Ann: Kathleen Valley Funding Package, page-532

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dynofish

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22/10/23

15:31

Post #: 70472094
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Originally posted by DaisyA: ↑

Thanks @Anteviariel, wonderful analysis and very helpful to understand the financial issues. I just wanted to raise another issue in response to your analysis and to @dynofish and his interest in dividends, which off course all LTHs are interested in. That issue is the prospect that Gina's seeing off ALB was NOT part of her plan to make her own take over offer for the remainder of LTR with a JV partner such as Rio. Instead it is part of her plan to form a JV with LTR to build a refinery using LTR feed stock. She has spoken of her desire to be part of the discussion about downstream lithium processing and has just opened her new critical metals business (registered with ASIC the day after ALB formally withdrew its bid) just down the road from LTR's Perth office. What better source of lithium than the high quality SC6 we will produce and from a company that she owns 19.9% in! She has the connections to get WA to cut red take and the State and Fed Gov would support an all Australian refinery 100%. The lithium hyrdoxide it produces could be sold directly into LTR's existing off take customers, namely Tesla, Ford and LG and any new customers, which would not be hard to find. It is cheaper for her to part fund a refinery with Gov assistance and partial LTR funding from its cashflow, than try and arrange a full scale take over of LTR.

My reason for raising this is to point out that such a plan is very logical and consistent with Gina's conduct (who has a history of JVs) but would obviously impact the debt ratio you mention and the dividend payout in the early years if money was directed to building a refinery with Gina. Pie in the sky some say, but I am not so sure. In any event such a JV would cause a huge rethink and rerate upwards to the LTR share price, even if it delayed or reduced dividend payouts.

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Hi DaisyA
I can't fault your logic and it would be consistent with the desire mentioned on these threads to assist India to establish a battery industry and EV manufacturing. 100% our government would get behind this...but they also have a kind of gentleman's agreement with Indonesia to support them with battery production coupled with their nickel.

Neverthless, maybe there's room for everybody in the tent? I haven't investigated the USA IRA implications of whether our product could feed into the western market that way or not. But given the now committed additional and/or earlier production in the ramp up, maybe the pieces fit together.

As you point out, there would be a big potential fillip for LTR and our share price as well as lower risk arising from a JV. Sounds a lot better than a takeover!!!!!

Regards
DF

LTR Price at posting: $1.90 Sentiment: Buy Disclosure: Held
26 Upvote

1 Great analysis

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