George Frangeskides, Exec-Chair at Alba Mineral Resources, discusses grades at the Clogau Gold Mine. Watch the full video here.
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Brilliant news, bizarre the SP don’t jump materially
First, this is more political than people think it is.
Europe needs all the resources it has to come to production to meet its 80% self sufficiency. Infinity resource in Spain is close to being frozen; while there are now question marks regarding Savannah’s resource in Portugal for which their partner who was expected to offer an offtake decided to let an exclusive agreement lapse.
So what’s left in terms of resources in Europe now?
Then, Germany has a lithium resource - Zinnwald. It also has Vulcan (which is way behind and is more questionable geothermal).
Why would Germany want to shelve this lithium resource and instead rely on on Czech lithium when it’s own resource is effectively attached to the Czech resource?
My view is that a merger between both resources is something the EU will push for. Remember EMH is only 49% shareholder of Cinovec, with Cez 51% - Cez being 70% owned by Czech govt. So this is very political indeed.
And I do think this transaction will in any case be imposed on EMH whether it wants it or not - obviously my view is that it wants it since not needing something, doesn’t mean there isn’t big merger arbitrage; and letting this opportunity go buy and not acting would be against EMh shareholder interest (I am EMH shareholder and I am very excited about this project too).
You buy something that trades at 1/5th your value, that is immediately value accretive to the buyer. The throw synergies and we are now talking very significant accretion to EMH shareholders.
If I were EMH (or CEZ) what exactly would be my motivation to buy shares from Ganfeng? Of course there are synergies if EMH and ZNWD merged, of course Li demand is expected to increase. However, my understanding is that EMH doesn't really need ZNWD for anything - larger part of the resource is on CZ side, tax incentives and dotations will also be on CZ side, there are no Chinese involved on the CZ side, gigafactory on CZ side as well.
Thanks for the info about Solarworld being defunct, I haven't studies that but this situation definitely doesn't sound bad.
For those concerned about cost for obtaining this exploration license.
They pay ‘small’ fee to mining authority, but there is no acquisition cost per se.
It’s hugely value accretive for company therefore - pay almost nothing and get a resource ufo grade of 35-50%. WAKE UP!
So let me recap the investment thesis here:
1) We are the next door neighbour of EMH, sharing the same Cinovec deposit on German side of border - yet we trade at 1/5th the resource multiple of EMH (and that’s before today’s announcement); assuming we buyback Solarworld share - a defunct company. This Solarworld acquisition could land anyday and takes us to 100% ownership of the asset vs EMH owning 49% of theirs. ZNWD shares will double on that announcement.
2) We are 44% owned by Bacanora, who received a takeover offer from Chinese giant Ganfeng. My view is Ganfeng will sell their shares to EMH. We are an obvious takeover candidate.
3) A takeover by EMH, which I am shareholder of, would be up to 70% value accretive to EMH shareholders before any synergies.
4) BIG synergies in consolidating ZNWD and EMH resource - saving on capex and growing IRR.
5) VW a German company is about to decide to sign an agreement for a battery plant 50km away from Cinovec deposit - with Cinovec offtake.
6) We just got an expl license which raises Li resource base by almost 50% at ZNWD. This will dismantle the arguments by those bearish on prospects of takeover on basis of smaller resource.
7) Hydroxide p rose to $14.5k, meaning c40% higher NPVs to Li co resources yet stock not budging.
8) shares not reacting to all this is completely irrational, and makes this a no brainer.
Clearly no one looks at this stock anymore - completely
under the radar.
BUY BUY BUY
New explor license includes JORC Inferred resource of 25Mt @ 0.45% Li2O. Stock totally missing significance of this…
ADDS a SIGNIFICANT c50% to ZNWD’s current LCE resource base!
What’s wrong with this market?