The Strikes Against LME Thesis - The Alternative Thesis Folks,
Further to my earlier note to the group posted on August 8th 2024 below is an alternative thesis to my "strikes against LME" note. Perhaps it's worth your time to look back on the facts and consider this thesis. It seems we have some time to do so...
In both thesis cases, the LME stock price will remain as is until a deal is announced - pending a leak from a trusted source on either side of a potential transaction that would drive the stokc price up. As an FYI, it's my view that RA's so called "leak on FB" does not qualify as a trusted inside source.
In my August 8th note, I laid out 8 strikes against LME that would prevent new money from taking a position in the stock:
1. No MRE
2. Limited mining expertise on the current board
3. No analyst coverage
4. No Sprott type partner firms as shareholders
5. No full time communications officer
6. Poor recent stock performance vs their quality peers
7. Reckless public posts by CEO spouse in the past
8. Not hiring a traditional mining focused M&A team
Others on this forum have added a few items to this "strikes against LME" list - little to no recent drilling activity and no presence at traditional industry events just to name a few.
In keeping with good debate practices, I offer the group an opposite of my "strikes against" thesis to consider.
This thesis begins with the belief that my earlier "strikes against" thesis is based on undeniable facts and then asks " who could overlook these facts" and proceed with an offer to purchase LME?
The clues to who this may be lie in the choice of USGC as an advisor as well as a careful review the actions of LME over the last few years.
Perhaps what LME leadership via USGC have been doing over the past year is hiring independent geologists to confirm the integrity of the LME data room. These groups - more than one I suspect who have been working in isolation of each other - may have been able come to a conservative consensus about the GEO potential of the Ishkoday property without doing and releasing to the public a traditional MRE.
Armed with their reports and conculsions, USGC may have built some kind of financial vehicle ( a PE Fund of sorts) and have solicited NHW clients from across the globe to provide the capital needed to buy out the LME current shareholders, fund future drilling and potentially move to capitalizing extraction operations.
Once USGC secures the necessary capital inside the fund, they table their offer. The timing of that step is pure speculation - but if we take the recent PR to be true - the action steps that USCG would be taking now would be gathering investors to capitalize this purpose built PE Fund.
They then table thier offer for LME.
There would a period where other parties could table superior offers. If other parties outbid them in that time period, the break fee included in their offer terms could potentially provide enough of a return to those parties invested in the fund to cover USGC's costs and offer the investors in the fund a nominal return. They could then choose to close down the fund. There is also the possibility that the fund would have held back additional capital in the event that a superior offer is tabled and they wish to increase their offer.
In this "PE Fund" thesis - the strikes against LME I listed above would not matter to the people who capitalize the fund as they are not looking at the acquisition of LME through the lens of a retail investor, mining specialist investment firm, or a large cap producer. Let's keep in mind that publicly traded large cap mining firms have put governance requirements in place for good reason and I suspect they are in no hurry to make any exceptions to their acquisition governance processes.
These governance restrictions may not be the case for a private equity investment vehicle who may be willing to use geological data coupled with modern predictive computational power to guide their investment decisions.
I suggest readers of this post take off thier retail investor hats and look back on the action steps and facts about LME through this "PE Thesis" lens.
Perhaps you'll come to the conclusion that we all have been part of a non traditional financial transaction that in time will prove to have been a major inflection point in the way modern technology will used to define mineralization, and how mining projects in the future are funded.
I have no facts to support when a PE Fund offer could be made public but note that the exclusion of USGC in the recent PR supports my PE thesis as they would be classified as a party to the transaction and restricted from being named in the PR.
I have no idea of the buy out price - but suspect that everyone who bought and held onto the LME stock will look back and say "that was worth it".
We all hope that Cynthia's commitment to her "alternative" approach works and that she has enough time and support to announce the disposition that she has promised. The fact is new approaches take time, but since time and money are not infinite she needs to wrap this up soon.
Before she runs out of money.
I am open to hearing the groups comments and how this thesis may be supported by the facts.
I remain long.
Time and Money