Shareholder Q&A

With the recent Trading Halt and Voluntary Suspension, the Company encouraged Hot Copper participants to send in questions.

ECT Chairman Glen Fozard and ECT India CMD Ashley Moore (currently in Chennai) prepared the following answers.

We will only be answering questions. Statements and ‘ranging’ questions will not be answered. Some answers may not be able to be disclosed due to sensitivity or disclosure obligations.

Questions have been edited for clarity and brevity.

As always, shareholders may call or email questions to the Company at any time.

Q1) from ‘Archer’

Surely if our Indian partners were keen to do this deal, they would have found a way to get this signed by now. Why create dates and deadlines only to ignore them?

What makes you so convinced that they are keen to progress this quickly as I am starting to believe these are all just delaying tactics to maybe wait until ECT is in a more vulnerable position to negotiate a better % for themselves.

Answer: The partners were willing to sign the extension agreement which confirms their willingness to proceed under the existing commercial terms. ECT continues to develop revenue streams outside the India project to reduce our single point sensitivity to this project. 

Q2) from ‘Arion’

  1. The $1.3 million deal you signed; what fuel was used there before Coldry? Answer: We are unable to disclose those particulars.
  2. By using Coldry product now, does this company have to pay a carbon tax? Answer: No.

Q6) from ‘Thunderbirdsarego’

  1. Would you please substantiate how it would be incorrect to construe, assume or posture that your recent q&a dialogues regarding timelines, the wording of the trading halt including not applying for an immediate suspension last week and the subsequent suspension reasons today were not misleading in any way shape or form.

    Answer: Per previous announcements (e.g. here) “Given the first-of-a-kind nature of the technologies and the project, the Company manages the uncertainties around changes in timeframes by providing ongoing guidance based on information at hand, with subsequent updates if there is a material change.”

  2. Did NMDC sign on today for the formal extension to the sunset? Answer: Yes.
  3. On what day did you become aware or plan to extend the sunset? Answer: Thursday 9 of August, after 7:30 pm.
  4. Who principally initiated the request for sunset extension and on what date did they request it be considered by all boards. Answer: NLC per above.
  5. If two out of the three boards rejected the request for an extension, what would have happened? Answer: The extension wouldn’t have been approved beyond August 31st. The joint approval of the extension demonstrates the parties intent to proceed.

Q7) by ‘young_punk’

How do you think shareholders can remain optimistic about our company?

Please don’t give me a reply that uses flamboyant words and technical phrases.

We just want answers.

Obviously, your working hard, the Indians are dragging their feet yet you are ultimately responsible for the announcements you make and deadlines you set. If you don’t feel that the deadlines will be met, why don’t you tell us? We only provide statements to the market that have been corroborated by our partners.  In all instances, we stand by what we say.

Look at HC the past week.

We actually were discussing the SP after the announcement. There was genuine excitement. There was genuine optimism surrounding our company.

This has not been the case for many moons and yet here we all were, discussing what our patience ultimately would be worth, once the belief we had FINALLY paid off.

And now?

The excitement is gone.

The anger is real.

The sentiment of this stock is so low. No one BELIEVES anything you release.

You must realise that a company that has SH’s excited and talking positively is almost priceless.

To lose that, from a company standpoint is absolutely shattering. There is no price you can pay to regain the confidence of your SH other than having your time-lines met and the deal done.

So please tell me, how much longer must we wait, why are we waiting and how do we remain positive about a company that has ultimately left its shareholders dis-spirited and flattened… ?

Answer: Your questions are many and your passion is obvious. But its very difficult to provide answers to the range of questions you ask. We are hopeful that your questions are answered by the full announcement that we will release.

Q8) from Giddiyup

  1. In regards to the new timeline and reasons for delay, what can give shareholders confidence the new timeline will be met?Answer: The recent visit has seen the parties address this issue and develop agreed structures for improved collaboration towards overcoming any issues.  An example of this was NLC’s recommendation to hold formal weekly steering committee meetings to facilitate timely collaboration. 
  2. What conditions could there be that would actually make our partners stick to these timelines?Answer: We have seen evidence of their commitment but are mindful of the continual need to be respectful and supportive of their difficulties.

    The market likes confidence and actions, what will make the market think that the construction timeline can be believable/achievable?

    Answer: We will be providing an overview of the project, including the budget and timelines. As activities progress, updates will be provided to the market. Obviously, delays will be reported, however, we have attempted to include an appropriate level of contingency to cover events such as rain delays and to accommodate the R&D nature of the project.

  3. I’m sorry but if the new timeline says another 3 months this is an absolute farce! The sp will go under a cent, more credibility lost. How can an agreement with all parties stating end of June, only be changed in June and then with a sunset clause in August and still not finalised. It is either total incompetence, lack of business knowledge or we are being played like a fiddle with no respect for our partnership. If it takes another 3 months to sign we may be at this level by the time the oc’s expire and most will have paid two years interest or accrued over 20% increase in their loan!Answer: Shareholders are aware that the parties are pursuing a first-of-a-kind project for two first-of-a-kind technologies in a country that is not only the fastest growing large economy but the worlds largest democracy. This creates a highly dynamic and unprecedented scenario.

Q9) from Samfiodiving

Looking at this now it looks to me like the Indians were never going to just sign off on this without their regular board meeting.

So my question where does that leave us now sitting at their convenience until their next official sitting some 3 months away for their next qtrly?

Answer: We are collaborating closely with our partners to help work through their remaining requirements where we can help.  Regular weekly steering committee meetings will also be held along with the continued parallel activities.

or

have they made arrangements to sign this at the highest level or call an interim meeting once all parties are happy to proceed if within the next 3 months?

Answer: Both partners have indicated a willingness to sign the agreement prior to the new target date but the new timelines are set to ensure adequate time to complete all requirements should that time be needed.

(will this ever get over the line )

Or do we just wait for them to sit in 3 months only to find something else they are not happy with, and the saga goes on and on

Answer: All three partners intend to stay close to the outstanding requirements to ensure none of us loses contact with the outstanding issues. This will be the function of the weekly steering committee meetings.

From the very beginning, we were informed there was a collective team working on this both Indian group and I presume Ashley on the ground on our behalf, Are the Indian team collectively capable of making an executive decision or is it the fact you the collective make a decision only to be overuled at a higher level

Answer: Our partners are large Government owned ‘Navratna’ companies. They have a very strict due process that must be adhered to at all times. They are certainly capable of delivering this project and have the structures in place to make all necessary decisions.

What is the problem and I am told in conversation they are frustrated and embarrassed, I’m sorry but I do not believe for one minute it is our side holding things back.

Appreciate your thoughts on this.

Samfiodiving

Q10) fromdave1479

Have you given any thought to keeping the stock in suspension until you have the signatures on the deal?

Answer: We will not keep the stock in suspension once we have updated the market. We are operating business as usual.

Q11) from Dougie54

Hi there, I am at a loss to know what to do, leave my substantial holding of ect shares where they are. Or sell out and perhaps buy back in when the dust settles! Is there anything you can say to keep me and many others positive?

Answer: We believe that the future of the company is very positive. The partners are proceeding with the actions required to reach financial close and commence the project. Hopefully, after reading the forthcoming announcement, you will remain positive, as we are.

Q12) from Vacre

  1. (INDIA PROJECT) With respect to the site works, what exactly has occurred to date? And please provide specifics so we can better understand what has physically occurred on site. Has the site been cleared of vegetation, levelled, are there portable buildings on site? What is happening at India ground zero?
    Answer
    : Vegetation and other environmental surveys have started which would allow for site clearance and levelling once complete.
  2. (INDIA PROJECT) We still don’t have a clear understanding of what happened with Niti Aayog. Did Niti Aayog actually review our project and if so, which month did it occur? Also, in a simple yes/no response- was our project deemed a project of national significance?
    Answer
    : It is difficult to comment directly on internal Government approval processes. What we do know is that both NLC and NMDC are able to sign when they have completed their internal requirements.
  3. (INDIA PROJECT) Has the company had any correspondence, communication or support from any high level Indian Government ministers within the past six months. It was mentioned once before that Piyush Goyal offered to help “get things moving” with respect to the India project and approvals. Has he or have we sought to reach out and make good on the offers made available to us for assistance?
    Answer
    : At all times we need to act with respect and careful diplomacy when considering engaging Indian officials and ministers. We had the High Commissioner of India attend the May 30 signing and we have continued support encouragement from other officials and ministers.
  4. (INDIA PROJECT) Is Narendra Modi aware of our project and if so, when was he last briefed regarding its status. If he is not aware of our project, do you feel that he should be made aware?
    Answer
    : We cannot comment on this. What we can say is that this project represents an important part of the Indian Government’s strategy to reduce reliance on imported coking coal and improve the uptake of technological advancements for sectors such as the steel industry.  

Q13 from Keith L

Could you please reconcile this statement from Friday’s announcement ” The Company is in the process of finalising an announcement in relation the signing of the Research and Collaboration Agreement with our Indian project partners.” with today’s announcement that the company is seeking an extension of the MPA sunset clause.

Answer: There is nothing to reconcile. We were finalising an announcement in relation to the signing, it so happened that what we were finalising involved a lack of information for which we needed clarification. The fact we placed it into trading halt reflected the lack of information we had at hand, per continuous disclosure requirements (see Listing Rules 3 & 17 and Guidance Notes 8 and 16).

Todays announcement reflects poorly on the company and it appears none of the parties have any clue with regard to time management.

Answer: We understand shareholders may seek to conflate the reasons for or context of delays with their own subjective assessment. It is incorrect to attribute the delay to poor time management. ECT has completed all actions as required, within target timeframes. We now look forward to continuing to work with our Indian partners to assist them to achieve the desired outcome. Further context will be provided in our forthcoming announcement.

Q14) from Don W

I appreciate the delay noted today is frustrating for our Management team but yet another delay raises great concern. This is terribly disappointing, not that I expected this announcement to be the end by any means but we have lived with numerous delays for years and it needs to be addressed.

  1. how can we be certain this will not continue to have delay after delay.

    Answer: See answers above.

  2. This seems like a great sign of disrespect and disdain for ECT by the Indian companies even if this is their way of doing business. How will you respond to these concerns?

    AnswerWe understand shareholders may try to conflate the reasons for or context of delays with their own subjective assessment. It is incorrect to attribute the delay to disrespect. We look forward to continuing to work with our Indian partners to assist them to achieve the desired outcomes. Further context will be provided in our forthcoming announcement.

  3. What does this mean for start date of construction and completion?

    Answer: Our forthcoming announcement will talk to the revised timing, however, we do not anticipate a significant impact in the context of overall project delivery timeframes.

  4. When will we see details of the financial split?

    Answer: this has previously been disclosed; ECT will own 49%, NLCIL and NMDC will each own 25.5% and contribute the ~$35 million funding to complete Phase 1 R&D.

  5. What else can we expect to hear in Victoria? Answer: Please refer to our announcement of 9 August (link) for the most recent information regarding the local market. 
Filed Under: ECT