"So just on that simple basis, say the JV produced 2 tonnes. It sold 1t to PLL at $900 and 1t on the spot market for $4,500.It has revenue of $5,400. Costs would be $1,000 (2 x $500/t).The JV has made a profit of $4,400 and that profit belongs to the EQUITY partners ($3,000 to SYA and $1,100 to PLL)"
I disagree with your reasoning:...The earnings (profits) of the venture all belong to SYA. PLL has a shareholding in SYA, therefore it has the same entitlement as any other shareholder in SYA, including you and I (assuming you are, in fact, a shareholder?). What PLL will get out of the JV will be proportional to its shareholding in SYA - PLUS any benefit of its agreement to purchase @ $900/tonne under the terms of the agreement which is an entitlement accruing to PLL only. There is only one entity running this venture, SYA (SYQ under SYA umbrella) PLL is a shareholder of SYA with a seat on the BOD.
SYA Price at posting:
23.8¢ Sentiment: Buy Disclosure: Held
(20min delay)