So my SECOND observation which has already been raised here is the specific wording as to the Piedmont ' Supply ' contract.
My view is that the Market would have already factored in that the ' Contract ' wouldn't have NOT been disadvantageous to Sayona from a pricing perspective or LOM relevancy perspective , and which some of us had already been suggesting anyway. So while the announcement appears to be somewhat of a surprise given the wording and where it has come from ( ie Piedmont Annual Report ) , the known facts would have been known by at least the ' experts ' and ' omnipotent ' players......
and which this same information will probably will be highlighted in our own Annual Report as well. But it wouldn't have mattered because in the end Piedmont would have had at best only around 2 years to have enjoyed those previously purported ' adverse ' terms given that Sayona would have been well and truly on its way to most likely producing Li Carbonate and then shortly after Hydroxides. So even these terms if they had been purposefully diluted in contractual terms ....do not ultimately matter all that much for the same reasons.
So the Market is not ' fussed ' which would more or less explain the continuing sideways ' accumulation ' actions pending our own Annual Report release with comments and revised Top 20 information etc......
So the timing and drop of this ' clarifying ' announcement or information can still be seen to be ultimately controlled by the investors who are better positioned with the legal and fine print contractual interpretations. Or are they ?
Because Lithium Prices as we know are always typically quoted CIF China . We also know that shipping prices as they currently are have more than quadrupled since early 2020 and the advent of COVID-19 . So therefore we also know that from North America to CHINA , these cost under the current China requested ' Cap ' could still be considerable for any Spod shipped in this direction. In fact we always knew this as compared to Australian spod.
Nevertherless , the wording here is very clear in that the ' Contractual ' pricing is an ' Either ' one or the other type scenario proposition on the pricing.
So I guess what we hadn't been privy to is this fine print contractual ' Elaboration ' by Piedmont in their only today released Annual Report , and where potentially others were aware of this interpretation where others were not.
So the fact that whilst the" OR " inthe below wording of DAP pricing to Cherryville North Carolina would include almost every cost of Insurance , Loading and Freight Mode , and Product Costs ( ie testing ), The unloading end of the cost spectrum at Cherryville, including all the CUSTOMS costs if any applicable to the ' Importing of the Spod by Piedmont would have to be borne by Piedmont.
So that is an interesting discussion point in itself.
And so what are the costs of customs clearance and applicable duties if any that Piedmont would have to wear in the importing of this Canadian produced product.
My thinking on this then is that the CIF China prices verses the DAP Cherryville prices will clearly be much higher , and so the DAP pricing will still afford Piedmont a lower input cost than it would otherwise be paying at CIF China Market prices.
Talk about beating the Chinese at their own game. Beating them by reversing on them , the obviously higher costs of doing business with them vis a vis incurring the higher costs of freight which have to be built into their pricing. No wonder they asked the Americans to put a ' Cap ' on seaborne escalating freight costs ex- China to America.
" We entered into a long-term supply agreement with Sayona in January 2021. Under the terms of the supply agreement, Sayona Quebec will supply Piedmont Lithium the greater of 113,000 metric tons per year or 50% of Sayona Quebec’s planned spodumene concentrate production from the combination of NAL and the Authier Project. Under the agreement, spodumene concentrateinsurance and freight, or CIF, China market price basis on a delivered at price,orDAP, (Incoterms 2020) basis to Cherryville, North Carolina "
(20min delay)