IMHO, MY TOP THREE THEORIES FOR THIS CR...
Some interesting possibilities today...and doesn't this forum love drama?!
10 day VWAP seems to be the most popular method, which works out to 21.9. Unless there is a discount...or a premium...
I have to agree with most here, this CR is different.
When you take into consideration the timing, as well as the cash on hand and the ATM facility, you wonder where this money will head?
I do believe, this cash is to fund something, therefore It's not for day to day ops.
A consolidation may happen in the future, but I always believed it would be after the SAYOC expiry, at a minimum....so not yet.
1. AMOSS- Resolute papermill conversion.
This is the most likely reason, for requiring cash fast.
We know from the Amoss locals, SYA have been in negotiation for quite some time to acquire this plant.
We have discussed the many positives, that this brownfield site could bring in metrics and reducing the timeline, and we know Brett loves a brownfield site.....and with the success we have had at NAL, why not?
There has been estimates of anywhere between C$12-60 million, to purchase the old mill.
Maybe the negotiations have been concluded, and we need, lets say.....C$50mill.....to complete the purchase.
SYAQ may have come to the conclusion, that the cash we have on hand, is committed to the operation, and will be used to sustain us before we begin to see incoming revenue.
The ATM process is too slow to get cash fast, without tanking the SP.
So, they have turned to a quick CR, to cover costs of acquisition.
To what end???.....maybe this is part of puzzle they are solving, for a JV with LG/Posco.
So, if this is the case, we may see the CR as primarily for the Amoss purchase, but the infancy of a JV with the Koreans.
Buying this plant, is just the beginning and the cheapest part of the conversion to a JV hydroxide plant....just the beginning of the CAPEX.
The partners will probably need to inject C$500mill plus, to get this thing converted and operational.
And then if they are thinking a bolt on CAM plant as well, double it....
February 13, 2023
Ian-Thomas Bélanger [email protected]
Resolute Plant in Amos:
Sayona Purchases Facilities
The mining company gets its hands on the plant, closed since April 2020
The Resolute paper mill in Amos, closed since 2020, should soon become the property of the mining company Sayona, which operates, through Lithium North America, the lithium processing plant of La Corne.
The Sayona Company is in the process of acquiring the facilities of the former Resolute paper mill in Amos, closed for almost 3 years.
Unifor General Manager Daniel Cloutier confirmed that Sayona is currently in talks to acquire the old plant."Currently, we know that the company intends to make major changes to the plant's vocation and that both companies are conducting the necessary due diligence to agree on a purchase price. For our part, we are interested in the file to determine the impacts that this acquisition will have on jobs at the former paper mill," said Daniel Cloutier, currently on a provincial tour for Unifor in the Amos area.For several weeks, a rumour had been circulating in the Amos area that Sayona was in the process of acquiring Resolute's facilities.Resolute's paper mill closed in April 2020, mainly due to the ever-decreasing global demand for newsprint. "2. NAL
So we know the carbonate PFS is due this month, however, some have suggested the PFS may be late and come in April.
We certainly have history in this regard....
Hatch has been on the case since last year, and have been involved with NAL for a very long time.
They know exactly what is in the existing carbonate plant, and it would not surprise they are very close to completing the 1st draft of the PFS. Enough to throw some solid figures Brett's and Guy's way.
SYA's and Quebec's plan was ALWAYS to go downstream, and we have seen acknowledgement of that fact, by all involved parties.
There is some conjecture in the timing, but ALL now agree, this is the path forward.
I would go so far to say that our delegations to Korea, knew the possibilities and ballpark metrics and timeline, of when the carbonate plant could become operational and what it could cost....and presented that to Korean friends as a possibility.
So it may be a case of the Koreans saying-
'You get operational and throw some solid PFS carbonate figures our way, and we could talk SC6 offtake, and JV- 50/50 for the refinery.'
We may be at this tipping point now, particularly if it is LGChem.
They have an existing SC6 offtake via PLL for the next 4 years, with preferential rites to negotiate further product.
Their CEO has mentioned Security of supply many times...... product is key.
Now if LG, are staring down the barrel of losing SC6 supply from NAL, when it goes downstream anywhere from 2025-2027, how would they react?
They have shown they are willing to throw money around to guarantee IRA compliant supply, and what better way of securing supply, than taking the rest of NAL's SC6, via an SYA offtake. So roughly 75% of NAL's SC6 to LG and 25% to Tesla, whose offtake could end by 2026, if not mutually extended.
And then, by JV'ing with SYAQ for the carbonate plant, ensure that they will be the recipient of NAL's carbonate, particularly, if that SC6 supply is cutoff, by being preferentially directed, to the carbonate plant, or another refinery in Quebec.
We gain a solid partner, the LG expertise in chemical production and LG's funding of half the plant.
We issue more shares and dilute further, ( as PLL did with LG) have a big cash injection from this new cornerstone investor.
The catch is we need to fund half, thinking 150-200 million, which could be raised from this dilutionary equity stake, and the shortfall, if any, via dilutionary institutional investment, via this CR. Either way there is further dilution.
Maybe there is no equity stake, and we need to stump up half, without that cash injection...purely institutional CR...
LG secures supply, whether it is SC6 or LiCO, and we get the refinery up and running, with an existing offtake in place.
3. MOBLAN
SYA Increasing their equity stake in Moblan to beyond 60%..anywhere to 100%.
As the PFS is not available yet, or the drill results and assays made public, SYA may want to increase their stake, before what everyone is expecting, will be stellar results is announced, and maybe trying to minimise their outlay for a greater stake.
SOQUEM will no doubt be in the loop, but maybe they would like to step back a little and use the funds to progress many of their other projects, or find and fund new ones. That is their forte after all.
If SYA do take 100%, it would also make JV'ing with LG/Posco a lot easier and a lot cleaner, and the Quebec government may be in favour of this.
This may be the first step along the JV path, for Moblan and Sayona du Nord.
Additionally, it may be part of the puzzle, that once solved, leads to a JOINT Korean JV partner at BOTH NAL AND MOBLAN.
Either way, we should find out by Tuesday, or maybe even Monday if we are lucky....
Good luck everyone.
(20min delay)