seiks notes from agm and drinks

My impression of the management's attitude and mood was
- Frustrated with all the promises they have made not being fulfilled
- Concerned about the share price wallowing about at low levels and not showing the real potential value.
- Don't want to dilute their shareholdings
- Acutely aware many shareholders feel the same way.
- Much more reserved in responding to questions of timing. The enthusiasm is there and the belief in what they are saying but they appear more cautious about overpromising on the timing.
- Exceptionally positive they will bring home the bacon.

My interpretation of the information provided.
During the last decade there was a strong friendship forged between a Top Kronos Exec's family and Mr and Mrs T. This started at TiO2 conferences and grew over the years. When the EARS technology broke through to convert the main waste product of TiO2 production (Ferric Chloride) back to saleable products (Iron and acid) the exec sat up and took notice.

The ferric chloride is deemed a hazardous waste and is costing a mint to get rid of. Currently Dupont cheats by pumping it into deep wells. As the other producers can't do this it make Dupont cheaper. Dupont are pushing to get into China but have been blocked unless they come up with a better answer.

(an Aside: Many years ago I posted on HC that one of my positives on APG was the fact that their TiO2 halved the amount of this waste by producing purities above 97% (3% waste materials) instead of less than 94% (over 6% waste materials).It didn't occur to me that now, with EARS converting the ferric waste into saleable iron, the full Austpac process has basically eliminated all the waste).

A deep and meaningful conversation started with Kronos 16 months ago and was part of the very positive outlook of the management then. The fact they had $5 mil coming from Astron was also part of that and the plans were to upgrade the plant whilst the Kronos deal was built into a firm partnership over the twelve months. If that had happened then it would have been the full Kronos agreement we'd be talking about now. Not the one where they fully fund the plant upgrade but the one where they are building other EARS plants in all their facilities and what the royalties would be. That's now conservatively a year away.

Kronos shipped two tonnes of their waste to Newcastle but because it was labelled hazardous waste ship captains refused to take it (they is their right) and it was stuck on docks in Singapore (I think) for three months (that's part of what causes Austpac time). MT arranged a mate who is an expert in this area to write up a multipage document that defined the real risks from the waste so that ship captains could make an informed decision. The container finally arrived in Newcastle in March and proving trials were done.

Kronos had two tech heads camped at Newcastle and once the results were out they strated talking about how to get this technology into Kronos plants. The industry is under the hammer about the waste and they have to fix it. APG does fix it. So the conversation is when and how to get the technology not if.

MT was flown to the US to work that out. MT and others talked about how different the conversation was compared to the slow and frustrating talks they had with the like of BHP and other large corporations where a meeting would be had and then three months later they think about having another meeting. Once Kronos had made up their minds, it was all about how to do it and tight timeframes. The fact that APG was stuck waiting for money from the court case was resolved by Kronos stumping the money up itself to get the plant done.

MT was cornered in the AGM meeting on providing a quantum on how much the plant will now cost (was that you Enigma?) and how much Kronos would cover and he indicated up to $8 mil for the plant and the deal was at least $10mil.
Conversations afterwards indicated he managed to leave lots of room in the potential value of the initial deal. Also this money will not be backed by equity so won't dilute the shareholders. I'd say that's what is still to be negotiated, will Kronos be paid back by future royalty relief or some other way, but it is not going to be by more placements.

You will have to blame the increase in plant costs on JW. He's been very busy during the year and now can have the plant handle any chloride waste including those from galvanisers. JW had told me previously he was confident he could get a mixed pickle from galvanisers report Zinc in one area and iron in another. Looks like he must have done so. Plant became a bit more expensive to build but more robust in what it can handle.

Enough for now, I'll let others fill in their own notes.

Cheers

Seik