Image by laughlin via FlickrThis is an update for those of you who took my advice and bought Salares Lithium in early July for around .60 cents per share. While their is a current hold on trading this stock (LIT-TSX-v) it is by no means a time to worry. It is a time to rejoice, because you have just doubled your money, at the very least. Here's why!
Talison Lithium is currently a privately owned company in Australia, producing lithium carbonate and shipping into the Chinese market from two operating production sites. In fact, it is the largest supplier of lithium into China at present.
Talison and Salares are merging into what will be one of the largest lithium producers on the planet, and the "only pure lithium production company" to be listed on the TSX (not the venture exchange). that will occur on Sept 17th.
I have spoken with Salares CEO Todd Hilditch and company consultant, Matt Johnston who assures me that the new company (he will provide the stock symbol in the next few days) will strike somewhere between $3.50 and $4 per share when it is launched on TSX in September. At that time, Salares share holders will own 1 share of the new entity for every 2.81 shares they hold of Salares Lithium (LIT-TSXv)
With a price cap between $340M and $350M, this equates to approximately 35.6 % of the new entity will be owned by current Salares shareholders which should return approx $1.25 per share, or more to those of you who took my advice 3 weeks ago.
If the TSX-v allows trading in Salares over the next few weeks, I will not part with many of my own shares. (of course I will take profit on a portion - maybe 15-20%) as I see this as a strong, bullish move for our holdings. The new company will be the only lithium producer listed on the TSX at a time when the electric car market is gaining momentum, and new lithium ETF's (NYSEARCA:LIT), are popping up on the NYSE.
This new company will have to be included in these ETF's, as a front runner in the lithium space supplying the huge Chinese market and developing the huge Salares 7 project that Salares Lithium brings to the merger table.
When I first posted on Salares Lithium I speculated that SQM (NYSE:SQM) of Chile may make a play for Salares, however it is Talison of Australia that has picked up this gem for it's future projects. Put Sept 17th on your calendar to pick up some shares in the new company before the ETF's do. We already have.
Disclosure: own LIT-TSXv