AGMnotes
Here are my notes from the AGM, which I attended.
SPN is still stockpiling and minimalizing the spending of capital. The full permit is on hold because the consulting and engineering work will cost around 100,000. Management has decided that this is not necessary at this time and SPN has 1 million tons they can barge which will give us capital to continue without diluting the stock.
The second conveyor is also on hold until orders start Also the final site for this conveyor is still not determined as ongoing site development continues.
HBK has 8 bids in on 8 different large contracts with the new terminals and pipelines. Not just HBK but everyone is quite until decisions are made. Even the Prince Rupert council is not making decisions on contracts yet.
Also, HBK is in ongoing talks with 4 contractors and keep coming back with requests.
Burnco is still in talks with us and Vic said that they would make the ideal partner. HBK have supplied Burnco with samples which they have indepentently tested and are happy with the quality of SPN aggs. Vic again empahasised that we are in constant discussions with them.
HBK explained how they come up with their quotes for contracts. They are based on information from the Prince Rupert community. There are 2 local competitors. One is in Terrace, 80 miles and involves trucking and this cost determines HBK quotes Quotes are also based on delivery time. One client wants delvery in 2017 but has contacted HBK wanting delivery time sooner. This changes the quote from HBK and these conditions can be renegotiated with all their quotes. So when a client requires the aggs is built into the quote. The second is a granite quarry, 30 KM away and they have to drill and blast which adds to the cost .
They also mentioned Polaris stating that they are focused on the USA. Also that their business plan is based on shipping at least 60,000 tons in ships that the port of Prince Rupert is not able to handle at this time. Also because of all the open ocean between Polaris and Prince Rupert barging would almost be impossible.
The West Fraser – Polaris barge was arranged by a Wesr Fraser associate who was barging logs over to the Island, so West Fraser was offered a very low cost for a back haul. HBK’s understanding is that this was arranged before SPN commissioned the wash plant. HBK is in discussions with West Fraser about future orders if required.
They also said that they believe NCC and Burnco will form an association.
The contractor who has bid on the underwater pipeline has vessels that can load at SPN who have agg samples and have visited SPN. They have also requested different quotes for having aggs delivered to Grassy Point.
With commodities you can look the price up unlike aggs .No one knows, your quote is only as good as your homework. What they do know is that the cost and use is going up each quarter.
Also some of the contractors that HBK have given quotes to have come back and asked for different agg size quotes. One has asked for quotes on 3 different sizes. These agg companies are private and keep their quotes are a secret HBK claims that one pipeline they were talking with said that their quote was 12 dollars to low. And that when the pipelines start, the price of aggs will be higher.
Proximity to the site and how aggs reach the site are 2 important factors. 100 miles via trucking is the limit and a 100,000 KM via rail. So Alberta is a HBK market. HBK has also been in discussions with Alaska.
For small community projects like road construction etc., locals use traditional suppliers and it is very hard to break into. They will use a contractor once every 2-3 years and they all know each other.
Once orders start HBK will start stockpiling in Prince Rupert. They have 3 different locations they are looking at and are in signifigant discussions with 2 of them.
The last HBK NR titled HBK praises BC LNG etc. was reposted by the LNG Interanational site without HBK requesting it. LNG Internation which includes big dogs like Shell, Chevron etc., has an office in the same building as HBK and are aware of who and what we are.
The school at SPN is a no go. The FN are getting certified at BCIT and this will be when HBK will hire them.
SPN has a crew of 7, one being also a mechanic. They work 3 weeks on one week off, 10 hours per day so no overtime or extra shifts are required. They will be going down to a crew of 5. They are protecting every penny until the orders start.
HBK also said that they have no fears about raising more financing if required. HBK has individuals who are in big and HBK gets ongoing enquires from them wanting to do another financing if needed and will continue to support HBK until the orders start.We are in the final stretch and all we need at this point is patience.. HBK is going after the large, long term contracts as is Burnco.
In the last 6 months HBK has traded 14.2 million shares, there are large commodity companies on the Toronto exchange who have not traded this amount. Last year, 38.4 millionk traded from 9 – 38 cents and 20 million warrants with an average price of .20.