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AGM, page-108

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False9

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26/11/17

09:16

Post #: 29119907
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Originally posted by RabbitTrap ↑

As requested by False 9 I have put together my notes from the AGM. As per usual, I cannot guarantee I captured everything correctly but assume someone will point out where I have misunderstood or missed something. Also forgive any typo's or grammar mistakes.

Terry Cuthbertson (TC) started the AGM with the usual acknowledgement that a quorum was available and that the meeting could commence. He then outlined that the board acknowledge the concerns expressed by shareholders regarding the remuneration being paid to MT. He advised that the going forward the payment would be performance based and that this would be considered by the remuneration committee. In addition the salary of MT would be cut by 25% in the 2017/2018 financial year.

TC advised that the previous year was a very successful year but acknowledge that to date they have been unable to convert that success into any commercial agreements to demonstrate this to the shareholders.

TC added that 2018 will be very active year and hopes that with ongoing success that within a nine month period there will be a much larger management team. As result MT will have be less involved in the Newcastle work.

MT gave an overview of the past year and some insights to what is expected for the coming year.

The APG zinc/iron recovery process is unique for the recovery of still mill by products and the progress of the patents process was give.

The Stage 1 “proof of concept” testwork has been successfully completed

More commercial scale test work will be performed following receipt of additional funding in Jan/Feb.

The funding facility with an American organisation has been completed, the agreement was reviewed by Colin Iles (CI) and John Winter (JW). MT praised the review process, advising the many terms and conditions in the contract that were not favourable to APG were removed from the agreement, and document is now back with the potential funders for review and sign off. MT advised that the term sheet has been signed, and it is now back with the US lawyers. It is expected that the earliest it will be available will probably be Feb, due to the silly season being about to start.

Discussions with various steel mills have been advanced but final agreements regarding possible funding, support are still a few months away.

MT discribed that as an old geoligist he is very excited by the drilling results at Nhill, due to the quality of the two very good intercepts.

I must admit I do find it interesting that in effect APG are drilling into what was once a island chain that has been buried under more recent sediments of an sea.

MT then handed the podium over to CI.

I will mirror the comments by other posters that the CI seems very knowledgeable and certainly presents very well. His presentation was performed without the need to use a microphone.

Initially he highlighted the growing global trend including in China to attempt to recycle waste products e.g the circular economy and the use of urban minerals. This is due to the increasing realization that there are only limited resources available and there will become an increase in the need to convert what is currently waste into virgin new products.

The video on the commissioning of EVAP unit was then played to show the results of last years work.

While it does not seem to be much process it has created much interest with potential customers and users. It has added a new quadrant to the steel industry. Currently the waste products have to be either stored or be sent to Port Pirie for processing an this is costing the steel industry large amounts of money. If APG can prove the next few steps of the process it could be a win / win situation for both APG and the steel mills where both can gain from the implementation of the technology.

Page 8 of the AGM presentation gives an overview of the use of the ZIRP in the circular economy.

Page 9 and 10 of the presentation display the sheer scale of the current waste from some of the larger world steel production regions, and the potential size of the market should APG prove the process and gain approval for the ZIRP process.

Slide 11 gives an overview of the market business model that APG intends to implement going forward.
The R&D includes the need to make the iron oxide a more solid product etc.

CI admitted that the business model is a big ask and will not happen in one year, but it is possible.

CI advised that it will take 20 to 25 weeks to complete the test work once funding has being received.

There is a known opportunity for a 40,000 tonne plant that they hope achieve once the test work results are able to be demonstrated. If successful this could lead to a multi million dollar fee. As it will be a win / win situation for both the plant operator and APG.

There is an aim to complete the Newcastle plant to process 10,000 to 15,000 tonnes per annum, using local EAF steel producers waste. This will result in APG finally having a cash flow, and being able to demonstrate the process to the global steel industry and secure licencing fees and royalties. They intend to explain the process using international trade shows etc.

Eventually they will also look to investigate other By-Product generating industries.

As a result of questioning from last years AGM, where the profitability of the potential plant could not be qualified, preliminary modelling was conducted to that shows that the plant will be profitable. While not of a BFS standard it confirmed that the plant is commercial.

The next presenter was JW

JW then gave a excellent walk through of the ZIRP process, the key to the new patent relates to the EVAP stage.
It appears that Stage 2 relates to the binding of the particles together without the use of added binding materials to ensure that there is no contamination.

Stage 3 utilises the process that was developed for Ilmenite.

The final stage to separate the iron from the zinc is a very well understood and well developed technology that has been in use since the 1930’s.

The final presenter was Mike Smith (MS) and he visibly was very excited by the drilling results and the possibilities of further exploration. He discussed tha Victoria is emerging as a new exciting base metals zone, similar to Chile that is the current premier base metal region in the world.

The map shown on Slide 23 shows a blue area surrounding the current APG tenement that is currently been held in reserve by the Victorian government. This land is expected to be released in early 2018, date yet unknown. APG is hoping to form a JV with a company that has sufficient funds to enable a tender that can secure these areas, perform the necessary drilling and hopefully carry APG to production. MS has a successful track record with winning a tender for exploration land as demonstrated by the WIM 150 tenement.

MS gave an explanation of the importance of the current drill results, and how they believe the high result occurred.
In an answer to a question MS stated that the deal he is looking at is for $0.5 million up front, the drill result is very interesting but is not yet a deposit. So there is a need spend money to buy the additional tenements and finance a drilling program.

MS warned that negotiating with a large company can be hard, but APG has a track record and he referred to the gold drilling that APG was involved in many years ago in Japan with MIM.

In answer to a question CI stated that the potential in the US is huge and it includes the presence of Bluescope in Idaho. He advised that they will only go to the US where the trip is planned based on results that can be demonstrated.

CI indicated that a typical transaction for a 20,000 tonne plant would have to be a win / win situation for both APG and the steel mill. When pressed he indicated it could include a base fee of A$6.5 million which would scale up for larger plants and a potential royalty of US$10/tonne.

When asked why it will take so long for the testing to be completed, e.g. 20 – 25 weeks, CI said half the time would be necessary to have the necessary pyrohydrolysis equipment fabricated. In addition, in order to keep costs down it is intended to only run 12 hour campagns. The funding currently being discussed will provide the funding for the remainder of the program.

There is a need to provide proof at a commercial scale. The current lack of progress is due to the lack of sufficient funds. The current funding negotiation will enable the next step of the process to begin, but success at the end of that step is necessary to obtain additional funding from people who need the process and are prepared to work in partnership with APG.

CI was asked if the process products for pig iron will produce the ductable pig iron of 10,000 tonnes per year that is imported, he replied if we can get the chemistry correct, then it is possible that we could.

When asked if Australian steel mills have sufficient resources to supply plants using the NIRP technology, he advised yes, and referred to growing waste dump area of Bluescope called 21 area in Wollongong and the fact Liberty currently send the waste to SA. The sending of the waste to SA is potentially costing millions and could instead be utilized to gain additional profits instead.

MT was asked what had happened to the synrutile discussion, and he showed disappointment that they are still waiting on a signature, and unfortunately are unable to contact the quote ‘gentleman that is if he is a gentleman’. He also reiterated that compared to the potential of the NIRP process, the synrutile has a much smaller potential for APG.

It was also confirmed that the current process is locked in stone, there will be no further tickering or changes until the plant is finished.

When asked about the funding timeline, it was advised that the terms have been negotiated and signed but the agreement is still with the US lawyers after a number of changes to the document as referred to earlier in my post. It is expected that the final document will be signed in Feb 2018 and funding will be available the next day.
When asked if the funding is sufficient, it was advised that the funding that is being negotiated is regarded as sufficient to take the product to market and show the potential customers that the zinc can be gained as a product as well as iron.

CI indicated that June 2017 was the completion date for the next step but from what I understand it will then be necessary to have a licence (fee) to proceed to the next step.

In the meantime, potential partners will be able to observe the plant results. Maybe I have misunderstood this but this is a bit of a worry, it indicates that unless additional funding is available we may again be in a holding pattern. If anyone else was at the meeting I would like your feedback to understand this part.

On a whole the meeting left me feeling the most comfortable I have about APG for a number of years. Assuming we get all the necessary funding we seem to have a very good team, MT has championed the change of direction of APG into first synrutile then urban mining, MT and NC have keep the company afloat with no debt, though we now have a large number of shares on issue. CI seems to be very energentic and organised and will help keep the focus on getting us a plant that can demonstrate the technolgy, JW is the technical brain behind our technology and finally MS is doing some interesting things with exploration on a tiny budget that could yet be very exciting for APG.

I really hope the next year finally brings some success to the shareholders of APG.

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Hi Rabit,

thanks for the unbiased and detailed overview. A lot of work went into it and is appreciated by all on this forum.

If I can refer to your paragraph re funding, timelines and licences.

CI did indicate that with Bluescope there are two opportunities for a very good transaction.

The first he said he is confident/very hopeful of a transaction within three months while the second as you say at the time of taking market to product.

CI seems intent on giving realistic timelines and I think most agree he is a straight shooter and calls it as it is.

Again, thankyou Rabbit, once again you pulled the facts out of the hat for all to see!

Cheers
APG Price at posting: 1.0¢ Sentiment: Hold Disclosure: Held
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