Spartex....Since the Idea made in my Post #13486 on 2/22/2018 of which the part relating to this post is shown below the hash tag line (###########), Nextsource Material's outstanding shares have increased to 468,933.611 per data from the TSX.
Actually such would have little effect on whats been written below the -hash tag line- assuming the idea were acceptable by the necessary parties. Thus the ideas numbers have not been changed.
If in effect one problem would be if/when new shares were issued. In such a case shares of each of the suggested new companies would have to be divided equally among. (Nextsource – Graphite) and (Nextsource – Vanadium) and possibly look negative for (Nextsource – Vanadium).
Further possible actions by (Nextsource – Graphite) could be to use bank financing to keep (Nextsource – Vanadium's) share count from increasing or by using -the ideas- Treasury Shares to develop (Nextsource – Graphite) Molo's Phase 2. Using the Treasury shares would increase (Nextsource – Graphite's) share count but not effect (Nextsource – Vanadium's). (Nextsource – Graphite) could also do a 2:1 reverse split and the 115,623,927 shares after a JV was in place would be 57.8 million shares which look good relative to potential earnings.
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Nextsource Materials Inc. should consider forming Two Separate Divisions within its Corporate Framework and then to allocate its existing shares on a equitable basis to each of the newly formed companies:
The First Company (Nextsource – Graphite). Will focus on production of Super Flake Graphite.
The Second Company (Nextsource – Vanadium). Will focus on production of Vanadium Electrolytes for both sale and leasing.
Presently Nextsource Materials Inc has 462,495,711 sharers outstanding.
If Nextsource Materials were to create - the Two Separate Companies on a 50/50 basis – there would be 231,247,856 shares in each of the new companies. In addition both of the companies would employ the Modular Plant Design methods. All of a shareholders stock holdings in Nextsource Materials would be divided between the two companies.
Not all shareholders will agree on the 50/50 basis to form the new companies. This could be, as (Nextsource – Graphite) would be closer to production than (Nextsource – Vanadium) and other percentage values might have to be agreed upon.
For example on a 60/40 basis (Nextsource – Graphite) would have (462,495,711 x 0.60 or 277,497,426 shares and (Nextsource – Vanadium) would have (462,495,711 x 0.40 or 184,998,284 shares rather than both having 231,247,856 postulated under a 50/50 basis. Thus on a 60/40 basis earnings for (Nextsource – Graphite) would be a bit lower. And based on 277.5 million shares rather than 231.2 million shares
Using the 50/50 basis below
(Nextsource – Graphite) will focus on production of Super Flake Graphite.
(Nextsource – Vanadium) will focus on production of Vanadium Electrolytes for both sale and leasing.
Based on costs for Molo's Modular US $18.4 million Plant with Total Capex at US $21.5 million and estimated mining and shipping costs of about US $690/tonne to produce the 17,000 tonne of Super Flake Graphite annually taken from the estimated $1014/tonne sale price, there could be a profit of about US $0.024 per share based on 231,247,856 shares outstanding. On the other hand graphite prices look to be increasing as EV battery demand is growing. It is not out of hand to see a price of US $1,600 tonne for Super Flake Graphite by 2019 when Molo is planed to be in production.. At US $1,600 per tonne its possible that (Nextsource – Graphite) could earn US $0.067 per share during 2019. At a PE ratio of 20:1 this could amount to a price of about $1.34 per share.
Considering a 50/50 JV with the Institutional Investors
Graphite is the main focus of this post and (Nextsource – Graphite) might also consider a 50/50 JV, but only with the Institutional Investors to further lower dilution. The recent heavy trading in next/nsrcf may signal that the Institutional Investors hold over 50% of Nextsource's presently issued common shares. If they agree to a 50/50 JV and hold more than 50% of (Nextsource – Graphite) those shares over 50% will – not be eligible for the JV.
If a 50/50 JV with the Institutional Shareholders is agreed upon, they would put up all the funds to build the Phase 1 Plant and surrender their 50% share holding to (Nextsource Materials - Graphite) which will be held in her Treasury to be used for her part of Molo's Phase 2 development as she sees fit. As a result (Nextsource Materials – Graphite's) outstanding share count would also be halved to 115,623,927 shares - without a reverse split as the result of such a JV. When production starts at Molo both (Nextsource Materials – Graphite) and the Institutional Investors would start paying 50% of the costs of operating and maintenance of the Molo Project. Both would earn 50% of the profit from Phase 1 and later if Phase 2 is developed both would share 50% of the costs to build and operate the Phase 2 Plant and share equally in its profits..
I believe such a JV would be fair to all, the Institutional Investors, the Company Insider's and the Retail shareholder's. Such would not create dilution of the shares held by the Company Insiders and Retail shareholders. The JV would provide both equal costs and profits to both (Nextsource Materials – Graphite) and the Institutional Investors.
The above ideas and JV thoughts could also be applied to (Nextsource – Vanadium) in the future.
