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One of the considerations for Ganfeng will be the number of juniors in the US and Canada and majors such as Rio in Argentina etc that are seeking offtake deals and funding. The pressure is on the OEM’s to declare their EV plans and secure their supplies. It’s a race to get the best contract deals done as soon as possible, before the price hikes again and throws their financial plans off track or someone’s else beats them to it. The battery makers will already know the product as the pilot plant has been producing test samples for the last few years so it’s quality assured even though it’s not been sold in volume into the market before now.
I think we’re well positioned to negotiate and get a good deal, after all it’s in both parties interests to move forward as quickly as possible.
Arbitrary figures Mike to illustrate the point, substitute it for £5 if you like and £150m for £2bn, obviously it would be dependant on whether it was backed by management too. The thought experiment illustrates how undervalued we are though.
@Jimb2 yeah, I personally think things are starting to happening behind the scenes, especially now they have the 90% of BCN. We are small change for them in any scenario conceivable. They are making record profits at these lithium prices.
@EV_Bull,
that will leave a window of opportunity for Ganfeng that's closing very soon and could make the next few days very interesting.
"But what would happen if they just delist?" - no idea what you mean, who delists?
"It’s more important for them to deal earlier than later with us" - Yes before they announce plans to scale up as they are making our JV more valuable by doing so.
"isn’t it better we let them sweat a little as the clock ticks up with the sp " up to a point yes, but the cash would be very helpful to fund our 49% stake in Amapa and our other assets.
But what would happen if they just delist? How will that affect us ?
So if I’m getting this , it’s more important for them to deal earlier than later with us …so in contrast isn’t it better we let them sweat a little as the clock ticks up with the sp ….
@Barksy1,
A welcome quandary that we may have to face in days or weeks ahead, the imagination can easily run wild but when we look at the lithium space!
As of today £200m seems unrealistic because why not offer say £1 per share for KDNC instead @Barksy/@Jimb2? It's not until we re-rate to our fair value that it no longer becomes a possibility. If it costs them £150m ish and they get everything incl EMH etc then why would they pay more than that?
I think a lot depends on our market cap being self fulfilling, we are far too cheap currently and a full buyout may look attractive to Ganfeng at our market cap, not out of the question given they have just done it with BCN. Let's see where the Amapa deal completion puts us.
If we were we already sat at £1+ per share then that wouldn't be on the table for them.
There are a few options for Ganfeng:
1) Do a deal with KDNC for the JV, unlikely they would pay much more than our market cap at the time (because a buyout would be cheaper), say £50m-£75m max (unless we re-rate to fair value beforehand).
2) Do a full buyout of KDNC £100-150m (unless we re-rate to fair value beforehand).
3) We come to some other arrangement with them e.g Toll Treaty or we need to fund our part of the JV. (assuming KDNC re-rates on the back of the news of the deal making it viable to raise the funds needed).
But Jimb IF we could afford to hold onto our bit wouldn't that also be mind blowing for the sp …being partnered with the Gorilla that is Ganfeng and being the only way into Sonora investment on Aims. I’d have thought we could just hold onto their coat tails and fly . I guess someone’s going to put me straight ;)
Worthwhile watching for the lth's on disruption in EV's and brings together a lot of what Tony Seba has been saying for many years with a fresh look - plenty of reference to him - 36 minutes or so long.
https://www.youtube.com/watch?v=M2FEGCUk2-c&t=37s
Keep in mind as you watch the progress in EV's and the increase in lithium prices since Ganfeng made the offer for Sonora, and we stand in the way for them to have 100% of a globally significant resource heading into a period of historic proportion in a technology leap.
I don't believe the negotiations will be drawn out, Gangfeng will need all the lithium they can get their hands on to meet the demand for a very long time to come.
Exponential growth - but many are still thinking in linear terms!
I'm beginning to think £200m is very cheap for our JV's