Good afternoon, ladies and gentlemen. Welcome to the 2023 Annual General Meeting of Shareholders of Andromeda. My name is Mick Wilkes. I'm the Chairman of Andromeda. Just a few housekeeping issues before we start. The emergency exit is over there, where the little green man is running, and you go out the doors to the car park behind me, and our staff will assist those people with that exit. If you need the toilets, they're through the doors on the other side of the bar. There's a sign for the toilets. Anything else, Kate, that I should mention? Is there any sirens that go whoop, whoop, or beep, beep? You'll hear the whoop, whoop and the beep, beep, and you'll know that there's something going on. Well, it's now 1:00 P.M.
I'd like to, on behalf of the board, do a welcome to country and open the AGM. On behalf of the board, I'd like to acknowledge the traditional owners of the land on which we meet here today, being the Kaurna People of the Adelaide Plains. We pay our respects to the elders, past and present, and extend that respect to other Aboriginal and Torres Strait Island people who are present today. Today's meeting is being held in person and online via the Computershare virtual meeting platform. This allows shareholders, proxies, and guests to attend the meeting in person and virtually, with attendees able to watch a live webcast of the meeting. In addition, shareholders and proxies can ask questions and submit votes during the course of the meeting.
I've been advised by the Company Secretary that we have a quorum present, and as it is now past the appointed hour of 1:00 P.M., I declare the meeting properly constituted and open. I would like to introduce to you, my fellow directors, our CEO and Managing Director, Bob Katsiouleris, immediately to my right. Beside him, our Non-Executive Director, Melissa Holzberger, and beside her, Non-Executive Director, Austin Perrin. Also joining us today, excuse me, is our Company Secretary and Legal Counsel, Sarah Clarke, on the end, and Darren Hall from Deloitte Touche Tohmatsu, our auditors. Darren, where are you? There you go. Thank you. I invite those present today to make yourselves known to us at the conclusion of the meeting, those shareholders present today.
If any shareholder here today in person has not already registered, please do so with Computershare now, so that you may vote during today's proceedings. So is there anyone that hasn't registered today, shareholders? Thank you. Could everyone in the room please ensure that your mobile phones are switched to silent during the meeting? Please also note that any unauthorized recording or photography during the meeting is prohibited. Excuse me. The notice of meeting and explanatory memorandum was made available to shareholders and lodged with the Australian Securities Exchange on the 20th of October 2023, within the time provided for in the Corporations Act. Consequently, unless there are any objections, I propose that the notice should be taken as read.
The minutes of the last meeting of shareholders, which was the annual general meeting held on the 21st of November, 2022, were approved by the board and are available for inspection with the Company Secretary. I'll now go to slide 4 in the process for asking a question. For shareholders and proxy holders attending the meeting virtually, you can submit questions at any time during today's meeting. To ask a question, press the Q&A icon in the top right-hand corner on the virtual meeting platform. Please select or type in the resolution number or topic your question relates to before entering the text of the question. Type your question into the text box at the bottom of the screen, and when you have finished typing, press the Send button.
Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Also note that your questions may be moderated, or if there are multiple questions on one topic, amalgamated together. While we may not be able to deal with all of your questions, I will ensure that members have a reasonable opportunity to ask questions. I encourage all shareholders attending the meeting virtually to submit questions as early as possible, and we will attempt to address these questions at the appropriate time during the meeting. I will check after all resolutions have been put to the meeting, and before I close the poll, to see if there are any questions that have not been addressed, time permitting. ...
For those shareholders attending virtually who wish to ask a verbal question, please follow the instructions written below the online broadcast. Our Manager in Investor Relations, Patrick Sinclair, who's over in the corner, will act as moderator for the meeting, and as such, will receive any questions raised by shareholders via the virtual meeting room. Patrick will read out questions received during today's meeting, and I will hand over to him at the appropriate times. For shareholders and proxy holders attending the meeting in person, you should have been provided with a blue or a pink card at registration. There will be an opportunity for you to ask questions and make comments with respect to each of the resolutions when they are put to the meeting.
For each resolution, I will invite questions from you at the appropriate time, and those wishing to ask a question can do so by raising your pink or blue cards. Please wait until I acknowledge you before asking your question, and a microphone will be made available for your question to be heard by those in the room and the virtual attendees. There will also be an opportunity to ask questions or make comments of a more general nature regarding the company's performance following the Managing Director's presentation, which Bob will give after the discussion on resolutions. For those attendees issued with a white visitor's card, you will be unable to speak or vote at today's meeting. Again, if you wish to ask a question, and you are a shareholder or a proxy holder, please raise your blue or pink cards. The voting procedure.
Before moving on to the various motions, I would like to briefly run through the voting procedure. Voting today will be conducted by way of a poll on each item of business. To provide you with enough time to vote, I will shortly open voting for all resolutions. If you are eligible to vote at this meeting, please, once the poll has been opened, press the Vote icon at the top of your screen, and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a Submit or Enter button, as your vote is automatically recorded. You will receive a vote confirmation on your screen. You can change your vote up until the time I declare voting closed.
To change your vote, select Click Here to change your vote, and press a different option to override your previous selection. I now declare voting open on all items of business. The vote icon will soon be updated. Please submit your votes at any time, and I will provide ample notice prior to the closing of voting. I remind attendees that our board strongly recommends that you vote for all resolutions. All undirected proxies that have nominated the chairman of the meeting as their proxy will be voted for all resolutions. I appoint Nigel Bulling of Computershare Investor Services to be the Returning Officer and to conduct the poll. Nigel is just over here. Mr. Bulling has power to co-opt, as do his agents, members of his staff, and staff of the company.
For those shareholders and proxy holders who are attending the meeting in person and were provided with a blue attendee card, but are not able to vote utilizing the virtual meeting platform, I will now provide instructions on how to vote. For those shareholders or proxy holders who are attending the meeting in person, on the reverse of your blue attendee card is your voting paper and instructions. I'll now go through the procedures for filling out the voting papers. Proxy holders have attached to their submission card a summary of proxy votes, which details the voting instructions for business items on the appointment documents in your favor. By completing the voting paper, when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions.
In respect of any open votes a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your open votes. Proxy holders should refer to the summary of proxy votes form attached to your voting paper for further information. Shareholders also need to mark a box beside the motion to indicate how you wish to cast your votes. Please ensure you print your name where indicated and sign the voting paper when you have finished filling in your voting paper. Please lodge it in the ballot box, which will be circulated after all resolutions have been put to the meeting, to ensure your votes are counted. If you require any assistance, please raise your hand. I'll now give my chair's address.
So since speaking to you at our last AGM last year, the company has made some crucial changes that has enabled significant progress towards the planned development of the Great White Project. Firstly, the Program for Environmental Protection and Rehabilitation, or PEPR, as it's known in short, which was lodged with the South Australian Department of Energy and Mining in August 2022, was approved in March of this year. The approval permits the processing of up to 300,000 tons per annum of ore, producing up to a nominal 150,000 tons per annum of halloysite kaolin products. The approval of the PEPR opened the door for development of the project, including investment in long lead items for the Stage 1A project and the start of discussions with potential debt financiers.
The most significant change in the past 12 months has been the appointment of Bob Katsiouleris as CEO. Our previous CEO, James Marsh, was consulted on this plan and himself recognized the need for change to both deliver the project for shareholders and maximize value. James made a significant contribution to the company, identifying the enormous potential of the Great White deposit and essentially putting the company on the map. For that, we are extremely grateful. The search for a new CEO commenced over 12 months ago, with Bob's appointment in April this year. Bob is a true professional in the kaolin and industrial minerals industries, with a deep understanding of their markets and their fundamentals. Bob's first assignment was to review our strategic plan to maximize the value of our kaolin resources.
As you know, Bob has tremendous knowledge about the kaolin market, and a new strategy was developed under his leadership to clearly understand what products we should be selling, who to sell them to, and at what price. That has led a step change in the value of the business and, importantly, in attracting financiers to support the company. The new strategic plan determined that the best pathway to developing the Great White Project is through focusing on the core ceramics market, with a focus on being included in the formulations of the European ceramic multinationals and supplying their manufacturing plants located in our home market in Southeast Asia. Additionally, the research projects, such as carbon capture and HPA, were determined to be adjacent projects to be pursued when cash flow and funding could support their development.
To maximize the amount of debt that the project can sustainably support, management has worked to increase the proportion of Stage 1A capacity that is bankable. That is to say, the total tonnage under binding offtake agreements with creditworthy customers. Binding and bankable offtake agreements have been signed with Plantan Yamada for the Japanese market and Foshan Gaoming for distribution in China. Discussions and negotiations are advancing on additional bankable offtake agreements with IberoClays, Opeque Ceramics , the Hallett Group for HRM here in South Australia, and now Traxys. We are extremely excited about this new potential partnership with Traxys. They are a major commodity trading company that is the leader in industrial minerals trading globally. They are strongly supported by a large syndicate of 16 international banks and have a deep network of trading relationships in industrial minerals.
Traxys provide the potential to assist us in securing further binding commitments, plus debt and equity financing. Our ability to attract the attention of such a significant company like Traxys would not have been possible without a clear business plan and financial model demonstrating the potential value of our business. To this extent, the updated definitive feasibility study, otherwise known as the 2023 DFS, capturing the value opportunity of the new strategic plan, has been a critical part of our progress this past year. The outcomes of the 2023 DFS showed significant improvement in economics compared to 2022 DFS. These include the increase of 65% in the pre-tax net present value to over AUD 1 billion, and a 59% increase in the average EBITDA of AUD 130 million over a 28-year mine life.
As I said earlier, the strong outcomes of the DFS 2023 has informed the discussions with a number of potential cornerstone and strategic investors, such as Traxys. The purpose of these discussions is not only to provide funding, but also enhance access to markets, distribution networks that could be beneficial to product sales and/or the economics of the project. We look forward to updating shareholders on this significant development in due course. The board continues to take an active approach to its oversight responsibilities to ensure proper governance practices. This extends to regularly reviewing the composition of and succession planning for the board and executive management.
To that end, and in light of the company's revised corporate positioning and business strategy, which I've mentioned earlier, a review of the company's organizational structure was undertaken. As a result, it was determined the best path forward was that both James Marsh and Tim Anderson's positions needed to be combined and filled by someone with existing expertise in targeting European ceramic multinationals and pursuing product development opportunities. The board believes these changes were required to streamline the business and create a solid and sustainable foundation for long-term success. We thank both James and Tim for their commitment and dedication in helping to get the company to this advanced stage of where it is today. The board also acknowledges the importance of committing to sustainable extraction practices in the supply of superior quality industrial minerals.
As the company moves towards production, our aspiration is to adopt, monitor, and report on relevant frameworks and metrics that emerge from the developing consensus and convergence of environmental, social, and governance frameworks and standards. This is not only what is expected from listed companies operating internationally in today's world; it is also important to our new and potential customers. In summary, the board believes Andromeda is well positioned to deliver long-term shareholder value with globally significant high-quality resources, which are perfectly positioned to cater to the growing need for high-quality kaolin products. We strongly believe the agreement with Traxys is a true demonstration of this potential. The board and management remain focused and committed to delivering on the full potential we have before us, which in turn will deliver long-term value to our shareholders. We'll now proceed to ordinary business.
We now move to, onto the formal business of the meeting. We have received 338 valid proxies, representing 214,843,421 shares, which is approximately 6.9% of the company's residual capital, issued capital, I should say. 327 of the proxies representing, excuse me, 212,918,000 shares are held by me as Chair. The wording of each resolution will be displayed on the screen for virtual attendees and on the screen for those attending in person to view as we deal with that resolution. Proxy results relevant to that resolution will also be displayed. Slide 8, the financial report.
The first item on the agenda is to receive and consider the financial report and the reports of the directors and auditors for the year ended 30th of June 2023. Are there any questions or comments that relate specifically to these documents that any shareholder would like to ask of the directors or our audit partner Darren Hall from Deloitte? If there are any physical attendees with a question or comment, please raise your blue or pink card. I now ask Patrick to read out any questions we have received online via the phone for this resolution.
We currently have 67 shareholders present online, but no questions.
Thank you. We'll now move on to resolution number one. Adoption of the remuneration report for the year ended thirtieth of June. The company offers shareholders an opportunity to vote on the remuneration report for the year ended thirtieth of June, 2023. The directors advise that a vote on this item is advisory only and does not bind the directors of the company. However, the directors will take the outcome of the vote into consideration when reviewing remuneration practices and policies. The remuneration report for the period ended thirtieth of June, 2023, details how the board approaches remuneration, including the significant changes made the prior year following feedback received from shareholders during the company's 2021 annual general meeting.
The company continues to review its remuneration practice and disclosures in an effort to ensure we meet shareholder expectations, on remuneration strategy, policies, frameworks and practices. The company also focused on extending its engagement with investors as a key priority during the financial year, as it navigates the long-term strategic funding requirements to manage the anticipated transition from explorer to a mining production company. The resolution is displayed on the screen together with the relevant, proxy results. Are there any questions or comments on this resolution? Please raise your pink or blue card if you're attending to ask a question. Patrick, any questions online to read out?
... There is a question on remuneration. Can the board comment on any restraints and time periods of the same, if any, that were allocated to James, to James upon his departure from ADN?
Sorry, can you repeat the question, Patrick?
Yeah. Can the board comment on any restraints and time periods related to that attached to James's departure from Andromeda?
There is a clause in James's contract which requires that he not be under the employ of one of our competitors in the kaolin market. We've restricted that so that such that he cannot work with another company for six months. That's the only constraint that we have on his termination. Sarah, any update on that?
I would just add that there's ongoing confidentiality obligations.
Yeah
... without end. So yeah.
Yeah. Yeah. No further questions? Thank you. Voting exclusions apply for this resolution, and they will be outlined in the notice of meeting. You were invited to lodge your vote for resolution one by using the vote icon for online attendees, and for those attending in person, you've been issued the voting paper. Please mark a box beside this resolution to vote. Thank you. I'll now move to resolution number two, which deals with my election as a director, re-election. Given this resolution deals with my re-election, I'll pass the chair to Melissa. Thanks, Melissa.
Thank you, Chairman. Good afternoon, everyone. As Mick mentioned, resolution two relates to his election as a director, and that resolution is displayed on the screen together with the relevant proxy votes. The whole board, except for Mick, who recused himself during deliberations on this resolution, unanimously recommends Mick's reappointment to the board. Appearing on the screen is a summary of Mick's experience. Are there any questions or comments on this resolution in the room? If there are any physical attendees with a question or comment, please raise your blue or pink card. I'll now ask Patrick Sinclair to read out any questions that we've received online or via phone. Patrick?
No questions regarding this resolution.
You're invited to lodge your vote for resolution two by using the vote icon for online attendees. For those attending the meeting in person or who have been issued a voting paper, please mark a box beside this resolution to vote. Thank you, and I'll now hand back the chair to Mick.
Thanks, Melissa, and thanks for those who voted for me. Now move to resolution three, the approval of the issue of securities under the employee incentive plan. Resolution three is a resolution to approve the employee incentive plan to enable the company to issue options or performance rights to eligible participants, being employees, directors, employees, directors, or relevant contractors. Employee incentive plan is intended to provide an opportunity to eligible participants to participate in the company's future growth. Further, the employee incentive plan acts as a mechanism to ensure the interests of shareholders and the management and employees of the company are aligned. The printed copy of the employee incentive plan is available for inspection here today, with a summary set out in Annexure One of this notice of meeting.
Shareholder approval is not required under the Corporations Act or ASX listing rules for the operation of the employee share incentive plan. However, shareholder approval is being sought to allow the company to rely on an exception to the calculation of the placement limits imposed by ASX listing rule 7.1 and 7.1A, on the number of securities that may be issued without shareholder approval. Accordingly, the passing of resolution 3 will allow the company to issue securities under the employee incentive plan, whilst preserving the company's placement limits for issuing securities and provide flexibility in the manner in which the employee incentive plan is managed. If resolution 3 is not passed, the company may still issue securities to key personnel other than directors on the terms as set out in Annex 1 of the notice of meeting....
However, those issues will count towards the company's 15% placement capacity under ASX Listing Rule 7.1. It is important to note that any votes cast in favor of Resolution Three by or on behalf of any person who is eligible to participate in the company's employee incentive plan, or any of their associates, will be disregarded.
This will be the case unless it is cast as proxy or attorney for a person who is entitled to vote in accordance with the directions of the proxy form, or cast by myself as chair of proxy or chair as proxy or attorney for a person who is entitled to vote in accordance with the direction on the proxy form to vote as the proxy decides, or cast by a shareholder acting solely in a nominee, trustee, custodial, or other fiduciary capacity on behalf of the beneficiary, provided certain conditions detailed in the notice are met. Hmm, are there any questions or comments on this resolution? Okay. Patrick, are there any questions or comments online, please?
No questions from online either.
You're invited to lodge your vote for Resolution Three by using the Vote icon for online attendees. For those attending the meeting in person, you have been issued the voting paper. Please mark the box beside this resolution to vote. Resolution Four, the approval of amendment of the Constitution to insert proportional takeover provisions. Resolution Four is a special resolution, therefore, it requires approval by 75% of votes cast by shareholders present and eligible to vote. Shareholder approval of provisions relating to proportional takeovers extends for a three-year period. Accordingly, as shareholders last approved of the provisions of Clause 25 of the company's current constitution at the annual general meeting of 26th November, 2020, approval is sought to reinsert the provisions for them to remain effective for another three-year period. Some shareholders might ask the question of why these provisions are required.
A proportional takeover bid is when a bidder offers to buy a proportion only of each shareholder's shares in the company. This means that control of the company may pass without members having a chance to sell their shares to the bidder, which can lead to the bidder taking control of the company without paying an adequate control premium for gaining control. The board considers that members should be able to vote on whether a proportional takeover bid ought to proceed. If Resolution 4 is approved and a proportional takeover bid is made, the directors must ensure that shareholders vote on a resolution to approve the bid more than 14 days before the bid period closes. If Resolution 4 is approved, the provisions will ensure that all members have an opportunity to study a proportional bid proposal and vote on the bid at their general meeting.
This is likely to ensure a potential bidder structures its offer in a way which is attractive to a majority of members, including appropriate pricing. It is also possible that the inclusion of such provisions in the constitution may discourage proportional takeover bids, or that they are considered to constitute an unwarranted additional restriction of the ability of members to freely deal with their shares. On the whole, the board considers the potential advantages for members of the proportional takeover approval provisions outweigh the potential disadvantages. Accordingly, the directors unanimously recommend that shareholders vote for Resolution Four, so that the proportional takeover provisions be reinserted into the Constitution with effect from the close of today's meeting. Are there any questions on this resolution? Patrick, any questions online?
None on this resolution either.
You are invited to lodge your vote for Resolution Four by using the Vote icon online for online attendees, and for those in meeting in person, please mark the box beside this resolution to vote. Resolution Five, approval to amend the Constitution to allow for virtual meetings and other minor amendments. Resolution Five is a special resolution, therefore, it requires approval of 75% of the votes cast by shareholders present and eligible to vote. The amendments to the Corporations Act in 2022 allow for a company to have the option of holding a wholly virtual shareholder meeting if it is expressly permitted to do so under its constitution.
To give the company maximum flexibility in relation to shareholder meetings and dispatch of notices to shareholders, it is proposed that the Constitution be amended to allow for the holding of wholly virtual meetings, as well as for notices to be sent to shareholders by any means permitted by the Corporations Act. Resolution 5 seeks shareholder approval to amend the constitution as detailed in markup on page 16 of the Notice of Meeting. The directors unanimously recommend that shareholders vote for Resolution 5, maximum flexibility in relation to shareholder meetings and dispatch of notices to shareholders. Are there any questions on this resolution? Are there any questions or comments online?
No, no questions on this resolution online either.
You're invited to lodge your vote for Resolution 5 by using the Vote icon for online attendees, and if you're here in person, please mark a box beside this resolution to vote. Resolution 6: approval of a 10% placement facility. Resolution 6 is a special resolution, therefore, it requires approval by 75% of votes cast by shareholders present and eligible to vote. The ASX Listing Rule 7.1 enables eligible entities to issue equity securities up to 10% of its issued share capital through placements over a 12-month period. This is in addition to the company's 15% placement capacity under Listing Rule 7.1. The company is seeking shareholder approval to have the ability to issue equity securities under the additional 10% placement facility to give the company maximum flexibility to secure additional funding.
If Resolution six is not passed, the company will be limited to the 15% limit on issuing equity securities without shareholder approval set out in ASX Listing Rule 7.1. It is also important to note the protections provided under ASX Listing Rule 7.1A. If approved, the 10% placement facility will only be valid for 12 months from the end of this meeting, and any equities issued must be issued at a price of at least 75% of the volume weighted average share price over the 15 trading days prior to the issuing of or agreement to issue shares. Some shareholders have asked questions about why the extra 10% is required, while others have expressed concerns about dilution.
The 10% placement facility may or may not be used as part of how the company funds the anticipated development costs for the Great White Project and its working capital requirements. Approval of this special resolution will provide maximum flexibility in our discussions to secure the additional funding required for the anticipated development of the project and other working capital needs of the company. Approving this resolution better enables the company to secure funding from, for instance, cornerstone and strategic investors, or strategic investors. That is commitment, committed long-term, deep-pocketed investors, investors that could provide significant benefit to existing shareholders through supporting the funding required over time as the company expands. Cornerstone or strategic investors have the potential to significantly de-risk our future funding requirements, thereby building confidence in the project and the company's future.
As of today, I can confirm that the company has no specific plans to use the extra 10% placement facility. However, the board considers it beneficial for Resolution 6 to be approved as it provides the additional funding flexibility should it be required. Accordingly, the directors unanimously recommend that shareholders vote for Resolution 6 for the company to have the ability to issue equity securities under the additional 10% placement facility, should it be required. Are there any questions or comments on this resolution? Are there any questions or comments online, Patrick?
No online questions related to this resolution.
Please mark a box beside this resolution to vote. That's the, that concludes the discussion on the resolutions to be voted upon. I will shortly be declaring the voting closed. Please ensure that you have cast your vote on all six resolutions. Shareholders are reminded that your board recommends that you vote for all six resolutions. For those shareholders and proxy holders attending in person that have completed a voting card, please ensure that you have placed a mark beside all six resolutions to indicate how you wish to vote. Please ensure you print your name where indicated, and sign the voting paper. Please lodge it in the ballot box, which is being circulated, to ensure your votes are counted. The box being circulated.
I signed it in the wrong spot. Thanks, mate.
... Please indicate by raising your hand if you would like more time to complete the voting. At this point, I now declare the poll closed and formally charge Mr. Nigel Bulling of Computershare as Returning Officer to count the votes. After the votes have been counted, the results of today's poll will be released to the ASX and displayed on the company's website. Should the results of today's poll be finalized before the close of this meeting, I will provide them to shareholders prior to closing today's meeting. I now invite Bob to provide his update on the business. Thanks, Bob.
Great. Thank you. Thank you. Great. Hello, everyone. Great to be here in Adelaide. Great to celebrate six months being here. It's a, it's a big change. Probably the biggest change is the temperature, and it's for me, traditionally, Thanksgiving, and cold, and turkey, and the rest of it, and it's absolutely beautiful. So a big change. I think really where I wanted to start today is, why am I here? Right, why am I here? Why am I, and have I made the decision to be here, right? To be here and take the opportunity to be CEO of Andromeda. The Great White project, this deposit has been around for a long time. It has, it has been known to people in industrial minerals as a premier deposit for probably the better part of 15 years, right? 15, maybe even 20 years.
So when I had an opportunity to come here and be part of a team to commercialize it, to make this happen in a market that clearly needs the product. It needs it because of supply, demand. It needs it because of consumer preferences. It needs it because of the variety of different applications and different types of demand patterns across a variety of end uses. I said: Look, I started my career in industrial minerals. What a way to come here to South Australia and make this happen. So I'm passionate about the product, the products. I'm passionate about the deposit. I'm thrilled to be part of this team and board and be part of building not a project, 'cause we're not building a project, we're building an industry, right? We have some of the world's best product ever found as a white mineral below us, Great White.
We have an incredible opportunity to expand with an equal, if not better, product to the north. Recently, as you've seen the announcement on the Chairlift resource to the south, arguably as good, if not better, and probably the best white mineral deposit announced in the, in this year or the next 5 years-6 years in terms of what's around. Absolutely thrilled with the opportunity, and I wanted to give you guys just an insight, what have we done in the last 6 months, right? What has changed? Where were we? What did we do? What are the outcomes? What is the strategic direction? What are we going to do next? How are we going to commercialize this, and how are we going to create very, very powerful and sustainable shareholder value, right?
Look, the first thing I did, I said: Look, we need, as Mick mentioned, you know, we need a strategy review. We need to look through the markets. Where do we want to play? Why do we want to play in certain end uses? We need to do it rigorously with a lot of discipline, and we need just to fundamentally understand what's core to our business. What do we want to be? So when we, when we did that piece of work, and we looked at, first and foremost, what does the market want? The market to mine piece. What does the market need? What does it need from economic, macro standpoint, from a micro standpoint? What are consumers craving for? What is it that we can bring that creates the highest value and the highest value in use for this product in the ground?
We did that piece of work. Then we did the mine-to-market work, which is probably the work that you guys typically see more of in Australia and South Australia, which is what's in the ground? What's the life of mine? What's the grade? What's the recovery? So forth and so on. Commercial strategy blends the two and optimizes to find that optimum spot. The best value, the best value in use, the best pricing, and the best NPV for the product. So we did that piece first, and that led to the second piece, right? Which was, how are we going to now update and reset the enterprise value of the project? We need to put a value on this, right? Based on pricing, based on demand, based on where we are, the volumes, the costs, OpEx, CapEx.
We went through that and laid that out in a very, very careful way to prepare and update the previous DFS documents. And based on the commercial strategy and the subsequent capital, OpEx work, mining costs, the rest of it, we really laid down the foundation to invite people to partner with us. I was never going to invite potential partners or investors, or even additional shareholders, to come and invest in Andromeda until we had done this piece of work, because it sets the value. It sets the value of what is in the ground and sets the value of our business. That's why it's so important. And Mick mentioned it before, right? Really, it took us a while to get to this point and make sure that we have confidence in it, because we want to present that to partners who want to be what?
You want offtakes, you want to be a potential cornerstone investor, you want to be strategic, you want to invest equity in our company, right? This is what our company is worth, this is where we're going, and this is our strategy. So it's a very, very key piece of work, and really is the foundation of where we are today and where we're going. The other piece of work that was really critical, especially in the first couple of months, is the value in use. How good is this kaolin, right? I get a lot of questions, you know, certain people say about, like, "What is kaolin?" White mineral, so forth and so on, right? It's an opaque, non-fungible commodity. What does that mean? You can't really find out a lot about the price, right?
Pricing is not something you can just read up on in terms of kaolin, right? You can't trade it on the London Metal Exchange or the CME, like you can gold, copper, aluminum, whatever. There's no market of last resort. If I can't sell the kaolin, there's nowhere else I can sell it to. There's not someone who's gonna say, "Hey, I'll take it," right? The way you would take leftover oranges or, or whatever, at a grocery store or wherever. It is up to us to establish that value, the value in use, specifically in that end use, and then determine the price. In an environment where you're not setting price, right, you are linking it and the value of your product to what that value is in the end use.
And then we, we looked at that value and compared it to all the other kaolins in the world. We ended up with a very interesting sort of position, where if you look at this graph from left, which is decreasing quality all the way to the lower right, we said, "Hey," right, "we are probably in the top two or three kaolins in the world." Maybe only the Brazilians, maybe a few others, that have this product that can go into tiles, porcelain tiles, sanitary ware, porcelain ware, potentially paints, and a whole range of other applications. More interestingly, more interestingly, the, probably the premier product in this type of application, in this type of comparison, are the kaolins from the Ukrainian Donbas, that have since been off the market for, what now? Almost two years because of the geopolitical crisis.
As a result, we have an opportunity to not only what Mick mentioned sell into Southeast Asia, China, the Asian markets, but clearly get into the European markets as well. The value in use work, most of that work was done by tier one laboratories and technical institutes in Spain and Italy, and they said, "Hey, this is where you are. This is the value of your kaolin." Three key parts of that value in use: the physical part, you can imagine what a tile looks like. The tile body, how strong are you? What's your density? How do you shrink? So forth and so on. The top part, which is the glaze, which is the top of the porcelain, the tile, those nice colors, the digital printing that brings out the chemistry that is put on top of a tile.
Very, very similar to crème brûlée, right? Crème brûlée, that you eat, the dessert, the top, right? You try to hit that top, try to get to the good part, right? And that strength, that strength of a glaze created by our kaolin is at least an order of magnitude better than what is currently available in the market. So we said, "Wow," right? "We can be on top of the tile, we can be in the middle of the tile. That's great." But we always knew that when you fired these kaolins from the Eyre Peninsula, they turn out to be incredibly white. I mean, a bluish white that's absolutely incredible, right? So the main whitening component in ceramic tiles is zircon. zircon, of course, is produced by Iluka here in Australia, $2,200-$2,300 a ton.
So the opportunity is, if I compare our whitening capability to the whitening capability of zircon, it's the bar graph here on the right, right? You can displace zircon in a tile and whiten it with our kaolin. We call this zircon replacement. So in the two months of work that we did to sort of figure out technically where we fit in these markets that are linked to our commercial strategy, we said, "Hey, the center of the tile, the top of the tile, and whitening the tile." Three things, very simple. All three are great value for us. Different markets, different regions, right? And unique, unique opportunities. So now we said: Look, we have an enterprise value. We know the value in use of our product. We know where we want to play in the tile, specifically with the end users we want to be in.
Now we have to find partners. We have to find customers, but we also have to find partners that understand the value of our DFS, that understand our commercial strategy, that understand our product and want to work with us. Because we're not producing anything. We need to believe and understand this to want to be partners with us. So we wrapped up most of that work. We're still finishing up doing some final work in terms of additional testing, and, you know, I think that's gonna be very, very important in terms of what are the next steps.
The amount of interest that the technical work got from the entire Spanish and Italian ceramics industry and the Southeast Asian industry was enormous, and simply because, remember, any high-end tile, anything that you see, be it kitchens or porcelain or tableware, most of those formulations remain formulated in Spain and Italy today. That's where they come up with the recipe, right? So it's important to say, "Well, hey, Bob, the chemist, he says we're gonna take our kaolin from the Eyre Peninsula, South Australia, and send it all the way over to the Mediterranean." It's important because you want to be in the mix. You want to be formulated there, so when that their plant in Southeast Asia or elsewhere is producing, they're using our product.
So wrapping that up, we said, hey, the mechanical side, the glaze side, the ratio that we have, and lastly, the zircon replacement piece, that's our position. That defines our market, defines our customers, and defines our partners. So when I went out, I was in Europe for a couple of weeks, developing existing partnerships, offtakes, and interest, and we had an incredibly successful trip. Just to summarize it for you here on this slide, of course, the work that we've done, ongoing work for the last three or four months with IberoClays. IberoClays is an existing key partner for us. We've expanded the discussions to include additional opportunities beyond the original letter of intent. We're planning on finalizing that and make that binding very shortly. We have incredible, incredible interest from the super white producers.
All these guys that make these super white tiles, people love super white tiles. I don't know why, but they just love this idea of putting them everywhere and then digitally printing them, right? We don't print the way we used to. We don't use glazes and pigments the way we used to. These are now printed digitally, and you can print anything you want on a tile. You want your family's photo on the tile? You can get that. Anything. You want the tile to look like marble, leather, textiles, whatever you like, and it can feel like whatever you like. So the Italians and most of the work we did in Europe have a lot of success there. We're testing, we're qualifying. There's a lot of upside for our business.
The big surprise and the big opportunity that came out of these discussions was the opportunity in India. India is the second-largest ceramic tile market in the world. It's growing at the fastest rate, 25 billion square meters of capacity, growing at 25-50 million square meters of capacity a year. Just imagine how much product they're consuming, how much products that they're making, and typically mostly commodity stuff. You know, the tiles you buy in Bunnings that are relatively cheap, made in India or made in China, do-it-yourselfers, hey, fix your bathroom. But India is turning out to be a very high-end market. They're one of the leaders in digital printing, and they're one of the leaders in slab technology.
No one's buying marble or granite slabs anymore, partly because of the crystalline silica issue, but partly because you can almost get exactly the same thing in a porcelain tile, a glazed porcelain, large format slab. Indian market is leading this development, and we have an opportunity with a new partner called Opaque Ceramics, to be part of the formulation in those tiles through their zircon. They're one of the world's leading zircon milling companies. And they say, "Hey, what an opportunity to use your kaolin mixed in our zircon in these applications." So we started that, those discussions and, of course, discussions across Southeast Asia that represent, with other multinationals, that represent, additional opportunities and certainly additional upside for our business. Traxys. Traxys is the fourth largest trading house in the world.
They are unique because unlike Glencore, IXM, and Trafigura, they are not really into trading metals, right? Big trading houses make enormous amount of money trading metals. You guys know about Glencore, Mt Isa, McArthur River here, all the other, issues. Trafigura, of course, owns Nyrstar, Port Pirie, and Hobart. I was involved in the Mt Isa, McArthur River concentrates deals between Glencore and Nyrstar years ago, and here in South Australia. But Traxys is a partner that is committed to industrial minerals. They are in soda ash, they are in zircon, they are in TiO₂. They have probably the biggest industrial minerals portfolio in the world, and the most interesting thing that they have is they have some of the world's best reputable banks behind them.
They have revolving credit facilities, possibly of, which shows right up here on the slide, $1.6 billion of uncommitted cash as debt available to them and to their partners. They're using $1.6 billion in their business, and they have this facility. Could be trade financing, could be debt, could be equity, could be financing, whatever needs to be financed. They have convinced the banks to support them, even though industrial minerals are not traded on the London Metal Exchange, even though they don't participate in copper, even though they don't participate in gold and aluminum.... That's what they bring to the table. They bring great marketing, great business acumen, great financial strength, and proven, proven partners. You've seen the details in the announcement.
One of probably, probably one of the most important things on this slide to note, that this is probably the fifth time I am personally engaged in negotiating and working with the same team in the last 12 years. So with the same team, we've done, big deal on zircon, we did, zinc concentrates, we did aluminum metal, we did TiO₂. So there's a lot of trust there. They're a great team. Industrial Minerals is Paris-based. They have a lot of involvement here in high-purity aluminum, also in Australia. They have a lot of interest in expanding their footprint, and to Mick's point, we are absolutely thrilled that they're a partner. We have a lot of work to do because we have to negotiate the offtakes they want. Then we want the trade financing for those offtakes. In other words, they finance our shipments.
So I'm not waiting 180 days to get my cash if I sell to China or the Med, right? You have someone who can give you the cash upfront and keep your business going. It's like having a trade finance facility, revolving credit facility for yourself. Something that, as a junior company, we would never get. There isn't a single Australian bank that would take risk on us, right? We're just too small. So very, very big deal. We're very excited. A lot of work. You know, you can just imagine between Opaque, Traxys, just the work we need to do to get those binding, get the facilities in place, get the financing in place, get the offtakes in place, get the India piece done. It's gonna be really a very, very big push here in the next, you know, 60-90 days.
Really, really important. Talked about the Indian market. Just, just coming back to that, just think and remember that it is not only the fastest-growing market, but it's the fastest high-end growing market in the world. So they export probably 25% of the high-end part of their business into the world. So we're, we'll probably be out there in Q1, visiting with Opaque, visiting potential customers, visiting potential offtakes, and locking that down, making that binding, and certainly making that part of our plans going forward. Just an idea of the products that Opaque makes. You can see it's like zircon flour. You guys, you know, use flour in the kitchen? It's that fine. We're talking about milling zircon to a flour level, then using it to whiten anything. Typically, tiles, also used in paints, right?
And our whitening capability as a kaolin, right, is almost equivalent at 10%-15%, same as the zircon. So real fantastic opportunity. I mean, you don't necessarily want to sell direct to the ceramics guys. You want these partners to be selling our kaolin in these bags, in their zircon bags. That's what we want. We have free trade agreements between Australia and India, and the best freight rates we have from South Australia into the markets are from South Australia to India. So we have the best freight corridor, we have potentially a fantastic trade partner, and we have a fantastic zircon partner. Hallett. Hallett is the third piece of what our strategic partnership plan is. Look, since I came to Andromeda, the work involved in commercializing and validating HRM has been a real challenge. Why?
We've been using kaolin and zircon in tiles for more than 100 years. We are now just introducing the idea that there's a kaolin that has unique rheological properties that can make concrete with less cement, less water, less aggregate. Now, getting concrete companies and building materials companies to believe that, test it, and make it part of their recipes is not easy to do because they've never done it before. You can have tier one European companies, you can have the opportunities you have here in this country, Adbri, Cement Australia, Hanson, Holcim, Heidelberg, everybody, right? But they make their own cement and then convert that to concrete. The opportunity with Hallett is super unique for us. Why? They buy cement. They buy cement from Indonesia, Thailand, Vietnam. They bring it to this country, and they batch it and make concrete.
They're using different materials, different technologies, very innovative logistics, and probably have one of the best technical facilities in the building materials world to develop applications for new additives, lower carbon, less fines, more pumpability, shotcrete, mining applications. So they're developing fly ash, the product, the project that they have in Port Augusta, and the potential fit between our product and what they want to do is really one of the biggest opportunities in front of us. Two South Australian companies, close by, close to the peninsula, similar strategies, first movers, private, well-run, fantastic executive team, fantastic opportunity for us. We're kicking off that work with them next week, and we're thrilled to be working with them. Where are we in terms of commercial positioning, in terms of offtakes? A good view here.
Like Mick mentioned, Yamada and FG, we have the IMCD distribution agreement. Where we are with Ibero, Opaque, and Traxys, those are all under discussions. We're getting those to the binding stage. I think Ibero is very, very advanced. We have a lot of work to do to get Opaque and Traxys probably to that same level. We have Hallett. You know, we don't have, you know, we don't have an idea of what those opportunities can be. It could be, it could be for any of, any of the opportunities I mentioned, so we don't want to guess right now, but Hallett's in front of us as well. Plus, I have, remember, coming back to slide nine, the opportunities in Italy, Spain, and other regions.
All in all, a lot of work to do to get sort of the dark blue, the second dark blue piece done and get those numbers up to where we need to, because what do we want to do? You know, we talk a lot about funding. People are worried about funding. "Bob, oh, my goodness, you're not funded." Funding is the number one thing on my mind. Not, and I don't want to fund this company without a really good, solid top-line revenue with partners that we can trust, we can depend on, and who will deliver that top line and get us the debt coverage we want and debt that we can service. That's what we want to do.
We want to do the best possible deals out there within these volumes and others to have the best revenue line, so our debt providers that are providing funding for our product, our project, right? will say, "Hey, man, this is a fantastic project. You have fantastic partners. You have fantastic commercial opportunities, technology. You've done the value and use, you've done the commercial strategy, you've done the work." We get the absolute best debt and funding opportunities that we can to get this project up and going. That's what we're doing, and it is the number one priority we're working on. All that's linked to this piece, which is linked to the strategy, which is linked to the value use, which is linked to those opportunities, and it takes that amount of work, including the work we did on the DFS, to invite people to understand that.
It's not easy, right? It's not gold or copper. It's a lot of work an average person needs to do to understand what kaolin is, right? Other projects, I mentioned this on the investor update in Sydney. We've done so much to really remove... Not, not remove, but to really focus on just the core. All the other opportunities we've had, Cobra, ECR, other opportunities. Everywhere we've had an opportunity and developed IP, we've kept the IP. The IP is still ours, right? Let's get this project up and going, linked to our core strategy, make some money, generate some cash, and come back to these opportunities in due course. Very, very important. We're spending a lot of money on tenements. We're spending a lot of money on gold and copper opportunities. We've wrapped all of those up. Get that, get that done.
Focus on getting Great White up and going. Focus on looking at what we're gonna do in the future of Halfpipe and Chairlift. Focus on how we can develop this industry and the infrastructure for this industry, including a port, roads, schools, hospitals on that side of the peninsula. That's what we're committed to. That's what's gonna make us sustainable, and that's gonna drive the best possible funding profile for us, not only for the first phase, but subsequent phases of our company and subsequent phases of our development. So next steps, you know, it's been, needless to say, a very, very busy six months. Traxys and Opaque, getting that done, getting those done, up and going, locking in the offtakes, right? And making sure that those offtakes also come with the financing opportunities for us, be it trade financing, debt, or equity.
We're really thrilled to do that, which is very important. The environmental bond, top priority for us to lodge that, get that done. The sooner we get the bond paid, the sooner we have access to the land. Why is that important? Because any of these potential partners, in order to develop their business, might say, "Hey, Bob, I need a ton of this. I need two tons of this. I need a little bit more sample." We need to have access to the land to be able to not only get the project up and going, but in case we need to do a little bit of sampling and have those samples available to potential partners who are tier one, that's also very, very important for us. It's a priority to get that done. We talked about Opaque. Hallett, we kick off as well.
Hallett's an interesting. It's an interesting opportunity because it's like a project-by-project, application-by-application piece, right? They're bidding on the T2D project. They're bidding on a shotcrete application in a mine. They're building homes in North Adelaide, right? There's always an opportunity for us to participate and make them more competitive. So it's like we're partners whilst we're developing up our product in their application. Whilst at the same time, they'll be building Port Augusta by the end of the year, which is essentially a fly ash-based cement and concrete, which is the innovative IP and technology that they have, which is really important. Look, on the back of the numbers I showed you and on the back of everything else that's going on, the team is looking at what we call Stage One A plus.
We've always talked about building the first phase of our project, product, project at 60,000 tons. We are looking at the economics, cost-benefit analysis of building 100,000 tons. How much capital do you need to spend to get 40,000 tons more for a market that's available to you, that has tier one great revenue opportunities, that allows you to service, to secure more debt and service it better?... So we're looking at that. We haven't made a final decision, but we are looking at that. That's very, very important, okay? So as we wrap up the work on the top line, notably with Traxys and some of the opportunities we have there, the India piece, we'll see how it goes, right? We need to work on that to move forward and lock in the next steps of funding.
You know, where we are right now, especially the optionality that Traxys gives us in terms of what they're bringing to the table with the revolving credit line facilities, it gives us certainly much more breathing room and time to think about what's the best place and best offtakes to lock down for our company. And that's what we're doing. Busy six months. It's been a real challenge, I think, to pull all that together. Mick mentioned some of the changes we've made on the organizational side. We're also really excited to have Pascal Bossier as our new CFO. Pascal is sitting and will be spending a lot of time very close to me, as he is right now.
And the existing team that's done a great job, our operations team, business development team, that have made a lot of this happen and continue to believe, and are anxious to get this project up and going. So, we have the resource. We're in the right place right now. The time is right. The geopolitical situation is right. The partnerships are right. We have the fourth best trading group specializing in industrial minerals in our tent, so to speak, as a partner. A group that I've worked with before in my life. I'm thrilled to work with them again, and we need to build this project, and it's the right time to do it. So, that's my presentation. It's been, it's been a real learning experience for me. I think there's still so much to do.
The potential is really in front of us. It really is. So thank you. Happy to take your questions. Yes?
My question is, if this is such important project, why the South Australian Government is not participating, in cost, with cost to develop the project? It's— Are we under the, what is called essential minerals, which government put a couple of... I don't remember exactly the number, but many millions AUD, and some companies, as far, as far as I know, are recognized as essential minerals. Is the Andromeda being under this, you know, under this essential minerals-
Sure, yeah.
basket, I would say it that way?
Yeah.
You know what I mean.
Yes. Look, that's an, that's an excellent question, right? Kaolin, our deposit and our applications, as is, we're not a critical mineral, so we're not part of the critical minerals program. However, the use of this type of halloysite-based kaolin to create high-purity alumina, to create HPA, HPA, the product, is a critical mineral. So for us, there is a further opportunity to sell what we have in the ground to the right HPA partner after having developed our own technology to produce HPA. Remember, we have and we're close to finalizing that. I've put that HPA on the side for right now because it's not core, but that is clearly an opportunity for us. There's three sides to the opportunity: sell your halloysite-based kaolin to someone who makes HPA, like Alpha Minerals or others in, in Australia. That's opportunity one.
Opportunity two is develop your own process, flow sheet, your own technology, to use the halloysite-based kaolin to create an HPA that is lower cost, better positioned in the market. That's very, very expensive. We would need about $10 million, AUD 8 million-AUD 10 million to do that. And the third piece is to find an existing HPA producer who would value a partnership with your halloysite-based kaolin, who has someone like Traxys selling their product, and that's the third opportunity. For right now, where we are, I've sort of left that to be looked at, let's just say, sometime next year. Number one thing for us right now, get funded, get the project, product up, project up and going.
But the HPA piece, supported to some extent by the South Australian Government , who's a big backer on critical minerals, is a real, remains, remains a complementary opportunity for our business. It's just not one I want to pursue right now because the priority is to get this done first.
There's an online question. Do you have a goal level for the level of debt as a percentage of the total funding requirements for 1A and 1A plus?
Look, our goal is to service the maximum amount of debt that we can as a structure, but to also make sure that we can service that debt, right? So, depending on the form of the debt, and it also depends on what's available from our partners. Trade financing is debt. Someone is funding, is funding your stocks at the port, your ships, all of that. That means you need less debt or equity if you have a trade finance line. So if you have a partner like Tra- like Traxys, who's offering you a trade finance facility, the finance facility alone for a company our size can be easily AUD 10-15 million....
So in terms of the funding package, we're looking at maximum debt, trade financing, where we can, in terms of the offtakes and the quality of the offtakes we have, and then an equity piece, and making sure we have the right blend. I think Mick mentioned it before, right? We're very concerned, well, concerned, but we're, it's in front of us, right? This issue of dilution, our shareholders, the history of, of Andromeda. It's very, very important for us to do what's right in getting this funded properly.
Glenn Woodward, ex Minotaur shareholder for a long time. What would we see on site at the moment? What stage of development other than just sampling?
We are. We have no equipment on site. We have our pilot plant still in Streaky Bay. We will be allowed to put up fencing and start clearing upon payment of the bond. So in terms of land purchase, we're finally. There's still some elements of finalizing the land purchase deal that we have with the farmers and the carriers in the area. However, at this point, we are clear and shovel-ready upon payment of the bond. So we are right there at the last part, and we do pay the bond. Pay the bond, clearly something we want to do as soon as possible, and we will do that right when we feel that, you know what? We have the top line, we have everything that we need.
We're ready to go because we don't want to do something premature at the wrong time, especially, you know, during the summer, dust, so forth and so on. But, yeah, we're keen to get that done. So that's the last piece before we have access to the land.
I've also got a question about the mining operation, hopefully getting going soon. The chair mentioned the board's desire to have a really good ESG rating and your desire to run the mining operation as a low emissions operation. Can you just explain your plans for what technologies you'll be using to achieve that as mining gets underway?
So let's start from what we aspire to be from an environmental standpoint. We want to be the lowest cost carbon producer of white minerals on a Scope One and Scope Two basis, right? That means I want to certify, as a company, everything that we produce, I want a carbon credit and certification on it in terms of exactly how much carbon this ton of kaolin is carrying to whoever I sell it to. And I want that, that Scope One, Scope Two, and potentially Scope Three is world-class. Our estimates right now, and I think that we published them in the DFS, put us right there with the top two biggest industrial minerals players in terms of being competitive on that ESG, CO₂ per ton, CO₂ per euro, Scope 1, Scope 2, Scope 3.
But in order to do that, right? How we mine, how we monitor, right? The way we're generating electricity with our turbine sets, the way we will be managing water. So water, dust, energy are all going to be a critical focus of everything we decide. The other important piece is that initially, when we are buying the capital to get stage one A up and going, we're not going to necessarily, at this small stage, look for BACT, Best Available Control Technology. But ultimately, at the 100,000 or 150,000 ton level, emissions, baghouses, burners, controls, all will have the BACT rating we want to control our plant the way we want. We've also agreed, I think with...
You know, Darren and his team has done a great job to finalize, I think, a very, very important agreement with SA Water. So part of our plan at 100,000 tons is to get water and pipe water down to the plant, instead of what we originally wanted to do, was truck water in. So a lot of, a lot of thought in that area, a lot of thought about safety, a lot of issues and thoughts going into road safety. We'll be moving a lot of product from one side of the peninsula all the way to Whyalla, Port Augusta, and around the Spencer Gulf. We need to think about all of that. Emissions, trucks, partners. We'll originally start with a mining contractor to open up our mining pit and operations.
We want, first and foremost, above all else, safety is paramount. We want people to believe that, that behavioral safety. If you're a contractor, if you're an employee, you have to believe in it, and you have to believe also in emissions, ESG, and every time there's an opportunity to manage what we do more safer, in a more safer way, in a more way that assures us of a lower carbon footprint. That's the plan. So already a focus on Scope One, Scope Two, and eventually, as we start shipping, a Scope Three as well, because people will want that. People will ask you for a certificate, and they'll say, "Hey, show me what your Scope Two, Scope Three numbers are." And sooner or later, they will be buying or not buying from you based on your Scope Two, Scope Three numbers.
It's not just price and quality alone. We're very conscious of that.
Online question: Given the next step slide, do you have any timing for the payment of the bond, and do you still expect a first shipment in Q4 2024?
Look, we want to pay the bond literally as soon as we can, right? We know that it's a priority. I think right now, we want to have a little bit more insight into a first round or second-round discussions with our key partners, which I've identified and discussed. Our equipment—especially the critical pieces of equipment, you know, are all on order. And I think that plan is that all of that is coming next year, right? So can we produce by Q4 2024? Yes, we can. Do we have to? We don't necessarily have to, but it does impact, to some extent, maybe, you know, 2025's negotiation season, so forth and so on. But right now, the priority, the priority right now is partners, top-line revenue, funding, bond.
That bond needs to get paid as soon as we can because to some extent, our partners want to get us on the ground as soon as we can. It's not just that I want to get on the ground and start the project, right? Our partners want us to get on the ground. There is a need, in fact, if we could, to generate much more than just samples for them. You know, people would like, would love to see us get on the ground, and open a box cut and do 10-20,000 tons to really prove out things and really get our project at the forefront of not only porcelain tiles, but zircon and all these other applications. Q1 is critical.
I would say actually, you know, the next 60-90 days are a big push to lay all those pieces in place.
A question on Hallett.
Oh, we have one... Yeah, go ahead.
Oh, sorry. Go ahead.
I assume, and knowing from the webinar with James, I know that you're going to not sell the raw product, you're going to build a plant, at least separate the sand from kaolin. And how much will cost that, and when, when will it be profitable, all this, all this production? You know, how long it takes to pay off and how much will it cost, if you can estimate, please, Bob.
Capital cost estimate for the 180,000 ton plant, somewhere in the order of AUD 65-67 million. The economics for that plant, I would say, are good, right? They're good, and the offtakes, as you've seen, are in good position for that plant. But the economics for the 100,000 ton plant, from what I can see and what we understand from capital, would be better because it's a bigger plant. And what we need to figure out is how much more capital do you need to make the 100,000 ton plant? Because those economics are better, the revenue is better, if you have the offtakes, and the debt you can service is better. So that's where we are right now in terms of that.
We have a good idea of operating costs, pricing, and and the rest of it. I think the biggest challenge we have from a cost perspective is going to be logistics. For the first couple of years, about one-third of our cost will be logistical cost, trucks, bagging, shipping, especially if we don't have a port on this side of the peninsula. Just trucking across the peninsula, and if we're able to do something, as an example, with Hallett in Port Augusta, or we can discharge and ship from Whyalla, that's great. But otherwise, let's go all the way around to Port Adelaide. So that's a long way to go. So freight, freight and the team is working very, very hard to see. Back to your question about what the South Australian Government can do for, for us.
They can certainly work with us, and we, we have those discussions going about a port option between Ceduna and Port Lincoln. Thevenard is an option, Lucky Bay is an option, Cape Hardy on the other side is an option. But, you know, we're not, we're not a—we're not Viterra, we're not Iluka, we're not Glencore. Right? Getting the South Australian Government excited about 100,000 tons of kaolin out of a port in the Eyre Peninsula is tough. There's not a lot of votes out there, and politicians are politicians. But we're working on that, and that would be, that would be very, very important for us, right? Especially a place like Thevenard, to be able to ship bulk. It's 130 kilometers from the mine site. You know, it would be fantastic.
Question? Online question about Hallett Group. Should Hallett include us in their recipe or their formulations, do you expect other cement and concrete companies to then consider our halloysite kaolin?
Yes, I expect that, but it's important to understand that Hallett's formulations and the way we're going to be formulated in Hallett's applications is significantly different, right? Because they're incentivized to use less cement because of us. And so if there's an opportunity to use those formulations across other applications with other concrete companies, we will do so. We will do so, right? Which is very important. But remember that the majority of application work that a company like Hallett does is proprietary. They're competing against everybody else because they're doing something that gives you the same strength and the same application at a lower cost. Why? Because of what they use. Maybe they're using HRM and the technology that they use or are planning on using.
So it's a really unique opportunity for us to also develop some unique applications, not only for HRM, but be part of concrete, concrete additives and concrete formulations that don't exist today, including the formulations that are being planned for the Port Augusta facility.
Another question on funding from online. In regards to potential cornerstone investors, have you looked elsewhere for the right funding mix, in regards to Cornerstone, such as companies like, Resource Capital Funds or RCF?
Yeah, we do. We have had a lot of discussions in the last three months with a wide range of potential investors, institutions that are interested in taking an equity stake. What we're looking for is we're looking for partners that not only are cornerstone or potential cornerstone investors, but we're looking for partners, right? We're looking for partners who are interested also in offtakes, who are also interested in offering something more than just equity for a percentage of our company, because that's also, you know, you really want to understand, at the end of the day, what does a cornerstone want, right? Outside of participating in your company just solely on a cash basis. A trader wants to participate in your company because the offtakes that you are giving them fit in their book.
What do I mean by that? Because they're not just selling kaolin. They're selling stuff all over the place, so they can optimize their industrial mineral plans in a much more powerful way. So when they want to be an equity investor, they want to be an equity investor because it's to their own interest in securing their own offtakes or their own trade financing. So we've had very, very good discussions with potential cornerstones, especially on the institutional side, and I would say that those discussions are still ongoing, as there's still a lot of interest. Yes?
... From PIRSA.
I'm sorry.
PIRSA.
Sorry.
Mining Industries.
If you can just include.
PIRSA. Any, any input from PIRSA?
P-I-R-S-A. No.
Primary Industries, I say?
Oh, yeah. It's now called DEM.
DEM and Paul and that team have been great partners. They, they have been very helpful, not only from the mining lease side, from the environmental permit side, the way we've managed the bond. They've been great partners also in, now we're thinking of selling the sand. You know, that there is, there's such a demand for sand in this country, and Paul and the team at DEM, you know, are saying, "Okay, let's include sand in those out, those opportunities in the mining lease and in the permit." So they've been really, yeah, they've been very, very helpful and a big part of our success, yeah. And they're very good.
Great.
Yeah. Yes?
What about direct shipping ore? Hi, Bob. My name's Mark. How are you?
Good.
That's good. Good to see you on board. What about direct shipping ore? That was mentioned a lot back in James' day. Is that still a possibility or not?
Look, there's a lot of interest in DSO from the Chinese, you know, clearly, right? And, you know, there are opportunities, I would say, for us to look at that if it made sense. There are a couple of concerns. You know, one is profitability. There's clearly more profitability and the value in use and capturing as much of the value in use with CRM, HRM per our, per our own plan. And I think right now, we're at the point where we can release more value from DSO through the processing work that we're doing than even they can. So the real opportunity and probably only opportunity left for DSO is to use DSO as a carrot to get a bigger deal done.
So if someone, to answer your question, right, if someone were to say, "Bob, look, I'd like 15,000 tons a year, I'd like 5,000 tons of DSO in the first year to prove out some process technology or for whatever reason," that would be something we might consider as long as that DSO and subsequent product stayed in that country. We don't want to end up competing against ourselves in Southeast Asia because someone in China is making a fantastic CRM out of our DSO. And it happens in China or all over the world, happens in the U.S., happens in Latin America. But still, there's still a lot of interest in DSO.
But we're managing that, you know, and we're thinking that, you know, what's really important is, as we place CRM, we talk about the top-line revenue, HRM, Hallett. There's also some thinking that we need to think about how this Hallett fit into this. You know, you have a deposit at 0.2 or less titanium that you can make paint grades out of. Now, paint is not part of what we're thinking about because it doesn't make sense. We wouldn't make money if we were making a paint grade. So then, you know, do you build a plant down there? Do you build one big plant? Do you build... So those opportunities in the next five or six years are clearly in front of us to get into additional markets that we're not in today.
But the focus today, clear, core, our partners, zircon replacement, porcelain tiles, porcelain wear, get that up and going. Hopefully, get to 100,000-150,000 tons as quickly as we can, because that's the profitability point that we need to be in. And from there, we can self-fund the rest of the way to 300,000 tons. We've got to get there.
There are no other questions. If there's any other questions from the floor? Just the last question, please.
One more from me. My question is, I'm following the company for nearly from beginning, and the shares were AUD 0.25, AUD 0.40, maybe not even though, and I bought parcel by parcel, but at the moment, they are AUD 0.024 or AUD 0.025. That means whoever invested, it didn't sell, is completely on big losses. This is not very attractive to the share, to buy the shares if somebody is looking, 2.5 cents, what they can do? You know, are you considering consolidation of the shares to make the price more attractive? And the other question is, are you considering doing another rights issue ?... so through sophisticated-
Yeah.
Investors and shareholders, please.
So we're not considering any type of consolidation. The share price, the markets are very, very difficult, especially for all Australian juniors. It's difficult for everybody right now. I think what's critical for us is the next phase, right? I think our share price, in my mind, am I disappointed with our share price? Yeah, I'd say I am, especially in the light of all the work we've done in the last 6 months. Am I discouraged by our share price? No, I'm not. I'm not because I think the value, right, of what we're sitting on, in terms of projects that I've been working on like this, over the last 30-35 years, this is one of the best ones. It's why I'm here, right? I'm a shareholder.
I'm a good size... It's a medium-sized shareholder in, in this company, and I invested in the company because I believe in it, not because I'm CEO. Because I think the inherent value and the, the latent value of what we have is what we have. And the question is: when is everybody else going to realize that? It's not a question of realizing it, it's a question of educating and making people understand that we're not lithium and rare earths. If you are an Australian investor today, and you have an incremental dollar to invest, even in this tough time, you're looking for the lithium story, the rare earth story, the Gina Rinehart story, the this story, the that story, right? You're looking for that excitement, right? And that's okay, right? But in that, in that opportunity is a chance for us to build an industry.
To build an industry. We're talking about the need for this product is 600,000 tons per year in the high-end segment. The need, the demand. The unmet demand in China alone is 400,000 tons, right? So we have a market out there, we have the product, and the value and the release of value that will that ultimately show up through the share price, will be when people get that. When people understand fundamental supply, demand, and that the product needed for that, especially in the Southeast Asian Chinese market, is right in the Eyre Peninsula, and that is the best white minerals deposit left in the world. Now, if I'm the only one who believes that, and the share price is AUD 0.025, I think that people will eventually figure that out. Okay? Anything else? Mick?
Thanks, Bob. Nigel, have we got the results of the voting?
They're being processed now.
Okay, they're still being processed. Sarah, do we have any other business? So, Sarah's confirmed there's no other items for business that have been lodged. Accordingly, this concludes the items to be discussed at today's meeting. Thank you for all of you for your attendance, and I now declare the meeting closed. Thanks very much.