I have some concerns, Can anyone comment/rebut on them..?
As a 50-50 JV, I think it's an appalling mis-match in entity size and structure. A minnow of a company up alongside a $Billion Corporation who have a completely different culture, objective and income profile. We've seen how terminally slow and suffocating legal actions are. IF SQM and KDR fell to dispute, SQM has several alternate revenue streams to tide along with and a suite of in-house legal experts with which they could drag a dispute out for years.
I see no synergy. At all. SQM are in another type of Li mining (might as well be another element). The 2 don't even speak the same first language. SQM has no operations here that they're bringing to the party. All they bring is cash. And with a rockstar resource, KDR could get that from anywhere. The only asset SQM
does have is decades of managing their own contractual mining interests which don't coincide at all with KDR's.
How adept would KDR be at being able to stand toe to toe with the dozens of elite accountants and lawyers on SQM's side on a month-by-month basis as they (e.g.) seek to feed every feasible expense from their corporate operations into the project. KDR people would be 100% assigned to mine project but who's watching the billing from SQM?
What insight would KDR realistically have into the going's on at any level with the SQM Corporate HQ in South America? KDR's Oz offices, mine and plant would have SQM people planted firmly at strategic desks covering key roles. I doubt a horde of KDR people would be likewise ensconced in Chile. "That's why you have Agreements" people can say but the devil is in the thousand operational invoicing details.
When you've got a hot item, the best and fairest way to sell is open auction or tender. Any Sydney or LA property investor can tell you that. If KDR's intention with this announcement was to spur suitors, I think it's a backfire manouver. Instead I think KDR are serious about this deal. But why the need for such haste? Poster's talk about possible take-overs from interested rivals, I think that's dreaming(?) It's expensive, messy and risky.
Then, why 50%? Was iy necessary to give away the key control for a grub stake? Why not 45%? Finally, the money in the deal with SQM is lousy. $80 Million would be just enough to buy you a
Sydney waterfront mansion with enough change to keep the grounds tidy...
