Ann: Allkem and Livent to merge - presentation, page-160

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dgb99.94

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11/05/23

14:08

Post #: 67723510
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Originally posted by cmonaussie ↑

I'm heavily in favor. Unquestionably accretive merger for both companies that actually do have "next door" synergies in 2 locations (Argentina & Quebec).

The one that excites me the most is Quebec synergy. The merged entity will get James Bay "unstuck" ... Livent own 50% of Nemaska Lithium ... the other 50% is owned by IQ (Investment arm of Quebec Gov't). Nemaska Lithium has the Whabouchi spodumene mine and constructing (i.e. already permitted) a Hydroxide refinery in Becancour.

Towards the end of the conf call today, it was noted that IQ would likely sell down ownership to 20%-25% (they have no operating role), and Paul Graves noted it would be the combined company preference to process ore from both Whabouchi and James Bay at an expanded Becancour refinery (needs to grow capacity by about 50% from 34Ktpa LiOH to about 52Ktpa LiOH to handle the total SC produced). That in itself is a huge win IMO.

Both companies contribute in ways that was glaringly obvious the CFAs on the calls did not comprehend. I get it they want numbers, precise numbers, but a desktop cashflow model isn't exactly the only way value is determined. And as for Market Cap, the US and Aust markets do not value companies the same way (as is evident by the EBITDA multiple discussed).

This shores up AKE/LTHM as THE Tier 1 producer of LiOH to the NA market by 2027 ... at a little over 50Ktpa LiOH. This market is heavily short on Hydroxide supply if all those NA Gigafactories are to be built on the specs they say they need (i.e. range/power = NMC not LFP).

While I agree with what you say and assuming by your handle you are Australian , do you not see any negatives with future dividends possibly not being paid and if they are , not franked?

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AKE Price at posting: $15.12 Sentiment: Buy Disclosure: Held
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Ann: Allkem and Livent to merge - presentation, page-160

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