Interesting german article about the recent announcement. Looks like the german Axino Capital is a PSC shareholder as well. Translated the article with google chrome.
https://www.axino.de/aus-der-redaktion/190-prospect-resources-ltd/3006-prospect-resources-kuendigt-sich-hier-grosses-anProspect Resources: Is there a big announcement here?
Investors who are not ignorant of any hype, but pay attention to fundamental data and attach great importance to the sustainability of their equity investments, should look at the Australian lithium companyProspect Resources Limited(ASX: PSC, ISIN: AU000000PSC9), presented by axinocapital.de,www. prospectresources.com.au, besure totake a closer look, because the press release of July 6, 2020 has a lot of potential.
Even if the company deliberately kept the press release somewhat nebulous: From now on everything could go very quickly and in the end there could be nothing less than a takeover of the Arcadia Lithium project or even a complete takeover of Prospect Resources by a major investor.
Arcadia has many unique selling points.More and more companies that need lithium are taking notice of these special features.However, the current market capitalization of Prospect Resources is only a lowEUR 12 million (EUR 0.04 / share)and therefore hardly reflects the actual value of the project adequately.
axinocapital.de and its affiliated companies are themselves shareholders of the company.There are therefore potential conflicts of interest, which we of course disclose according to MiFID II.Nonetheless, we are seriously wondering how to interpret today's Australian company press release.
Will Arcadia or even the full prospect resources be bought before the company becomes known to German-speaking investors?
We cannot currently imagine that a possible transaction will take place based on the current market capitalization.If only because the management of Prospect Resources itself holds significant shares in the company.So what could happen in the short and medium term?
Australian investors will probably study the press release more closely and, like us, will also come to the conclusion that the stock is significantly undervalued and therefore has to rise.- Yes, must go up, otherwise there will be no transaction.The52-week high of EUR 0.15provides a first indication.Prices may also be called far beyond this, because it should be clear to everyone involved that Arcadia or Prospect Resources would still be a bargain for every buyer even with such a price.
We can imagine that management would advise shareholders to sell the company completely if an attractive offer is made.The outcome is uncertain and therefore pure speculation.But we are pretty sure in one thing:the price has to go up!
Lithium projects are like sand at the sea.For us, Arcadia is one of the best projects in the world because it is unique.It is the most developed lithium project in Africa, has an impressive current feasibility study and already has three top-class potential customers for the lithium that is still to be extracted.
The lithium hype has undoubtedly stalled after the widespread enthusiasm for e-mobility has waned, at least in the western world.But Prospect Resources not only has the world's seventh largest lithium deposit.It will also deliver unique products for other industries.In addition to spodumene concentrates for the e-mobility market, petalite concentrates for the glass and ceramic market are also to be produced.The latter will most likely be able to achieve a significantly higher price due to its extremely low iron content on the world market compared to peers.If the general public considers e-mobility to be reliable, nationwide and affordable, the lithium market will turn again and the prices of its products are likely to rise sharply again.
With regard to environmental compatibility, the mining of lithium products from solid rock is now considered to be much more positive than the extraction from salt lakes, because this is not possible without extremely high groundwater consumption.The feasibility study for the planned Arcadia mine shows that this solid rock deposit can produce valuable lithium products with an estimated total value of USD 3.42 billion over a period of at least 15 years.Added to this are further proceeds from the expected tantalum and cesium sales.The study predicts an excellent project return.The investment rate of return (IRR) is exceptional at 71%.The estimated $ 162 million investment in the mine would theoretically pay for itself in just 1.5 years.
The necessary political backing is also in place: the government in Zimbabwe is fully behind the project.In the first five years after the start of production, it will waive some of the export tax.The pan-African multilateral financial institution Afreximbank has already shown interest in participating in the project financing with a credit line of USD 143 million.
No wonder that with these impressive key data for Arcadia, some top-class global companies want to secure their future need for lithium now.Uranium One, a subsidiary of the Russian state-owned nuclear power company ROSATOM, wants to buy at least 51% of Prospect Resources' future lithium production after positive due diligence and completion of all negotiations.Sinomine Resourcesis a Chinese producer of battery-compatible chemicals such as lithium hydroxide and carbonate.This company entered into the very first purchase agreement with Prospect Resources and is also its major shareholder.But the EU also stands with the traditional BelgianSCR-Sibelco NValready on the list of future customers and customers.After all, it is Europe's largest retailer of ultra-pure petalits.
Conclusion
It is not yet clear at the present time whether a transaction is coming and if so in what type and on what terms.One thing is already certain, however: the valuation of Arcadia and thus the valuation of the shares of Prospect Resources should benefit from possible discussions in the long term.We see here a lucrative speculation that cannot be found on the stock market every day.The renowned and globally active investment bank Renaissance Securities (Cyprus) Limited has already been appointed as an exclusive advisor by Prospekt Resources.
Link to the English press release
https://www.prospectresources.com.au/sites/default/files/asx-announcements/6985279.pdf
This is my personal opinion only and it is not financial advice. Do your own research.
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