I will not dwell on what was in the presentation as this can be viewed by everyone, but will quote from sections of it to give an overview of some of the items that Colin Iles (CI) and Mike Smith covered in the delivery of the presentation.
This will also be a much less detailed summary that in previous years, and is only been produced at the request of Rickaroonie and Desperate. It was nice to had a discussion with both of you and the other shareholder I met.
It appears that APG is intending to utilise their expertise and have strategic partners to shoulder most of the operating and capital risk of the projects, such as the use of YanGang.
As we all know the current focus is on the recovery of the Zinc from the contaminated Basic Oxide Filter Cake (BOF). APG believe that the process has been proven technically, and the results are been independently reviewed by a steel company.
During the run representatives from two steel companies viewed the process, staying for half a day till 9 PM at night. This enabled them to review the process on site. In particular it appears that they are reviewing the trace elements in the output for the various stages up to the pre-reduced pellets as well as the coke and other off puts from the processes.
When questioned CI reiterated that the Zinc component is very important due to the fact that the number of zinc producers are decreasing and there is a lack of new producers coming on line. Refer to slide 13 of the presentation 'Zn supply and demand'.
CI gave the overview of the steel industry by product dusts and the circular economy that has previously been covered in earlier AGM presentations and detailed how over $2 million of funding has been obtained over the last year on slide 7 of the presentation. The zinc contaminated BOF is becoming an increasing important issue for the various producers as it is costly to dispose of either overseas or to Port Pirie.
Explanations were given as to what was achieved to enable the the Proof of Concept (PoC) that was undertaken for the first 3 stages of the process including the required redesign of the EVAP and the new vessel for the pyro and pre-reduction.
Stage 4 is currently with the CSIRO and is expected to be completed in the first quarter of 2020. There is usually a two to three month wait time. It appears that the tests by CSIRO will determine if the pig iron produced has low enough contaminates such as manganese, sulphur, chrome etc. It appears if the manganese content is too high the process will be a failure at this stage. As well as the zinc recovery.
It was stated that APG has managed to maintain John Winter, which is very good news.
In answer to a question, it was stated the pig iron has a much higher iron content that the iron ore currently being produced by companies such as BHP
In answer to another question it was stated that some modelling has been done regarding the financial returns of the products from the ZIRP process which indicates it is economic but in the end the commercial viability will depend on the usual commodity market forces.
In answer to a question of why there was a delay from the timeline indicated at last years AGM the following reasons were given.
- A transformer was down for about six months.
- and there was a cash shortage
When CI was asked of the timeline to commercialisation he said anywhere from 12 months to 3 years.
The run through the various stages of the process will need to be repeated to prove the consistency of the results before it is possible to become a commercial process.
When asked if the first three stages of the process are now locked down CI indicated that it depends on the results of the fourth stage.
When asked about the pending patent, it was advised that the application was withdrawn due to cost, and that it was best to keep it secret. It was also advised that YanGang is supportive and protective and will not share the information with other Chinese companies to give it a competitive advantage.
As stated by False9, the various written questions given to prior to the meeting were answered, but most were too quick for me to catch. If I heard correctly the $319,000 outstanding share will be paid out by the end of 2019, and $150,000 have already been paid out back since the beginning of the current financial year.
In respect to the loan by TC, I believe it was stated that it does not have security and that it is repayable in cash with a 5% interest.
Mike Smith gave and overview of the drilling at Nhill and the issues faced regarding the drill hole earlier this year on EL 5291. The local farmers are reaching retirement age and the younger generation are not interested in continuing the farming. So they are very supportive of APG as they are keen to increase the value of the land holdings.
It appears that drilling for GG-01 has hit a PHMS style mineralisation, and can be identified by gravity and magnetic surveys. These have indicated two massive sulphide targets identified on slide 21 of the presentation. It appears that the hit at GG-01 was outside these targets as it was in effect a wildcat hole.
Issues were faced with the drilling of GG-02 which is a steeply dipping target and was drilled at an angle as indicated in slide 23. The rods became stuck in the water logged fine sand at 269 metres in the gravel basement and before it hit the targeted area. Mike Smith discussed the issue with around 100 geologist and two to three have encountered a similar problem which he believes he now has a solution to prevent a repetition of the issue with thick sloppy mud stopping the drilling.
There are hoping to drill out the two identified targets in March / April next year. The renewal application for EL is expected to be approved by the ministerial delegate in the next week or early next year.
When asked Mike stated that the surrounding tenements that were up for tender a couple of years ago did not get taken up as they were broken up into large areas with large associated costs.
When asked to cost of each hole it was replied that they are in the region of $110k to $115K each.
When asked if the targets are in the same area as the recent STAVELY MINERALS LIMITED discovery, Mike answered these were well to the south of the APG tenements. He also advised that Chris Cairns from Stavely has inspected the core from GG-01, probably around the time APG was hoping to get a joint venture partner for the tender for the surrounding tenements.
Surprisingly I am happier with the APG situation than in recent years despite the ultra low share price, as the company has some cash, a supportive partner in YanGang and progress in proving up the ZIRP process and have finally modified the equipment to continue with additional testing. There is also promise,maybe a long shot with the Nhill drilling. At the current share price I hope for at least some success in the coming year.
As usual forgive any typo or grammar mistakes and correct or add any additional information.
