Sale Price and Payment Structure: Valuation of A$517 million:
Q: How was the sale price of A$517 million determined, considering the previously reported post-tax NPV of A$4.1 billion: A: That previous NPV was, forget about lithium price and those sorts of things by and large that remains consistent but what has changed is the code we have to work under. We will be providing more information in regards to this in the Notice of Meeting, what the key thing is the Government will take 35% to what we had previously banked on to be 20% which immediately takes away 15%. The the financial terms deteriorated on 30 different metrics, so there is no longer tax incentives on ten different metrics. The Corporate Tax holiday is gone, on every single lever they have moved it to favour the government, so the ground rules have changed.
Rationale for Split Payments:
Q: Why are the sale proceeds split into two tranches? Couldn't Ganfeng make a single payment after satisfying all conditions precedent? A: It was a negotiating point between the parties, they have large capex requirements on their other projects plus still need to fund Goulamina 100% from here on. They came to us and said they would rather split the payments, our analysis is it is financially better and splitting in two was the best outcome we could get.
LLL Price at posting:
50.5¢ Sentiment: None Disclosure: Held
(20min delay)