Could you accept that
1. They are 2 independent agreements and NOT co-dependent on any criteria contained in either agmt.
(a) OTA #1 has PLL as Seller and TSLA as buyer and SYA is NOT a named party to the Agmt (the ore mined may or may not be shipped to TSLA at PLL's discretion. This OTA is currently is DELAYED by MUTUAL AGREEMENT as reported by Reuters.
https://www.reuters.com/business/energy/piedmont-says-has-delayed-timeline-supply-lithium-tesla-2021-08-02/In addition, there is nothing explicit wrt price, just an implicit reference to a 5 Year Fixed Price agreement for a fixed "approximate" volume (160Ktpa). I say implicit because it is loosely linked to 10%-20% of PLL's total revenues from it's proposed integrated mine-to-hydroxide project for the initial 5 year term.
It might just be the first SC6 OTA linked to LIOH price - one way of looking at it.This OTA is binding and would effect only if the condition of PLL and TSLA agree upon a start date for spodumene deliveries to commence (which was Jun'22 - Jul'23). This condition has been delayed by mutual agreement - see intro statement.
Lastly this agreement does not include SYA .... and every time it is explained from PLL's perspective the proverbial flows thick and fast
(b) OTA #2 has SYA as Seller and PLL as buyer and TSLA is NOT a named party.
This OTA has explicitly stated terms of:
* Duration: Life of Mine
* Volume: The GREATER of 113Ktpa OR 50% of production (I'd love to see 300Ktpa SC6 out of DFS .... volume is then 150Ktpa)
* Price: Equivalent cost, insurance and freight
(“CIF”), China market price basis on a delivered at place
(“DAP”), (Incoterms 2020) basis to
Cherryville, North Carolina* Price Floor: $500 per ton
* Price Ceiling: $900 per metric ton.
None of this should be a surprise - its been disclosed often enough and discussed at length.
I respect your opinion
@YkikaBear that you would prefer a scenario where
"PLL do not proceed with the Tesla Offtake... Does that set a precedent......?" That does not take into account the binding condition being met first of all. PLL & TSLA might simply say we can't agree on spodumene delivery start date and the agreement voids. As for setting a precedent ... companies back out of agreements all the time as pay compensation (for reference SYQ could backout of building LiOH refinery and pay the $20M penalty (i believe that's the number). Furthermore your base assumption is PLL backs out ... consider that maybe my view on the price with TSLA being linked to hydroxide price/revenue is correct and maybe TSLA backs out for some other contract. Do not confuse these agreements for Take-or-Pay style. NONE OF THIS MAY BE TRUE if there are clauses dealing with termination options and repricing "windows".
The scenario of PLL paying $900 to SYA and reselling to TSLA at <$500 is far-fetched to me and KP's banking experience should/would prevent such an occasion from happening (i.e. PLL having to source 3rd party product at market price to supply a fixed price).
In the end to me (owning both) it doesn't matter. The part I am most interested in is the decision of if/when to invest in LiOH refinery and the cross company (dividend) payments of SYQ to SYA/PLL from SC6 sales and how much is retained in SYQ (to build said LiOH refinery for example) and then the PLL to SYQ payments under OTA for SC6 going to future refinery.
IMO if you are concerned about PLL going quiet on their TSLA OTA ... that seems more like something to discuss on PLL forum (you still hold them right?)
(20min delay)