notes from the ags agm

My apologies for the poor grammar in my previous post - I was in a hurry and a little excitement crept in as I was typing - I think you can understand why.

Now that I have some time, I will now provide a summary of my notes from the AGM presentation and other comments. If anyone else was present at the AGM, please feel free to correct any of my notes if I have misinterpreted anything that was said.


Maldon Gold Prospect
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Impressive board member … most have been with the company for many years and have seen it survive through the difficult times …. they have kept the dream of Maldon Gold Mine alive despite the obstacles along the way.

They have put a lot of work in to get the Maldon community behind them.

They seem quite passionate about this project and believe there may be a possible or Gold remaining to the east and west (to the left and right) as you travle down the existing decline as you head towards the target …. they will be exploring and wouldn’t be surprised if they find something …. nothing definite but the area is prospective.

They are hoping to get good cash flow ($2M to $3M per year) from the mine in about 18 to 24 months time. They are hoping that this will help fund their other activities without the need to keep diluting capital.


Beverley 4 Mile Prospect
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WOW!!!

* B4M prospects is the most significant U discovery in Australia or the world in the last few years

* Heathgate are excited about the B4M prospect as it is the largest U roll front resource they have seen and the U % grades are also higher than seen elsewhere

* Steve Johnston, the CEO, mentioned that the SA Govt view the B4M prospect as the next most significant mining project in SA after Olympic Dam and Prominent Hill

* AGS’s 25% of B4M prospect looks like being a company maker

* Quasar approach AGS to JV based on the copper mineralisation potential of their Arkaroola tenements - it was John Dunlop, the Chairman of AGS that convinced AGS to apply for exploration licences in this area.

* U potential at B4M was discovered more by chance than knowing where to drill - they acknowledge it was a lucky break

* Quasar / Heathgate is a private company …. relationship is good but they only provide a minimum of information in most cases. Quasar recognise the talent in AGS and do consult them - it was AGS that convinced them that it was time to conduct a proper assessment of the maiden JORC resource estimate for the high % area of the Western Zone.

* Quasar is keen to explore B4M as quickly as they can. Exploration budget was $3.5M but AGS thinks Quasar has spent much more than this in proving up the resource. The chairman mentioned that they were expecting to be able to announce the maiden JORC resource estimate some time within the first 3 weeks of December.

* AGS believe that the high % U grade in the Western Zone warrants open pit mining to ensure that the maximum value can be extracted. U resource is deep underground and high strip ratio will be required - can be justified though given the value of the U beneath.

* Slide 12 of the AGM presentation pack - Steve Johnston explained that the red images show the extent of the U mineralisation. If you look at the Western Zone the curvature of the red area to the right show the boundary of the roll front.

* Eastern zone - large area of U mineralisation but at lower % grade ….. ISL mining techniques look like the best approach for this zone - cheaper approach by recovery % is much lower

* The eastern zone has been drilled all the way to its western boundary along the edge of the dry creek area - good results obtained and evidence suggests that U mineralisation extends towards the west ….. Does it go all the way to the western zone? If you look at the AGM presentation slide pack is suggests the distance is 5KM (slide 12) from the left of the western zone to the right hand boundary of the eastern zone. They didn’t make a comment about this but the mind boggles.

* The area between the West Zone and the East Zone is the dry creek area and seems to be about 2 to 2.5 km wide. Most of this area is still subject to Native Tittle and negotiations are underway …. not something AGS wishes to rush.

* Steve Johnston mentioned that the U mineralisation in the Western Zone is shallower that that found at the Eastern Zone ….. I think he said 150m versus 170m (ie. down hill slope). They have drilled a few holes to the right of the Western Zone and it didn’t really highlight anything of significance. Steve said that they suspect that they may not have drilled deep enough and that they would explore this further to see whether they have missed the mark.

* Other zones to be explore ….. Area to the north and north east of the Western Zone and don’t forget the Southern Zone ….. Refer to recent announcement.

* Someone asked about a takeover threat from Quasar / Heathgate. The board indicate that it would have to be on friendly terms otherwise they wouldn’t entertain the idea. AGS’s larger shareholders have enough backing to block an unfriendly takeover and would use tactics such as going to other large U producers etc. They gave a pretty clear message that they are not ready to sell at this point in time. The board will look at the viable options once a BFS has been completed and not until then.

* Some asked about the boards view on hedging versus spot prices. The chairman provide a comprehensive answer which in summary said that the demand-supply energy gap going forward suggests that AGS sees little reason to consider hedging - they expect demand beyond 2013 to grow quicker than supply - Spot prices is their preferred position.

* AGS is planning to play a pro-active and active role in decisions about how the B4M prospect will be developed - they have the expertise to contribute. Once a decision to mine has been made, a new Mining JV will be set up between AGS and Quasar / Heathgate. Total B4M project capex cost will be over $100M (which was the cost of the Beverley mine) - extra costs for processing plant (ball / crushing mill) plus pre-strip activities etc.

* The AGS board believe that S.A. is currently the best state to be if you want’t to be a U explore and producer.



Arkaroola Uranium-copper-gold Prospects
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* Quasar are primarily focussed in B4M and other prospects have taken a back seat

* Quasar hasn’t really put much attention into the other U hard rock Mt Painter prospects near M1

* Terrain is certainly prospective for IOCG style mineralisation ….. drilling results at M1 and M2 haven’t highlighted anything of significance yet.

* Area to the east of M2, the historic Yudnamatana Copper field is an area they plan to explore

* As stated earlier …. Quasar originally wanted to JV with AGS for their Copper / IOCG prospects



Warrina IOCG / Copper & Gold - BIG NE Prospect
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* 60Km NE of Cooper Pedy

* As mentioned in Brookvill2’s post earlier today regarding his notes from the AGM:

“Steve is also very excited about the Warrina project. A slide was shown at the meeting that will not be shown to anyone else because of competitors in the area. It shows an area of a gravity target very similar in size to Olympic Dam. Drilling on the Big NE site is due to start in December and they may have to shift a diamond drill from Maldon to finish off the 2 holes they have planned. The target depth is 200 metres and they are very confident off finding something substantial here.”

* Slide 20 - last dot point - “Drilling (2003) into gravity target intersected Cu to 0.17% from 475m. Steve Johnston mentioned that on reviewing the drill results again they realised that the hole was still open at depth and looked like getting better. This caused them to do more research and to look at where they drilling … they believe they may have missed the core of the targets.

* AGS is very excited about the prospects on this lease - Steve Johnston mentioned that this could potentially be a company maker …. no guarantees but the 10km magnetic anomaly and proximal gravity anomaly readings are encouraging ….. hence the reason they are keen to drill a couple of holes before the end of 2006 if it can be arranged. Well worth watching developments on these prospects.

* I think Steve Johnston mentioned that previous drilling had identified low grade U hits (< 10ppm) on these tenements


East Frome (NSW) Application - Base Metals
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* Large area Near Broken Hill - look at the maps on slides 6 and 7 of the AGM slide pack

* AGS will be a 4 project company if their application is approved.

* AGS was surprised that no one else had submitted an application for this large prospective area

* AGS has reviewed the drill data from past exploration companies on these tenements and that there were some signs that U was present.

* Steve Johnstone wasn’t able to say too much about their East Frome application but his few words and body language suggest that this is definitely one to keep an eye on.

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This post is based on the notes I scribed at today's AGM. In no way should they be taken as investment advise. As always, please do you own research and seek professional advice before investing in AGS or any other company.