Waste will be a massive issue in Canada - throughout the supply...

Waste will be a massive issue in Canada - throughout the supply chain. So much so it could be a deal breaker for incorporating Authier into NAL feed - appears SYQ is lining up Jourdan as an alternative, not a supplement. The optimal situation will be for concentrators and converters to be on the same site or within a very short distance.

I don't know the intentions for what type of cells Northvolt will be producing in Canada. I suspect for the initial years of operation they will need to import regardless of choice. As for do it now, my understanding is that Northvolt will be requiring salts and that is not a product NAL could supply right now.

NAL producing more in 2 years than currently - I should certainly hope so but do not expect it to be at their targeted nameplate - appears to be 226ktpa at 5.4% LiO2 on a wmt basis. It is a difficult resource that SYQ is dealing with and they have set themselves quite a target as operator. I really do feel like these threads, aided by SYA statements, have set unreasonable expectations.

Further expansion raises a host of issues at the site. I don't think it will happen in your timeframe (2 years) and it is an awkward situation for SYQ if that further expansion doesn't supply SYQ's own converter and goes in it's entirety, or near that, to PLL below cost (AISC). Would SYA be comfortable contributing 75% capex for no return or a loss on that expanded production? I do expect that in the next couple of years there will be a renegotiation to remove such a roadblock. SYA may need to give up some of their share of the JV. As it stands from a SC perspective, PLL has an offtake for at least 50% and ¼ of remaining sales - if the PLL OTA SC was to be sold at cost and the remainder at market rates then PLL would have an economic interest of 62.5%. It is known PLL have a LOM price ceiling of US$900dmt (SC6 subject to adjustment) on a delivered basis to North Carolina and it is my firm belief that on an AISC basis once in steady state that will be at a loss to SYQ. During rampup the delta between cost and sales price to PLL is far greater.

I'll talk about costs a little because it isn't too difficult to play around with cash costs of production - we've seen all SC producers do it to varying degrees. PLS is more transparent than Allkem at Mt Cattlin - the former provides a CIF breakdown that includes royalties, while the latter sticks to FOB only without royalties and marketing. Both use WMT. A lot of stripping costs can be capitalised, just to name one example. Sustaining capex is left left out. Where possible expect SYQ to capitalise costs in order to present a more palatable cash cost to the market - not intended as a slight aqainst SYA, just standard for the industry. Helps SYA that cash cost is stated as WMT FOB as holders will compare it to DMT CIF pricing. I tend to talk in terms of AISC to get a more complete picture. Also important to keep in mind that capex (even what has been treated as sunk) needs to be recovered at some point - can't pretend that wasn't shareholder funds spent and pushed aside as though it doesn't matter as long as selling price is above cash costs. Yes the capitalised expenditure will be depreciated / amortised over time but it is still a cost borne by holders.

PLS

AKE Mt Cattlin

If anyone wants an indication of what steady state costs may resemble then I think Mt Cattlin is a reasonable benchmark with the understanding that NAL has a more difficult ore body to work with. CXO actually isn't a poor indicator given both are currently going through rampup and have difficult deposits. The major difference is that some prior learnings will have been applied to NAL from the previous failings.

At the end of the day NAL will become profitable in the near term and an asset that helps fuel the growth of SYA. I do not anticipate SC pricing to fall to SYQ's AISC this decade. I expect the market to generally remain in shortage for SC and if there is a slight surplus of Li salts then other sources like China lepidolite will cease production. That is a significant safety buffer in terms of risk. It is also worth noting that projects will take longer to develop than anticipated and rampup will be quite a slow process for most greenfield projects. I do not believe the industry is headed for a repeat of the dark days of 2020 where some shipments were sold in the low US$300s - well below cost. What is possible is that the pendulum swings back to converters having the greater margins in percentage terms (if considering their costs of value adding and not the cost of buying SC precursor) but one must consider the capex cost differential between a SC concentrator and a converter. It is worth noting that both SC miners and their converters are likely to experience excellent margins - even the more challenging operations like NAL.

Looking forward to further updates as to the scale of costs and data outlining NAL production.