I totally agree with you about the value of Bald Hill, but unfortunately any offers are likely to be opportunistic, low-ball bids. Some may see no offtakes as a positive, but in a general sense signed offtakes at least indicate that there is an existing market for the product. A40's sole offtake falling through is the reason for this whole mess in the first place. Despite the future value, a lot of potential bidders will see a beaten down industry, no offtake (therefore no income), very high production costs, $100 million plus debt, limited mine life without the inclusion of the Cowan tenements, etc. All of these issues together mean you would require a particularly motivated bidder, which I just can't see in the current climate (other than GXY due to the potential synergies and existing investment in A40).
Some have suggested that Jiangte may be a potential bidder, but from my understanding this would also require FIRB approval, would it not? Given the WA government's plans for the domestic Li industry, I doubt 100% ownership of A40 by a Chinese company is a likely outcome.
I tend to think that GXY will ultimately acquire A40 for around $100 million AUD (including the secured current debt, previous SPP, etc). I then see GXY probably tipping in another $20 mill AUD or so to bring down production costs and move forward.
A40 Price at posting:
8.2¢ Sentiment: None Disclosure: Not Held
