US$36m upon shareholder approval US$20m upon underground mining activity approval (2-3 months)
USD$56m=AUD$84m @ current exchange rate.
188m soi/$84m=44cps/85%=37cps return to shareholders, less any expenses/taxes
Royalty US$25m=AU$37.5m or another 20cps of future value.
So if the deal happens as outlined, the company will retain about $13m plus a future royalty which MTC may yet choose to take as a lump sum payment of US$25m, or AU$37.5m at current exchange rate. That's potentially $50m of retained value after distributing 85% of the first $84m payments, or $71m to shareholders
The shares in MTC should still retain some value, so even if there was a hold-up in receiving the underground mining approval, the share price and initial distribution should underpin an sp of 30c on a conservative basis, with plenty of potential upside. The current Canadian lithium assets are a bonus that could be worth something when lithium comes back into favour.
I consider MTC a risk worth taking as there is no real sale value reflected in the current sp.
The Top 20 hold 78% of the company so they will decide what happens here. I would think Gino likes the thought of a big pay day coming as he holds about 23m shares, so plenty of incentive to hand back as much cash to shareholders as possible.
Just my opinion.
MTC Price at posting:
23.0¢ Sentiment: None Disclosure: Held
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