Ann: ARL SMM and MC to form a JV to develop KNP Goongarrie Hub, page-182

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01/05/24

11:42

Post #: 73605125
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Originally posted by Jacko22: ↑

Looking at it that way, sure, they get a good deal. BUT, the SPV also needs to:

optimise debt funding for the entire capex - something a coy the size of ARL couldn't possibly dream to do alone;
The SPV will purchase 75%+ of production at prices to be agreed after the DFS has dropped;
Therefore, the SPV is funding ARL's potential EBITDA of $400M per year for 40+ yrs;
The SPV will be liable for 50% of debt funding requirements (not in addition to but by virtue of its 50% holding in KNPL);
The SPV will provide its decades of learning in developing, refining and operating HPAL plants to develop and optimise our DFS - something that would cost ARL a lot more than it could afford to get this project up to see the light of day. Plus, we receive the backing of not one, but 2, globally significant coy's to partner us throughout the project;
The SPV will drop $100M in to fund the DFS, allowing ARL to continue to develop the other 50% of it's known resources and other unknown resources (NiSu, gold, REE, etc).
And the big one - we get to finally move a globally significant resource into a DFS and (hopefully) production stage - with reputable partners who have agreed to take most of our production.

That's just the start. Seems to me, as another dumb retailer, that ARL is actually getting a pretty good deal (and top notch partners) out of this. Think of what will be received - not what you give up in return.

Just my simple take on it.

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Great summary, Jacko.

What are LT shs' thoughts regarding ARL conducting further drilling campaign on the Goongarie tenements in order to increase the MRE by a lot more, including the polymetallic credits?

On the one hand, it seems to me to be pointless in view of the proven LOM of > 40 years. Also, why do it to benefit the JC if they are not contributing to the drilling costs.
But on the other hand, it also seems to be a waste of a great opportunity just letting the economic ores continue to lie underneath and undiscovered.
ARL Price at posting: 70.0¢ Sentiment: Buy Disclosure: Held
4 Upvote

0 Great analysis

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