VYSARN LIMITED — AGM Information 2013

Nov 21, 2013

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MHM Metals Limited CEO presentation 2013 AGM

November 2013

Presenter: Matthew Keen, Chief Executive Officer

Disclaimer

should not be considered as an offer or invitation to subscribe for, or purchase any, securities in the Company or as an inducement to make an offer or invitation with respect to

2

ALUMINIUM OPERATIONS

Company Profile

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MHM Metals is an industrial / green tech company, focusing on
innovative solutions for the aluminium industry.
MHM’s primary focus is the implementation of a process to recycle
waste from the secondary aluminium smelting industry and help to
eliminate the current practice of sending this waste to landfill.
MHM continues to look at opportunities to expand outside of
Australia.
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ALUMINIUM OPERATIONS

Company Snapshot

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Exchange: ASX
Share Price: $0.09
Shares on issue: 130,218,145
Market Capitalisation: $11.72m
Cash at bank (17-Nov-13): $2.01m
Debt: $0
-
Shareholder Profle (Oct 13)
Top 40 shareholders 45.5%
UBS Wealth Mgmt 15.7%
Brazil Farming PL 8.3%
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Directors
Iain Kirkwood (Chairman)
Franklyn Brazil (Non-exec)
Phil Thick (Non-exec)
Management
Matthew Keen (CEO)
Jason Thiele (CFO)
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4

ALUMINIUM OPERATIONS

Achievements for the Year

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Cash fow
In the last 12 months the business has moved from a position of monthly cash burn to a position of positive net
operating cash flow. Increased revenue lines negotiated for the tolling of incoming salt slag and significant cost
savings have contributed to the change. Further work is continuing on both the revenue and costs of the
business to move it towards a positive NPAT position.
Chemistry
In November 2012 the business employed an industrial chemist. This has greatly assisted MHM in understanding
the chemical reactions that occur in the process of treating the salt slag and the impacts of this on the NMP
product that is produced. There is also a much improved understanding of the components of the NMP which
has greatly assisted in MHM’s ability to obtain repeat orders for Standard NMP product.
This combined understanding means MHM is now selling all of the Standard NMP being produced.
Design
Over the last 3 years there have been many design variations to the Moolap plant, none of which successfully
dealt with the reactivity of the material being processed or the fines handling during the removal of the
chlorides (salt).
The new design incorporating the filter press has significantly reduced the fines in the feed to the clarifier whilst
maintaining the ability to keep the chlorides below 1% in the NMP (critical for sale of NMP).
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5

ALUMINIUM OPERATIONS

Positives for the Business

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Favorable Process
MHM has a process that is desirable for its customers (Alcoa and Sims) and for the regulators (EPA) in that it
removes the need to landfill a hazardous byproduct. This gives MHM vital support from two very important
groups of stakeholders.
Favorable Partner
Having Alcoa as an important stakeholder is very positive due to their knowledge of the aluminium industry and
their support in strategic directional changes.
Understanding our business and process
After several years of trial and error MHM is arriving at a point where it understands its process and the
products it produces.
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to survive.

6

ALUMINIUM OPERATIONS

Filter Press

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The filter press is a game changer for the MHM business, whilst it has taken longer than anticipated to install the
long term benefits of this piece of equipment are clear.
Since running the filter is semi-automatic mode we can see that:
•
The filtrate is clear of fines material.
•
The NMP appears to be of equivalent specifications to the current standard NMP that we are currently
consistently selling.
•
Throughputs will exceed those of the overall plant creating headroom in the filtering component of the
plant.
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7

ALUMINIUM OPERATIONS

Challenges for the business

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Stockpiles
The time that it has taken the business to create a stable reliable process has meant that significant stockpiles of
partly processed and unprocessed material have built up. This material has to be processed with minimal revenue
streams available to the company. This holds the company back in terms of revenue and ultimately profits. It is
expected that the majority of these stockpiles will be worked through during calendar year 2014.
Harsh environment
The NMP process is very hard and abrasive and the salt is very corrosive. These two components combined
form a very harsh environment for the equipment used in the process, causing many breakdowns and equipment
failure. Further work needs to be done on the preventative maintenance regimes that the company undertakes
Complex product to treat
The incoming product can have high variability, however the out-going NMP needs to be produced within tight
tolerances to allow it to be sold. This creates a situation where the process needs to be flexible enough to treat
a wide variation of product and produce a focused outgoing product. The company believes with the addition of
the filter press that it now has a process that can fulfill this complexity.
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8

ALUMINIUM OPERATIONS

Keys to the business turnaround

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Consistency
Critical to the business is the ability to create consistent output products (AL, NMP and Salt) from inconsistent
salt slag. This requires the process to be robust and repeatable. MHM now has a process that is showing good
reliability. The next step is to introduce more monitoring and some further automation to help further monitor
and finesse the process.
Reliability
Having a reliable plant is important, especially when downtime completely stops the process and therefore costs
money. Creating a reliable process that has limited unplanned downtime is crucial as there is very little
redundancy in the process.
Throughput
The two items above (being Consistency and Reliability) are critical to getting good rates of throughput. This is
essential to MHM’s business due to the high level of fixed costs in the business. Therefore high throughput will
reduce unit costs and make the business more profitable. This is especially important when MHM considers
moving to the USA where there is limited subsidy compared with the Australian business.
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9

ALUMINIUM OPERATIONS

Short term plan

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Targets
Successfully install the Filter Press and remove bottlenecks associated with the fines in the process.
Improve throughput to 800T per week on a consistent basis.
Reduce stockpiles of partly processed and unprocessed material from site.
Ship and sell all NMP that is produced, no more stockpiling of out of spec NMP.
Identify further cost savings in the business.
Improve monitoring and ‘fine tuning’ of the process to understand where further improvements can be made.
Outcomes
This will allow the stockpiles to be reduced, the business to operate in a cash flow positive manner and allow
the business to stabilise.
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ALUMINIUM OPERATIONS

Long term plan

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Targets
Determine if plant throughput towards 1,000T per week is feasible.
Identify and if applicable implement value add to the NMP.
Determine the economics of an expansion into the USA and if feasible implement that expansion.
Outcomes
Ability to leverage knowledge from the Australian operations into a new purpose built operation in the USA.
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ALUMINIUM OPERATIONS

Forecasts
	FY14	FY13
	(forecast) [A$,000]	(actual) [A$,000]
Revenue	9,000	4,713
Expenses	7,500	8,477
EBITDA	1,500	-3,764
Net Proft	-500	-7,018

Forecasts

ALUMINIUM OPERATIONS

MHM

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For further details please visit the website:
www.mhmmetals.com
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ALUMINIUM OPERATIONS