Apologies people. Have been enjoying a week of attendance and viewing of the fabulous Australian Open tennis , .....so I make no apologies for that. I hope that wherever you were , you had a chance to enjoy it as much as I have. Whether at home or on site , it was absolutely fantastic to see Melbourne , Barty , the special K's .......and our own ' adopted ' Nadal up and about. What a match last night , and what an absolute Champion and Gentleman Nadal is. So in awe of his ability , tenacity and stamina.
I did see the AGM presentation and made a few notes on my observations as per below. Remember these are only my observations and interpretations and therefore will do not expect and will not be responding to any ' Flak ' from others who differ in their views. I have read all posts on the forum and have myself respected those who have different opinions by not intentionally going after them personally.
Here are my comments.
In the presentation , he ( BL ) also obviously state that they are in discussions with'Key Financiers 'and' Investors '..... which for me implies Institutional clients ( ie more than one and a group ) , and perhaps including a structure of ' Flow Through ' tax incentives together with debt for equity ' Buy Back ' or swap of I.Q's preferred stock and replaced by some sort of quasi stapled security ......or bond issue.
He also stated that negotiations were expected to be completed by March ( on the $70 million start up Capital ) , which they would move swiftly from there to being fully funded ( assume again that this is for the $70 million only of the NAL re-start capital ).
So then I interpret that ' Moving ' quickly from ' Negotiations ' being finalized means that actual funding will flow in the 2nd QTR from April which would also be consistent with I.Q's new budgetary 2022 /2023 financial year.
He mentions that off-take is a' Key Transitional 'aspect which is associated with its relationship with the Quebec Government . This tells me that it won't necessarily be a Tesla , Ford or GM .....unless it involves further commitment to Quebec for its place in the market with respects to integrated battery manufacturing and cathode & anode precursors. So who is more capable of this ? .....and who has already declared they are in talks ? And so I can't help but think that in part , it is more complex a deal and involves Quebec's significant posturing around the A.I industry. We know then that ALL this puts Tesla's firmly back front and center in the frame of candidates with all matters considered......so we continue to watch this space intently.
And they aren't in a hurry because there is a significant amount of work to be done here I would suggest with regards to how all this meshes with Quebec's overall ambitions and strategies.
In regards NAL and its 23,000 tonne carbonate capabilities - it would seem that as stated by BL , a ' significant amount of planning 'has taken place over the years but very little money due the fact the market conditions and the fact it hadn't had the money . And he ( B.L ) mentions that they were very close to pressing the button if they had the' Market and the Money '.
And this apparent anomaly goes totally against the many articles and publications to the contrary about where they were at , and in my opinion has been a big part of the public relations and public opinion issue surrounding these projects ( NAL and Nemaska ) thus far.
The fact that Quebec at a time of significant expenditures on COVID-19 .....and much like many Governments of course , is NOT in the position and does not want to be seen throwing more money at a project which was by all intensive purposes meant to have this money already applied. And the issue becomes more sensitive and almost increasing difficult to sell when you've already bailed out Nemaska massively in only the last 12 -18 months as well.
That being said , he does then state that the design and infrastructure ....plant layout' pots and pans 'has been put in place and established which will save BOTH time and Capital. He then also mentions this is why they can be not only faster butCHEAPERin the production of Carbonate which I believe had been mentioned several months ago.
However , it's how much CHEAPER that we and the Market don't know which constitutes the investor uncertainty and reservedness if you like .........as well as the fact that the Quebec Government still has to sell that to its constituent public voters. Remembering also that there is a Quebec Provincial general election scheduled on or before 3rd October 2022. And at the same time , I feel as though one has to be cognizant of the Anti-Trust , control and market share dominance that Tesla has acquired to date. So I feel as though Brett eluded to the fact that Piedmont with its ' Arms Length ' connection to Tesla is enough for the time being. This should then put paid to rest from all the ramping about Tesla being a certainty or sure thing for a deal in January to now promoting an ' Auction process for an ' unknown ' lithium price market which is some 12 - 18 months out from now. For me that's a pretty BIG call , and quite a jump to a polar opposite view. And the market certainly is not going to ascribe a premium to a stock price based on what the price of Lithium ' Might be ' in 12 to 18 months.....if anything it will discount significantly from current obtainable prices.
So I guess the jury is still out as to whether any future off-take will be with Tesla directly .....but certainly NOT going to happen in January as some had previously purported and probably not for a little while at least in the overall scheme of things and at least until NAL and the blending options have proven themselves at the production level.
He also states that if they go the path of Carbonate , the ' Earliest ' would be by the end of 2024 ....largely due the fact of what's already been put in place. I do note that this would be well before the beginning of year 6 mandatory timeline stipulated by Quebec as one of the conditions of sale for NAL. So that's 3 years earlier in fact.....and at' Half 'the price of a' greenfields operation '.....which would be around $1 billion ( considering inflation ) on average .....so that's around a further $400 - $ 500 million spend is what I would consider to be conservative for that to take place. And that's just the one Abitibi HUB.
When it comes to the question on BAPE , I am left wondering why he kept looking over to his right more frequently than at any other time in the Q&A. To me it was almost as though he was looking for approval on what he could say or his interpretation from someone else who knew more about where they were at with it. For those who weren't counting , he did this clearly 7 times in that question.
Its important to note the bit where he states that" once we have 6% spodumene production , then we've got the feedstock to be able to go as fast as we can into downstream processing ....and so that is building momentum as we speak "
Its worth mentioning that a rough 10% placement at around 10 -12 cents would be around 583.3 million and 700 million additional shares .....and is little as 283.3 - 500 million shares if the I.Q's current $20 million in preferred stock ' quasi debt ' were to be converted ,exchanged , swapped , bought back , or divided in some way to ordinary ranking equity or debt ....and this is because it was originally ' Non-Cash ' upfront consideration in the NAL acquisition. So you can either look at it as being 200 million more shares for example at 10.0 cents .....or a $20 million debt for equity swap and replacement of a bought back bond being converted to lesson the effective SYA contribution or offset against the effective cost of the refurbishment of the NAL operation.. Of course we have to account for the other approximate 25% portion ( $17.5 million of the $70 million ) liability for the financing arrangements coming directly from Piedmont. So I can't help but think something like this will be concurrently structured alongside the outside party finance transaction given that I.Q has already visited the NAL site with consulting engineers.
So in my view they will definitely be involved in some way with the structure of the required finance. The question then becomes HOW MUCH .......and whether they do this BEFORE their end of financial and budget year being March 31st 2022 or in its NEW financial year being an election year commencing from April 1st.
So I guess it should be no surprise then in what BL believes will be the significant driver of the share market value of the company should be based around.....which is essentially ' Execution ' and Sayona showing and demonstrating it has the' Wherewithal ' to actually get the NAL restart plant operation up and running ...and that that would be ' Game on First and the MOST 'significant driver with the second mention being the developing and expanding the ' World Scales Resource Base ' - ie Moblan , Lac Albert , Tansim , Authier and NAL. So its totally normal to see some Market ' Hesitancy ' until some of the outlined milestones are actually delivered upon.
He also states that the nearer term ' Revised ' NAL - Authier integrated DFS will be a powerful and significant driver with a lot of this due in February. And to my recollection , they didn't exactly say ' When in February ' , and with the majority of this trading week being the beginning of February , one has to wonder whether is will be sooner than later. And because when is Piedmont's AGM.......that's right its on Thursday 3rd February - at 2;00 pm US Eastern Standard time which is Friday 4th February our time at 6:00 am in Melbourne and BEFORE the market obviously opens.
So in anticipation of that event this week , I'll certainly be looking for the ' Cross promotion ' effect of KP and a strong opening if not a trading halt as a result from SYA . That is of course with all things being equal with Global Markets.
I note in the very last comment from the Chair at the Sayona AGM was that he ( whoever the chair person was ) said they look forward to updating shareholders at further meetings during the year. So if he meant ' Official ' meetings , this would mean that there will be some obvious EGM's will be required throughout the year....and this no doubt means some potentially exciting matters on the horizon
So essentially what we have here at the AGM was the delivery of a 5 Year broad level Business Plan with most of the economic , accounting and financing numbers yet to be slotted into the spreadsheets. Although I feel they already have a pretty sound idea as to what they are. And why wouldn't you as I have stated before and shown from existing NAL resource / Pit diagrams , the 2019 42 odd DD holes for 12,000 metres of yet to be analysed NAL spodumene represents around 28% of the entire amount of hole / metre's EVER drilled on the project. So why wouldn't you expect an uptick in the resource at NAL.
So as an investor , you have to stand back from all this and try to review objectively from a measured and unbiased perspective. Because at the end of the day , the only Critic of your investments can , and only has to be yourselves.
And after all this , I can't help but look upon whats been discussed as being in the looking glass of the age old adage of Cogniznt Fluency and the phenomenon of that good or bad things happen in 3's.
So what we have first up is the delivery of the ' high Level ' integrated DFS economics incorporating Authier. Almost concurrent with that , we have the obvious ' Resources Upgrades ' where applicable on either of or both of NAL and
Authier projects ......followed by potentially the NOVONIX purity results.
Then almost straight after that, we have the next potential3announcements being significant Upgrade to Moblan , successful findings at the new claims at Lac Albert , and finalization of the ' fully funded ' private financing and the disclosure thereof all potentially happening in March.
On that note , I haveONEmore significant observation which I will hold over until my next post on account of the additional detail required in posting this information.
In the meantime we await the Quarterlies to see and dissect further why , how much , and what we have spent our shareholders funds on in the December Quarter. Should be out sometime today.
(20min delay)
