Significant news, Mr T. I guess we all have to ask ourselves, if a YES is being deemed a done deal, why stay invested at 23c?
Whatever happens in the tussle to own and control TMT's projects at Yarrabubba and **banitha, Largo dying certainly helps us.
TMT ( or a Supersized AVL ) can step into Largos boots, no worries, to serve the existing world market, and massive potential future demand from the further electrification our energy systems, erratic renewables supply, et al.
Ultimately, the high spec V price plays God for this project. A rising commodity price will attract the CapEx we need, and even help compensate for the dilution we're facing.
As we all know here, upside is amplified as income rises over fixed costs, potentially delivering exceptional profits, ROI, and exceptional SP gains. Even small price gains will have big NPV impacts.
If RCF's priority is simply to aggregate, and then, turn around it's AVL/TMT investment loses, it's going to focus earning a ROI on it's most advanced and valuable resources, without unnecessary delays and CapEx.
That means, whatever the corporate structure imposed, running with TMT's projects (while maybe retaining the AVL downstream vision in so far as the tax-payer grants and subsidies make that worth entertaining).
It's the upside case as far as merger is concerned. Investor confidence that RCF will take the brakes off TMT's progress and communications, and even strongly back the success of TMTs projects.
That would be a major positive.
I'd hazard to suggest, that this trust factor alone ( and the knock-ons like honest, positive communications, an active focus, and confidence that management are focussed on succeeding ) would today support an TMT SP exceeding 46c.
It suggests to me that today's 23c is fair to good value for TMT now. A Supersized-AVL, resting on the takeover of TMT's superior quality resources, would effectively be achieved by a dilution of TMT's SP by half.
At 23c the takeover and dilution by AVL is already priced in.
That is why I'm not selling my remaining TMT holding yet. There's a prospect of at least short term gains as RCF is assumed by the market to back the progress of TMT high quality projects, under their AVL shell structure. It may even turn out true.
The downside case on merger is that RCF ( in full control via a AVL board that knows it has been gifted TMT's viable projects ) will prefer to delay visible progress, maybe in conjunction with on milking taxpayer grants and CRs, to ultimately create a "financing crisis" that "only they can solve".
I've seen this often enough, the major financier and debt holder rides in as "The White Knight" and at very little additional cost secures a valuable and well advanced project, that taken private, and with the removal of a few simple roadblocks starts returning an exceptional ROI.
Which road RCF will take is yet to be seen, but in the shorter term there is good prospect for these TMT share to make gains above 23c, especially if Largo is failing!
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