Think of them as a big vulture looming over a dying animal.
This is the general context in which Mineral Resources (ASX:MIN) is buying Poseidon Nickel’s (ASX:POS) WA-based nickel concentrator plant to convert it into a “lithium processing hub.”
While licensed to run into the early 2040’s, nickel sentiment has single handedly pushed down POS shares thanks to Indonesian supply dominance in the 2020’s.
Worth 13c at one point in the pandemic, Poseidon is now a penny stock on the ASX.
It opened on Monday morning at 0.8cps with 1 year returns down -77% and YTD returns down -33% The stock now has a market cap of $29M on the back of 3.7B issued shares.
Mineral Resources smelt the carrion and has now made the move to snatch up an entire concentrator plant for relatively low cost.
What is Ellison’s brainchild up to?: it wants a lithium hub in the Goldfields.
Poseidon’s Lake Johnston asset will be converted into one for Australia’s favourite battery metal with ore to be fed in from MinRes’s Bald Hill and Mt Marion plays.
Ultimately, the company wants fines – and it’s going to use Poseidon’s plant, currently designed to handle nickel, to do so.
For MinRes, the move is purely strategic. Lake Johnston has an airstrip, the right to extract groundwater, workshops, labs, and fitouts to host 200 workers.
MinRes is to pay a paltry $1M upfront; $6.5M when the sale is complete and another $7.5M in a year’s time.
MIN shares last at $65.91.