Forgent (LSE:FORG) — Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the FORGENT PLC investor presentation. Questions are encouraged. They could be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish our responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful.

0:31 And I would now like to hand you over to CEO, James Parsons. James, good afternoon, sir. Thank you, Jake, and, good afternoon, everyone, and welcome. As Jake said, this is James Parsons, chief executive officer. Thank you for joining us. Now many of you will know the company from its previous life as EQUTEC. Others, of course, may be hearing the story for the first time. Either way, today is about what comes next. So let me start by briefly setting out clearly our investment case. FORGENT PLC is a decisive relaunch of your company driven by two powerful and complementary value engines. First, near term copper and gold exploration assets in Western Australia, where I expect us to be drilling within six months.

1:18 Second, a proven waste to value gasification platform with more than a decade of operating history and revenue. That combination is unusual on AIM. Now our strategy here is simple. Exploration provides near term value inflection points and news flow. Gasification builds long term recurring revenues. So whether you're here for the mining upside or because you followed the company through its gasification history, the core idea of this combined portfolio is value creation through two business lines with both complementary risk profiles and complementary monetization timelines. Joining me today are Jerry Madden, our CFO and company secretary, and Ed Mead, our lead geologist. I'll ask them to introduce themselves shortly. But before I hand over to them, let me make the most important introduction, and that is to our first gold copper mining asset, Greenrock.

2:12 This is our primary near term catalyst. First of all, let me just remind you. Greenrock sits in the proven mining district of Western Australia, one of the world's leading mining jurisdictions, and that gives us a highly established operating environment, strong infrastructure, access to skilled local workforce, and a clear supportive regulatory framework. Now what attracted us to Greenrock specifically is simple. Highly prospective geology, multiple high grade surface expressions, clear exploration upside, and a defined pathway to near term drilling. Importantly, what Greenrock has lacked to date is modern systematic drilling, and that's exactly what we're about to deliver. Our plan here is straightforward. Four months to define drill ready targets, six months to have the drill bit turning. And more importantly, we're underway already. Our team is mobilizing to site shortly for the maiden visit, and we'll be sharing updated images so you can see for yourself the visible copper mineralization.

3:13 So the takeaways are this is an asset with real substance, clear upside, and near term activity, and we're moving at pace here. Now alongside Greenrock, I also want to briefly touch on Peak Hills. This is a second project under option, and it represents a very different kind of opportunity for us. Unlike Green Rock, Peak Hills comes with a substantial body of historical work, including drilling and multiple high grade results. So whilst Green Rock is our near term catalyst, Peak Hills is really offering longer term scale and upside. We'll share more on that in the coming weeks. Although I can't say much about it yet beyond these two assets, we already have several other opportunities firmly in our crosshairs. We're building a pipeline here, not just a single project.

3:58 And let's not forget the global backdrop. Recent volatility linked to Middle East tensions does not change the bigger picture. Gold and copper markets remain very strong and structurally strengthening.

4:12 Now I also wanna be absolutely clear. Our conviction in gasification is as strong as ever. Our technology platform and the revenue it generates is what differentiates FORGENT from a typical AIM junior explorer. Our technology is not theoretical. It's been operating commercially for more than a decade with significant independently audited runtime. We have revenue, and we have huge potential. And let me just mention the strategic context here. Waste volumes are rising globally, and converting waste into syngas and downstream fuels will inevitably become an increasingly important part of our energy transition. Our immediate focus in this part of the business is simple, delivery, delivery, and delivery. We're prioritizing the commissioning of successful reference plants at Greece and Norfolk in California.

5:01 Every customer, every potential customer, and every investor wants to see a recent example of our technology operating at commercial scale, and frankly, so do I. And the opportunities in gasification once we have a reference plant are significant, particularly in policy driven synthetic fuel markets such as sustained by aviation fuel. It's also worth mentioning we see strong potential in energy import dependent regions such as Hawaii. Here, the limited landfill space and the reliance on imported fuels really creates compelling economic case for our technology. So let me recap. It's straightforward. Exploration gives us regular short cycle catalysts and real activity at the drill bit. At the same time, gasification generates revenue through engineering services and technology licensing.

5:50 And we're staying disciplined here on cost. We've already reduced our cost base versus twenty four full year by more than 50%. So that's the foundation of the FORGENT story. With that said, let me now introduce my colleagues. Gerry, over to you for a short introduction, please, and an update on financial matters, perhaps including the recent debt restructuring and cost base reduction. Thank you, James. Good afternoon, everyone. My name is Gerry Madden. And as James said, I'm the chief financial officer and company secretary of FORGENT PLC. I'm a chartered director and chartered accountant, and I have over 20 experience in capital markets and the energy sector. What I would like briefly to do is highlight two finance led initiatives that we as management have targeted and executed during the latter half of twenty twenty five and the first quarter of twenty twenty six.

6:47 Firstly, as James said, a cost optimize optimization program, and secondly, a debt restructuring program.

6:55 The cost optimization program involves streamlining operations across Europe, seeking reductions in rent and other establishment expenses, and in addition, the significant rationalization of the existing workforce. This has now been completed and has led to an annualized reduction of 53% in group recurring operating costs compared to the full financial year to December 2024.

7:24 These actions have enabled the company to transition to a significantly leaner and more scalable operating structure and supports targeted capital allocation towards near term exploration activities and the delivery of key gasification projects. On the debt restructuring side, the objective here was to materially deleverage the company and remove any near term refinancing risk. With that in mind, management entered into negotiation with its secured lenders regarding existing secured indebtedness of approximately 5,700,000 sterling. Management successfully concluded negotiations during the first quarter and the company entered into binding agreements, the result of which FORGENT PLC now retains 1,900,000 sterling of secured long dated zero coupon debt and an unsecured debt of 1,900,000 sterling in its Spanish subsidiary Equitec Iberia.

8:27 In summary, both of these successfully executed programs provide a strong foundation for the execution of FORGENT's strategy as set out by James. I will now hand back to you, James. Thanks, Jerry. And now, Ed, if I could also ask you please just to introduce yourself and provide some color and context on our new mining assets and and perhaps your perspective on the opportunity there. Yeah. Sure. Thanks, James. Well, I suppose it's good evening where I am in Perth, Western Australia. I'm based in Perth. The projects are about ten hours north of where I sit at the moment. I'm a geologist with about thirty years experience in the resource sector. Haven't also worked in oil and gas. I've worked in in most commodities, copper, gold.

9:17 So I have a lot of experience in the assets that that FORGENT has picked up. The Green Rock project is called Green Rocks mainly because the main copper mineral is malachite, which is green. And, sampling of that along with, probably some other, copper minerals is, you know, given quite quite good, recoveries, by assay with copper grades up to 46.7, which are very, very good grades. Gold has been up to 5.31, which are grams per ton gold. These results are part of many that have been taken from structures that have got east west from a major crustal suture.

10:06 And our plan at the moment is with the guys on-site, all the the field crew, to validate existing results, to look at the geological model that may be along with the primary mineralization. Also looking at mineralization that may be within some of the segments that sit above the top. A similar style for this is Carlin style, which is well known in the Nevada area. But we're primarily looking at mineralization and outcrops at surface, and our plan is to then be able to come in and do subsurface investigation using a drill rig initially along the the structures to a fairly shallow depth, maybe only, you know, 50 to 60 meters as as first phase.

10:57 As James has said, you know, this is an early stage project, but there's a lot of news flow and a lot of upside. And the other project that FORGENT has an option over, PCOOL, is a very well known gold producing area. A lot of historic work looking for for copper. We will continue to look for copper at PECO once the option is consummated, but we will also be strongly focusing on gold with numerous gold plants within the the peak hole area. So both assets, I think, are gonna provide some decent news flow through the year, and we've got a a good a good strategy and a team in place to carry work out. Over to you, James.

11:43 Thank you, Ed. And, Jake, let me just hand back to you to facilitate the, q and a section, if that's okay.

11:51 Absolutely, guys, and thank you very much for the update this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. Just while the company take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can all be accessed via your investor dashboards. Guys, you can see that we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But at this point, if I may just hand back to you to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you. Thanks, Jake. So I think the first question here is around, Italy. Just a bit of an update on on what's happening there, Jerry. Can I ask you to handle that one? Yeah. Sure. I think the question is, are you able to reveal what interest Equidex still has in the Italia MDC?

12:45 Just to give slight background and then answer the question, itself, Management reached agreement with Queensland Limited, the local shareholder in the Italia MDC, to provide the additional capital that was required to get the plant to an operating status. And the context here was a decision by the company not to contribute any further scarce capital to the project. The Italian MDC to Queenstone is finalizing a restructuring agreement with the local Italian bank that includes a payment moratorium until the 06/03/2026. Now Queensland's investment to finance the plant's recommissioning will position it as a majority shareholder in the MDC. It'll give its senior creditor status among shareholders and the lead role in completing the Galena plant.

13:34 As a result, the company's equity interest is significantly reduced with its shareholder loan subordinated to those of Queenstone. The equity interest now stands at around 27%. And as previously reported, the company has significantly impaired the carrying value of its equity in the Italian MDC. However, the company will continue to back Queensland's leadership in bringing the Galena plant to completion. Thank you, James.

14:03 Thank you for that, Jerry. Just looking at the questions here. There's one on Hawaii just asking for confirmation if we still expect to to operate there. As I sort of mentioned at the outset, I mean, Hawaii very much a part of our strategic focus. This is for the gasification business, of course. You know, Hawaii is a great example of exactly the type of market where our technology just makes the the most economic sense. High reliance on imported fuels, limited landfill capability, and a supportive policy for low carbon solutions. So whilst our immediate priority is very much on getting Greece and Norfolk plants up and running through through back end of commissioning and and acceptance testing,

14:43 you know, Hawaii is is probably the largest contributor to to the gasification revenue in the next twelve to twenty four months. Well, that's our expectation and and hope. So near term focus on execution firmly and then turning our heads to to the next tranche of opportunities. But thank you for these questions. There's a question here. Are we planning regular news flow and PR? And and, you know, here we are today starting really a sequence of of events and presentations, which will begin us to ramp up that that news flow and and help people understand what the proposition is here. Another question coming in saying, you know, why shouldn't investor consider taking a position in FORGENT? And I I think the answer for that is is pretty clear and links to most of the themes we presented today. Let me just recap. It's exploration upside near term. It's coming from historic lows. You've got those macro tailwinds around copper and gold at full force. You've got the proven technology platform in the background with a solid revenue stream, and you've got the strategic reset complete. So the simplified capital structure, no near term refinancing risk, cost base reset to 21 levels, and a refreshed leadership team with execution capability.

15:58 So I think that's how we are sort of pitching this story. That's why we see this as a pretty compelling time to get involved. There's a lot of questions on what do you think of the market cap, what's the expectation for the market cap. You know, we really aren't allowed to to offer a sort of a numeric view on those things. But, obviously, we see value at this point, and and and, you know, there's a lot coming down the tracks, which I I think is is important. Ed, there's a question here for you, which maybe I could just ask you to handle, which goes along the lines of have you seen, you know, any learnings from other companies in the region which you'd apply to what FORGENT's doing here? I think it's more that you there is a the BLACK CAT, probably the the company that doing most of the work in the area. They they own Paulson's operating gold mine, which is 35 kilometers to the north. They've also got a project, Mount Clement, which I've done work on previously, which is a a copper gold project.

17:04 I I think the thing with the pro with with Greenrock is with the with the mineralization sitting sticking out of surface, really, as James highlighted before, the the the view is to go in and start drilling sooner rather than later and to investigate this. And then that leads into, you know, probably six to eight week turnaround time for assays. So any work program that is completed in submission, we expect the assays within probably two months. Over to you, James. Yeah. Thanks. Thanks, Ed. There's a question here on on revenue. When are we gonna see significant revenue? I mean, just to recap here, you know, the the sort of combination of this portfolio is very much having the gasification business as as the the revenue generator, the cash cow. That, you know, is gonna take us to, first of all, we think, and that's our focus to really deliver one or two reference plants, Greece and and Norfolk being our chosen priorities, and then to to rebuild that business and and use the pipeline we have, which is a strong pipeline, including Simon Petrie in Hawaii.

18:12 And we're excited about that. And so we think there's a there's a trajectory here for that revenue, which increases materially over the next eighteen months, and we think that's super exciting. Meanwhile, that in turn, you know, enables us to to get on with the the drilling this summer at, you know, in Australia. And we think those, in combination, make for a sort of sustained period of of news flow and a sis sequence of rerating triggers. So that's sort of the the thinking there. We do appreciate these questions. Just scanning for for more here. I think there's there's a question here sort of talking about, look, the history and and, you know, what assurances can you give that that will see real value under the new management, which I I just wanna share that just to show we're not ducking the difficult questions here. It's it's a fair question. Look. I agree there's a lot of history in this business. It's no secret that execution and cost control haven't always been where they needed to be. What we've done here is address that head on. We've materially reduced the cost base.

19:12 We've simplified the organization and reset the business really around disciplined delivery and a and a sort of enlarged portfolio. So, you know, the focus now is is not at all on looking back, but really demonstrating consistent delivery and rebuilding credibility through results. So that's our focus at the moment. And then there's a further question here on mines are notoriously expensive to set up. What's the sort of situation broadly on the funding? You know, we we can't be too specific on that, but I I think there's a failed and tried and tested junior AIM Explorer model here, which we're looking to replicate, which is to go through the early exploration phase, which is capital light by nature and and cheap. I mean, the the total drilling, the our estimate of drilling costs in in in green rocks is, like, less than $200,000.

20:04 So, you know, it it's cheap, but the upside potential, if it works, is huge. And that's the sweet spot for for us, for our balance sheet, for our funding capability. Would we see ourselves taking these assets long term into production? That's a decision we'll have to take later, but as the question author rightly says that can get quite capital intensive. Know, I think at the moment, we're very much in that sweet spot. Early stage exploration, huge upside if it works, and limited capital required to get us there. And I think other than a few sort of questions which we're gonna struggle to answer within the the AIM rules, I think we we more or less, Jake, have have covered off everything there that that's that that's available to to respond to.

20:51 Perfect, guys. And that's great. Thank you very much indeed for addressing those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But James, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great. Yeah. Well well, thank you. It's certainly been great to see such a strong turnout for our first investor event, you know, many more subscribers than, frankly, we expected, so that's super news. So thank you all for your time and continued support. We plan to run these sessions quarterly to give you regular touch points with management and a direct line for your questions. So watch this space more to come. We know credibility comes from delivery, and that's very much our focus now. So we look forward to updating you again soon.

21:42 Perfect, James. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback? On behalf of the management team of FORGENT PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.