Perth Roadshow - Quotes of Interest

Friends of LWP... I bring you some quotes of interest from yesterday's roadshow in Perth, all subject to the usual disclaimers including, but not limited to a less that favourable recording on my iPhone (or maybe some early hearing degeneration?... or both!).

There were about 12-15 punters in the audience, lots of edible goodies to indulge in (of which I had zero - that was my only disappointment other than having to shoot of and not being able to check-in with Ryan1986!) and two very upbeat LWP Directors. It was almost as if they were trying to suppress their excitement, and when we reached the Q&A, I realised why. Below is my best effort at capturing most of the key comments made by Ziggy and Sean. Much of the content has been mentioned in other's posts (thanks again to all who provided feedback from the various roadshows!) but thought I would leave it in for reinforcement.

I'll leave you to peruse these quotes (my bold and [ ]) , read between the lines and draw your own conclusions. Some require no reading between the lines at all as they leave noting to the imagination.

Personally, I think we could strike multiple deals in the next 6-12 months... I for one will be following EAS' lead and accumulating over the next few months.    

gh.

ps. Apologies for the small print below - I copied it over from word.

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On early interest from the Brisbane trade conference… [Ziggy]

“So far, we have presented at one trade conference … (Brisbane, Nov 15)… with the interest we received from there, we could have sold everything we could make in India 3 times over. So, we’re expecting that trend to continue.”

On the off-take agreement timeline for India… [Ziggy]

“We expect that our presentations in the USA, where they don’t know out technology exists, will result in off-take agreements. As soon as we get those, we’ll press the button on commercialisation. We have everything ready to go in India. It’s just a matter of committing the funds. So we commit the funds, and we’ve got the money to go ahead as soon as we get some off-take agreements. And I’m expecting a timeframe of no more than 3 to 6 months to get sufficient off-takes in place to go ahead with India.”

On the impact of oil price on moving forward with India… [Sean]

“I don’t think the oil price is what’s going to preclude it. What it has done is narrow the market focus for us out of India because transportation and logistics costs weigh a heavier factor now that what they would have done. So, even at $35 oil, we believe we can get off-take agreements and still have a very profitable operation out of India.“

On production timing in India… [Sean]

“India’s not the quickest place in the world, I have to be honest. Ah, 9 months I would say. 9 months to 12, and if we had someone that really needed something quicker than that, we’d probably have to get a couple of extra people over there…”

On the market for production out of India… [Sean]

“We can get it across the Gulf, we can go to Kazakhstan. India’s actually fracking itself… there is a limited market in India that we can push into.”

“This isn’t a huge plant. It’s 20,000 tonnes, which is probably only… 10 to 15 wells. So it’s not a huge plant that you’d be able to do more than that. So you’d really be looking for a single, strategic off-take agreement, and it may even be Australia.”

On scalability/expansion of the Indian plant… [Sean]

“I’d love to scale up there, but we don’t have the room there. But, there are other opportunities in other places. They’re awash with fly ash. India is absolutely awash with fly ash. And there are incentives there from their government to get rid of fly ash. So there are other opportunities for us there. You’ve got to remember that we didn’t sell a licence for all of India either. We only sold a licence for one state*… so there are other opportunities there once we get it rolling, and I believe even the people who picked up that joint venture deal will be interested in looking at some of those other states.”

*Note: there are 29 states in India!

On recent market enquiries… [Ziggy]

“We’ve had enquiries for licence agreements out of Saudi Arabia… so, two in the last two months. So we’re finding a situation where Saudi Arabia… there is a lot of wells that have either ceased production or dropped production dramatically, they need now to get fracked for the first time. There are coal-fired power plants in the Middle East that are burning South African coal; that fly ash is perfect for our purposes. So you can see the feedstock is there… so, they’re looking at the logistic advantage of being able to make it there in the Middle East using the existing waste stream – that by-product – and they can see the opportunity; that’s why they’re knocking on out door. But we haven’t been able to respond to those because our test results weren’t in. Now we’re perfectly positioned to accelerate commercialisation from here.” [Sean added…] “And they’ve made contact since then.”

On cash…

[Sean]

“I think in India we’ll have to be using cash. It’s within our budget with the cash reserves we’ve got. It’s not necessarily something we’d like to use all of our cash up on. It would be hard to get a financial institution in Australia – or even in India, for that matter – to bank that with us at the moment. Whereas if I went to the NAB and said I’ve got a prospective plant in Australia, then they’ll start talking.
“Anything else that we’re looking at, including what we think we may do in Australia, we’re thinking about debt.

[Ziggy]

“Also, the ATO decided that they would do an audit on LWP. That audit concluded on Monday this week. Now we’re expecting our R&D tax offset monies to be released; somewhere in the order of $1.5 million we’ll expect in the next three months. And at the end of this year, because of all the R&D we’ve done of the 15/16 year, we are expecting another million or so to come from that to boost our cash reserves. So that’s good news, and we’re not looking for any money. But since we’ve done this roadshow in the last few days, one group has offered us $4-6 million, and another group said we would like to fund you to the tune of $5-10 million on other commercialisation opportunities that might emerge.”

On share consolidation… [Ziggy]

“Share consolidation is something we’ll have to do at some time. There’s no doubt about that. But the timing of that is absolutely imperative and if it’s done wrong, all the shareholders take a haircut. I’m the largest shareholder – I’m going to take the biggest haircut – so I can tell you consolidation will only happen on the back of a very, very good announcement.

On EAS’ involvement… [Ziggy]

“I can tell you that in the last round they raised a couple of million dollars for us out of the US. Everything was put on hold until we had our test results. We have with EAS together a whole program of how we are going to work together from here, and you’re going to find that they are going to be doing more and more. Maybe their name won’t be at the forefront, but I can tell you that they are very, very supportive. They’ll be attending trade shows with us.“

“The Top 20 hold about a 30% of the company; that’s got to get to about 50%. And then you’re going to see us, on good announcements, keep building to new platforms. But we have to suck up some of those shares. And you’re going to find that over the next 6-12 months, EAS are going to be a major contributor to putting those investors in there… to buy on market and stay there. So we see them being very, very helpful to us going forward.

On the Top 20 Shareholders… [Sean]

“Half-year results will be out in about 21 days or so, so they’ll definitely be a Top 20 shareholders list in there.”

“EAS haven’t sold a share, and they’ve been accumulating more.”

On licencing agreements in the US… [Ziggy]

“The target that we have is in Texas. Texas residents, like Western Australians, are very parochial – “You make it in Texas, you’re gonna sell it.” – that’s just the way it is.

“Because the Eagleford shale represents terrific opportunities both for the Texan market and also for the Mexican market…. we asked an expert to go and have a look around and see which is the best place.”

“[Jim Irvine] said there’s nine power plants around that place… and out of those, we think that… one is best suited to LWP’s technology. We shipped 50kg to our lab in Germany for initial tests… looks good… now we’ve shipped half a tonne. So in developing a licence for a particular geographical area, like Texas – the Texas Licence – this is the groundwork that has to go in to make it very attractive for a licensee. So we’ve had two enquiries for a Texas licence and we doing our due diligence on that feedstock to make it as easy as possible to get that licensee across the line.

“It would be a new plant. [as opposed to a retrofit] We think it will cost around US$50 million.” [Output will be] about 70,000 tonnes/year. [Expect payback to be about] 18 months.”

“Because it’s the real first licence, we’d be looking for US$5 million for that licence and upfront fee. We’re going to struggle to get that in cash being the first plant, so we’ll probably take some equity in the plant in lieu of a licence fee for a deferred settlement. And then we’d expect sales prices in Texas to be somewhere around about US$0.25/pound… work out the revenue… 10% will be ours for royalty. 10% will be on gross revenue without transport.

On the potential for something in Australia… [Sean]

“I’d be thinking short term rather than medium to long. [Followed by a mumbled reference to Santos and an awkward moment about whether he could go down a certain path with his answer… Ziggy said ‘No’.] We’re talking to people in the industry, and that’s all we can say. Santos is one of those discussions. They came along to the presentation yesterday in Adelaide so… 5 or 7… 8 all together yesterday [I don’t know if that refers to presentations or Santos reps!] … so there’s a potential market in Australia and we’re looking to address it.” [As and aside and related to this point, I did here Ziggy chatting to someone to behind me before the presentation about how “Santos loved them!”]