Resolutions:
All resolutions carried
The last resolution was particularly long and Stephen suggested that it might have been the longest sentence he had ever spoken.
Acknowledgements
Stephen Hunt read through a list of people to thank, including us the over 3000 shareholders. He also paid tribute to previous directors who are not with the company now days, he thanked them for their support and professionalism.
He then gave a special welcome to Trevor Mathews the new CEO who was sitting in the audience.
Unless stated otherwise the text in quotations are Stephen Hunts words.
I have just written down the things said that i think will be of interest to people
Slide 3
“looking at our capital structure, yeah we’ve got a hell of a lot of shares on issue.”
“we have been up as high as 14.5 cents, hopefully it's not to long till we are back up at those levels. But certainly a long way from 1.1cent, if anyone in this room got in there at that level you would be pretty happy.”
“so we still have a bit of cash, that was at 30th of September from the last quarterly report which is obviously constantly coming down a little bit, but we still have a reasonable amount of cash which is very pleasing”
Stephen then mentioned Kabunga Holdings which holds 16.3% of the shares and introduced that person who was in the room and thanked him for attending, he then went on to say “I think past that there is certainly no one else above the 5% threshold, it certainly thins out past there.”
Slide 6
“JORC was upgraded in May to 214 mt and subsequently in October to 446 mt. So clearly we haven’t had any problem finding the stuff, so there is plenty there. What we really are focused on is looking for the good stuff and that work will continue on even once we have the PFS and throughout the DFS we will continue to look and increase the quantity of the better quality graphite that we have.
Slide 7
“so that resource that we have certainly compares very favorably against our east African peers. Obviously Syrah there with a massive amount of inferred resource, one wonders how beneficial all that is but anyway, I think obviously indicted and measured is a better representation of where the value lies. However having said that given our development of the project and we still have some way to go in our development vs Syrah and Magnis, I would expect that we would definitely add to the measured and indicated categories there.”
“One of the first things we noticed is that our graphite is actually very clean, it's quite easy to separate as well which is very important. So when I say clean, we don’t have any deleterious elements. Often you will hear, particularly with projects in Mozambique – Syrah and Metals of Africa they certainly have a lot of Vanadium. They believe that is a bit of a positive; I guess the jury is still out on that to some extent. But that is something that we don’t have to worry about as our graphite is indeed very clean.”
“We can get our graphite up to 99% in just about all cases just by crushing and flotation process, that is exceptionally good particularly compared to a lot of the more traditional places where graphite is produced such as china where they have to throw a lot of acid into it in order to get to that sort of grade. And of course if you are in Mozambique and you want to get rid of your Vanadium, you have to treat that as well.”
Slide 9
“What we have seen particularly from our Namangale South area is a fantastic array of Super Jumbo, Jumbo and Large size categories. So that’s definitely unique amongst our peers, so im not saying this is our entire area but this one particular area is certainly demonstrating some excellent flake sizes. And why is that important, well I think we all no its important because its where the decent prices are for graphite and its quite a marked difference between super jumbo-$2500-$3000 a tonne down to the fine and amorphous people are saying with Syrah coming on those prices will be down at $300 a tonne. So you want to be on the left hand side of that graph as much as possible.”
Slide 10
“the big surprise came when we saw the graphite coming up with 99.99% carbon, which is very exciting. That wasn’t across all our flake sizes but you know we possibly could get it up to that, that was just one sample one test and that’s done with just conventional purification processes so we are delighted to see that.”
“the German lab said to us, our graphite is perfectly acceptable for virtually all of the applications that they are aware of.”
“we sent I think a dozen samples around the world at this point in time, china, Europe and the US. We haven’t had all of those people come back with results but those that have come back have all said yeah its great graphite, they want to continue the discussions with us.”
Slide 11
Someone asked Stephen if there are any red flags around the area of doing the environmental and social impact assessment.
Stephens response was – “we are not seeing any. I think its fair to say that there is not a lot of people we are disturbing anyway, it’s a fairly remote area. Certainly better than some other projects where they have to move quite a lot of people. This isn’t the case, we don’t see any red flags and yeah I think seeing that announcement by Magnis I think last week where they came to an agreement with the locals for the relocation that bodes well for us in the sense that if they can do it with a lot more people I am sure we can do it with a lot fewer.”
Slide 14
Talking about Chris Davis, Stephen said – “I am sure you are all aware we are not the only ones out there, there is a bit of a race on to get into production as quickly as we possibly can and its fair to say we are looking at different ways to achieve that. We understand its vitally important to be early into production, we wouldn’t want to be 5th or 6th down the line. I think we would be really struggling if that was the case. Syrah, who knows whats going on with them these days but they appear to be under construction. Magnis are a bit down the track from us, they started a hell of a lot before us and then I would like to think we would be the next cab of the rank, umm you have Kibaran in there but they are fairly small “
Someone then asked – “with the fast tracking of production would you be looking at a small scale production plant to kick of before a major production plant, would that be a way to enter the market?”
Stephen responded – “yeah, we are looking at lots of alternatives and if that scenario made sense and the cost was workable then yeah it would be hard to say no to it”
Alwyn Vorster then commented, I can’t quite make out what he said but I think it was – “I think the challenge is the regret capital, that you don’t over capitalise. It will be one of Trevor’s first priorities, to sort out what is regret capital.”
Slide 16
“its really important that we start introducing the Volt story to institutional investors sooner rather than later, no point going when you have done all your work (BFS) and then knocking on peoples doors and they will go – well we have only just heard about you, its going to take time. But if we can introduce ourselves and warm the market, let them feel comfortable plus we will get to know them and hopefully it will come together at some point down the track and they will participate when we need the big bucks for the project.”
Slide 17
“things are going in the right direction. I think we need the general sentiment for the Lithium Ion battery space to continue to really fire up so that all graphite stocks, not just ourselves but certainly the wider graphite stocks sentiment on the macro space to improve from where it is at the moment but certainly with the de-risking of our project and what we have got we would believe that we should be outperforming our peers.”
“next year I think is going to be a very interesting year for the whole space to see what happens. A lot of these giga factories that you hear about, we have done some work through Michael Lew in New York. He has actually picked up the phone and spoken to all these Lithium Ion producers – guys he knows well, so he isn’t relying on other research analysts some much its his own direct information plus conversations I have had with companies in China we see the current Lithium Ion Battery capacity is at 66 Gigawatt hours currently and that’s going up to 402 Gigawatt hours by 2020. Its actually a relatively short period of time but it’s a massive capacity increase and we know that’s all brought about by EVs and power storage for your homes, the growth is just phenomenal.”
“when I was in china talking to Optimum Nano, talking to the director there. About to sign an MOU for 20,000 tonnes, we had just been talking about how they where going to increase production by 300% next year and the year after and that from June they could not take any more orders for the rest of the year. And he said instead of making it 20,000 tonnes can we make it 60,000 tonnes, so I wasn’t about to say no. So there is a tremendous amount of growth that I think we will see to start to come through. Obviously these plants don’t go up over night so yeah maybe towards the end of next year you will start to see some of the demand start to kick in.”
Question time
Question 1 – “We have a lot of MOU’s, but what are the chances of those turning into binding off take agreements because at the moment Magnis is still trying to get that western offtake. What are your thoughts?”
Answer 1 from Stephen – “yeah really good question. We were only talking yesterday, if you don’t get your binding offtake – you don’t get your finance. So it's absolutely critical to us. I think we have made a good start with these guys, I think with what I have just been saying – their demand will mean they will want to talk to us. We have sent them samples, we need to send them more samples, they need to do more test work, more representative samples, give them the confidence we can produce that product on an ongoing basis. The Chinese are I guess a little bit easier to get over the line in terms of Binding Offtakes compared to non Chinese who tend to perhaps do a lot more test work but I think the other things a good offtake partner will want to see will be certainly a PFS as well as see us develop corporately. They want to see progress being made, probably mining license in place. So yeah certainly its going to be a huge focus for us next year.”
Question 2 – “It was fantastic to see high grades 99.99% and super jumbo but I am concerned about the grade in the ground, it is very very low 5%.” The question was longer than that but I couldn’t hear it all.
Answer 2 from Trevor (he said a lot more than I have written here and it was fairly detailed and impressive but I can’t make it out on my recording) – “if you have got good quality product coming out from a lower grade resource you have a much more bankable project than a project that has a high in situ grade but a bunch of products that you can sell at only $300 a tonne.
Answer 2 from Stephen – “if you compare our Opex with say Syrah (when our PFS is out) ours may be higher at a worst case scenario but our basket price will be higher. It more than compensates, I would much rather have better quality product and lower grade in situ any day.
Thats all folks
VRC Price at posting:
6.7¢ Sentiment: Hold Disclosure: Held
(20min delay)