There was only a handful of investors, some personnel from computershare, and some other official looking attendees.
It's not often I get a chance to attend a companies meeting in Melbourne, so its a bit of a luxury being able to jump on a tram, rather than typically fly to Perth....as is usually the case.
Brett chaired the meeting, and the formalities with the resolutions were breezed through as expected, with all passing comfortably. For the most part, the no vote sat at around 20%, which I suspect would be the protest vote from retail.
That then gave Brett and Tim time to address the room, where they gave us their perspectives on Belfast, Makuutu and Brazil. But more importantly, gave us plenty of time to ask questions.
In my experience, so much more can be understood, by the reactions of people when being questioned. Most people sub consciously, will tell you something without saying it.
So we had plenty of time to talk about strategy, timelines and prospective markets.
In a very broad sense, the strategy is Belfast and recycling first, Makuutu next and Viridis and Brazil to progressively develop over the next few years.
As many of you have realised, the emphasis is being placed on Belfast and the recycling tech, as they have focused on this being the nearest term catalyst, to bring value back to the shareholders and resurrect the the market cap. The Belfast demo plant is performing well, with the PFS to be made available for review in the next 6 weeks. They will then carry out their due diligence and release to the market. I made the insinuation that this may be the piece of the puzzle that other stakeholders have been waiting for, and it was not denied.
Tim is still confident of solid government support from a number of agencies and funds in the UK, as well as from the UK Infrastructure Bank. Unfortunately, as with all government agencies, progress is slower than what he would like, so he is very reluctant to offer firm timelines. We do however tick many boxes on a number of fronts, and do seem to be a favoured project and in a favourable position.
A rough timeline for Belfast is PFS next quarter, followed by a funding package decision and a FID by the end of the year. A FEED will then be commissioned early 2025, which by all accounts is quite straight forward, as our process seems simple to engineer and procure, with first commercial production 2026. I did make the comment that to keep that timeline you would want to be scouring the commercial real estate apps for industrial park land options now, which he indicated they were already doing. Tim also mentioned France, Italy and Germany structuring their own sovereign funds, in addition to the EU and UK, for the energy transition. I made the point of those 3 having massive auto sectors and he agreed, with them requiring transitions from ice to EV asap to protect their local industries and all the jobs that are associated...literally millions of jobs, with the UK alone, having around 1 million people in their auto sector and supported industries. This does seem to fit into the narrative that I think we all subscribe to, that governments have just not done enough, to combat the heavily subsidised Chinese EV onslaught that is now happening. Just yesterday Stellantis, which among others, owns Vauxhall, Peugeot, Citroen,Fiat Group, Chrysler and Opel, criticised the UK government for not doing more and threatening to start closing plants in the UK in under 1 year.
Vauxhall owner says plants could shut unless UK helps EV makers
Stellantis to rule on viability of Luton and Ellesmere Port sites ‘within year’ amid criticism over lack of government cooperation and sales incentives
They need to decouple from China and support local supply chains. Tariffs, will not be enough...they need to make EV's more attractive to stimulate sales. And with more sales, they need more resources, more lithium, more nickel, more steel, more copper, more rare earths....and that's where having this microcosm supply chain in the UK, with Belfast supplying LCM and in turn supplying the magnet makers to supply Ford, then Stellantis, GM...BMW, Mercedes, VW.... etc....UK, France, Italy, Germany and eventually North America.
Stellantis will not be the only one making these threats....make no mistake.
But I think the market that had both Brett and Tim excited the most was defence, with many sovereign states in the EU, having their own defence industries. The UK, France, Germany, Italy, Spain etc,,,all have their own multi billion dollar defence industries. Price is no object, security of supply is paramount...there is no other consideration to this equation...security, security, security....
So how close or how far from deals with military contractors is something only the company can answer, but it is very encouraging that this piece of the puzzle, is a part of the strategy....and could be huge.
I asked about feedstock for Belfast, but they were quite confident it is a non issue. It seems inroads have been made here, and they are not worried about securing it. Not worried about supply and not worried about price. We didn't speak figures but I got the impression the figures looked good.
And I think what little info I could get around the PFS, that it was shaping up to be pretty good too.
We also talked about cost saving. This is crucial at the moment, and they are very conscious of their spending and a have an increased focus in keeping it low.... They acknowledge that this CR was done in a tough market, which was far from ideal, with conditions to stay tough through 2024. Another investor there pushed them on the Cr options. Every angle was examined, with the company and its advisors running the ruler over all options, and eventually going with the CR we just had. The advisors thought it would be difficult to raise via SPP again, as the last SPP was only last November/December and was not fully supported by the retail investor base. The analysis indicated the support mat be even lower, and the cost may have exceeded the capital raised, so elected against it. Tim confirmed that the institutions that invested, still have all their shares and are long term investors, so hopefully it continues to play out like this. With no love and minimal liquidity given to small caps at the moment, particularly in the rare earth space, its tough for anyone right now to raise capital. The cash burn has come right down, with the few that are left in the office essentially shouldering the load. This 5.5M has to last, and they know it.
The plus side of this tough market, is they feel with the first mover advantage they have, being on the radar of the uK government and others, many incumbents will struggle to raise capital and finance their projects....and many of them just wont get there. Such is the depressed market we are in now, with commodity prices so low, it is difficult to get a BFS and FID to stack up...you just wont get the capital. The same can be said about the lithium space, with many now saying that if you are not already producing, or in the final stages pre production and fully funded, you just wont get there. So, many of our potential competitors will not survive. We have to be first or one of the first and move quickly, because you will probably only get one shot at this.
I see what they are trying to do and see it as a revolutionary idea. Pioneers. A chance to circumvent and short circuit the Chinese supply chain. To establish, build and grow, the relationships the connections and the product in a circular, ESG friendly and complete supply chain. With supportive governments and OEM's who want to take the bull by the horns and be part of the solution. I really don't see anyone else trying to put these pieces together like we are. Filling the void and trying to connect the partners to make this happen. To fill this void in the supply chain and offer a true, home grown sovereign capability, that is finally a viable alternative to the Chinese domination that the west has allowed to proliferate unchecked for decades.
This technology can then be replicated further afield...France...Germany...Italy...North America ( US/Canada) and South America(Brazil) Brazill was also mentioned a few times, with Viridis and possibly also an independant recycling plant.
Supportive governments are the key and if they too can see the simplistic brilliance in this idea and go some way to fund it, then I have no doubt Ionic will be a success.
The meeting concluded with myself and a few other investors chatting to Tim and Brett, and with the 2 of them being appreciative that we attended and appreciative of the interaction.
Personally, I did leave with a an optimistic outlook, albeit a cautious one. There has been some great milestones to this point, but the journey has not been without its flaws. Our capital position has been the source of my greatest concern, so its good to see that they too have recognised this and put measures in place to slow the cash burn and give us a longer runway to execute. Hopefully the orphan period I have previously spoken about does not last for too much longer and a positive PFS finally attracts the necessary attention and investment we need to take this to commercialisation.
The boys are thinking big, and are trying to move as quickly as possible.
Let's hope things start falling into place in the second half of 2024, and Ionic starts to realise its true potential.
IXR Price at posting:
1.1¢ Sentiment: Buy Disclosure: Held
(20min delay)