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3.3¢ sayona mining limited

Something that seems to have been forgotten, (or is rarely...

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Oneiroi

364 Posts.

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14/11/23

11:21

Post #: 70886832
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Originally posted by Sjlasx: ↑

It was still a big risk for PLL at the time.

They had no idea if SYA would be able to improve on previous attempts... and I'm sorry to say, I fail to see the return from the massive capex spend - most of which was conveniently ignored by dropping the DFS after restart. Compared to previous operations, SYA appear to be about on par. Perhaps they can lift throughput a little higher than the prior operators.

Reading the latest announcement it seems that despite having promised nameplate months ago, output is a disappointment. Throughput isn't much improved. It seems, and I should point out, to be expected, that SYA is just beginning to understand the issues that face the operation and are now identifying constraints. I read they have a plan that may lift recovery rates by 4% which would take it to the high 50s. Please DYOR and see how long it has taken other operators to get their plants running optimally and whether they hit any feasibility targets along the way without major capex injections to change the scope of the project. 226k wmt pa from the NAL plant is a huge ask, even at SC5.3 or 5.5.

The problem is and always has been the geology. You can't change the feed. They are however attempting to better manage the consistency. Have tried many times in the past to explain this. The MoneyofMine podcast pointed this out as well but that seems to have been dismissed by the hotcopper mob. They also pointed out it is not difficult to find qualified directors. So why the delay? Even PLL have never chosen to appoint a director, as is their right. (For those that have been wondering when PLL mentions control, they do not mean absolute control but the ability to appoint a director means some control).

I will point out another thing that I have not seen addressed on these threads. I apologise if it has already been covered. The search for a new CEO was not mentioned. It appears James Brown will be permanently taking the position. One must ask about corporate governance at SYA. This is not a small company, but no Chairman and to have only 3 directors is not good corporate governance.

I absolutely understand your frustration. PLL may also be frustrated, but I suspect given their own NAL updates they have been well aware - they new what they were getting in to, unfortunatelythose relying on SYA announcements alone did not. You were promised an unrealistic nameplate and that it would be reached a couple of months ago. You were given promises of recovery rates and costs on par or if not better than peers like PLS.

So now pricing is lower and output is not what you expected. Winter is coming without a crushed ore dome. PLL will take their 56500dmt this calendar year and it is looking very possible that with what has been updated, PLL will be taking ⅔ of CY24 production under their OTA. I do not recall the poster that debated when I suggested it likely PLL would receive 75% of the economic benefits from NAL in initial years. A big part of that reasoning was my expectations of output.

I totally understand it stings to see a lower pricing environment than many anticipated, much lower output and PLL paying USD805dmt hurts. I think I was the only one here to point out it was likely that transport costs of the OTA would somehow be reconciled as the agreement was for delivery to North Carolina.

I do however think much of the frustration with PLL would have been lessened if SYA hadn't overpromised and underdelivered. You must understand this hurts PLL as well. The value of their 25% stake has been reduced.

Another thing to point out is that the OTA has been renegotiated at least once already. There was the increase of the minimum volume to 113ktpa. That may well have been linked to the decision to lower grade in initial years. That significantly hurts PLL in their OTA. If it wasn't part of an OTA renegotiation then it was very generous for PLL to agree on a grade that is below what even SYA considers is necessary for their own downstream intentions.

As for downstream, it is clearly in PLL interests for it to be delayed as much as possible, but please also consider the possibility that going downstream would take significantly longer than what SYA advised - their ambitions did not seem to allign with other projects globally. 2027 may well be as fast as SYA could have possibly achieved. SYA itself may have been wanting to wait until SYQ was self sustaining before embarking on that.

From here SYA will need to manage the optics for the Canadian government. They can achieve this in 2 ways. One is to demonstrate the steps and studies undertaken and ongoing to go downstream along with providing information on realistic timelines based on others in the industry. The 2nd is to blame PLL. That 2nd option would be quite a hostile move. You may believe PLL have acted in a hostile manner, but requesting tradeoff studies etc is reasonable. They have put forward sound arguments as to why Hydroxide is a better path forward. Quebec itself may prefer Hydroxide if it is what doenstream manufacturers in the area require. As previously mentioned, NAL would be a global outlier in concerting SC to Carbonate. On that topic we do not have a good understanding of what is actually required to complete the Carbonate plant as the PTS was limited. We don't know what half finished actually means. Was it more hyperbole and to what extent is the existing half tied to Carbonate.

I do not understand how any investors can trust SYA forecasts at this point. My concern for both SYA and PLL is the recent SYA announcements have been a softening of the blow and there are more downward revisions to come. Did the recent production forecasts take into account the lack of storage dome or other issues uncovered in the strategic review? If it did account for the lack of dome then why wasn't that mentioned at the time?

Right now as far as I am concerned PLL has no responsibility to SYA beyond ensuring the JV is viable. It is not their responsibility to ensure SYA has enough distributions from SYQ to fund their other activities like Moblan. Let's face it. This discussion around PLL gifting SYA by altering the terms of the OTA is not for the viability of the JV, rather it is concern about SYA's need for funds elsewhere. Fortunately the JV is in a position where it is self sustaining. Another concern is the potential capex requirements from the flagged bottlenecks SYA has now identified and any other required plant improvements. That could see the resumption of equity calls from the partners.

To try and bring this all back into perspective. Why aren't the holders that bought at 3cps being asked to give up some of their stake because they have already seen a fair profit and it would help reduce shares on issue?

Expand

Something that seems to have been forgotten, (or is rarely mentioned) is Authier. The higher grade ore from Authier was to be blended with the NAL ore, to improve the feed quality and hence achieve increased product at a better quality.
Instead, the decision was made to opt for a more stringent environmental permitting regime (BAPE), thereby taking Authier out of the equation for another 2 years.
I'm wondering if they are rueing that decision now, or was there perhaps some other issues with Authier, that havent been brought to light?

SYA Price at posting: 8.0¢ Sentiment: Buy Disclosure: Held
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