Here we go
We participated in the Great Western deal because Great Western is our top pick in the space, because we do believe there's a great deal of value there and because we would be happy to have our clients own a stock where we are fairly certain that the returns are not going to embarrass us.
TCMR: In a Dec. 1 research report on Great Western, you noted that the company's latest round of financing was not sufficient to complete mine construction and required processing plants. However, you expect additional non-dilutive financing. What form will that financing likely take?
JH: There are two possibilities. GWG's prospective partner, Aichi Steel of the Toyota Group, may provide financing in the form of debt. There's also the prospect for non-dilutive financing in the form of off-take agreements – cash payments up front for guaranteed supplies of material and even perhaps material at a discount later.
TCMR: Who are the likely players to come forward for those agreements?
JH: It could be an entity like Toyota Tsusho that will take the material and sell it within the Toyota group and to outside entities. It could be a group like Albemarle or a BASF, which needs lanthanum and cerium for its catalytic materials, but have been buying those materials from Ganzhou Qiandong Rare Earth Group Co. Ltd. (GQD) (which GWG has partnered with on a solvent extraction joint venture). Knowing that the quality of material out of GWG will be the quality of material that GQD has always produced, there may be a number of offtake partners emerging soon.
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