So people who know more than we peasants do decided not to put money in.
If they do/did truly want AUZ’s supply then it makes no sense at all for them not to have at least renegotiated the terms of the option deal. I truly believe that they played this as a denial of resource to their competitors game.
If SK has locked up an avenue of potential supply, its competitors can not make use of that.
It improved SK’s position in comparison to a competitor who didn’t get that deal.
Comparative value.
Company A has an offtake deal for potential future supply.
Company B does not.
Company A becomes a better comparable investment when considering that criteria alone.
Life’s a game & the world is the board we play that game on. SK got a free point in the game, ultimately that’s all it was.
If they truly wanted in why would they basically sabotage the project by not kicking in the very important first chunk of money that would have helped assure bankers etc as to the likelihood of the project going ahead in its current form? They would not.
Let’s say our mate has a business. If we invest sufficient moneys to acquire a 20% stake in his business, he can expand using those moneys & thereby get the business closer to a position where a financier or partner would kick in the larger chunk we need to develop the business’s core asset.
We did not invest. Our mate now can not advance his plans to that next stage. We either never actually wanted to help him or the situation changed enough that we changed my mind. ( as with most things the truth is probably somewhere in the middle ).
AUZ needs a partner which will meaningfully commit to being committed as SK is said to be at that moment because by not putting in the $80 million they’ve just made the commitment they’re apparently committed to less likely to succeed.
This has all been & continues to be a free lesson to other companies in what not to do- if the BOD here learn from it & can navigate a way forward regardless of it? Great. If not? Not so great.
( also of course a lesson to investors in what kind of deal one should cheer as opposed to which one they should question ). I look at that offtake deal as pretty much worthless because ultimately it gave no meaningful value to AUZ. Improving the SP didn’t translate to money in the bank.
Even $1 million to AUZ as a show of faith by SK would have been far superior. ‘You want my future supply? Ok- but you have to stump up some money right now for that. Quid Pro Quo.’ If the BOD here truly saw value in the promise of future supply why did they value that potential at $0?
I know I got a premium on the sale price of my properties back in Sydney based on development potential. I got money for that because both I & the buyer saw value in that future potential.
It’s all just a game & no one in their right mind gives things they see value in away for free.
SK may have made an error but as the ones with the money it kinda doesn’t matter. That’s one of the suckier rules of the game.
(20min delay)
