Here is a transcription I did of Andrew Drummond's appearance on...

Here is a transcription I did of Andrew Drummond's appearance on Boardroom Radio, Tuesday 18 November 2008, following that notorious broker report:


TM (Tom Mckay) ... Good morning and welcome to Boardroom Radio. Joining us today is Mr Andrew Drummond, Managing Director at Minemakers. Morning Andrew, thankyou very much for your time.

AD (Andrew Drummond) ... Yes, thanks Tom, much appreciated

TM ... Andrew, yesterday there was a broker's report saying that the capital costs for the Wonarah Phophate Project would be a thousand million dollars. Would you like to comment on this?

AD ... I certainly would Tom. Look, I'm disgusted a broker could put out a number that was apparently picked out of the air without any justification. They didn't approach Minemakers nor apparently did they read any of our output or anything put out by other brokers and competitors. In short, it is a total fabrication. In a very tough market, such as we're now experiencing, I think it is grossly unfair on shareholders that such information should be pedalled and you've got to question the motives. It is a false rumour and it cost our shareholders about 10% of their investment yesterday and I'm not happy.

TM ... Is this estimate they've made very far wide of the mark?

AD ... Yeah, this fabrication is right off the planet. Allow me to illustrate Tom. Many of your listeners follow the phosphate sector and they know that there's another intended producer in Legend International. Now, Legend's aiming to produce 5 million tonnes a year, which is two-thirds more than us, so hence it's going to need a bigger plant and all the rest. They've got a very inferior infrastructure compared to ours. They've been told they're having to build long slurry pipelines, upgrading ports, buying barges, establishing an offshore deepwater reloading facility, etc. All of this is still going to cost them less than a thousand million dollars, according to them. We don't have to do any of that stuff. As our shareholders know, we're adjacent to a public highway, which is connected to an open access standard gauge railway, which runs to the excellent port of Darwin. Third parties, including the NT Government under our Major Project Status, will be paying the capital for any connections and necessary upgrades. Yet according to this WA broker, ours'll cost more than Legend's. It's just a joke.

TM ... Okay, but this broker says you're going to build a 500 million dollar railway Andrew. What's he talking about?

AD ... Well, I honestly don't know. It again shows they've done no research on us at all. We don't need to put in a railway to go into production. We've always said that. Why would anyone build an unneeded railway to run parallel to a public highway which we can use? ... and especially when major capital is going to be hard to get? We've never said we would build a railway line to get into production. In fact, quite the reverse. We have said for a stage 2, to expand production subject to markets and all the rest of it, we will consider putting in a railway line. That would be with taxable profits. Our development is not contingent upon putting a railway line in. I don't know where they've dreamt it up from. It runs contrary to everything we've been saying for the last 12 months.

TM ... Okay, is Minemakers still aiming to get its capital and operating costs out to the market in December?

AD ... Yes, thanks Tom. As I said only last week, and was something the broker didn't bother to research, we will be putting out the numbers next month as soon as they are available. They're coming from our management. We're working with Coffey Mining and Lycopodium Engineering. I cannot and will not say today what they're going to be before then, simply because they haven't been finalised and it would be grossly unfair to everybody, but I can reassure your listeners that they'll only be a small fraction of this 1000 million dollar fabrication.

TM ... Okay Andrew, a later statement yesterday, that same broker said that rock phosphate prices were likely to return to US$50/tonne. Do you agree with that statement?

AD ... Ah look Tom, when I started drinking beer it used to cost 20 cents a glass and anybody who thinks it is going to go back to 20 cents is living in dream world. Look, perhaps this wise analyst can suggest where the extra supply will come on market to drive the price down to that level. Demand is rising, more people are here, more people have to eat. Unless another company, or say any company, has a very favourable infrastructure arrangement like Minemakers, any new production is going to need big capital. Big capital is going to be very hard to acquire in the foreseeable future. So, as I said last week, it is highly likely that some of the plans from our competitors will have to be deferred or cancelled or wound down to some level, because capital will be hard to get. We don't have to raise a billion dollars. We are only looking at some fraction of that. So given that, I think there's every chance the supply situation is going to remain tight. Demand's sort of pretty well fixed. So, I think just deciding that a reversion back to US$50/tonne which is a figure I haven't seen supported by any analyst anywhere and nor by any producer anywhere in their numbers. I think it's just sort of been plucked out of the air and it's nonsense. I just want to wrap up Tom by saying I'm very sorry shareholders lost value in their investments yesterday, about 10%, It would be nice if people perhaps engaged their brains and did a bit of homework before they tapped their word-processor keys. In the current market it's very easy to cause unwarranted loss and pain to shareholders. I'm very angry and look forward to blowing away that capital estimate right out of the water in the next few weeks. Thanks Tom and cheers.

TM ... Andrew, thankyou very much for your time this morning. That was Mr Andrew Drummond, Managing Director of Minemakers. If you have any questions about this broadcast please email brr[at]brr[dot]com[dot]au. I'm Tom McKay, thankyou for listening to Boardroom Radio.