And nice to see Sigma Lithium following through again on last night by achieving another ALL TIME HIGH on its share price. I see its now carrying a Market Capitalisation value of around A$2.564 billion which is a figure we should easily be still reflecting even now ,and which would comfortably see us back at the 35.0 - 36.0 cent level via the 31 - 33 cent pathway.
Yeah so I do very much like the comparisons to Sigma Lithium as you all very well know , ans since I've been banging on about it for what seems to be forever.
And I like some of the other similarities and not just those specific comparisons to their project holdings and development stages verses ours. Its what you find in addition to this which is also interesting.
For instance , if you look you will find that Sigma Lithium's projects are located in the Minas Gerais State which is the fourth largest in land size at 586,528 square kilometres. So like Quebec , it is also ranked as the second most populous, and the third highest of all its 26 states by gross domestic product (GDP).
So their Brazil's ( the Minas Gerais State ) of where Sigma's project is located has a GDP of approximately US $280 - 300 billion in aggregate versus Quebec which comes in at US $360 -$400 billion for an area of 485.8 square kilometres , and which ranks as the largest province in Canada , and second only to Ontario as measured by population.
GDP per capita in Quebec is around US $52 - $55 thousand verses the national figure in Brazil in 2021 of only US$7,741.15 per person.
So with the total Nation GDP of Brazil v Canada being much the much , the difference in the per capita clearly lies in the difference in Populations with Brazil's approximate 212.6 million versus Canada's at 38.01 million with Quebec representing around 8.5 million or a tad over 22% of the total
So despite these similarities , Quebec is clearly more wealthy in its resource distribution as seen in its significantly higher GDP output to more than HALF the equivalent population of its peoples.verses the Minas Gerais region.
So I would imagine that if it's hard to find skilled workforce in Quebec , imagine what the difficulties as well as competitiveness for jobs on a mouths to feed basis it would be in Brazil .
Of course where Sigma benefits is that Brazil was one of the BRIC economies as originally founded by the definition and still benefits by their local content and relative low wages and salaries and other material input costs when they receive their top line sales revenue in US Dollars.
However at the same time, their upfront CAPEX cost of engineering and quoted major input machinery and plant components are still having to be priced and paid in US dollars until they have sufficient revenues to hedge the ongoing LOM CAPEX .
But essentially this is where their modelling gets a significant boost.
Still though , when the Canadian Parent organisation has to restate their costs in Canadian dollars , these costs are always subject to the vagaries and uncertainties of an often declining or volatile Brazilian Real in relative terms - but at the same time they would probably have a buffer of at least HALF the cost in relative salaries and wages to that of the Quebec mining industry personnel and what they would receive.
So effectively if Sayona can manage to stay ' level ' with Sigma and Brazil on cost , logistics , and supply chain neorology basis to that of Sigma , then we are doing very very well to be able to compete with a low wage BRIC economy producing nation.
I think you also have to consider .......and I do like the added comparisons on use and availability of Hydro Power and overall access and use of renewables as well.
Brazil of course is right up there at the top in overall deployment of renewable energy sources at over 80% with around 66% coming from Hydro and where it ( Brazil ) is ranked 10th in the World.
Canada on the other hand is obviously more of a ' mature ' industry with 3 of the TOP 4 global largest players ( Companies ) in Hydro including Hydro Quebec which is ranked No. 2 in the World behind China . However when put together with those also operating in the US like Duke energy , the North American market players would ranked No 2 in ' Installed ' capacity and a considerable amount ahead of Brazil who would be ranked 3rd at around 110 GW.
Quebec is also the World's 3rd largest Hydro Business with its 63 hydro electric stations pumping out an approximate 38 -40 GW per hour compared to Brazil's Centrais Eletricas Brasileira's 48 power stations which produce approximately 42 - 45 GW's of generated power per hour , and China's Yangtze Power's 82 hydro producing stations pumping out around 45 -50 GW with more than 58 of them with the capacity of over 700 MW's.
So all of these figures are great , but what really counts is when you have a look at Quebec Hyrdro's latest annual report to find that they are the lowest cost supplier to residential customers in ALL of North America and have the largest and most affluent ready made market just to the south of the border and to the other provinces of Canada where they exported 33.7 Twh of power including a 20 year long term deal with Massachusetts to supply 9.45 Twh as well as a potential additional 8 Twh currently being negotiated with New York City and its grid.
And that's where I think Brazil doesn't have the ability to match higher revenues to low cost because they have to sell low revenues to neighboring poorer relative export nations to that of Quebec. So then you ( Quebec ) can deploy these relative comparative strengths in this area by using the added comparative financial clout in building out NEW assets and investments in the new economy electrification supply chains etc...etc...
So if your costs are the same , but you're getting more even after part of this is being soaked and allowed for higher wages and salaries , you will still have higher higher profitability as measured in US Dollars in relative terms for further value add investments in projects in your economy. And I guess this is why they can payout 75% of their net income as a very lucrative dividend to it's owners the Quebec Government....which they can re-distribute as they see fit. And I know this is only around C$2 billion currently per annum , but its by all intent and purposes into ' Perpetuity ' so goes on forever until they decide to say Privatise it ( which they won't as its still growing ) . So the point here is that if they invest accordingly into the Lithium Chemicals and Extraction sectors , they can effectively create another income producing Asset component from their state which pays perhaps even a BIGGER dividend distribution to its Quebec stakeholders than it currently receives from Quebec Hydro.
So I guess these are some of the things to contemplate when measuring up the ' REAL ' differences in valuations and longer term benefits through access to markets and access to Government Funding of projects when compared to Sigma Lithium.
But ' Net - Net ' , we are definitely thereabouts if not in front of them in many aspects ......which again is why I like the comparisons very much. We will catch to them again for sure.
(20min delay)