*****Meeting with AZCO*****
I had the good fortune to be able to spend some time yesterday with Doug
Ramshaw and Jim Paterson. I was at a mid-town NYC Hotel seeing a client and
I noticed there was a Mining Investment Show on the 5th floor of the hotel.
I walked in and wandered around for about 5 minutes and saw that one of the
booths was AZCO. I got to spend a fair amount of time with Doug Ramshaw,
who is the VP-Corporate Development. Doug is a mining geologist from the
Royal School of Mines in the UK. He was also a mining analyst for a
brokerage firm before he joined AZCO. In all my years talking to corporate
execs, Doug is one of the most open and honest ones I have had the pleasure
of speaking with. Being an HR Director, one of the things that is most
important to me, besides the basic information that I am seeking, is
opportunity to look someone in the eye. Doug more than passed the test. He
assured me that if he didn't know something he would tell me he didn't
know. However, I was free to e-mail him or call him any time and he would
get back to me with the answer to my question as fast as possible.I told
him that I had three main concerns with investing in mines. The first was
did they have the goods, second was did they have the ability to get it out
of the ground and process it, and finally, did they have the customers to
buy the stuff AND at a price that would make the whole thing profitable. My
secert forth concern is does the company have the shareholder in mind when
the profits come in! That concern was laid to rest when during our conversation he said he though of himself as working for the shareholder. He didn't think there was anything that a shareholder shouldn't know, except for what would be insider info or info that would undermine the ability of the company to operate. When I met Jim Paterson later in the conversation, he reiterated the same thing.
1. Do they have it in the ground? - Has been confirmed by independent
geologists. Doug also said they spent much time looking at Black Canyon
before deciding to buy it. They were looking at numerouse (more than 10) different projects at
the same time and they picked this one as the most profitable for the least
effort. I told Doug that I heard there was suffcient mineral on the surface
that would make actual mining unnecessary for a year or two. He thought conservatively
that there was sufficient for at lest 9 months without mining. Now, owing
to the fact that they can and are processing this surface stuff without a
permit from the Bureau of Mines (the permit is expected within the next 2
weeks to a month) is most gratifying.
2. Can they get it out of the ground and process it. YES - Doug said that
they already have one processing line up and functioning and that a second
is almost complete. A third and fourth will be added before the end of the
year. When they get all 4 on line, Doug said conservatively they will be
able to process between 10 and 15 thousand tonnes annually. He said that
the overall quality of the mica was the best available in north America.
The type quality that he was seeing was stuff that would only come from the
best mines in India (think of the savings in transport alone). He did not commit to any aspect quality as he didn't
know. But he said to e-mail him and he would call the mine manager and get
that for me. He did say he had the opportunity to hold a small bag of 625
screen. He said the mica powder was so fine that it felt and reacted like a
liquid.
3. Can they sell it and at a price that is profitable. - A little more difficult. Doug said they would have no problem selling everything they could process for .60 a pound, but the quality of the mica warranted at least $1 to $2 per lb and some beyond that. Certainly there was some lower grade mica that they would sell at .60, but had no intention of undercutting themselves. He did say that there were customers out there that would not pay more than .20 to .30 per lb., but they were people who did not take the quality of their "ingredients" seriously. Doug was most reassuring that there were sufficent customers that did take the quality of their material seriously, and that with a little bit of effort, they would be able to do a brisk business with them. I told Doug that we were having trouble getting a handle on the pricing structure of mica, and he said he wasn't surprised. He said that in the mineral industry, pricing is a most closely guarded secret. He said he knew of one company that was selling the exact same grade of mineral to one company at one price and selling it to another company at 3 times that price. He anticipated that when the contracts started to happen for AZCO, the pricing would not be available to the public. (I anticipate with the sharp people on this thread, we should be able to back into the price, or at least get close enough for gov't work, when the quarter #'s get released.)
About this time Jim Paterson came over and introduced himself. Jim is Investor Relations for the company. Another nice guy. We did not have long to talk as they were tearing down the booths. He reassured me that any questions we might have, he would do his best to get them answered ASAP.
My overall opinion of the meeting was most positive. These are smart, hardworking guys that are in love with what they do. They did not try to "sell" me for one instant. Since I work around salespeople all day long, I am supersensative to being sold. They gave me the facts without hype. In fact, I hunch is that they were always talking on the conservative side. One topic that we did not get into, that I am very interested in, mineral does not sit in the ground all by itself. I wanted to see if there is anything else mixed in with the mica and the host feldspar that is going to be of interest.
Let me thank Doug and Jim for their time. My emotions are running high on AZCO.
Best,
TMan
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