ASX Today, page-28312

I had a mate email me last night as he had received research notes from Macquarie after they had initiated coverage of and SYA and PLL. He wanted to know my thoughts which I post below. Some of below is plagiarised a little from elsewhere.

SYA

Regarding main project in Quebec, SYA owns 75% and the rest owned PLL. It has 58% of LTR resource and is 58% of LTR MC. However, they are locked into sell 50% of its spod to PLL for only $900tpa (PLL offtake ~113,000tonnes x $900tpa = $101.7m pa). LTR spod price is linked to hydroxide price and likely around 3-4k/tonne at current prices and will be producing 600,000tpa v's 226,000tpa for Piedmont. LTR resource average grade also better, 1.4% vs 1.1%. This last point is more important than you might thinks. LTR product will be first rate.

Pros:

1. North American Lithium cheap hydroelectricity operation (ESG aligned).

2. $90m cash & no debt.

3. Largest hard rock lithium base in North America.

4. Next North American hard rock lithium supplier.

5. Will be the first downstream processor in North America 2026 (if LCE plant proceeds, which is very likely given plant is half built and onsite).
6. 50,000m of drilling planned in 2023 which will they hope will significantly increase resource base, life of mine and NPVs.

Other Projects
1. Abitib project 87.8mt @1.05%.

2. Northern Hub 12.03mt @1.4% (drilling to expand. Hope to increase in excess of 60mt).

PLL

Haven't looked into PLL as much. Near term producer due to owning 25% of SYA project in Quebec. Other projects, one in Ghana (Atlantic..see below) and another in Carolina planned to be online in 2026 and 2030, respectively.

Even though their offtake agreement with SYA is at a good price and they will be a vertically integrated producer, they only own 25% of Quenec resource and other projects too far off for my liking to get involved. Hence, why market cap only 1.7bil. I guess?

Other major concern here is the short seller report just released which is below. My experience is, even if wrong the shorter seller reports can have a medium term negative effect on the share price. They are often well researched too, so buyer beware imo.

Blue Orca has alledged in a report on Wednesday that the mining licenses obtained by Atlantic in Ghana were through what appeared to be “textbook corruption”.

In 2021, Piedmont invested $100 million in Atlantic to secure spodumene – high-purity lithium ore – from Atlantic’s mine in Ghana.

Piedmont has the right to buy half of Atlantic’s production at market prices on a life-of-mine basis, and to earn a 50% interest in the Ghanaian projects.

Blue Orca said in its report that Atlantic obtained key Ghana mining licenses by making secret payments and promises of payments to the immediate family of a high-level politician in Ghana. Reuters could not immediately verify Blue Orca’s allegation.

The short-seller also said it does not believe that authorities in Ghana will ratify Atlantic’s mining licenses, based on precedents in the country and around Africa.

Atlantic in a statement refuted the allegations made by Blue Orca.

Piedmont is planning to use spodumene concentrate from Atlantic as partial feed for its proposed Tennessee Lithium hydroxide plant.

The company, however, said that if for any reason it does not exercise its right to the offtake supply, Piedmont “is confident that alternative sources of spodumene concentrate would be available to feed the Tennessee facility.”

Both SYA and PLL will likely get ramped with news due to the North American connection but personally I still favour LTR for resource size, quality, 100% ownership, management and quality of our offtakes.

At the end of the day, they are all lithium companies in a hot sector.

G