Interesting post Karl89. Gold companies have never been cheaper compared to the Gold price. It is certainly cheaper to acquire ounces thru M&A than discover it, drill it, declare a Resource, feasibility studies then finance & build a plant.
FFX is back to where it was before the demerger where the Lithium is worth about the same as the gold (certainly that is the case based on the last traded price). Is FFX a Gold stock, a Lithium stock or an investment vehicle?
Most Gold companies looking at M&A probably don’t want a sizeable stake in a Lithium company that is escrowed for 2 years.
On the other hand a Lithium company looking at M&A could find FFX very attractive because of its 17% holding in Leo. As I posted on the 24th, the owner of that 17% would be entitled to a Board seat & be LLL’s biggest shareholder. Stage 2 is uncommitted.
In the Western World we are aggressively trying to be less reliant on China, and China is trying to do the same thing in reverse. While China has at least 80% of the World’s Lithium conversion plants, it does not have the raw materials. It is very unlikely the FIRB would allow too much more Chinese investment in our resources. The same goes for the US, Canada, even countries like Brazil are clamping down on overseas investment. That leaves Africa.
As I previously suggested car OEMs are having to source their own lithium supplies, look at Ford giving LTR a $300m loan, more recently GM prepayed Livent $198m to guarantee their supply. While the market only values Leo at around $600m, the Ford, GM, Tesla & Ganfengs of this world know it’s true value.
To me FFX has 2 ways it can go
1 make it work, which shouldn’t be too hard
2 sell the whole thing
FFX Price at posting:
20.0¢ Sentiment: Buy Disclosure: Held
