I think part of the issue is also as Jasen96 posted a buy the rumour and sell the fact.
The rumour to which I paid 27c was, in production by Junish, offtake, part build carb plant. So things looked rosie.
If we fast forward to last announcement, it appears we are under the current situation of över promised and under delivered"
As "offtake was stated in coming weeks" back in April/May. Fast forward to the 2nd of August announcement.
I can see now why the capital raise was done when it was done. When shorting was re-taken up post capital raise (early june) then we had this shame of an announcement in August also playing down on the current price.
Snippets from latest announcement:
"The first shipment of approximately 20,500 metric tonnes of on‐specification Li2O spodumene concentrate has been sold into the buoyant global spot market via a major trading company, minimising risk and allowing for logistic flexibility as NAL prepares for increased sales tonnages in fiscal 2024. The AAL Moon vessel carrying NAL’s spodumene concentrate departed port on 1 August 2023, with the concentrate bound for the international lithium market for further processing. Sayona will monitor the process chain of the product as a pathway to global lithium chemical accreditation."
Whats bad about the above is, not only has it confirmed a lack of an actual offtake. Management couldnt even get the product to market without assistance from a trading house. Whats the commission that they will pick up on this? As if giving PLL half our product isnt enough each year, now we have the added weight of commission fees to the overall opex.....
Its also almost comical that they say minimises risk..... Without this offtake it exposes SYA to greater risk of price volatility on an open market as opposed to a fixed price agreement even if discounted from current market rates/indexes. Considering the macro market atm globally, if demand for products continues to fall with financial institutions attempting to curb spending to control inflation. What is going to feed up the supply chain to upstream producers? A lack of demand for products. Why? Because downstream producers simply dont require the products. While this remains to be seen in the lithium space. Car sales in general fell off a cliff in Australia back in May.... This was not limited to ICEs and impacted directly on EV sales too.
So without a locked in OTA and no relationship building and thus being lied to by the BoD about an offtake agreement in coming weeks. Is it any wonder why our price continues to slide. Pair this now with added price volatility risk and no offtake partner and things are not looking so rosie.
My only optimistic outlook was the comments that followed on from the above snippet:
"Sayona will continue to explore opportunities for long‐term offtake agreements for the uncommitted portion of spodumene concentrate produced at NAL. In the interim, the Company intends to continue selling the uncommitted portion of NAL spodumene concentrate at market prices. Sayona will announce the volume and relevant customer for additional shipments made in the first half of fiscal 2024 in due course."
Perhaps the offtake between PLL and another party, in conjunction with what the government want and a move sooner rather than later to Nal carb was simply too many balls to juggle from a prospective OT partner.
Lets hope that management have made the right decision not giving away our product for peanuts and that a lithium price trend will change that is favourable for our turnover sooner rather than later. Until then if we continue to see price declines on the open spod market the SYA share price is likely to follow suit.
The funds we need YoY now impact significantly our drillout of Moblan, ramp up ability of NAL in terms of Carb plant. Not to need capital input from us again etc...
An while the NAL pfs used ~1,300 per ton for a conservative NPV of 2.2B. Our $3k p/t estimate looks less and less likely: 3k per ton is for 6% not 5.4% so discount it by 10% grading = 2,700 less the commission via the trading company could be a further 10-15%.
It could be shorts, it could be a targeted take over. But the announcements they were promised also differ greatly from I think what was expected.
(20min delay)