Ann: Peak and Shenghe Sign Offtake and Strategic Co-operation MOU, page-131

An interesting take from the REO this week with Shenghe Resources (Singapore) Pte Ltd

Our take

Technical cooperation is something that Shenghe feel they might be breaking China’s export restrictions for rare earth production know-how. See our post “China Technology Export Prohibition and Export Control List” on May 22, 2022 and “Shenghe Resources investor call September 19, 2022”. Therefore Shenghe’s tech support may stop at production of concentrate.

Acquiring a direct interest in Ngualla would be a counter-dilution measure, or so it seems.

Peak will need a lot of money to develop Ngualla. Apart from the continuous dilution through capital raises Peak will need money from Shenghe. Shenghe will probably provide money in exchange for an ever larger direct share in the deposit until they own the majority and call the shots. That will be the end of the line for Peak shareholders.

And what is the point of a 12 month term for a non-binding MOU? Exercise in futility? No. Simple: It is a probation period for Peak. Shenghe want the loose ends in Tanzania tied up. Shenghe also want to see good behaviour and no more noisy complaints of Peak to governments.