Took Friday arvo off to attend the AGM at the Celtic Club. As...

Took Friday arvo off to attend the AGM at the Celtic Club.
As usual the room was packed.
Resolution 1 Renumeration report had a swag of proxies against, item went to a poll and defeated 8.5m to 18.6m
Strike 1 ! Resolutions 7, 8 and 9 (various share incentives for management) had been withdrawn prior to the meeting.
I see this as a good thing. Management have been sent a very clear message from shareholders that they are not happy and that they expect better performance going forward.
It was clear to me based on comments by the Chair and BD that the message has been received loud and clear and that they are taking it on the chin and acknowledged shareholder disappointment.
There was a fair bit of discussion about operational issues that have hampered a smooth transition to forecast production. The 1 in 100 yr weather event in Q1 17 had a significant impact on the mine plan. The heavy rain and flooding of the pits not only delayed mining efforts but exposed weakness's in some parts of the pit wall structures. This forced the company into a large (unscheduled) cut back of part of the pit which delayed access to higher grade ore.
It was said that there have been several changes to the mining 'team' and that the company is now happy that they have the right people on the job. With regards to the pit wall slippage last qtr the company has made significant modifications to berms and benches and is confident that the issues are sorted.
BLK currently mining 3 sources M4, galaxy and Golden Age. Golden Age is performing well under new mining methods and is cash positive. (production from GA doubled from June qtr to Sept qtr). Costs are in line with DFS.
Grades are as expected in DFS
The 'challenge' now for BLK is to get thru the depletion zones and build their high grade stockpiles ahead of the wet season (Jan - Mar). This was where the last few qtr.'s have fallen down post rain event (processing low grade stockpiles). They are now madly stripping M4 thru December in order to pave the way for 2H 17/18. It was said that the current qtr would be better than the last and that Q3 and Q4 17/18 look to be significantly better due to accessing the sweet spots in these pits plus GA high grade.
The company is expecting a strong second half to this financial year.

The Co remains focused on increasing production and building a long life operation. It was said that prior to Apex closure the mine had operated continuously for 28 yrs. BLK looking to grow oxide reserves from Lakeway/Williamson, North and South of Matilda and the Mentelle structure. Also looking to bring extensive sulphide resources (3mOz) into the expanded mine plan

FUNDING
There has been much conjecture here (and angst) about the TH followed by suspension of trade. It was said that the companies intention was to continue to trade after the TH as finance was being finalised but the ASX insisted on the suspension of trade.
Obviously BLK very happy to have funding sorted and a new corner stone investor. As am I !
Pacific Road have significant inhouse technical expertise and have conducted exhaustive due diligence on the company, its strategy and its assets. They clearly have the view that BLK can and will be a profitable operation going forward. Pacific are an equity investor, the finance deal underpins their equity commitment. The deal gives BLK certainty of funding going forward and Pacific have left the door open to further funding for the expansion to 200kOz pa. Funding uncertainty has been a significant drag on sentiment/sp and the finalisation of this deal will see this monkey off the back of BLK.
I have no doubt that this funding deal has consumed much of managements resources and they will now be free to refocus on profitability.
I think that the rights issue is an acknowledgement that shareholders have copped the rough end of the pineapple over the last year and allows s/h the chance to top up at a time when the sp has overshot on the downside. I will be taking up my entitlements with the RI roughly in line with my initial entry price and so much development work done in between it seems like a good time to invest in the turn around.

In short I am expecting modest improvement this qtr and a significant improvement for the 2nd half of this FY.
Management appear to have got the message and made adjustments to personnel and strategy accordingly. Finance sorted, new cornerstone investor and about to hit the sweet spot mining.

On the whole I am feeling confident about BLK's ability to turn things around from here