Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
0:00 Okay, good morning everyone. Welcome to the Akela Resources annual meeting of shareholders. This year we've elected to do our annual meeting virtually, which is different than how we've done this meeting in past years. Again, in keeping with health and safety protocols in light of the COVID pandemic, we wanted to take into consideration safety of employees, safety of our stakeholders. And so we've elected to do this meeting virtually. So good morning, everyone. Welcome. I'll now call the meeting to order. My name's Barry Hildred. I'm CEO and a director of the corporation. In accordance with the bylaws of the corporation, I shall preside as chairman of the meeting.
0:48 With the consent of the meeting, Mrs. Stephanie Malik will act as secretary of the meeting. In order to make the best use of our time, certain shareholders have agreed in advance to move the resolutions, which we will consider, and which are set out in the notice of meeting previously mailed to all shareholders. The notice calling this meeting, the management information circular of the corporation, a form of proxy or voting instruction form, which included a supplemental mailing card were mailed to all registered and non-registered shareholders of record as applicable in accordance with applicable laws. A copy of the consolidated audited financial statements of the corporation and management's discussion and analysis for the year ended December 31st, 2019, were mailed to those shareholders who requested to receive them.
1:39 The affidavit of mailing has been provided by TSX Trust Company, and I direct the affidavit be attached to the minutes of this meeting as a schedule. With the consent of the meeting, Dennis Dang of TSX Trust Company will act as the scrutineer of this meeting. A quorum for the transaction of business at a meeting of shareholders as at least 2 persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxy or representative for an absent shareholder so entitled. I will now ask the secretary to report on attendance at the meeting. This scrutineer's report indicates that the following shareholders are present in person or represented by proxy.
2:26 We have 1 holder represented in person or by proxy with 67,941 shares, and we have 126 management proxies representing 261,890,701 shares for a total represented at the meeting of 261,958,642
2:53 shares, representing 77.375% of shares outstanding. Okay, I declare that the requisite quorum of shareholders is present and that the meeting is properly constituted for the transaction of business. I direct that the scrutineers report on attendance be attached to the minutes of the meeting as a schedule. Unless a ballot is demanded, voting on the election of directors and the appointment of auditors will be conducted by show of hands. I now place before the meeting the audited annual consolidated financial statements of the Corporation for the year ended December 31st, 2019, together with the auditor's report thereon, a copy of the audited annual consolidated financial statements for the year ended December 31, 2019, and related management's discussion and analysis were mailed to shareholders of the corporation who requested to receive the documents, and I do not propose to read them to the meeting.
3:52 The next item of business is the election of directors. The corporation currently has 8 directors whose term of office will expire at the end of the meeting. As stated in the management information circular, 5 of the existing directors have been nominated for re-election and there's 1 new director nomination. Mr. Andrew Boushey hereby makes a formal motion to nominate the following 6 persons to serve as directors of the corporation. Edward Mundin, Barry Hiltred, Andrew Dunn, Ian Pritchard, Paul Johnson, and Pamela Saxton. Mr. David Carew hereby seconds the nomination. I declare that the nominations are closed. Mr. Andrew Boushey hereby moves for the election of each of the 6 persons nominated as directors of the corporation to hold office until the next annual meeting of shareholders or until they resign or their successors are elected or appointed.
4:48 Mr. David Crew hereby seconds the motion. The preliminary results have been tabulated and I declare that Edward Mundin, Barry Hildred, Andrew Dunn, Ian Pritchard, Paul Johnson, and Pamela Saxton are elected as directors of the corporation to hold office until the close of the next annual meeting of shareholders or until their successors are duly elected or appointed. I just want to take a brief moment to thank our 3 outgoing directors, Jacques Perrin, Kevin Drover and Joseph de La Plante, who didn't stand for re-election due to other commitments. I just want to thank them for all of their contributions to the board over these past number of years.
5:35 They will be missed and we wish them all the best in their future endeavours. I'd also like to welcome Paul Johnson as our new director to the board and on behalf of the board, look forward to working with Paul over the next year. The next item of business is the appointment of auditors. As disclosed in the management information circular, management is proposing that PricewaterhouseCoopers, LLP Chartered Accountants be appointed as auditors of the corporation for the upcoming year to hold office until the next annual meeting of shareholders at a remuneration to be fixed by the directors of the corporation. Mr. Andrew Boushey hereby makes a formal motion that PricewaterhouseCoopers, LLP be reappointed as the auditors of the corporation to hold office until the next annual meeting of the shareholders or until its successor is duly appointed and that the directors of the corporation be authorized to fix their remuneration.
6:34 Mr. David Crew hereby seconds the motion. The preliminary results have been tabulated and I declare that the resolution has been carried. The next item of business is to approve all unallocated option rights and entitlements under the corporation's equity incentive plan. The form of resolutions to be passed at this meeting was set out in the management information circular, and I do not propose to read it to the meeting. Mr. Andrew Boucher hereby makes a formal motion that the resolutions regarding the re-approval of the corporation's equity incentive plan in the form set out in the management information circular be approved and Mr. David Crew hereby seconds the motion. The preliminary results have been tabulated and I declare that the resolution has been carried.
7:25 That concludes the scheduled business of this meeting. If there is no other business that anyone wishes to present to bring to the attention of the meeting, I will ask for a motion to terminate the meeting. Mr. Andrew Boucher hereby moves that the meeting be terminated. And Mr. David Carew hereby seconds the motion. I declare the motion carried and the meeting terminated. Okay, so that concludes the formal portion of our annual meeting. At this time, I'd just like to give a quick update for the benefit of some shareholders that are on the phone. I'm just going to go through a year in review and then talk about some of the milestones that we're focused on as a management team and a company over the coming year.
8:20 This year, obviously, I think it goes without saying, it was marred by COVID and we are still in the throes of the COVID pandemic here and working with it and dealing with it as best as we can as a company. We did during the year continue to push forward, making progress on BAC 40 from a permitting perspective. As most of you know, our 4 major permits have been received, including our mine permit. We're in process on a dam safety permit, which will be the final state issued permit to be received for the project. And we hope to get that application in the end of this year with the decision in 2021. Today, we've received favorable rulings on all resolved legal challenges, and we're just currently waiting on the judge's decision on the contested case for our wetlands permit. We're expecting that decision literally any day now.
9:22 During the year, we also work constructively with some of our key stakeholders to address near-term funding needs. We did amend our Gold purchase agreement with Asisco in June. We closed that amendment in June. It did accelerate a portion of the outstanding funding and increase some flexibility within the stream. We ended up ending Q2 2020 with US$4M in cash. There is another US$7.5M that is due to the company over the next 12 to 18 months on the achievement of certain performance milestones. Most recently, we published our BAC40 PEA incorporating the known underground resource. We press released the results of that PEA back in August. We published the actual document last week that PEA showed encouraging results after tax MPV using a 6% discount rate led to a $176M USD MPV, approximately CAD$235M, which contributed to a 26% IRR.
10:37 We used long-term consensus metal prices, which included 1485 Gold and $1.08 Zinc. We do have, as most of you are aware, significant leverage to Gold in the project. If you factor in spot, and at the time we press released the results of the PEA, we did put out a spot analysis which used 1998 Gold and used $1 for Zinc. Zinc is certainly a little bit higher today, Gold a little bit lower than that price today. But you can see because of that leverage to gold, it significantly improves the NPV to $316M, $422M Canadian, again, using a 6% discount rate and contributes to an IRR getting closer to 40%.
11:37 At that Gold price, the other interesting thing is over 50% of the gross revenue from the project, about 52% of the gross revenue from the project comes from gold. We also continued to build our team. We did add a couple of new team members recently. So, you know, after we went through the initial lockdown phase in the state of Michigan, we decided to, you know, bring back most of the team and we did add to the team to prepare us for this next phase of development of the project. So we added Mike Foley, an engineer in the position of Director of Environment and Infrastructure. As we continue to push towards a shovel-ready status, he is going to be focused on some local permitting, state permitting and infrastructure.
12:34 Then we added Bob Mann as director of exploration. Jeff Lynott, who was the director of exploration at Aquila, retired in January. So Bob has brought in to replace Jeff and We welcome them to the team. We will certainly look to continue to add to the team and evolve the team again, depending where we're at in the development cycle at Back 40. But right now we think we're in good shape in terms of the resources that we have in place today to move the project forward.
13:09 And then the focus moving forward, These are sort of the milestones and the activities that we're focused on as a management team and as a board. So following the PEA, which again, I gave this enterprise view of the project that included that known underground resource. And for those of you that don't remember, the ore body is open at depth, so we do think there's a significant opportunity to expand and to grow the resource. So one of the things that we're going to be looking at doing is doing some additional drilling at Bag 40. This will include a couple of geotech holes that are necessary for an underground mine plan.
13:54 We will look at doing some infill drilling, which will target some of the inferred resource in the underground and look to convert some of those inferred resources into measured and indicated tons. And then again, budget dependent, we'll look at doing some step out holes, which will look to add tons to the overall resource. This will lead to a resource update, which will then support a feasibility study update, which we'll look to do in 2021. And again, try to time that feasibility study update in the updating of all the costs to coincide with the finalization of permitting and shovel-ready status. At the same time, in parallel, we want to focus on Wisconsin exploration. We do have these 2 other exploration assets in Wisconsin on the Pinocchio and VMS belt in close proximity to Back 40, Bend and Reef, both are Copper Gold projects.
14:53 The intention is to do some drill programs on those projects in the immediate term. Ultimately, the goal is to establish both assets, NI 43-101 compliant resource estimates. And then at the same time, we'll continue to advance with certain pre-construction activities at back 40 again, preparing for that shovel-ready status. You know, overall, our long-term investment proposition thesis is we want to create a de-risked multi-asset portfolio in a new US district with many years of mine life ahead of it. We think if we do that, it's going to create some different strategic options to the company, not only from a financeability standpoint but from a strategic standpoint as well.
15:46 So that's it for the year in review and that's it for my comments, pretty short and sweet. And if there is any questions, I'd be happy to answer them. I don't see any on my list here. So for any of you that do have questions, feel free to call either myself or Dave Carew, we're available to discuss any matter that you wish to discuss or to answer any questions you might have. We look forward to reporting to all of you on our progress moving forward over the course of the coming months. And we thank everybody for coming and just wish everybody safe and good health over the next year.
16:40 Take care.
