notes from egm

Here are my notes summarising the key areas of discussion at the meeting today:

Market – the directors are acutely aware that market sentiment is very poor and even the companies with the most compelling investment opportunities in the market are struggling to secure funding. This has worsened over the course of the year. The companies experiencing the greatest difficulty getting access to funds are those in the final phases before development but this is not an issue limited to geothermals.

Funding – the directors are still confident that CIFI will be able to secure the $30m equity funding by the end of the year. The Board would consider the sale of other project assets to free up funds to progress the flagship Copahue project

Discounted capital raising – I asked why the capital raising in July/August was at such a hefty discount. Dr Shaw said that this reflected the difficult market conditions that the company faces in securing funding. One thing we have to be thankful for is in voting for Resolution 2 we ensured that the next cap raising is at no lower than 80% of the 5-day VWAP rather than 50% last time.

Activities on the ground in Copahue over summer – I asked what activities were planned for this summer for Copahue. The main event is the geophysical survey which is scheduled for before year end. EHR is ready to move forward with other initiatives as soon as project funding is secured. They also confirmed that project partners such as SKM and Alstrom are also ready to progress with activities once funding is secured.

Timetable for development of Copahue (this was a question that cj had – 18mths or 5 yrs) – the answer is that everything is hinged on securing the final 10% of funding required to progress the project to the development stage. As mentioned above the directors are sticking to the expectation that CIFI will come up with an investor by the end of the year. Once that has been achieved and the results of the geophysical come back they will be able to start drilling. Although I don’t think anyone asked the question directly, they didn’t seem concerned about PPAs being a hurdle, just the $10-15m funding gap.

MidOil USA – I asked if MidOil, who invest directly in projects as well as advising clients, had indicated an interest in taking a stake in EHR. Dr Shaw said that they had not made this intention known to EHR but they were investigating all options at this stage.

Fiale – the joint venture is still a credible opportunity in the Board’s view but they are expecting this to move slowly and are comfortable with this as too much progress would require further funding to be identified in order to progress the project

Toronto listing – this is off the cards at this point as the view is that sentiment in the Canadian market is not positive enough at this time to warrant a listing at this time.

SixDegrees – Dr Shaw was very open to suggestions as how to better get messages across to the market in ASX announcements. He said that they are passionate about the company and its prospects and try their best to get messages out as clearly as possible but are open to suggestions for how to relay messages in the future. He said to boppy and I that if we drafted something up they would happily review it and use it. Thinking about that now though it doesn’t make much sense as we would need inside knowledge of news events to be able to draft an announcement to be released to the market.

Director buying – when I asked if the Board were open to on-market buying to send a clear message of their confidence in the company to the market they said they would consider this and in fact that had announced after the last CR that they would underwrite any gap. Dr Shaw was sceptical of the sustained benefits of director buying on the share price and believes that other factors play a far greater part.

Summary – Boppy and I had a brief chat to the Chairman after the meeting. We all talked about how frustrating it is to be invested in a company with a 90% funded project to build a “green” power plant based on proven technology that has been around for decades and watch its share price falls to the levels it has. Over the past few months I had started to doubt the commitment of management but today I heard a passionate Chairman talk about a company he believes in and I can only imagine that if Torey had been there he would have been even more passionate.

Unfortunately I forgot to ask about the progress of the search for a new “value accretive” director to replace Norm Zillman. There were also some other questions people on this forum had but we ran out of time. We were actually getting kicked out of the room at the end as the meeting was booked for 1 hour and we were there for over an hour and a half.