@Irishmist Very reasonable and asking the right questions for a...

@Irishmist Very reasonable and asking the right questions for a LT holder sitting on good profits. Aside from my personal view on SVM, I have enough scars to remind me that profits are only realised when you sell and I've rarely regretted selling when the going was good. Certainly I regret profits lost when a price falls a lot more than watching the price keep rising after taking good profits... but maybe that's just me.

Experience has also taught me that 95% of juniors with large scale deposits talk up the potential takeover angle. This is especially the case in bulk commodities, where capex is high, throughput needs to high for economies of scale because margins tend to be low. Markets hate the risk of juniors funding large projects for obvious reasons, both dilution for funding or the binary risk that the project never quite makes it that far even. What shareholder wouldn;t prefer to be taken out at a large premium rather than dilute heavily and wait 2-3 years for mine build...

I punted SFX 2 years ago mostly on the bet ILU would take them out. Long story and it wasn't the driving factor in my punt, but management told me often they didn;t believe they would be building the mine because one of the big boys would take them out first. Even after 12 months and failing in a formal sell sale process the head guy was sure that TO was about to drop now the price had fallen and holders were softened up. A TO never came, shares fell 90% by the bottom of covid crash because the market thought no TO, no funding, project worth f-all.

TO talk is cheap, I want to say last refuge of a scoundrel but it's really just the first refuge of a junior developer. TO's in mineral sands are few and far between. Only a few TO's of note in the last 30 years from memory, being Crystal taking out Bemax (Murray Basin), Tronox taking out debt ridden Mineral Commodities on their knees (Grand Cote, Cote D'voir), BSE buying Tolliara for $100M from World Titanium (Madagascar), ILU taking out Sierra Rutile (and we know how that is working out). A few mergers to consolidate for scale (ie RGC and Westralian Sands to form ILU) but by and large the big boys have their own project pipeline and don;t want to pay for someone elses. Note only one of those TO's was an undeveloped deposit (Tolliara)... all the rest were opportunistic TO's of already developed producers!

History shows most discoveries sit around until a supply window opens and the market is right to fund. STA just funded Coburn after floating around 20 years (ex Gunson Reosurces), World Titanium couldn't fund Tolliara for 10 years before selling to BSE, BHP pretty much walked away from Corridor in Mozambique and plenty of others left on the shelf. Return on investment is one fundamental reason why such TO's of undeveloped deposits in min sands rarely happen. It's hard enough to get a decent return after capex investment with all the risks, cost blow-outs and commodity price cycles even if you own the deposit... adding $100M to buy the deposit in the first place just makes it that much harder.

Example. say SVM drops a DFS with an NPV of US$500M with an initial capex of $250M (to be generous lol). If ILU paid $300M for SVM, that expense is effectively added to the capex for ILU when they consider their return on investment. ILU will have invested $550M (ie $300m + $250M capex) for an NPV of US$500M ... not so great anymore. There may be LT and expansion upside to the DFS of course, but there is also lots of potential risk, cost and margin disappointment moving from a comfortable spreadsheet to cold reality. ILU would prefer to develop their own projects and save $300M even if the projects aren't as good because $300M is a bloody big head start.

If a TO eventuates, when will it likely happen? SVM have put a big enough target for the government and community on their heads already with this talk about being so big and profitable it will disrupt the titanium feed market. Malawi will be licking their chops thinking about negotiating royalties, community dividends and probably even a free carried interest with such a world class and highly profitable project (Sprott's words not mine). Last thing a big fat major like ILU or RIO needs is to TO SVM before all the permits and approvals are delivered 'to the struggling junior' imo. Tactically makes no sense to step in and get bled by the locals before you have to. Secondly, every chance SVM fall to a low MC as market worries about how/if they will get a large new mine funded. After DFS and permitting when funding is all the worry, that's the time launch a TO.

All this TO talk is predicated on this new Malawi province actually being a very large, low cost industry disruptor. If it turns out to be only a modest TiO2 feed player ... is there any need for a TO? Does ILU or the other min sands majors (RIO, Tronnox) want to even get involved with a new mine in Malawi? If SVM is modestly profitability and with considerable risks pre-development (as I contend) , does anyone want to risk paying for a TO before the 'prize' is known and de-risked? History says no, they will watch and wait, then act after the project is built and de-risked but the share price is low during a commodity downcycle. No need taking on the risk themselves for a high premium too early, why would you?

Then again, what do i know....