Hi allI don't usually comment on the GXY Board - main reason is...

Hi all

I don't usually comment on the GXY Board - main reason is that there are many others who are a lot more informed than I am on the technical details of Lithium Production and the state of the Lithium market (GCar, Seetheworld, Findinggems, Gareth78, and even Thesi, notwithstanding that her view is very different to others on this forum, and on balance I tend to be more persuaded by GCar). I've learnt a lot from all of you and must say this is one of the more informed HC boards, which assisted me in getting in at $1.20 last year. So thank you.

There now appears to be a bit of confusion here on some matters relating to the takeover. This is one of the things that I feel I can add value on, and clarify some confusion:

1. Because this is a scrip-for-scrip offer, there are no adverse CGT implications. If Orocobre had offered cash only (eg to buy out everyone's shares at $3.90) or partial cash, partial scrip (eg $2 per share and 1 ORE share for every 4 GXY shares), there would have been CGT implications. As it is, there will be no CGT implications, and you can still avail yourself of the CGT discount when you sell, provided that at that point the combined period that you had held GXY shares and Orocobre shares is more than 12 months. See: https://www.ato.gov.au/general/capital-gains-tax/shares,-units-and-similar-investments/takeovers-and-mergers,-scrip-for-scrip-rollover/

2. Some people have commented on the fact that OREs share price is going up more than ours today. This is to be expected, because ORE is the share that will ultimately be traded for the combined entity (ie it will incorporate the benefits of the merger). Meanwhile, GXY shares will 'follow' ORE shares so that they should always be priced at more or less .569 of the price of an ORE share. Small arbitrage opportunities between the price of ORE and the price of GXY may exist, but they will be relatively small, and from this point onwards, the main thing we should care about is the ORE share price. The fact that (for instance), the PLS share price is up more than the GXY share price does not indicate that the market does not view this as a positive for Galaxy - rather, it is because the market anticipates the GXY share price being tied to the ORE share price at a rate of .569, per the terms of the agreement. As some have noted, this is a small discount (~2%) to what GXY is currently trading at, but that ultimately doesn't matter because GXY holders will ultimately just be holding ORE shares.

3. Some people have commented about the possibility that this will trigger a bidding war (eg Livent). It seems to me that this is unlikely, because ORE and GXY have deliberately made that very difficult, by including mutual 'no shop' / 'no talk' / 'no due diligence' clauses. The practical effect of this is that if another company were to want to buy out ORE or GXY, they would have to do so without access to key confidential information, and neither GXY nor ORE are legally permitted to entertain any discussions with other bidders (making any investment significantly more risky for the bidder). Both companies have likely done this for protection, as they genuinely do see this as a merger of equals, and don't want to be opportunistically taken over by a foreign company when there remains significant upside to this merger.

FWIW, I think this merger is marginally good, but not groundbreaking for GXY. As others have said, it de-risks SDV, allows us to accelerate James Bay, and gives us access to a good customer in Toyota.