news from the agm

I wasn't sure if they closed off George Street for the HEG AGM or for the Premier of "Australia" with Nicole Kidman & Hugh Jackman.... ....either way, I was proudly wearing my HEG-Cap through the streets of Sydney :-)

As we registered at the front desk we could pick up the latest 150oz gold bar(surprising heavy for its size) and each attending shareholder(About 40 of us) was given their very own "Hill End Gold Nugget" which now has a place of honour next to my computer screen!!

After a formal opening, it was straight down to business and PB did a fantastic job of explaining the history, current situation and future of the operation. All the mumbo-jumbo finally made sense to me - especially after seeing the 3D slide of the mining operation together with the informative commentary.


Below is my interpretation of the main points:

They are devoting 99% of their resources and time to the Reward project - the other new projects(Laos and to a certain degree Hargraves) are more for the future. Even though their main focus is on Reward, if a "bargain" advanced undervalued gold/silver mine comes onto the market, they may think of purchasing it - but that was a big Maybe.....

Their main aim at this moment is to become self supporting which they hope to achieve by moving from a sampling mine to a producing mine and their plan is to increase the monthly production from 500 oz per month to 1500 and then to 2500.

They are determined to achieve their aims by self funding and do not want to go down the "Bendigo Road" of raising a lot of capital and not being able to give a return on the investment.

So far, they have produced 1,200oz worth about $1M. At the moment, the "Unrefined gold" gets sold to the Perth mint and they get about A$1,085 per oz - they are considering alternative places to sell the gold(e.g. to bullion dealers) which might give them a slightly better price.

The current production-cost (not including capital expenses) is around A$400 per oz which could drop to $300 once the operation is in full swing.

Getting parts for the processing plant is not easy and this does cause some delays.

They are very excited about the future potential of Hargraves. At the moment, they only have an explorers license but are in the process of getting a mining license so they can set up a mining project. It would take a MINIMUM of 2 years to set up a mining operation there.

One of the shareholders raised the point that even if they reached the 2,500 oz level this would barely cover the annual operation costs($700k per month) and not leave a lot for profit. PB reassured us that they are doing everything to possible to make money for the company and shareholders.
The shareholder also complained that last year he was told of the 5 million oz potential and not much progress seemed to have been made towards this goal.
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The management & the board were all very professional and well informed. I felt that although there wasn't any earth shattering news, the company is in competent hands and there is the potential of HEG becoming a much bigger operation in the future. I for one will not be selling any shares in the foreseeable future.