TLG (ASX) Notes from 2023 AGM

Originally posted by howyargoin: ↑

Hi all, I attended the AGM today, and given how well my summary notes from last year were received I thought I would share my notes from today. Keep in mind these are not direct transcription and I'm paraphrasing in many cases.
Terry Stinson was an apology, which I thought was strange and not a good look for the chair of the board. His absence was excused due to a late change to the AGM date and prior commitments
Not much to say about the official proceedings, except the board copped a bollocking from a retail investor on Resolution 4.
Misc comments on the anode business
Mark made an interesting discrimination between Talga's Vittangi project and other Graphite mines: Rather than just a graphite mine, Vittangi truly is an anode mine, given that almost 100% of the graphite particles in the mine are sized correctly to be made into anode. For other projects it is a much smaller proportion of the total graphite resource that can be utilised for anode.
The graphene supply chain for non-anode purposes will be derived from the small portion of graphite particles that are not used in the anode supply chain. Hence there is basically no mine waste.
Worth reiterating that Talga anode has already been qualified (proven) with major customers. There is no longer uncertainty with respect to whether the product works.
On project financing
The DFS for the Vittangi Anode Project has a capex of USD$500-550 million. Talga has publicly stated they are looking at financing with approx 60% debt; and therefore 40% (or ~$200M) will be non-debt funding.
Mark stated that 'over his dead body' would this non-debt component be funded entirely with equity, and that TLG will be exploring opportunities for funding from State, EU or strategic private partners to minimize dilution, including the possibility of receiving upfront payment from major customers for construction costs.
On the Supreme Court Vittangi environmental permit appeal
When asked when we are likely to hear about the outcome of the appeal application with the Supreme Court, MT stated there is a guideline which states the processes should take between 1-4 months, and we are currently at the one month mark (though the court does not necessarily abide by the guideline).
MT reiterated this important point: if the court does decide to review the appeal, they will only send the case back to the appeal court if there is evidence that due process has not been followed; that a law has been broken. The Supreme Court is not reviewing the merits of the project or its potential environmental impacts. The courts have already reached their verdict on the this. The Supreme Court is only to ensure that due process has been followed. If the court finds no issues, then no further appeal can be submitted. This is the end of the line.
The number of cases that actually win a second appeal through the Supreme Court is only 1.8%
In the extremely unlikely chance that the Supreme Court does find a breach of law, they will send the case back down to the original Appeals court, and it will likely then be another 6-12 months before a verdict on the second appeal is completed.
If the supreme court rejects the appeal, the next step (following celebration!) is for Talga to apply for an exploitation permit with the Department of Mines, which is expected to be approved within a month.
A side note on this: MT states that the original judge (judges? not sure how the process worked) told the lobby group not to appeal the decision, but they did anyway, and likely did so because the Swedish legal system is broken in the respect that it costs the party nothing to apply for an appeal, and in that way, delay the project. Whereas in Western Australia there is a cost associated with the application, which filters out a lot of the malicious/protest appeals.
On the Critical Raw Materials Act
The CRMA is set to lower the target limits for processing times on permit applications to 27 months for mining projects and 12 months for downstream processing plants.
Talga can likely receive strategic project status, which would allow future permits to be fast-tracked even more
Some improvements to the permitting procedure are already coming into effect. Just last week, the EU requirement for 'Offroad permits' (?) was dropped (no idea what this means - I presume its about driving offroad for mineral exploration).
Further reviews of the permitting process are to be undertaken next year
On the Aero Lithium Project
Mark describes this as a 'free kick' for shareholders, and estimated (tongue-in-cheek) that it has a value of 'somewhere between 0 and 10 billion dollars'.
This project is obviously not a priority for the company right now and is unlikely to be explored using TLG coffers alone. Apparently there are a few big players in the lithium space who have voiced interest in it, so further exploration may be completed through some kind of joint venture
The prospect is located right next to an existing iron ore mining town, and therefore has good accessibility to existing infrastructure
On TLG share price action over the past year
Obviously dissapointing, but MT argued that if you look at our SP change in the last 12 months, we have outperformed peers on the asx and in global markets, with many similar sized graphite mining companies seeing SP declines of ~70%.
On China anode export restrictions
Restrictions on natural anode exports from china are starting tomorrow (1 Dec 2023).
Mark considers this a big wake up call for car makers, who previously did not think much about where the anode in their batteries was coming from, given the battery manufacturers they dealt with handled sourcing of anode (spoiler: it was all coming from china). Now EV makers are actively worrying about it.
The reason why China is doing this, Mark thinks, is in response to high export tarrifs applied to cheap EVs entering the EU market. It's China's subtle way of reminding the EU that they have their domestic EV manufacturers by the neck - currently, there is no where else to source anode from. Very good for Talga.
Final comments
This are just a couple of things to end with, that MT mentioned throughout the Q&A, but i think speak volumes about the company and management.
During the Q&A MT received a question from a person asking him about a photo in the annual report, of a scientist looking at a computer screen, and he asked what the man was doing. Strange question IMO, but without even looking at the picture, MT knew the battery scientist by name, and described what he was doing in the photo: reviewing graphite particle sizes using an electron microscope for a sample being submitted to a customer. How many MDs have that attention to detail?
In the past 14 years that the company has been in operation, Mark has not sold a single share, and has mortgaged his house 4 times to buy more.

Expand

"Mark made an interesting discrimination between Talga's Vittangi project and other Graphite mines: Rather than just a graphite mine, Vittangi truly is an anode mine, given that almost 100% of the graphite particles in the mine are sized correctly to be made into anode. For other projects it is a much smaller proportion of the total graphite resource that can be utilised for anode."

This is one of the main reasons I went heavily into TLG. This is a first principles advantage that Talga has above anyone else.
I don't understand why this is not the primary message in the investor presentations, as both professional and retail investors can instantly see why to chose Talga instead of anyone else.

I had not seen this statement much the last couple years, so I started to think they had changed their anode in a way so they had to do more work on the graphite before it could be used as anode.

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Notes from 2023 AGM, page-9

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Notes from 2023 AGM, page-9

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