This is where management earn their money. Lots of tricky wheeling and dealing going on in the background (while some, not many complain about the lack of announcements/progress).
Our management have a simple equation in front of them. How do they build a mine, PSG plant and an opportunity to go further downstream whilst keeping as much of the company as possible and minimise dilution.
I am often disgusted by the large handouts some management and boards give each other, but these guys will be worth every penny they receive if they can pull this off. To be honest I haven’t paid a great deal of attention to what bonuses they gave each other at the AGM. They don’t seem to have their hands in the trough so far.
As mentioned earlier POSCO are shroud operators but seem to play fair. They have a cool $4 billion in cash and $40 odd billion in assets. They can basically do what they want. From watching from a distance the last few years they seem to want to move from their traditional business of Steel into the future with battery components and minerals.They paid GXY $280 million (can’t remember if it was AU or US) for the southern section of SDV (lithium Slade) a few years back which we at GXY saw as a huge win as the lithium prices were well down, but a couple of years later they would look at it as a very smart business decision. So they are smart and forward thinking.
So here is my thinking RNU build, fund and operate Siviour, keep 100% ownership, POSCO fund the PSG plant with a part loan and part equity stake and allow RNU to come into a future anode plant with a similar deal, but smaller stake for RNU. Also POSCO takes up a small equity stake in the whole of RNU. Could work out simpler than that but that’s my thoughts. Also POSCO takes 100% of the PSG at market contracted prices, which is always a bit below spot prices.
Everyone’s a winner, especially those of us that see the big picture and are patient enough to see it out. Now let’s see Scarpa do an evaluation on that. Come Scarpa we know you can do it. I’ll take a quick guess more than 10x, suppose it depends on the time frame though.
RNU Price at posting:
11.5¢ Sentiment: Buy Disclosure: Held
