Attended the AGM today in Perth, and as with all AGMs no price sensitive information disclosed nor expected. Nevertheless, well worth attending to gauge the ‘confidence levels’ regarding RAP framework completion & project finance timelines as per recent announcements & broker reports.
I took a few notes but not attempted to 'report' anyone directly for risk of misquoting.
Below is simply my recollection of gist of conversations with Andrew Spinks, Rob Hodby & Rob Pett over coffee and questions during AGM:
Resolutions
All resolutions were carried and sample graphite was passed around during proceedings.
Good to have one of the hefty glass 'egg' jars in your hand and eyeball the spherical graphite close up
Finance
Company is focused on delivering project funding Q1 2017 with AS reiterating ThyssenKrupp’s commitment to KNL & their strategic shift to ‘ex-China off-takes’.
He noted, that to a large degree, TK/EGT off-takes not result of extra European demand per se, but deliberate policy shift away from Chinese suppliers.
He emphasized size of initial project (40,00ktpa) is 7% of current global demand and 30% of European demand. Difficult to characterize as ‘boutique’!
Also reiterated that German Govt regard graphite as 'strategic resource' with KfW IPEX-Bank to pursue Untied Loan Guarantee(UFK) on satisfactory RAP framework completion.
RAP Framework
AS expectations are that RAP framework completion could be around end Dec 2016. (A conservative timeline of Q1 2017 was announced recently.)
Ambit Legal Claim
Interesting that basis of claim seems to have been misunderstanding with regard to bulk sample excavations. AS mentioned that local subsistence farmers thought associated digging & trucking was indication mine had commenced without any discussions, compensations etc.
Special Mining License
Background: Projects with initial BFS capex > $100 Million USD require an SML (Special Mining License). Discussed with both AS & RH after formal meeting closed and can confirm initial capex expectations are well below threshold.
Increase in capex for proposed BFS upgrade to 60ktpa also estimated to be under threshold.
Going forward post construction, RH pointed out any additional capex after production commenced to expand capacity would not result in need for SML.
i.e incremental capex requirements in future years if beyond $100Mill not an issue and not trigger SML legislation. Drilling to support expansion to 60ktpa and associated addendum to BFS is ongoing: results expected late Dec/early Jan at this stage. Potential to expand Epanko considerably given additional demand and KNL would preference this site over developing Merelani.
Christoph Frey & Downstream Processing
CF overseas and did not attend, apologies etc, but considered by AS as 'Golden Child' of graphite processing. KNL/CF focused on significant value-add re: un-coated spherical as output of proposed Dar es Salaam battery facility.
That's about it, overall impression was of a pragmatic, matter-of-fact MD who’s focused on delivering graphite to German/Japanese customers and making decent profit for shareholders in the process. There was no ‘flannel’, just a conviction they will fulfill current demand for replacing ex-China supply re: signed off-takes, generate cash-flow and position themselves to capitalize on future expansion of EV opportunities.
cheers
(20min delay)