@mickzed thanks.
There are two different legal creatures in this respect - one is a ROFR and the other a ROFO. MIN are of the opinion that they have a ROFO and PLS that we have a ROFR and this is my opinion as well but I have not seen the exact wording of the agreement but Counsel for PLS would have considered this and come to the determination that this is what we have.
A ROFO is a Right of First Offer - PLS has a world class lithium resource and want to sell it, under a ROFO, they must first offer to sell to MIN. A ROFO is a contractual obligation by the owner of the asset - in this case PLS, to a rights holder - MIN in this case, to negotiate the sale of an asset with the rights holder before offering the asset for sale to a third party. If the rights holder is not interested in the purchase of the asset, or cannot reach an agreement with the seller, the seller has no further obligation to the rights holder and may sell the asset.
A ROFR is a Right of First Refusal and is a contractual right for the rights holder to be given the opportunity to enter into a transaction, in this case on terms no less favourable to PLS than negotiated in the BOA with GLC.
My interpretation of what we have, purely from what is in the public domain as I have not seen the exact wording of the agreement, is that we have a ROFR as the rights holder has the right to take the concentrate on terms no less favourable to PLS than those terms offered by the third party. Yes, you could negotiate in secret with the third party and come to an agreement in respect of price and subsequently seek to negotiate with the rights holder for the same of better deal pursuant to a ROFO but any such negotiations would have to be based on the condition precedent that the rights holder did not match or better the offer.
I think what MIN are overlooking if they want to play the ROFO card is that the ROFO only allows them the right to make an offer before a 3rd party - the offer still has to be accepted by the seller, in this case PLS, and if the offer is not acceptable PLS are quite free to sell to the third party with the exception that MIN take the 2.5% royalty. Clearly if the third party offer were to fall over in such a case the seller would be free to go back to the rights holder and seek a new offer, which clearly would be lower then the original offer and the process starts again.
A ROFR is probably more in MINs favour as opposed to a ROFO as they simply have to match the offer from GLC or take the 2.5% royalty. If they think the ROFO is the way to go, they could well be faced with the situation where PLS wont accept the offer that MIN makes and simply goes to sell product to the third party as PLS would have met the requirements of the ROFO by offering product to MIN, and subsequently saying, sorry your offer is not acceptable we are selling to GLC and you can have the 2.5%.
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