Happy New Year folks... hope everyone has had a chance to recharge the batteries and enjoy some time with family & friends.
I've been giving a bit of thought to a what IF funding scenario since re-reading through the PEA and most notably seeing this mentioned on Pages 35-36.
"Argosy could pursue other ‘value realisation' strategies such as a sale, partial sale or joint venture of the project. If it does, this could materially reduce Argosy’s proportionate ownership of the project".As they say there is always more than one way to skin a cat and the above 'mention' in the PEA has me thinking, would JZ & PA consider bringing in a 3rd entity to the Puna Mining JV, as apposed to having the OT'er / strategic partner invest in AGY directly ??
Some food for thought, it is probably much of a muchness on the surface, but for a strategic partner to gain a share of the Puna Mining JV may be more attractive than an equity stake in ASX listed AGY at this point in time.
I think it's important for AGY'ers to understand the Corporate structure of ORE / Olaroz and their JV partners and the advantages in this type of structure (Eg. access to cheap debt financing).
ORE structure looks like this:
View attachment 1409087Copy/Paste from their website >
The Olaroz Lithium Facility Joint Venture is managed through the operating company, Sales de Jujuy S.A. The shareholders are Sales de Jujuy Pte Ltd (SDJ PTE) and JEMSE, a mining investment company owned by the provincial government of Jujuy, Argentina. SDJ PTE is a Singaporean company that is the joint venture vehicle for Orocobre and TTC.Safe to say the Mgt team are weighing up a series of options currently available but I do sense their are a few moving parts to the picture and we may well see something a little unexpected come to fruition.
Currently AGY hold 77.5% of the Puna Mining JV, with PA n Co holding the remaining 22.5%. As per the terms of the JV, on moving to commercial Ops this will see AGY increase there JV earn-in to a 90/10 split.
Let's say for interest sake JZ can convince PA n Co to reduce their S3 JV earn-in to 8% on the basis that AGY will reduce their final earn-in to 75% allowing for a new strategic partner to join the JV with a 17% stake via equity.
AGY - 75%
PA n Co - 8%
New JV partner - 17%
So if we work off the NPV for the base case commercial scale scenario of 10ktpa / 16.5 LOM @ $399M USD, the new JV partner would be required to invest $67.83M USD as an equity stake but also contribute 17% of the Capex requirement (17% of $141M = $24M USD).
So that's nudging $92M USD in Stage 3 funding before off-take discussions and would put AGY in a solid position to source the remaining $50M USD either via debt funding and/or a placement to existing SH's & Sophs.
Keen to hear other ppl's thoughts on this possible/similar scenario playing out
(20min delay)