The reality is that SP was always going to give back a bit on the Friday AFTER the FTS offer closed and effectively went ' Ex ' issue
It never of course helps though when the market overall is giving back recent gains in the face of continuing recession fears off the back of the " Higher for Longer " rhetoric in terms of the FED's moves.
So it's always going to have a ripple effect into ALL classes of investment options. However , short of fixed interest as being the only place to hide......maybe currency relationship trades what are you gonna do but try and find the ' Emerging ' growth and gainers.
So the Market always finds a way to have Live ' with whatever the current situation is. But in my entire investing life , NEVER seen such a long and protracted narrative regarding ' Recession ' that has yet to eventuate on paper.
It's like the Market has been using it as an excuse in the absence of anything really ' Shock & Awe ' to ratchet it down.
O.K , so we've effectively had the post COVID economic landscape change in regards to contributing to supply chain interruptions leading to a ' decoupling ' in previous levels of Globalisation. And all of this has been in the face of the outbreak of significant conflict in Europe with the Russia / Ukraine war together with the continued elevation of uncertainty regarding China - US relations including Taiwan and the south China Sea etc.....
Despite all this , I still believe the Economy can enjoy the benefits of ' Full Employment ' and moderate inflation & interest rates.
Perhaps when history reflects back on this time , it will forever be remembered for it being the " Recession which NEVER happened but needed to be talked about endlessly " And the reason is for investors to try and create the opportunities from the oscillating volatility.
I mean , I would have thought that iff everything was as bad as they are suggesting that we would see a MASSIVE capitulation blow off on the DOW and other indexes. And we haven't had that.
In fact last year , our swings down and up were constantly measured in the 900 points range time after time , and now we're only talking 300 to 500 ish.
So with the risk of sounding to ' off topic ' in the economic subject matter , coming back to Sayona and Moblan for a moment. I am still of the view that when you have done and near completed a 60,000 meter odd drilling campaign when the last announcement back in June 2022 was for only 20,000 , surely you would be in a position with at least some of the drill cores to report back to the Market.
In fact I would have thought that you have a requirement if not an obligation to do so. Especially since originally they were talking in the narrative of ' Doubling ' the JORC resource , and are now talking it up by between 5 and 8 times.
So where is the at least at a minimum , the progressive ' Proof ' of this type of increase further and the ' Talk ' surrounding it. Because talk almost always resonates to investor expectations ......and when expectations are not met , therein lies the risk to Management and the BOD that the results have come in NO WHERE near what they had been talking up on the public record.
And so , the bar on this one has indeed been set very high on the investors expectations and should have at least been shown some further proof of this given the drill campaign had been increased some FOURFOLD , without ever communicating this to shareholders until some 4 - 5 months later.
That's just my thoughts on it. That surely there have been completed cores to update the market on , and that due the Authier 3 missing diamond drill holes which have never been reported on since December 2021 , ONE definitely has to wonder if they are simply buying themselves more time. If this were to be the case , I would think it a very dangerous game they are playing here with very high risks of leaving Investors disappointed.
And maybe that is the case . Maybe after that additional 20,000 metres advised in June 2022 they had nothing really of any further substance to report on and decided to continue on to 50 - 60 thousand metres and which again have shown nothing outrageously ' stellar ' but more mainstream steady and consistent rather than any single standout hole above the ' average ' expected. And so they need them ALL in order to move the dial to a figure which even remotely backs up their verbal claims.
But I do find it all interesting , because surely the right thing to have done would have been to capitalize on the release of progressive drill holes when market conditions were more favorable ......like the late Christmas rally , or the mid January rally in the SP. Because I can definitely see and feel that any sort of favorable figure for Moblan has NOT currently been priced into the SP. How could it be when you see and compare what resource definition and drill hole reporting had been doing for some of the other peer operators in Quebec - vis a vis Winsome , PMT , and others with ONLY nearology to these two players.
So it is a strange one to get your head around as to why they would choose this strategy to effectively ' wait ' on release of ALL results and a revised JORC over this period.
One reasons which would make at least some sense would be that they ( Quebec ) vis a vis I.Q and their 40% holding , is that they are trying to
' Shop it ' to another potential Sayona Partner. And this partner would NOT just have a mining focus , but a more broader downstream development focus as well. And so the reasonings here would be that while they are in potential commercial discussions , they don't want to declare the Moblan full potential because by NOT declaring it , it keeps the uncertainty factor up a bit and the SP obviously under wraps and still relatively cheap . Remembering of course that Sayona paid approximately A$125 million for 60% at a time when it raised the cash at an effective 14.5 and a TERP pricing of 14.7 cents per share.
And so the question gets even more interesting in light of this recent raising attached to the FTS where the funds deployed on exploration are set at 68% for Moblan . I mean , the Government can't pay the eligible exploration credits to itself for the 40% it owns . So it becomes a somewhat questionable ownership structure when you can't say utilize 100% of your expenditures for exploration capital requirements or only 60% of the credits against future profits after receiving 40% back from I.Q.
And what figure has 1.Q been paying as its share of these ever increasing drill campaign , exploration , and consultancy costs. Hopefully we see something more in the Half Year Accounts next Friday which will expand upon the breakdown of the $31.859 million received from ' Minority ' interests investment in subsidiary's amount shown in the December Quarterly cashflow statement.
I for one would certainly love to know how much of this figure was from Piedmont and how much came in from I.Q's minority interest in Moblan , and because there would be a whole lot more owing from them now that where were we're at with respects to outgoings at Moblan at the end of December.
Let's say it was $10 million. Well , it would be at least another $10 million and the rest on top of that since January 1st 2023.
So you would have to think that on the flip side of keeping the SP under wraps , the trade-off is that I.Q has to continue to tip ever increasing amounts into the venture for its share.......and it will have to recoup on any potential sale of its 40% . So at the time of Sayona's acquisition , I.Q Moblan share was valued at circa $83.33 million , and it's now spent perhaps another 25% of that to add to its defacto ' .
And while its a tough market to make any sorts of valuation on in the absence of revenue and profits , the question then becomes - what exactly is the value of Moblan. Because if we go back to Sept 2021 before the transaction , Sayona was worth around $1.139 billion. So then Moblan had to add something , and lets call that something $125 million. That's now $1.264 billion. Sayona then substantiates its value to an extent by producing a PFS for NAL with an NPV of around A$1.070 billion at an exchange rate of USD .76 cents .....so effectively now an NPV of A$1.210 billion. Of course this NPV was delivered on an earlier virtual ' doubling ' of defined resources at the NAL mine.
Sayona then goes on to raise another A$190 million for development and improvements to the NAL asset , and which is also like raising A$215 million if you consider the same implied exchange rate movement on the implicit value this has created. And this can be corroborated by the positive gains reflected on exchange rate movements in the quarterly cash flow statement. So now we're at a straight up value of approximately A$1,425 billion.
We then enter a JV with Jourdan which represent near enough A$15 million if we end up executing it through to our maximum earnin , and another near $60 million in cash and equity for the acquisition of the Troilus package.
So now we're up to approximately A$1.5 billion with another $54 million in working capital in exchange for our eligible ' super flow through ' exploration tax credits PLUS another $30 odd million of exploration dollars already spent in allegedly ' Enhancing ' the underlying JORC resource value.
So that's a total now of A$1.584 billion if you are using the base amount of the calculation as the NAL PFS adjusted NPV
However , if you use the adjusted for exchange rate ' pre Moblan ' figure of A41.139 billion you would get A$1.289 billion. Add the additional A$140 million due exchange rate movement onto the Moblan PFS NPV ( which happened later ) , and then add ALL other transactions mentioned from there , and you would arrive at a more reasonable valuation of approximately $A1.928 billion.
But of course this second figure calculation is WITHOUT a single cracker of increased valuation applied to the A$125 million implied value of Moblan which was completed almost a year and a half now.
So if you are effectively ' Doubling ' the JORC resource since then , you should in theory be arriving or adding another $125 million on to its valuation. Another $250 for tripling it , $375 million for quadrupling it , $500 million at 5 times the size ( or 60 million JORC MRE ) .......and so on and so forth up to $1 billion as we approach 10 times the size. And which in one conversation at least is what they have been quoted as saying.
So essentially even if we are at only 5 times , our valuation should be coming in at least somewhere conservatively around A$2.428 billion ....anda again without a single extra dollar being applied from the market from the added valuation of advancement towards nearer term downstream capabilities.
The calculation ALSO does not apply a single dollar towards the Australian assets because I assume in this example that the ' Starting ' value of pre - Molban valuation of A$1.139 billion also does not include a value for these somewhat ' idle ' projects including Authier and Tansim et al.
So you can see by even this ' rudimentary ' build up of valuation that we are currently close to around 16% undervalued with an SP which should be 19% higher at at least around 27 - 27.5 cents.
And all of this is premised on mostly Moblan.price And unless it has somehow gone down in price when other peer projects have gone up , there really is no further explanation other than to say that the Market is ' hesitant ' until it sees some results as to what it is prepared to ascribed to it.
So again , it comes down to the question as to why Management and I.Q / Quebec allow this project to more or less ' flounder ' in the eyes of the market's perception of value here.
Something more to it I would think , and most likely to do with the Government's 40% minority interest and what it is likely to do with it in the shorter term, and perhaps even BEFORE the disclosure of a PFS valuation. And if they were going to sell it now , I would think they would want far more than the implied A$88 odd million established at the time of Sayona's 60% acquisition.
How much more is the question , and at what stage in this possible reduction of its stake would they choose to ADD the implied value to the Moblan project......, and of course who would be their preferred partner for Sayona , and what price would any of these potential partners be prepared to pay to enter this project.
(20min delay)