Long term ORE holder here. butcherboy is doing a good job, I'm...

Long term ORE holder here. butcherboy is doing a good job, I'm not going to repeat that. My post won't be as elegant as his, but nonetheless these are my thoughts.

ORE has dealt with some very unfortunate circumstances. Just as they started ramping up production the lithium price tanked, then soon after they got hit with covid. Argentina didn't deal with covid as well as Australia did, so our operations got hit worse than Mt Cattlin. 2020 was beyond even the worst case for the lithium sector. Taking those real world numbers during those nightmare years and comparing them to the "on paper" numbers of SDV is simply not fair. Not to mention that producing battery grade is much more complex than many people realise, and I have no doubt that GXY would face many of the same issues ORE did. Lab results and pilot plants are trivial, it's the scaling up that's the challenge. I think that's the main reason this merger is happening, GXY are seeing the issues coming and think ORE are better equipped to deal with them.

Much has been said on OREs struggle to make battery grade, but there's a missing factor. While ORE were ramping things up the battery grade market completely bombed, no one was buying. So they sold industrial grade instead. With the battery grade market returning they're once again ramping things up, in the latest quarterly they're producing 55% battery grade and that'll keep improving. And they have a nearly completed hydroxide plant in Japan to process the difference. There's talk of expanding that plant too.

There have been mentions of OREs lower price for their lithium. I quote from the latest quarterly "Approximately half the sales in the March quarter reflect contracts that were agreed in late November and early December prior to significant movement in lithium prices". Most lithium is sold in long term contracts, not spot price, so a sudden surge in spot prices takes longer to filter through. These are the realities of the real world of selling battery grade lithium, and if SDV was producing they would be dealing with the same market issues.

ORE have had very unlucky timing, a tough ride, they've been attacked consistently by commentators like Joe Lowry, and they've never had the amount of support on HotCopper like GXY and PLS do, so it's not surprising that the perception of them is on the negative side. But despite that ORE have been slowly ticking the boxes, being the first new player in decades to produce battery grade from brine. They have an excellent partner with Toyota, they acquired Advantage Lithium to gain a second monster lithium resource for future expansion, they've got a hydroxide plant nearly ready to go, a CEO with good links in Argentina. They've been carefully moving the pieces into position, navigating the tough times, and they're all set for the coming surge.

ORE don't need Galaxy. They've got all the partners, contacts, management, experience and deals they need. All lined up ready to go. All the things that Galaxy have struggled with for years. Galaxy are VERY lucky to get such a generous deal. They don't really have anything to offer ORE in return besides a nice resource and an advanced project. ORE could acquire something a bit less developed for much cheaper, they have the experience and means to advance projects themselves. But the lithium world is accelerating fast, so I can see how getting things ready sooner could make a big difference. I can see how the synergies can make up for a lot of what Galaxy is lacking, and the combined entity will be greater than the sum of its parts. So for that reason I'm optimistic.

I'd urge all GXY holders to read the latest ORE quarterly https://hotcopper.com.au/threads/ann-quarterly-activities-report.6011795/ ORE does very detailed quarterlies, which is great. This isn't a company just making promises, they're coming out of a rough patch (caused by internal and external factors) and they're getting things done. Exactly what GXY needs right now, someone to get things moving. ORE are much stronger than you think, the challenges they've faced are in the rear view mirror. They have a bigger overall resource than GXY, they are far more advanced than GXY, they've got the funding just like GXY, and their future expansion plans are just as ambitious. Look at the future, not the past. I think you'll find they'll more than pull their weight with this merger.

And yes, of course I'm going to be biased towards ORE. I have my reasons for holding them instead of GXY. But that's what this thread is about, so there you go.