Originally posted by kropka
@luanboo
Would in your opinion current suspension have anything to do with SGX taking into account
that past TAW suspensions were no more than 4 days ?
I still think that the main reasons are negotiations and Burwill ROFR.
While on the subject of ROFR, I think NamesLittle compared this to PLS/ MIN situation in 2016 and only mentioned the price PLS paid to MIN.
I can't remember NL been involved on HC in PLS tread those days, but as a shareholder of MIN and PLS I was watching all developments very closely and IMO PLS/MIN case of ROFR had different base than A40/Burwill and would no worry about A40 giving away 100 M shares in order to get free of ROFR.
If anyone thinks that both ROFR's are similar, please put your points across for discussion as I am happy to challenge this based on facts.
The current suspension will not take into account any past history (SGX or ASX).
In my own personal opinion (with no concrete information), the suspension could bend either way.
One possible situation (negative) could be that the Burwill/JiangTe carbonate/hydroxide is a disaster (no announcement since ignition late Aug 2018) and Burwill are unable to onsell our spodumene concentrate to other converters because of the price that they bought from us. Hence, Burwill is not taking further shipments (after the last one in Nov 2018) in which the financial penalty will start to kick in (15 days after agreed schedule sometime in mid December) and moving towards breaching the offtake agreement (60 days after agreed schedule, estimated to be mid Feb). Alliance is then forced to start serious negotiation with other offtakers who are in the pipeline. This is not a good situation, as our negotiation power is greatly reduced as our key (and sole) offtaker is going to fallout of the agreement.
On the other extreme, it could be a very positive scenario whereby Alliance is planning huge increase in output from 155kpta to 300-600kpta (Fines Circuit and even DMS2). Burwill knows fully well they will not be able to absorb everything from Baldhill and definitely unable to support the expansion with more prepayments. Hence, Burwill is probably coming back to Alliance to dial back their earlier aggressive commitment for ALL output (made when spodumene prices was rising fast then) and give up their exclusive rights to avoid financial penalties and outright breaching the offtake agreement for late acceptance to delivery. Meanwhile, Alliance management has sprung into actions immediately after the merger to negotiate & signup 1 or more new offtake agreements. Given our quality products, there should not be too much of an issue to attract good offtakers at good prices, as long as we are not in a desperate situation.
Of course, there might be many possible scenarios in between.
We might have to patiently wait for the official announcement to know which scenario had happened. And while I hope the management manage to sort this out by this week, I am prepared that the suspension might be extended again. Till then, have a good day folks!
