All in opinion as potential scenarios:
I hope to see this play out in any one of four scenarios which could all have upside for AGO investors:
* Scenario 1 - No vote wins. Lithium drilling successful. AGO splits into 2 entities and merges it's IO entity with MIN or another company and keeps the Lithium.
No vote wins. AGO retailers vote no, and so do some bigger holders as commodity markets strengthen and prices rise. AGO SP improves towards 6c-10c (2-3 bag) over the next 12 months as IO improves along with realised diversication profits and lithium drilling upside.
Mt Francisco drilling is promising
Pancho drilling is promising.
Why would AGOs SP go back to 1-2c when MINs offer was 3c? That's the new base from now on isn't it. In my eyes AGOs SP is only going up from here on, with or without MIN.
Let's assume future Lithium drilling is promising for AGO.....
If Lithium drilling is successful, AGO could then have the potential to split into two entities. AGO IO and AGO Lithium resources. Merge AGO IO to MIN? for Scrip of 4-5c (higher price?) without any AGO Lithium upside for MIN (No Mt Francisco and No Pancho) and just for IO resources including Ridley's high grade. AGO IO gets its MIN rail. MIN gets its AGO IO. AGO Shareholders reap rewards of holding a merged AGO OI / MIN entity in the Iron Ore space with lower costs.
AGO Lithium Resources (which shareholders could potentially still hold under such a scenario) reap rewards of potential Lithium upside and AGO keeps its existing PLS JV with potential opportunity to merge with PLS later. A double bonus for AGO holders in that scenario with enormous upside?
* Scenario 2 - Yes vote wins. AGO / MIN merge. Lithium drilling successful. MIN doubles eventually.
Yes vote wins. AGO retailers vote no, but lose on vote. Merge eventuates. We get MIN shares as per offer......
MINs shareprice will rise as:
Realisation of AGO merge benefits.
IO output increases.
Costs decrease.
Diversified income from AGO JVs improve profit bottom line.
Benefits of a merged entity leveraging off each others infrastructure and resources.
Let's assume future Lithium drilling is promising following the merge..
Mt Francisco drilling is promising.
Pancho drilling is promising.
Exploration upside with AGO tenements over time as the diversification strategy materialises further.
MIN SP could potentially double ($30 per share) over the next few years as upside is realised from the AGO merge and benefiting from its transport service. Which is equivalent to AGO 5-6c today.
Not bad either for some holders but no where near as sweet as scenarios 1, 3 and 4...
* Scenario 3 - After higher offer/s, Yes vote wins. AGO / MIN merge. Lithium drilling successful. MIN doubles.
Yes vote wins. Only after MIN raises it's offer after another offer presents itself with AGO shareholders receiving 5-7c+ scrip and we move on from all this and reap the benefits of AGO as a merged entity. Win win. Happy days for some holders...
* Scenario 4 - Bidding war for AGO as Lithium drilling results roll in making it really interesting.
Bidding war begins for Altas.
It first starts above MINs offer, then
as the bidding war drags on, AGO Lithium drilling results presents itself which is potentially promising. Bids come into AGO left right and centre as bidders want a piece of AGOs humble pie for cheap entry into Lithium.
Bidding war continues until settled.
AGO holders happy days....
Good luck all holders. Holding regardless of what eventuates. In opinion AGO is a diamond in the rough for investors, the commodity space will strengthen and so will world leading Aussie miners who have been forgotten for far too long while the tech pack fall from grace and euphoria. So the economic cycle continues.....
Commodity Fundamentals
In opinion:
Commodity fundamentals and indexes point to improvement as the slow shift of investor money could potentially seek a positive commodity future as markets adjust to an inflationary environment and last year's equity wonders and tech unicorns take a well earned breather. Have a look at IO since
2016 April. Yep it's trending up and in my eyes there's plenty more upside for years.
1. Commodities may continue to jump on firm U.S, China and Global Economic Data as a inflationary environment takes place over the next new years. China building strongly off a bigger base each year.
2. World growth is up. Demand remains robust for commodities.
3. Some Geopolitical tensions easing as the world becomes pro infrastructure and pro sustainability as they grow, modernise and tackle population growth. The world is getting on with it and so should Wall Street with increased exposure to commodities over the next few years. The term protectionism is really a means of negotiation people and nothing more. Onwards and upwards as commodities dominate....
4. Rates will rise internationally. This will flow onto Aussie banks and Aussie consumers. Get used to it people especially those on interest only mortgages which soon will expired to principle and interest because it's coming, as is our property market downturn as prices dive. Reno flip at your risk.....
5. AUD will fall against US dollar.
6. Even with AGOs higher costs, (assuming costs go down or level out and at least not increase further!), IO will move up with inflationary commodities in general. Regardless, my opinion is AGO could very well make a handsome profit over the next 2 quarters combined with higher IO prices and with its diversified income. $$$$$$. As
@rcman mentioned, IO price this year is now higher compared last year. The LT cyclic trend of IO seems to be up. I'm ignoring the ST fluctuations and just looking at it LT price cyclically.
7. Commodity supply peaked and as it struggles to play catch up with increasing demand from emerging markets compounding on existing China demand such as India, Africa, SEA, US etc prices will no doubt go up. Inflation will also help rising prices. It's all about profits now....
8. Global Lithium demand will build as supply struggles to keep up with demand for years to come.
In summary:
Who wants to sell or accept a scrip merge of AGO shares for 3c when AGO is still paying off debt with potential exploration upside in lithium as IO fundamentals improve? Not many retail holders I assume. When profits could easily accelerate for AGO as IO price moves in LT cyclic trend upwards and potential positive lithium drilling changes the game for AGO.
The world is getting on with it. The doom and gloom which commodity shorters have traditionally embraced is fast disappearing in my eyes. It's essentially non-existent or exhausted.....Soon shorters will have nothing negative left to back a short against with regards to commodities. Oh what a shame and more so what a risk.......Which leaves accumulated mining stocks to rise strongly over the next few years to the positive extreme. To the upside....
Good luck all AGO holders.
