I can't quite see it either Rookie, but RCF clearly does, otherwise it wouldn't have invested in both companies.
The best I could come up with is as follows:
-Stranded TMT resource - presumably there will be a portion of resource that can't be recovered at the edge of the TMT permit, as it would require the pit to extend into AVL's territory.
-AVL resource - the AVL acreage also has similar high grade ores that would go through the TMT plant
-Electrolyte plant and batteries - the downstream operations of AVL would have some value
-Plant and mine synergy - a combined operation would have greater scale and possibly make it easier to attract capital (with another near term competitor being eliminated from the race)
The reason I can't see it happening is that TMT appears to be the higher value play, however AVL currently has the higher market cap. So that position must be reversed before a merger would ever be contemplated by TMT. I assume RCF will have a plan.
Possible next steps:
-TMT market cap increases off the back of a few juicy announcements -Merger discussions commence between TMT and AVL -As long as RCF (biggest AVL shareholder) crafts a deal that isn't offensive, then other AVL stock holders will fall in line
However the essential ingredient is that the relative value needs to invert as it doesn't quite stack up right now.
TMT Price at posting:
26.5¢ Sentiment: Buy Disclosure: Held
