AGM reportHere are my thoughts and feeling about this year AGM.
First let me start by saying that last year we were all jammed packed in a small room, this year they had planned for a much bigger room. I was expecting a much larger crowd so as they I guess, but we were after all a very small group. JSL and JFM were as relax as usual, I would say so relaxed, they look like they were on top of everything and had everything under control, they know what they have in the ground and they seemed to know where they are going, they just can’t say it yet.
Last year they were very enthusiastic to present us the project with all their new developments and things to come, it was very instructive and fun. As of this year they seemed to have done the AGM because they had no choice but they might have preferred not to do it because they had absolutely nothing new to share. The feasibility for phase one is done, the numbers are out and all the rest they can divulgate to us for the moment has already been said in the PR. They didn’t / couldn’t say anything else at this time. It was a weird feeling being there, it was a cold atmosphere and we didn’t feel that much welcomed. I mean they were nice with us it’s just that they were not allowed to divulgate more information and they seemed to be lips tight on many subjects that we tried to bring on the table, their lawyers were all in the back and they were watching them as they referred many times.
JSL even cut the conference short at one point and concluded with a small video of the project showing the potential future mine with phase 1 and 2. I guess he didn’t have a choice, we were only coming back with different angle questions to try to get our answers and since they just couldn’t say anything I guess that was the easiest way, but anyhow I found it a bit weird; I had to go see the management at the end to ask the rest of my questions.
Nonetheless here is what came out, as you will see, not much and it’s not because we didn’t try. We tried with different kind of questions, but they were unable to comment more on many of the subjects.
- When ask what happened with the Helm deal:
They said that they can’t talk about it, Helm walked away for their personal reasons, they didn’t want to comment more.
- When ask about the 12 NDA:
They said they couldn’t talk about it, they are working on finding /establishing a deal that will be most beneficial for the company and the shareholders, but they just couldn’t say anything else.
- When asked if out of those 12, if there was one company (without naming it) that they were closer to get a deal with then the others:
They couldn’t answer that either.
- When asked if there was something blocking the companies (potential partners) from getting a deal done or something that didn’t please them or issues that needed to be resolve before a deal can be made:
They said that nothing is blocking anything, there are no issues, it’s just that it takes time to go through everything, it is very complex and there is a lot to take in consideration. For those potential partners / companies, getting a deal with CRE is one part of their business, but they have other things to take care of and analyse. From our management perspective everything is normal so far in the time frame and they are not worried.
-When asked about the permits situation:
They were vague about it, they didn’t want to specify a date, but they didn’t seem worried about it.
-When ask about the environment study:
They said that they have done their part, it was amended last December, they are now waiting for more questions from the governments, it is not something they have control over in terms of deadline. They didn’t seem worried about it.
For them, the permits, the construction start, the environmental study approval is all place in one big scheme in terms of deadline. They didn’t want to be specific for one in particular, and they said that they see it all come into place at the latest in Q1 2019. They are working hard for sooner than later of course, but their objective is at the latest in March 2019 the construction will start.
-When ask about the feasibility study for phase 2:
That was kind of weird, it says Q2 2018 in the presentation on their website, but they were very vague about it once again. It doesn’t seem to be a priority for them. They said that even if it was only phase 1 with spodumene concentrate and Tatalium they would be making lots of money. The rest will all depends on what their future partner needs. What happens if the future partner doesn’t want carbonate… They didn’t say that it is the case; they just don’t want to spend more money before they know what the future partner needs. They didn’t want to say where they are with it and because they can’t say anything about their discussions with any potential partners, they didn’t comment more on that.
-When ask about the extreme weather (winter) and exploitation of the mind:
JFM said that it is not a problem at all; they don’t even consider it as an issue / challenge, they are equip for it and it’s been done before, he didn’t get into details.
-When ask why Canaccord reduced our price target to 1.50$:
JFM said that they were not pleased with it either and they talk to ric in Canaccord who did the analyses. I didn’t read his report myself but apparently in his report he uses the same calculation method as he does with any other company. The 1.50$ is based on a 100% equity at 1.something $. If it would be 50% equity, 50 % dept financing it would be 0.90$ higher so 2,40$. Canaccord also used 10 000$/ ton for its calculation, if they would have used anything higher then this (11 to 14 000$/ton) it would add more value to the share price as well. 10 000$/ton seem to be a bottom price for the moment.
Management is talking more about anything between 10 to 20 0000$/ ton. They said a small company who needs lithium very fast will probably pay 20 000$/Ton, but a large company who is planning well in advance would probably pay between 11 to 14 000$/Tone.
JFM also mentioned that because Canaccord is implicated in the discussion with the potential partners, they are kind of bind as well in what they can say about the company and that is why CRE was not put in their latest report about lithium. ( I haven’t read that report either).
-When ask about the resent 7m private placement deal:
They said it is true that they had previously mentioned that they would be ok financially till the end of 2018, but that was taking in consideration that Helm would have exercise their warrant at 0.77$ witch would have given them 5m. Since it was not the case, they had to find another solution. They said that this new deal is actually much better; they have raised more money for fewer shares at the end.
They said that the deal was concluded in about 40 mins, it was that easy for them to raise that money.
-When ask about their salaries:
JSL wasn’t to please about that question but he told me that even if it wasn’t printed that way the numbers that we saw for the salaries in the package for the AGM were actually for the years 2016 and 2017 but they were all put in the 2017 line. So in reality it is actually half of that per year and it should be pretty much the same for the forthcoming year. He said to look around with other companies and it is pretty stander.
-When ask if Dr Haber still with the company:
JSL said in his own word that he is one of the key members of the company and he is presently working very hard and that is why he couldn’t be at the AGM this year. He didn’t want to specify where he was, Europe or Asia or somewhere else and couldn’t say anything else…
-When ask if they see the lithium market as strong as before and why are the price dropping so much (because we are not the only one who’s share price has drop) :
JFM said that the latest report about SQM still hurts the market, but in their mind there is no reason why it won’t come back. The market is been played with, to many players are presently in need and that will only increases as we progress through the years. As it’s been mentioned before by others, we are looking at a 500 000 ton of lithium need and right now only 140 000 can be produce at this time. Other players will have to come into play.
They are saying that CRE is one of the 3 companies left that are presently not tight up with partners and the market would actually need 20 other mines like CRE to be able to address the lithium demand to come. They understand our frustrations, they are stockholders to, but in their mind there is no dough CRE will succeed.
That pretty much covers what I remember from the AGM, I wish I could say more, but it was very quick and restrictive this year. For those of you, who were there too, feel free to add if I missed something. It was a pleasure meeting you all!
Personally I was expecting some grudge by big ownership players (companies or something), but on the contrary none of that. It was like only us the ‘’small’’ investors were having concerns and asking questions. It was like a formality if the big players were in the room with us, the feeling that it gave me was like everything is already known it’s just that it can’t be disclose at this time for some reason.
Cheers to all