Trying to understand the benefits of LPV for Largo's shareholders. This is my understanding and would like to hear your opinion in this topic since it is not very clear to me...
1) Largo owns Largo Clean Energy which will manufacture/sell VRFBs under the brand VCHARGE
2) Largo produces high purity Vanadium that it will use to produce electrolyte for its batteries
3) Largo created Largo Physical Vanadium (LPV) which owns the Vnadium used in the batteries
Under reported aggrements (PR Feb 2 and Feb 24) LPV will be acquired by Column Capital Corp. (CPC)
From the PR:
LPV:
- will invest and hold substantially all of its assets in physical vanadium products and provide direct investment exposure to vanadium
- LPV’s physical vanadium holdings would be used, in part, in long duration VRFBs
- the batteries will act as secure safe-keeping for LPV’s physical vanadium holdings.
- Storing vanadium in VRFBs would provide the opportunity of generating rental revenue to offset part of the administrative costs of LPV
- LPV presents an opportunity for Largo to monetize its vanadium used in its VRFBs in addition to the revenue it expects to recognize from the sale of VCHARGE battery components to prospective customers.
- The substantial benefit of LPV to Largo is expected to arrive following the sale of additional VCHARGE batteries to prospective VRFB customers.
"Upon completion of the proposed qualifying transaction, the CPC will have acquired 100% ownership of LPV and the business of LPV will become the business of the entity resulting from the proposed qualifying transaction" Largo Contribution In-Kind
...Largo will exchange vanadium equivalent products to LPV in exchange for common shares of LPV, on terms and conditions that will be determined in the context of the market. The size of the Largo Contribution In-Kind and applicable price will be based on the availability of material and will take other market related factors into consideration at the time.
In addition, LPV will enter into an agreement with Largo for a right of first refusal over any non-committed commercial vanadium equivalent products from January to October of any fiscal year from Largo.
If I understand correctly after the transaction:
- CPC will be the owner of LPV. Therefore, any expenses/revenues related to LPV belong to CPC and not to Largo
- As part of the transaction CPC, since CPC is acquiring full ownership of LPV- Largo will be paid for the value of its shares in LPV (what willbe the value? Costs related to setting up LPV,Value of Vanadium that has been contributed to LPV, ??).
"LPV and the CPC expect to effect a business combination that will result in the CPC acquiring all of the issued and outstanding securities of LPV in exchange for securities of the CPC, resulting in a reverse-takeover of LPV by the CPC. "
Also, keep in mind that Sprott is raising funds for LPV to the tune of 5-20 millions and if CPC is doing a reverse takeover will Largo shareholders or Largo receive anything at all?
The way I understand the "monetize" part is that Largo will sell its Vanadium to LPV. The sales will be done at market value (hopefully not funny business is involved in the agreement between LG and LPV regarding the price). The more batteries LGO sells the more Vanadium LPV will buy from Largo to be able to provide the required electrolyte for these batteries
Once LPV starts renting the Vanadium to companies buying batteries from Largo,will Largo shareholders receive any revenue from the rental?
Based on what has been announced and the incoherent answers provided by the executives it seems to me that Largo will sell Vanadium, also the batteries and this will be their main source of revenue.
Any future revenue generated by LPV from the rental of the electrolyte belongs to CPC since LPV will be100% owned by CPC
Will Largo own a substantial portion of CPC and this is how Largo will participate in the revenue generated by the rental?