Was a good interview Split. I would encourage everyone who hasn't already to make time and tune in for a listen. Here's how I would somewhat randomly break down some of the discussion points. - we can then compare notes and thoughts :-
> Obviously Arne Managing Partner of Pallinghurst & Chairman of Nouveau Monde Graphite and on the BOD of Nemaska Lithium as well.
> Aspiring to be Largest OEM Graphite player outside of China much in the same way as Sayona is quickly becoming the largest Lithium from hard rock supplier in North America.
> Not happy with Nouveau's Share Price at the moment - just reinforces what Pallinghurst is all about . And no doubt they will find a ' Creative ' way to ratchet it up somehow.....
And maybe this is with Sayona or NOT with respects to Lithium which will have a cross benefit to its Graphite investments
> Interesting that he almost purposefully skips over the opening line of questioning in regards the reference to NAL being BOUGHT , and Moblan being BOUGHT , and BOTH by Sayona.....
He just doesn't respond at all and moves directly on to discussing Becancour ....etc. I wonder why ? Maybe it's just his way of saying it's not his place to comment .......or maybe there is more to the plan which he doesn't want to get into in this Interview. Who knows , but I do find the ' Body Language ' interesting.
> Both the Graphite and Lithium processing will be at Becancour. This is a shift from what is generally a ' NEW ' strategy this year because previously the Graphite was to be produced at
Saint-Michel-des-Saints. And so this ' coming together of Graphite and Lithium which had previously been talked about now becomes even more evident by this ' widening ' strategy at Becancour and is not really all that surprising when it was most probably previously HIGHLIGHTED as far back as when the former Nemaska Chief Guy Bourassa as well as Pierre Renaud ( former Government BAPE CEO - McCarrthy Tetrault Lawyer and Consultant to Sayona ) , and of course I.Q ( Investment Quebec ) were driving and steering the plans ' Pre - Pallinghurst ' .....
So Becancour as he mentions is for their ' Expansion ' for their Graphite pilot plant currently located at Saint-Michel-des-Saints and is what Harold refers to as the battery minerals processing HUB that he Arne is trying to create.
> Interesting they mention Air Liquide with their Hydrogen plant at Becancour as well and where he mentions the location of the previous Nuclear Plant and Quebec only previous Nuclear plant which was shut down after 29 years of operations in 2012. , and therefore the necessary infrastrastructure for safety of fine chemicals , and it being one of the most industrial parks in North America. And of course Rio Tinto's Alcan has a refinery there as well . He also mentions Olin , the world's largest Chlor Alkali producer as well as hydrochloric acid and sodium hydroxide ( used in the next generation of Li-ion batteries ).
Interesting that the Quebec electric bus manufacturer Lion Electric is only located 176 .9 klms or 1 hour 49 min away at Mirabel Quebec in Montreal's Airport region in a south west direction from Becancour. And of course they wouldn't be the only ones and you just have to look at the companies situated around our own major airport ' corridors ' like Campelield and ring road accesses in Melbourne. So at least we have a better understanding of Why Becancour ....and as can be seen in the attached copy of their slide.
There is also this point which I see as relevant as well :-
> Only pure Canadian Graphite play listed in the US - and since the decision to list on the NYSE, the share price has declined some 70%. Interesting that they ( Howard and Rodney ) are advisors to Nouveau as well as shareholders...... And they talk about the disconnect in ' Value ' currently playing out here between Lithium , Graphite , and some of the technologies - but they also have a direct vested interest in promoting it as well....so I guess you have to keep this in mind too.
And I like how Arne replies that " Mining is never a straight line if you look at Valuations " so I like how he emphasizes that they wanted to have ' First Market ' advantage as a Graphite player with access to the US capital markets ( long term ) and because that's were they believe the educated investors sit. And why wouldn't he think this as has been discussed in previous posts , he and some of his colleagues have deep connections to Goldman Sachs et al .
I like how he also compares themselves in relative value terms to his ' Peer ' company's and their respective ' Deposits ' that they are the only ones in less challenging mining jurisdictions with access to ' Cheap ', ' Green ' energy from Hydro Quebec as well as direct investment directive and support from the Quebec Government.
In my final summary though , I also have to wonder who the ' Other Technology ' provider who he specifically states at around the 32:57 mark in the interview and that he cannot say at this particular time who it is . He speaks of obviously partnering with Hydro Quebec as well as the Beconcour based Olin which he mentioned at the beginning of the interview. So I wonder who that could be......and why he cannot say it in the interview now .....or even when we might hear of this partnering from Nouveau. Is it Panasonic , the supplier of batteries to Tesla who are headquartered in Newark N.J with their advanced battery manufacturing operations based in Sparks Nevada and who also have a ' Technology ' collaboration with Slumbergers New Energy subsidiary Neolith Energy who currently operate their pilot plant out of Clayton Valley Nevada. So maybe it's with Panasonic which may or may not include it's future Lithium from Nemasks which is why he can't talk about it now. However , Livent who is also a shareholder in the ' New Nemaska ' also supplies and has offtake agreements with Tesla.
But I guess in so far as who this ' Other ' technology partner is with respects to BOTH their ( Pallinghurst's) Lithium and Graphite processing in Becancour , it could very will be the ' Behemoth ' Chemicals producer Olin who is mentioned a couple of times during the course of the entire interview ...without saying they are the unnamed ' Other ' Technological Partner would imply that he can't say it because the plans are not quite set with Quebec yet.....would be my bet. And this is where I think to an extent the Mom and Pop small investors are being played sometimes.
And I can't help but reflect back on that other Interview I provided way back when that Quebec Minister was speaking about how they are aware and conscious to the fact that the companies they work with are Public and have reporting requirements to their shareholders .....and that Plans cannot often be shown or declared by the Government so it can sometimes be a conflict and a fine line at times. And having said this , I would say even more with Quebec because of its often large Direct Investment Interests . So yeah , I reckon there is a lot more going on with respects to the overall planning and shaping of this Industry that we are not yet privy to as shareholders due the Quebec Government largely pulling the strings on their controlled timelines. And that's part of the reason I reckon Arne cannot say too much here with respect to Becancour.
Towards the end of the interview , I find his whole messaging a little confusing because whilst he says they are not specifically going out there to ' equity raise ' to fund the $765 million in required capital , and because he already raised $70 million by the NYSE listing - they did state that they would be using the listing to raise $500 million progressively over 24 months or so from the listing at the time they did that FIRST raising. So personally , I see it as a little ' wishy washy ' and again with the connections to Nemaska and the fact it isn't listed and has effectively denied those previous shareholders who have effectively lost significantly on that prior Nemaska play , that they are now a bit ' gun shy ' or hesitant in backing him or the market on the Nouveau Play given its association through Pallinghurst of Nemaska.
And I guess that's where Sayona can now perhaps come into the picture in assisting the ' Resurrection ' if you like of a more complete Nemaska and where the market will clearly have a more positive view given the strength of Sayona's script and recent share market performance .......which is what I have been saying all along with respects to what I.Q and Quebec would be fully aware and very happy with I would imagine . And happy enough obviously to have ' steer ' the 60% share of Moblan and the nearology to Nemaska's Whabouchi Lithium project directly into the hands of the strong performing Sayona at what clearly looks to me as an almost convenient and timely ' Fast Tracked ' manner.
And I know this is just ' fanciful ' and convenient dreaming , but isn't it at least funny that they ( Nouveau ) have $86 million cash on hand , while at the same time Sayona picked up the 60% share of Moblan for $86.5 million .....
And of course it means nothing , but I just like the way these numbers agree at exactly the same point in time that's all.
And I can't help but wonder why he Harold goes specifically out of his way to again bring this ' differential ' if you like between the ESG ' Premium's " being paid for unproven technologies being affixed to Lithium Companies and their tantalizing sustainability concepts is incredible "
And so I do find it intriguing when Harold refers to Quantumscape being US$10 billion market cap. Because going back to what Arne said in doing the NYSE listing to achieve first market mover advantage , it would appear that Quntumscape also have the First Market Mover Advantage when it comes to Investors tendencies to want to Buy into what is though to be the future Tech......and that they ( Quantumscape ) may be the FIRST ones in that particular space in so far as Market perception.
So I reckon it's as much about the Investor ' psyche ' as anything else. Plus , I think when a company gets to the point of ' Near ' producing , or at that point of ' Tapping ' shareholders for more downstream development funds - he said himself that that was what the NYSE listing was somewhat about ........so then follows from there that because of the recent 2018 - 2019 ' Boom Bust ' of Lithium et al .....is that ' Fear of Failure ' is more at the forefront of the Investor mindset. That's just my opinion of course , but I do feel as though that is often a factor. Once bitten twice shy kind of investor mentality.
So while they are trying to explain it away by saying there is this ' disconnect ' and lack of understanding from the market in regards the differences in cost and financial returns of Lithium verses Graphite , I tend to think the Market is not that ' Stupid ' and is fully aware of the positioning of Graphite in terms of more near term development capital being required......and almost sooner in order to catch-up.
And obviously , the leap or jump to lithium conversion chemicals will have the same effect on Investors as failure of Nemaska and others will have been relatively fresh in Investors minds. So I think to a degree , they're trying to justify why they aren't doing as well as lithium , and yet at the same time their reasoning's completely miss some of these underlying Investor concerns .
So effectively they are concerned that their ' Future ' capital requirements are going to come from this NYSE listing and shareholders. I know he says NO right at the end , but it's very hard to convince Investors AFTER you already elude to it. ie mixed messaging by a BOD is never good in my opinion.
And they pretty much said so themselves when they stated they would be raising some US$500 million over the next 24 months.....with Howard stating that Nouveau's Capex is somewhere's around US$765 million.
So in my opinion , the market is worried about ' Pushing ' the price of their shares ahead of these Capital requirements , only to see themselves get burnt in a similar fashion to Nemaska. Same effect in part I believe is happening with Piedmont's US listed share price.....whereas Sayona may be somewhat different as we are expecting some level of ' Privately Funded ' debt at some stage with less dilution from the point where we are now.
Interesting though how after all their back and forth , he can't really support his ' disconnect ' arguments because the Capex whilst roughly HALF that of Lithium conversion , the EBITDA generated from the revenue side is also HALF that of Lithium. So one nets off the other in terms of what Investors see as the relative ' Growth ' CAGR curve for Lithium Hydroxide v Coated Spherical and high purity Graphite. And you also have the 11 times lithium demand to 4 times Graphite due synthetic ....so that Math doesn't really make sense to me except that any further demand for Graphite can be met at least in part by Synthetic substitute products.
I can personally see the argument where he states that Graphite is where Lithium was 4 years ago because , but at the same time we are supposed to be ALL now the same point in the EV battery supply chain demand given that in his words " you can't have a single EV battery without a graphite anode "
So unless EV's and EV Batteries are still way behind or out of whack in terms of end user take-up to that of the upstream raw materials and downstream converted materials , I can't see the logic of what he is saying if we can only make batteries to a point .....and then have to wait for the graphite anodes to catch up. Doesn't make sense to me. He seems to be wanting the argument on both sides in trying to justify his question as to why his Graphite Company is ' underperforming ' lithium.
The other thing is that they don't have material offtake's yet as well as still being at the proving of ' Purity ' stage. So from that respect , they might be a bit behind some of the comparable Lithium potential producers at similar stages of Capex spend and downstream development.
I then like how they compare Novonix as a ' Natural Graphite ' player who is valued at as much as the next 10 equivalent players including Nouveau. Now if that isn't the clearest possibility of future M&A corporate activity just waiting to play out - then I don't know what is. Or maybe it's just more about the fact that NVX is more advanced with its operations in the US and so is valued by the market accordingly.
And to me that is a lot of the point here in that NVX as has been previously stated is a significant contributor to the research of anodes in Canada and is well placed to capitalize on their ' Rights ' to the technologies being produced and so perhaps as I stated would be a good fit to absorb Nouveau at some stage ....and definitely when the SP is more suppressed and weak and perhaps even after it has built out much of its downstream plans.
Whatever the case and in my opinion , we can clearly see Wyckoffs theories are definitely being played out here ...and with the Aussie Companies being particularly strong and particularly well placed in that North American and Canadian market now. Perhaps he will take a leaf or intends to take a leaf out of our book by partnering with the fellow Quebec companies who are currently ' outperforming ' Who knows , maybe they are even part of it , and we just don't know yet. Irrespective , it would seem that Sayona is in a very strong position with a very strong script valuation ' Bargaining Chip '.
(20min delay)