The change in the macro environment in recent months has forced the boards hand. Because they failed to secure offtake in a timely manner during the better times. We are now forced to sell it on market which atm is drifting further south. As I also mentioned, had this been done proactively SYA would have a contract with possibly even a small portion of fixed price agreement too it. Rather than prices we are attaining now, it would also now be developing a business relationship with a offtake partner, potentially for the long term.
Call it also either experience or dumb luck, but hindsight, not sure if it was fires in Canada or the board being aware of the lithium market but the capital raise I consider a very well timed one. If we didnt get the 200M and we found ourself in the current position with no cash and at the current share price. All of us would be further dilluted and they may not have raised anywhere near the 200M previously received.
I was glad that my spot price concern of 1000p/t comment also happened to be raised at the AGM. As Brown addressed it and mentioned price/cost cutting and ensuring we operate as best we can to optimise output for revenue to help cushion cash burn or losses. It was also mentioned even stopping production all together if things get really bad, but lets hope this isnt the case. The SYAQ team are working class just like the mum and dad investors here. So while it would be easy to put NAL into care and maintenance you are effectively firing all the workforce at NAL too. So while it might crush PLL, it may leave a bad taste in the mouth of locals, so double edged sword here. The issue we also face coming into the winter months in Quebec is not having the Ore Dome finalised to help "de-bottle kneck" operations as such. Hopefully they have enough access to pre-mined ore through the winter months, or if not the weather allows for some mining or movement of mined ore to allow for processing.
Its painful to say it but, in a downturned market, the ramping up our refinery side of things ie fast tracking or even subscribing a Partner to share in the cost is going to be difficult. That is unfortunately how the commodity market works. We produce spodumene and the recent spot price decline is likely push other explorers for lithium to other avenues like gold or uranium etc... An it will hinder new mines coming online and also how much the produce. This is because the revenue might not be there to support adding in a second concentrator for added revenue as an example.
In essence the above will lead to a supply crunch at some point or rather when the demand chews threw any lithium mined. So at some point demand will drive prices up again. How long until this happens? How long is a peice of string?
BoD have to prioritizing surviving the storm, because if they priorities NAL downstream without the survival of existing operations as priority what good is downstream plans and timelines if we are in suspension in a year?
Get NAL output up and cost down and hopefully we can produce 50/50 share with PLL and at which point prices have turned for the better.
The board is at least semi conscious of NALs commitment to downstream as long as its not pushed completely to the side it should come into focus in time.
SYA Price at posting:
6.6¢ Sentiment: Buy Disclosure: Held
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