PEA is an acronym for 'Preliminary Economic Assessment'. It is a...

PEA is an acronym for 'Preliminary Economic Assessment'.

It is a third party (independent) estimate for the economics of the mine.
It will basically be arithmetic...
(Resource Output in tonnes) X (Price Per Tonne) - OPEX = Annual Profit.
With a mine life estimate etc.
It's more complex than that (running into many pages) where the methodology, assumptions and source data is described.

Normally, a PEA is released before making the decision to develop the mine i.e. before spending money on digging and plant & equipment, hence the use of the word "preliminary".

Clearly, AGY has jumped the gun and have started mine development (built production wells, ponds and processing plant). This is their "fast-track" strategy. However, they made this decision based on their own in-house Economic Assessment (not third party).

I question why they might call it a PEA, rather because they can base their numbers on the Stage 1 processing plant (i.e. have access to real data in terms of OPEX and recovery rates, instead of lab results) it's not so much "preliminary" but something more advanced.

So, the obvious question is "why bother?"

Many fund managers operate under rules about what they are allowed to invest in, typically funds choose key indicators such as Market Cap (typically minimum $100 million) and can't invest in projects that have yet to release their PEA.

The PEA is the first independent estimate of what the future potential of the mine is and the fund managers can therefore project into the future and work out the likely future share price potential.

Because AGY are releasing their PEA so close to signing an OT agreement, they have a conundrum. Any numbers, particularly assumptions about Lithium pricing will be immediately out-of-date when the OT is released (the chances of the pricing being exactly the same are slim). Normally a PEA is done months or years before an OT agreement is signed.

Of course, I could be wrong about this, not knowing exactly where AGY are at with their OT agreement or what the real reason is they have yet to release their PEA (been talking about the PEA for 6 months). Who knows?

Hope this is helpful.

IMO
DYOR