Well lets see, how to frame this post without ticking off too...

Well lets see, how to frame this post without ticking off too many posters .... Lord knows they (and they know who they are) have for the past couple of years assumed the high ground and blasted anyone who did not agree with them (esp those that held PLL).

This post is more about SYQ ... Sayona Quebec - the incorporated JV between SYA and PLL (that hated company and despised CEO) and the asset - North American Lithium (NAL)

Now I asked JB after the AGM if he could provide the equivalent of a waterfall chart that was specific to SYQ JV and NAL. Pretty much got my wish ... begged for "starting cash " in the JV going forward .. didn't get that, but I'll ask again (because I think its important for shareholders to understand the JV's financials ... since financials SYA are presenting are CONSOLIDATED and the true picture isn't easily ascertained (remember - numbers don't lie).

So, with 2 Qtrs now the "waterfall picture" looks like this:



(Gee imagine the posts if it were PLL ... starting cash $233M and ending cash $99M ... imagine "burning through" $134M in 6 months ... or a whopping $268M annualized run rate ... no way the company survives ... I recall posts along that line not that long ago. Silly boys).

So lets get real on a few things:
1. SYQ = NAL at present and its easy enough to see what's going on financially
2. NAL is in ramp up. Ramp up is time consuming and can be highly variable. Apart from the many things that operationally need to optimized, what an INVESTOR SHOULD KNOW is that during ramp up, OPEX UNIT COST comparisons are not really very useful as production may vary considerably and that will greatly affect unit costs. Same goes to the ASIC as fixed costs (Capex) is going to also vary as improvements are made. This is especially true QoQ.
3. IMO, its always better to average over longer periods (e.g. rolling 6 months) using a "moving average" than to compare QoQ so that these imorovements are captured.

So lets "re-orient" that info a little bit:

A word of caution ... I don't have the opening cash for SYQ (yet) so I assume $0. I would dearly love to have it. All that would change here is that we would see some number for SYQ and lower number for SYA (ex-SYQ) and the same number for SYA group (and again keep in mind SYA consolidates the financials of SYQ). That "opening cash" is what is in SYQ accounts (and that cash sort of belongs to the JV partners 75/25 to SYA/PLL)



OK big deal ... at least the numbers align (remember they don't lie) - so no errors in there.

So over the last 6 months of operations SYQ has negative free cash flow of $40M. Think about that ... this means that if FOR EXAMPLE SYQ had say $43M as its starting cash it now would have just $3M left in its cash account after the last 6 months operating the business - which includes making improvements which requires capital. At you can extrapolate out sideways to SYA and infer that if $43M was SYQ opening cash position then SYA opening cash position was $190M and now, after 6 months of operations (on stuff that has nothing to do with NAL) they have just $96M left.

Why is this important to me (and by extension to you all - as SYA shareholders)?
Well ... cash comes from only 3 sources ... positive cash flow, cash from the equity partners and cash from borrowing (debt) ... that's it. And that 's true for SYQ, SYA and PLL.

OK, well the equity partners (thats SYA and PLL) contributed additional cash of $78M to SYQ ... and that means SYA stumped up about $58M and PLL about $20M (you can see this the SYA waterfall also as "Equity Contribution to JV"). If I started with $0 in the kitty at SYQ and ended with $0 in kitty then I can infer that of the $78M contributed $59M was invested into the business (Capex + Exploration spend) leaving $19M as "cash needed to make ends meet" - i.e. keep operating.

Well now that doesn't sound to bad does it. $19M short for 6 months of ramp up operations ... a little over $3M/mth

What am I getting at ???
Exploration isn't a "continuing operational expense" ... its a sustaining capital expense in reality because without exploration/infill drilling the resource shrinks and we can't have that ... mine life is important too.
The same goes for the Capex spent on TSF1 and the COD - they are not continuing operational expenses either.

The "loss " isn't as bad as it seems (you're seeing the whole Capex in 1 period as opposed to being depreciated over time).

The other thing worth thinking over is to just look where the overall costs are heading .... and that's DOWN ...I would stress again that this is a ramp up and trying to make a QoQ comparison isn't all that helpul



The Jun'24 Qtr Production is just a WAG - thats why its in blue - as in blue sky number ... but reasonable yeah. And if Opex was the same $70M again for this June Qtr ... then costs have come down in the Qtr simply because production increased (and some will argue that because production has increased so have variable costs - like waste ore disposal. That's true - but we are banking on operational efficiencies to be higher than that. If not then, perhaps this project is doomed and cannot operate through the cycle and is just a marginal produce. I don't happen to believe that.

Just like in the 6 month before that compared to this 6 month period. Costs are something SYQ can control. And sure they will go through periods - like now while operating above the old underground diggings - which is slower and more expensive, or when ore grades are not quite as good and more waste is present - increasing costs. I'm looking at the total Opex cost to the total SC produced (not $$$ sold ... because at this point REVENUE is an unreliable number given the price volatility and adjustments being made - because revenue is taken when shipped and an estimated deferred amount is reserved for next quarter adjustment).


Which takes me back to earlier commentary. What is the cash left in SYQ (not SYA ... we know its $99M) and how much of an Equity contribution is needed (if any) this Qtr? That's going to take some guesswork and PLL's help (when they report on May 9) - hoping they give guidance for Q2 and further clarity on Q1. The critical number for me is (obviously) the cash that comes in this Qtr. My guess is SYQ operates on a very thin working capital basis ... relying on its JV partners for continued equity contributions to make up the difference in operating cash flow losses.

So what's the solution (for SYQ). There is one obvious solution to me. SYQ (at the supposed nameplate of 226Ktpy) has ~113Ktpy of production that has not been contracted. Contract that to TSLA. Negotiate a partial pre-payment in advance - this is simiar to what has been done for decades in Oil & Gas industry - called a VPP (Volumetric Payment Plan) where buyer buys a % of production in advance for advance payment).

The sale of NAL SC to TSLA has begun via PLL's OTA (good news for PLL because of the pricing mechanism in their OTA will TSLA). It's also good news for SYQ as that would begin TSLA's TX LiOH refinery's materials qualification process and testing the supply chain (noting it was a rail shipment of SC). It also means that shipping cost should come down and there is no China VAT in the price either. TSLA is willing to use a LiOH price index (or they have with PLL) and that also gets us away from China pricing to a more "local NA" pricing that is contracted (yes with floors and ceilings and a sliding scale in between based not just on a benchmark price but a % of margin).

TSLA has always wanted surety of supply ... well this sort of option + their OTA with PLL should get TX LiOH raw materials sourced locally and fully IRA compliant.

NAL has a location advantage being in NA (much better than say LTR shipping into Houston for example)

Anyway, I don't think its doom and gloom. I think quite a few posters are shall we say "mis-interpretating" what's put in from of them (again).