No I agree with you, doesn't make sense to me either; on multiple points; might be easier to just give up.
The original investment was a "Strategic Placement Agreement" of A$106 million and Cooperational Agreement, this was announced 29 May and some 3 months later this was changed to Equity Investment Agreement which already had the approval after the resolution was passed by the Ganfeng Board on the 8th September.
~ the reasoning for the change was (quote) " is that regulatory approvals in China should be easier with a direct project investment."
It is no secret that approvals coming out of China do not just happen overnight, so under whose advice did the Company take to change the investment structure?
+ At what point did the Company decide not to progress with the strategic placement and shift to an equity investment?
+ Did the strategic placement agreement actually get rejected?
+ When the decision was made, why wasn't the cancellation of the proposed issue of shares made at that particular time and not held back for when the equity investment was announced?
** Point is, 3 months is a short time frame for approvals coming from China to be put to a resolution of the sitting board (strategic placement) to then submit the necessary paperwork to have the board resit to vote on the resolution for the equity investment.
I also struggle as to why we would need cash? The US$137.2 million (A$210 million) of equity will be solely funded by Ganfeng for Capital costs, that equates to A$94.2 million that Leo Lithium do not have to contribute?
-- ie: Ganfeng (55%) = A$115.5 million, Leo (45%) = A$ 94.2 million = total A$210 million
* Leo Lithium will be responsible for 45% of costs post the sole funded period.
-- -- or not that simple? and/or I need more wine .. .. ..
The announcement on the Hong Kong Stock Exchange, 18th January 2024 - Proposed Acquisition
In the Special Notice;
Point 2 ~ The transaction is subject to approval by various competent authorities, and subject to approval by and filing with relevant authorities of the PRC and Mali, which involves the risk of failing to obtain approval.
The announcement on the Hong Kong Stock Exchange, 6th September 2023 - Equity Investment
In the Special Notice:
Point 2 ~ The transaction is subject to verification and approval by and filing with relevant competent authorities of the PRC, and subject to approval by the board of director of Leo Lithium, and which involves the risk of failing to obtain approval.
This has me somewhat perplexed as to why the proposed transaction requires the approval of the Malian Government; whereas the previous transaction didn't?
OVERVIEW OF THE TRANSACTION
1. At the 72nd meeting of the fifth session of the board of directors of Ganfeng Lithium Group Co., Ltd. (hereinafter referred to as the "Company") held on 15 January 2024, the Resolution in relation to the acquisition of certain equity interest in Mali Lithium, involving mining rights investment was considered and passed, it was agreed that GFL International Co., Limited, the wholly-owned subsidiary of the Company (hereinafter referred to as "GFL International") propose to acquire no more than 5% equity interest in Mali Lithium held be Leo Lithium Limited (hereinafter referred to as the "Leo Lithium") with its self-owned funds of no more than USD65 million. The management of the Company was authorised to exercise the full power to handle all matters relating to the transaction.
Leo Lithium to date haven't withheld any price sensitive, material changes or other information which is subject to continuous disclosure obligations, which also includes time in suspension.
So why didn't the Company release an announcement today, to coincide with the JV partner Ganfeng's release on the Hong Kong Stock Exchange?
~ The Resolution was only approved by the Ganfeng board 18th January and was for the proposed acquisition .. .. ..
~ Are Ganfeng / Leo Lithium still in negotiations on the proposed acquisition? and being incomplete nothing to announce.
~ Has Ganfeng actually presented Leo Lithium with the proposal?
The proposal is to acquire no more than 5% equity interest; and for no more than US$65 million.
~ given the narratives of these threads predict/suggest that selling the 5% now when it could be worth multiple of that in a couple of years?
WHO initiated this acquisition / sale?
The Company cannot be forced to sell any more of the asset.
But to help Ganfeng out, I suggest they can have 1% (which is no more than 5%) for their US$65 million or conversely acquire 5% of the Mali Government portion of their "optional" 10% and Ganfeng can pay the royalties over the 5% they acquire, win/win/win all round.
cheers
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