I went to the presentation of the annual report this morning....

I went to the presentation of the annual report this morning. This is the first time I’ve been able to attend any of the BDR meetings. As I’ve explained on other sites, I like to mix with the management of these companies to get a ‘feel’ as to their knowledge of the company especially the non executive directors – try to gain an impression as to how much they’re contributing. I also arrive with a page or two of questions. I know these people are not able to make any disclosures that are not in the public domain but often you can gain hints as to what is really happening.
I better confess that I’ve only been a shareholder for 18 months or so. I’ve read as much about the company as I could find but…….I found today that I couldn’t even pronounce the company’s name correctly. I hope there’s someone else out there who didn’t know it is BeDELL not Beedel.
I only discovered the company when I read some of their drilling results at Tropicana (some of you will recognise that I’ve been a long time supporter of IGO although some of that belief has lost its shine).
After reading up about the BDR story I couldn’t believe the share price. What was I missing?
After today, I don’t think I’ve missed anything and to be honest, if I had some cash I’d be buying.
Now here’s what I found out.
Those people who posted earlier today were correct. The institutions had decided en masse to reject the options package. The acting chairman said they had been rapped over the knuckles and had been given their first strike. The board will now be consulting more widely in future.
Peter Bowler gave a VERY impressive presentation. He’s sure as hell not slick but by goodness, he’s on top of his facts. Everything we threw at him he responded with such openness (and what I perceived as honesty)that I found very refreshing. Obviously there were analysist’s from broking houses within the room and he often referred to them by name to get consensus on certain industry wide subjects.
I’ve nothing new on the gold front except to say that BDR are going to have one of world’s lowest cash costs even without the additional benefit of high grade iron ore extracted from the tailings. PB kept emphasising the advantages of operating in Brazil. Lower wages that only rise with the GDP. Earthmoving experience without peer. He made what I thought was a very valid point that they’ll bring this plant in on budget even though the figures are two years old. (compare that with Australia). Electricity is (I can’t remember the actual figure) way lower than Australia.
He was asked for a comparative gold mining company. This question went around the room with several of these ‘suits’ contributing until they agreed on Regis Resources. That company will have an annual production of 400,000oz compared to BDR’s 180,000 but…….PB claims that our company will have a greater resource. (the emphasis from everyone was that they were both quality projects that stand out from the field)
When???? They have a much sort after spot at the next Diggers and Dealers. By then he hopes to bring us a big jump in what they have in Tucano. This new drill is achieving 250m a shift compared to the diamond drill they were using at 15m a shift. As a result he says we’ll be getting updates far more often. His target is 3 million oz within two years.
The iron ore story.
I went along wanting to ask why the heck Anglo would be condescending to talk with such a small fish. The answer (and I asked him to repeat this twice) we have far more iron ore than Anglo has within their nearby project. They have a resource that has a life of 7 to 10 years. If they can do a deal with BDR they’ll have at least 25 years (and a monster like Anglo is only interested in long term projects).
We were told that an agreement is close to being signed. He told us that Anglo has been very active the last three or four months in trying to get this agreement. Now, I also heard rumours coming from both the ‘suits’ at the back of the room and also from the top table that Anglo might be trying to get their operation ready to be sold. PB assured us that he and the board are quite happy with that.
If you go to page 13 of the Sydney Presentation you’ll see a target called Duckhead. As you can see it’s a high grade pod of gold with an overlay of iron ore. If/when the agreement with Anglo comes about he says he’ll get them to scoop all the top ore off and …….he gleefully announced the quick boost of cash that will result within the early days of production.

In summary. BDR will be the second biggest gold mine in the state of Amapa. They’ll have a workforce of 480 and he says they’ll only have a couple (2) expats on site. (the third biggest employer in the state) This approach and their community credentials have won them great favour with the government.
To illustrate his point about a low cost environment he pointed out that the largest mine is producing 400,000oz @0.4gm.
He believes the cash costs will be under $450 and with his confidence in signing with Anglo this will be further reduced by the iron ore extracted from the tailings being costed between $30 -50.
Commissioning should be straight forward and every thing is working to specification (he’s just been there). There was a hold up because of the Bangkok floods. I can’t remember what he said they’d bought off Kingsgate but that had caused the delays.
The emphasis is to get Tucano operating profitably before targeting their other projects. My interest being in Tropicano was met with “There’s no way we’ll contemplate a joint venture. Once the profits start flowing from Brazil we’ll throw a lot of resources to see what we have there. It could well be as big as Tropicano itself.”
There are 10 companies who have produced analyst reports on BDR and seven others have asked permission too. The largest shareholding is 6% and among the top shareholders are some of the largest North American institutions such as Blackrock. They’ve had much interest from New York Jewish investors who are bullish on gold long term.

Now why in the hell is my shareholding in this company glowing red at the moment? He assured me to hold tight – it won’t be long now.
James