options aren't converted, would you consider getting a firm to underwrite them or perhaps consider reissuing them with a different exercise price/expiry?
They wouldn't be able to reissue them but would consider an underwriting, obviously there would be some sort of deal associated with that as they wouldn't just give away shares.
4. Is there a reason the next plant is yet to be ordered? One announcement mentioned METS who do engineering design , are you currently working with them to improve efficiency before proceeding with ordering the next 200ktpa?
There are ongoing opportunities with METS and Huate engineers to look at how the existing processes and equipment could be better utilised in the future in order to achieve the same outcome but with less capital expenditure.
5. Do you have visibility on the ordering process of BMM Ispat and/or JSW Steel? Have either indicated their likelihood to issue purchase orders soon?
As released in previous announcements, NSL are already apart of the BMM Ispat vendor list. They also visited the site a few weeks ago as released to the market. NSL's product truely is premium. This is not just a term, it reflects that the steel mills are able to introduce it into their production processes at a later stage and reduce the mills operating expenses.
On a side note, the current processes for the steel mills is to source their millions of tonnes of iron ore in 4kt lots. This means that the grade when they are all combined can range much lower than originally intended and these transactions are often buyer beware. This means that NSL are also offering both visibility and consistency to the process.
6. Does the company still have plans to progress AP14 in the near future or is that a longer term goal? Also, has the company been in regular contact with the Government of Telangana regarding the project?
Absolutely, the company are in regular contact with the government of Telangana.
7. Are we still on track to receive the prefeasibility for the pellet plant by Dec 31st? Are you excited about it?
Yes we should be on track, a lot happening in parallel. The company are primarily focused on iron ore production.
8. Are we still on track for cash flow positive by the end of the quarter and do you anticipate purchase orders prior to production or shortly after?
Yes, no answer regarding PO
9. How many steel companies in Andhra Pradesh are interested in our ore and what are their names?
There many throughout Southern India, not just Andhra Pradesh. I didn't ask him to lost their names.
10. Would you be open to doing a video interview for Young Aussie Investor at some stage similar to your interview with the Financial News Network?
Didn’t ask as it seemed like a stupid question
11. Are you still planning on attempting to finance the steel mill with Wei Hua through the AIIB?
Yes.
12. Are you planning a CR at any stage in the near future or planning to use a cheaper means of finance such as debt?
No, we will have cashflow and options money
13. Is the $2.5m cash note to be paid back soon in order to be debt free in 2017 as I believe was indicated in an interview with FNN or will it be extended further?
There are many options, desirably it will be paid off by 2017 but no definitive answer.
14. How did the delegation go and were the Chinese impressed with what appears to have been a decent turnout from the government of AP? Did Modi stop in to meet with the delegation while he was in Kurnool on the 5th of Nov as reported by the media?
It went very well. There were a lot of AP government representatives and they did get time with CM Naidu, the Deputy CM, Secretary of Mines etc. Both sides were very excited. The words “very excited” were used a lot.
15. Are you coming to the party tonight at The Windsor?
No he will be spending some time with his wife and kids, which is understandable!
16. Are there more potential HOA in the pipeline in order to increase our mining further down the track? Do you have a rough idea of how many more mines we will require to achieve the 8mtpa goal within 5 years?
There are approximately 25 leases within a 15km radius of NSL which are potential supplies for NSL. Lots of options.
17. What are the time frames / terms for purchase order to convert into payments?
There are several different types of terms, some upfront, some in a week or 10 days. The company will work towards the most cash flow secure options available to derisk cash flow.
18. Would you accept a takeover offer at 50c today or are you in this for the long haul?
Would you? was Cedric's response. I would consider it personally.
19. Does the company have an indicative time frame on a potential outcome of the legal action regarding it's coal tenements?
No. The company were confident initially and their confidence has continued to grow as things have proceeded.
20. Do Magna still have some options and have their indicated whether they plan to convert them if so?
Not sure what they are doing with their options.
Notes:
Current transformers will be suitable up to at least 1mtpa plant, then will require minor upgrades to accommodate expansion.
Big thanks for Cedric, Sean and Dan for spending a large amount of their life flying and sleeping away from their wives and children. Your sacrifices are much appreciated by all of us.
Cedric and Sean only fly economy. They stay in self rated 1.5 Star accommodation and do an excellent job at minimising costs where they can. Big kudos.
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