As has already been suggested by both CNJ and GSR in their recent announcements, as well as by GLP in a recent interview, I think that it is highly likely that the Callisto/MTJV tenements/assets will be placed into an entirely newly created company (with an IPO), with the shareholders being IGO, GAL, CNJ and GSR.
IMHO, this new company would be very attractive to institutional investors (apart from being a far better investment vehicle for existing GAL and CNJ shareholders).
It would also obviously be a big win for IGO i.e. it would be a very cheap way for them to secure a major PGE/Nickel/Copper etc. deposit (and Lithium?) and thus an extremely important raw material supply in WA (and already near existing infrastructure!), at a time when the demand for these raw materials is set to explode over the next couple of decades.
IMHO, this new company (containing the Callisto/MTJV tenements/assets) will be run by IGO and GAL (thank God!). Its goal would be speedy growth and value creation, both for the company, as well as for CNJ shareholders (about bloody time!)
This new company will take CNJ to an entirely different level (after ca. 15 years of mismanagement, unfulfilled promises, as well as major geological miscalculations, basic strategic mistakes and regular and highly embarrassing corporate blunders) i.e. this new company will be all about enabling a much bigger future (rather than lining one's own pockets).
This new company will literally take years off the exploration and development process of the combined Callisto/MTJV tenements, as well as the construction of the mine, which will have extremely positive implications for shareholders (apart from the much lower exploration and development costs and far earlier profitability of the resultant Callisto/MTJV mine!).
In addition, by having IGO/GAL running the show, this new company will be exposed to a far greater global market for its raw material products (PGE's/Nickel/Copper/Lithium? etc.)
Normally, I would say that there would be very positive “synergistic" effects brought into this new company by all parties, however, in this case, it will primarily be IGO and GAL who will be bringing mining expertise, a far higher level of professionalism and business acumen etc. to the table (does CNJ have anything at all to bring to the table in this regard?).
Moving along to the other "synergistic" aspects, quite simply, the combined value or all four companies (Callisto/MTJV tenements + IGO/GAL's management and mining expertise, financial clout etc.), will be far far greater than the sum of the separate individual parts.
Diving even deeper, there are obviously significant "economies of scale" advantages to be had via a merger i.e. the lowering of exploration costs, lower technical and administration costs, as well as far better financing opportunities (debt as well as equity), just to name a few!
In summary, the larger the business, the greater the opportunity to leverage corporate opportunity to grow profits on a magnified scale. In addition, having one company acquiring its suppliers and service providers also enables control of the supply-chain and the applied prices, making the entire process far more efficient and far more profitable. In addition, this new company will end up holding a far larger raw materials market share (PGE's/Nickel/Copper/Lithium? etc.), which will give it a far more dominant position in the global market.
In a nutshell, CNJ really have only one alternative i.e. to merge with IGO/GAL. If not, i.e. if CNJ decide to continue to go things alone (and bumble on!), this would not only be corporate suicide, it would also be to the severe detriment of CNJ shareholders. In fact, the only winners that I could see if they do go things alone, would be the current management and the BOD of CNJ, who would continue to be paid for their services (which up until now, have been pretty damn poor, to say the very least!).
Having said all of this, it will clearly be the assay results from the drilling at the MTJV tenement (Phase 1 and Phase 2), as well as those from the Callisto tenement, which will determine the destiny of this project and potential mine entirely i.e. with great assay results, I doubt that even CNJ could screw this major opportunity up! (although they are still doing their best!). On this basis, I think that it is highly likely that the Callisto/MTJV tenements/assets will very soon all be placed into an entirely newly created company (with an IPO), with the shareholders being IGO, GAL, CNJ (and GSR).
Given this extremely positive potential future scenario, which I believe will unfold very soon, I am very optimistic about the future of a potentially new corporate structure for this fast emerging and potentially highly valuable and highly profitable Callisto/MTJV PGE's/Nickel/Copper/Lithium? etc. mine. I therefore remain fully invested in CNJ.
Wishing you all a pleasant public holiday and good fortune over the coming weeks and months.
CNJ Price at posting:
3.9¢ Sentiment: Buy Disclosure: Held
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