Phoenix Copper Ltd. (United Kingdom) (LSE:PXC) — Annual General Meeting

0:00 Good afternoon, and welcome to the PHOENIX COPPER LIMITED Annual General Meeting. Throughout this recorded meeting, attendees will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. I would now like to hand you over to interim nonexecutive chair, Catherine Evans. Good afternoon to you. Hi. Thank you, Alex. Thank you all for coming today, and sorry for if I've got my back to the people on the screen. I'm addressing the room. So we have a quorum, and the notice of the meeting is correctly given so we we can start. And I'd like to start by reading out each of the resolutions.

0:48 So the first was that the company's annual accounts for the financial year ended December 31 together with the report for the directors and auditors report on those accounts are received and adopted. And the votes for 91.89%, votes against 8.11, and the votes withheld 2,800,000 votes out of potential 287. So on the basis of the the votes that are validly received, that resolution is passed. Subject to the poll. Thank you, Charles. Okay. So number two is that Crowe UK LLP be reappointed as the company's auditors to hold office from the conclusion of this meeting until the conclusion of the next meeting at which the accounts are laid before the company.

1:42 And the votes for are 84.37%, votes against 15.63, and votes withheld 2,830,000. So again, subject to the poll, that resolution is passed. Number three, that the directors be authorized to determine the auditors remuneration, and that was 91.8 for 8.2 against and 2,830,000 withheld. So subject to the poll, that resolution is also passed. Four, to reelect Catherine Evans who's retiring in accordance with article 12 of the company's articles of association and who being eligible officer self for reelection.

2:35 So that's 91.84, 8.2 against, and 2,830,000 votes withheld. So subject to the poll, that resolution is passed. Number five, to reelect Ryan McDermott who's retiring in accordance with article 12 of the company's articles of association and who being eligible offers himself for reelection. That's 95.614, 4.39 against, and 2.9 votes 2,900,000 votes withheld. So that is also passed. Number six, to reelect David Jarvis who's retiring in accordance with article 12 of the company's articles of association and being eligible is offering himself for reelection.

3:29 That's 99.58% for, 0.42 against, and 4.2 votes withheld mid sorry, 4,200,000 votes withheld. So that is also passed subject to the poll. Seven, to reelect Jason Riley who's retiring in accordance with article 12 of the company's articles of association and who being eligible offers himself for reelection. That's 94.794, 5.21 against, and 4,190,000 votes withheld. So subject to the poll, that one is passed as well. Number eight, that the directors be generally and unconditionally authorized in accordance with the article 3.2 of the company's articles of association to allot and issue shares in the capital of the company.

4:25 And that's 91.794, 8.21 against, and 2,380,000 votes withheld. Those were all ordinary resolutions. And on the special resolution, it's subject to the passing of resolution eight, the directors be and are hereby empowered in accordance with article 3.4 of the company's articles of association to a lot equity securities for cash pursuant to the authority conferred conferred by resolution eight. And that is 91.78% for, 8.22 against, and 2,480,000 votes withheld. And that's the resolutions.

5:12 So we'll put them to the poll. So should I call Is anybody is anybody who hasn't put in a proxy form what he wants to do on a poll here? Hello. Is that is that format? Has each of the resolutions. I kinda fill in the shareholder name. You're in then. Thank you. So should we hand over to Ryan now while Yeah. We'll pick up we'll pick up the poll calls at the end, and then, obviously, we'll announce the final results. Yeah. We've done a bit late this afternoon. We've done a lot of as soon as possible post the poll because we've got till four four. We need to provide the information to the LLC. We got a bit around the pool. Okay.

5:58 Crack on the bus as as we can. So, Ryan? Yeah. Kathy, I I I assume that everyone who's listening remotely gets the same information I do. Could you repeat what everyone just said about the poll, but face the camera so everyone can hear? Yes. Sure. So Thank you. So we have a representative here from NIU Invest who are voting their poll shares at the moment. And so we'll have to, I guess, wait for the results of that. And in the meantime, Ryan and we've done the resolutions, and they've all passed subject to the poll. So do you wanna go ahead and and and give a short presentation?

6:46 Sure. You bet. Can everyone see that? Yep. Well, hello, everyone. Thank you for attending. We'll start the presentation out here with a slide that I think most people have seen. What you're looking at all these colored blocks is the current mining claim holding near Empire. The Empire property proper, which is the the private property, is in blue. The shaded area, you can see my cursor. For scale, the area in blue is 328 acres.

7:33 We then have Horseshoe Windy Double LPC and, of course, the Navarre Creek claim block altogether is about 7,500 acres. Within the blue shaded area, the Empire area is the oxide open pit, and then the underlying sulfide vein target. The Horseshoe and Windy Devil claim blocks are also very prospective exploration targets with a similar polymetallic flavor as Empire copper, gold, silver, some lead, some zinc. Then, of course, Navarre Creek, which we believe is associated with the same mineralization as Empire, but is predominantly precious metals, gold and silver at surface.

8:21 And again, a very large claim block with with excellent exploration potential. We all of these colored blocks that you see the mining claims are secured, and none of that has changed since the last AGM. A little more specific to the to the map that I just showed you. We've got the red star area, which sits right about here. If you can see my cursor, it is associated with the, both the open pit and the underlying sulfide vein system. It's a mix of both. The open pit, which I spoke about, as well as Navarre Creek and the and the underlying vein system.

9:12 The vein system, we believe, is is probably priority number one when it comes to exploration. We have done a limited amount of drilling deep into that system. And the results the analytical results from the drilling are very similar and actually confirm the the mining that occurred and smelting prior to World War two. So it it's good to have that to have that confirmation. In September 2024 or excuse me. In in May 2024, we issued a the mineral reserve statement, which you can see here. This is in copper equivalent, both tons and and, total metal resulted in in proven and probable reserve.

10:06 Again, copper, gold, silver being reported as copper equivalent of about 10,100,000 metric tons and 66,000 metric tons of total metal copper equivalent over a nine year mine life. September 2024, using the the mineral reserve that I just presented, we published a prefeasibility report that was done by, independent consultants, Hard Rock Consulting of Montana USA. And specifically, this report used the metal prices that you see at the bottom, $4.45 copper, $2,300 gold, and $27 silver.

10:56 Obviously, since September 2024, metal prices have changed significantly. I'll also point out that the pricing you see at the bottom was three year trailing average prices. So what this resulted in, seven and a half percent discounted NPV, 73,000,000, 40% IRR, and a 1.6% or one point six year payback period. One of the first things that we're gonna do once this raise is approved is update the mineral reserves and update PFS to current. Given that metal prices are significantly higher today than you see at the bottom of the screen here, we would expect these numbers to to, obviously increase and the economics improve from what they are.

11:50 Not that these are bad, but we should we would expect to see some improvement. So just real quickly, upcoming milestones. After this raise, we'll clean up the balance sheet, repay some debt, including Indigo. As I mentioned a minute ago, we'll update the mineral reserve statement and the PFS. The timing of that, I'm sure, is of interest to everybody. The consultant will start that work, in mid August, and it should take them thirty to forty five days to complete. So not not a long period of time. Following that, we'll continue with the the detailed feasibility engineering, which will include the hydrology report that we need to complete for that engineering.

12:41 And the hydrology report will also be integral to the to the permitting the the plan of operations in the permitting application. As well, process design for the processing plant and the mine design that that ties into that. Does anyone have any questions? Are you seeing the questions, Ryan? Yeah. None yet. Okay. Any questions in the conference room there, Kathy? Around no. Not at the moment.

13:28 Could you just focus on the cleanup of the balance sheet and Yes. Sure. Indigo and Riverfork situations? Okay. So Indigo is we're gonna pay them back in full as we announced in the circular. Did you hear that, Ryan? Yes. Okay. So and then River Fort, we they obviously believe that they that we owe them x, and we think it's y. And so we do not believe that their claims are contractually supported as we announced in our financial statements. Any other questions? I have a, excuse me, a question here.

14:14 The question is when will more funding be required? The current do do you wanna answer that, Kathy, do want me to? I can answer it. More funding will be required by the end of September. So we will be, you know, we're assiduously fundraising right now actually, and we'll continue that process. And, you know, the ideal situation for us would be long term investors who understand the long term story and who would come in via either a convertible loan note for the a long term, say, five year time frame or via the bonds or via equity. And in terms of Or or a combination of In terms of a convertible loan note, and most debt type instruments have a coupon component.

15:01 So how would you work around that given the cash flow? Well, the the best would be an implied coupon. So, you know, coupon rolled up to production or an implied coupon over the terms and notes. Okay. Sorry. Did did you hear all that, Ryan, on on screen? I could hear you. I could not hear the question. Okay. The question was about the coupon attached to any notes, you know, how we would like to treat. And obviously, us, it would be better to roll up coupon until production or to have an implied coupon over the term of any note. I heard that. Okay. End of September, how much are you looking for? Ryan, did you hear that? So the the question was how much we're looking for? And once we've done this raise, we'd be looking for an additional $7,000,000.

15:55 That that would get us to a record of decision. And at that point, we would obtain construction finance. Do do you wanna walk through that process, Ryan? Through which process? It's a process of value, the use of funds between now and record of decision, and then and then the construction finance and how that would be obtained. Yeah. You bet. So, first order of business here, we need to complete all of the detailed engineering. That engineering work, product go is rolled into a plan of operations, which is simply an application for the mining permit. Once the federal agency receives that, they begin their their review.

16:45 It's both desktop review and field review. They'll verify all the data that the information that that we have in the application. They will publish a draft environmental impact statement. That'll be their the the regulator's responsibility. That once that's done, it goes out for public review. Public review process, I think, is ninety days. And following that, we receive a record of decision, which is essentially the license required to, construct and and obviously begin construction or, excuse me, begin production. Any other questions from the room?

17:44 Ryan, do you have any any other question that came in at the same time as when will we need the money? The question is how will the funding be raised? And I think you answered that, Kathy, but if you wanna answer it again. Sure. So so how it would be raised ideally for us would be either via with a long term investor, either through a loan note or through the copper bonds or through a combination of those and equity. So I have another question. Yeah. Was trying to get your attention. Sorry. The building on this chat's questions regarding indigo and Riverfoot, we just focus back on Riverfoot. Is that going to end up as a legal challenge?

18:32 I don't think so because they're so the question was, is Riverfort going to end up as a legal challenge? I don't believe so because the last the last we heard for them, they were going to set up their particulars of claim, and they haven't done so. And they and they were gonna set them out with a view to a settlement rather than so I don't believe so. And what liability do you portion to Riverfoot? We think we owe them 64,000, which is a prepayment penalty. And how much is owed to Indigo? 1,564,000, and we're gonna be paying that back in full. Is that out? That's out of the Out of this raise. Raise. Yes.

19:18 So your actual gain of this raise is less than £1,000,000? Yes. Yeah. Hence, the need to raise more funds very urgently. How many active discussions are underway in terms of the funds? So the question from Khalim is that how many active discussions are underway? Several. It's but, obviously, we can't discuss any of them until they're signed, sealed, and delivered. So And do these investors have mining expertise or have they invested in other mining projects? Some of them do. Some of them do. Yeah.

20:04 K. Like, was in this institutional capital? Yeah. So sorry. For those on screen, the question is, do the the counterparties we're talking to have mining experience? And some of them definitely do. Some of them actively look for mines mining projects. And the other question was sorry. I've forgotten what it is now. I don't know much about this. Is it institutional? Oh, is it institutional? Yes. It's institutional capital. Yeah. Yes. And some family office some family offices as well. Thing is we we actually our current profile suits family office or ultra high net worth better because of our market cap. So it it makes it very difficult for some of the institutions to to invest with us currently.

20:59 Slightly longer term question, given the current fundraise and the subsequent fundraise, just given the tough environment to raise money in London, you know, would it be more was beneficial for the company to shift its focus, you know, with a dual listing structure or improved dual listing structure. So the question is, would it be better for the company to have a dual listing structure? Presumably, mean in The States? Yeah. I think over the long term, that would be a really good thing for the company, but currently, our share price is too small for us even to contemplate that. So we have to, you know, get the share price back on track again before we but at long term, it definitely makes sense because it's a US asset.

21:51 You know, we will have US investors. So it it would make sense over the you know, but we're talking a couple of years away Yep. At least. Are there any more questions from the conference room there? I don't think so. No. K. No questions on my end, so we can I think we can wrap this up? Thank you everyone for attending. Hang on one. Yep. There's another question. Go ahead, Kathy. I'm just waiting for it. So way back when NIU Invest requested an AGM.

22:39 Mhmm. Subsequently, it didn't take place. Is there a particular reason why it didn't take place? I think we they had several questions about the the dismissal of Marcus Edwards Jones and Richard Wilkins, and I think we managed to satisfy those questions. Coming back to the issues with Riverfoot and Indigo. Riverfoot is only over 64,000. However, NIU renegaded on an £80,000,000 investment and only provided 5,000,000. I understand subsequent or post this AGM, NIU will have warrants.

23:31 Yes. Can you confirm that those that they have been given those warrants? And why have they been given those warrants when they renegaded on £75,000,000 of funding? Because they had a certain number of warrants for each tranche of funding, and they were entitled for that first 5,000,000 to 3,700,000 warrants. And those those warrants had anti dilution protection, which now entitles them to further warrants, which we are granting as part of this fundraise. So are is there any chance that NIU ever gonna come good on the £75,000,000? Well, I I I can't speak for them. I don't believe that's on the table. And, I think that, the timetable for that that investment has now passed. Fairly ironic, isn't it, that they should have had an interest in the the outcome of the two two directors leaving their positions when there was £75,000,000 outstanding in funding.

24:40 I can't comment on that. Can I ask a question on that? Sure. Presumably, we got the legal advice on the agreement between us and the NIU. What did that say? The contractual protections for for them not funding further tranches were not very strong. I'm talking more about the final agreement. In terms of Well, the recommendation to sign it or not. As in this was obviously very one-sided. So what did our lawyers say we should do? Well, Charles, would you like to take that question? The so there is an there is an agreement with NIU as confidential provisions in, so we can't disclose anything about that agreement.

25:32 But there has been discussions around what each boss' rights are, and then what I can say is that there's not an agreement about what his rights and obligations are at the moment. Sorry. There's no just repeat that again. There's there there there is a difference in opinion in in what those obligations arise are. In one of the questions in the I think it was the last AGM, there was a question that was put to Richard about why, the second payment did not come from NIU. He responded and said, that we, meaning the company, basically didn't ask for that amount of money.

26:27 I've subsequently heard that that's not the case. You did ask. So what's the truth? We did. Yes. We did. So why did he make that statement? I can't comment on that either. So he lied. It was it's well, should I just remain silent? No. He was deliberately misleading, wasn't it? But she can't comment on that. Yeah. I can't, I'm afraid. Alright. I've got another question then. How much money was misappropriated by those two individuals? $1,700,000 over a ten year period, and that was split three ways up until 2024, And that's between Marcus, Richard, and Terrence Lloyd, who was Marcus' partner.

27:19 And then from 2024 onwards, the money was split two ways. And then there was an additional, around about $500,000, which was paid to various brokers and to a PR firm against board direction as well. We announced that in our r and s at the time and, also in our financial statements. And this money disappeared over an extended period. So what were our auditors doing? I can't comment on that, I'm afraid. When are we gonna find out? Well I mean, you're talking about years.

28:05 Yes. That's true. And, yeah, it is true. So after this AGM, we will be undergoing a, a very full review of all of our third party providers, including our auditors. And then you will make your statement visually. At the right time. Yes. Kathy, I received a question here. So if you if you can explain what you did early on, what what are the results of the vote after NIU who voted? I'm not sure that everybody listening in listening in understands. So, once this meeting is adjourned, we will count the poll, and we'll announce it by RNS today.

28:54 Right, David? Yeah. So Ideally, before four. Yeah. Before 04:00. So we'll announce. So, basically, all of the votes are subject to the poll. And what time is it now? So we'll have half an hour to announce the results today. Okay. Then another question on this end. Shareholders are concerned about the dwindling value of their investment. Obviously, they are so are we. Can you outline the plan to get the share price back at a level a level where shareholders might recover some of their investment? I I'm I'm happy to answer that, and that is exactly what we're trying to do, and it begins with this raise.

29:42 The the value of this company is in the asset, and the asset value, we believe, will increase with the completion of engineering, submission of permit application, and and ultimately construction and and production. So we're we're taking an industry standard methodical approach to this and increase, obviously, increase asset value. And I would hope that that that will increase the the value of the company overall. And also to ensure that news flow is is by is from Idaho as in operational milestones achieved rather than That's correct. Rather than sort of corporate window dressing.

30:27 Yep. Ryan, a question for you on equipment. In the webinar, you were saying that, hopefully, the majority of the expenditure that's gonna be coming up will be on effectively secondhand equipment. And you were saying that you believe that that was reasonably readily available in the market. Have you got a ballpark figure in your mind how much money we're talking about? Just for the used rolling stock, or are you talking about for for for construction CapEx as a whole? Basically, get the mine up and running.

31:15 Well, if you look at the at the the PFS, the capital requirements estimated at that time are $62,600,000, and that that would get us to full full construction and and production ready. Right. Thank you. When when we update the mineral reserve and the the PFS or or final design engineering, we'll we will refine those numbers accordingly. Right. One other question is probably two years ago now, you and I had a discussion about what potentially was gonna happen on-site. And I think you mentioned a second a drilling of of a hole in that there's one existing, isn't there? You were gonna drill another hole. Is that correct?

32:13 Drill another hole? Well, shaft. Sorry. Oh, okay. What you're you're you're what you're addressing is exploration of the of the deeper vein system. Yes. Right now, our our focus is on the open pit. The open pit reserve is has been fully delineated. Exploration is expensive. Yes. We do have a we do have a plan for for exploring the sulfides, but that right now, the focus is on the open pit. So is that effectively gonna be years down the road? The the plan is to to explore that area down the road. Yeah. It just it takes funding and time and and the Yeah.

33:04 Rough rough yeah. Long Brian, any idea? Any idea on timing of when we start exploration of the sulfides? Yes. Question I can't answer because it's all dependent on on future funding. But it is a separate exploration project. That's the point. So if we could obtain separate fund financing for it. Right. So We yeah. Go ahead. You say that this has gone over on over ten years, the $1,700,000, you say, portionable to three individuals and then more likely two. Mhmm. Where is the collective responsibility of the other directors if this has been going on for so long? Why hasn't been anything done before more recently?

34:13 Because it took place without any of the board members current or past being aware of it, and it became evident when we've when we asked the bank statements earlier this year because Richard was giving contradictory answers about the cash flow. And so we asked to see the whole bank statements. We had as a board every expectation that the summarized management accounts that we were provided by our CFO were correct. Why is this true? Well, this this picks up as to why this wasn't picked up. I was just surely. Well, it's very difficult for me to comment on that without without the auditors being present to Explain why they didn't do their job. Yeah.

35:04 Precisely. It's a as I said, it's something that I can't comment on. No. I understand that. When are we gonna find out? Might understand that. But because of the extent and the money involved, previously, just part that to one side. These two individuals in that ten year period, something like $60,000,000 was raised. Correct. Now we've come to a position, and, obviously, perhaps the market and the situation's in a different place, But there was something like short of 300,000,000 shares over that ten year period for that amount of funding. You've come out to the market now, and the shares you've got share dilution, but the shares are going to more than double. And you've only raised 2,500,000.

35:51 And 1,500,000 of that is going to pay a settle of debt. So measured on success. In actual fact, if they did, whether the rights the rights or wrongs of $1,700,000 out of a $60,000,000 pot, a right or wrong, based on success alone Well, I think we all agree that that the fact that they raised 58,000,000 and got ten years down the road is far better than where you are in that you dilute the shares. Just by just Yeah. But that's an impact on the share price, isn't it? Well I'm not I mean, I just wonder I just wonder whether it's very, very convenient to blame two directors that are no longer part of the company and get rid of all the bad rubbish and have the clear out and scapegoat them.

36:42 Because from what I'm looking at, this latest share offering and what you're doing now does not look like success. And it's definitely I don't think definitely not it's definitely not inspiring confidence with the share price. I don't think any of us are presenting this as a success. We tried to raise more money at a better price, and this was the money that we were able to obtain. We are not presenting this as success. But it is it is at least paying some of the debt back and it's moving the project forward and it buys us a little bit more time to obtain the financing we need. Any more questions on your end, Brian? Nope.

37:37 Would you like to say a few words? Yeah. Well, again, just wanna thank everybody for attending the meeting. And as always, if you have questions, feel free to email Kathy or myself, and we will respond accordingly. Thank you very much. Yeah. Thank you very much. Catherine, Ryan, thank you for updating attendees today. On behalf of the management management team, we'd like to thank you for attending today's annual general meeting. That concludes today's session, and good afternoon to you all. Thank you, Alice.