The Dawn of EV, page-1324

Re takeovers,
It is common practice commission an independent valuation report as part of a takeover. It is also rare for boards to recommend a takeover if the bid price is below the bottom of the independent valuation range. A number of games can be played on how that independent valuation range is determined, but it is supposed to be a comprehensive independent review.

Some of the items that would make it difficult to write an low-ball independent valuation report are:

• The current 44% Mn price is above the PFS estimates.
• Strong internal documentation should exist around smelter credits.
• The PFS only used the 50.6Mt of proved and probable resources. The remaining 212Mt of inferred resource is not part of the original NPV and has some value.
• The expansion study suggesting a low capex improvement in the project after-tax NPV from A$421m to A$798m. This increase occurred by bringing forward the production timeline of the 50.6Mt. It didn't include any value to the other 212Mt of ore.
• The HP scoping study suggested an after-tax NPV of US$395m to US$1,142m (50kt / 150kt capacity).
• Out year optionality would exist for further expansions.
• Any non-published internal material that has been written towards a HP feasibility study and any early work on a DFS
• Needing to attribute at least some value to lithium prospects (tenements are held with good geological characteristics)
• The October 2021 Petra capital research report indicating a A$3.98 value (and one poster indicated a new report is >A$5)

Despite the supposed if not probable valuation gap, an agreed takeover would be difficult becase a low-ball offer would likely stall on the valuation report. Hostile takeovers aren't that common and I doubt big players would go down a hostile takeover for a small entity like E25. I could however see management recommending a HP JV. It would take some potential value off the table for E25 shareholders, but it would materially improve the likelihood of the HP project proceeding in a timely manner.