Just trying to think through what happens when we reach DFS. My knowledge is conceptual based on what I have read to day, not technical, so welcome anyone pushing back.
Option One We are really big. We have cracked it in our pursuit of gold and have huge MC. GL1 not so much. Technology for batteries has moved on, price of Li has fallen and GL1 itself remains tiny.
Baby - its all about the DFS.
If still worth doing we might leverage our enormous MC and negotiate a signficantly greater interest in the resulting project as GL1 will have a much harder job getting funding given its more limited value and viability. But whether we wish to is both debateable and has limited impact on our intrinsic worth.
Option Two We have screwed up. Gold just isnt there, Yanks have walked and Tom is drinking Pina Coladas by the pool. But GL1 has boomed with fantastic growth in the Li market. Their MC dwarfs ours.
Baby - we have a backstop that limits our SH losses.
Given the booming Li market the closer we get to DFS the more our value moves with our prospective interest in the project. We might struggle but we move heaven and earth to maintain our proportionality in the project and of course the better it is the easier that becomes.
Option Three Both markets grow really well, and both companies with them. We are both doing really well.
Baby - we have choices.
Our decison will be more inherently strategic than financial. Questions will be whether we want to concentrate on gold or maintain an alternative income stream, and also whether we have alternative uses for the capital we have tied up in the project. Good problem to have.
I guess there is a 4th option related to neither market or company doing well. In which case the thing just withers on the vine.
Note also our individual companies could do badly even if the markets in which we operate do not. That starts to look like Option Two. We have a backstop for our own incompetence in the intrinsic value of the project. Moreover in respect of GL1 we have that reversion clause related to failure to do DFS within five years, so we have a failsafe in respect of (their) individual company risk.
Just my ramblings, dont judge any obvious errors too harshly.
BRB Price at posting:
28.5¢ Sentiment: Buy Disclosure: Held
