Ann: Change in substantial holding from PLL, page-108

Hi @tobiasroy

More common than you might think. See it a lot in gas supply & LNG agmts.... Standard "S-curve" ... floor, ceiling and slope based on an index. Lots of howls from buyers when oil price spiked (since commodity was gas) and lots of howls from sellers when oil price slumped. But contracts were honored (many contracts had deferment options and other options) as in the end they were long term and provided some price constraints.

But this (Lithium) appears less like price movement and more like a price disconnection. Fundamental shift away from cost plus margin to purely market pricing and this is eventually subject to marginal costs of production (as in if its still profitable to produce that extra unit of production it gets produced no matter the cost). Leads to oversupply and high cost producers eventually forced out. But that seems a long way away given the forecasts for Li demand.

But back to why did BL accept those terms .... my guess is he needed the capital and KP's was the best on offer - I mean why else take that high a risk (I suppose price could have collapsed and BL would be the hero and KP the patsy). Don't forget that was Jan'21 and BL just secured ~AUD$15.5M and an offtake of 60ktpa. Share price more than tripled in the 6 months post that investment by PLL. It also laid the foundation for the rights issue in Mar (which PLL fully supported) and IMO helped get the NAL bid over the line.

Only BL and SYA BoD know the answer ... but consider if PLL was the best offer what were other offers like? You know the old saying about Money Talks and the "other" walks