CoTec Market Update

0:08 Hello everyone and welcome to Kotech Holdings Live Investment Summit today hosted by 6. I'm pleased to introduce their President, CEO and Director, Julian Traeger, who's going to be discussing the latest news and answering questions that you submit live. And as a reminder to that point, if you do have any questions for Julian, please submit them in the Q&A chat on the right-hand side of your screen at any time today. And as always, this event is being recorded, so it'll be available on six.com in the coming days for you to check out if you'd like to. Without further ado, Julian, I want to hand things over to you so that you can get us started. Great. Well, thank you so much, Cam. And thank you, everybody, who's tuning in to this update on Kotec for the last year. We recently, as you may have seen, released an update to the market, but I'm very happy to talk you through that today and also to answer any questions that you might have.

1:00 Starting at a very high level, though, I think it's important to reiterate that the COTEX strategy, which is to focus on disruptive green technologies to create more commodity extraction, continues to be more and more valid. The world is not going to be able to generate the commodities that it needs to get to the global targets that have been declared. That's becoming increasingly apparent. There isn't enough development, there's enough financing for development, and other routes need to be urgently considered in order to get to where we need to be. And one of those routes is definitely going to be using technology to make better use of what we've already got, to recycle, to make our mines more efficient, to make the commodities that have already been mined last longer. And that's exactly the sweet spot that Kotech intended to occupy when it was set up around a year ago and that we are claiming for ourselves. So I'm super excited about the path we're on. I think it's definitely the right one.

2:22 And in the last year, we've made enormous strides from this company being a shell company. A year ago, we have got our full listing back. We've raised capital. We've strengthened the board immeasurably with some very high profile members who signify the ambition that Kotech has. And of course, we've made a number of exciting investments which have grown quite quickly in value and allowed us to declare a profit already in Q3 and hopefully with more to come in the coming months. So a lot has been achieved, but there's still a lot to be done.

3:10 And I think we're well set to continue to execute on this path. Just turning to the team and the board, I mean, the board has a number of industry veterans who are extremely well-versed in technology globally. We were delighted to most recently and appoint Sharon Fay to the board, who was the CIO of Lions Bernstein, which is a very large fund management entity that's global, but focused on North America. And we also announced that John McGar who had previously headed Rio Ventures is helping us on a technical front. And those 2 individuals complement the existing bench led by Lucio Genovese, who used to run Glencore's copper business, Tom Albanese, who was the CEO of Rio Tinto, John Conlon, who's a seasoned mining entrepreneur and investor, Bram Yonker, who's now stepped down to become focused purely on finance, but who's also got a lot of experience in the mining space, and Marga Nordi, who had previously run in her career the mining investments for

4:42 the Canadian pension plan. So it's a heavyweight team, which signifies the ambition of the business and one that we are starting to execute. We were also very delighted to welcome John Singleton onto the operating side of the business. The executive at the beginning of this year, he brings a wealth of experience to us with very impressive students at Anglo-American, at Rio Tinto, at Sentiment. And I think he will allow us to have much greater bandwidth to both make new investments and continue to develop the ones that are already on the books, ably supported by Eugene Hogan, who runs the business from a financial accounting perspective very much day to day.

5:40 So perhaps I should talk a little bit now about the investments we have made and why we're so excited about them. We've made so far 3 investments, and I'm pleased to say, given that we are investing large amounts of our own capital here, that we've thus far avoided any mishaps. Our due diligence process is working well, and the investments we've made have increased in value and have enormous potential to continue to do so. The first investment we made was in the technology called binding solutions, which uniquely can pelletize the materials needed for the iron that's needed for green steel at ambient room temperatures, rather than at the 1200 degrees, which traditional induration pellets have required.

6:35 This means, in fact, that if binding solutions technology was rolled out globally, this technology alone could reduce global carbon emissions by 1% because induration pellets represent around 15% of the carbon emissions from steelmaking, and steelmaking is about 8% of world global carbon emissions. So it has enormous potential, and we think that the excitement that's being shown by the global iron and steel companies is very much justified. The company grew its revenues significantly last year. They also took in an investment from Mitsubishi, which is a great vindication of the model.

7:27 And that complimented the investment that they'd already received from Champion Iron Ore. And they continue to get parties who want to invest in the business at much higher valuations. And we hope within the next quarter, we will see one of these come home to roost, which would provide an opportunity for a further uplift on our investment. We in fact invested at 75 million. Mitsui already invested at 130 million, but the current indications are that the market value of the business is considerably in excess of that. And I just spoke to the CEO of Binding Solutions about an hour ago, and he was very excited about the progress they continue to make in developing IP and understanding of how to make these pallets, how pretty they can cure them, the strength that they're getting.

8:29 And their pipeline has really grown very significantly over the past 12 months. So we are confident that over time this could become a several hundred million dollar business. And what's also interesting for Codec is that we have the right to apply the technology to waste opportunities. Because 1 application of the pelletizing technology is to recycle iron or waste, steel waste, and metallic waste dumps. And we have now, after spending a couple of months really looking for interesting opportunities, We have 2 which we are progressing and if any one of them comes to fruition that alone should create effectively a cheap mini-mine which has the value for Kotec of many multiples of our investment cost.

9:37 So that is going well. And then as you, I'm sure know, the Kotech model is not only to identify these revolutionary technologies, invest in them cheaply, and help them scale and develop. But it's also to then use those technologies to acquire stakes in commodity-rich assets, which aren't properly valued by the market. Examples of those would be marginal mines, mines that aren't care and maintenance, mines that are restarting, and of course, waste dumps, which in many instances are seen as environmental liabilities. And our philosophy is to take those technologies, apply them to these assets in a way which transforms the operating profitability of those assets, transforms their cost profile and own those assets so that our shareholders ultimately will end up with a number of valuable operating assets. So the trajectory we are pursuing is to start with technology in the same way that many of the Silicon Valley businesses did, but ultimately to become a significant asset rich business, recycling dumps and operating commodity extraction businesses,

11:08 but in a way which deploys the technology in a much more efficient method and allows them to be much more profitable. What's very gratifying so far is that the technologies that we're investing in have a commonality in that they use much less heat, they use much less water. They are much cheaper than traditional ways of doing things. In the case of finding solutions to create a pelletizer for around 1 million tons a year is probably 10 to 20 percent of the existing way of doing things. And importantly, they're all modular. So they can be scaled in a much more flexible fashion. And this I think is a indication of the way in which the commodity extraction sector is gonna change and allows new entrants like ourselves to start producing products, start moving to income without the huge investments which were required historically.

12:19 So with the assets, we will see how we progress these opportunities with BSL, but with any one of them, they would start to generate income for our shareholders. And we think that that's something which will occur much more rapidly than you would find from a traditional mining business. An example, therefore, of the way in which we plan to apply technology to assets is our second investment, which was Magine, mining and iron ore processing business in the Midwest and Minnesota, which had had hundreds of millions of dollars spent on it, but funded that largely with debt and only had 1 customer they were aligned on. And one time, a couple of years ago, the annual price fell and their customer defaulted and they went into receivership. And we picked this up at a low valuation.

13:20 Your company, Kotec, owns around 18% of the business. And we are in the process of seeking to restart it and also to apply the binding solutions pelletizing technology to the Magine operations in due course. Magine has waste tailings of around 200 million tons. Currently, they also have around 1 billion tons of iron or in the ground, which they've uncovered, but they haven't mined yet. And we've been testing the mag iron metals with new processing technologies, which have had a great result.

14:11 And as such, we're very excited that this will really create something which will generate multiples of the current market cap of Kotex for our shareholders. We've already brought in one of the world's major trading houses who gave us some capital to develop the business at a $30 million valuation when their convertible is converted. But current indications are that the valuation of the business is considerably higher than that. And we would hope to have some further news on valuation milestones in the next 3 months or so, which could be a catalyst for renewed interest in undervaluation of Kotech.

15:04 So that I think will be a great demonstration of the Kotech model and the way in which we intend to apply technology to assets. And the third investment we've made is equally exciting, also in the recycling space. It's the Makango Magneto technology, which can take used magnets, extract rare earths from them, and therefore generate a new stream of rare earths. And given the dependence and security issues of the West on Chinese rare earths, this is extremely important. The UK government has already funded and has opened a power plant using this technology in England.

15:54 The EU government is now building a much bigger plant, which we hope will open next year. And Kotec has the right to take this technology on a co-earning basis with the shareholders of Magneto Technology to the US and North America. And we think there will be a very large market for that. One of the things that we plan to really focus on progressing this year is how to do that, where to locate the plants, but the margins of those plants are very attractive. So the NPV is multiples of the cost. And we think this will be of major interest and strategic import to the US.

16:46 But we're not sitting on our laurels. We are also looking at new opportunities. There's a great pipeline. We have looked so far at over 200 technologies. We've only made these 3 investments, But we have term sheets out with some more. Focusing on areas like better leaching of copper stockpiles, creating greener ways of developing cement and concrete, and other similar exciting opportunities, which we think have enormous upside, have asset applications, and will make a difference to the world's carbon footprint.

17:36 So we are absolutely focused on the task at hand. We're conscious that the market in our stock hasn't really reacted to these developments. And that is part of the reason whilst in recent fundraisers, myself and my fellow directors have put up considerable amounts of capital because we see the undervaluation that's developing for Cotech. But one of the other things that we have done is we are moving rapidly to get an OTC share price or share listing. And we hope that that will open the Cotech story up to a larger market.

18:26 So that's a brief summary of where we've gotten to on your behalf over the past year. We've done a lot, but there's still a lot to be done. And we will, of course, also be announcing our full year results quite shortly within the next couple of weeks, hopefully. With that, I'll hand back to you Cam to see what the Q&A situation might be. Yeah, absolutely, Julian. Thanks for the great overview. And just as a reminder to everyone in the audience, if you do wanna ask Julian any questions, please feel free to submit those in the Q&A chat on the right hand side of your screen at any time. To get started, Julian, we actually did get an email coming in earlier that I'll go through now just so that we don't miss it. The question is, is there an opportunity to buy back in at a later date for the international zeolite deal?

19:20 Well, yes, I think there should be. I mean, international zeolite is a situation we had looked at in great detail. We were excited about the opportunity to enhance fertilizers and enhancing the efficacy of various commodities and materials is something which we are very interested in and another theme which we're interested in pursuing in a way to use the world's commodities better. But we ran out of time with respect to the due diligence process over there. So we continue to monitor the situation carefully. We have an interest, a small interest in the company on an ongoing basis.

20:09 And absolutely, it continues to be on our radar. All right, fair enough. We have A question from Ron in the audience. He's wondering what your current shareholder breakdown is and specifically what percent is institutional versus retail? Well, I think the shareholder breakdown continues to be heavily biased towards retail. We have a couple of small holdings by institutions which hopefully will grow. We have enormous interest from institutions, But the institutions are waiting for us to scale in terms of market cap and liquidity before they are willing to come on the register in a major way. So we continue to raise capital. We have enormous interest also from strategic investors.

21:04 You know, we're talking a lot to Japanese trading houses, sovereign wealth fund. I think people are pretty excited and interested in what we're doing. But the register continues to be dominated by the board. So the board members represent probably around 60% of the shares currently. And Then retail is probably another 30% and possibly 10% would be more institutional. It's certainly an area we want to grow though. All right, fair enough. Could you explain Makengo's green process to recycle magnets? I'm not a very technical expert. I know that it involves hydrogen.

21:52 I know it's cleaner than alternatives. But I think that's something we can provide further explanation on outside this forum. Fair enough, absolutely. Dan in the audience is wondering if you're looking at any technologies for lithium extraction. We have looked at a number, but the lithium space continues to be, in our view, very crowded. There are lots of competing technologies. The technologies which we tend to focus on tend to be unique. They are differentiated. You know, there are 10 different direct lithium extraction technologies we've seen. And it's not clear which one's going to be the winner. So, whilst you have a chance of doing extremely well, the likelihood is that you'll probably end up losing money over the longer term.

22:52 So we tend to really look at things which are less crowded, which are less popular at the moment, and where we can make an investment at a good valuation. Lithium is a bit on fire at the moment and therefore something that we are stepping away from until there's a better opportunity. All right, fair enough, absolutely. There's a question about if investors can be expecting any more news releases this quarter and as well for that matter, just upcoming 0.25. Well, as I mentioned, there are a number of catalysts we see, obviously we're gonna be announcing our results soon but also the news on the next round of fundings from both investors in planning solutions and in Magneto, I think will be very interesting for the shares and our share price.

23:57 And also, hopefully we'll make another investment within the next quarter and any progress we make on the rolling out of the Magneta technology I think will be important and you should expect some announcements on that probably in March. All right, good things to look forward to. Another question, very general, and you've touched on this today, but maybe some reiteration, maybe go by the big points. How do you see the market evolving? Well, the market, I mean, for us, I think we're ahead of the pack.

24:46 I think there's less competition than there's definitely gonna be, but there's certainly interest increasing in technology. It's becoming more mainstream. And I think the sort of commodity technology space is, as someone mentioned to me where FinTech was 20 years ago. So we are expecting real growth, real competition, but for the moment, I think we have a headstart of a couple of years on others. So We're not being complacent, but we're in a good place. It's not a bad place to be. Well, listen, Julian, that looks like all the Q&A we received for today. So I wanna thank you. And of course, I wanna thank everyone in the audience, especially those who participated. Before we wrap up, I wanna just pass things back to you for any closing remarks you might have.

25:36 I mean, I think I've said it already. I think we're onto something here. The individual investments each have enormous potential. They could each IPO at very high valuations, and I think that will happen. So the company is significantly undervalued in our view. I've personally increased my stake quite considerably over the last couple of months and will continue to do so. And we're looking forward to another exciting year of executing on our vision. You