Since the management has been doing a poor job of it, let me try to throw-out a few facts to answer questions that I have seen floating about.
1. Our offtake with PLL caps the price we get for SP6 at US$900/mt. The 30,000 mt shipment to PLL should bring NAL US$27M. We own 75% of that.
2. A little back of the envelope math says that the first shipment was 20,500 mt and the Shanghai spot price for SP6 is approximately US$3,200/mt, so revenue should be in the neighborhood of US$65.6M. Again, we own 75% of that.
It would be nice to hear real terms, but so far, all we know about the first shipment is that it was 20,500 mt, it was sold to a trading company, and it is being shipped on the AAL Moon, which left Quebec on 1 August, is currently off the coast of South Africa as I type this, and is due in Port Louis, Mauritius on 8 September. We are due to receive provisional payment (probably 80% of the agreement) "within five days of receipt of shipping documentation by the trading company." Since the vessel is due to arrive in port on 8 September, 13 September would be a best case scenario, since we don't know if Mauritius is the actual destination, and whether the shipping documentation is generated when the vessel reaches port, or if we have to wait for offload and train/trucking to the end destination.
It seems that most of the AAL Moon's trips are between America and either Vietnam or China, so Mauritius MAY be where the "trading company" has warehouses, or Mauritius may just be where the vessel needed to stop for fuel/provisions, and it's still got a few more weeks to get to China or some other point East of Mauritius. Vesselfinder won't list the ship's next destination until it reaches Port Louis.
3. The 1 August ANN about the first shipment leaving port also indicated that NAL already had sufficient product stockpiled at port to cover the PLL shipment, so whatever we've generated in the past month is good to go for a third shipment, which would again be sold at spot pricing, rather than the restrictive PLL offtake agreement rates. We know we're going to be alternating one shipment we sell to "the market" followed by one shipment to PLL.
4. In theory, if you trust the BMO MIning Conference Presentation, we're due to ship 120,000 mt of SP6 by 31 December. Assuming half at $900 (to PLL) and half at $3,200 (current spot price), that means estimated revenue of US$54M from PLL shipments and US$192M from "other" clients, for a total of US$246M. Against that, estimated AISC (cost) is US$740/mt, which for 120,000 mt amounts to US$88.8M, yielding a profit of US$157.2M. We'll need an estimated US$14M/annum for sustaining CAPEX, dropping that to $143.2M gross profit, US$107.4M of that attributable to SYA.
It'll be interesting to see how many shipments we've been paid for by the end of the quarter, and if we really deliver 120,000 mt of SP6 by the end of the calendar year. It'll also be interesting to get guidance on what sort of rates we can expect for the half of output that isn't delivered to PLL. All the sort of information it would be nice to hear from management.
The good news is, there's a good chance that we will finally show a profit for the quarter ending 30 September, although I would warn that between drilling all over Canada and WA, especially the massive drilling at Moblan, and the FID on the Lithium Carbonate plant, I suspect most profits will go to CAPEX (my personal opinion, we'd be daft to start talking about dividends, CAPEX is the best place we could invest any profits, and we should probably all look at EBIDTA and FCF, rather than net income, for the next two years, maybe three, because we need to spend a considerable amount on CAPEX to get to where we want to be in three years, which is Moblan and at least one other mine in operation, NAL generating 226,000 mt of SP6 AND 23,600 mt of Lithium Carbonate per annum,
SYA Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
(20min delay)