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SecretPauly

277 Posts.

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20/01/22

15:36

Post #: 59014379
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Originally posted by Red Baron: ↑

I've just been looking at how some of the recent spinouts have performed after a demerger.

NiCo listed yesterday after being spun out of Metals X. The IPO price was 20c, it closed yesterday at 36c an 80% increase. As I write its 56c up 55% on yesterday's close, almost 3 times the IPO price.

Can we expect the same sort of returns out of Leo?

As I posted a while ago, considering it's only being offered to FFX shareholders, I think it'll be offered at a bigger discount than most other IPO's. So that would set us up for a good gain straight away.

It is amazing how often the market looks at a spin out in a different light to when it was part of the mother company. In NiCo's case, the assets are the same, the only thing that's changed is these assets are now in a separate company. It's almost like the spin out causes a reset, where the market has a fresh look at the assets and reassesses it's value.

I think the same thing will happen to Leo (and Firefinch for that matter). All of a sudden the market will see a new Lithium stock, a stock that is fully financed, has commenced building the project, and has 100% offtake. They'll then compare it's market cap to it's peers and bang - you get a rerate.

Sometimes the market is so dumb it doesn't see the forest for the trees until it's unscrambled, put in a separate shell, then all of a sudden the penny drops and the market sees the opportunity.

IMO after Leo lists, there'll be a big rerate and we'll start to see valuations closer to our peers. I fully expect the more astute investors to realise this and start accumulating as we get closer to the Record date.

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Instead of accumulating more shares in FFX though I'll be saving cash for the entitlement offer in LLL. We still don't know the details of that yet so better safe than sorry.

FFX Price at posting: 79.5¢ Sentiment: Hold Disclosure: Held
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