That is perhaps one of the most spiteful comments I have read on Hotcopper. One self declared retail holder hoping a JV partner will go under. To what benefit? Shadenfruede at the suffering of other retail holders? Someone else picks up PLL as a whole or the pieces are sold off including the SYQ JV. I would be astounded if any new owner of the assets would give up their OTA with SYQ.
Regardless there is no indication that SYA's largest shareholder PLL, a substantial one for that matter is even close to going under. So to me that just leaves envy that for the next 3 to 4 years at a minimum, PLL will be the main economic beneficiary of the SYQ JV between SYA and PLL to the tune of potentially 70-75% - notably unusual given the ownership structure of the JV is 75/25 in favour of SYA.
I have seen
@Langleybc post over a period of years and would not describe him as completely uniformed despite the impression some of his posts might give to an unbiased observer. I would expect he has taken the time to read the PLL reports which detail their financial position. I do not believe that he genuinely believes the narratives regarding PLL.
I have not followed these threads closely enough to notice if
@Langleybc has commented about SYA retail holders being unfairly wished the worst by non-holders but the comments regarding the hope that PLL holders effectively lose everything does strike me as hypocritical.
So let's break down some of the theories as to why PLL might go under. From what I gather there are multiple main contributing arguments.
1: The idea that PLL have not been paying their share of costs for SYQ and "owe" the JV or SYA tens of millions of dollars. This is pure speculation of the wildest nature / disinformation that is easily disproven by the financial records of PLL that clearly demonstrate that they have been paying their way and SYA has not been carrying the can as some posters claim.
2: That PLL might need to repay the US$147m IRA grant if the Tennessee or Carolina plans fall over, and they do not have funds to do so. The fact of the matter is that PLL has not received the funding at this point. The grant has not been finalised as the final details are still being negotiated. The grant would only be able to be applied to support the construction of the Tennessee Lithium refinery project and one would expect it to be provided in stages.
3: That Ghana may not issue a mining license for Atlantic Lithium's Ewoyaa project or that Ghana may strip Atlantic Lithium of it's tenements and that as a consequence PLL will not have feed to supply it's Tennessee Hydroxide refinery. Even if this worst case scenario were to play out, the Tennessee project remains viable. PLL would have to purchase SC on spot or enter into a supply agreement with a new entity. There are of course options for PLL to enter into an OTA with a range of suppliers. While PLL would miss out on the benefits of being semi-integrated by supplying SC from what would likely be a 50% owned project, it's OTA with Atlantic is at market rates unlike the terms it has with SYQ. Losing Ghana would be a blow, but not a deal breaker for Tennessee.
4: Ongoing legal proceedings in the US. There are 3 pending class actions relating to PLL. These primarily relate to alleged non disclosure regarding the status of the Carolina Lithium project. There is 1 lawsuit in the early stages of litigation that is currently assessing motions to dismiss. That class action is against the company. The other 2 are related to the same subject however it is worth noting that these 2 are both claims purportedly on behalf of PLL (the company) lodged by shareholder/s against certain of the company's officers and directors. The latter 2 suits have been stayed pending the motion to dismiss the 1st suit. It is worth noting the company filed a motion to dismiss in July 2022 and the court is yet to rule on that motion. It is common knowledge that the US is a particularly litigious society and it is not at all unusual for companies listed on mjor exchanges like the NASDAQ to have outstanding litigation.
As at June 30, PLL had cash and cash equivalents exceeding US$88m and as is known will be shipping at least 56500kt of SC tjos calendar year from NAL at a purchase price of ~US$810t delivered. The company has stated it anticipates a material decline or even ceasing of the amount it has been paying into the SYQ JV from the 4th quarter of this calendar year.
In short PLL does not have a liquidity issue and will soon be receiving revenue from the sale of NAL SC under it's OTA. Until those shipments are sold, PLL is in the same position as SYA and any other company in development stages - no revenue from sale of product. Of course there has been an ongoing need for more funds and like SYA, PLL had to raise and dilute. Worth noting that neither have gone down the debt road. Neither company is in the position where a secured creditor can place them into receivership following breaches of covenants.
For those that struggle to understand the concept of a JV, typically partners pay into the JV when the JV considers it necessary, in order to maintain liquidity. These calls are made in advance of anticipated requirements. Bills are not split each quarter or as they are received. Just as the JV will agree as to if / when distributions will be paid to the partners, when funds are required the JV partners agree to funding requirements. The financial information showing that PLL has been paying it share of funds is plain to see if you care to read the PLL financials.
I understand the frustration and spite many SYA holders have towards PLL. It may not seem fair that PLL has a favourable offtake. I think it is important to keep in mind that if SYA had not formed the JV with PLL for NAL the project could well have gone to another entity.
Prior to submitting the JV bid with PLL, SYA had repeatedly tried and failed to secure NAL over a significant period of time. It is all very well to use hindsight to say the terms aren't fair, but I believe it is worth keeping in mind that NAL and all the benefits that came with it for SYA would not have been possible without PLL.
Is it really at all reasonable to hope that PLL goes under?
I believe the targeted hit job against PLL by SYA holders that is driven by envy of the JV terms and spite, would not be considered at all tolerable by members of these SYA threads and no doubt there would be calls for an official investigation by authorities if the shoe was on the other foot.
I hope for the success of both SYA and PLL. Yes they are partners with differing vested interests at NAL but neither would have progressed to this point without having teamed up. As far as I can tell neither SYA nor PLL have liquidity issues.
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