TLG Ann: Anode project development and funding advances - 14th Jun 2022, 8:20am

[annb0t]

TLG Ann: Anode project development and funding advances
Price Sensitive: N
Date: 14th Jun 2022, 8:20am

>>> Read announcement: Google: TLG Market Announcements

 

[BigDog]

Positive news likely to help reduce the impact of the market wide sell-off. Either way, happy for an update that reassures us that financing is not looking like a problem.

 

[Smarty13]

So much more than that, soon we will have a better picture of what the company actually truely believes will be its run three output and scalable upgrades this is not the month to sell IMO

 

[Semmel]

For me, it seems to be a mixed bag for an announcement. The ASX deemed it to be not price sensitive, and maybe it wasnt a contributor to todays sell off. When looking at other stocks (I like to compare to NVX, SYR, VUL, we are kind of a bit below these. In the past, an announcement of non binding contracts was greeted with a selloff because investors rightfully expect announcements with binding contracts. This is a another announcement of different funding options, not funding directly. Its good to see, but its not the meat on the bone that I expect. Then again, I didnt expect any hard decisions before at least the processing concession but probably not before the environmental permit. But lets set the broader market reaction aside, its a bear market and positive news gets next to no reaction but if the CEO was to sneeze, we would sell off 5% at least. Negative information is currently waaay over reacted plus the general slide of the market (ASX 200 is down ~4%)

Lets look at the content. What is interesting here is.. Mitsui is missing. In the past, Mitsui was named as a powerful investor in the space with deep pockets that would invest in Talga in exchange for a ~20% stake in the company. With the development of the share price, I am glad that Talga is persuing other options. At this level of share price, an equity raise makes no sense. So its rather a good thing. But I also kind of miss any language or update on the Mitsui engagement as a whole. I am currently wondering if they are in the picture at all any more. We might be heading for another non-renewal of contracts in August.

Regarding funding from the EU, its very positive to see this in the update. The EU is planning to invest 300B Euros for the green energy transition in Europe. Finally! And I hope, Talga is one of the benefitors. We dont need to be given money, its enough to get a loan with good conditions that help us develop Vittangi so we can become a profitable business. I hope the banks that were named are providing a loan on top of EU finding to provide some form of 50/50 funding requirement or whatever the expectation of the EU is. A typical requirement is, that the government gives you some fraction of the funding for a project and you have to come up with the rest. I think we are seeing this type of funding structure develop here in this announcement.

 

[WheresTheMonkey]

For me, it seems to be a mixed bag for an announcement. The ASX deemed it to be not price sensitive, and maybe it wasnt a contributor to todays sell off. When looking at other stocks (I like to compare to NVX, SYR, VUL, we are kind of a bit below these. In the past, an announcement of non binding contracts was greeted with a selloff because investors rightfully expect announcements with binding contracts. This is a another announcement of different funding options, not funding directly. Its good to see, but its not the meat on the bone that I expect. Then again, I didnt expect any hard decisions before at least the processing concession but probably not before the environmental permit. But lets set the broader market reaction aside, its a bear market and positive news gets next to no reaction but if the CEO was to sneeze, we would sell off 5% at least. Negative information is currently waaay over reacted plus the general slide of the market (ASX 200 is down ~4%)

Lets look at the content. What is interesting here is.. Mitsui is missing. In the past, Mitsui was named as a powerful investor in the space with deep pockets that would invest in Talga in exchange for a ~20% stake in the company. With the development of the share price, I am glad that Talga is persuing other options. At this level of share price, an equity raise makes no sense. So its rather a good thing. But I also kind of miss any language or update on the Mitsui engagement as a whole. I am currently wondering if they are in the picture at all any more. We might be heading for another non-renewal of contracts in August.

Regarding funding from the EU, its very positive to see this in the update. The EU is planning to invest 300B Euros for the green energy transition in Europe. Finally! And I hope, Talga is one of the benefitors. We dont need to be given money, its enough to get a loan with good conditions that help us develop Vittangi so we can become a profitable business. I hope the banks that were named are providing a loan on top of EU finding to provide some form of 50/50 funding requirement or whatever the expectation of the EU is. A typical requirement is, that the government gives you some fraction of the funding for a project and you have to come up with the rest. I think we are seeing this type of funding structure develop here in this announcement.

I hear you but this part to me says Mitsui still in the mix "Talga's financing strategy targets a mix of project equity and debt,...."

 

[WheresTheMonkey]

Looks like BurnVoir have in the past advised Mitsui on other projects

Track Record | BurnVoir

www.burnvoir.com.au

 

[Semmel]

I hear you but this part to me says Mitsui still in the mix "Talga's financing strategy targets a mix of project equity and debt,...."

Might be the case, yes. Project equity is a stake in the Vittangi project, not in Talga as a company. I wonder how this would play out. They would not dilute Talga shares, but say the Vittangi project is then owned 70% by Talga and 30% by mitsui. Would they have to pay dividents and stuff? I have no idea how this sort of partial subsidiary structure would work.

 

[Semmel]

But I am on very thin ice with everything here because I have very little idea about it.

We all are to a large extend. This announcement is not easy to read or interpret. We have to be careful to not fall into whishful thinking, so being aware of ones own biases is important. I for one do not beleave that EU will provide most of the funding. Maybe half of it at the max, but not most. However, the structure of the letter of support / intend seem to be common when dealing with government agencies. Basically you have a chicken and egg problem. EU will fund our project if Talga can show (say for the sake of argument 50 50 split) that we contribute 50% of the funding. However, the banks will only give us the funding if we can show we get 50% support from the EU. So the letter of support / intend is the way to break the knot. The banks give us letters of support, we show these letters to the EU. EU agrees to give us the funding, with that Talga goes back to the banks which can now close the deal with us. Thats why it has to be non-binding because the banks need a way out if EU denies funding.

At least, thats how I read the situation and structure. The stuff with ABB is certainly very interesting and I dont really have a good idea how that is structured. Good find that SERV (gives me flashbacks to NGE-NERV) only be available to Swiss companies. This indeed implies a deeper entanglement of ABB with Talga. Would be cool if that was true.

 

[cosors]

We all are to a large extend. This announcement is not easy to read or interpret. We have to be careful to not fall into whishful thinking, so being aware of ones own biases is important. I for one do not beleave that EU will provide most of the funding. Maybe half of it at the max, but not most. However, the structure of the letter of support / intend seem to be common when dealing with government agencies. Basically you have a chicken and egg problem. EU will fund our project if Talga can show (say for the sake of argument 50 50 split) that we contribute 50% of the funding. However, the banks will only give us the funding if we can show we get 50% support from the EU. So the letter of support / intend is the way to break the knot. The banks give us letters of support, we show these letters to the EU. EU agrees to give us the funding, with that Talga goes back to the banks which can now close the deal with us. Thats why it has to be non-binding because the banks need a way out if EU denies funding.

At least, thats how I read the situation and structure. The stuff with ABB is certainly very interesting and I dont really have a good idea how that is structured. Good find that SERV (gives me flashbacks to NGE-NERV) only be available to Swiss companies. This indeed implies a deeper entanglement of ABB with Talga. Would be cool if that was true.

I think that sounds logical with the letters! For what security should a bank lend us its money and for what project guarantee should the EU give us funding without approval. I have emphasized in the discussion thread that I suspect that we need money quickly, almost immediately for down payments of orders for the production of the equipment.
What do you mean by NGE-NERV?