What's the alternative? I see 3 potential situations -1. Ganfeng...

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MrInvestor2

699 Posts.

190

07/09/23

08:13

Post #: 69763130
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Originally posted by camban: ↑

I agree on protecting the majority (or, subsequently, at least an equal) stake. The slicing & dicing that is occurring now to suit the narrative of this new arrangement being equivalent to the previous one is frankly odd imo.

LLL holding 50% (or 45% or 40%) of the JV & mining assets is vastly superior to holding 45% (or 40.5% or 36%) regardless of Ganfeng otherwise taking a stake in Leo shares alongside you and me. I do not consider the new arrangement to be equivalent to the old arrangement at all.

It would be a bit like me being given the option to invest a few hundred grand directly into the Goulamina JV and then claiming to you that we are still effectively equals and it’s absolutely no different in terms of rights, powers, profit share & control to what I would otherwise have owned/exercised via a small holding of ASX-listed LLL shares.

Under the new arrangement Leo now owns & controls 5% less of the mine, it’s revenue, and it’s future profits than before. We are a minority partner not an equal partner, and no real control premium has been paid by the majority partner for this privilege. That the whole thing was renegotiated in the first place - and while in a suspension over DSO - reeks of Leo having had its back put to the wall here, with seemingly no option but to give up more of its prized asset which it contributed to the JV in the first place. This does not fill me with great confidence that we won’t be snookered again at the next unpredictable turn of events.

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What's the alternative? I see 3 potential situations -
1. Ganfeng got word from the Chinese government that they would block the investment.
2. Ganfeng holding LLLs feet to the fire when they knew they had the power to do so.
3. Ganfeng knows that Mali is coming to target LLL and FFX want no exposure to LLL directly.

I personally believe Ganfeng has so far been acting in good faith towards their partner but could obviously be wrong so it is 1 or 3 for me.

It is obviously not as good as the original but is equivalent enough. It sure is better than the dilution if they came out of suspension and announced a raise for the money at 50 cents isn't it?

LLL Price at posting: 60.5¢ Sentiment: None Disclosure: Held
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1 Great analysis

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