a wise owl told me

Hi all,

Now that BHP has taken a placement….What next ?

How do we assign a value to the technology.
I have asked 4 friends who are in a position to know these things.
What should an appropriate royalty be ?

The 4 replies were essentially the same.
When summarising we get the following :-

A royalty for a technology is usually somewhere between 2 and 5 %.
A royalty that is actually a breakthrough in knowledge commands 7 %.

These rates apply to a technology that is fully tested.

But APG needs BHP to spend money to complete the testing.
WE know (& Tewks forsees no problems on the scale up) the technology will work….. but we need BHP to spend money,…….. so the royalty stream needs to be discounted to allow for the monetary input.

So it gets down to relative bargaining power.
All 4 advisers said this was the case.
You can apply various % scenarios …and work out a value but they will probably be way off the final outcome.
The only thing that can be said with certainty is that if the technology is good then BHP will probably at the end of the day finish up owning it.
At some point in time BHP will move on APG.
The price they will be prepared to pay will be either of two things :-

The enhanced profit value of the technology that flows to BHP.

A sum that is less than the cost of defending a protection of patent claim.

Can someone research Rheem vs American Flange to see the costs awarded . The closing address by the silk went on for 72 days. It was in it’s day the most expensive case ever.

Could APG defend a case such as this.
This may not be such a lopsided position as you think.

There are legal firms that will look after you for a % of the payout.

The wise owl said to me.
The best thing to do is open the bottom drawer.
Stuff as many APG shares in as you can.
Then forget about them for 3 years.
You will probably finish up very rich.

Hark……..I hear the bottom drawer opening.
Paper is fluttering down.

Finally

I expect our specialist titanium minerals non executive director R Harrison is beavering away on some specialist reports right now as I type to beef up the number of APG negotiation points.