Unlike the general meeting in September both John and Rob were there along with a couple other shareholders and the company auditor; Grant was unable to attend as he is still in Tanzania.
In regards to Merelani, unfortunately they pretty much gave me nothing of value, other than saying it was taking longer than expected and couldn't specify a completion time. They did however say that the ThyssenKrupp binding off-take agreement being signed off on was not dependent on the JV being finalized. They also advised that one of the great benefits of Merelani was the headstart it had over Epanko in terms of time to production but that has dissipated now , apart from the fact that Merelani has a mining license already (but Epanko will most likely as well in four months).
In terms of seeking another director, all John basically said was they are mindful they told the market they are on the hunt but for the time being it is definitely not on their priority list. They are looking for someone who is close to global institutions to assist in seeking development finance when the time comes.
The scoping study indicated a current basket price of graphite of around $1,200 per tonne and they confirmed that this would be the price they would get today as advised by their graphite partners. For future pricing, they accepted the concept that prices in 2016 when they anticipate they will be commencing production could be higher than this price, evidenced by China seeking graphite internationally and not solely relying on domestic production anymore due to environmental concerns etc. I posed the question about whether the upgraded grid power and construction of the new bridge would reduce operating costs and John only said it was hard to tell at this stage. John also confirmed initial development costs / working capital would be $50 - $60 million per the scoping study.
In terms of financing the project, John used a figure of 65 - 35 debt / equity ratio they would be looking at. In the binding agreement that they will be signing with ThyssenKrupp they were particular in saying there would be a clause in there stipulating that TK will lend their balance sheet essentially for financing. However I am sorry to say that TK are very particular in where they invest in equity and for some reason they are put off by Africa. This means that unfortunately TK themselves will not be taking an equity stake in the company, and they will not be offered a 10% position in the company when the binding agreement is signed. The good news is both Rob and Andrew will be in Germany in three weeks times / for three weeks (was unclear) with the intent of signing the binding agreement. John then jokingly said they will not be coming back until it is signed. They went on to say in regards to the equity portion of the funds needed that the EGT may be interested in taking an equity position once the project is de-risked via leverage. John said at this stage we will have two binding / possibly another MoU/LOI signed along with a feasibility study completed and a mining license; if that does not secure finance then they are in the wrong game.
It was much tougher to get the answers I was looking for today due to the volume of people there but I believe most of the questions were answered. Couple last things, the flake distribution results are actually based off of three diamond drill cores and not one. The other seven diamond drills recently completed have arrived at their locations around the world to be vigorously tested. John said we are unlikely to receive results in the short term, and really they only need to release them (release them early as opposed to when the feasibility study is published) if anything significant is discovered, such as a lower / higher flake distribution than previously reported etc. Finally, they also put the share price decline to global markets blah blah but I got the feeling that they were cautious not to spill the beans about something.
Have a good one guys.
KNL Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
(20min delay)