I have extracted a few things from the Quarterlies and my criticism of the presentation is the unprofessional(!) summary of individual items into an impenetrable construct:
„The average realised selling price (FOB) decreased by 52% to A$946/dmt compared to the previous quarter. Lithium price indexes continued to decline during the quarter, leading to Quotational Period adjustments totalling A$6.1 million (A$254/dmt) which related to a prior quarter shipment. The estimated underlying average realised selling price achieved for the quarter (excluding Quotational Period adjustments) was approximately A$1,200/dmt.
Unit operating costs for NAL increased 14% to A$1,397/dmt compared to the September quarter. The normalisation of non recurring capitalised development costs from Q4 FY23 contributed to the increase in unit costs compared to the previous quarter.
Controllable costs increased due to additional workforce costs and replacement parts incurred for the major planned shutdown during the quarter, together with additional safety equipment hired to manage geotechnical risks around the mining of historical underground stopes.
Unit operating costs increased due to lower concentrate sold during the quarter, however this was offset by favourable inventory movements.“
Although we can see that costs from the past have been capitalized (and not newly incurred!), we can also see that there was a price adjustment for deliveries in the previous quarter, as the final sales price was only determined after the customer received the goods (in the December quarter) due to the lower spot prices at that time, but there are no concrete quantities and prices.
What SYA calls "controllable costs" would probably be called variable costs. After completion of the work in the last quarter, these no longer affect the new quarter. However, there is no precise breakdown here either. This also applies to the last sentence.
As a boss, I wouldn't let my accountant get away with that.
On the positive side: "In December 2023, NAL achieved a record monthly production of 13,954 dry metric tons." If you multiply that by 12, you get an annual production of 16,800 tons. - Pretty close to nameplate production.
Yesterday China closed with limit up (10%) for the spodumene spot price and today the price in China was unchanged.
I have read in the last week from some commentators that they think the Li price has been manipulated from China all last year. (My opinion: yes, that makes sense, as Chinese companies were able to secure additional companies/shares cheaply, especially in South America and Africa). In the meantime, however, prices have fallen below a level at which the mines in China can cover their (inferior) Li costs. Together with the fact that Chinese stocks of Li have reached a low, this would suggest that we have reached the bottom of the price decline and that the next opportunity is more likely to be on the upside.
The Quarterlies report under "Production" on 3 factors that will reduce costs in the future:
a) the improved Li2O content from the crushing circuit process;
b) the improvement in the mill after the shutdown in November 23 and
c) an improvement in the recovery of Li from the ore as a result of the measures implemented in November.
( The rise in concentrate production was achieved by higher feed grade, improved plant utilisation following the planned shutdown in November, the addition of the retrofit high-density conditioning tank, and ongoing optimization initiatives such as frequent changing of rods to prevent mill stoppages. )
All in all, that's 8% + 3% + 4% - although I don't know whether you can simply add the 3 figures together mathematically - or whether one improvement led to more favorable figures being reflected in another measure. But the bottom line is that I have a good feeling that costs should fall from FY3/24. In addition, we had a good 20,500t of ready-to-ship inventory at the port as of Dec./31. That's about 82% of what SYA shipped in the December quarter (23,942 tons)! If production continues at just under 14,000 tons, another 28,000 tons will be added by the end of February. This could lead to sales of 50,000 tons in FY3/24. - or to increasing stockpiling if the price level increases and BOD decides to sell later with even higher prices.
After a price level ofA$1200/t was established in December ( The estimated underlying average realized selling price achieved for the quarter
(excluding Quotational Period adjustments) and this should cover costs, as the 1397A$/t from the last quarter includes non-recurring costs as I described above, the discussion about a C&M for NAL is superfluous in my opinion.