SOME CARBONATE FIGURES AND WHEN IS A PFS A PTS.... I just thought I would weigh in with my interpretation of some points being discussed of late.
First of all why of PTS and not a PFS?
ACCURACY OF REPORTS NAL CARBONATE PTS
So why A PTS???
There are different accuracies, specified by each level of study.
In order of accuracy is-
PTS/PEA PFS DFS/BFS
Which are all considered and lead the BOD to a FID. That is, is this project feasible?
PTS is at PEA level accuracy -30% +50% A preliminary economic assessment(or PEA) means a study, other than a pre-feasibility study or feasibility study, that includes an economic analysis of the potential viability of mineral resources. Typically the accuracy of a PEA is in the range of -30% to +50% with a contingency of 25% to 50%.
NAL CARBONATE PTS 21st June 2023
Because the plant restart includes the use of existing equipment and infrastructure that operated in past years, site visits were completed to define a CAPEX allowance for the equipment refurbishment. Estimated initial capital expenditures (CAPEX) are shown in Table 3 below. The capital cost estimate was completed to an AACE Class 4 level of accuracy, with a stated accuracy of ‐30% / +50%.
PFS level is at +30% -30% NAL PFS 23rd May 2022 Microsoft Word - SYA_ASX Announ_20220523_NAL PFS_Final
he PFS has been completed by independent consultants BBA to an accuracy of +/‐30%,with contributions from a number of leading industry service providers. The Ore Reserve Estimate has beenestimated by Ms Mélissa Jarry, P.Eng.
DFS AT -15% +15% NAL DFS 14th April 2023Microsoft Word - SYA_ASX Announ_20230414_NAL DFS_Draft
SCOPE OF SERVICE
The Mineral Resource update and DFS has assessed strategic options for development, determined aneconomic open pit mine operation, production schedule and site layout for the preferred option. All workscompleted to date form the basis of a Definitive Feasibility Study (DFS), with an overall accuracy of +15%/‐15%. . . .Dougal has publicly stated the PTS was written to a PFS level. However, same old conservative Sayona....the accuracy for the PTS is -30 +50% in costs.
+50% in this inflationary environment, is probably a wise move. Conservative but wise... We have seen many project costs blowout by this amount. Even though we have built in a $111M contingency into the costings, the responsible engineer at Hatch did not want to sign off the Carbonate PTS to a PFS level, because they were not wiling to stick to the +30% figure, mandated by a PFS.
We have seen many PFS's recently NOT stick to their +30% PFS range, some with 50-100% overruns. Even our JV partners Ewoya capex, is around 50% more...and these are very recent studies.... To be honest, what is the point of any study, if you can't adhere to the metrics. These studies are a 'best guess' at the time of publishing., and the more advanced they are, the better the guess.
So, we end up with a PTS...no issue, no conspiracy...conservative...and probably a better fit for a hydromettalurgical chemical plant.
CARBONATE PRODUCTION In terms of concentrate production and carbonate numbers, I have made a little table of concentrate numbers at 5.82% and corresponding carbonate numbers.
First of all-
FURTHER IMPROVEMENTS TO THE CONCENTRATION CIRCUIT- In pit iron separation, already stated by BL-Improving the slowest processes of the circuit, in my opinion the rod and ball mills.This could be duplicated, running 2 sets of mills, and increasing the throughput of the plant.Would be a hefty investment, and probably take 12 months to implement. It may be better in the long run to just build another concentration circuit. . . IMPROVEMENTS TO THE CARBONATE CIRCUIT- The plant was already designed to produce 20kt LCE.Improvements to the pyrometallurgical section, as well as a rotary calcine cooler, a ball mill, modifications to the acid mixing circuit, and the addition of an acid bake kiln to replace the existing acid reactorAnd an additional crystallizer, to recapture further carbonate from the waste stream, and also produce value add sodium sulphate.
NAL DFS Microsoft Word - SYA_ASX Announ_20230414_NAL DFS_Draft
The NAL DFS is based on an annual ore feed of circa 1.4 Mtpa to the process plant to deliver average annualoutput (steady state) of 226,000 tonnes annually of spodumene concentrate containing 5.4% Li2O from2023 to 2026 and 186,000 tonnes annually of spodumene concentrate containing 5.82% Li2O from 2027 to2042. The current LOM plan is based on a multi‐stockpile strategy (low grade, high grade and Authier) toenable optimal blending of ore. . . ..To highlight these figures, I have presented them below-
Conversion factor 7.8t sc5.82% per tonne carbonate. This figure should improve with the upgrades to the carbonate circuit, particularly with an increase in thermal efficiency. The pyrometallurgical section of the flowsheet identified that major upgrades are required, including the addition of a feed preheating system, a rotary calcine cooler, a ball mill, modifications to the acid mixing circuit, and the addition of an acid bake kiln to replace the existing acid reactor.
SC5.82% Li2CO3 186kt = 23,846 Li2CO3, 4200TPD 200kt = 25,641 Li2CO3, 4500TPD 243kt = 31,154 Li2CO3, 5500TPD ( I have highlighted the middle figure, because we should be able to achieve 4500tpd this year)
The plot has well and truely thickened, with BL spruiking 4500-5500 tpd.
So, you TELL ME, what he is aiming for?
More CONCENTRATE, or more CARBONATE?
They are indeed separate circuits and are processed and refined individually.
And I think we will USE ALL OF OUR CONCENTRATE, FOR THE REFINING PROCESS.
. So, The answer is- MORE CONCENTRATE= MORE CARBONATE . They are aiming for 4500TPD within 6 months , or by the end of the year. That would yield us 25,641 Li2CO3 If the upgrades to the carbonate plant are as effective as I think they are going to be, than the efficiency of the plant should see the conversion factor of sc5.8% per tonne of Li2CO3 increased, which will lead to a drop in required concentrate from 7.8, to around 7.0t/tonne of carbonate. . At 4500tpd and a conversion of 7 tonnes sc5.8/tonne Li2CO3 we would yield 28,571Li2CO3 This is with the existing concentrate plant . And, as the Carbonate plant is scheduled for mid 2026, it would give us plenty of time to not only prove up more reserves, but to get our in pit ore sorting/ metal rejection established, and possibly run an additional ball and rod mill in the plant. These improvements, will see us head to 5500TPD, or beyond. Additionally, If the reserves are proven up along strike to Vallee, extending the NAL pit, we may end up with a second concentration circuit at NAL. And when Authier comes online late 2024 into 2025, we will have more ore than we know what to do with.... .
5500TPD would yield 31,154 Li2CO3 or if the conversion factor improves with the upgrades to 7, around 34,714 Li2CO3
. As for the supply agreement by the JV, there are many more forces at play than just the partners. Canadian and Quebec provincial ambitions, will factor in here HEAVILY. Additional partners with deep pockets may also be involved and wield heavy influence....
. Aiming for the concentration circuit to push output to-
295kt sc5.4%, or 243kt at 5.8%, to feed the carbonate plant and produce nearly 35kt Li2CO3 . Either way, ALL THE CONCENTRATE USED TO FEED A DOWNSTREAM PLANT. We will be using a head grade of 5.8%, and can push the concentrate circuit to around 200kt. or with further upgrades, to 243kt.
This will be a 30kt+ Li2CO3 refinery.
So, a few different scenarios there at 4200, 4500 and 5500TPD, and conversion factors of 7.8 hopefully reducing down to around 7.
We shall see how all this plays out, and may get a better understanding when the next offtake drops, as it may include a carbonate component, and expectations of carbonate production figures.
And like the difference we saw in increased value from the NAL PFS to the DFS, which more than doubled the NPV, we could see a corresponding increase in NPV in the Carbonate DFS.
The DFS probably will not come this year, but we could see increases from 15% to 50%, in efficiencies and increased recoveries, as well as sodium sulphate value add.
Additionally, if you wish to use a US$35,000 dollar carbonate price, you are looking at another 40% increase- up from US$25,000. I see this as a long term sustainable price, with most industry analysts agreeing, until 2030 anyway...
To give you an idea, the 40% increase in carbonate price alone drives our NPV. The beauty here, is that as spodumene goes up and drives carbonate up, we are buying ours in house at a fixed price, if not at ASIC.
I don't think they have the modelling perfect here, but this illustrates the point, and once again underscores Sayona's continual conservative figures. . The model certainly seem to indicate it....however inflationary pressures are not calculated, as well as other variations. . Food for thought....remember, this is only an increase in carbonate price to US$35,000, and NOT inclusive of the previous efficiency gains in the concentration and refinery circuits....If you include those you may see another 10-50% on top again. . Can the pre tax NPV grow to C$4,880,000,000???, up from C$2.88B
And before you scoff, take a moment to reflect back on the AU$1B NAL PFS from last year, and what the DFS NPV was.
The long term modelling from us old LTH's poking holes in that PFS have mostly come to fruition, and I expect history will repeat itself here again.
However, we will have to wait until the DFS to confirm, now due H1 2024...and I think we all know why it will take so long...
I better go.
Once again all the thoughts in my head have spewed out onto this post, and its taken way too long!
Happy Sunday and Good luck everyone...
SYA Price at posting:
17.5¢ Sentiment: Buy Disclosure: Held
(20min delay)