I was in two minds on whether I would post my notes from the APG...

I was in two minds on whether I would post my notes from the APG AGM, but in the end decided that I would.

How to best describe the meeting, first the venue is not really suited to a AGM, it is small and unfortunately it was very hard to hear some of the questions from the floor or some of the answers.

Unlike the previous meetings no microphone was given to the person asking the question and the volume MT’s microphone was often too low to hear the response. This was aggravated by the noise from the various fans in the room.

The shareholder turnout reflected the current state of the company; I only counted a little over 20.

I think the mood of the meeting is best summed up as somber and the description by merrv is pretty accurate.

MT started his presentation with referring to the direction the company was going to take at last years AGM. As has been previously advised it was decided that after investigation, the high cost and high technical risk of following that pathway was too risky. This was mainly due to the fact that the process was at early stage of development.

It appears that JW has done some investigation and using existing technologies can enhance the current plant to gain access to a third revenue stream of zinc.

JW and a new consultant Colin, mentioned in False9's post have been looking at how APG can progress the building of the NZIRP and have as recently as Oct come up with the two stage approach outline in the presentation. The two stage approach will minimise both the capital cost and the technical risks.

Stage 1 utilises the current plant without the use of the briquette machine, and some of the gas treatments steps and uses larger fluid beds that are currently installed.

The production of pig iron instead of briquettes is due to the fact that pig iron is a much more accepted product in the industry. Pig iron has 95% iron while the briquettes only have around 90%.

Stage 1 includes the introduction of an induction furnace, which has well understood technology.

It will cost an estimated $9 million and produces zinc oxide in stage 1. This is still a lot of money in APG current financial state.

As False9 advised there are steel mills in the US that are interested. The American companies interest has increased since the Trump victory and the fact that the NZIRP will be able to produce three separate products.

There are potential funding options via either the Federal or state government grants.

They will be following up with the NSW grant next week. The state grant amount is unknown but of the 10 so far granted to various organizations the value has been around $38 million. The Federal grant would be in excess of $1 million if granted and would involve a university, from memory Wollongong University.

In addition an R&D refund claim as also been lodged for over a million dollars. This is expected in the 1^st quarter of next year.

Funding talks continue with the US group,

The timeline for stage 1 could be up to 2 years including a six-month commissioning stage.

There are multiple sources for the raw materials in NSW. To quote MT, it is a classic example of urban mining.

As outlined in the presentation this is estimated to have a revenue stream of $20 million, and when pressed MT refused to quantify the profitability until further investigation was conducted.

The costs to run any US plants would be lower due to the availability of cheap natural gas.

MT advised that all the revenue streams, pig iron, HCL and Zinc are currently showing improved prices.

Stage 2 would add the Zinc electrolysis stage at the end of the process, and would result in the production of Zinc metal. It would only occur after the stage 1 is cash flow positive. The process has already been extensively tested using Bluescope materials.

The first step is for the two-step development would be the detailed engineering and design outlined in stage 1 of $1.5 million.

The Asian deal is still progressing and while MT described it as frustrating slow, it still looks promising. The other party are awaiting approval of funding before they proceed, but it does appear to be close. As False9 stated, APG will benefit from the royalty flow and an interest in the plant.

I had a quick chance to catch up with the ex head of CMC metals Aust, and he advised that currently Australia is importing around 15,000 tonnes of pig iron per year from Brazil and South Africa. He has hopes that the pig iron produced by the NZIRP will have the specifications of low sulphur, phosphate and manganese to replace this import, but this is not yet confirmed.

Finally APG is planning to drill Nhill using the grant from the government, it would cost around $50K, unfortunately they need to outlay the money first and then get reimbursed for 50% so it may not happen for a while.

One thing I will say about APG is that they are tenacious; I expect that until some funds are available that they will just make sure that they survive. If and that is a big if, they get a funding deal it will be a whole new ball game.