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The alternative to an offtaker getting more favourable pricing for providing funds in advance of delivery with a multi year deal is that their cash buys assets at the deal point in time, eg as Piedmont did. Atlantic have not ever mooted this possibility (which would obviously be dilutive to holders) afaict.
Whatever, getting this finance is paramount to project success. A massive risk eliminated.
Jlite it's not an upfront payment - it's a facility that ALL can draw down upon as and when needed like the existing PLL arrangement
Piedmont paying market price. At no point have they said 2nd offtaker gets any favourable terms such as cheaper product. It's unlikely when there are 6 competing and bidding for access to the supply in the final round of talks. Plenty of deals like this and most likely outcome is the offtaker pays the spot price like the majority do and like Piedmont is.
Bring on the news.
PD also to add to your list for potential SP movers:
-Assore 33p+ bid
-MiiF $28MILLION paid in
-ML to be ratified
-$70-100mil offtaker announcement
*EPA permit
*Resource upgrade
*Feldspar report
I know we don't know the formula that will be used but the price Piedmont will be paying should be near to market price if I understood the terms of their deal correctly
Thanks Gaias. That sums it up pretty well. Way better than my post!
My worry was how much of the value they have to give away to get the $75m-$100m up front cash they need to develop the mine and continue exploring. If they have to give away too much, then the majority of the first 3-5 years of profits are effectively used up to develop the mine. So decent profit wouldn't kick until year 4-6 depending on the deal.
Not long to wait now though, and with so many potential positive catalysts over the coming quarters, I am not letting any go.
JL
Any potential offtaker will get a discount for providing up front cash. Commod deals I've seen over the years ranged from around 1/4 off to 2/3rds dependent on many factors. Hopefully Atlantic achieve a small discount as it's not long to delivering.
Inevitable the early years bottom line will be hit compared to them getting unencumbered pricing. An example:
SC6 spot 1600, aic 800, deal size 100k/y over 5y, cash up front 60m.
Customer discount say 40% - ie for paying say 60m up front they get 100m off the spot over 5y. 20m/y ie pay 1400/t simplistically that will cut 1/4 off cash flow. That impact highly dependent on spot price. Many variations possible.
A deal should be on av good for valuation but a poor deal for Atlantic could be negative. They won't!!
Just out of interest if Atlantics financial commitments are met via offtake /Piedmont etc why will they not start making after production starts ..not sure on your take there Jlite
I agree. The offtake will be really interesting. In the last presentation, it was clear that only 30% of the output was up for grabs, leaving the final 20% unaccounted for. I assume the remaining 20% is MIIFs 19% share leaving 1% spare each month. Is that correct? If so, ALL are fully funded for the development but won't make any money for a little while after production commences. Which possibly explains some of the SP weakness.
JL
Perchance ?
What will move the SP, and mb prompt a bid, even, is the offtake agreement that we are expecting to provide the balance of capex funding needed.
Neil has been v bullish over this , painting a picture of ALL having several options.
When THAT news lands, we're off.
Potential SP movers:
-Assore 33p+ bid
-MiiF $28MILLION paid in
-ML to be ratified
-$70-100mil offtaker announcement
-Ghana listing complete
Don't wanna say it's a leak but basically there's plenty of news due this quarter that can cause sudden buying like we've had this week.
Finally??
Things to happen before project level company shares are finalised (i.e Barari DV): Piedmont fully pay their share of capital costs, MIIF (Ghana) buy in, Ghana takes their free carry.
Once above is completed, project ownership will be as follows:
Atlantic Lithium 40.5%
Piedmont Lithium 40.5%
Ghana (incl' MIIF) 19%
After Piedmont gets to 50%...... Is it Atlantic owns 45% of the projects (after 10% free carry split 5%) and Piedmont 45% of Ghana and 9.5% of Atlantic (is it just for this project or all other areas not yet drilled/studied)
Or Atlantic 90% of project and Piedmont a 50% shareholder in Atlantic
Option one at 45% post tax gives Atlantic circ £540m NPV at $1500 ave spod prices, so at current what maybe £375m NPV based on a Mcap of £125m??
I would guess for production.
Personally, here waiting for another bid.
Would I grab profits and sell? Rather depends on the terms of the bid. If a major mining company offered cash or shares I might consider the latter.
Whenever in suit, something important just around the corner!) I've noticed this trend. Looking forward to all the news
I went through the new presentation deck last night. Nothing really new but I thought it was really good. Very compelling case in my view, but I would say that! Lots of news flow coming up, any one of which could light a fire under the share price. It certainly needs it.
In my view, the listing, the ratification, and the MIIF investment are all intrinsically linked. As soon as one lands, it validates the others. I thought the same after the first MIIF investment but my timing was clearly wrong. Not sure when any of these will land, but once one does, the others should follow in quick succession. The main reason for thinking they are linked is that if only one doesn't happen the whole thing falls apart. Without the listing confirmed, we won't get ratification as that is a condition, without the ratification we won't get further investment from MIIF. Although the formal listing could actually happen later, but as long as they have the process confirmed, ratification should not be held up.
Then onto permits and financing which are also only a few months away!
I topped up recently, and am now maxxed out. Fingers crossed!
JL
Lol cheeky post🤣
Sairfect - 100% agree. Been watching this for a while and suggest the mm's are building stock for the Ghanaian listing.
Had a fill or kill buy order in all day yesterday for 19.4p which wasn't filled. Bought 59k this morning at 19.325, but there's very little movement on bid/offer.
Maybe both as not so much of a gamble for them, far better odds with these two factors
Investment I would think.
What do you guys think?