On the topic of takeovers and company value. If lithium prices...

On the topic of takeovers and company value. If lithium prices stay at their current levels, the medium term intrinsic value of this company is in excess of AUD15. I'm basing this on the current contract price of spodumene / lithium chemicals and on PLS's proposed expansion plans. If anyone's going to go for takeover, they'll need to have deep pockets. In my opinion, all of the take over activity will be in the other direction - PLS buying out other companies to expand and diversify.

PLS still has the highest growth rate (56%) of any company on the ASX, so it would appear that the future remains bright, assuming the US debt ceiling issues get resolved soon.



US Debt Ceiling Developments

There's been another interesting development regarding the US debt ceiling this week. I'm posting this because it obviously has the potential to derail the stock market and thought that PLS holders might be interested in the goings on in the US.

For background, the debt ceiling in the US is about to be reached in the first week of June, and it would result in the US defaulting on government debt. This legislation was enacted in 1917 and is unique to US.

About a week ago, the Democrats came out and explained how they'd managed to pass a bill that would allow them to bypass the Replublican Speaker, Kevin McCarthy, who sets the agenda in the House. This would allow the Democrats to introduce a discharge bill from the floor that would effectively allow the debt ceiling to be raised. All they would need is 5 House Republicans (not the MAGA republicans) to side with them and vote to pass the discharge bill. Here's a video clip explaining this:



Now a second strategy has emerged. A US constitutional expert, Laurence Tribe, believes that the debt ceiling legislation, which was introduced in 1917, can lead to legal contradictions with the US constitution. The 14th Amendment requires that the President pass spending bills which the Congress has already passed. The current state of affairs in the US has led to a situation where the President may simply have to ignore the debt ceiling requirement to ensure that he upholds the constitution. This type of action was taken by Abraham Lincoln and is cited as being a precedent. Here's the clip explaining this:


The debt ceiling issue is potentially serious / catastrophic. The majority of the Republicans don't want to mess around with the debt ceiling. Unfortunately, the MAGA republicans are pushing the rest of the party in whichever direction they want it to go, because they hold a controlling minority in the House (hold the balance of power). It's worth noting that a number of the MAGA republicans hold extreme views and believe conspiracy theories.

Let's hope this debt ceiling issue comes to nothing and the continued buoyant lithium prices continue.

All just my opinions only.

GLTAH.