
Tesla offered $325M for Salton Sea startup - galori
http://www.desertsun.com/story/tech/science/energy/2016/06/08/tesla-offered-325-million-salton-sea-startup/84913572/
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johnm1019
The article raises a few interesting points I didn't know:

\- In SoCal there are several areas which have geothermal activity and
correspondingly several electric plants based on that

\- This geothermal activity raises both hot water and a fair concentration of
a brine solution containing many metals

\- The lithium isn't mined, they were getting it by processing this brine
solution

Based on that, and reading many comments that modern batteries also needs lots
of Co, Mn, etc... I wonder if the brine water coming up from this area is
basically 'battery soup'? Seems like a lot of potential value that is already
being pumped out of the ground by someone else - who considers it a waste
product!

~~~
ci5er
Yes, but it is pretty thin soup!

~~~
cmdrfred
Boil it for a while?

~~~
ci5er
I know (expect?) you are being funny - but one of the things that the eco-
people always miss in their end-to-end cost calculation (that they do not do)
is the cost of "boiling it for a while". It's like free energy! :-)

~~~
moron4hire
And a thing non-eco-people (wtf?) seem to miss is that eco-people aren't all
the same person.

~~~
Retric
I am rather low on the eco scale. Pollution including CO2 IMO should be
heavily taxed as a negative externality. But, things like land preservation is
really just about land use with leaving it alone as one option. Extinction is
another meh issue. Make an effort to preserve DNA, but trying to save animals
that compete with humans is rarely going to work well.

So, recycling for example needs to be a net gain when adjusting for
externality's not just a pointless feel good measure. Eco homes are another
pointless waste. Want to save the environment live in a condo.

Basically, you can do what you want with your land, but don't hurt other
peoples air, water, etc.

PS: Needless to say, rarely do I find people with similar viewpoints.

~~~
PCMcGee
Please, realise there is no "your land" island on which people live apart from
the ecosytem. Personally, I feel that living on "your" land is fine, it's that
market mechanism forcing the extraction of value from it that scares the shit
out of me.

~~~
Retric
I am all for curbing polution and even city's have ecosystems, but they look
nothing like untamed land. Saying, you can't turn your property into a parking
lot because _reasons_ is rarely well thought out.

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newacct23
>$325 million, paid in Tesla stock.

>Musk wrote in a June 21, 2014 letter to Simbol CEO John Burba

Jesus. I probably wouldn't have taken this deal either because it's all in
stock but damn they must be kicking themselves right now.

~~~
ckastner
All in stock of a not-yet-profitable company who's stock price has been highly
volatile in the past.

I don't mean to disparage Tesla, but rather to emphasize that there's a
difference between receiving $325 million in cash, $325 million in blue-chip
stock, and these $325 million.

~~~
gondo
THIS! it seems like everyone simply assumes that current stock value = cash
value. if it was true, than the offer would be $325m in stock OR in cash. but
not even Elon think that offered stocks are worth $325m

~~~
banktaoe
If they wanted to guarantee cash, they could've bought a collar by selling
calls and buying puts. It would have a very small cost, and the deal's
investment bankers could set it up, no problem.

tl;dr: you're both extremely confident, ignorant, and wrong.

~~~
MagnumOpus
If it were that easy, Tesla could do the same. It is not that easy. While you
or any other spiv can buy a collar on $10k or even $1m worth of stock for a
super short period (1 month, 3 month), it is an entirely different thing to:

\- But options for multi-year expiries (because that is how long the disposal
will take, after the obligatory lockup)...

\- ... in a stock that is 1000x less liquid that your usual AAPL or GOOG...

\- ...on a short notice on $325 million worth of stock, i.e. a huge percentage
of the free float of the stock, making it impossible to hedge for any bank
that offers the collar.

tldr: You are a bit too cocky given your lack of knowledge.

~~~
jonknee
FWIW, Tesla is a high volume stock and over a billion dollars worth of TSLA
shares are traded daily. It's comparably liquid to GOOGL.

The full $325m would be about 1.5M shares which would be 15,000 options
contracts. Quite a bit, but not too far from the current action in some
December strikes (the 50 put has 11,883 open contracts).

tl;dr You could quite easily either divest of the stake outright or protect a
large portion of it through options.

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chaseideas
Like they say... hindsight is 20/20...

Finding this piece really interesting though for other reasons. Had a similar
idea for a project based in that area a couple years back. Imperial Valley (in
general) strikes me as a HUGELY under-capitalized opportunity at the moment.

As a San Diego native, grew up familiar with it as the cesspool and stink-
puddle that it is... but, if you look into the history of Imperial Valley and
Salton Sea (and the abundance of mineral-rich 'dust' and other waste) it's
actually an extremely fascinating tale.

Anyone want to put a few million into helping establish a similar project?
Seems like there's way more than just Lithium to be monetized out there.

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lifeisstillgood
So roughly what we know can be summarised as

\- company has promising but not proven scalable means to extract lithium from
drilling waste water.

\- company gets all stock offer from Tesla which to all intents and purposes
is "if tesla succeeds you get rich, if not you fail as well." Not clear what
voting rights there were.

\- company seems to have not responded one way or another.

And who can blame them - they work for the dream, and the best offer is to
take a part of someone else's lottery ticket. Turns out it was a good bet but
who knew.

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samfisher83
It looks the investor wanted the company to go to BK. Maybe they were also the
senior debt holder which means they could potentially get the company cheaper
since senior debt holder have highest priority in getting paid back.

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peter303
Remember this isnt a proven technology yet (lithium brine mining). There are
tons of promising projects in the sheltered environment of chemistry labs that
dont scale up in the real world due to unforseen complications. I'd say 9 out
10 promising battery announcements fall into this category.

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garyclarke27
Tesla should buy the Jadar mine in Serbia, huge deposits of Lithium, Rio Tinto
seem to have done nothing with it! Serbia could do with some positive
investment, economy is still dire, lovely people who deserve a break.

~~~
dogma1138
The amount of lithium in LiOn batteries is actually very small a common
chemistry 18650 has between 0.3 and 0.7 grams of lithium per battery.

~~~
Reason077
More than 7000 of those cells go into a Tesla battery pack. That adds up to
several kilograms of Li per vehicle!

~~~
dogma1138
Yes but you use more manganese or cobalt or w/e based on the chemistry of your
battery than Lithium. Oddly enough if Tesla is going to buy mines for
batteries Lithium most likely is not going to be their first buy. I don't know
exactly what chemistry Tesla is going to end up using but if it's LCO/NMC
which is 60%/20% cobalt they probably want to find a source of cobalt before
lithium. If they are going to sploosh on super fancy NCA batteries (unlikely
since they only do about 500 cycles, LCO and NMC are the most likely chem for
EV's) which are only 9% cobalt that still probably makes sense since the world
production of cobalt is about 10 times smaller than the production of Lithium.

~~~
PCMcGee
Musk mentioned nearly the exact percentages of metals used in the last Tesla
shareholders meeting recently.

~~~
dogma1138
Do what are they? I couldn't easily find out, I've seen various sources
quoting NMC and some indicating that they are switching to NCA.

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michaelbuckbee
The facts are still a bit scarce, I wonder if their claims of a more efficient
extraction process failed to scale up.

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powertower
For the curious, this is the patent for the tech -
[http://www.google.com/patents/US8637428](http://www.google.com/patents/US8637428)

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jrcii
As someone who grew up in Palm Springs I can't believe there was a startup
there. There is absolutely nothing going on there. Maybe it's changed in the
last 10 years.

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jeffwass
The HN title is quite a misleading alteration of the actual title.

There's no mention that the startup "refused" the buyout, and it was unclear
why the negotiations fell apart.

The actual article is simply titled "Tesla offered $325 million for Salton Sea
startup".

And here's a quote from the article giving a different picture : "The person
with knowledge of the negotiations told a slightly different story, saying
Musk shut down all discussions after seeing the $2.5 billion valuation from
Jefferies. According to that source, Musk abruptly ended all negotiations
after reviewing the valuation, never giving Simbol the chance to present a
counteroffer to his proposed $325 million purchase price."

~~~
chaseideas
Definitely seems like there was some creative liberty in the submission title.

I suppose a "refusal" could be inferred by the lack of their acceptance on the
initial buyout offer and their (apparent) rebuttal of a $2.5bil valuation.

For instance, if I offered you a million dollars cash for your house and you
came back to me with an appraisal saying it was valued at $20mil... I think it
would be clear (or at least _strongly_ insinuated) that you refused my offer
of a million dollars.

Thinking that's kinda what happened here? Seems like Elon didn't take to their
method of countering and called the whole thing off.

Just my $0.02 and I'm not privy to all the inside-details. Could've gone down
entirely different than any of us know.

Plus, it seems like there's a LOT of infighting among the co-founders and
previous team. Will be curious to see if more information emerges.

~~~
Alexx
In the UK at least, under case law (Hyde v Wrench, 1840), if you give a
counter offer it legally voids the original offer. So if you offer to buy
something for £1m and the seller responds that they will sell it to you for
£2m, the original £1m offer is legally terminated - so in the UK, legally
speaking, this would count as a refusal.

Unfortunately I'm not familiar with how this translates over to US law, but
I'd be interested to find out.

~~~
dietrichepp
That's an interesting question about US case law, but my guess is that the
negotiations had lots of clauses like "this supercedes any prior offer" and in
this case things are a bit cut and dry, legally speaking. That's why we have
lawyers, after all.

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PaulRobinson
1\. Buy mine in Serbia

2\. Invest hundreds of millions in mine

3\. Have mine taken off you by Putin one day when he's pissed off at the US
State Department and wants to strut to the Russian electorate

4\. Cry

Seriously, you would be utterly insane to invest in Russia at the moment with
money from US, UK or EU. The reason Rio Tinto are so reluctant to invest might
well be because they know it could be taken off them tomorrow.

~~~
smcl
Not sure if you're trolling, but Serbia is not Russia. Serbia was part of
Yugoslavia before the breakup, and it was vaguely heading in the direction of
EU membership until recently.

However I think that effort has stalled in recent past and relations with
Russia got a tiny bit cosier, so you might not actually be so wrong after all
:)

~~~
gaius
Crimea is not Russia either. Oh wait yes it is now. All bets are off in that
part of the world right now. And prospective EU membership just makes things
worse; it was Ukraine snuggling up to the EU that provoked Russia into
intervening...

~~~
michaelt
To get from Russia to Serbia you'd have to go through Hungary or Romania both
of which are EU member states.

I know the EU doesn't have a history of coordinated military action. But if
tanks crossed EU borders France, Germany, Britain and Italy couldn't ignore
that.

~~~
gaius
NATO is the mutual defence pact, the EU was spectacularly ineffective in the
former Yugoslavia.

~~~
michaelt
Yugoslavia wasn't part of the EU at the time though?

You can't really judge how an alliance will respond to conflict crossing their
borders on the basis of how they've responded to conflict outside their
borders. Governments and militaries think borders are a pretty big deal!

More generally, there are some people in "the European project" who would like
to see a United States of Europe with its own foreign policy and military. But
this is pretty unpopular with voters in most member states, so everyone
involved is happy to keep that level of integration on the back burner,
leaving member states to respond how they like to foreign military conflicts
while the EU maintains "We're a pacifist trading union, not a belligerent
military alliance or a superstate, shucks we don't even have a military"

Politicians are happy to keep kicking the can down the road on EU military
coordination for as long as it's politically convenient. But if an EU member
state was invaded, they couldn't do that any more; they would have no chance
but to make a decision.

And public opinion is far more likely to support (and may even demand) a
tough, belligerent stance if Russian tanks have are invading our allies.

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galori
Apparently lithium gets mined. Who knew.

