Frankly there’s been minimal discussion on it. There’s endless repetitive focus on the other negatives of the merger like ASX vs NYSE, or a tiny debt from Livent, or a less than five percent error in merger ratio… these are all really minimal in the grand scheme of things.
I’m a long term investor, and for my investments I’m interested in what will make a stronger and more resilient company. No one has been able to make an argument of why NewCo won’t be stronger and survive bad times better than AKE will if it goes it alone.
Olaroz is a world class brine resource. Hombre Meurto is better because it has less impurities. NewCo has the once off opportunity to consolidate the Hombre Meurto Salar, but only as a merged company. If anyone can answer why the Hombre Meurto resource isn’t worth having them I’m all ears. As far as I can tell Hombre Meurto has huge potential for resource to be upscaled.
An other important point is that not all brine resources are the same quality and worth owning. It’s incredibly unlikely that AKE will be able to discover or buy a good quality brine asset will be found elsewhere in a desirable location.
What happens if there is a DLE breakthrough that makes spodumene uneconomical?
Also, whilst it has been studied and they think impacts will be minimal, are you willing to bet that Livents operations don’t affect SDV in 10-20 years time? What happens then? At best it will be years and years of court cases seeking compensation. For NewCo it’s irrelevant as they own both plants.
AKE Price at posting:
$8.48 Sentiment: Buy Disclosure: Held
