Notes from meeting 9/9

Attended the meeting today. Was a small but nice office in Subi. I was one of three other shareholders / investors who attended. Andrew presented the meeting as John & Rob were absent and Grant is in Tanzania. Andrew is a very nice guy and approachable, and it goes with out saying that he is a massive believer of the Kibaran story.

Enough of that for now onto what most of you want to hear:

Andrew said that the company has sufficient funds for the next 12 months after the capital raise in July earlier this year. However he did say that should an opportunity present itself for the company to raise after been offered a proposal to good to be true then of course it would be taken. Andrew will be heading off to Sydney this afternoon to present at the Proactive investor presentation luncheons in Sydney and Melbourne this week. Then in early October he will be traveling to Hong Kong for what I presume would be another investor presentation. He said that during the next month the company would be actively seeking out a cornerstone investor to take a 5 - 10% position in the company.

The company has almost completed the diamond drilling program at Epanko which is expected to conclude within the next one to two weeks. The results from this drilling will form the backbone of the feasibility study which is expected to commence late September / early October and conclude in March next year. Upon completion of the feasibility study the company will then look at funding for the project. Andrew said roughly they would be looking at a 70 / 30 debt / equity ratio funding arrangement which would mean that approximately $15 million would need to be raised via the market.

He then discussed the second off-take that the company is seeking. The buyer is a 'household name in Europe' of which unlike the EGT for our first binding off-take agreement, they would allow KNL to mention their name in any agreement that eventuates. Like the first off-take agreement, they will first be looking at signing a MoU and then a binding agreement down the track. It is very important to note that he said both KNL and the buyer are on the same page regarding a possible agreement. Currently they are weighing up whether they need to meet first in order to sign the MoU as Andrew was saying once the MoU is signed they would then need to undertake a site visit in order to finalise the binding agreement - and Andrew does not want to double up on travel costs etc. (which is good to know for us shareholders). I tried to ask about how much graphite they were looking at purchasing however did not get a clear answer - rather he moved on to say just how he can't see how some of the company's around quoting 100ktpa yearly production amounts will have the demand there (i.e. one the largest graphite producers in China last year produced 120ktpa of graphite - which was their largest producer). A final point regarding the second off-take is that depending on what they are demanding they could subsequently increase the production profile used in the feasibility study (even though the scoping study used 40ktpa).

Now this is the probably what we were most in the dark about (until now that is) - Merelani. Andrew initially stated that when the school was built in Tanzania they were waiting almost 12 months for the president to come out and officially open it. Then KNL came along with the donation of the desks and literally 'stole the show' - as noted made the front cover of two Tanzanian newspapers (which for a country with a population of 55 million is quite an achievement). More importantly, they spent a full 25 minutes with the president strictly discussing Kibaran's graphite and the importance of Merelani. Interesting to note too is that Grant is based in Tanzania and he has a massive presence over there with regards to community development etc. (which is important for our environmental studies) and that he has been approached by a few company's to join them of which he has declined. When KNL met with STAMICO (which we knew due to the photo released on the board re-structuring announcement) literally the whole STAMICO department were present (which is over 50 people). Okay so i posed the question to Andrew have STAMICO given any indication as to whether they agree with the terms proposed by KNL and the simple answer is - yes! The term sheet for the agreement has changed a few times (naturally) but the company now believe the terms are set. So why hasn't it been signed off yet? Well the STAMICO board consists of 13 members and in order for them to pass a resolution they all need to be present - they are unable to pass a circulatory resolution. The STAMICO board were planning on meeting last week, and the meeting was postponed to this week. Andrew believes that once they meet it is just a matter of them signing off on the agreement. He then said it is now a weekly proposition of KNL announcing the completion of the agreement.

I am sure I have probably missed a couple things but hopefully I have jotted down the core of what was discussed.

He reiterated quite a few times just how undervalued KNL is right now and I and am sure many others would agree.

Cheers