AGM:Brian was supposed to be there but last minute was called...

AGM:

Brian was supposed to be there but last minute was called into a meeting with the new Minister of Mines and Energy. We need government approval of our aim of bringing in concentrate from other sources and treating them at the plant so the relationship needs to be good. Apparently the meeting went very well and it seems we have good support. The meeting was scheduled for 15 minutes but went for 1.5hrs.

Present at the AGM were Ugo Cario, Pamela Bardsley and the CFO.

Production at the plant is improving with recovery rates growing. Apparently 16% above budget in April. So trending up very well!

Oxidation rates are going up and sulphide levels are falling. With the aim being 3% sulphides they are now seeing levels as low as 4%. This is a result of getting better at tweaking the existing plant configuration and the insulation of the existing Albion tanks. The 6th tank is still offline.

The feed thickener will be commissioned next week and it will help them get consistency to better control the tweaking of the plant and give them control over highly variable rainfall.

Dredging in the last year has been problematic and they are very confident that that has been improved with expat management of it. This is extremely important as together with the thickener makes tweaking of the plant easier as input is more controlled.

The 6th Albion tank will be commissioned end of July. This and the feed thickener are expected to produce a step change in recoveries and production.

I personally expect to see a real step change in the output now, given that sulphide levels are down to 4%. Maybe they are only down to 4% for short periods and not consistently (i did not think to ask Ugo this at the time though).

The metallurgist in charge of the plant is reported to be the most excited he has ever been at present with the improvements happening at the plant. This is what he has said to Brian.

Revenue is currently just below 1M per week and MQG debt is being repaid. It is expected to be under 30M by June 30 2014.

I completely forgot to ask for an explanation of what happened with Mr Zach Casley.

Xstrata are building a Albion plant in Kazakhstan and have asked for technical assistance from PGI staff due to the experience they have. A question was made regarding IP in this regard but the answer was not detailed and Ugo simply stated that they were protecting their IP.

It was asked whether all profits would just get spent and lost on exploration of the DR tenements. The answer was that they see much greater return on investment in processing concentrate shipped to the plant than from new mining. No specific locations/sources of concentrate were disclosed but the story is that they are looking at a number of potential sites.

The fact that MQG have a share of output due to the debt means processing concentrate is complicated so they see themselves refinancing the debt and completely removing MQG as a debt holder (ie buying their debt out 100%).

My personal feelings are quite mixed. The same old story was given; things are being fixed and are improving, just watch. But this time verbally and not just written on paper. The signs are good with sulphides down so low but recovery rates must rise accordingly and we are yet to see those concrete numbers.

It is also good that the mechanical issues that have plagued them seem to no longer be an issue. So things do seem on the surface to be going much better.

I was expecting to see more technical information, def to see Brian there and maybe even the manager of the plant. So really personally i feel like i wasted my time flying to Sydney for the meeting. At least the weather was nice :)

Things are def looking up but significant risk remains.