Andromeda Metals Limited (ADN) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the market briefing for Andromeda Metals Limited regarding changes in its executive management. [Operator Instructions] Speaking at today's market briefing will be Mick Wilkes, the Chair of Andromeda. He will be followed by Rob Katsiouleris, Andromeda's CEO and Managing Director; and then Luke Anderson. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Mick Wilkes, the Chair of Andromeda. Please go ahead.

Good afternoon, everybody, and thank you for joining us today to discuss the executive changes at Andromeda that were announced this morning. I wanted to first say that we are continuing with the business plan as we have set out in recent times in progressing towards development and production of the Great White Project. There are ongoing discussions in finalizing the volumes committed under contracts and getting those offtake contracts in place, there is a decision pending on upsizing the plant to Stage IA, capacity of 100,000 tonnes per annum. And we are continuing discussions with the debt providers to finalize that to support project funding. As announced today, Bob has decided to return to Europe for personal reasons. Luke has been appointed as his replacement starting on the 1st of August this year. And Bob is going to stay with the company as the CEO until the end of July and until Luke takes over. And will beyond that, stay on as an adviser to the Board and during his period -- during the period up to the end of July, he'll be working with Luke to ensure that there is an orderly transition in the CEO position. I wanted to say that Bob has done a fantastic job for the company. His energy and enthusiasm and his expertise has brought a lot to the business, changing the commercial strategy in setting our path forward. And I'll now hand over to Bob to say a few words.

Yes. Mick, thank you very much. Good afternoon, everyone. I just wanted to reiterate a couple of really important things. First and foremost, it's been a privilege for me to be the CEO and continue to be CEO until end of July, I think we have achieved an incredible amount in the last 12 months. And I think the future is looking very, very bright. My own personal circumstances have changed. And as a result, I certainly need to come back home here in Europe, but that doesn't preclude our business going forward in the direction that we've laid out, the Board support, shareholders, stakeholders and our employees. So I'm very excited that Luke will be moving into the role. Luke comes from an excellent background in industrial minerals, a wide range of different disciplines. And I think he is going to certainly be instrumental in continuing not only our business plan, but enhancing it and certainly taking it to the next level. So with that, I'll turn it over to Luke for a couple of comments.

Yes. Thanks, Bob. Yes, well, welcome, everyone, and thanks for having me here today. So I'm very excited about my appointment to Andromeda and the prospect of developing the Great White Kaolin project and also building ultimately, an operating industrial minerals company here in South Australia. A little bit about myself. I grew up here in Adelaide, worked in the mining and logistics industry for over 30 years. I started with Normandy Mining here in Treasury and Corporate Development roles, moved to Sydney and worked in Normandy Industrial Minerals for a number of years before that business was sold to Unimin Corporation. I ended up working for them in the U.S., move through the ranks, became CFO and then ultimately CEO of Unimin Corporation. Unimin's one of the largest industrial minerals companies in North America, has 40 operations across mainland U.S., Canada and Mexico, 2,500 employees. I moved back to Adelaide in 2015. That was really mainly for family reasons, coming back to Adelaide. I moved into the CFO role at OZ Minerals, where we made the decision on the development of the Carrapateena project. So that was a great outcome again for South Australia. And then I became the CEO of One Rail Australia, which is the third largest rail operator in Australia. And I think really enhance my knowledge of logistics, which is important in any mining project, but also particularly this project. So what drew me to Andromeda Metals? I think it's the prospect of developing a world-class Kaolin operation right here in South Australia and certainly takes me back to my roots in industrial minerals. The project has really solid fundamentals. It's a high-grade deposit with the ability to supply into the high-end ceramics markets. Bob's done a great job to refocus the business and really underpin the project commercially, which is really important in industrial minerals. The market, it drives the products in many cases. So done a great job there and great progress has been made and will be made in coming months. So I feel like from that point of view, the business is in really good shape to take it forward. Projects has strong economics, reasonably simple mining and processing operation, a very supportive Board and a great team who I've met this morning. So very keen to work with Mick and Bob, particularly over the next few months for a seamless operation handover. I'm on board with the trajectory of the company. So that should be business as usual and really taking it to the next level. So thanks for having me here today. Thanks Mick and the Board for my appointment, and I look forward to meeting you all in due course.

Thanks, Luke. Before we move on to Q&A session, I'd just like to reiterate a few things. Firstly, the Andromeda has an exciting future as we work towards the development in production is the Great White Project, which we have a lot of confidence in. And with our partners and offtakers, and we continue -- we are committed to executing the business plan that's been constructed over the past 12 months. Yes, it is unfortunate that Bob has had to return to Europe for personal reasons, but we have a great replacement in Luke, who is starting on the first of August. I'm very pleased that he's accepted the appointment, bringing extensive operational and financial expertise and a significant international experience in industrial minerals and logistics and project development right here in South Australia. As we said, Bob will remain with the company as an adviser and we'll be remaining in the CEO role to ensure an orderly transition until the end of July. I'm confident these changes in place -- place the right management team in place and structure to effectively execute on our strategic opportunities over the long term. And finally, there will be an opportunity to meet Luke and Bob next week at the RIU conference in Sydney. We'll now move to the conducting the Q&A session to provide an opportunity for as many of those seeking to ask questions within the allotted time. We do ask that questions be limited to the management changes announced today. Only questions of an operational nature will be addressed by e-mailing the company directly at the e-mail address ir@andromeda.com.au. We also asked the questioners limit themselves to a maximum 2 questions at a time. We'll now start the Q&A session.

[Operator Instructions] Our first question comes from Anthony Moore from the Three Kings Group.

Good morning, and thanks very much, gentlemen. I understand the difficulties involved in coming together at such short notice. My question is for Bob. Bob, firstly, thank you for what you've done. You've been able to articulate the vision really well. Are you confident that vision will be able to be enacted? And Mick suggested that we're still looking towards -- I know that this plays into the vision, but we're still looking towards the 1A project, the upscaling. So if you could just unpack a little bit of that for me, please.

Sure. Thanks for the question. Look, first and foremost, the vision is clear. It impacts -- we've certainly come a long way. I think we are at what I call the P80 part of doing the project. We have still an incredible amount of interest in our product globally. We're working through the final details of very comprehensive and complicated offtake agreements with the full intent of all the parties involved. Appreciate Anthony and all of the shareholders know that we are in the kaolin industry. Kaolin is an opaque mineral, it is good to understand pricing, economics, macroeconomic, macro continues to be a challenge in educating the market, educating partners. But to answer your question, all of that I think is very much in place. The vision and the energy is, if anything, really moving in the right direction. And I think -- so I'm very excited to see someone of the caliber of Luke's background and experience really going to be able to not only be part of that, but also execute in South Australia, which is going to be a very, very big positive for our business.

Just a moment for our next question, please. Our next question comes from Ross Cameron from Cameron Research. Hello, Ross? We'll come back to Ross. Ross, please line up again to ask a question. [Operator Instructions] Just a minute, we have a question. We have Diane Kerr from ADN.

My question is a little bit more pointed, I'm wanting to know with regards to opaque and Traxys, where are we at in trying to determine that final BLA with both of those companies? And I also would like to ask at what point is funding has to -- a decision has to be made with regards to funding, is there a time line that you would actually have to agree to funding at 1A or 1A Plus?

Thanks for that question, Diane. As I said, the business plan is still the same as it was before. Nothing has changed in terms of debt. We are in detailed discussions with an offtake partner Traxys and that is a key to us moving forward with the financing for the project. And the outcome of that Traxys discussion will determine the financing going forward. Bob, do you want to add anything to that?

No, Mick, I think that's clear. And then I think coming back to the point I made on the previous question, appreciate the complexities involved in building an offtake of, first of all, of potentially this size and importance and so we really want to make sure, as all the parties do that we are doing. We're doing really everything in the best interest of the company because we're really laying down the foundation for the future. So that's taking time. The [ barrel ] deal also took time was a complicated deal as well. So we want to make sure we're rigorous, we're disciplined and at the same time, it's something that really forms the foundation of what we're doing for the next couple of years.

So there's actually no time line on that?

I would say, we're in -- go ahead. Go ahead, go ahead. Diane, I think there is -- I would say we're in the final stages of pulling that together right now.

And are there any other offtakes that are mining offtake agreements that are in the mix regarding opaque, pallets or anyone else?

We have -- Diane, we have several ongoing discussions with smaller end users, direct users who are interested in our product. Those are progressing. But at this point -- and I would say probably for the last 2 months, we have focused 100% on getting this big offtake agreement in place simply because it's the priority. But we still have quite a bit of interest in smaller volumes, I would say, for our product. But due to the nature of the size and complexity of the ongoing negotiations, we're focused on getting that across the line first.

Thank you. Our next question comes from Andrew Grant from a private shareholder. Please go ahead, Andrew.

Thank you. After getting over the initial shock of the announcement this morning, I began to think once I recovered that, maybe I'm crazy for thinking, but I was thinking it could easily be an advantage having Bob in Europe, there's so much of Andromeda's future resting with these companies in Europe that Bob would be very strategically replaced in the same time zone, et cetera, et cetera, and is able to spend the time. It may have -- may be a plus for the company strategically. I don't know if that's a crazy thought.