The meeting notice got me thinking on a number of other related issues Folks.
Briefly on the meeting though , and a couple of quick observations . ONE is that the whole emphasis of these resolutions seems to be regarding the vote so they can effectively preserve and renew their ASX 7.0 15% capacity raising limit sooner than later. And that makes sense as I have been indicating the likelihood of a 15% SPP. TWO is that SYA can in fact offer shareholders and SPP provided 10 days notice to Piedmont who cannot obstruct unreasonably any capital raising intentions so long as they are offered on the same terms. The THIRD observation is that while the Convertible notes issue have a term of 5 years , there is also a provision that they can be converted anytime within 3 months and still NOT effect SYA's ASX 15% capacity raising limit.
My FOURTH observation is that while the Convertible Notes were originally worded up as the ' additional ' 10% interest in the Sayona Parent Company , the wording used for BOTH tranche 1 and tranche 2 seem to be more focused on projects relating to specifically mentioning Sayona Quebec. So in practice , if this were to be the case and it was really meant to be targeted to Sayona Quebec , this would potentially mean that Piedmont would have 41.5% of Sayona Quebec instead of 40% . So just an observation and a minor difference which probably means nothing unless Sayona and Piedmont change this future targeted 10% by further agreement.
O.K so onto the good stuff. And there are a lot and I mean a lot of moving parts on this one folks. Mainly because they have been very assertive in announcing up to 4 drilling programs . And of course one has to wonder where they have got all this new found confidence from ....not to mention where they will get all these additional funds from when most of the funds you would think have been slotted in for the potential NAL acquisition Hence a capital raising for obviously NAL , but also for such assertively planned drilling and exploration programs. And we know these don't come cheap right ?
So essentially I got to thinking why would you proposed a drilling expansion program on Authier if a) you were not reasonably certain that the BAPE was going to go through , and b ) why would you mention that the Authier proposed drilling program was to " improve the strip ratios " unless it had something to do with the increased likelihood that the NAL bid and " blending " proposition was going to be successful and winning Bid obtainable. Because Authier already has a fairly moderate strip ratio compared to say Sigma Lithium's Xuxa's project in Brazil who has a strip ratio of 9:6:1 ( see below Sigma comparison.) compared to Authiers current 6:9:1
So even if Sayona were to obtain some sort of Hybrid successful BID win for NAL , why then the need to improve the Strip Ratio. Answer this question and I believe we will have answered the question as to whether we are definitively involved in NAL , and whether Authier will be approved for excavation of it's Lithium Ore.
And it's All about the ' Economic ' advantage that Sayona's proposition has over its competitors. And I say Economics folks , because the more you look into the DFS Mach 2 and compare this again to some differentiating yet revealing similarities to Sigma's operation , you begin to get a feel for the enormous Cost savings and efficiencies which could be obtained by having the TWO deposits / ONE concentrator model versus a stand alone operation from a countering party who can only run out the NAL operation to its useful life.
And on the surface it is not as straight forward breaking out these costs because Sayona's DFS combined the TOTAL upfront costs of Mining and Processing together. This is o.k though because we can gather a rough split off of these differentiating amounts through the Sigma project economic analysis.
So as we can see by the attached comparative projects and their corresponding economics is that there is significant savings in both upfront capex via processing as well as ongoing operational costs savings and lower potential administration costs. And this is what makes the Sayona BID so unique....with potentially HALF the running cost , with at least 40% increase in the resource throughput , resulting in upto TWICE the bottom line earnings and virtually TWICE the NPV output. And no other consortium will be able to replicate this significant increased benefit's this combined project will produce. Only Sayona.
And when we do make the closer inspections , we easily begin to see the extent of these potentially HUGE chunks of savings of BOTH initial upfront capital as well as ongoing operational re-current annual expenditures. So by my estimates , there could easily be $30 - $50 million in capital cost savings as well as between $50 and $100 million further savings through recurrent annual plant processing costs. ( refer attached Sigma and Authier Comparative project economics )
DFS 1. Initial Capital Costs
The total capital expenditure proposed for the project is estimated atC$ 89.99M includinga C$9.2M contingency
DFS 2. Initial Capital Costs
• Initial capital costs C$120m; life of mine capital costs C$211m
So in looking at Sigma as compared to Just Authier , you can see in the attached JORC table comparison pic that while Sigma has higher grades resulting in 65% more contained%Li20 , the overall tonnages are within 12.25% with the main difference being the categories of Probable verses Proven
However if you compare this to the Total Authier project by taking into account the Indicated and inferred categories , of the ' open ' in all directions Authier deposit in upgrading the ' Proven ' from ' Probable ' , you are then getting very very similar projects. And hence the planned drilling program.
So WHERE are they likely to drill and WHY ? Well we can start by revisiting some of the key features of the Authier Deposit and then compare these wordings with various past drilling pictorials together with pics of the conceptual Authier PIT design and plan as well as the 3D modeling of the resource compared to the current PIT and the areas of further prospectivity. ( refer the pics below )
Geology and mineralisation
The Authier project hosts two separate mineralised spodumene‐bearing pegmatite systems including,Authier and Authier North. Authier is 1,100m long, striking east‐west, with an average thickness of 25m,ranging from 4m to 55m, dipping at 40° to 50° to the north. The deposit outcrops in the central‐easternsector and then extends under up to 10m of cover in the western and eastern sectors.
Authier North, located400m north of the main Authier pegmatite, is approximately 500m in strike length,7m average width, dipping 15° to 20° to the north. The Authier and Authier North pegmatite dykes remainopen in all directions. A magnetic geophysical survey has demonstrated that the Authier mineralisation ishosted within a strong east‐west trending magnetic low anomaly. Future exploration will focus onidentifying extensions of know mineralisation within this structural feature
Drilling
The Authier project has been subject to more than 31,000m of drilling. Between 2010 and 2012, GlenEagle completed 8,990m of diamond drilling in 69 diamond drill holes (NQ diameter) of which 7,959mwere drilled on the Authier deposit; 609m (5 DDH) were drilled on the Northwest and 422m on the south‐southwest of the property.
So when we trace the logical flow of these PIC's to current status of Authier , we can see by the planned phases of excavation of the PIT that the STRIP RATIOs then become more significant in the strategies of ' Blending ' Authier Ore with NAL's ore. They even eluded to this in their / ours ( Sayona's ) own DFS in regards to the blending of Authier Ore within Authier. So the concept has already been hatched within Sayonas own project plans
The mine development used a total of five push-backs, or phases, designed to meet thefollowing objectives:
• Enable the mining of high grade mineralisation as early as possible;
• Effectively reduce the stripping ratio in the initial mining stages;
• Balance the stripping ratio over the period of the mine life; ( as it previously pertained to Authier before NAL )
• Blend the high-grade and low-grade ore feeds over the LOM.
So considering these findings , you then see that it is imperative that they revisit the ' Step Out ' drilling on the yet to be ' Measure ' Westerly extension which is the Phase 1 Zone of the Authier main ore body so as to capitalise on the much lower strip ratios recorded at 2:1. And they will do this regardless in my opinion of the lower grades , because once they start defining into the measured by more drilling , the higher grades per the diagrams in this area will increase.
End result will be a higher grades , lower strip ratios , and achieved in much FASTER time frames in potentially feeding the NAL concentrator with blended feedstock.
In my opinion they will then focus on the Phase 3. zone which is the critical Authier North ' Indicated ' category and one which assumes a 5:7 strip ratio which significantly contributed to bringing the average down to 6.9:1. They will do this because the design already had this zone at lesser depths and so will result in obtaining the lowest hanging fruit with some of the lowest potential strip ratios to be utilised in the blending first.
So the options are almost endless for Authier , and a combined Authier / NAL but in summary it looks like the apparent ' Go Ahead ' on Authier Exploration together with the strategy of reducing strip ratios whilst increasing grades to expedite speed and blending quality early in the project would in my opinion SPELL out that there is a very very strong probability that we have a good slice of this project in our Corner.
This and the fact that Piedmont would have known this as almost a prerequisite to invest in Sayona. And after all it does speak fairly succinctly that Piedmont have access and be across ALL Siyona projects in the announcement yesterday including accepting their input and advice.
So in other words they would have done ALL their due diligence long before they took their stake. And this DD would have included all these comparisons and analysis as well as much much more of their own.
They've got this folks , and with only 50% offtake in place for JUST Authier as compared to Sigma's 100% at US$480 , we too could be having a re-rated market capitalization to that of Sigma's $C373.6 million ( A$381 million ) or 10.1 - 10.2 cents per share sooner than most think.
Keep in mind also folks that the DFS 2 assumed a CAD to USD conversion of .76 versus the current .78 , the Aussie has now appreciated to almost par with the CAD whereas at the time of the DFS 2 it was 7.7% less. So that means the C$216 project NPV is now worth an extra approximate $17 million aussie as is the previous EBITDA of C$461 million is roughly A$36 million more , and the LOM Net Revenue of C$1.412 Billion would be estimated at A$109 more than it was 14 months ago. Of course these approximates will be much more as result of any reduced upfront capital or LOM capital or operational processing expenses with the grand total of gains, favorable currency movements , and savings fast approaching $250 - $300 million in my opinion.
So Wins coming in from
ALL directions for Sayona with a revisit to 10 cents coming very soon I reckon.....
(20min delay)