Do you know what the next key financial and administrative milestone is? Are we just waiting for Chinese government approval?
What happens if Bacanora gets bought by ganfeng? Do we hold ganfeng? Are our shares sold?
I would be very surprised if mexican gov allows this big project to be owned by chinese ganfeng
Agreed.
NOT happy about this offer at all.
I’m not sure what will happen here I know their was talk of the Mexican government looking into nationalising some of these projects so I can’t imagine they would be happy about a Chinese company buying them out so could they block it possibly however it is equally possible they could end up driving the share price down or causing the Chinese company to pull their resources out the project so I wonder if it is better the devil you know rather than out the frying pan into the fire
100% agree with you regarding the Mexicans.
But I doubt the Chinese will pull out entirely - They’re already deep into it.
How Bacanora Lithium are letting down their shareholders and allowing China to corner the lithium market
Disclaimer: I wrote the article
To note:
The article was written by you, right?
Its just important to know that it is your own post.
I agree that I was aiming for a higher valuation, but I don’t think that the UK government will block the acquisition.
I could potentially see opposition from maybe the Mexican government, but I am not sure they can stop it.
Valuation-wise, just to note the NPV of 3.4 Billion USD that you quote is based on a 0% discount rate which is unrealistic. There has to be some opportunity cost (even if you assume that the price of Lithium will rise with inflation) and a cost related to the risk and uncertainty of the project. Also, any debt raised will have a cost.
In fact, the main umber the company quotes is an NPV of 1.25 Billion USD, which is based on a discount rate of 8%. After tax it becomes 800 million USD.
Your article:
The Bacanora presentation from April 2021:
I agree with you that for shareholders it is best to continue independently, to unlock the future value of the project.
And I also agree that for the UK (UK company) and Germany (2nd Bacanora project, ZInnwald, is here) it is also likely to be better.
I added a disclaimer.
I agree it’s important to discount NPV’s, however I used NPV 0 on the basis of lithium prices going up.
It’s also worth mentioning that the NPV is for one concession of Sonora. This project is scalable to even 200,000 Tonnes of Carbonate per year.
The other concessions Ganfeng will be picking up are adding even more value.
It begs to reason what the Board of Directors are up to.
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I agree.
At this point and if you are willing to hold for years, through construction and until they get the production to a sizeable amount the shareprice could do quite well. Although it could be quite a long time… (of waiting)
However, it could be that the second largest shareholder, M&G Investment funds, wants to sell before the share price falls again (during development). Between them and Gangfeng they probably control the board.
Lets assume China takes over company, what does that mean for our shares? Do we get 65p per share and the middle finger?
Correct. Well, 67.5p per share.
Most likely though, there will be a higher bid.
It’s times like this where 212’s lack of voting rights become an issue.
I contacted chat for a certificate, so hopefully if it comes down to a vote, that’ll be enough.
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Why do you think that there will be a higher bidder?
And who could that be?
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Interested as well why there should be a higher bid and on another note, what do I (we) need a certificate for? @GungHo
The certificate is to (hopefully) allow you to take it to Bacanora and vote, should it come down to a vote.
With regards to a higher bid, I doubt we’ll get a white knight coming along, but this is more than likely the opening gambit from Ganfeng.
Usually, the opening bid is just that - an opening bid. And bidding 67.5p a share, makes something like 80p a share seem a lot more palatable. However, I still think a bid north of £2 would begin to look reasonable.
I don’t see how Hanwa would vote for this - Average price 80p, and they bought in for the off-take. Would Ganfeng give them any off-take beyond the original deal, once they have 100% control?
M&G have their own shareholders. For what purpose would they wish to sell up, having held for so long. They bought on the basis of this achieving long term growth.
Unless there’s something underhanded happening, I can’t fathom how this bid (at this price) is accepted.
Ideal situation for us a shareholders is to kick up enough of a stink to go back to the JV situation.
Most likely situation though, is this gets sold at a price above 67.5p to Ganfeng.
Britishvolt if they have an IPO is worth a gander