I appreciate that the analyst has taken the time to examine various scenarios surrounding Sal De Vida.
The only question is funding for Sal De Vida and where that might come from?
Avoiding high debt levels will be top of the companies agenda whilst minimizing reduction in ownership.
Maybe a good scenario for a JV might involve a larger reduction in equity for some equity in a currently producing asset which draws further revenue to the ledger.
Albemarle was initially sounded as a potential suitor however they don't appear to have the experience that SQM have with brine. SQM have recently partnered with Ganfeng and LAC to diversify outside of Chile, meanwhile Albemarle are diversifying into Chile with some very hefty royalties imposed on them. - Joe said Luke blinked first, though maybe ALB have plans to export a lower grade out of Chile to bypass the royalties...
Tianqi recently purchased into SQM and that indicates they have an interest in the brine space. Tianqi has been flying under the radar of late and are mainly known for their 51% ownership if Greenbushes. -Tianqi also have a history with Galaxy, be it good or bad they certainly know one another by way of the Jiangsu transaction.
We have seen Ganfeng fairly active, even making inroads into International Lithium who are diversified similar to Galaxy however have a long way to come before they start realising any revenue.
FMC haven't done a great deal. They are still happy next door to SDV and I have speculated that maybe an expansion partnership with them might be on the table also? - A deal liken that certainly has the potential to get Galaxy into production sooner at Sal De Vida than all the other options I can think of.
Volkswagen could certainly be in the mix, with their ties to Bosch who are linked to GS Yuasa by way of Lithium Energy Japan. - and this is where we get to Occams Razor.
What or who is Occams Razor?
It's a priciple of which no more assumptions should be made than are neccessary.
So who or what is Occams Razor in this instance?
Mitsubishi, they are the patner in the Lithium Energy Japan alliance that supplies the materials. There is also ties to Renault and Nissan who have a long history of electric vehicle innovation.
Anthony in his recent presentation talks about wanting to partner with a long term partner that is interested in growth. -Mitsubishi have been that long term partner back when Galaxy was pre-jiangsu. Then even when GMM came along Mitsubishi came forth with the partnership again and locked themselves into a deal that leant very much in General Mining and Galaxy's favour in which Mitsubishi are bound to strictly buy from Mt Cattlin only for the next 4 years with an option to extend.
Mitsubishi have been there all along and have always been a good partner so maybe the partnership will continue and expand globally into James Bay and Sal De Vida.
Or maybe speculating on a partnership/JV is all wrong and Galaxy will go it alone which has always been the perception I have held with the tax losses accumulated just needing to be converted into hard cash. $200 million+/- would get Sal De Vida up and running especially with revenue from James Bay in the mix. -Maybe this is the Occams Razor?
GXY Price at posting:
59.5¢ Sentiment: Buy Disclosure: Held
