"risktaker" is someone who has posted on ShareJunction -- exceedingly frequently -- his views on Alliance Mineral Assets (AMA). One of his posts, dated 08-Apr-2018, is a good resource for key information on AMA's development. Here it is, with some editing changes:
Common Question & Answers based on my Research:
Important timeline for understanding the achievements of AMA during past 12 months:
1) Alliance & Tawana Bald hill join venture agreement completed during 19th April 2017.
2) Lithium Offtake Agreement and Prepayment on 26th April 2017
3) Maiden Lithium Mineral Resource on 14th June 2017
4) Construction Commences on Lithium Plant at Bald Hill Mine on August 2017
5) Bald Hill Delivers Excellent Metallurgical Test work results on 6th september 2017
6) Bald Hill resource update on 11th Oct 2017
7) Significant Exploration results continue at Bald Hill on 6th December 2017
8) Bald Hill on track for lithium production this quarter on 12th Jan 2018
9) Lithium Production commences at Bald Hill on 14th March 2018
10) Bald Hill plants Achieves Key Milestones on 29th March 2018
This is a company that had nothing in April 2017 and just 12 months later it has commenced production and achieved key milestones. This shows you the superb leadership of Tawana management, a 5-star management team.
Important Things to note:
1) Coming reserve upgrade to be announced soon will be significant. Note that total land explored is just 5%. (The total land is as big as Singapore)
2) Trading of Alliance was halted on Thursday and Friday for fund raising conducted by Cannacord Australia... new shares are only placed out to institutional investors or fund managers. (If u have contact with Cannacord and try to get some shares... they will tell u it is fully subscribed)
3) Alliance has achieved key production milestone and not in development stage anymore. The project has been de-risked. Each ton of lithium produced is worth 880 USD... it's a cash cow now. First shipment of 10,000 tonnes is expected to be this month worth 8.8 million USD. and followed by monthly shipments.
4) Production is expected to be fully ramped up by June/July so the tonnage would increase to 12,000 to 13,000 tonnes. Once fine circuit is installed it should hit around 18,000 tonnes per month by end of the year which is around 15.8million USD per shipment.
5) Financial report for 2nd Quarter should turn positive (It may change if they proceed with the 2nd DMS construction, but it only shows China's strong demand and the amount of lithium beneath Bald Hill).
Regarding the merger deal... just to recap.... I reckon this is a fair deal for both Alliance and Tawana...
Just some points I wish to highlight.
Will Alliance holders get Spinco shares?
Answer is No for individual Alliance shareholders but (after Oct) the merged entity will have 15% of Spinco.
Tawana's other assets will be spun out by June 2018, which is before the merger. The other assets will be injected into an entity tentatively named Spinco.... which will be eventually IPO, RTO or Takeover (based on Mark Calderwood's track record - happen before under MSR IPO).... so value will be unlocked for all Tawana shareholders maybe in 2019 or latest 2020...
FYI currently Tawana is working together with Western Australian government on the drilling of the Cowan project -- there is " co gov funding"
How will the merger affect my Alliance shareholdings?
For Alliance shareholders, there will be no changes to your holdings.
But Tawana shareholders will be given 10% extra for each Tawana share held. The ratio is 1 Tawana share = 1.1 Alliance share which will happen after the record date (Should be around late September or early Oct).
Current holders can basically ignore the current trading price. As this only happens in Oct 2018.... so no one will know what is the price.
Example: some investors brought 100k of Tawana shares @ 45c in April. (IMPORTANT Note: This example is premised on everything progressing well and market does not crash.)
By September 2018 with the resource update, progression, profits coming in and expansion of 2nd DMS, the share price of Alliance is lifted to 80c at record date (estimated late September or early Oct)
I bet everyone will be happy...
So just before the record date, Tawana should trade at a 10% premium to share price of Alliance: If Alliance trades @ 80c, Tawana should trade @ 88c.
But if it didnt: if Tawana trades @ 85c, and Alliance trade also @ 85c, no one should sell their Tawana shares, right? Because they would be getting 10% extra Alliance shares.
Is the share going to be dual listed on ASX and SGX?
According to the announcement, if I read it correctly, in order to list in ASX we need to have 75% of votes. So there is no guarantee that there will be ASX listing but very likely.
The merged entity with a bigger market cap will allow fund managers and institutional investors to invest... as many cannot invest in an entity whose market cap is below 500million.... So this will attract more quality investors....
Also it will be easier to deal with single company (rather than Alliance & Tawana) if there is any interested party to take over the entire company.
My view only and could be quite speculative as I assume everything will be smooth...As of today I have 0 position in Alliance....mainly because market is currently very bad because of Trump. I expect market to correct at least 10% to 20% within the next 2 months..... Fed is not showing any signs of panic.... therefore the market is currently in panic mode...
No one can foresee the future..... for me I may load batch by batch.... so that I will not buy at the highest price... Remember I am not advising anyone.. just sharing my view...
Watch drone footage of Bald Hill project -->