AGM happenings, page-6

I went to the meeting and due to the current state of the company and the pending section 249D notice I was expecting a rowdy and angry meeting, it was as described by cyw a sombre meeting, the questions asked were put in an non aggressive manner and answered calmly.
As described by cyw, the presentation was performed by Colin Iles (CI) and Mike Smith (MS) after a brief introduction by Terry Cuthbertson (TC) who also advised that subject to gaining finance in Jan, MT will be stepping down as managing director.
John Winter was not present at the meeting but is still involved with the APG as required, as is CI, APG is attempting to keep costs to the minimum in order to survive until funding to progress further.
CI presentation was a cut down version of the previous years presentation, and gave a recap from last year.
Currently 90 million tonnes of dust is produced each year, of which 40 million tonnes has a high zinc content. The zinc in scrap in Australia is particularly high being around 30% whereas the zinc in the US is around 20 - 22%. The disposal costs are quite high for the zinc contaminated waste.
The ZIRP process is a simple process, that consists of four stages, APG is still testing the first stage, where three runs were run creating 350 kg of pellets.
The key stages to prove the process works and is commercial are stages 1 and 4, stages 2 and 3 are proven technologies. Stage 4 requires the use of an induction furnace and will be performed elsewhere as the cost to APG to set up would cost over $1 million, and obviously this is not possible at the moment. At the end of stage 4, 30 kg of finished product will be available for test and analysis.
As a sideline MT mentioned to me he got a fork lift licence and was actively involved in the testing earlier this year with CI and JW for the stage 1 process, in order to keep the costs down.
Stage 4 is the key for the test work.
CI advised that the business model described in last years AGM has not changed, it will consist of an upfront licence and royalties.
Draft agreements have been created with a local steel producer and there are ongoing discussions with parties in the US, China and South Africa.
The steel mill in China is larger than the combined steel production in Australia and produces around 10 million tonnes per year, and has 200,000 tonnes of waste.
One of the South African contacts is a class 1 Black Business Enterprise (BBE), which will allow access to government funding, local industry and other investors.
MS gave and overview of the progress on the Nihill site, there has been a detailed magnetic survey performed over the site, that has identified two targets for drilling that are over 250 metres down, one of the targets is over 6 km long. The previous hole hit one of these targets so it is known that at least part of the target is highly mineralised.
Ongoing discussions with prospective JV partners are in progress, but awaiting confirmation that they will progress, but there is definitely interest by other parties.
That in effect is the presentation, then the floor was opened to questions.
When asked how confident APG was of getting an agreement signed in view of the resulting share price as a result of the Bergen deal, CI admitted that APG were overly optimistic last year of getting a deal to follow up on the Bergen deal, and the the Bergen deal did contain the option of funding the next stage of the development when additional funds were introduced to the company. He gave a overview of how slow and conservative the steel industry is and how potential partners move in a slow and deliberate fashion through the various levels of management in order to get approval to sign a deal.
The ZIRP process is not in the main business of steel mills, and is working with the by products of these companies. Currently there is still not enough pressure on these companies regarding environmental concerns, but CI advised that the environmental pressures are increasing and a price point will be reached that will increase the demand for the process. I suspect that this would be particularly true for the party from China.
At the same time MS was asked how confident he was of getting successful drill results, but I do not remember if this question was answered as CI response came first.
Questions were asked if APG still has any valid patents, a International patent application was lodged in Nov 2016 for the zinc oxide, iron oxide recovery process, this is still in the process of being processed. Once lodged it ensures that no one else can utilise the process.
The original EARS patent was from 2000 and the patent lasts 21 years so some of the original patents are coming to the end of there lives. JW is still the fluid bed expert and APG has moved on since the original patents particularly in respect to the technology for the recovery of Iron and Zinc from waste products.
When asked how far along the process of testing the four stages on a scale of 1 to 10, it was admitted that where are currently at around 3.
When asked if the company is confident that the process would be commercially viable, CI advised that both APG and interested parties have used there values in a model of the process and it is feasible.
When asked if the only way to get to 100 % completion of the testing is via 3rd party funding it was confirmed that this was the case.
When asked if the company has the required skill set for getting an agreement over the line, it was felt it has, and this was the particular reason that Ci was brought into the company and onto the APG board.
CI advised that the Chinese have been out three times and once came with the managing director to review the process.
When asked if the EPA could be approached to help, CI discussed the current process of Bluescope storing the waste on their own land at Area 21 and Liberty sending the waste to Port Pirie. While the EPA is very interested, there is little that they can do unless people start to place the waste products into land fill.
It was announced that MT will resign at the end of Jan 2019, if no agreement is signed.
In answer to a question Nick Gaston (NG) advised company has submitted and R&D refund request for $300k and waiting on the process to finish to receive the refund.
In response to a question regarding a possible share consolidation, TC advised that this will only take place if there a good new flow, otherwise this will further erode the shareholders values.
When questioned regarding the Bergen deal, and whether proper due diligence was performed before the signing of the deal, MT advised that the terms of the agreements were heavily reviewed and changed prior to the signing of the agreement, and that Bergen had indicated that they were very interested in being involved in the final build process, but when the market correction occurred, everything changed and they went back to form.
Questions were asked about the Partly Paid shares (PP), and why these have not been cancelled or why they have not being paid out? NG and TC both advised that the PP are so out of the money they will not be converted, and that most are expired and cannot be exercise anyway. The legal cost of cancelling these share is quite high, and I can understand the reluctance at the stage of involving additional costs to cancel them. NG dis state that this will however be addressed by the end of next week and will involve the usual auction of shares.
Regarding question of Notsag and the unpaid amounts for the placements in Jan and Jun this year, NG advised that these will be fully paid out by the end of the year and that Notsag was the underwriter of the these placements and the investors did not pay up as the share price fell as a result of the Bergen behaviour.
When asked about the current shareholder who is prepared to put in $500,000, it was advised that this is a binding agreement but the identity of the shareholder will not be revealed.
As noted by cyw, a first strike has been recorded against the board with 37% vote against the remuneration report.
Not sure if I caught everything correctly but I am sure someone will correct anything that I miss out on or incorrectly recorded.
Lets hope that a deal can be done and the company is still around for the next AGM.