The stake that MinRes has built up will be large enough to block...

The stake that MinRes has built up will be large enough to block the existing scheme arrangement and also large enough to block any future takeover. While a higher takeover offer is a distinct possibility, there is at least one other noted below.

If MinRes are looking for the ore as a DSO operation to Mt Marion, one conceivable possibility is that they provide ESS management with a life of mine DSO off-take offer conditional on them immediately having a director on the ESS board, recommending against the takeover through the scheme of arrangement at 50c and changing strategy to implementing this supply of DSO ore to Mt Marion.

Under this possibility:

• The director on the board means they have oversight as to how ESS is run
• Existing management (possibly with significant turnover) would implement then run the DSO operation
• Existing management (possibly with significant turnover) would continue to explore surrounding areas for lithium and may be encouraged to acquire more interesting tenements near around Pioneer dome / Mt Marion and do DSO deals with Min Res on these
• The value of getting a DSO operation should support the share price at or well above current prices so they would be sitting on profits not losses on having make an investment to control the ore
• Min Res don't need to get directly involved in running a modest sized satellite supplier for Mt Marion
• ESS remains listed and a feasibility study is done on what a DSO only to Mt Marion operation looks like. If the DSO offtake had a floor price it would be compelling
• Min Res looks at capacity expansion at Mt Marion to accommodate the additional ore. They have the balance sheet to fund this
• Existing shareholders can continue to hold on this new journey to being a producer of DSO
• Min Res don't need to cough up the remaining $125 to $150m+ that would be needed for a competing bid (not that the cash would be a problem for them)
• Min Res avoid another public takeover battle
• Capital gains on longer-term shareholders are avoided as they continue to own ESS shares
• Min Res don't need to go through the effort of untangling all the small holdings that ESS have
• Over time Min Res may use creep provisions to increase to perhaps 25% or 30%.
  

This would seem to tick enough boxes that it could be an alternative strategy still consistent with acquiring a stake of just under 20%