Question on takeover pricing

@CaptainGrumpy

In order of importance to deciding value in a transaction:

1. Bidding war - whoever bids highest

I do not see RIO or any other going after this. Will be Chinese or Japanese only. Japanese paid a high price for ORE and that has not given them security. Maybe the Koreans come in but they would still have to toll through the Chinese.

Excluding a bidding war, if we were are all sitting around the table / drinking / talking takeover prices:

1. Similar transactions are weighted the heaviest - GMM / GXY combination - their EV / Resource is 3x higher so takeover price would be 1.80 / share (unrisked) (maybe apply a 20% discount as they are producing cash) - 1.44 /share (risked).

2. Relative valuation to a local company - for us that would be Tianqi Lithium (10x multiple difference) or Ganfeng. Assume they do not want to pay 10x multiple but would pay 2x our current price and therefor PLS would still be cheaper by a multiple of 5. Takeover valuation 1.20 /share.

3. Value per ton of resource. So if current price is 700/ton and our extraction cost is 200 /ton that leaves 500 /ton potential value. Our current market cap against our resource is around 350 / ton with 150 / ton upside potential + strategic value (once Chinese get PLS they control the lithium price) ~ so let us say takeover price of 1.20 / share.

4. Discounted Cashflow Model - very arbitrary.

So if a bid came in right now I would expect 1.20/ share to 1.44 / share as a realistic expectation today.

If the company had more time I would expect higher.

@ozblue is trying to get us to a point down the road with cash flow that this would be higher.

Would love to see higher numbers.

Cheers,
Super Ninja