Meeting Report15 Jun 2017 13:38
The following of my Notes of Meeting 15-June and in no specific order. Feel free to ask anything as happy to expand where I can. I got the opportunity to speak with David Brown 20 mins before meeting started and he gave a general update after the main business.
In attendance: Bernard Pryor, David Brown plus 2 shareholders + 2 others who signed in (shareholders/ analysts?)
All motions were passed, with everything being in place the deal will be completed over the next few days and we will officially be a producer going into the new fiscal year in July!!
DB seemed very happy with the way everything is progressing. The government want the project to go ahead and he has particularly good relationship with the water and environmental agencies. He's particularly pleased with the agreement with the IDC, something that they have hoped to achieve for over the last 6 years.
They hope to acquire the outstanding farm land over the next 4-6 months. They have made one final offer for the remaining land which the owners have 7 days to accept otherwise the expropriation process will begin. They don't anticipate any issues with that or finalising the surface rights. He described this as a momentous step. They continue to push the government to get things done, and DB certainly knows everyone that he needs to.
DB has been in London since Tuesday and he had visited 6 analysts. He thinks Makhado might need to start producing before they get further coverage, but progress has been well received and people are starting to take notice. He often gives an analogy of a swan swimming gracefully on the water, but below the surface there’s a huge amount going on. Now, that action is beginning to reap some rewards,
With regards to Makhado, ArchelorMittal has signed a letter of intent to take some production (60%). The coal has been tested and is of very good quality (as we already know). He spoke enthusiastically about a Makhado Lite project that will involve one-third of the CAPEX and a shorter construction period. This will be presented to the board in September. If this version goes ahead then they will start construction in 2018 H2 with first coal produced in 2019 Q3. He thought this might be the better option as some shareholders thought unrealistic given current CAPEX numbers relative to the current share valuation, and some of the 3.2m tonnes/year of product would need to be exported. Board are currently happy as the price of coal is currently above the long-term rate used in their analysis.
Vele: still deciding what to do. Given its location, he suggested it might be sold to reduce overheads and put money in the bank as opposed to mining it themselves which was previously suggested. The deciding factor will be the price and coal, as to whether this is sold or mined themselves.
...more to follow
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