Ann: IGO: Lithium Joint Venture to Acquire Essential Metals Limit, page-241

In the charts thread @cosmoman had the link below. The general presumption is that TEAL as a new owner would proceed with Essential's strategy of looking to bring Pioneer dome into production relatively quickly. They would have the financial resources to do so and the contacts to sell the product. This would add to world supply and if producing at circa 150kt-200kt add a similar volume to what Core Lithium will be while not changing demand. This would again reduce any deficit or increase any surplus of supply.

An interesting alternative is whether TEAL looking to secure long-term supply but not bring in into production in the short term. This would only be a sensible strategy if you were one of the existing major producers (and TEAL is), had a finite resource (which they do), would benefit from a stronger for longer price thematic (which TEAL would) and had the financial resource to mean the acquisition could be easily funded (which TEAL does).

If this is TEAL's strategy for ESS (and I'm not saying it is), their takeover of ESS assists the future supply/demand balance to avoid flipping to a surplus. While it remains in deficit, the disconnection to the cost curve can continue and TEAL can keep progressively receiving super high prices on their very substantial production. Greenbushes FY23 production guidance is 1,350-1450kt of Spod. An increase of A$100/t in the price being received is A$135m to $145m. I wonder whether removing ESS's supply would assist the market price to stay at least $100/t higher (for one year or by a smaller amount than this over multiple years). If it did, acquiring ESS and not immediately starting Pioneer Dome quickly could double-pay for itself in firstly assisting a higher market price and then when developed supplying a source of lithium.

The decision to take over ESS wouldn't have come from saying - what a wonderful resource they have, but from a brainstorming session looking at how it may be possible to keep the current high spod prices higher for longer.

https://www.australianstockreport.c...o-the-acquisition-of-essential-metals-asx-ess