I view the hectorite stuff as a call option on lithium price spike but obviously not a serious competitor to quality brine producers. Similar to spodumene guys except with tech risk added. If Western Lithium is the best they got at $160M then that gives us sometyhing to work off.
ORE coincidentally had market cap around $160M at yestersdays closing price. Given the Toyota thing and bottom of the cost curve production cost would have to assume that Canadaians would pay twice as much for ORE as Western Lithium. Add the new discovery at Grandes with the ability to do it all over again (say Sumitomo, LG Chem, Chinese etc) and in a moment of passion one could double that valuation again. So lets say "Canadian Fair Value" at twice our current share price or $4 AUD. With this purchase the Canadians will get Grandes upside for free so they don't feel completely out on a limb paying that sort of money. Absolutely has to be more than $2 AUD which is only the same market cap as Western Lith dreamers.
If these metrics hold up in the Canak market then no wonder RS went the dual listing route. He is no fool (although prone to generosity ..lol) and I would imagine that exactly this sort of math was sold to him during the pitch to dual list. As I said earlier, we just don't need $20M right now, so as PP said, there must be more to it, and a significamt re-rating is the expectation. A reasonable re-rating would have happened in Oz on the back of new discovery anyway (guess modest discount to Patto's $3 valn, say $2.50) so RS must have an expectation for something north of that in Canada or why bother? Look at the value of SQM (circa $16B I think) and I can understand why punters would be happy to buy at even twice the price.
Crystal ball gazing time. Placement is put away at modest premium to $2 pre-announcement price which keeps everyone happy that it was a good thing. Canadian broker is already eyeing off a valuation report they prepared earlier at $4 (with new discovery has to be more than Patto's $3 and then add "Canak Premium")so that their clients have some immediate upside once they get set. RS was told that if price expectaions run to high here in Oz it might scare the placement takers thus the timing of announcement etc. Placement gets away at $2.30 to $2.50.
The shares surge towards $3 post placement as some the broker cavalry and those who missed out come in to pick up the Stags. Based on Patto's previous $3 valn, round numbers and the jump in market cap shares trades around $3 for some time while BFS completed etc etc. Buyers provide liquidity to profit takers with one eye firmly on the $4 valuation report post placement awaiting developments.
Well done 2ic, put down your glasses and take yesterday off, the fat lady has sung.
goodluck
ORE Price at posting:
$2.21 Sentiment: LT Buy Disclosure: Held
