AGM 2022 minutesIf you enjoy this post, you know what to do...
Here is the summary of Robex's annual meeting, held on June 20, 2022. The purpose of this summary is to send you the information received, as faithfully as possible.
Mr. Faucher opens the meeting by announcing the results of the shareholders' vote. All achieved results above 98%.
Ms. Veronique Maltais presents the 2021 annual financial statements.
Mr. Faucher announces that the management team and the board of directors have been renewed.
Mr. Faucher announces the renewal of auditor Price Waterhouse Cooper.
Mr. Faucher extends his congratulations to the entire team for the resolution of the problems encountered in 2021, as well as for the development activities. The sustained efforts of the team is what made it possible to conclude an acquisition agreement for the Kiniero project.
Mr Cohen explains that Benjamin has caught Covid and therefore cannot be present. He presented the agenda for the meeting, in particular the presentations of Augustin Rousselet, Aurelien Bonneviot and Alain William, the new Director of Financial Affairs.
Mr Rousselet begins his presentation by addressing his disappointment with Benjamin's absence. He mentions that the company had a fundamental transformation in 2021 and this is what the presentation will be about. The decision to acquire a new project was made in 2021. This change is accompanied by everything related to the presentation of the company. Until now, the objective was to make Robex the most profitable company possible, in addition to securing its proper functioning. From now on, the objective is to become a multi-asset company and to develop financial marketing.
Mr Rousselet mentions the excellent performance of the industrial exploitation of Nampala, despite a low gold content; the political situation in Mali and security issues. This performance was recognized at the PDAC and during a presentation in London. Mali has a good mining history for gold but remains a small country in terms of development prospects compared to Guinea. Mining activity in Guinea is very important and represents an important part of its economy.
Mr Rousselet mentions that the exploitation of Nampala was built over 4-5 years, to obtain a stable level of production; recurrent and efficient; demonstrating new mineral reserves; generate permanent cash flow; managed to get out of debt in addition to paying 6 cents in dividends. The Nampala plant is now reliable and configured to support investments for the Kiniero project.
Mr Rousselet mentions that the solar power plant is now in operation and that beyond the savings made, the interest of the economic community for these environmental efforts is important. Efforts for the environment are supported by its commitments and by maintaining certifications. Workplace health and safety efforts are also maintained through certifications.
Mr Rousselet mentions that to ensure the stability of the Nampala plant, its management must be carried out by Malian resources. Out of 800 people working in Mali, which includes internal resources and subcontractors, there are only 7 expatriates. This structure of the organization allows expatriates, who mainly have a technical profile, to focus on the improvements of the Nampala plant and to start working on the Kiniero project.
Mr Rousselet mentions that the means to ensure the security of the Nampala site are important. No incidents have been reported to date and 120-130 people are assigned to security on site. The construction of an airstrip is currently under construction and will be ready in about 1 year.
Mr Rousselet mentions the arrival of Alain William, Matthew Sharples (Sycamore) and Michael Milken (Sycamore).
Mr William introduces himself and underlines his enthusiasm linked to his arrival at Robex. He is Franco-Senegalese and has 25 years of experience in the field of financial markets as a self-side analyst. He has worked for companies such as Caisse de dpts, SGF, ING, Natixis, etc. Beyond his role as director of financial affairs, Mr William wishes to improve financial communication at Robex in order to enhance the stock, ensure better management of cash flow and finally, develop a capital allocation strategy to make it more predictable.
Mr William is happy to welcome the arrival of Mr Sharples and Mr Milken. Mr Sharples is a trained geologist who worked for large mining companies before becoming an entrepreneur. In the structure, Mr Milken will be the country manager while Mr Sharples will lead the technical teams from London. Mr William mentions that the technical teams have already started working on most of the Robex permits, in addition to the Kiniero project.
Mr Bonneviot mentions that Robex's development objective was to find an asset the size of Nampala and to preserve cash flows. He mentions that we were lucky to find the Kiniero project, which has extraordinary potential. The transaction was carried out in such a way as to preserve the financial capacity of the group. This project will be acquired by issuing shares for an approximate value of US$116,000,000. This is equivalent to paying $34.20 / ounce of gold according to historical data, while the norm for a project with similar characteristics is generally set at $40-$50 / ounce.
Mr. Bonneviot mentions that the closing of the acquisition will be effective when the technical report 43-101 (PFS) is filed at the beginning of July; when the restructuring of Sycamore's Lomati project is completed; when Sycamore's audited financial statements are filed and ultimately, following the approval of the transaction by the TSX. The objective is to finalize all these steps in July.
Mr Bonneviot mentions that the stake of the Fairchild company should drop to around 39% when all the shares are issued. Regarding Onex Holding, it will become a strategic investor in Robex, for which it has already expressed its interest in participating in financing. When the transaction is completed, Onex Holding will hold a 19% stake in Robex.
Mr Bonneviot mentions that everything will be done to ensure that the promotion of the SP is consistent with Robex's projects.
Mr George Cohen mentions that Robex took control of the Sycamore company several months ago. Robex did not wait to take over the operational management of the Kiniero project and now they have complete control of the construction activities; the development of the 43-101 technical report and the planning of the future plant.
Mr Bonneviot talks about the important synergies of the 2 companies. The ambition now is to build a multi-country and multi-asset group in West Africa, in addition to continuing to achieve good financial performance. Concerning the financing of the construction of the plant, Robex has already had meetings and received proposals from investment banks which are ready to follow us.
Mr Bonneviot mentions that they have already started to transpose the ways of doing things from Nampala to Guinea; unify management systems and use suppliers and expatriate resources from Nampala. The synergies are evident since these projects are close to each other, in distance and culture, in addition to being similar in terms of geology and technical operation.
Mr Bonneviot mentions that there is a very significant potential for increased resources on Kiniero. There are currently 3 drills on the site and the objective is to demonstrate the maximum mineral resources in order to start the production of the plant without concern. The synergies are significant enough to consider Kiniero functions being administered from Bamako. Mr Bonneviot mentions that Robex now has sufficient size to ensure a substantial valuation of the SP, in addition to the 2 assets spread over 2 countries.
Mr Bonneviot mentions that Robex remains opportunistic for the acquisition of new projects even if the priority consists in administering the Nampala project and the development of the Kiniero project. As soon as the financing parameters for the Kiniero project are better defined, Robex will continue to analyze projects with the aim of doubling the group's overall production capacity again.
Mr Rousselet mentions that structural changes are underway. The management of 2 operating sites requires significant changes, as does the arrival of new individual and institutional shareholders.
Mr Rousselet makes a retrospective of the evolution of the Nampala project. He attributes the good financial performance of the Nampala project as a determining factor that made it possible to acquire the Kiniero project at a good price. The year 2021 required significant investments in order to strip 4 new areas. Now we have a factory that uses little energy; very autonomous; works very well and which will be able to support the development of Robex.
Mr. Cohen mentions that the negotiation with the Sycamore group was tough, in addition to lasting more than 8 months before obtaining a signature. Mr. Cohen is very happy with this transaction because it will bring a new dimension to Robex, in addition to significantly increasing the group's gold production. Current production should be multiplied by 3 or 4; with substantial mineral reserves, in addition to current results that continue to demonstrate the potential of this project. Mr Cohen mentions that this transaction will mark the history of Robex because the potential is significant enough to allow it to become a major mining company.
Mr Rousselet mentions that government institutions in Mali are not working properly and that security issues are deteriorating in the north. The arrival of the Kiniero project in Guinea suggests a much simpler operation.
Mr Rousselet mentions that the solar power plant is now operational on the Nampala site. It provides 4 megawatts with 6 megawatts of battery, for a penetration rate of 35%. The cost per kilowatt hour is 19 cents and will eventually drop to 14 cents. In comparison, the cost of thermal kilowatt / hour was 23 cents 2 years ago. Consequently, the savings are substantial.
Mr Rousselet mentions that the investment in the solar power plant obtains good visibility with financial actors, who are increasingly aware of climate change. This contributes to Robex's brand image. The partnership with Vivo Energie will continue through its involvement in the Kiniero project, for an investment of 35,000,000 euros. The Kiniero solar power plant will produce 17.7 megawatts with 30 megawatts of battery, for a penetration rate of 50%. This solar park project will be world-class; will continue to strengthen Robex's brand image, in addition to facilitating support from financial institutions for our projects.
Mr. Cohen mentions that during the PDAC held in Toronto, Robex was surprised to see the level of visibility obtained by the acquisition of the Kiniero project and the interest shown in participating in the financing of this project. Mr Rousselet confirms that Robex's visibility has greatly improved. Many visitors passed by the Robex booth and showed amazement at the size of the project.
Mr Bonneviot mentions that there are currently 2 pits in operation on the Nampala site and that the entire organization around the project is working well. Robex is currently re-evaluating the exploration model with the Sycamore team. He mentions that the Syama and Morilla project provide a better understanding of the potential of the Nampala deposit.
Mr Bonneviot mentions that the development strategy will focus on Kiniero, without forgetting that part of this development will come from the exploitation of the Nampala deposit, in particular by increasing the capacity of the plant.
Mr Bonneviot mentions the history of the Kiniero project and the importance of documentation. The Kiniero project was Semafo's first operational project, from 2008 to 2014. This project was then taken over by the Guinean state and then sold to Sycamore in 2019; operating permits have been obtained; $25,000,000 were invested in drilling and they proceeded to buy out the Mansounia project, adjacent to the Kiniero project. Large-scale projects are located near Kiniero, including the Bankan project of Predictive Discovery and that of Hummingbird Resources. In its current state, the Kiniero project qualifies as a tier 1 asset and there is believed to be significantly more gold than has been demonstrated to date. Many potential areas have already been identified for future drilling. As the site has already been in operation, there is already ore available to supply the plant. The consolidation of the results of drilling carried out over the past 20 years has made it possible to identify 47 new drilling targets. To date, the Sabali zone has produced very interesting results, which justified the purchase of the Mansounia permit located to the south. The Sabali area extends to the south and provides a very large area to discover. For the moment, the objective is to determine new mineral resources on the surface, in the oxidized and transition zone, to supply the plant directly.
Mr Bonneviot mentions that Robex wishes to continue collaborating with Soutex, Wacom, Vivo, … for the implementation of Kiniero. These partners have already started to provide efforts for the Kiniero project. The timeline of events aims to finalize the 43-101 technical report for early July; to continue the preparation of the Kiniero site and to conclude the financing in 2022; start construction of the plant in early 2023 for a first gold pour in the first quarter of 2024. The financing for the debt part will be necessary for the beginning of 2023.
Mr. Bonneviot mentions that the drilling objective for Kiniero is to obtain 1,500,000 ounces of gold in the “reserve” category and to produce a feasibility study for a production cost of less than $1,000. Mr Rousselet adds that the new plant will be able to process the ore in the following proportions: 50% which comes from the oxide zone, 20% from the transition zone and 30% from the sulphide zone. Because a plant has already been in operation, there is already transition and sulphide zone ore available to supply the new plant.
Mr Rousselet mentions that the effort of the shareholders is made by dilution, for the purchase of the project. For the future, the objective is to finance with debt.
Mr Bonneviot mentions that the base camp, the canteen, the common areas and the administrative buildings have been renovated. There are currently around 160 people working at the Kiniero site.
Mr Bonneviot mentions that relations with the surrounding communities are excellent. Sycamore has already completed 2 infrastructure projects for communities, which demonstrates that Robex and Sycamore also complement each other in terms of values.
Mr Bonneviot mentions that the Kiniero plant was completely dismantled because drilling revealed that there was gold under the site.
Mr Rousselet mentions that the Nampala plant was built to process 4000 tons/day and recently processed 7800 tons. Although this will not be recurrent, it must be understood that by improving efficiency, it is possible to optimize operations. Regarding the Kiniero plant, the objective is to initially process 3,000,000 tonnes/year.
Mr Bonneviot mentions all the work done to better understand the geology of the Kiniero permit. The consolidation of all historical and most recent data has been carried out. It continues and accelerates.
Mr Bonneviot mentions that we have a fully operational airstrip on Kiniero. With the one to be built at the Nampala site, both safety and efficiency will be improved. The objective is to maximize the synergies between the 2 sites.
Mr Rousselet mentions that when condemnation drilling was carried out under the plant site, we found gold; same thing under the storage area for petroleum products, just like under half of the airstrip. The track will therefore be shortened on one side and lengthened on the other. This gives an idea of the prospective aspect of this project.
Mr William mentions that the sustainable growth strategy has been validated in 2021. The operating results have been rebased and the results will continue to improve. Systematically, operating flows are lower than investment flows. For the future, the objective is to better manage the use of cash flow in order to obtain better predictability of our ability to generate cash.
Mr William mentions that Robex went from a net debt of 35000000$ CAD in 2017 to a net cash of 9000000$ CAD at the end of 2021. To date, 60% of the cash generated has been allocated to investments, 22% for debt and 18% for dividends. Considering the Kiniero project, the percentage allocated to investments will be maintained at a high level. The main objective for the year 2021 was to acquire a new project, which has been achieved. For 2022, the objective is to structure the head office in order to support the Kiniero project; increase our presence in the capital market; monitoring the company by a few financial analysts; graduating to the TSX and consolidating the actions of 10/1 and integrating the technical team of Sycamore.
Mr William mentions that the 43-101 technical report is expected for the very beginning of 2022-Q3. For the end of 2022, the objective is to have determined the type of plant and to start construction in 2023-Q1.
Mr. Cohen mentions that steps have been taken to migrate to the TSX. The authorities mentioned that it will not be difficult because Robex already meets most of the criteria and that it will be necessary to comply with some administrative rules. This will be completed by the end of the year.
Mr. Rousselet mentions that the gold production level of 50,000 ounces / year to 200,000 ounces / year will make it possible to comply more with the criteria of investment companies. This overall increase in production should make it more visible. The acquisition by issuing shares will make it possible to increase the liquidity of the security and consequently, attract more institutional investors. The arrival of Alain Willian and Stanislas, who worked within the BNP for the mining sector, will allow better communication; build relationships; promote the company and raise funds. We have the history; size and future prospects to be interesting.
Mr. Cohen mentions that he will lose the majority, which is an important event for him. Nevertheless, it was in the company's interest to finance the acquisition of the Kiniero project by issuing shares. Mr. Cohen will remain a reference shareholder and intends to remain so for a long time. He mentions that the acquisition of Kiniero is a first development operation and that there will be others.
Mr Bonneviot mentions that for institutional investors, gold production is important, as are mineral reserves and resources. Consequently, Robex's objective is to demonstrate that the mineral resources are significant and that the potential is still very significant. Mr. Cohen mentions that all this should make it possible to develop the SP in a consistent way. Mr. Cohen mentions to all shareholders to keep his shares preciously.
Mr Rousselet mentions that the level of knowledge of the Kiniero project is very high. Despite the forthcoming release of the PFS level technical report 43-101, he considers that this project has already reached the DFS level, at 80%-85%.
Mr Bonneviot mentions that the increase in Nampala's production capacity is not for now. He considers that it is preferable to demonstrate more mineral resources beforehand so as not to find oneself in an emergency such as a few years ago. Soutex has already planned this capacity increase. Mr. Cohen mentions that we should not limit ourselves to the idea of increasing the production capacity by 15,000 ounces. It may be more.
Mr Rousselet mentions that the Kiniero project is so forward-looking that one has to wonder whether it is better to invest an expansion budget for Nampala or develop Kiniero further. He mentions that you have to work hard to find gold on Nampala whereas on Kiniero, you can find it everywhere.
Mr. Cohen concluded the meeting by saying that there is still a lot of work to do and that our situation is enviable. We have quality assets and it's nice to lead a company with such a bright future, for the good of all.
If you enjoy this post, you know what to do...