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aceisme

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14/09/23

16:05

Post #: 69860689
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Originally posted by Kevo88: ↑

Why would PLL agree to a lower cut??

The key flaw in simply "investing in NAL downstream ASAP" is that PLL are not incentivised to do this. And they need to agree before the downstream initiative proceeds. The offtake needs renegotiation and SYA need to be prepared to give up JV ownership % in exchange. It's as simple as that. I for one hope that happens, as the offtake is really killing SYA's growth at present.

In answer to the above, its quite simple really. When NAL was first bought by PLL and SYA via JV it was agreed upon that ultimately NAL would move downstream. I believe this is tied in with a requirement from the Quebec government with the purchase.
Sayona Mining (ASX:SYA) and Piedmont Lithium (ASXLL) acquire North American Lithium | The Market Herald
-from above source:

"Notably, these activities form part of several commitments agreed by Sayona Québec under assignment and governance contracts to establish industrial spodumene conversion facilities in the province of Québec — known as the “Québec Content Undertakings"So, firstly, regardless of incentives to commit to downstream processing at NAL, it is what SYAQ signed up for. So they are just going to stop now? Because we dont need the conversion? or use someone elses and lose more marginal profiteering???? Seems a little silly. An what about this commitment in regards to the Quebec government? We just ignore it and hope there is no consequences of not meeting commitments made to the government?

But on the topic of why PLL would agree to a lower cut and that there is no incentive. Mate not to be rude but your comment has no substantive conclusion, its a blanket statement.

I have already highlighted a number of reasons why PLL and SYA benefit from conversion. Plus basic mathematics on the "pfs" of NAL carbonate?
So dfs no conversion is $2.2B
50/50 of that is $1.1B. - PLL share

pfs of carbonate was 3.2B stand alone + 2.2B for NAL spod operation - total 5.4B
25% of 5.4B - 1.35B

so that is the value add in pure NPV of derived cashflows.

But then you have to factor in that PLL also own 9% of SYA shareholding. So any value add we derive exclusively, they will get slightly less than 10%.

So not only would we be fulfilling commitments made to Quebec government.
You also have value add in each PLL and SYA
You have the cost benefit/opex reduction of not needing to transport the stuff to the other side of the planet
Add to the above the environmental benefit of doing so (positive externality)
You also have the opportunity to source (not necessarily required) a 3rd party (they may have either a major or minor part in SYAQ). It wont really matter too much unless they can add significant value to the overall operation at NAL. But yet again leaving a door open for further value add through relationships.

So I ask you, what exactly is the disincentive of which you speak????

Expand

Great post and it shows why PLL will go downstream. The penalties alone for not doing so by the agreed time frame with the government, will dramatically eat into PLLs profits year in and year out. The only problem is that Keith will drag his feet right up to the agreed date, hence the reason we are looking at such a long time to finish the half built plant. As far as PLL going downstream however, that will happen regardless.

SYA Price at posting: 10.0¢ Sentiment: Buy Disclosure: Held
7 Upvote

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