I was hoping for this quarterly to be better....
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We have been hanging on and hanging on and hanging on...
And they are still not showing me they are capable, that they can turn this around and get this done.
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The Good....well In terms of production, the plant is running well.
Record production, record mill utilization and record recoveries. Except we are now down to 5.3% and opex is still basically the same.
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We were relying on volume to spread the costs, but it doesn't seem to have made much of a difference.
Even with a 19314t production in May, which is a projected 231768 for the year, our costs are A$1500
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The jaw crusher came on line this month, which although not reflected yet, should improve things this quarter.
Production targets are on track, but that opex is simply horrendous.
Even with the sale of the the shipment we missed, it would sill be too high.
Ore mined was 33% lower, yet our costs are basically the same?
ROM pad inventory was, now including in pit, was within 8%.
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So, if the shipment of 14000 was included, we would have sold 41,729dmt and revenues would have been US$37390000.
That revenue will show up in the next quarter.
Additionally, we had the Troilus sale accounted for the delayed shipment, which on the books, kind of cancel each other out.
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So we still lose.
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Then this statement-
Unit operating costs on a tonnes sold basis were unfavourably impacted by lower concentrate sales due to the delay of the scheduled third cargo,, however this was mostly offset by favourable inventory movements.
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.So now they are saying that the lost revenue to the delayed third cargo, was mostly offset by favorable inventory movements???
That is next quarter, unit operating costs will be similar, or slightly lower?
Unacceptable....its not enough.
Shipping is killing us.
Spot price would have average around US$1000 during the quarter (currently at 940), yet we receive
US$604. 100-150 would be shipping, as well as adjustments for grade and wmt/dmt.
Right?
Well the 2 shipments that got out were 1 for PLL and 1 for the spot market.
So shipping is US15/t to PLL and US$150 for spot sales
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Of the 27729 we sold at an average price of 604, we received US$16,748,316
The shipping impacted realised price to a tune of US2.3M which wipes out nearly 14% of our revenue.
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So all we can manage is 604....that is why you need an offtake partner.
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So, Where the hell is the offtake?
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I sat there listening to JB last AGM, really not believing what he was telling me.
Making inroads, heaps of contacts, material being qualified ...etc...etc...and a small part of me was maybe he could...maybe he will finally nail something.
Maybe Jamie and Rupfel and the other JB fans are right...I didn't believe it, but I conceded to give it some time....
Well, sweet FA....Not even a mention of an offtake....
PLS recently renegotiated a deal with their off taker and their quarterly realised price was US$840 AU$1272 adjusted for 5.3 (US$960 AU$1454 sc6)
I quote-
The estimated realised sales price for spodumene concentrate in the June Quarter was US$840/dmt2
(CIF China and based on ~SC5.3% product grade), up 4% on the prior Quarter. On an SC6.0 equivalent
basis, the average estimated sales price for spodumene concentrate was US$960/dmt (CIF China).
At the end of the Quarter Pilbara Minerals completed price reviews with two major offtake customers,
resulting in improved pricing outcomes relative to the current pricing formula which are expected to be
realised in the September Quarter.
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That's US$236 more per tonne!
As for MINRES-
The weighted average realised price achieved in the quarter across all three lithium operations was
US$970/dmt (US$1,212/dmt SC6), an increase of 15% qoq.15% UP quarter on quarter....
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As for SYA- US$604 DOWN 11%
Really?
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This is the value of having an offtake customer/partner.
This why we need one, not left to the whims of the spot market.
The spot market is for excess production, not core production.
You go to the traders with your spod, they know they have you over a barrell....where else are you going to go?
I wonder how many here now wished we had locked in the fabled offtake Brett and Dougal nearly got over the line last year?
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Some other things to consider which haven't really been mentioned.
Our COH is never what it seems.
Many have mentioned we had a the Troilus sale in of around 15m to bolster the books, to keep them at around 90M.
So we have a single unrealised injection of cash, with nothing really left to sell outside of Moblan.
Authier and Tansim, you might get a set of steak knives for em.
Otherwise, irrelevant, has been properties, now overshadowed by 100mt and 1.5%+ tier 1 resources.
And our 90M COH, still probably includes around 20M of FTS money....basically only for exploration.
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And while we are trying to cut costs, Dow now announces we have massive drilling campaigns, probably worth around C$40M at NAL and Moblan coming up...why?
Because we still have anywhere between 15-25M sitting on the balance sheet that must be used for exploration as per the FTS funds we have remaining, and we will pull the rest of the capex from our COH.
Why when we are losing money?
And not just a small campaign, 80,000m for Moblan...that is the biggest campaign we have ever had there....while we are bleeding cash.
Big and expensive.-------------------
And as for NAL, another 30000m there...
$$$$$$$$$$$$$
As we continue to earn less than we spend, expect a consolidation, probably 25:1 as at Morella, then either a CR or the ATM exercised.
In a recent JB interview with Howard Klein, he basically confirmed a consolidation was on the cards.
Look how well it worked out at Morella.
They consolidated from .003 to 7.5c, and instantly they are down to 4.4...nearly half the market cap wiped...consolidations just give the market and shorters more runway to decimate the SP, particularly in this climate.
The same may happen to us.
Let me rephrase, probably happen to us.
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So production at NAL is now the best it has ever been.
Some anomalies with head grade and output grade, anomalies in the quarterly between 5.4 and 5.3.
Seems they are playing with the special sauce to boost the production numbers...to hit their KPI's. Higher head grade, should yield a higher production grade....yet we produce a lower production grade to 5.3.
Even more discount to our realised sales price....outstanding!
As well as Shipping costs that would be close to the highest in the world for spodumene concentrate.
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No mention of offtake.
No mention of carbonate plant.
And we still need to drop our capex down to below US$604...currently US$990 (AU$1500) or 39%.
Now I can see it dropping, but not by that degree...its just too much. And that's just to break even.
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And I have given up on the analysts and so called experts from fastmarkets and benchmark, predicting higher lithium prices.
Prices which we need to save us.
The RK boys, JLowry...they are all bloody wrong, scratching their heads why their predictions didn't come true.
You need a new crystal ball fellas....
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They have all underestimated China's ability to supress and control not only lithium, but rare earths, nickel and cobalt.
Western governments are just as much to blame.
The decades they gave China the leverage to grow and perfect critical mineral processing and refining have well and truly backfired. They whinge and sook and throw insults and tariffs at China, but what have they done?
Have they helped and subsidised refineries?...the true failure of the western supply chain.
We have the rock, we have the processing....but refining, that's the key.
And support, fund and subsidise like China.
Fight fire with fire...
Stick it out until we have perfected it and ontrain others to do the same.
Stick it out no matter what the cost...just like the Chinese did. If its left to private industry, eg Minres, then it wont work, because as soon as its too much of a drain on the balance sheet over a protracted period, then it gets shut down and we get no where...wasted time and wasted energy. We need to start the process and stick to it. It will take time, but it will come.
So while the Quebec and Ontario governments have thrown billions at OEM's and battery plants and CAM plants...refining? Not enough....and Still basically all China.
We were supposed to be part of that plan, part of the ex China refining solution.
Yet still, we wait.
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As we have previously stated, hoping for a higher lithium price is not a strategy.
If we continue, C&M will loom on the horizon.
But I don't think JB will entertain that, just like at Altura, and the keep selling at loss narrative may continue.
As for Dow, it may be stating the obvious, but make no mistake, he works for the board.
So it remains to be seen if his abrasive reputation is tough enough to bite the hand that feeds him, or will he suffer the same fate as Lynch and Nolan?
Last AGM, we tried to push for change.
Push for more independence on the board
Push for offtakes.
Push for progress at the carbonate plant.
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Yet we have achieved basically none of this in the last year.
The continuation to operate and gain efficiencies will not work to make NAL profitable as a rock only operation.
Not with the challenging resource we have, and not with China controlling the price.
The realisation that we may never be profitable looms, and with that our ultimate demise.
A demise which will be a slow death, with consolidation, capital raises and ATM drawing, keeping the board fed, but diluting the hell out of the existing shareholders.
This scenario has a possibility for many of us losing another 50% of our investment as this all draws out, on top of existing losses.
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In my view, change is still required.
An offtake is still required
The carbonate plant progression is definitely required.
More independence and a fresh perspective on the board is required.
The old guard of Buckler Brown and Crawford have taken this as far as they can.
If the new blood of Dow and Elder are to take us forward, they need a strong, progressive team around them to institute change and progress prospective off takers and partners.
Crawf is in perpetual retirement, Buckler is up for re election and they are all on their first strike. This year, they have no PLL vote to count on, nor do they from Troilus.
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So unless they rapidly turn things around,
the writing is on the wall for the Ipswich mafia.
And I am not talking about an extra shipment to pump revenue next quarter, we need an offtake partner to lock in rates, we need the opex to drop 50%......and I would wager, neither of these will happen.
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Good luck everyone....
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(20min delay)