Yes, absolutely.
MergeCo will have a hydroxide plant in Japan, a future spodumene converter in Canada in addition to battery chemical production in Argentina.
Anyone who followed the Lynas rare earth story and their struggles with China dictating RE prices due to their +90% market control and their political influence in Malaysia (LYC RE refinery) can attest to the dangers of critical mineral monopolies held by one non-democratic country.
How would you price in such a diversification into the value of the merger and its future potential?
I am still digesting the merger and its risk/reward potential for GXY and my investment plan. I never held ORE but was aware of the difficulties their BG Li production experienced and their corporate structure (only partially owned).
My first reaction to the merger news was negative:
¨OMG, management took the easy way out, GXY board robbed me again, another SV40 debacle, poor Simon and his hard work, etc!¨
But I am coming around seeing many more positives (thanks to many posters here) than negatives and huge potential in the short term (5 years) when the EV revolution is going to kick in with full force.
management, partnerships & finance
-combined ORE/GXY board can't possibly be worse than current GXY board
-GXY's world class assets, SDV and JB, might get finally developed AND in a much shorter time frame
-proven ORE management, they have put some hard work into getting Olaroz from a bad start into production of BG Li
-both CEOs, Martin and Simon, know each other for some years (the mutual respect was obvious in the merger call)
-one or more of our overpaid board members (relative to our peers) will depart GXY in the next 12 months (end of gravy train)
-like GXY, ORE managed to survive Li crash
-ORE provides additional 'Argentina experience', connections and political clout
-ORE management secured strong partnererships (e.g., Toyota)
-diversification of off-take partners (ex-China, de-risked from a potential Alita event / loss of off-take partner)
-global market access (North America, Europe, SE Asia)
-finance (debt, JV, off-take) for project development and market access will benefit from larger MergCo profile (lower geo risk, cash flow, profit and production)
-Number 5 Li producer has some serious weight in securing OEM as partner
-sooner off-setting of GXY tax losses from POSCO sale?
-ASX100
assets & vertical integration
-immediate diversification of Li production (lithium carbonate/hydroxide chemical and spodumene)
-in house hands-on knowledge in production of BG Li carbonate from brine
-access to brine test facilities
-access to hydroxide plant in Japan (ORE mentioned that only a part of their technical grade Li from Olaroz will be refined in Japan)
-already producing BG Li carbonate chemical with a positive trajectory of improving efficacies (32 to 37% BG) and pricing
-Mt Cattlin ramped up to name plate production with improving sales price
-concurrent, fast tracked development of SDV with 32kt design and JB mine+converter
-massive combined resources
-massive growth profile of both brine and hard rock assets
-access to BORAX gas pipeline (SDV)
An objective perspective is a wonderful thing!
Please add to that list or criticise items.
GLTA
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