2022 was suppose to be a year of increased M&A according to the analysts.
Almost zero in Australia (the biggest Lithium mining country), a little offshore, but fairly subdued compared to prior years.
With the “cash cow” status of incumbent producers, they have amassed some good war chests.
PLS had $1.37b Sept 30, probably easily over $2b come Dec 31.
MinRes had $2.4b June 30 and have just made a $403m all script offer for NorWest (oil & gas)
Like Rio, Albemarle have announced they are looking for M&A opportunities but are yet to strike.
Companies like PLS have in the past taken advantages of Altura’s receivership to acquire their operation & that was when Lithium was in the doldrums and not having the luxury of $2b in their bank account having to raise money to acquire it.
Reading between the lines of our largest shareholder’s announcement re appointing Treadstone to try to sell Firefinch. I think it quite likely they’ve had a lot of interest so have handed it over to an agent to get the best offer. They didn’t engage an agent to try to sell the gold mine probably because there was no interest.
I think Treadstone will find a buyer for FFX, what affects us is whether that goes to a strategic buyer, such as a car OEM or battery manufacturer (eg CATL own 7% of PLS) who is happy to long term hold that stake, or it goes to a player wanting to takeover Leo. This sales process will flush out any interested parties in Leo, because if it did go to someone like CATL any corporate play on Leo would then be blocked out. IMO the best outcome
If a predator was looking to takeover Leo, I doubt they’d make a play for FFX 1st. Imagine if for example Rio bought FFX for 20c a share ($236m). The market would immediately assume they’ll make a play for the rest of Leo, that would push the price up & they’d end up paying a lot more for the other 83%.
The logical thing to do would be to sound out FFX thru Treadstone (confidentially), make a bid for Leo, knowing once accepted FFX would sell their 17% - with Leo being under different “control” - that would be allowed under the asx escrow rules.
Not sure what Simon can do to prevent this.
Why did he go to Frankfurt? Simon has said it was partly about stage 2 offtake, he also said they were about to kick off a concept study into the stage 2 options. Maybe he was speaking to interested European parties about the 17%.
(20min delay)