I posted this on another group and it was suggested that I post it here as well.
It is very easy with this quarterly earning report to cast a negative view at Sayona, but I would like to post several items that may or may not have caught peoples eye, that are actually quite positive and point to a much better Q4 and likely our first profit in the not so distant future. I feel pretty confident that next quarter will be close to break even and then in Q125 we should see our first profitable quarter.
First of all, as of March we are at 82% of nameplate. I know we will take a hit in April because of the planned shutdown, but this may not be as substantial of a hit as you might think. I looked back to July when we had the rod mill tangle and we took a 13% hit to production, the tangle took about the same amount of down time and that is why I chose it as a benchmark. So March was 15700/t and 13% hit would take it to 13689/t for April... But that is with the assumption that the improvement with the new dome and refeed chute had no effect to the positive afterwards. On two occasions I have seen the words "substantial improvement" used to describe what they are expecting from these upgrades, will this completely wipe out the negative effect of the loss of production in April, probably not but I do think it will have maybe a 5% to 6% offset to the negative in April. After that May and June could actually make a huge difference and potentially, we could make it to nameplate by June.
2nd - During March we were able to achieve the DFS level of recoveries of 69%, that was before the improvements were put into place, we could be seeing at least a 73% recovery this quarter and that would be HUGE, not many in the business are seeing that high of a recovery!
Third - During Q3 we built the ROM up by 56%, this was done while only mining 9% more ore than the previous quarter. The OPEX rose by 10%, well if you mine 9% more ore shouldn't your OPEX increase by 9%? We now have the largest ROM we have every had and it is equivalent to 2.5 months of mining, so basically if we mined nothing for 2.5 months the mine would continue to process ore and not miss a beat. Part of this ROM build was to start stockpiling the crushed ore dome without effecting the rest of the operation, so I feel like the 10% uptick was because we needed to build up ROM and this quarter, we can live off of some of that inventory build and not mine as much ore in Q4.
4th - I sort of touched on it but the reason we could mine 9% more and build ROM by 56% was because we are in some of the best ore we have ever seen at 1.24% - I think the DFS states 1.07%. This means that less rock is going to the waste pile and more rock is going to ROM!! (insert dream sequence here with moblan being 1.34%). This really good ore is in and around the underground mining area and we should be in this really good stuff for at least 6 to 9 more months.
5th - We are winding down CAPEX spending, and while I do not expect it will be completely gone on Q4 quarterly, I am thinking we may be down by 50% and then almost completely gone in Q1-2025.
6th – Nameplate is about 620 tpd – yet we have been hearing 710 to 750 tpd on multiple days, this could indicate that 226,000 will be exceeded. For instance, 710 tpd indicates 255,000 and 750 tpd indicates 270,000.
And 1 final note on this, we have been approved for 4500 tpd but we are not doing that yet, once we have the dome in place we should be able to achieve that as well.
7th - Although the announcement says $58 Million in revenue, by quarter's end we had only placed about 1/2 that amount into our bank account. The rest is in accounts receivable and once delivery takes place (likely already) that money will show up in cash on hand. The 5b is a cash flow statement not a P & L so it looks like we have a much larger loss when its really not. We also add $13 million to the bank account post quarter end, so you can think more in lines with $99 million + $29 Million + $13 Million or around $142 Million available. So as I said the loss is still not great but far less than what you might think.
Our group took about a 2 week period in early March where we scrutinized each of the areas that are shown in the Quarterly. In the past each of us did our own back of the napkin math and that was not all that effective in predicting the numbers.
Each question started out with a discussion period where we each gave our views on why we thought what we thought. We then came up with 3 to 4 choices and turned that into a poll question and we cast votes, in each case we took the answer with the most votes. I would not say we nailed it completely because it is very difficult to guess things like CAPEX and exploration without any real company guidance but we did come up with some numbers that were very very close to what you see on the quarterly report. Our biggest mistake was not realizing that part of the revenue would not have made it to the bank by the end of quarter so initially we thought we were way off, but when you add the $29 million for accounts receivable back into the mix we were not all that far off from our predictions. The reason I do not post on HC much any more is because we can not have this sort of interactions with each other any more, the group has grown too large and there is a large contingent who are only here to destroy shareholder value for their personal gains and they rely upon the uninformed and unresearched to spread fear.
I am aware that not having some voices that seek to educate others is not, which is why I have decided to make this post and also will try to post some other info that will at least give some information that is not steeped in fear. I will encourage others in my group to do the same.
I know this past year has been hard on many people and their portfolios have been brutalized. IMO we have 1 relatively flat QTR remaining and then we move into profitability. My Guess is this quarter we will be hearing more on Moblan with potentially more tones than patriot and updates on NAL drilling as well. We will also likely have some additional news about partnering / and or funding / OTA's in the near future. If you jumped into Sayona because you saw huge potential, that has not gone away, all of those things are very much still in play.
Good luck to all holders,
Split
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