It is a monumental task, starting a new mine from scratch.....a full greenfield site...
I have mentioned previously, greenfield sites will take at least 5 years to develop, probably closer to 7 with environmentalists, indigenous populations and first nations, having a much greater impact, now and into the future.
As an example, Core turned to from Zinc, to lithium in 2017. Fast forward to 2022, with some DSO already being sold, and shipment of spodumene concentrate on track for 2023. 5-6 years....in a stable, supportive jurisdiction, and a market which is seeing record demand, volumes and investment/pricing...ideal conditions.
We have turned NAL around, with first spodumene shipments due in 18- 24 months....1.5 to 2 years....from the signing of the takeover, 11th June 2021
So, if you can find one, a brownfield site, which was not previously commercially viable due to the soft lithium market pre 2021, is the fastest way to market. We are one of the fortunate companies who have realised this...
Just as when some producers reactivate brownfield coal, iron ore, gold mines or gas/oil(or any commodity)when their respective price shows sustained future strength.
SYA/PLL- SYAQ has reactivated NAL. Reactivated, at a time, when most experts forecast sustained lithium record pricing into the foreseeable future, heading down this path makes commercial sense.
The path for a new site is long, complicated and expensive. Multiple types of permitting, land access and rights, government approvals,water, power, financing, multiple studies, PFS, BFS, DFS, FID, CR,CR,CR.... Then procurement of items with long lead times, fighting the continually depressed logistical channels, staff, contractors, executives and building a mine, mine plan.....then processing...concentrate, carbonate, hydroxide.....where it all starts again...the permitting and environmentals, studies, PFS/DFS/BFS, FID financing CR's, etc...etc...etc....
In regards to SYAQ and spodumene ALL this is 99% done......, to 3800tpd anyway.... permits, finance, staff, executives,contractors, mine already dug, overburden mostly gone, tailings and waste rock facilities ready to go, power, water, concentration facilities, with even the refining facility having a 50% head start.
The additional advantages are that as these facilities have previously operated, the new owners can build on the operational experience and make improvements....everywhere. Even a lot of the staff, including Guy, have previous experience at NAL. To me that type of experience is priceless...
Power, water, roads and tracks, infrastructure, staff facilities....then Pit optimisation,improving access and the ability to effectively pull more ore from the pit 24/7. Then we move to SC6 concentration and the knowledge gained from the original facility, improving bottlenecks, replacing previously unreliable machinery, increasing capacity and throughput, as well as improving the lithium recovery rate. New machines, bigger machines, better machines... Typical ramp up for a new concentration facility can be 6 months, but for an improved brownfield circuit, probably half that. Making for a more productive and reliable production facility, from the get go... And as for the downstream refining.....once again, NAL is approved to 20kt LCE ALREADY.... with some of the heavy lifting already done, as can be witnessed by the existing installation, including Splits photo of the massive kiln and exhaust,,,,some serious, expensive hardware...
SYAQ and Hatch already know what we have here, now they just need to formalise that in a PFS and DFS. With the exposure and experience already gained there, as they have previously been onsite, I am hoping the PFS and DFS will be on time. Famous last words..... I know.....but from what I have seen so far, execution of studies is not our strong suite, but execution of physical capital improvement...construction, machinery, procurement, facilities, staffing...is bang on.....and actions speak louder words.
ACTION AND EXECUTION- THAT IS WORTH MORE TO ME THAN ALL THE FLUFF AND SPIN THAT OTHER CEO'S SPEW OUT TO THEIR SHAREHOLDERS...
So yeah, BL does go missing. Comms with the company are pedestrian at best. I am still waiting for a response to a couple of emails, the latest just asking for an updated top 20 list..Announcement deadlines....well, what can I say that hasn't already been whinged about?
They are not full of pomp and bravado, and there is NO spin. I mean ZERO. Everything I read seems to be underdone, subdued and purposefully conservative... to the extreme.
But even with these base case/worst case scenarios, we make money and are profitable. My further investigations show we will probably make more than they are disclosing, even if the PLL offtake is enforced and remains in place.
And as for the offtake, it is there in black and white for all to see, and with the existing conditions, we are still profitable. At a minimum, it need to be taken seriously and needs to be accepted and taken at face value, as a base case.
Personally, I do think the conditions for the offtake to PLL will change. And in a broader sense, any offtake made before mid 2021 in the lithium space, that has a fixed price and does not have a embedded formula for market pricing, needs to be renegotiated. That includes our deal with PLL and PLL's deal with Tesla.
I have done some research into offtake renegotiations lately and found it is quite common. Particularly in commodities which have had sharp, sustained increases/decreases in price. They even have a term for it- force majeurewhich is generally written into a contract.
A CONTRACT WHICH WE HAVE ONLY SEEN A SUMMARY....
The events of 2021/2022 have led to a spike in force majeure renegotiations. There has even been industry wide conferences held, for all participants in a particular commodity/industry, to understand the extreme and unprecedented market forces that we are dealing with. The point being, an increase in understanding for all parties involved, fostering in house mediation. To a fair degree of success....
Marathon(capital): We have seen a couple of things. One, some projects have failed or needed to renegotiate offtake agreements because of timelines being missed or force majeure being declared. With new contracts, I see the biggest impact in the terms and conditions shifting to push risk on to the buyers. And that's happening for a couple of reasons; it's because the risks have become greater, and it’s also because the supply to demand ratio has changed. The sellers are oversubscribed with buyers wanting energy and RECs from their projects at the same time that they're suffering from these supply chain issues. So, they're in a position to say, ‘Hey, can you help me with these risks?’ and that has included price increases during the negotiations of a contract.
So, There almost is an industry expectation that renegotiation is a given, because it cant be all one way traffic. Sure, there is a clear winner in the offtake when the commodity price shifts, but what's the point of an offtake if the mine goes bankrupt....liquidation.... maybe a takeover by a new owner, and the mine may renegotiate with another party and completely cut out the original offtaker, which is generally what happens. Lose...lose. And vice versa, if the offtaker goes bankrupt in a soft market, then the producer need to find a buyer asap. In an event such as when oil crashed during covid, it was impossible to find a buyer....storage and tankers were full worldwide...you couldnt give the stuff away....I guess the oil companies are making up for lost time now!!!
Dare I say, there is NOT a judiciary in commercial arbitration anywhere in the world, that would look at this PLL offtake objectively, and come to the conclusion that it DOESNT need to be renegotiated...it is just so blatantly obvious....
As I stated, currently as we stand, the offtake must be taken at face value. However, in my opinion, expect to see some movement in this regard... I have multiple theories and scenarios about the how and why.....
Anyway, getting back to our brownfield site-
With this brownfield headstart in production, concentration and refining-
Production and concentration, and with it, revenue, is imminent... We then go refining at NAL, for me this is a GIVEN. It will exponentially grow our revenue...... And when Moblan comes online, we will be THE North American lithium powerhouse...
(20min delay)