Listing Talga in the USA

Well I think I got full on "confirmation bias" ... but it makes sense to me.

I don't have any doubt whatsoever that TLG will fully list in the USA (and delist in Australia). When I say fully list I mean on either NASDAQ on NYSE. There will be no need for TLGRF OTC anymore.

I am also going to go out on a limb here and suggest that Talga will get its US list via a Special Purpose Acquisition Company (SPAC). I don't know which one (because if I did I would be in it) but there are a few already sniffing around the space. Also MP Minerals (the former (bankrupt) Molycorp if that is a name familiar to readers was list via a SPAC in Jul'20 and completed in Dec'20).

I would recommend reading through this
https://www.sec.gov/Archives/edgar/data/1801368/000119312520192954/d949883dex992.htm
which is the merger presentation from Fortress Value Acquisition Corp (the SPAC) when it did the deal with MP.

You should see some interesting reference items in the presentation (from Morgan Stanley) and also the flow ... could very easily be "Talga" instead of MP Minerals. What's really important is the target company profile ... MP Minerals like (but nowhere neat as good as LYC.AX) mines rare earths and processes them to compounds for use in magnets (amongst other things). TLG mines graphite and processes it into Battery Anode Materials. Similar concept

Here is how I think it can be done. Put your thinking hats on please.
Keep in mind we've just done a CR so our BS will be pretty clean and strong (as in not leveraged at all).
ALL $$$ ARE US$






The first and most important thing to notice and understand is the "Talga Group Equity Rollover". This is us the existing shareholders. MT and MS have to convince the SPAC that we are worth and that they agree to value existing equity at $1.2B right now (don't bother with its worth more, or a lot more, or less or whatever). I'm making the argument that at the present equity trades at ~US$1.50 and we have ~300M shares with people lining up to give the company money which they have scaled back! I'm assuming we'll be trading close to US$2 soon ... so for the purposes of "valuing" the equity its US$4 and 300M shares .... ergo US$1.2B (think like a greedy investment banker).

The second thing is we actually do need capital to do the project. So you see there is cash coming from the SPAC Investors (some of which is used to pay for the warrants issued to Sponsor) and also from Mitsui and LKAB (just $100M each). The result of all this is that net US$425M goes onto TLG's BS.

This makes the ownership look something like this ... original equity owns about 69% of the new company and note that the new TLG has only 175M shares issued (but at US$10 each) ... so roughly if you had 1,000 shares of TLG.AX that were trading at say AUD$2.50 then you would now have 690 shares of "new Talga" trading at $10.

Also note that we start off "new Talga" with $600M of bank debt (MS has to do something useful) as well $100M offtake pre paid by Mitsui. Our total liquidity is about US$1.175M ... more than enough to finish NS+Niska.




Why do I even remotely think this structure is achievable? It's already been done (with MP Minerals)

So how does TLG SPAC stack up against MP and also LYC.AX and for good measure Livent (specialty chemical company which mines Lithium and processes it to BG LiOH as well as other uses). This is a peer multiple comparison.

To quickly explain.
For a SPAC the typical share price at listing is $10 ... this is the "Yellow" Highighted box. So a direct comparison of value at SPAC list to compare Talga ans MP Materials is to scroll down to FY'23 and look at the EV/Rev numbers which is 8.4X for TLG and 8.2X for MP. Both of these can be compared to Livent and Lynas in FY'21 (i.e. a standard forward twelve month view). The "Red" highlighted share price box is what MP, Livent and Lynas are trading at as of last close. The "Pink(ish)" highlighted box is the MEDIAN ANALYST view ... so for MP its $25/share which begins to give you an idea as to what new investors might be paying ... in FY'23 for MP EV/REV its now 26.2 versus our 8.2 when priced at $10/share

The purple lines are now EBITDA as opposed to Revenue (remember earlier post about multiples and their importance on share price estimates). MP does very well in FY'23 ... but Talga as not yet hit nameplate capacity (look at FY'24 & FY25).




I keep hearing that MT is great etc etc. This is his chance.

Yes @pabs I know you don't like SPACs but this is a way to be very definitive about the value assigned to existing equity and not reliant on roadshows and book builds etc. You seen in the MP SPAC presentation a way to limit the dilution and the incentives etc.

I really do think there is a chance that we can get a great deal like what I outlined above. It will take all the negotiating prowess of MT and MS to get it done, but hey why not.

Would you rather this way or some other way. If the multiples are close it implies a market value post SPAC in the US$25/share range (new shares not old TLG.AX shares).