TMT (ASX) Ann: Merger Presentation

Originally posted by dbd25: ↑

The best case economics for this project would be to mine the best grade ore first, plus any credits, so you are back to considering GVP plus Yarrabubba, for 12,5000tpa V2O5. Leave the oxidised ore in the ground for 20 years. You can't double the V2O5 production, because then the capex would blow out to >$1 billion. So its what TMT were proposing to do. As you say that's hard enough to get the numbers to work, with say a $700m capex. Likely need to see a V2O5 price in excess of $10.00/lb to make it work and get a decent NPV. Now throw in massive extra dilution due to the merger ? The economics and upside for any shareholder will look much worse. The combined entity will have bugger all investment value. TMT should be going alone, and wait for an upturn in the V2O5 price. AVL have no chance to get finance for their project, unless they grab TMT's assets.

All IMHO, DYOR

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Without truly understanding AVL's project (I skimmed the BFS when it came out and thought, nope, that won't be built based on those economics) I struggle to see what value TMT obtains from the merger. As @dbd25 suggests the best case economics for the project would be largely based on mining and processing our ore, so I read this as saying we are only going to get to 42% of our NPV now based on the merger.

If it gives us access to finance that we wouldn't have gotten otherwise then that is a win but at what cost? What happens to previous letters of interest (i.e., EKF) if we merge?

Some questions for those more technically minded then me:
Does the AVL tech offer any benefits when processing our ore?
Can AVL's ore be processed using our plant. If the answer is yes does Opex costs go up and/ or V2O5 produced decrease as a consequence.
To improve project economics we would need to increase production rate to reduce life of mine to back to circa 25yrs. to increase production by say 50 to 100%, is either our plant or the AVL's plant more easily scalable?
Does the combined project still require the **anitha gas pipleine. If not is there a penalty premium we need to pay APA?
We've engaged contractors to progress MTMP implementation phase (ASX announcement 10 March 2023). Is this work lost? What penalties are associated with terminating the contract?

Interestingly, the final project split (prior to AVL dilution) seems to be based on contained resource split between the projects. Don't know if this is a coincidence or not, but if it isn't is this the best way to value the projects? I know the projects DFS/ BFS were completed at different times and that ours needs to be updated but:

Our average annual EBITDA - $182M
AVL average annual EBITDA - $175M

Perhaps this would be a fairer way.

Has anyone been able to find any information on what percentage of votes (either by share or headcount) is needed to carry the merger? All I can find is that the scheme meeting has been set down for December.

Cheers