Mastermyne Group Limited (MYE) Earnings Call Transcript & Summary

Good afternoon, everybody. Welcome to the General Meeting of Metarock Group Limited [indiscernible] today [indiscernible] whether you're attending today in physical venue in Brisbane or via the online meeting platform provided by Share Registry Service -- Link Market Services. My name is Colin Bloomfield, I am the Chair of Directors of your company and the Chair of this meeting. It's now 2 p.m. The appointed time for the meeting and the necessary quorum is present. So I officially declare the meeting open. As stated in the notice of meeting, this is a hybrid meeting. Before we proceed with the meeting, I have some housekeeping points for those in attendance at the venue in Brisbane. Please switch all your mobile devices to silent mode and do not make or accept a call during the meeting. Recording devices and cameras must not be used during the meeting. In the event of an emergency, please follow the emergency exit signs and instructions of the staff at the venue. The agenda for today's meeting is set out in the Notice of Meeting dated 11th of April 2023, which was released through the ASX and made available to all shareholders on the company's website in a manner required by the Corporations Act. For this meeting, the notice of meeting, which includes the accompanying explanatory statement is taken as read. We will proceed as follows: Firstly, I will present my address, which has been released through the ASX prior to the commencement of the meeting. I'll then address any questions that were sent through prior to the meeting. We will then proceed with the formal business of the meeting as set out in the Notice of Meeting where we ask shareholders to participate by asking questions or making comments relevant to each item of business and voting on each resolution. At the conclusion of the formal business, I will close the polls and close the meeting. Results of voting via the online platform and via the voting cards of those attending at the meeting venue in Brisbane will be collected and processed by our share registry, and we will determine and announce the results of the meeting on the ASX announcement platform on the company's website as soon as they are available. Your company's Directors and Senior Executives are in attendance today. As mentioned, I am attending and chairing this meeting here in Brisbane. And with me are my fellow directors, Andrew Watts; Gabe Meena, Julie Whitcombe and Paul Rouse. Also with us are Paul Green, our Managing Director; Jeff Whiteman, our CFO; and Andrew Ritter, the Company Secretary. We are also joined by our audit partner from Pitcher Partners, Jason Evans; and our company's advisers from Clayton Utz, Link Market Services, Wilsons and KPMG. Finally, we are very pleased to have with us Matt Latimore attending by phone, and Aidan Meka and Murray Smith from M Resources. And Murray is one of the nominated directors to the company pending the outcome of today's meeting. In response to the numerous business challenges over the last 18 months or so, Metarock has initiated a turnaround plan to return the business to previous levels of stability and profitability. The key elements of turnaround plan include: appointment of a new senior management team, which commenced in late 2022; termination of the Crinum and Peak contracts by mutual agreement and exiting the Thalanga contract; sale of idle plants, including the Crinum coal equipment and various hard rock equipment; and a recapitalization of the business to improve liquidity and net debt. The recapitalization is a fundamental element of the turnaround plan to improve cash flow, reduce net debt and secure the company's funding position. This is being achieved through an equity injection and a proposed nonrenounceable entitlement offer, an extension of existing working capital facilities and an asset divestment program, which is ongoing. M Resources has agreed to invest $25 million to acquire at least a 51% interest in the company via replacement, which will be subject to shareholder approval. And M Resources Group is a privately owned group of companies with substantial investments in the Australian mining sector, in particular, coal mining. This strategic investment brings material advantages for Metarock, including M Resources' deep insights into the sector across the value chain; potential to leverage the relationship for new contract opportunities and the combined capabilities of the two groups to deliver a full service offer in the coal mining sector. It is intended, however, that M Resources and Metarock will operate on an arm's length basis. The company also intends to undertake a pro rata non-renounceable entitlement offer to existing shareholders to raise up to $3.9 million. Combined, these raisings will see an injection of up to $28.9 million of new equity capital before costs into Metarock. The funds raised from the transaction will be used to improve cash flow, reduce net debt, including the ATO payment plan and the deferred consideration for PYBAR and secure the company's funding position. Full details of the conditional placement were contained in the company's general notice of meeting, which was released on the ASX platform on the 11th of April 2023. Also note that upon the completion of the conditional placement myself, Gabe Meena and Julie Whitcombe, will retire from the company's Board. And Murray Smith has been nominated to the Board. On behalf of Gabe Julie and myself, it has been a pleasure to have served the company as a Director and Chair of the company. We now come to the business of the meeting as set out in the notice of meeting. Before moving to the resolution to be considered, I will outline the procedures for the meeting. In accordance with the company's constitution as set out in the notice of meeting, we have determined that voting on each resolution will be conducted by a poll rather than on a show of hands. I now declare the poll open on the resolution. The poll will close 5 minutes after the close of the meeting. So if you have not completed your voting cards and submitted your vote by the close of meeting, please do so as quickly as possible after the close. I will shortly touch on the procedures for voting at this meeting. I have appointed Ms. Rachel Teo of Link Market Services, the company's share registry, as returning officer for all polls conducted at this meeting. The result of the poll on each resolution will be declared and released to the ASX later today. Only shareholders, proxy holders or appointed representatives are entitled to speak or vote at this meeting. Only shareholders who are entitled to vote at this meeting may cast a direct vote on a resolution. I will vote directed proxies as directed. And as stated in the notice of meeting, where authorized I will vote undirected proxies in favor of the resolution. As we consider the proposed resolution, I will disclose the directing voting and proxy voting directions that the company has received for that resolution prior to the meeting. Shareholders and proxy holders attending at the venue will cast their votes by filling out the paper voting card they receive when they register their attendance at the door. If you are registered with a yellow voting card, you are a voting shareholder, proxy holder or corporate representative and have chosen to vote using a paper voting card. You're also entitled to speak at the meeting. If you are registered with a blue card, you are a non-voting shareholder. While you are entitled to ask questions and make comments, you are not entitled to make a vote at this meeting. If you are registered with a white card, you are a visitor and you are not entitled to speak at or vote at the meeting. Your completed voting cards will be collected at the close of the meeting for inclusion in the polls. If there is anybody at the Brisbane venue, whether shareholder, proxy holder or visitor who is not registered, please do so immediately. If you're online, at the bottom of the web page, there are 3 boxes that invite you to get a voting card; one, get a voting card; two, ask a question; and three, download the notice of meeting, the independent expert report and the virtual meeting online guide. You ask a question and get a voting card buttons are replicated at the top of the web page. If you are participating in the meeting online and are entitled to vote, you can cast a vote -- direct vote using the electronic voting card that you have received when you validated your holding. You validate your holding by clicking on the "get a voting card" button on the virtual meeting platform and then providing your SRN or HIN in the shareholder number field when requested. If you have any questions about casting your vote online, please refer to the online platform guide or call the numbers set out in the guide or on the screen in front of you. If we experience any technical issues today, a short recess or an adjournment may be required depending on the number of shareholders affected. If this occurs, I will advise you accordingly. We value your questions and comments. At each item of business or at the item of business at this meeting, shareholders and authorized representatives of shareholders are asked to -- are invited to ask questions or make comments relevant to that item. We ask that you do so respectfully. If you're attending at the venue or hold a yellow or blue card, please raise your hand at the appropriate time and when invited to speak, please identify yourself to the meeting. This year, shareholders can ask questions online during the meeting, and we also have functionality to allow shareholders to dial and ask questions by voice. [Operator Instructions] When we reach the item of business, which relates -- to which your question relates. We put in a queue in the relevant time the teleconference monitor moderator will introduce you and prompt you to ask your question before unmuting your line. [Operator Instructions] I'll consider questions submitted online after I have taken questions from the floor and the phone facility. For fairness to everyone present, I encourage shareholders who are participating in the meeting online to submit your questions now so we can schedule your questions to be answered as soon as possible. For shareholders who are attending the venue in Brisbane or on the phone, I ask that you submit your questions one at a time and restrict them to the item that we have under consideration today. As Chair of the meeting, in the interest of the meeting of the all, I may rule question to be out of order if it does not pertain to the business of the meeting. Before commencing the item of business being put to shareholders today will address questions in advance from shareholders. Andrew, are there any questions from shareholders?

There's been 2 that have been received. Under general business, would you like to answer them now?

Yes, let's do it now.

The first question is, are there any callback options for the deferred consideration for PYBAR given the underperformance of the Thalanga contract?

So there is a deferred consideration amount to be paid by agreement in September, and that will be subject to the terms and conditions of the contract of sale, for the PYBAR transaction. And those things will be considered at the time when the deferred consideration is due and payable. So that would be an item of business for the new board.

And the second question is, what is the expected timing of further asset sale tranches?

Okay. That's -- we continue to make progress on asset sales, including a number of items of plant in the PYBAR and the Mastermyne business over the previous months. We still have a few items of plant and equipment that we intend to continue to look for sale for, and we expect that over the coming months that we would be in a position to sell more plant and equipment. But I would point out that the urgency around the sale of plant and equipment is such that we will ensure that those sales reach full value. So we don't have the urgency to sell them that may have been the case in the past, and we will be expecting that we get full market value for each and every piece of equipment that we sell.